Stocks inched further into record territory this week. And while there’s another big news event to weather this week (the Fed’s Jackson Hole meeting and Jerome Powell press conference), the market has already motored ahead in the face of a bad July jobs report and escalating inflation. The real test is likely to come in September, historically the worst month for stocks as Wall Street returns from its summer vacation and sells off its laggards. So today, we add a bit of safety in the form of a low-beta, high-yield utility courtesy of Cabot Dividend Investor Chief Analyst Tom Hutchinson. But this utility acts more like a growth stock, thanks to AI and data center buildouts.

Details inside.

Led higher by the Russell 2000 (IWM), which gained 3% on the week, the leading indexes saw extreme rotation, but closed the week higher as the S&P 500 rose by 1%, the Dow added 1.7%, and the Nasdaq gained 0.8%.

Led higher by the Russell 2000 (IWM), which gained 3% on the week, the leading indexes saw extreme rotation, but closed the week higher as the S&P 500 rose by 1%, the Dow added 1.7%, and the Nasdaq gained 0.8%.

All in all, not a bad month. The stock markets had a nice bounce. The unemployment rate held steady at 4.2%; productivity increased (by 2.4%), higher than economists expected; and while home prices continued to rise in certain areas of the country (Northeast and Midwest), nationwide, they fell by 4.9%, to $401,800, on average.

And best of all, the turmoil regarding tariffs doesn’t seem to be affecting earnings much.

FactSet reported that, so far, 90% of S&P 500 companies have announced second-quarter earnings, and 81% have reported a positive EPS surprise and a positive revenue surprise.

That gives us an 11.8% earnings growth year over year—not bad!

This was a great week for Explorer stocks.

Coeur Mining (CDE) shares were up 19.6% this week following last week’s 13% gain after quarterly revenue was up 117% year over year. Dutch Bros (BROS) shares were up 16.9% this week. Sea Limited (SE) shares were up 17.3% this week following net income in the second quarter increasing by more than fivefold to $414 million.

Artificial intelligence is a massive catalyst that is changing the market. It is spreading beyond technology and transforming other industries.

Utilities are companies that provide water, energy, and electricity to homes and businesses. They operate monopolies or near monopolies in their areas and the rates they charge are usually determined by regulatory bodies.

They usually pay strong dividend yields and provide highly defensive earnings that continue in any kind of economy. But, aside from the dividend and defensive characteristics, they’ve typically offered little else. Good stocks tend to outperform the indexes in flat or down markets and underperform them in bull markets. They are the market sector that most closely resembles bonds.

But skyrocketing electricity demand, mostly from data centers supporting AI, is changing that sector for the better. The phenomenon is making electric utilities growth businesses as well. The changing environment is adding another hugely positive dimension to these underrated stocks.

In this issue, I identify a beneficiary of that positive change that’s ahead of the pack. It’s an opportunity that has never existed before in modern times. The combination of defense and growth is the best of both worlds.

Led higher by major tech stocks (and especially AAPL), the Nasdaq gained nearly 4% last week, closing at a new record high. Less impressive were the other leading indexes, though their gains were very positive as well, as the S&P 500 added 2.4%, while the Dow rallied 1.3%.

The big-cap indexes remain in an uptrend, but it’s still a tricky and narrow environment, with just about every other index making no progress (net-net) for the past few weeks while they test their key 50-day moving averages. That means the intermediate-term trend is on the fence, which is obviously something that bears watching. On the positive side of the ledger, though, we’re still encouraged by what we’re seeing during earnings season, with many signs of strength from growth-y titles. All in all, we’re sticking with the stance we’ve been in—our Market Monitor remains at a level 7.

This week’s list has something for everyone, with strength seen in a variety of sectors. Our Top Pick just broke out of a beautiful launching pad after earnings, with some others in the general group also doing well.

The major indexes continue to march higher, but trouble is brewing under the surface. That’s been reflected by the number of earnings blowups of late, including in many stocks of companies that beat estimates. Our portfolio was not immune to that phenomenon last week, and as a result, we’re doing some late-summer housecleaning this week, selling four positions that have been lagging and got worse after reporting earnings. Meanwhile, with technology stocks becoming a bit overcooked, today we add to our portfolio a manufacturing name that makes essential real-world products that are always in high demand. It’s a stock whose shares have been building momentum – enough to attract the attention of Cabot Top Ten Trader Chief Analyst Mike Cintolo.

