Stocks closed higher yesterday, carrying over Friday's momentum.

Tech stocks continued their rebound as well. But the rotation into non-tech continues, as the economy grows and investors diversify.

You'll recall Microsoft, Alphabet, and Amazon last week, all trekked lower after reporting significantly higher CapEx related to AI. Concerns whether these massive investments will ever turn a profit weighed on stocks.

But it's clear the companies making these investments see the demand, and have determined they will produce high-return results.

We are still in the relatively early stages of the transformational AI boom. And I believe it has years more to go. To be sure, it will enter different phases along the way. Companies like NVIDIA, for example, are selling the AI infrastructure (chips, servers, AI training systems). Others have to buy these products to build their AI models and tools. Then those tools are sold to others to build their products, or used internally to build their own products.

We are in the infrastructure phase right now and it's accelerating. The tools and models phase are in the early innings. And the application and productivity phase has really just begun. That's where the real broader economic payoff happens. But the winners will multiply as the cycle moves thru its stages.

Last week's volatility hit gold and silver, and cryptocurrencies. But the relief we're seeing has extended to them as well.

Not much in the way of economic reports yesterday. But today we'll get Retail Sales, the NFIB Small Business Optimism Index, Import and Export Prices, and Business Inventories.

But the report everyone is really waiting for is Wednesday's Employment Situation Report from the Bureau of Labor Statistics (BLS).

The Fed has a dual mandate, which is price stability (read low inflation), and maximum employment. While inflation is still too high, the Fed has acknowledged it has eased significantly and that "longer-term expectations remain consistent with our 2% inflation goal."

But the labor market has recently become the chief concern for the Fed. And a softening labor market could make the Fed act on rates again sooner rather than later. The Fed still expects to cut rates by 25 basis points this year. Some in the market are expecting two cuts. Either way, with the Fed insisting they will be data dependent, all eyes will be on Wednesday's jobs report.

Earnings season continues this week as well with another 758 companies set to report, including Coca-Cola, CVS Health, and Marriott International before the open today, and Gilead Sciences, Robinhood Markets, and Cloudflare after the close.

We're off to a solid start for the week. We'll see if the markets can keep that going for the rest of it.

See you tomorrow,