Stocks Closed Higher Last Week For The Second Week In A Row Stocks closed higher on Friday and for the week, making it the second up week in a row. The Nasdaq led the gainers on Friday with a 0.83% increase, while the Dow and the S&P 500 both made new all-time highs. The Dow was the top gainer for the week with 1.39%. The post-election rally continues on as well. Since the election, all of the major indexes are in the green with the small-cap Russell 2000 leading the pack with an outsized gain of 7.69%. The mid-cap S&P 400 was next with 6.66%, with the Dow close behind at 6.37%. The S&P 500 and Nasdaq are up 4.32% and 4.22% respectively. Stocks being up last week was no surprise given that stocks typically go up during Thanksgiving week. Black Friday sales were up roughly 1% for in-store shopping, and more than 14% for online purchases. Also not a surprise given the strength of the economy and in particular, the consumer. We'll see how Cyber Monday does today. On the economic report front today, we'll get the ISM Manufacturing Index and Construction Spending. But the main report everybody is really waiting for is Friday's always important Employment Situation report. Last week's FOMC Minutes showed the Fed leaning toward more interest rate cuts. The Minutes said, "in discussing the outlook for monetary policy, participants anticipated that if the data came in about as expected, with inflation continuing to move down sustainably to 2 percent and the economy remaining near maximum employment, it would likely be appropriate to move gradually toward a more neutral stance of policy over time." With last week's PCE index (not to mention the CPI and PPI inflation reports in the weeks prior) out of the way, the focus shifts back to the labor market. A hotter than expected jobs report might give a bit of pause to those expecting a rate cut. But I would assume it would be viewed favorably given the volatility the last few reports have shown. An overly weak report, however, would likely have people questioning the state of the economy, but would also underscore the need for additional rate cuts. So it's hard to imagine not getting another rate cut in December. After Friday's jobs report, the Fed will get two more looks at inflation with the next CPI report on 12/11, and the next PPI report on 12/12. The next 2-day Fed meeting concludes the week after on 12/18, where they are expected to cut rates again by another 25 basis points. The CME FedWatch tool shows Fed Funds traders placing a 65.2% likelihood on that. But the Fed insists it will be data dependent. Hence the focus on Friday's employment report, and next week's inflation reports. Including today, there are 4 weeks and 2 trading days left in the year. YTD, the Nasdaq is up 28.0%; the S&P 500 is up 26.5%; the mid-cap S&P 400 is up 21.0%; the small-cap Russell 2000 is up 20.1%; and the Dow is up 19.2%. And with Q4 being the best quarter of the years for stocks, and earnings estimates on an upward trend of improvement, I expect to see the year end on an even stronger note. So make sure you're taking full advantage of it. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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