Stocks closed lower yesterday in a back-and-forth session.

Reports that President Trump and President Xi of China talked on the phone early Thursday morning lifted stocks at the open.

Mr. Trump said he had a "very good call" that was focused "almost entirely" on trade. He said the 90-minute call "resulted in a very positive conclusion for both Countries."

Trade talks will continue in the coming weeks.

In other news yesterday, the European Central Bank (ECB) cut interest rates yet again by another 25 basis points, bringing rates down to 2%. It comes, in part, as a result of continued progress on inflation, which fell to 1.9% in May. Like the Federal Reserve in the U.S., the ECB's target rate for inflation is 2%.

In general, the Fed and the ECB usually see their monetary policy move in the same direction. Not always. But usually. Either way, the ECB has cut rates by 175 basis points since the middle of last year, going from 3.75% down to 2.0% today. The Fed, however, has only lowered rates by 100 basis points, going from a midpoint of 5.38% in 2024 to 4.38% today, which has been on hold since the new year began.

The expectation is for the Fed to begin cutting rates again by 25 basis points at their September 17^th meeting. And the Fed has stated they still see two rate cuts this year.

I should also mention that the public spat between President Trump and Elon Musk, which subsequently weighed on Tesla shares, contributed to yesterday's weaker tone. Tesla is the 10th largest market-weighted holding in the S&P 500 at 1.69%. (Microsoft, NVIDIA and Apple take the top 3 spots at 6.55%, 6.36% and 5.64% respectively.) Tesla being the tenth largest holding, definitely carries weight, and helped drag the index down yesterday.

But the market's attention will shift to this morning's Employment Situation Report by the Bureau of Labor Statistics (BLS). Especially after Wednesday's weaker-than-expected ADP Employment report which showed just 37K new private payroll jobs were created in May vs. the consensus for 110K.

This morning's Employment Report by the BLS is calling for 129,000 new jobs to have been created in May (123K in the private sector and 6K in public). The unemployment rate is expected to stay steady at 4.2%, with average hourly earnings expected to ease slightly on a y/y basis to 3.7% vs. last month's 3.8% pace.

A higher-than-expected job gain will help assuage concerns that the economy is weakening, while a lower-than-expected job tally will only amplify it. That report comes out at 8:30 AM ET.

With one more day to go, all of the major indexes are still up for the week. If all goes well, that'll make it 2 up weeks in a row.

A friendly jobs report today could help keep it that way.

Best,