Stocks closed mostly higher on Friday with the big 3 indexes (Dow, S&P and Nasdaq) finishing in the green, led by the Nasdaq's 0.72%, while the small-cap Russell 2000 was lower by -0.77%.

But they were all up for the week, making it 2 up weeks in a row for the Dow, 3 up weeks in a row for the S&P and Nasdaq, and a whopping 7 up weeks in a row for the Russell.

The tech-heavy Nasdaq gained 2.21% for the week, with the small-cap Russell a strong second index at 2.16%.

The previous week's soaring sales outlook by Oracle for its AI products, which has been called "momentous confirmation" of the AI trade, not to mention NVIDIA's announcement last week that they would be investing $5 billion into Intel, which had NVIDIA's CEO Jensen Huang saying, "the era of accelerated and AI computing has arrived," sent tech stocks surging.

Likewise, the Fed's 25 basis point interest rate cut last week, and the forecast for 2 more cuts (presumably by 25 bps each), by year's end (1 more than expected), along with the Fed's upwardly revised growth outlook, gave an extra lift to small-caps.

The previous week's better-than-expected inflation reports definitely played a role in the Fed finally greenlighting rate cuts last week.

And even though they appear ready to cut again when they next meet in October, they continually insist they will remain data dependent.

So, all eyes will be on Friday's (9/26), Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation gauge.

But short of a significant increase, the Fed seems poised on cutting again, given their primary focus has shifted to the softer labor market.

Only real cautionary things to be aware of at the moment are 1) Congress needs to pass the government's spending bills (or Continuing Resolution) by September 30^th to avoid a shutdown; 2) the back half of September is typically not favorable for stocks; and 3) October is considered the most volatile month for stocks, although it usually winds up in the plus column by month's end.

However, that being said, Q4 is typically the best quarter for stocks.

So, if we do see some extra volatility, it could present an ideal time to add to the market if you are expecting, as I am, to see stocks close at even higher highs by the end of the year.

See you tomorrow,