Friday's Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation gauge, came in as expected with the headline rate up 0.3% m/m vs. last month's 0.2%, but in line with expectations. The y/y rate came in at 2.7% vs. last month's 2.6%, but, again, in line with estimates. The core rate (ex-food & energy), was up 0.2% m/m vs. last month's 0.3%, and in line with views. The y/y rate came in at 2.9% vs. last month's 2.9%, and forecasts for the same.

The tame inflation report underscores the Fed's latest narrative that inflation is not expected to go up substantially. And that recent price increases will be a "one-time" shift due to tariffs, rather than ongoing increases.

This keeps the Fed on track to cut two more times this year (presumably by 25 basis points each in October and December), as the Fed had forecast after their last FOMC meeting.

The market cheered the news.

Thursday's better-than-expected final GDP estimate for Q2, also buoyed stocks with a print of 3.8% vs. the previous estimate of 3.3%. That shows the economy's resiliency, and bodes well for future growth. It also supports the Fed's latest upwardly revised estimates for economic growth for both this year and next.

In other news, the Consumer Sentiment Index came in at 55.1 vs. last month's 55.4 and views for the same.

Today we'll get the Pending Homes Sales Index and the Dallas Fed Manufacturing Index.

Tomorrow is the deadline for Congress to pass the government's spending bills (or Continuing Resolution), to avoid a shutdown. So there could be some extra volatility.

Coincidentally, October is considered the most volatile month for stocks. Although, it usually winds up in the plus column by month's end.

But, then again, September is considered the worst month for stocks. And September, with just 2 days left, has been fantastic, so far.

The Dow, month-to-date, is up 1.54%, the S&P is up 2.84%, the Nasdaq is up 4.79%, and the small-cap Russell 2000 is up 2.87%.

And with the start of Q4 right around the corner, which is considered the best quarter for stocks, I'm expecting a lot more upside to go.

See you tomorrow,