Stocks closed mixed yesterday, with the Dow, small-cap Russell 2000, and mid-cap S&P 400 gaining 0.35%, 0.37% and 0.57% respectively. The tech-heavy Nasdaq and S&P 500 were up for a good part of the day, but turned red in the back half to close lower by -0.43% and -0.10%.

After the close, Micron reported earnings and posted a positive EPS surprise of 17.39%, and a positive sales surprise of 12.91%. That translated to a quarterly EPS growth rate of 1,214% vs. this time last year, and a sales growth of 345%. They also raised next quarter's revenue guidance to $50 billion (midpoint), which is 14.5% above the prevailing consensus. CEO Sanjay Mehrotra said Micron's "record" financial results and even "stronger outlook," "reflect the strategic value of memory in the AI era."

The memory-chip shortage is real. And it's not temporary. It's structural, driven by AI demand.

Micron's blowout earnings lifted other memory-chip makers with Sandisk and Western Digital each up 12% in after-hours trade.

In other news, yesterday's MBA Mortgage Applications were up 1.0% w/w, with Purchases off -0.6%, and Refi's up 3.0%.

The Survey of Business Uncertainty showed businesses expecting Sales Growth to be up 3.66% over the year-ahead period vs. last month's 3.62%, with Employment Growth up 4.19% vs. last month's 4.27%.

And New Homes Sales slipped to 580,000 units (annualized) vs. last month's 626,000 and views for 640,000.

Today we'll get Weekly Jobless Claims, Corporate Profits, Durable Goods Orders, Retail and Wholesale Inventories, the Chicago Fed National Activity Index, the third and final estimate for Q1'26 GDP, and the Personal Consumption Expenditures (PCE) index (which is the Fed's preferred inflation gauge).

Estimates for this morning's PCE put the headline numbers at 0.4% m/m vs. last month's 0.0% pace. The y/y rate is expected at 0.5%, in line with last month. The core rate (ex-food & energy) is forecast at 0.4%, same as last month. The y/y rate is estimated to be at 4.1%, up from last month's 3.8%.

These would be modest changes if they come to fruition. And given falling crude oil prices, that bodes well for next month's inflation reports. (Especially since rising oil prices has been one of the biggest contributors to the recent increase in inflation, and subsequent talk of a possible rate hike later this year if inflation persists.)

If oil continues to fall, that could/should ease inflation concerns, and potentially scuttle rate hike talk. And in turn, move up the timeline for resuming rate cuts. Even now, with a rate hike on the table for 2026, the Fed's Summary of Economic Projections (SEP) is still forecasting cuts to resume in 2027 and 2028.

Oil was down another 4.56% yesterday. It's now down -40.6% from its conflict high made in April. And is only up 4.25% since the war began.

Talks continue regarding the U.S.-Iran Memorandum of Understanding (MOU). More progress was announced yesterday, including Iran agreeing to allow International Atomic Energy Agency (IAEA) nuclear inspections.

Big after-hour gains by memory-chip stocks yesterday, look good for today, could provide a lift to the markets, and reinvigorate the larger AI trade with it.

See you tomorrow,