Stocks closed mostly lower yesterday with only the Dow in the green.

Semiconductor stocks led the decline. They have been struggling since hitting new highs mid-year. But I don't think this is the end of their run in the least. Not by a long shot.

After soaring earlier this year (that includes semis, memory chips, AI hardware and infrastructure, etc.), not to mention last year, they were due for a breather. But that's what I see it as ? a pause before their next leg up. Because the AI buildout does not appear to be slowing. If fact, it seems to be accelerating. And with that, I'm expecting the AI trade to soar once again.

We'll get a clear look at AI demand when NVIDIA reports earnings on Wednesday, 8/26, after the close. We'll also hear from AI-related names CrowdStrike and Synopsis after the close as well.

NVIDIA's earnings on Wednesday will officially closeout Q2 earnings season, even though unofficially we'll get more names reporting.

FYI ? for those who are interested to know, reported earnings by Alcoa has long been considered the 'official' start to earnings season, while Hewlett-Packard (now HP Inc.) has long been considered the 'official' end to earnings season. That's because, Alcoa, at one time, was the first Dow component to report earnings. And Hewlett-Packard was the last of the Dow components to report earnings. Ironically, both AA and HPQ are no longer part of the Dow Jones Index. But after bookending earnings season for so long, that tradition has stuck, regardless of their current Dow non-membership status.

HPQ, by the way, reports on 8/26 as well. But NVIDIA's modern-day importance to today's economy has many now citing them as the new official end of earnings season rather than HP.

(If a question like that ever comes up on a trivia quiz, now you know.)

Also weighing on stocks yesterday was the U.S.-Canada tariff escalation. Over the weekend, trade talks between the two countries ended without an agreement, and the U.S. will impose a 50% tariff on roughly $20-$28 billion of Canadian goods, while Canada is expected to impose "dollar for dollar" retaliatory tariffs on the U.S. on September 8.

And, of course, concerns over the Middle East, the Strait of Hormuz, and the expanded sanctions that will be placed on Iran (and those caught helping them), weighed on stocks as well.

In other news, yesterday's Chicago Fed National Activity Index slipped to 0.08 vs. last month's upwardly revised 0.06 (from -0.02). The 3-month moving average was at -0.04 vs. last month's upwardly revised 0.01 (from -0.05).

Today we'll get the Case-Shiller Home Price Index, the FHFA House Price Index, New Home Sales, the Richmond Fed Manufacturing Index, and Consumer Confidence.

Aside from NVIDIA's earnings on Wednesday, the main economic event this week will be Wednesday's Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation gauge. Last month's report saw headline inflation ease to 3.7% vs. the previous month's 4.1% pace, with the core rate (ex-food & energy) coming in at 3.3% vs. the previous month's 3.4%. This report is expected to show headline inflation (which includes the volatile energy market), easing once again to 3.6%, while the core rate stays steady at 3.3%.

Should be a busy week this week, especially Wednesday.

See you tomorrow,