Stocks closed higher again yesterday. This time the Nasdaq led the way with an outsized gain of 1.96%, followed by the small-cap Russell 2000 with 1.32%.

And now all of the major indexes are back in positive territory for the year with the Russell 2000 up 9.02% YTD; the mid-cap S&P 400 up 8.26%; the S&P 500 up 1.78%; the Nasdaq up 1.71%; and the Dow up 0.98%.

Optimism over the prospect for a longer-lasting peace deal, beyond the 2-week ceasefire, is lifting stocks.

And word that another round of talks between the U.S. and Iran could take place as early as Thursday is helping to underscore that optimism.

The market is starting to get back to focusing on the fundamentals of the economy and earnings.

Software and AI stocks soared yesterday, showing the AI trade is alive and well. And that software has likely been grossly oversold.

The market also got some better-than-expected news with yesterday's Producer Price Index (PPI) wholesale inflation report. The headline rate was up 0.5% m/m, in line with last month's downwardly revised 0.5% (from 0.7%), while the y/y rate came in at 4.0% vs. last month's 3.4%, and well under estimates for 4.7%. The core rate (ex-food & energy) was up just 0.1% m/m vs. last month's downwardly revised 0.3% (from 0.5%) and views for 0.5%. The y/y rate actually ticked lower to 3.8% vs. last month's 3.9% and the consensus for 4.2%.

It was an excellent report. And confirms last week's better-than-expected Consumer Price Index (CPI) retail inflation report.

While it's unlikely to make any difference at the next FOMC meeting later this month on April 28-29 (virtually zero odds for a rate cut this month), it does show that oil-induced inflation fears may be overblown. And it aligns with the Fed's narrative that they see inflation on pace to reach their stated goals. And it aligns with their latest SEP (Summary of Economic Projections), which is forecasting one 25-basis point rate cut this year, and another one next year.

Today, on the economic report front, we'll get MBA Mortgage Applications, Import and Export Prices, the Empire State Manufacturing Index, the Beige Book, and the Housing Market Index.

And we'll get more earnings with financial powerhouses Bank of America and Morgan Stanley reporting before the open. We'll also hear from energy infrastructure company Kinder Morgan, and semiconductor equipment manufacturer ASML Holding.

So far, earnings season is holding true to form. Stocks typically go up during earnings season. And it's already off to a great start.

Place that against the backdrop of a resilient economy, rising productivity, an ongoing AI boom, and forecasts for double-digit earnings growth not just for this earnings season, but for each of the next 4 quarters out, and it's no wonder stocks are back on a tear again.

See you tomorrow,