Stocks closed mostly higher on Friday, with modest gains. But all of the major indexes were up for the week, led by the Nasdaq with 0.91%, followed by the small-cap Russell 2000 with 0.84%.

Friday's Personal Consumption Expenditures (PCE) index (the Fed's preferred inflation gauge) came in largely as expected. Headline inflation was up 0.3% m/m, which was in line with the consensus. The y/y rate came in at 3.0% vs. the previous outing of 2.9% and forecasts for 2.8%. The core rate (ex-food & energy), was up 0.2% m/m, slightly better than expected, while the y/y rate came in at 3.0%, down from the previous report's 3.1%, but above estimates for 3.0%.

Although, Friday's report was not a reflection of November or even October, but instead, September, before the government shutdown. There was relief that there were no real surprises. But considering the age of the data, it probably would not have factored much into anyone's decision either way.

With last week's weaker-than-expected ADP Employment report, and a tame inflation report (stale or not), the Fed essentially has the green light to cut rates on Wednesday when they meet for the last time this year. The CME's FedWatch tool places an 87.2% likelihood of a 25 basis point rate cut.

Given the high expectations for another cut, it's what the Fed's outlook is for next year's rate-cut schedule, that has investors anxious to hear what they say.

In other news, Friday's Consumer Sentiment report came in at 53.3, up from last month's 51.0 and estimates for 52.0. The year-ahead-inflation expectations (also part of that report) fell to 4.1% vs. last month's 4.5% pace.

One week down. Three and a half more to go for 2025.

YTD, the Dow is up 12.7%, the S&P is up 16.8%, the Nasdaq is up 22.1%, and the Russell is up 13.1%.

With earnings forecasts pointing to growth, and the bullish seasonals in our favor (Q4 is the best quarter for stocks, with a 77.8% likelihood of being up in December), coupled with falling interest rates and the ongoing AI boom (which is likely to last for years), I'm expecting a strong finish to the year.

And for those keeping track, the S&P only needs another 3.2% by year's end for my 20%+ gain prediction to come true. But who's says it can't be up 25% or 30% or more this year?

Either way, I'm looking for an end-of-year rally.

See you tomorrow,