The S&P 500 and Nasdaq briefly tagged record territory on Thursday, buoyed by a wave of semiconductor enthusiasm and optimism surrounding President Trump’s summit with Chinese President Xi Jinping, only to give most of it back Friday when oil prices surged back toward $105 a barrel and Treasury yields climbed — a toxic combination for a market that had already run hard. For the week, the S&P 500 eked out a gain of roughly 0.3%, while the Nasdaq slipped 0.2%, the Dow fell 0.2%, and the Russell 2000 was the notable laggard, falling close to 2% as small caps bore the brunt of Friday’s broad selloff.

It’s been a great seven-week run, especially in leading stocks, but we’ve clearly hit our first major pothole in most names, with some sharp dips on Friday and especially today. As always, we’re not complacent—should the market and/or leading stocks really tip over, we’ll turn more cautious. But, to this point, the intermediate-term evidence remains in great shape for the market, and even for the dented leading AI stocks, the vast majority of action has been unpleasant, but normal, to this point. Thus, we remain optimistic, though to respect the pullback, we’ll move our Market Monitor down one notch to a level 7 today.

This week’s list has a nice mix of stocks, including many strong names that are either pulling back normally or refusing to budge. Our Top Pick is a mid-cap biotech outfit with one huge-selling product and gushing sales and earnings growth.

Cracks are forming under the market’s surface in the face of myriad headwinds, but for the most part, stocks have held up well on the heels of a historic six-week run. That said, it makes sense to play things a bit closer to the vest right now, so today we take our foot off the growth pedal and add a value stock that’s a household name. It’s a company I recommended to my Cabot Value Investor audience earlier this month – a true growth-at-value-prices opportunity.

Details inside.

The S&P 500 and Nasdaq briefly tagged record territory on Thursday, buoyed by a wave of semiconductor enthusiasm and optimism surrounding President Trump’s summit with Chinese President Xi Jinping, only to give most of it back Friday when oil prices surged back toward $105 a barrel and Treasury yields climbed — a toxic combination for a market that had already run hard. For the week, the S&P 500 eked out a gain of roughly 0.3%, while the Nasdaq slipped 0.2%, the Dow fell 0.2%, and the Russell 2000 was the notable laggard, falling close to 2% as small caps bore the brunt of Friday’s broad selloff.

The S&P 500 and Nasdaq briefly tagged record territory on Thursday, buoyed by a wave of semiconductor enthusiasm and optimism surrounding President Trump’s summit with Chinese President Xi Jinping, only to give most of it back Friday when oil prices surged back toward $105 a barrel and Treasury yields climbed — a toxic combination for a market that had already run hard. For the week, the S&P 500 eked out a gain of roughly 0.3%, while the Nasdaq slipped 0.2%, the Dow fell 0.2%, and the Russell 2000 was the notable laggard, falling close to 2% as small caps bore the brunt of Friday’s broad selloff.

The S&P 500 and Nasdaq briefly tagged record territory on Thursday, buoyed by a wave of semiconductor enthusiasm and optimism surrounding President Trump’s summit with Chinese President Xi Jinping, only to give most of it back Friday when oil prices surged back toward $105 a barrel and Treasury yields climbed — a toxic combination for a market that had already run hard. For the week, the S&P 500 eked out a gain of roughly 0.3%, while the Nasdaq slipped 0.2%, the Dow fell 0.2%, and the Russell 2000 was the notable laggard, falling close to 2% as small caps bore the brunt of Friday’s broad selloff.

A couple of rain clouds have formed overhead, with the broad market starting to take on water and Treasury rates testing multi-month (or longer) highs, which does mean the risk of a sharp pullback or rotation is elevated. That’s a good reason to be selective on the buy side, but with the primary evidence (trends of the market, action of growth stocks) very positive, we’re optimistic and looking to extend our line. This week we sold one name and replaced it with another on Tuesday, and tonight we’re adding a half-sized position in another new position--though we’re keeping 37% in cash for now as cushion (and buying power) should things shake out.

After hitting a temporary bottom at the end of April, the markets have rebounded—albeit with a little volatility thrown in. They look pretty solid to me right now, but of course, there’s still the war with Iran that can cause quick changes, as investors try to assess the possible outcomes, and cope, at the same time, with rising prices that have led to inflation creeping back up (now 3.8%).

