Stocks closed mixed on Friday, with only the Nasdaq closing up for the week. (Although, the S&P only missed the mark by less than one-tenth of one percent ? ending essentially flat.)

It was a busy week last week with the FOMC Announcement taking center stage.

After the Fed raised rates by a quarter point on Wednesday afternoon (first hike in 3 years), stocks sold off on the news. (But it seemed overdone, and misplaced.)

Sure enough, the S&P and Nasdaq are both higher now than before the Fed raised rates.

As I shared last week, I believe Wednesday's Fed move could very well mark the beginning of the next leg up.

For one, it was widely expected. And much of the recent selling was likely done in anticipation of the hike. And two, the Announcement painted a bullish picture for the economy.

The Fed Funds rate is now at a range of 3.75-4.00% (midpoint 3.88%). But the Summary of Economic Projections (SEP) showed the majority of participants expecting just one more rate hike by year's end with the SEP only getting as high as 4.1% in 2026 and the same for 2027, and begins falling, with the longer run rate at 3.2%. Not as hawkish as some had feared.

And the SEP shows PCE inflation (headline) at 3.7% this year, but falling to 2.3% in 2027. That's vs. previous expectations for 3.6% and 2.3%, which is not much of a change. Core PCE is forecast at 3.4% this year and 2.5% next year vs. 3.3% previously and 2.5%. Again, not much of a change. And it suggests rates could very well start falling sooner rather than later. Especially given that Fed Chair Kevin Warsh attributes a portion of the rise in inflation to higher oil prices rather than a broad-based acceleration. (And the Middle East tensions won't last forever.)

Additionally, the SEP also showed the Fed raising their GDP outlook for 2026 to 2.3% (up from June's projection of 2.2%), with 2027 at 2.4%, up from June's 2.3% estimate. (Mr. Warsh noted that "the economy's output is solid," and that "capital expenditures and productivity are strong.") The unemployment rate is pegged at 4.1% for this year and next (where it is now). That's down from June's forecast of 4.3% for both years. (Mr. Warsh also said that "current unemployment rates are consistent with full employment," and that "labor markets are solid and steady.")

All in all, a less hawkish than expected Fed, and a more bullish than expected Fed.

And as we head into Q4 (less than 2 weeks away), which is historically the best quarter of the year (since 1950, the S&P has gone up 79% of the time, with an average gain of 4.1%), not to mention the start of the next earnings season (stocks typically go up during earnings season), I think the next 3 months are poised to be the best 3 months of the year.

So make sure you're taking full advantage of it.

See you tomorrow,