Stocks closed mostly higher yesterday, led by the Nasdaq with 0.86%, followed by the small-cap Russell 2000 with 0.77%. Only the Dow missed the cut, giving up -0.16%.

Many AI-related stocks that got pummeled on Friday, rebounded sharply on Monday. Marvell gained 9.63%; Micron rallied 9.87%; Advanced Micro Devices was up 5.14%; Intel was up 11.19%; Sandisk was up 5.30%; and NVIDIA added 1.73%.

Didn't totally erase Friday's losses. But a good chunk of them.

But it does appear some long overdue profit taking was seen.

Will it turn into a pullback for the major indexes? It's possible. Pullbacks are defined as a decline between -5% and -9.99%. But they are very common. And they happen on average of 3-4 times a year. Every bull market has them. And it would be perfectly normal if we got one. Especially after the spectacular rally we've seen over the last couple of months.

But pullbacks are also short-lived. Since 1990, the typical pullback lasted about 28 days.

And if you know pullbacks and corrections are commonplace moves, you can instead look at them as opportunities to buy rather than places to sell.

Plus, the AI trade is alive and well.

And aside from that, the economy is doing well. Last Friday's employment report shows the labor market is doing well.

And corporate earnings are doing well. More than well. They're doing great. Q1'26 earnings season just showed the S&P 500 EPS growth rate at 23.3%. Q2'26 is forecast at 21.2%. Q3'26 is forecast at 18.4%. And Q4'26 is forecast at 20.4%.

Not a stretch to expect another double-digit gain this year, to the tune of 20% or more for the S&P 500, given the double-digit growth rates for the rest of the year.

Not much in the way of economic reports out yesterday.

But today we'll get the NFIB Small Business Optimism Index, the International Trade in Goods and Services report, and Existing Home Sales.

But the main events this week will be the upcoming inflation reports. On Wednesday we'll get the Consumer Price Index (CPI) retail inflation report, and then on Thursday, we'll get the Producer Price Index (PPI) wholesale inflation report.

Inflation has been ticking higher lately. Not as much as expected. But higher nonetheless. Between that and the better-than-expected jobs gains we're seeing, the timeline has already been pushed out for the next rate cut.

But the last FOMC Minutes showed some suggesting we could see a rate increase if inflation keeps rising.

So all eyes will be on this week's inflation reports. And those will be the last inflation reports we'll get before next week's FOMC Announcement 6/17.

In the meantime, we've got a whole rest of the week to get thru first.

See you tomorrow,