Details inside.

Led higher by major tech stocks (and especially AAPL) the Nasdaq gained nearly 4% last week, closing at a new record high. Less impressive were the other leading indexes, though their gains were very positive as well as the S&P 500 added 2.4%, while the Dow rallied 1.3%.

Led higher by major tech stocks (and especially AAPL) the Nasdaq gained nearly 4% last week, closing at a new record high. Less impressive were the other leading indexes, though their gains were very positive as well as the S&P 500 added 2.4%, while the Dow rallied 1.3%.

The big-cap indexes remain generally resilient, but under the hood, the market continues to thin out, with fewer names participating in the rally. To be fair, we are seeing more growth titles either emerge or set up nicely after earnings, and of course, the market’s big-picture outlook remains favorable. But we’re comfortable staying relatively close to shore for now as the broad market decides which way to go. We’ve made a flurry of moves in the past couple of weeks and have one small buy today, but we’re holding a good chunk of cash as we look to see if growth stocks can get moving en masse.

Last Friday on the Cabot Street Check podcast I co-host with my colleague Brad Simmerman, I predicted that a 5% market pullback was forthcoming after a month of stagnation. We’re more than halfway there already: the S&P 500 is 3% off its highs entering Thursday and narrowly halted a four-day losing streak on Wednesday.

My reason for thinking a mini-correction was imminent was simple: a strong fourth-quarter earnings season had been helping to counteract all the bad news (tariffs, escalating inflation, stagnant interest rates, etc.) that’s impacted the market over the past six weeks … and Q4 earnings season is now effectively over. Sprinkle in the fact that the S&P had actually poked its head above new all-time highs just over a week ago, and a pullback of some kind seemed almost inevitable.

Stocks are taking a hit. It was an ugly day last Friday and there was more of the same on Tuesday. Should we expect more?

In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including Agnico Eagle Mines (AEM), Alcoa (AA), American Airlines (AAL), Berkshire Hathaway (BRKB), Brookfield Wealth Solutions (BNT), GE Aerospace (GE), Pan American Silver (PAAS), Starbucks (SBUX) and Toast Inc. (TOST).

At the index level, small caps have hardly changed since last Thursday, but it sure feels like there’s a lot of downward drift out there.

I could say the same thing for the broad market. Things seem to be getting a little more tense. But then again, the S&P 500 and Nasdaq just hit fresh all-time highs.

I am a little concerned that it’s going to be harder to ignore all the background noise once earnings season is over. Because there is a lot of noise.

This week I’m in Cebu, Philippines. While in a shopping mall I spent a couple of hours analyzing a fascinating situation whereby Samsung, Apple and Huawei stores were right next to each other.

I’m not technically proficient enough to tell you which company and product offer the best value, but Huawei’s lower end smartphone was only $450 and seemed to offer everything anyone would need. Its high-end leader was just slightly cheaper relative to Apple’s most recent model, with all the bells and whistles. The store was very polished and in no way seemed to be of lesser quality to Apple or Samsung.

The U.S. stock market is doing just fine. More than fine, in fact. On Tuesday, the S&P 500 closed at a new all-time high, and the index is up roughly 4% year to date through the first seven weeks of 2025. That comes on the heels of back-to-back years of gains in excess of 20%. And while the current bull market has been mostly spearheaded by a handful of artificial intelligence and Magnificent Seven stocks, the rally is finally starting to spread, with the Equal Weight index also up 4% this year, the Dow Jones Industrial up nearly 5%, and the Russell 2000 up nearly 3%.

While the S&P 500 has stalled at about the same level since late November, it’s been more exciting under the hood.

The market indexes have stalled mostly because of technology. Those stocks still haven’t fully recovered from the DeepSeek plunge in late January. At the same time, earnings for the rest of the market are catching up.

The market has been sideways for the past couple of months. It’s up YTD because of a rebound from the December swoon. But the S&P is still at about the same level it was in early December.

Earnings have been solid, averaging about 11% growth in the quarter as tech earnings moderate and the rest of the market catches up. Earnings are expected to average about 14% in 2025. But the solid earnings quarter is only helping the market hold serve in the face of higher interest rate expectations, tariffs, and a strong dollar.

