Stocks closed higher yesterday, but off their intraday highs. Nonetheless, the S&P 500, Nasdaq and small-cap Russell 2000 were up more than 1% by the close.

Monday's selloff felt overdone. And stocks were ripe for a bounce.

However, the market rotation trade is likely still in play. Same for the breadth expansion. True, we are in the midst of a pullback/correction. But these are normal events. And both can be happening at the same time.

But overall, it's important to keep sight of the bigger picture, i.e., that the economy is doing well. Granted, it has slowed. But the labor market is still adding jobs at a healthy pace. A 4.3% unemployment rate is historically low. Q2's GDP came in above expectations at 2.8%, while Q3's GDP is forecast at 2.5%. And corporate earnings and sales estimates are trending up with Q3 earnings growth estimated at 5.5% and sales at 4.8%; Q4 earnings at 11.7% and sales at 5.4%; and Q1'25 earnings at 13.2% and sales at 5.5%.

Again, as painful as pullbacks and corrections are, they are very common. Every bull market has them. And if you know these are commonplace moves, you can instead look at them as opportunities to buy rather than places to sell.

Earnings season continues. Before the open yesterday, Caterpillar reported a positive EPS surprise of 8.32%, although a negative sales surprise of -0.45%. That translated to a quarterly EPS growth rate of 8% vs. this time last year, and a sales growth of -3.6%. Nonetheless, they were up 3.04% yesterday.

Uber reported before the open as well and posted a positive EPS surprise of 51.6%, and a positive sales surprise of 1.34%. That equated to a quarterly EPS growth rate of 161% vs. this time last year, and a sales growth of 15.9%. They were 10.9% yesterday.

After the close, Airbnb posted a negative EPS surprise of -6.52%, and a negative sales surprise of -0.05%. That showed a quarterly EPS growth rate of -12.2%, and a sales growth of 10.9%. They were up 4.12% in the regular session before earnings, but were trading down by -16% in after-hours trade.

Today we'll hear from another 394 companies, including Novo Nordisk, Disney and CVS Health before the open, with Occidental Petroleum, Monster Beverage and AppLovin going after the close.

On the economic report front, we'll get MBA Mortgage Applications, and Consumer Credit.

And we'll see if the market can add to yesterday's rebound.

See you tomorrow,