Stocks closed modestly lower yesterday after both the S&P and Nasdaq hit new all-time high closes the day before.

The markets were essentially treading water for much of the morning and early afternoon yesterday ahead of the FOMC Minutes. Afterwards, they headed lower, but bounced off their worst levels by the close.

As expected, the Minutes showed policymakers acknowledging that progress on inflation had slowed, and that "it would likely take longer than previously anticipated for them to gain greater confidence that inflation was moving sustainably toward 2 percent."

This was largely communicated at their May 1 announcement, and subsequent press conference by Fed Chair, Jerome Powell.

What was new to learn was that "various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate."

Granted, debate on what to do if things got worse, is different than taking action based on present circumstances.

But it was surprising to read of a willingness to potentially tighten policy further, given that Mr. Powell (after that debate), said it was unlikely the Fed's next move would be a rate hike, and suggested the Fed was still expecting to cut rates later this year.

Gladly, the friendlier PPI and CPI inflation reports since then suggest those worse case scenarios are unlikely to develop.

In other news, NVIDIA reported earnings after the close and it was another decidedly good number. They posted a positive EPS surprise of 11.48%, and a positive sales surprise of 7.02%. That translated to a quarterly EPS growth rate of 595% vs. this time last year, and a sales growth of 262%. Moreover, they raised their outlook, increased their quarterly cash dividend, and said they will split their stock 10-for-1 on June 7. They were up roughly 6% with shares trading over $1,000 in after-hours trade.

Looking at economic reports, MBA Mortgage Applications rose 1.9% w/w with purchases down -1.2%, but refi's up 7.4%.

Existing Home Sales slipped to 4.14 million units (annualized) vs. last month's upwardly revised 4.22M (from 4.19M). That puts existing home sales down -1.9% m/m, an improvement from last month's -3.7% pace. On a y/y basis, it was down -1.9% as well, also an improvement from last month's -3.7%.

The Atlanta Fed Business Inflation Expectations came in at 2.3% for the year-ahead period, unchanged from last month's expectations for the same.

Today we'll get Weekly Jobless Claims, the Chicago Fed National Activity Index, the PMI Composite Index, and New Homes Sales.

We'll also get more earnings with another 136 companies on deck to report with Medtronic and NetEase going before the open, and Intuit, Ross Stores and Autodesk reporting after the close, to name a handful.

And, of course, we'll see if yesterday's earnings beat by NVIDIA, which shows there's no end in sight yet for the AI boom that's underway, can lift the indexes to new heights.

See you tomorrow,