Stocks closed lower yesterday with all of the major indexes in the red.

Not much in the way of news yesterday.

As for economic reports, MBA Mortgage Applications were up 0.6% w/w with purchases up 0.3%, and refi's up 0.8%.

New Homes Sales rose to 800,000 units (annualized) vs. last month's 664K and views for 649K. That's a 20.5% increase and the largest gain in 3 years.

And the Survey of Business Uncertainty showed U.S. firms expecting year-ahead sales growth to come in at 3.83%, up from last month's 3.77% pace, with employment growth at 4.16%, down a bit from last month's 4.23%.

Today we'll get Weekly Jobless Claims, the Durable Goods Orders report, the 3rd and final GDP estimate for Q2 (consensus is for 3.3%, the same as last month's estimate), the International Trade in Goods report, Retail and Wholesale Inventories, Existing Home Sales, the Quarterly Services Survey, the Corporate Profits report, and the Kansas City Fed Manufacturing Index.

We'll also hear from Fed policymakers Austan Goolsbee, Jeffrey Schmid, Michelle Bowman, Michael Barr, Lorie Logan, and Mary Daly as they speak at their respective engagements throughout the day.

A jam-packed day of reports today.

But the report everybody is really waiting for is tomorrow's Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation gauge.

Even though the Fed has shifted their focus more towards the labor market vs. inflation, it is part of their dual mandate. The report is not expected to show any surprises. The headline number is forecast to be up 0.3% m/m with the annual rate at 2.7% vs. 2.6% last month. The core rate (ex-food & energy) is estimated at 0.2% m/m, down a bit from last month's 0.3%, with the y/y rate at 2.9%, in line with last month's pace.

Earlier this month, the CPI (retail inflation) showed the core rate coming in at 3.1%, in line with last month, while the PPI (wholesale inflation) fell by nearly a full percentage point to 2.8% vs. last month's 3.7%.

While interest rates are still too high, the Fed is no longer expecting significantly higher inflation. In fact, Fed Chair Jerome Powell has said that the "base case" remains that the recent price increases (which are showing up in moderate rises in inflation) will be a "one-time" shift due to tariffs, rather than ongoing increases.

With 2 more days to go, stocks are trading lower for the week.

Coming into the week, the Dow was up 2 weeks in a row (and up 5 out of the last 7 weeks); the Nasdaq was up 3 weeks in a row (and 5 out of the last 7 as well); the S&P was up 3 weeks in a row (and 6 of the last 7); with the Nasdaq up a whopping 7 weeks in a row.

If the markets end up in the red this week, it should not come as a shock. There was bound to be some profit taking after the heady gains over the last couple of months.

But we will soon enter Q4, which is historically the best quarter of the year for stocks.

So, if we see some volatility, so be it. I'm expecting the market to continue its rally going into the end of the year with the S&P finishing up by 20% or more.

See you tomorrow,