No doubt, price hikes in gasoline are affecting consumers, and the University of Michigan’s latest consumer survey reflected declining consumer sentiment; in fact, at 48.2, it was the lowest on records dating back to 1952.

It’s a mixed economic bag, though, as job openings, at 6.87 million, remain healthy and the ADP Employment Index actually came in at 109,000, considerably higher than the 84,000 forecast. The unemployment rate remained at 4.3% for April.

Even the very best investments get cheap from time to time, and they don’t stay cheap for long. Finding the bargains makes a big difference in investment success. Buying a stock at a bargain price makes a mediocre investment a strong one. It makes a good investment a great investment. It’s also crucial to seek out bargains in a high-priced market like this.

In this issue, I highlight a historically strong-performing stock that has temporarily reached the cheapest valuation in more than a decade. The ability to seize the current low price can make this historically good investment a great one.

The bulls made it six straight winning weeks, powered by a semiconductor surge that has shown no signs of slowing down. Also helping the mood: the April jobs report blew past expectations Friday, with the economy adding 115,000 jobs against a forecast of just 65,000.

For the week, the S&P 500 gained 2.3%, the Nasdaq led the pack with a surge of 5.4%, the Dow added 0.5%, and the Russell 2000 tacked on 1.9%.

The market remains in very good shape, continuing the super-powerful rally off the March lows that continues to bring with it some rare signs of momentum. To be fair, there have been a couple of rain clouds that have come into view—the broad market, for instance, has mostly stalled out since mid-April, and many AI stocks are in nosebleed territory, both of which ups the odds of an overall market hiccup or possibly a near-term rotation. Even so, it’s still mostly sunny out there, with the rubber-meets-the-road evidence (trends of the indexes, action of leading stocks) looking great. We’ll leave our Market Monitor at a level 8.

This week’s list features a lot of tech but also a few other recent earnings winners. Our Top Pick is one of a few software names to rebound nicely on earnings. Aim to enter on weakness.

Stocks continue to rise to new heights as the miserable March recedes further in the rearview mirror. With the war in Iran still ongoing, however, oil and gas prices remain elevated, and this week we’ll find out how much that translates to rising inflation, with CPI and PPI data due out Tuesday and Wednesday. In the meantime, let’s keep our foot on the growth pedal, with a twist: Today we go outside U.S. borders for a mid-cap miner that’s taking full advantage of the AI and data center craze. It’s a new stock recommended by Cabot Explorer Chief Analyst Carl Delfeld.

Details inside.

The market turned on the afterburners. The S&P 500 made up all the March losses and catapulted to a brand new high in a remarkably short time. It’s a market that sure looks like it wants to go higher. But stocks are being held back this week by more war uncertainty.

The current ceasefire with Iran expires on Wenesday night. Talks may not happen, and war talk is growing. The resumption of the war will almost certainly prompt a decline in the market. Aside from that near-term threat, investors are clearly looking past this war. Hopefully, it won’t last much longer.

The market came roaring back to new highs last week after a tough March. But the war isn’t over yet, and there could be more bouncing around in the weeks ahead.

Investors are clearly already looking past this war, as there is a high degree of optimism that hostilities will soon end. There is probably still a big rally or two left in the tank when the war actually ends. Sure, there is still headline risk in the meantime. But the war is clearly fading as the biggest market catalyst and giving way to earnings.

The old adage that markets trade on expectations, not news, was certainly validated in the wake of President Trump’s announcement last weekend of his intention to block the Strait of Hormuz.

Although the announcement was initially made as a categorical threat against any and all incoming vessels, it was later softened to a more targeted blockade in which the U.S. and other non-Iran-bound ships are generally allowed to transit the Strait.

Markets have remained strong, with the Nasdaq up 11 days in a row and on track for its third consecutive up week. The S&P 500 is also on track to post gains for its third week in a row, and it looks like the S&P 600 SmallCap Index will post its fourth consecutive weekly gain.

Markets have proved to be resilient in making a comeback despite the backdrop of the conflict in the Middle East. The churning of sectors earlier this year has led to some bargains and momentum in stocks, from semiconductors to minerals and mining. This is paired with consumer and energy prices climbing steeply. Recent big bank earnings have been solid and volatile markets are good news to bank trading desks.

All of a sudden, stocks are trading at new all-time highs!

How did it happen? Hopes of an end to the war in Iran, first and foremost, as the ceasefire announcement 10 days ago sparked a rally that’s still going, with the S&P 500 now up 10 of the last 11 trading days, gaining nearly 10% during that time. Prior to Wednesday, that was the best 10-day trading stretch since the market came off the Covid lows in March 2020.

