Stocks closed lower yesterday, ending near their session lows.

News that President Trump and President Xi struck a conciliatory tone at their meeting in South Korea yesterday, was met with relief, but stopped short of lifting the indexes. Although, a case can easily be made that the recent move up was based on positive expectations for the meeting. And yesterday's pullback could fall into the category of "buy the rumor, sell the fact," i.e., buy the expectation of something happening, and then sell once that thing does happen.

Regardless of yesterday's price action, the two leaders came to an agreement to reduce trade tensions, with China agreeing to not impose rare earth trade restrictions for 1 year (to be renewed/renegotiated each year), and buying U.S. soybeans, while the U.S. agreed to reduce the tariffs levied on China by 10 percentage points.

In other news, some contend that Wednesday's FOMC Announcement, when the Fed said a rate cut in December "is not a foregone conclusion," weighed on stocks. But I would argue that's typical Fed speak (rarely if ever will they say they are definitely cutting rates on such and such date).

But I think their actions and words favor another cut. For one, they said as much after their September meeting/rate cut, when they forecast 2 more cuts by year's end. We got one of them on Wednesday.

Second, Fed Chair Jerome Powell, after saying that "job gains have slowed," cited the recent rate cut as "cushioning a softening labor market." With maximum employment being one of the dual mandates of the Fed (and its elevated significance now that inflation has moderated), it sounds like another cut is likely.

Earnings season continued yesterday with 2 more Magnificent 7 stocks reporting.

After the close, Apple reported a positive EPS surprise of 6.94%, and a positive sales surprise of 1.25%. That translated to a quarterly EPS growth rate of 12.8% vs. this time last year, and a sales growth of 7.94%. Apple touted a fantastic quarter and a "record fiscal year." And they are expecting double-digit iPhone growth in the current quarter ending in December. They were up 0.64% in the regular session before earnings, and roughly 4% in after-hours trade following earnings.

After the bell we also heard from Amazon, which posted a positive EPS surprise of 23.4%, and a positive sales surprise of 1.29%. That equated to a quarterly EPS growth rate of 36.4%, and a sales growth of 13.4%. Amazon said their AWS (Amazon Web Services), is growing at the fastest pace since 2022, when revenue growth was their highest. They also noted they are "investing quite expansively" to more aggressively take advantage of AI. They were off -3.23% in the regular session, but soared by more than 14% in after-hours trade.

Today we'll hear from another 53 companies, including AbbVie and Exxon Mobile before the open.

With only one more day left in the week, the big 3 indexes are all on pace to close higher for the week, making it the 3rd up week in a row. And they are all on pace to close higher for the month. That would make it 6 months in row for the Dow, S&P and small-cap Russell 2000, and 7 months in a row for the Nasdaq.

And with Q4 considered the best quarter for stocks, I'm expecting a lot more upside to go.

Best,