Monday, Technology (XLK) names surged, sending the NASDAQ-100 (NDX) higher and dominating the S&P 500 (SPX) top advancers list.

Industrials Lead the Way

Technology provided the oomph, but Industrials (XLI) enjoyed the strongest gain in the session. Perhaps we are seeing the second-derivative artificial intelligence (AI) rally evolving. The XLI chart is very attractive here.

Green Tidal Wave

It's rare to see green across all factors, and the smallest advance was more than 1.0%; 84% of the S&P 500 and 90% of the S&P 400 rallied.

The last couple of weeks have seen lots of victory laps for cheerleaders in defensive sectors. This is the same spot they rebounded from in 2000, but I still think the best play is buying the big dip.

After the Close

Reactions to earnings after the close underscore that stocks aren't safe, even if they’ve already sold off a bunch. Disappoint on earnings, and there is still considerable hell to pay.

Today’s Session

After yesterday’s pop, it was going to be a heavy lift to see stocks higher today as the anxiety isn’t gone, but calmer heads are emerging.

Nvidia (NVDA) continues to capture all the attention in the room, and not just from investors. The salacious story makes it a huge Main Street story, and media trying to connect Trump in a nefarious way will be a subplot for some time.

Rate Hikes

Fed hawks were not moved to become softer after the election and that massive stock market swoon last Thursday.

In fact, some are sounding even more hawkish, including Chris Waller, whom I considered a dove until recently.   He argued for a 50-bps hike next month, if CPI came in hotter than consensus.

CPI Comes in Hotter than Consensus

CPI came in higher than expected on headline and core, and immediately added pressure to equity futures.

Crude Continues to Tumble

Crude oil continues to tumble as President Trump seems to have abandoned any pre-election thoughts of ratcheting up engagement.   The latest retreat in crude was not captured in the CPI report this morning and coupled with slowing data center development should have members of the FOMC considering a pause not a hike and certainly not 50 bps.

Happy 251st birthday to the United States Marine Corps, and thank you to every Marine for your service.

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