The big three indexes (Dow, S&P 500, Nasdaq) closed lower yesterday, but off their lows. The small-cap Russell 2000 and mid-cap S&P 400, however, both closed higher, gaining 0.65% and 0.26% respectively.

Crude oil, which was up roughly 6% at one point intraday yesterday, closed lower by -0.91%.

Although, LNG (Liquefied Natural Gas) was up sharply, with the European benchmark gaining 13% on the day, following an Iranian strike on an LNG export facility in Qatar, threatening 17% of their output. They said they would not restart production until hostilities ended.

In other news, yesterday's Weekly Jobless Claims fell -8,000 to 205,000 vs. the consensus for 215,000.

And the Philadelphia Fed Manufacturing Index rose to a better-than-expected 18.1 vs. last month's 16.3 reading and estimates for 5.5.

Today we'll get the Baker Hughes Rig Count report.

And it's Quadruple Witching, which means index futures, stock futures, index options, and stock options all expire. So there could be some extra volatility.

Micron, which reported blowout earnings the day before, closed lower by -3.78%. But the price action was far less important than what they reported. For a recap, they posted a quarterly EPS growth rate of 682% vs. this time last year, and a sales growth of 196%. They also upped their guidance for the current quarter with their midpoint EPS forecast coming in 59% higher than the consensus, and their sales forecast up 37% higher than the consensus, which would represent a 902% EPS growth vs. last year, and a 260% sales growth.

I will chalk up yesterday's move to simple profit taking after heady gains leading up to earnings. Going into the report, they were up 61.8% YTD. And 448% since January 2025 (15½ months).

As I wrote yesterday, their stellar numbers show the AI trade is alive and well and accelerating.

The market is also digesting Wednesday's FOMC Announcement. Rates were left unchanged, as expected. But they raised their shorter-term outlook for inflation.

While they increased their forecast for PCE inflation to 2.7% (up from December's forecast of 2.4%), the increase was more modest for 2027 at 2.2% (up from 2.1%). And the projection for 2028 was unchanged at 2.0%.

For real GDP, however, the increase was for all periods. They raised their forecast for 2026 to 2.4% (up from December's forecast of 2.3%); 2027 was raised to 2.3% (from 2.0%); and 2028 was raised to 2.1% (from 1.9%).

And their Fed Funds outlook was virtually unchanged, which is still forecasting one 25 basis point rate cut this year (as expected), and another 25 basis point cut next year (also as expected).

While inflation is still too high, Fed Chair Jerome Powell acknowledged their higher forecast was largely tariff-based. Meaning once they pass through, that should be it, because those are one-time price-level adjustments. Which is different than demand driven inflation, which can persist. After mid-year, much of the tariff-induced price increases should have made their way thru the inflation data.

And that will give the Fed the ability to focus on the economy and labor market, which they previously acknowledged saw great greater risk than higher inflation. And that's supportive for rate cuts.

With one more day to go, the big three indexes are down for the week, while the small-caps and mid-caps are up. The S&P and Nasdaq, however, are within striking distance of turning positive. A little bit of good news today could do the trick.

Best,