Stocks closed mostly lower yesterday with only the Nasdaq picking up a small gain of 0.20%.

Tuesday's announcement that the U.S. launched retaliatory strikes against Iran, following their attacks on tankers in the Strait of Hormuz, weighed on stocks. But not as much as feared.

The U.S. launched additional strikes yesterday. And President Trump said the ceasefire deal is "over," and said the negotiations were a "waste of time."

However, later in the day, the President said Iran reached out following the strikes, and that "they want to make a deal so badly."

As I've said before, certain factions in Iran (namely the IRGC ? Islamic Revolutionary Guard Corps, and maybe others) don't seem to want to make a deal. But others clearly do. And there's clearly a disconnect there.

We'll have to see how this plays out. And which Iranian faction wins out. The those who want peace, or those who want war. We shall see.

In other news, yesterday's MBA Mortgage Applications showed the Composite Index down -2.2% w/w, with Purchases down -0.6%, and Refi's down -4.1%.

And yesterday's FOMC Minutes for June's Fed meeting (which was new Fed Chair Kevin Warsh's first) didn't pack a lot of surprises. We already knew a growing number of Fed officials favored a rate hike if inflation failed to ease. But there was no consensus on timing. They described the labor market as resilient. And they reaffirmed their plan to continue their balance sheet runoff at the current pace.

All eyes will shift to next week's Consumer Price Index (CPI ? retail inflation), and the Producer Price Index (PPI ? wholesale inflation) reports.

Prior to the flare up in the Middle East, the markets were wrestling with weakness in tech and AI-related names. And that has not necessarily gone away.

Despite the huge growth rates, or maybe because of them, some worry it could signal 'peak earnings,' given the soaring spending on AI, and concerns over the sustainability of that spending.

I am not one of those skeptics. At least not yet. I believe there will come a time for that. But I don't think that's now. In fact, some believe the spending will grow even larger before it slows down.

And in the grand scheme of things, I think we are still in the relatively early stages of the transformational AI boom. And I believe it has years more to go. Companies like NVIDIA and Sandisk, for example, are selling the AI infrastructure (chips, servers, AI training systems, memory). Others have to buy these products to build their AI models and tools. Then those tools are sold to others to build their products, or used internally to build their own products.

We are in the infrastructure phase right now and it's accelerating. The tools and models phase are in the early innings. And the application and productivity phase has really just begun. That's where the real broader economic payoff happens. And the winners will multiply as the cycle moves thru its stages.

So I think there's a lot more upside to go.

But that doesn't mean it won't be without volatility.

And we'll have to see if the recent bout of volatility has run its course, or if there's more to go.

Either way, I remain convinced we'll see another double-digit gain this year. And actually, I'm expecting a 30% gain in the S&P this year.

Given it's currently up 'only' 9.31% YTD, I think the best is yet to come for the rest of this year.

See you tomorrow,