Stocks closed sharply higher again yesterday, this time led by the small-cap Russell 2000 with an outsized gain of 2.14%. The S&P and Nasdaq were no slouches either with 0.91% and 0.67% respectively.

Yesterday morning's Producer Price Index (PPI ? wholesale inflation) eased investor worries with a mostly better-than-expected showing. The headline number was up 0.3% m/m, in line with estimates, while the y/y rate came in at 2.7%, a bit higher than the expected 2.6%, and the previous print of the same. The core rate (ex-food & energy) was up 0.1% m/m vs. views for 0.3%, while the y/y rate came in at 2.6%, below forecasts for 2.7%, and the previous reading of 2.8%.

The previous PPI numbers we got were in September, and reflective of August. Yesterday's numbers are reflective of October.

With inflation becoming less of a risk (yesterday's inflation report further underscores that narrative), and the labor market becoming the larger focus, that bodes well for another interest rate cut in December.

Adding to that outlook were comments from Federal Reserve Governor Stephen Miran yesterday, who said the U.S. economy is "calling for large interest rate cuts."

In fact, he's calling for a 50 basis point cut, saying monetary policy needs to get "to neutral as quickly as we can," stressing that higher rates are "holding the economy back," and "pushing the unemployment rate gradually upward."

The market ate that up. Especially small-caps, which are typically more sensitive to interest rates.

The CME's FedWatch tool put the odds at 71% for a quarter point rate cut last Friday. That rose to 81% on Monday. And increased to an 84.9% likelihood yesterday.

In other news, Retail Sales rose 0.2% m/m. Ex-vehicles it was up 0.3%. Ex-vehicles and gas it was up 0.1%.

The Case-Shiller Home Price Index was off -0.5% m/m (unadjusted) vs. last month's -0.6%, with the y/y rate at 1.4%, in line with estimates, but under last month's 1.6% pace.

The Pending Homes Sales Index came in at 76.3% vs. last month's 74.9%.

The Richmond Fed Manufacturing Index fell to -15 vs. -4 last month.

And Consumer Confidence slipped to 88.7 vs. last month's upwardly revised 95.5 (from 94.6), and views for 93.3.

Today we'll get MBA Mortgage Applications, Durable Goods Orders, GDP, Weekly Jobless Claims, Retail and Wholesale Inventories, the Chicago PMI, New Home Sales, and the Personal Consumption Expenditures (PCE) index (which is the Fed's preferred inflation gauge). The last PCE core rate we got (August data), showed it at 2.9% y/y. The consensus is calling for another print of 2.9% today.

So far, the market has put in a strong showing this week. But it should not have come as much of a surprise since the market typically goes up during Thanksgiving week.

The week after is less generous.

But given that December is seasonally a strong month (Q4 is the best quarter for stocks after all), and with it being a post-election year when December has a 77.8% likelihood of closing higher, I am expecting a strong finish to the year.

Note, today is the last regular trading day this week. Tomorrow (Thursday) the market is closed for Thanksgiving. And on Friday, we have a half-day with the markets closing early at 1:00 PM ET.

Have a great trading day today.

And have a Happy Thanksgiving tomorrow.

See you on Friday,