Stocks closed mostly lower on Friday, but mostly higher for the week. And it was the second up week in a row for the Nasdaq and S&P 500.

Stocks continue to benefit from blockbuster earnings. Q2'26 earnings season, which officially wrapped up the other week (even though earnings continue to trickle in), showed Q2 S&P earnings growth up 45.2%. Nothing short of spectacular. And Q3 is just around the corner (it officially starts on 10/28 when Alcoa reports after the close, but it unofficially begins 2 weeks prior when big banks start releasing their earnings). And it too is forecast to be another strong one. In fact, it's looking that way for the next several quarters with Q3 forecast at 23.0%, Q4 at 25.3%, and Q1'27 at 20.4%.

Earnings drive stock prices. And the earnings picture is decidedly bullish. That's why stocks are trading at or near all-time highs. And why I'm expecting a lot more upside to go. And not just this year, but next year, and even further out.

Let's not forget, the AI boom is not slowing down. It's accelerating. And with AI being touted as the most transformational technological breakthrough ever, I'm expecting this historic rally to continue for quite some time.

Friday's Employment Situation Report came in better than expected. Some attributed the weaker tone in the market to raised expectations for a rate increase. Although, I think Friday's softness was more of a short-term risk-off trade going into a 3-day long holiday weekend. The stronger-than-expected labor market reinforced the resiliency of the economy and underscored the strong earnings outlook. All bullish signs. Granted, that did lift the expectations for a rate increase later this month from 50% going into the report to 60% afterwards. But one 25 basis point increase, if we get it, which is debatable, isn't going to undo the 3 rate cuts that preceded it last year, or derail this historic time in the economy or the market, in my opinion.

Anyway, the Employment report showed headline jobs up 162,000 (127,000 in the private sector and 35,000 public) vs. the consensus for 55,000 jobs (53K private and 2K public). The unemployment rate was unchanged at 4.1%, in line with last month and under estimates for 4.2%.

Revisions from previous months saw June gain an extra 11,000 jobs to 31,000 (up from 20,000), and July adding 44,000 jobs to 21,000 (up from -23,000), erasing July's surprising decline and confirming a gain after all.

The biggest job gains in August came from the following: Food Services and Drinking Places were up 59,000; Local Government Education added 42,000; Manufacturing was up 16,000; and Health Care gained 13,000 jobs.

With the next FOMC Announcement coming out next week (Wednesday, 9/16), this week's inflation reports will be the last inflation readings before the Fed makes their next decision on rates. On Thursday, 9/10, we'll get the Producer Price Index (PPI ? wholesale) inflation report, and then on Friday we'll get the Consumer Price Index (CPI ? retail) inflation report.

The last several reports have shown inflation pressures easing. While it's still too high in absolute terms, it has not been climbing, as many had feared with oil prices back on the rise. If we get another easing, that augurs well for another pause. But we shall see.

In the meantime, stocks are near all-time highs. Middle East concerns continue to worry investors. But the earnings and economic picture continue to excite.

We'll see which one carries the week this week.

See you tomorrow,