Stocks closed lower on Thursday with the big three indexes down about -0.40% each. The small-cap Russell 2000, however, saw a biggest decline, shedding -1.66%.

But all four indexes remain higher for the week heading into today's session.

Nvidia was in the spotlight following news that CEO Jensen Huang had resigned, following revelations of affairs, that had the company's board threatening to fire him. Shares finished down roughly -4.34%, although they recovered considerably from their earlier lows which saw the stock down as much as -14.3% at one point.

The broader market also recovered from its early selling. The S&P had been down nearly -1% shortly after the open before working its way back and finishing with a much smaller loss.

That was an encouraging response to a difficult headline. A leadership change at a company so closely associated with the AI investment boom creates uncertainty. But the market's ability to absorb that news suggests investors were willing to look beyond the initial reaction.

Ideally, we want to see participation broaden as stocks recover. A rebound becomes more convincing when gains extend across company sizes and sectors.

In other news, Cisco and Applied Materials reported earnings after the close. Both delivered strong earnings reports, providing some encouraging news on AI infrastructure spending.

Cisco posted a positive EPS surprise of 5.26%, and a positive sales surprise of 2.14%. That translated to a quarterly EPS growth rate of 40% vs. this time last year, and a sales growth of 24%. They reported record revenue. And also raised their full-year outlook, with fiscal 2027 revenue now expected between $74.8 billion and $75.8 billion, and adjusted EPS between $5.47 and $5.53. And it increased its forecast for AI infrastructure revenue from hyperscalers to $9 billion -- more than double last year's total.

Applied Materials posted a positive EPS surprise of 2.46%, and a positive sales surprise of 1.10%. That equated to a quarterly EPS growth rate of 92%, and a sales growth of 53% on record revenue. Management cited AI as a driver of strong incremental chip demand. Looking ahead, it forecast next-quarter revenue of $11.1 billion, plus or minus $500 million, and adjusted EPS of $4.35, plus or minus 20 cents.

Together, the reports offer evidence that AI spending continues to translate into sales and earnings across the infrastructure supply chain. Questions about the ultimate returns on that spending remain. But for these two suppliers, the demand is showing up in their results.

This morning, attention turns to inflation again with the release of October's Producer Price Index (PPI ? wholesale) report. Expectations are for headline PPI to rise 0.4% m/m vs, last month's 1.3% increase. The core rate (ex-food & energy) is expected to rise 0.3% m/m vs, last month's 0.7%.

Those would represent slower monthly increases. But the market's response will likely depend on whether the actual numbers come in above or below expectations, along with any revisions to the prior month.

A softer report could help ease inflation concerns and give stocks some support. A hotter report could do the opposite.

Nevertheless, yesterday's recovery from the early lows was constructive. Today gives the market another opportunity to build on it.

Best,