Stocks closed sharply higher yesterday, led by the small-cap Russell 2000 with an outsized gain of 1.83%.

The big 3 indexes (Dow, S&P 500 and Nasdaq), once again, put in new all-time highs in the process.

Yesterday's in line Consumer Price Index (CPI ? retail inflation), in addition to Wednesday?s PPI report, all but guaranteed a Fed rate cut next week.

The headline CPI numbers showed inflation up 0.4% m/m vs. last month's 0.2% and views for 0.3%. The y/y rate came in at 2.9%, up from last month's 2.7%, but in line with the consensus. The core rate (ex-food & energy), was up 0.3% m/m vs. last month's 0.3% and estimates for the same. The y/y rate came in at 3.1%, in line with last month and expectations.

This comes on the heels of the previous day's Producer Price Index (PPI ? wholesale inflation), which came in much better than expected with a headline number of -0.1% m/m vs. last month's 0.7% and views for 0.3%. The y/y rate eased to 2.6% from last month's 3.3% and expectations for the same. The core rate came in at -0.1% m/m vs. last month's 0.7% and the consensus for 0.3%, while the y/y rate ticked lower to 2.8% vs. last month's 3.7% and forecasts for 3.5%.

The Fed is widely expected to cut rates next week when they conclude their 2-day FOMC meeting on 9/17. But there are other questions to be answered. 1) Will they cut by 25 basis points, or 50 bps like they did last September when they kicked off their rate cutting cycle? 2) Will this be the beginning of a series of cuts, or a one-and-done cut, regardless of its size? And 3) if a series, will it be two or three cuts, or more? The Fed had previously forecast 2 rate cuts this year (presumably by 25 bps each). But that was before the weakening jobs market, the record amount of downward job revisions, and the easing inflation reports.

In other news, yesterday's Weekly Jobless Claims rose by 27,000 to 263,000 vs. the consensus for 234,000. Although, the smoother 4-week moving average was only at 240.5K, up from last week's 230.75K.

Today we'll get the Consumer Sentiment report and the Baker Hughes Rig Count report.

Stocks are on a tear.

NVIDIA's recent earnings report, not to mention Oracle's report the other day where they forecasted soaring demand projections for their AI tools, confirms the AI trade is alive and well.

Add in the long-awaited interest rate cuts, and investors are wasting no time in driving stocks to new heights.

This is a bull market for the ages. One that I expect will be talked about in the history books for years to come.

In the meantime, I'm expecting plenty more gains by years end, with the S&P notching another 20%+ gain for 2025.

See you tomorrow,