It was an encouraging session yesterday. All major equity indices opened under considerable pressure but attracted buyers throughout. Market bears were all over the financial media, sensing this was their moment. When the dust settled, the S&P 500 finished at its highest point of the day and entered the closing bell. 

I don’t want to lay it on too thick. The volume was extraordinarily light, and no critical markers were removed. But it was a bounce-back, and I’ll take it.

An element of profit-taking caused two of 2024's hottest sectors to fall lower during the session.

Advancers

Value hunters were out in full force, so much so that a brokerage upgrade to ‘neutral’ from ‘sell’ propelled The Mosaic Co. (MOS) to the top of the advancers list.

Heat Map

The largest squares and rectangles were mostly in the red, but there wasn’t a lot of damage. The real story was all those tiny green squares and rectangles of unloved stocks that have been trying to get investors' attention for a couple of years.

It remains to be seen if this is the start of the rotation trade, but it's better than the entire market simply rolling over.

Tariff Tamp Down

A report suggests the Trump administration will gradually impose tariffs, halting the dollar rally and reviving stocks. The intense media focus on tariffs has worked, but it also undermines the need to force fair trade into our free trade arrangements.

The economic calendar kicks in today, and tomorrow's Consumer Price Index (CPI) report is the most important release of the week.

Today’s Session

Producer prices climbed less than expected month-to-month and year-over-year, but are still rising. Markets initially rejoiced at the number, then sobered a bit. 

Red Flags

Component that feed into personal consumption expenditures (PCE) edged higher led by airline passenger service.

Small Business Rejoice

Small businesses continue to feel the power of renewed animal spirits as optimism continues its parabolic rise.

At 105.1, it’s the second consecutive month above the 51-year average of 98, and the highest read since October 2018.

We are all thrilled when our small businesses are pumped.  

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