Stocks closed mostly higher yesterday with the Nasdaq and S&P 500 notching another new all-time high in the process.

Carryover strength from last week's better-than-expected employment report put stocks on the right track yesterday. And allowed the market to overlook Iran's rejection of the U.S. peace proposal.

Despite Iran's response and counterproposal to the long-term peace plan being considered "totally unacceptable" by the U.S., hope remains that a deal could still be reached.

In the meantime, the fragile ceasefire is still in place, even though each side has fired at the other, and the U.S. naval blockade of the Strait of Hormuz remains in effect.

But Iran's refusal to yet accept a peace plan has President Trump considering renewed military action.

Additionally, the U.S. on Monday announced new sanctions on companies helping to facilitate Iranian oil shipments to China.

This comes as President Trump is set to meet China's President Xi in Beijing this week (May 13-15).

Mr. Trump and Mr. Xi will be talking about a host of issues, including the reopening of the Strait. They'll also talk about technology and AI.

In other news, yesterday's Existing Home Sales increased to 4.02 million units (annualized) vs. last month's upwardly revised 4.01M (from 3.98M), for a 0.3% m/m increase. On a y/y basis, it was flat with a 0.0% change.

Today we'll get the NFIB Small Business Optimism Index, and the Consumer Price Index (CPI) retail inflation report.

Headline CPI is expected to be up 0.6% m/m vs. last month's 0.9% pace. The y/y rate is expected to climb to 3.8% vs. last month's 3.3%. The core rate (ex-food & energy) is forecast at 0.3% m/m vs. last month's 0.2%, with the y/y rate at 2.7% vs. last month's 2.6%.

The other week's Personal Consumption Expenditures (PCE) index (which is the Fed's preferred inflation gauge) ticked up a bit, but came in as expected.

After today's CPI report, we'll get another look at inflation tomorrow with the Produce Price Index (PPI) wholesale inflation report.

But first things first. The CPI report comes out at 8:30 AM ET.

Earnings season continues today with another 300 companies set to report. Between today and the rest of the week, we'll hear from as many as 930 companies, including Cisco on Wednesday, and Applied Materials on Thursday, to name a couple.

Earnings season starts winding down next week with only 582 companies in queue to report, including AI juggernaut NVIDIA on Wednesday, 5/20, along with Analog Devices.

What an earnings season it's been. It's not over yet. But it has so far underscored the resiliency of the economy, and once again, demonstrated the insatiable demand for all things AI. That has been the catalyst for the double-digit sales and earnings growth, and one of the key drivers behind the upward guidance of many.

There could be some headline risk with the stalled peace talks in the Middle East.

And the market will be watching what happens in China when Presidents Trump and Xi meet. Will there be any breakthroughs? Any announcements? We'll have to see.

But if the market keeps focusing on the economy and earnings, we could be looking at another fantastic week.

See you tomorrow,