Stocks closed mixed on Friday, but mostly higher for the week with the S&P and Nasdaq up for the second week in a row, while the small-cap Russell 2000 was up for the sixth week in a row.

Last week's tame inflation reports, which showed CPI's retail inflation matching expectations, and PPI's wholesale inflation beating expectations with the annual core rate easing by nearly a full percentage point to 2.8% vs. last month's 3.7%, lifted stocks ahead of this week's FOMC Announcement, when the Fed is expected to cut interest rates.

After pausing their rate-cutting cycle since the beginning of the year, they appear poised to resume their rate-cutting cycle after 8½ long months.

This comes on the heels of the updated narrative by the Fed citing increased risks to the labor market vs. inflation.

The concern over the labor market was underscored by the previous week's softer-than-expected employment report, and the record-high reduction in job growth for the previous 12-month period ending March 2025.

The Fed is widely expected to cut rates on Wednesday, 9/17. But there are other questions to be answered. 1) Will they cut by the expected 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 downward job revisions, and the easing inflation reports.

Also lifting stocks last week was Oracle's soaring sales outlook for their AI offerings over the next 4 years ($18 billion in fiscal 2026, then growing to $32B in 2027, $73B in 2028, $114B in 2029, and $144B in 2030), sending their stock up by 36% the following day ? their best one-day advance since 1992.

Analysts were quoted as being "blown away" and "in shock" at the forecast. And a Wells Fargo analyst called it a "momentous confirmation" of the AI trade.

People were in awe a couple of years ago when NVIDIA gave skyrocketing forecasts, and then delivered on them and more.

Since 2023, Oracle is up 292%. For context, NVIDIA is up 1,117% since 2023.

In other news, last Friday's Consumer Sentiment report slipped to 55.4 vs. last month's 58.2 and views for 58.0. The year-ahead inflation expectations (which is part of that report), remained unchanged at 4.8%.

This week we'll get the usual slate of economic reports.

But the main event will by the FOMC Announcement on rates, followed by the customary Fed Chair Press Conference a half hour later.

One thing to note: Congress needs to come to an agreement on the government's spending bills (or pass a Continuing Resolution) by September 30^th to keep the government from shutting down. Coming to a bipartisan agreement on almost anything has become increasingly difficult over the years. We will see if both parties can get something passed before the two and a half-week deadline arrives.

In the meantime, stocks are sitting near all-time highs or YTD highs. And it looks like there's a lot more upside to go.

As you know, I'm expecting the S&P to finish with at least another 20%+ gain for 2025. And that means another sizable move over the next 3½ months for that to happen.

See you tomorrow,