In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including Alcoa (AA), American Airlines (AAL), Berkshire Hathaway (BRKB), Sirius XM (SIRI) and SLB Ltd. (SLB).

Overall market liquidity remains ample, yet small-cap stocks have lagged in recent months, suggesting money availability isn’t as profuse as it was last year.

WHAT TO DO NOW: We continue to stay relatively close to shore as the major indexes remain rangebound and many stocks are hit and miss—but we are impressed given the resilience shown after some worrisome headlines, and earnings season has gone fairly well so far. Today and tonight, we’re making a few small moves: On the sell side, we sold one-third of our AppLovin (APP) stake today and, tonight, will sell half of our On Holding (ONON) position—but we’ll also buy an additional 3% position to Duolingo (DUOL) and start a half-sized stake in DoorDash (DASH). All told, we’ll still have a mid-40% cash position, but we could do more buying if the recent resilience leads to clear buying.

Small caps have underperformed since last Thursday with yesterday’s selloff pushing the index to the lowest level since mid-January.

The main culprits are yesterday’s slightly hotter-than-expected CPI report, concerns about tariffs (carveouts expected) and an uptick in bond yields. Yesterday the 10-year yield jumped back to 4.64%, a three-week high.

On last Friday’s Cabot Street Check episode, the weekly podcast I co-host with my colleague Brad Simmerman, we welcomed on four different Cabot analysts to help us take the market’s temperature in the midst of an eventful and rather volatile start to 2025. All four of them – Mike Cintolo, Cabot’s Chief Investment Strategist; Jacob Mintz, our options trading expert; Tyler Laundon, our small-cap and early-stage stock expert; and Clif Droke, my fellow value investor who runs the Cabot Turnaround Letter – described themselves as varying degrees of “cautiously bullish.” Given all the headlines of late, that qualifies as a victory.

Celestica (CLS) Reports. AST SpaceMobile (ASTS) Update

FTAI Aerospace (FTAI) Still Firing

Kaspi.kz (KSPI) and Netflix (NFLX)

WHAT TO DO NOW: The major indexes are bouncing some this morning, but growth stocks remain mixed, and after last week, many are damaged. We’re going to sell the rest of our small CrowdStrike (CRWD) position, as not only is the stock fading again, but we think perception has likely been crushed and could stay that way. That will leave us with 54% in cash—that’s too high given the top-down evidence, so while we’ll hold onto it for the moment, we could put some back to work this week if things shape up a bit.

Today, a whopping eight Profit Booster positions will expire. Most are “slam-dunk,” full-profit trades, while others will go down to the wire.

The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.

WHAT TO DO NOW: It’s been a brutal week for growth stocks in general, with the major indexes off some but with more breakdowns than we have seen in a few months. Today’s update involves CrowdStrike (CRWD), which is getting hammered today after an update glitch has disrupted a ton of the world’s operations overnight and this morning. To respect the action, we’re going to sell one-third of what we have, though we’ll hold the remaining small-ish position for now. Many more details below. Our cash position will be just shy of 50%, which we’ll hold onto as we wait for growth stocks to find support.

The market and growth stocks are getting hit once again today (partially because of rumors of geopolitical tensions regarding China and Taiwan), but as always, we go with the evidence, and the selling wave in growth stocks that popped up a week or two ago has continued this week with more and more name flashing intermediate-term abnormal action.

WHAT TO DO NOW: Four days doesn’t guarantee success, but the sharp broad market rally during the past few sessions has turned our Cabot Tides positive and improved our Two-Second Indicator; growth stocks remain choppy, but some names are perking up there, too. All told, we’re going to put a little money to work today, adding half-sized stakes (5% of the portfolio) in Robinhood (HOOD) and ProShares Ultra Russell 2000 Fund (UWM). That will leave us with around 30% in cash. Details below.

Sell BellRing Brands (BRBR)

A few Cabot Options Trader subscribers have asked me about ways to protect gains in their portfolios, so I thought I would write to everyone with a couple of strategies using options to hedge your portfolio.

A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.

Want to know how the big institutional investors use options? Here is an example of how one trader spent $132 million on three technology stocks.

Options trading has its own vernacular. To know how to do it, you need to know what every options term means. Here are some of the basics.

Our Cabot Top Ten Trader’s market timing system consists of two parts—one based on the action of three select, growth-oriented market indexes, and the other based on the action of the fast-moving stocks Cabot Top Ten features.