Stocks closed mostly lower yesterday. They were down shortly after the open. Traded higher by mid-morning. Stayed in the green for much of the afternoon. Then finished lower by the close.

Reports that Iran may be laying mines in the Strait of Hormuz helped sap yesterday's gains in equities.

But it did not lift oil, as crude was down another -8% yesterday.

Even though the campaign against Iran appears to be ahead of schedule, it's still very dangerous. And the unknowns regarding how it will affect oil prices, and for how long, has the market on edge.

President Trump has warned Iran against placing mines in the Strait, saying, "if for any reason mines were placed, and they are not removed forthwith, the Military consequences to Iran will be at a level never seen before." And War Secretary Pete Hegseth said, "we will not allow terrorists to hold the Strait of Hormuz hostage."

The uncertainty around shipments thru the Strait of Hormuz is probably the biggest unknown for the oil and gas market, given that 20% of global supplies pass thru there. Once that situation is resolved, that should take much of the risk premium out. Until then, it's one of the biggest concerns, at least in terms of the markets (both oil and equities).

In other news yesterday, Existing Home Sales increased to 4.09 million units (annualized) vs. last month's upwardly revised 4.02M (from 3.91M) and views for 3.88M. That's up 1.7% m/m vs. last month's -5.9% pace. But down -1.4% y/y. Still an improvement vs. last month's -1.7% annual pace. But down nonetheless.

And the NFIB Small Business Optimism Index came in at 98.8 vs. last month's 99.3 and estimates for 99.7.

Today we'll get MBA Mortgage Applications, the EIA Petroleum Status report, and the Consumer Price Index (CPI) retail inflation report.

The CPI is expected to show headline inflation up 0.3% m/m vs. last month's 0.2%. On a y/y basis it's expected to remain steady at 2.4%, in line with last month. The core rate (ex-food & energy) is forecast to increase 0.2% m/m, just under last month's 0.3% pace. The y/y rate is expected to come in at 2.5%, same as last month.

For context, that's still a ways away from last year's high of 3.3%. But all eyes will be on today's inflation report for hints on when the Fed might resume lowering interest rates.

But after the CPI, the market will pivot to Friday's Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation report. That is expected to show the year over year rate holding steady as well (2.9% headline, and 3.0% core). Although, the core would be even with last year's high.

But first things first, and that's today's CPI. That comes out at 8:30 AM ET.

As you can imagine, Middle East headlines will continue to drive the market.

But it's important to remember that regional conflicts and events usually only have a short-term impact on the markets.

And that the underlying fundamentals of the economy are strong.

Same goes for earnings. Q1'26 EPS growth is forecast at 11.3%. Q2 is put at 14.6%. Q3 is at 11.6%. And Q4 is at 13.3%. Those are stellar numbers. And bode well for more gains to come.

So, keep your eyes on the big picture.

See you tomorrow,