Stocks closed higher yesterday, but off their intraday highs. Nonetheless, they finished with solid gains. The top performers, once again, were the small-cap Russell 2000, and the mid-cap S&P 400 with outsized gains of 1.23%, and 0.86% respectively.

For those keeping track, all of the major indexes are still in pullback territory (defined as a decline between -5% and -9.99% from their all-time high close). But the small-caps and mid-caps are back in the plus column YTD with the Russell up 2.19% and S&P 400 up 3.29%. (The Dow is down -3.40% YTD, the S&P 500 is down -3.70%, and the Nasdaq is down -5.65%.)

Stocks rallied this week after the U.S. said they would delay striking Iran's power plants for 5 days while they continued talks with them. But gains have been tempered by denials from Iran that there have been any such talks. Although, they did recently admit that communications have and are taking place.

On Tuesday, it was reported that the U.S., via mediator Pakistan, presented Iran with a 15-point peace plan.

And there is hope in the market that there might be an end to the hostilities.

But once again, hopes and gains have been pared following comments by Iran. While they have said they are reviewing the plan, they also said they will not talk with the U.S. directly, or at least the previous envoy. And they are looking for recognition from the U.S. that Iran has sovereignty over the Strait of Hormuz.

The 5-day deadline comes due on Saturday.

In the meantime, crude oil was up about 1% yesterday. Since the strike on Iran began, it's up 36.2%. And YTD, it's up 59.0%.

In other news, yesterday's MBA Mortgage Applications were down -10.5% w/w with purchases off -5.4%, and refi's lower by -14.6%.

The Import and Export Prices report showed Import Prices up 1.3% m/m vs. last month's 0.6%. On a y/y basis it's up 1.3% vs. last month's -0.1%. Export Prices were up 1.5% m/m vs. last month's 0.6%. On a y/y basis it's up 3.5% vs. last month's 2.6%.

And the Survey of Business Uncertainty showed U.S. firms forecasting Sales Growth over the next 12 months to be up 3.60% vs. last month's 3.72% outlook. Employment Growth is expected to be up 4.43% vs. last month's 4.33% estimate.

Today we'll get Weekly Jobless Claims, the Kansas City Fed Manufacturing Index, and the EIA Natural Gas Report.

We'll also hear from Fed policymakers Lisa Cook, Stephen Miran, Philip Jefferson, and Michael Barr as they speak at their respective engagements throughout the day.

Separately, the partial government shutdown affecting the DHS, and which has slowed check-ins at airports given TSA 'sickouts' due to not being paid, enters day 41 today.

No telling when a deal might be reached. But eventually there will be. And when it does, that will be a bit of good news for the market. So far, the market has been taking it in stride. But the longer it goes on, the more fallout there will be economically. So the sooner it gets resolved, the better. And why the market will cheer an eventual resolution.

We'll see if the market can add to their weekly gains today.

See you tomorrow,