Stocks closed sharply higher yesterday, led by the small-cap Russell 2000 with 1.58%.

The major indexes are now up for the month. Too early to celebrate just yet as we're only 2 trading days in. But still a good start.

Not much in the way of economic reports yesterday. But we'll get our fair share as the week goes on with Motor Vehicle Sales and the PMI Composite Index today.

On Wednesday we'll get MBA Mortgage Applications, Factory Orders, the ISM Services Index, and the ADP Employment Report.

On Thursday its Weekly Jobless Claims, Wholesale Inventories, and the Challenger Job Cut report.

And Friday, we'll get the always important Employment Situation report.

That's the main event this week.

With the Fed believing there's more downside risk to the labor market, given easing inflation numbers, all eyes will be on Friday's report.

The last report came in stronger-than-expected. But the continued downward revisions, which have slashed hundreds of thousands of jobs from previous jobs reports, remains a concern. Will Friday show more strength, only to be undercut by downward revisions from prior reports? Will we see only strength, especially after Q3's soaring 4.3% GDP growth? Or will we see weakness, both present and past? Or something else?

We'll have to see.

Whatever it shows, it could have an impact on what the Fed does when they next meet on January 27-28.

After cutting interest rates three times in a row last year, they forecast one more cut in 2026. Will that be January? March? A little later? Or much later, if at all?

With the Fed insisting they will remain data dependent, it all comes down to the numbers.

And while jobs do seem to be getting the most focus right now, inflation is still part of the equation, given their dual mandate of maximum employment and price stability.

Next week we'll get the Consumer Price Index (CPI ? retail inflation), and the Producer Price Index (PPI ? wholesale inflation). Benign reports would augur well for a rate cut sooner. But a hotter-than-expected reading could muddy up the outlook and suggest a pause, or at least wait for more info.

Nonetheless, the labor market, for now, seems like the main driver on the Fed's next move.

In the meantime, there's plenty of bullish catalysts for the market, including the ongoing AI boom, a robust economy, and increased earnings estimates.

And we're not that far off from earnings season, which is always an exciting time, since stocks typically go up during earnings season.

Once again, great start to the new year. And with the bullish seasonal January Effect in our favor, that bodes well for more gains to come.

See you tomorrow,