Stocks closed mostly lower yesterday, but well off their intraday lows, which saw the S&P down by -1.00%, and the Nasdaq down by -2.03% at their worst. But by day's end, the S&P was only down -0.16%, and the Nasdaq by -0.71%.

Middle East concerns continue to make headlines. With Iran rejecting the U.S. peace plan, and the U.S. rejecting Iran's counterproposal, President Trump is considering resuming the bombing campaign.

In the meantime, the U.S. naval blockade of the Strait of Hormuz remains in place.

And that has been sending oil prices back up. Yesterday, crude oil gained $4.29 or 4.37% at $102.36 for the June contract. That puts it within 10% of their conflict high close of $112.95 made on 4/7/26.

Later this week, the markets will also be watching as President Trump meets China's President Xi in Beijing on May 13-15.

President Trump and President 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 Consumer Price Index (CPI) retail inflation report came in a tad higher than expected with the headline number up 0.6% m/m, which was better than last month's pace of 0.9%, and in line with views for 0.6%. The y/y rate came in at 3.8%, which was higher than last month's 3.3%, but in line with estimates. The core rate (ex-food & energy) was up 0.4% m/m vs. last month's 0.2%, and forecast for 0.3%, while the y/y rate came in at 2.8% vs. last month's 2.6%, and the consensus for 2.7%.

Today we'll get another look at inflation with the Produce Price Index (PPI) wholesale inflation report. The headline numbers are expected to come in at 0.5% m/m (in line with last month's 0.5%), with the y/y rate at 4.8% vs. last month's 4.0% pace. The core rate is expected to be up 0.3% m/m vs. last month's 0.1%, with the core rate at 4.3% vs. last month's 3.8%. That comes out at 8:30 AM ET.

We'll also get MBA Mortgage Applications. And we'll hear from Fed policymakers Susan Collins, Neel Kashkari, and Lorie Logan as they speak at their respective engagements throughout the day.

Speaking of the Fed, Fed Chair nominee Kevin Warsh was confirmed by the Senate yesterday to a 14-year term as a Federal Reserve governor. This clears the procedural path for Mr. Warsh to be confirmed as Fed Chairman to replace outgoing Fed Chair Jerome Powell when his term ends of 5/15. The Senate is expected to vote on Mr. Warsh's confirmation as early as today, 5/13.

Earnings season continues today with another 345 companies set to report, including Nebius before the open, and Cisco after the close.

Since earnings season 'officially' began on 4/16 when Alcoa reported earnings after the close, the S&P is up 5.11%. The Nasdaq is up 8.23%.

Earnings season is always an exciting time since stocks typically go up during earnings season. And it's not done yet.

Tomorrow we'll hear from Applied Materials after the close. And then next week we'll hear from NVIDIA on Wednesday, 5/20 after the close.

In the meantime, there's lots of economic reports in queue. And everyone will be watching to see what happens in China when Presidents Trump and Xi meet. Will there be any breakthroughs? Any announcements? We'll have to see.

Stocks remain near all-time highs. And if all goes well, we could see even higher highs by week's end.

See you tomorrow,