Stocks closed higher yesterday, led by the small-cap Russell 2000 with an outsized gain of 1.91%.

Yesterday's weaker-than-expected ADP Employment report likely all but sealed next week's expected rate cut.

The consensus was calling for a gain of 20,000 new private sector jobs for the month of November. Instead, the report estimates we lost -32,000. That's a huge difference and an actual decline in jobs.

In all fairness, the ADP report has a spotty track record of forecasting what the Employment Situation report by the Bureau of Labor Statistics (BLS) will say, typically a couple of days later. But with the November report being delayed by nearly two weeks, coming out on Tuesday, 12/16 vs. 12/5 (it usually comes out the first Friday of the month), that's all we've got. And it paints a picture of a weakening labor market.

And given the Fed cited the last rate cut as a way of "cushioning a softening labor market," and acknowledging that the risk to the labor market has increased vs. inflation, that bodes well for another rate cut next week. No surprise that the CME's FedWatch tool puts the likelihood at 89.0% for a 25 basis point cut next week.

In other news, yesterday's Motor Vehicle Sales report showed total sales improved to 15.6 million (annualized) vs. last month's 15.3M and views for 15.4M.

MBA Mortgage Applications were off -1.4% w/w with purchases up 2.5%, but refi's down -4.4%.

Industrial Production came in at 0.1% m/m vs. last month's -0.3% pace and estimates for 0.1%. Manufacturing Output was flat (0.0%), and the Capacity Utilization Rate was the same as last month at 75.9%.

The PMI Composite report saw the index ease to 54.2 vs. last month's 54.6 and forecasts for 54.8. The Services Index also eased to 54.1 vs. last month's 54.8 and expectations for 55.0.

And the ISM Services Index ticked up to 52.6 vs. last month's 52.4 and the consensus for 52.1.

Today we'll get the Challenger Job-Cut report, Weekly Jobless Claims, Factory Orders, and the International Trade in Goods and Services report.

Yesterday after the close, Salesforce reported earnings and posted a positive EPS surprise of 14.0%, and a negative sales surprise of -0.05%. That translated to a quarterly EPS growth rate of 34.9% vs. this time last year, and a sales growth of 8.69%. They also upped their Q4 revenue guidance above the consensus. They were up 1.71% in the regular session before earnings, and were trading up roughly 2.0% in after-hours following earnings.

This comes on the heels of Monday afternoon's top and bottom line beats by Marvell Technology (+1.33% EPS surprise, +0.61% sales surprise, for an EPS growth rate of 76.7%, and a sales growth of 36.8%), which went on to gain 7.87% yesterday. Investors also cheered their announced acquisition of Celestial AI as it looks to ramp up its AI and cloud data center offerings.

After a shaky start to the week, the major indexes are back in the plus column for the week.

Let me remind everyone that December is typically an up month. Especially with it being a post-election year, which gives December a 77.8% likelihood of closing higher. And with Q4 being the best quarter for stocks, I'm expecting a strong finish to the year.

See you tomorrow,