Stocks closed mixed yesterday with the S&P 500 and Nasdaq ending modestly lower, while the small-cap Russell 2000 ended more than 1% higher.

The market rotation/breadth expansion trade continues.

Earnings were on top of mind yesterday with Danaher, GE Aerospace and Philip Morris posting positive EPS surprises before the open of 9.55%, 23.7% and 2.58% respectively. They were up 5.15%, 5.59% and 2.18% in the regular session.

After the close we heard from Alphabet, which posted a positive EPS surprise of 2.16%, and a positive sales surprise of 1.06%. That translated to a quarterly EPS growth rate of 31.3% vs. this time last year, and a sales growth of 15.0%. They were up 0.14% in the regular session before earnings, and 1.20% in after-hours trade. (Note, they traded on both sides shortly after reporting, so there's plenty of action taking place in either direction.)

Tesla also reported after the close and posted a negative EPS surprise of -16.1%, but a positive sales surprise of 1.48%. That equated to a quarterly EPS growth rate of -33.3%, and a sales growth of 2.30%. They were down by -2.04% in the regular session before earnings, and another -3.40% in after-hours trade.

Texas Instruments reported after the bell as well and posted a positive EPS surprise of 5.17%, and a positive sales surprise of 0.60%, for a quarterly EPS growth rate of -34.8%, and a sales growth of -15.7%. They were down -3.69% in the regular session before earnings, but were up 4.09% in after-hours trade following earnings.

It was a mixed bag of reports yesterday. But leaned more to the positive.

Today we'll get another 215 stocks on deck to report with marquee names like Thermo Fisher, AT&T and Boston Scientific going before the open, and IBM, ServiceNow and Chipotle posting after the close.

In other news, yesterday's Existing Home Sales came in at 3.890 million units (annually) vs. last month's 4.11M and views for 4.00M. That was down -5.4% m/m vs. last month's -0.7% change. On a y/y basis it was down -5.4% as well vs. last month's -2.8% pace.

The Richmond Fed Manufacturing Index declined to -17 vs. last month's -10 and estimates for -7.

Today we'll get MBA Mortgage Applications, the PMI Composite report, New Home Sales, and the Survey of Business Uncertainty.

But, as I mentioned yesterday, the report everybody is really waiting for is Friday's Personal Consumption Expenditures (PCE) index. That's the Fed's preferred inflation gauge. And it'll be the last inflation report we get before the Fed meets on July 30-31.

While nobody is expecting the Fed to cut rates next week, it will help inform their outlook on if they foresee a cut coming in September or further out like November or December.

In the meantime, we'll see if the small-caps can continue their rally after breaking out to the upside 2½ weeks ago.

See you tomorrow,