Stocks closed lower on Friday and for the week.

After 2 up weeks in a row, there was bound to be some profit taking. And we saw some of that on Friday.

Last week's rate cuts, and stronger economic outlook, bode well for the new year.

Now that the third and final rate cut for 2025 is in the books, investor attention has turned to what the rate cut schedule will look like for 2026.

The Fed still expects 1 more cut next year. The question is when? Maybe January? And will there be more (or possibly less)?

With inflation expectations continuing to ease, the Fed's focus has shifted to the labor market.

The last employment report (which showed how the jobs market was doing in September, prior to the government shutdown) was weaker than expected, and showing a loss of jobs.

The Fed also recently cited their belief that the jobs numbers have been systematically overstated.

That being said, there will be extra attention on this week's Employment Situation report by the Bureau of Labor Statistics (BLS) on Tuesday, 12/16.

That will give us a look at the jobs market for November (as well as some October stats), the first glimpse we'll get following the record government shutdown.

A weaker-than-expected report could energize the market as that would augur for another rate cut sooner rather than later. Although, a better-than-expected report could provide a sense of relief as well.

Of course, the market could interpret either one differently. We'll have to wait and see.

But I'm expecting the former.

In the meantime, it's been a stellar year so far, and there's 2½ more weeks to go.

I'm still expecting a nice end-of-year rally. Not just because of the seasonal tendencies (Q4 is the best quarter for stocks, and December has a 77.8% likelihood of finishing higher), but also because of the fundamentals.

That includes moderating inflation, lower interest rates, upped GDP growth forecasts, increasing earnings estimate projections, and of course, the continuing AI boom.

I'm also still expecting another 20%+ gain this year. With the S&P up 16.1% YTD, we only need another 3.9% more to get there.

We'll see if the market can reignite that expected end-of-year rally this week.

See you tomorrow,