Stocks closed modestly lower yesterday.

Oil finished higher.

While tensions in the Middle East have increased, and fears of greater escalation are real, the worry over oil rising again is probably more about what that will do to inflation and how it'll affect monetary policy.

The last few inflation reports, despite the rise in oil prices, came in better than expected, both on the core rate (which excludes energy, along with food), and the headline number (which includes it). But if oil keeps rising, those dynamics could change. Gladly, it truly does look like structural inflation is easing. But the volatile energy prices are still causing concern and are having real impacts.

Both the U.S. and Iran have signaled a willingness to negotiate (even if not with each other directly). But only time will tell if any of that is followed by action.

In other news, yesterday's MBA Mortgage Applications showed the Composite Index up 1.9% w/w with Purchases up 5.5%, and Refi's down -2.4%.

And the Atlanta Fed Business Inflation Expectations came in at 2.2% y/y vs. last month's 2.3% pace.

After the close yesterday, Alphabet reported earnings and posted a positive EPS surprise of 216.32%, and a positive sales surprise 2.31%. That translated to a quarterly EPS growth rate of 294.4% vs. this time last year, and a sales growth of 26.8%. Even though revenue for Google's cloud business jumped by more than 80%, and Gemini subscriptions are rising, which underscores the growing demand for AI, the company's Capital Expenditures doubled last quarter, and they upped their full 2026 CapEx forecast to a midpoint of $200 billion vs. their previous estimate of $185B. They were off -1.46% in the regular session before earnings, and fell another -4% in after-hours following earnings.

Also reporting after the close was Tesla, which posted a negative EPS surprise of -34%, and a positive sales surprise of 9.41%. That equated to a quarterly EPS growth rate of -17.5%, and a sales growth of 25.5%. Solid top line, but operating margins fell to 1.4% vs. 4.1% last year. Like Alphabet/Google, Tesla's CapEx more than doubled last quarter, although they did not provide any guidance looking forward. They were off -1.30% yesterday before earnings, and were trading lower by -4.4% in after-hours following earnings.

And Texas Instruments reported after the close as well, posting a positive EPS surprise of 12.04%, and a positive sales surprise of 4.57%, for a quarterly EPS growth rate of 51.8%, and a sales growth of 22.8%. They raised next-quarter's revenue guidance by 4.9% above the consensus, and next-quarter's EPS guidance by 11% above the consensus. And CapEx fell -61% last quarter vs. the same time last year, with trailing twelve-month CapEx down roughly -31% vs. the previous TTM. They were up 0.99% in the regular session, and were off by -3% in after-hours.

Today we'll hear from another 184 companies on deck to report, including Intel, Lockheed Martin, and American Airlines to name a few.

On the economic report front we'll get Weekly Jobless Claims, the Chicago Fed National Activity Index, and the Kansas City Fed Manufacturing Index.

And as usual, the markets will continue to keep an eye on the Middle East.

With 2 more days to go, the big three indexes (Dow, S&P 500 and Nasdaq) are all up for the week. The mid-cap S&P 400 is also up, while the small-cap Russell 2000 is just -0.08% (eight-hundredths of a percent) away.

See you tomorrow,