Stocks closed higher yesterday, led by the Nasdaq with a 0.67% gain, followed by the S&P's 0.41%.

The markets opened lower, but quickly began their climb back up.

President Trump's comments last Friday that China has "violated its agreement with us," contributed to the softer open.

But reports on Monday that President Trump and China's President Xi Jinping would talk on the phone this week to work out a trade deal, lifted stocks.

The market still has to digest Friday's announcement that tariffs on imported steel are being raised from 25% to 50% on June 4^th, which is expected to complicate trade negotiations with the EU. (Previously, the threatened 50% tariffs on the EU were suspended until July 9^th to allow more time to hammer out a deal.) But the market seemed to brush that off yesterday.

The market was also energized by last week's earnings reports by NVIDIA and Dell, as they both showed that the AI trade is alive and well.

NVIDIA posted a quarterly EPS growth rate of 39.7% vs. this time last year, and a sales growth of 69.2%. They also showed that data center revenue was up 10% from last quarter and 73% from last year, confirming that demand for AI continues to grow. Dell further underscored that narrative by raising their guidance for the current quarter and full-year, and citing "unprecedented demand" for AI related products.

Additionally, last Friday's Personal Consumption Expenditures (PCE) index showed that progress on inflation continues with headline inflation easing to 2.1% y/y vs. last month's 2.3%, while core inflation (ex-food & energy) ticked down to 2.5% vs. last month's 2.7%.

Yesterday's PMI Manufacturing report improved to 52.0 vs. last month's 50.2.

The ISM Manufacturing Index slipped just a bit to 48.5 vs. last month's 48.7.

And Construction Spending showed a m/m change of -0.4% vs. last month's -0.8%. On a y/y basis it was off -0.5% vs. last month's 1.2% pace.

Later this week on Friday, we'll get the always important Employment Situation report. The last couple of reports have come in better-than-expected and shows the labor market remains strong.

In the meantime, today we'll get the Job Openings and Labor Turnover Survey report (or JOLTS for short), and Factory Orders.

Stocks are off to a good start this week. And if talks between the U.S. and China go well, not to mention a friendly jobs report on Friday, the week could end on an even higher note.

See you tomorrow,