Stocks closed sharply higher yesterday, adding to Friday's gains. The tech-heavy Nasdaq led the way with an outsized gain of 2.69%. Small-caps soared as well with 1.89%, followed by the S&P with 1.55%.

Thanksgiving week has a high probability of finishing in the positive. And we definitely got started on the right foot for this Thanksgiving week.

Note, it will be a shortened trading week. Thursday we're off for Thanksgiving. And Friday will be a half-day.

Last week's comments by Fed policymaker John Williams, when he said he sees "room for further adjustment in the near term," continues to underscore expectations for another rate cut when the Fed meets on December 9-10 (just 1½ weeks after Thanksgiving).

Currently, the CME's FedWatch tool puts the odds at 81.0% (up from Friday's 71.0%), that we'll get another 25 basis point rate cut, and fulfilling the forecast the Fed had said earlier this year of 3 rate cuts by year's end.

The worry of an AI bubble continues to hang over the market.

Although, AI stocks are making a convincing argument that there's no such thing.

I should also point out that Jensen Huang, the CEO of AI-bellwether NVIDIA, doesn't think we're in an AI bubble either.

Last week, NVIDIA positively surprised on both the top and bottom lines, posting a 60.5% quarterly EPS growth rate, and a 62.5% sales growth. Astonishing numbers for such a large company, not to mention the consistency of these huge gains (10 quarters in a row of double-digit and triple-digit gains for both sales and earnings). And their upped revenue guidance for Q4 was just as astonishing, prompting Mr. Huang to say their Q4 outlook is "crazy good."

I also liked the below comments by Mr. Huang, as it encapsulates the long-term trend I believe we are in for AI.

He said, "we're in the beginning of a very long-term buildout of the fundamental infrastructure of humanity, which is computing." "We reinvented computing for the first time in 60-70 years, and so all of the computers that have been installed around the world, is being modernized to accelerated computing and NVIDIA's GPUs and to Artificial Intelligence."

Pretty exciting stuff.

In other news, yesterday's Dallas Fed Manufacturing Survey showed the General Activity Index coming in at -10.4 vs. last month's -5.0. The Production Index, however, rose sharply to 20.5 vs. last month's 5.2.

Today we're supposed to get the Producer Price Index (PPI ? wholesale inflation), Retail Sales, the Case-Shiller Home Price Index, the Pending Home Sales Index, Business Inventories, the Richmond Fed Manufacturing Index, and Consumer Confidence.

Lots of reports jammed into a shortened week.

But so far so good.

And if all goes well, we'll have something else to be grateful for on Thanksgiving.

See you tomorrow,