Stocks closed sharply higher yesterday after "substantial progress was made" over the weekend in trade talks with China.

The Nasdaq led the pack with an outsized gain of 4.35%. But everything else looked pretty strong as well with the Dow gaining 2.81%, the S&P 500 up 3.26%, the small-cap Russell 2000 up 3.42%, and the mid-cap S&P 400 up 3.51%.

All of the major indexes are now higher than where they were when the tariffs were announced on April 2^nd (Liberation Day).

They are still down YTD, but not by much. The Dow is only down -0.32%, the S&P is only down -0.64%, and the Nasdaq is only down -3.12%.

A far cry from their worst levels in April when the Dow was down as much as -13.9%, while the S&P and Nasdaq were down as much as -17.8% and -23.4% respectively.

Over the weekend, the U.S. and China spoke in Geneva, Switzerland for two days of trade negotiations. President Trump after day one said that the U.S. team had a "very good meeting with China." And after the talks concluded, Treasury Secretary Scott Bessent talked about the substantial progress that was made between the two countries.

Early on Monday, it was shared that there would be a 90-day pause on the escalated 'reciprocal' tariffs, with the U.S. bringing their tariffs imposed on China down from 145% to just 30%, while China will bring theirs down from 125% to 10%.

Mr. Bessent on Monday also said he expects to be talking with China again in the coming weeks as the two countries look to hash out more details on the historic agreement.

In other news, the President signed an Executive Order on Monday which is expected to reduce prices on prescription drugs sold in the U.S. by 30-80%. Essentially, by declaring a 'most favored nation' policy, the pharmaceutical companies will be forced to charge in the U.S. the lowest prices they are being sold anywhere else. The measure is voluntary. And uncertainty on pushback, implementation and possible court challenges remain. But it was a sweeping order. And you can be sure we'll be hearing more about this in the coming weeks and months.

Earnings season continues (even though it's winding down), with another 373 companies on deck to report today.

But the main event (assuming there's no new tariff news, which there very well could be), is this morning's Consumer Price Index (CPI ? retail inflation) report. Last month's CPI report showed core inflation (ex-food & energy) easing to 2.8% y/y vs. the previous month's 3.1%. A softer inflation report is likely to be cheered by the market. Especially given all of the hand-wringing by the Fed over fears of inflation due to the uncertainty over tariffs.

Granted, there's still plenty of uncertainty. And tariff pauses are not to be confused with signed deals. But the worst of the tariff fears seem to be behind us. And if we can get another inflation report showing prices easing, that could go a long way to reducing concerns by the Fed, and energize the market.

The CPI comes out at 8:30 AM ET this morning.

What a week already, and we're only one day in.

See you tomorrow,