Stocks closed higher on Friday and for the week. And with one more day to go in June, they are on pace to close higher for the month as well, making it 2 up months in a row for most all of the major indexes (3 months in a row for the Nasdaq).

Moreover, all of the major indexes are above where they were before the tariffs were announced. The big 3 indexes are up for the year. And the S&P and Nasdaq have both made new all-time highs.

Easing Middle East tensions. Trade deal optimism. Modest inflation. Resilient economic data. A robust labor market. And better-than-expected earnings have all contributed to the historic rebound.

Although, on Friday, stocks briefly traded in the red before bouncing back up, after it was announced that President Trump canceled trade negotiations with Canada due to their European-style Digital Services Tax on American companies. President Trump said it was a deal-breaker and suspended negotiations. The Administration is expected to announce the additional 'reciprocal' tariffs Canada will pay after the 90-day pause expires.

A bit of a surprise given that just the day before it was announced that the U.S. and China had agreed on a trade deal framework.

Additionally, it's expected that a deal with India could soon be announced.

In other news, Friday's Personal Consumption Expenditures (PCE) index (the Fed's preferred inflation gauge) came in mostly as expected. The headline number was up 0.1% m/m, in line with last month. The y/y rate ticked up to 2.3% from last month's 2.1% and views for 2.2%. The core rate (ex-food & energy) was up 0.1% m/m, also in line with last month. The y/y rate came in at 2.6%, up from last month's 2.5%, but in line with the consensus for 2.6%.

The modest increase in inflation, along with the continued progress seen in the previous CPI and PPI reports, have come as a relief to the markets, given the repeated concerns voiced by the Fed of higher inflation due to tariffs (which have yet to really materialize).

The progress on inflation is unmistakable. And repeated concerns notwithstanding, the Fed, just the other week, said they still expect to cut rates two times this year. Clearly, they do not seem overly worried about inflation, in spite of sitting on rates this year. The odds favor a rate cut at their September meeting (which is just two meetings from now ? next one is July 29-30).

Although, Federal Reserve Governor Christopher Waller recently said that he believes the Fed could begin lowering rates again as early as July's meeting.

We shall see.

In the meantime, the market is looking good with two of the big three indexes in record territory.

As I've said before, I'm expecting a big move this year of 20% or more. And the recent upside breakout looks like it's the beginning of the next leg up.

So, make sure you're taking full advantage of it.

See you tomorrow,