Stocks closed solidly higher on Friday and for the week, making it 2 up weeks in a row for all of the major indexes.

Big earnings beats by many of the biggest banks in the previous week, and plenty of big beats by big tech and blue chips last week are setting the tone for what looks like another better-than-expected earnings season.

Earnings season ramps up this week with another 1,019 companies in queue to report, with marquee names like NXP Semiconductor today; Visa and Booking Holdings tomorrow; Microsoft, Alphabet, and Meta on Wednesday; Apple and Amazon on Thursday; and Exxon Mobile and AbbVie on Friday. That's a big week with no less than 5 of the Magnificent 7 stocks on deck, plus many other big-name companies.

Friday's Consumer Price Index (CPI, retail inflation), finally came out after being delayed previously due to the government shutdown. And it did not disappoint. The headline numbers showed inflation up 0.3% m/m vs. last month's 0.4% and views for the same. The y/y rate came in at 3.0%, slightly above last month's 2.9%, but slightly below the consensus for 3.1%. The core rate (ex-food & energy), came in at 0.2% m/m vs. last month's 0.3% and estimates for the same, while the y/y rate came in at 3.0%, beating the 3.1% pace of last month and expectations.

The Fed will make their announcement on rates on Wednesday, 10/29, at the conclusion of their 2-day FOMC meeting. There's a 98.3% likelihood that the Fed will cut rates for the second time this year by another 25 basis points. After cutting in September, they forecasted 2 more rate cuts (presumably by 25 bps each), by the end of the year. If the Fed maintains that stance on Wednesday, we can expect another cut when they meet again in December.

In other news, Friday's PMI Composite report showed the Composite Index at 54.8 vs. last month's 53.9. The Manufacturing Index was at 52.2 vs. last month's 52.0 and views for 52.1, while the Services Index was at 55.2 vs. last month's 54.2 and estimates for 54.0.

And the Consumer Sentiment report showed the Index at 53.6 vs. last month's print and forecast for 55.0. The year-ahead inflation expectations (part of that report), was unchanged at 4.6%, in line with last month and expectations.

Last week, the White House ended trade negotiations with Canada due to their advertising campaign over tariffs. Canada said they would stop those ads after the weekend. But it was not fast enough, and the Administration added an additional 10% tariff on Canada as a result.

This week President Trump and China's President Xi will meet on Thursday, 10/30, before the official start of the APEC summit in South Korea on 10/31-11/1. The hope is both countries can enter into an agreement, or at least set the stage for continued progress on trade, after recent flare-ups with China imposing export restrictions on rare earths and the U.S. retaliating with proposed 100% additional tariffs, and the U.S. threatening to stop buying cooking oil from China after they stopped buying U.S. soybeans.

With 2 more months and a week left in the year, stocks are having another great year. YTD, the Dow is up 11.0%, the S&P is up 15.5%, the Nasdaq is up 20.2%, and the small-cap Russell 2000 is up 12.7%.

With Q4 typically being the best quarter for stocks, coupled with the expected additional rate cuts, strong earnings, the ongoing AI tech boom, and the broadening rally, I'm expecting a lot more upside to go.

See you tomorrow,