Stocks closed mostly higher yesterday, led by the tech-heavy Nasdaq and small-cap Russell 2000 with 0.54% and 0.61% respectively.

Big gains from CoreWeave yesterday (up 19.59%), after reporting big sales growth and upped guidance the afternoon before, was yet another impressive outing from yet another big-tech company this earnings season, helping to underscore that the AI trade is alive and well.

Nebius was another big, tech winner yesterday, gaining 33.56% on the day, after reporting earnings before the open. They posted a positive EPS surprise of 82.09%, and a positive sales surprise of 1.49%. They narrowed their quarterly loss to -12 cents vs. -38 cents four quarters ago, translating to a 68% EPS growth rate. Sales soared to $582.3M vs. $105.1M last year at this time, for a 454% sales growth. They also swung to a positive $236M adjusted EBITDA, beat on margins, and reaffirmed their rev guidance for FY'26 of $3.0-$3.4B. Nebius also said capacity is selling out "as fast as it comes online," showing the growing demand for AI compute.

Today we'll hear from another 530 companies on deck to report, including Brookfield Corp before the open, and Applied Materials after the close.

In other news yesterday, the market also cheered the as-expected Consumer Price Index (CPI) retail inflation report. The headline numbers showed the m/m change at 0.1%, in line with views and up from last month's -0.4%, while the y/y change eased to 3.4%, also in line with views and an improvement from last month's 3.5%. The core rate (ex-food & energy) came in at 0.2% m/m, in line with the consensus and up from last month's 0.0%. The y/y rate eased to 2.5%, in line with expectations and down from last month's 2.6%.

It was another inflation report that supports the Fed's pausing rather than rushing to raise rates. Quite frankly, with core continuing to soften, it supports the idea that structural inflation is indeed easing. And if that can continue, it helps build the case for a return to cutting. But for now, the Fed is on pause. And the data backs that up.

We'll get another look at inflation this morning – this time with the Producer Price Index (PPI) wholesale inflation report. The headline rate is expected to show a 0.2% m/m increase vs. last month's -0.3%, with the y/y rate at 4.9% vs. last month's 5.5%. The core rate is expected to come in at 0.3% m/m vs. last month's 0.2%, with the y/y rate easing to 4.2% from last month's 4.7%.

We'll also get Weekly Jobless Claims. And we'll hear from Fed policymakers Beth Hammack, Thomas Barkin and Cheryl Venable as they speak at their various engagements throughout the day.

And of course, we'll be listening for any new news out of the Middle East as it relates to any potential peace agreement or the reopening of the Strait of Hormuz.

See you tomorrow,