Stocks closed lower yesterday, giving up earlier gains.

Rising tensions in the Middle East are weighing on stocks.

The continuing and widening attacks by Iran on Gulf States is sending oil prices higher on fears that the conflict could drag on.

And following the death of at least two U.S. service members over the weekend after Iran attacked a U.S. base in Jordan, the retaliatory strikes by the U.S. are intensifying.

There was a report out yesterday saying that Iran was open to continuing diplomatic talks. That was in response to mediators delivering a 10-day proposed ceasefire. But Iran's supposed openness for dialogue appeared to be with other mediators rather than with the U.S. directly. Nonetheless, the U.S. has said it was still committed to a diplomatic solution. But the actions on the ground belie what's being said in mediation channels. But hope still exists.

Adding to the Middle East concerns were reports that the Houthi's in Yemen announced a maritime embargo/naval blockade against Saudi Arabia. While it was not by Iran directly, the Houthi's are backed by Iran, and reports say Iran pressed the Houthi's to close the Bab el-Mandeb Strait if the U.S. continued strikes on Iranian infrastructure.

Separate from Middle East concerns, but likely to add to the recent volatility, was a report yesterday afternoon that the U.S. will impose a 50% tariff on an assortment of Canadian goods, as a means of reciprocation for Canada discriminating against American goods, in particular autos, alcohol and dairy products. Many Canadian products were protected under the USMCA trade deal. But the agreement's 6-year review period expired on July 1^st, and because the U.S. declined to extend it, Washington can now suspend the tariff preferences on previously protected Canadian products.

In other news, yesterday's Leading Indicators report slipped -0.2% m/m vs. last month's 0.1% and views for -0.1%.

Today, there's nothing much in the way of economic reports.

But tomorrow we'll get MBA Mortgage Applications, and the Atlanta Fed Business Inflation Expectations.

And earnings season starts heating up. Today we'll hear from 63 companies on deck to report including Novartis, Charles Schwab and 3M to name a few.

Tomorrow we'll hear from another 149 names including 2 of the Magnificent 7 stocks -- Alphabet and Tesla.

Despite a strong start to earnings season last week with big earnings from banks, the geopolitical worries and the subsequent rise in oil prices have muted the response.

But stocks typically go up during earnings season. And after coming off of Q1'26 earnings season, which showed a stellar 25.7% EPS growth rate, and forecasts for this earnings season (Q2'26) to come in at an equally impressive 25.3% (not to mention 21.1% for next quarter, and 23.4% for the quarter after that), we could be in for another fantastic earnings season and price action.

See you tomorrow,