Stocks closed higher on Friday and for the week. The S&P 500 closed higher every day last week. The Nasdaq was up in 4 out of the last 5 days. And they both finished the week at new all-time highs.

The other indexes were no slouches either. They too were up on Friday and for the week. The Dow is within striking distance of making new all-time highs of their own. And the small-cap Russell 2000 and mid-cap S&P 400 are on the verge of making new YTD highs.

There's been a wave a good news lifting the economy and the market, not the least of which has been a better-than-expected employment report a few weeks ago, better-than-expected inflation reports a couple of weeks ago, news that the Fed is still expecting to cut rates two times this year, better-than-expected earnings, and news of some big trade deals with hopes of even more in the coming days and weeks.

Last week it was announced that the U.S. and Japan finally came to an agreement on trade. An important deal given they are our fifth largest trading partner (behind the E.U., Mexico, Canada and China).

And with the August 1^st deadline fast approaching, there was plenty of hope that a trade deal with the E.U. would be forthcoming next. And sure enough, on Sunday it was announced that the U.S. and the E.U. did in fact come to a trade agreement, with President Trump calling it "a very powerful deal." The European Union, as a bloc, is our largest trading partner, and more than 4x that of Japan.

There's also hope that a deal with Canada and Mexico will be sealed as well.

As for earnings, they continue to impress. And we'll get 966 companies on deck to report this week, including 4 more Magnificent 7 stocks with Microsoft and Meta going on Wednesday after the close, and Apple and Amazon going on Thursday after the bell as well.

Also this week, we'll get the FOMC Announcement with the two-day meeting concluding on Wednesday. While nobody is expecting the Fed to cut rates this week (the odds of a rate cut are only at 4.1%), the market will be focused on the Fed's signals for their 3 remaining meetings afterwards (September, October and December). As of now, the likelihood of a September cut jumps to 64.5%, with October and December at 81.2% and 93.4% respectively.

We'll get another look at inflation this week with the Personal Consumption Expenditures (PCE) index on Thursday. That's the Fed's preferred inflation gauge. But that won't come until after the Fed meeting. The PCE index, like the CPI and PPI inflation reports, has fallen over the last several months, in spite of the Fed sitting on rates for fear that inflation would rise due to tariffs. If the PCE index can also show that inflation continues to ease, or a tick-up is muted, that will further increase the chances for a rate cut sooner (September) rather than later.

Stocks are in a great position at the moment.

And with more companies set to report this week and over the next few weeks (stocks typically go up during earnings season), they are poised to breakout to even higher highs.

See you tomorrow,