Stocks closed mostly lower on Friday and mixed for the week. The tech-heavy Nasdaq and S&P 500 closed lower for the week. The Dow, small-cap Russell 2000 and mid-cap S&P 400 all closed higher. It was the 3rd up week in a row for the Dow and the Russell. And the Russell put in its highest weekly close ever.

Small-caps, after lagging in previous years, have been the leaders recently. They led in the back half of 2025, and are taking the leadership position so far in 2026. (Mid-caps are doing well also.)

Truth be told, all of the indexes are doing great. But small-caps and mid-caps are killing it. YTD, the Dow is up 7.93%; the S&P 500 up 7.43%; the Nasdaq up 8.84%; the Russell is up 21.3%; and the S&P 400 up 15.5%.

I might also add that biotech appears to be staging its long-awaited breakout.

Tech and AI-related names struggled last week. But there's no such struggle when it comes to the stellar sales and earnings of these companies. That was underscored once again last week when memory-chip maker Micron reported another spectacular quarter, posting 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."

Memory-chip stocks have been soaring. The memory-chip shortage is real. It's not temporary. It's structural, driven by AI demand. AI is consuming memory at a rate the world has never seen. And it's expected to last thru 2027.

But some worry tech stocks may have gone up too far, too fast. Quite frankly, I don't think they have gone up far enough, given the insatiable demand and amazing numbers they have been putting up, and are expected to continue putting up. But it's possible they have gone up a bit fast. A little bit of profit taking would not be surprising. But I fully expect the historic rally to continue in due time. And probably sooner rather than later.

Last week's Personal Consumption Expenditures (PCE) index inflation report came in largely as expected. That was a relief for investors. And given falling crude oil prices, that bodes well for next month's inflation reports. Especially since rising oil prices have been one of the biggest contributors to the recent increase in inflation, in addition to subsequent talk of a possible rate hike later this year if inflation persists.

With oil continuing to fall, the rate hike contemplated for 2026 might not happen after all. And could very well move up the timeline to resume rate cuts.

Although, oil will be closely watched this week after Iran fired on ships in the Strait of Hormuz on Friday and Saturday, which prompted the U.S. to strike targets in Iran. The fragile ceasefire and memorandum of understanding is being put to the test. There are some factions in Iran that do not want a peace deal. We'll see if those that do are able to keep the peace.

But the main event this week will be Thursday's (7/2) Employment Situation report.

And that'll come a day early as Friday (7/3), the market and government offices are closed in observance of July 4^th Independence Day.

Should be a busy week this week, especially given it's a shortened week.

See you tomorrow,