What a turnaround! We may not be out of the woods yet, but investors are moving beyond the Iran war.

Optimism about the end of Middle East hostilities is palpable as the market has already made up all losses from a rough March. The S&P 500 had fallen 7.7% in the month of March at its lows on the 30^th. Since then, the index has rallied 9.7%. As of midday on Tuesday, the S&P is back above where it was when the war began and within less than 1% of the all-time high.

The bad news is that tensions in the Middle East are escalating. The good news is that the market doesn’t seem to care.

Peace talks with Iran collapsed over the weekend. The U.S. has moved into the Strait of Hormuz and is blockading Iran. Iran has vowed attacks on Gulf region oil interests in response. The price per barrel of oil has shot up over $100 again after pulling back last week. As of midday on Monday, the S&P 500 and the Nasdaq are higher for the day. Go figure.

With all that’s going on in the world today, it’s quite remarkable—at first glance—that stocks have held up against the headwinds as well as they have. But when considering the market still enjoys massive support from the historic high in defense spending and the ongoing AI buildout, it’s actually not that surprising.

This brings us to what I think is a pertinent review of some of the key trends we’ve focused on in the newsletter for 2026.

WHAT TO DO NOW: The market’s rally of the past two days (and the week before that) is encouraging, and some signs (like our Aggression Index) are looking good. That said, most of the evidence out there is still neutral (like our Cabot Tides) or negative (like most everything else). Given our huge cash hoard, we’re adding two half positions tonight—Marvell Tech (MRVL) and Dell Tech (DELL)—and restoring a Buy a Half rating on Corning (GLW). But we’ll still keep around two-thirds of the portfolio in cash and look for further green lights to extend our line in the days ahead.

Markets have shifted back toward a risk-on stance over the past week following news of a two-week ceasefire between the U.S. and Iran. This “de-escalation trade” was fueled by short covering and the removal of macro hedges as investors pivoted back toward the domestic growth narrative. As a result, attention has begun to drift away from the unrelenting geopolitical uncertainty that sidelined all but the most risk-tolerant investors in March, and back toward earnings growth and a still-solid U.S. economy.

Wars are never good for the stock market. But ceasefires evidently are, at least in the short term.

That’s why stocks had their best day all year on Wednesday, hours after President Trump announced a two-week ceasefire, raising hopes that the Strait of Hormuz would soon reopen. All three major U.S. market indexes were up more than 2% yesterday, while oil prices tumbled back to the low $90s and the VIX dipped as low as 20, after touching the low 30s last week. Value stocks had a good day too, continuing a pattern of outperformance – they’ve fallen less than 3% since the Iran war began, and are up 5% year to date.

WHAT TO DO NOW: The market tried to stabilize earlier this week, but today’s action is ugly and is hitting many areas; our Cabot Tides have turned down, joining most growth stock measures. The Model Portfolio is already nearly two-thirds in cash, but today we’ll add to that, cutting loose Axsome Therapeutics (AXSM), which is following through to the downside after its post-earnings dip. That will leave us with a high-60% cash position; we’ll have more details (and possibly more changes) in tonight’s update.

Allient (ALNT) Delivers in Q4

Time to Lighten Up

FTAI Infrastructure (FIP) Reports

Earnings Updates: PRMB, BBIO, PTCT

Shares of Xometry (XMTR) are selling off today for reasons that aren’t clear, since this morning’s Q4 report and forward guidance for 2026 were all good. Here are the details:

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.

Valmont Industries (VMI) Reports

Shares of National Energy Services (NESR) are up nicely today after the company reported better-than-expected Q4 FY25 results early this morning. Revenue jumped 15.9% compared to Q4 FY24 (and +35% versus Q3 FY25) to $398 million (beating by 7.5%), and adjusted EPS rose almost 7% to $0.32 (beating by $0.07). The strong results were driven by high utilization and the beginning of work at the Jafurah frac tender. There were a few one-time costs in the quarter, including restructuring costs and two technology investment write-offs.

Atmus Filtration Tech (ATMU) Reports

Artivion (AORT), our MedTech company that specializes in cardiovascular and aortic repair solutions, reported Q4 FY25 results after the close yesterday. Results came in a hair below expectations. Revenue grew by 11.7% to $129.5 million (missed by $48K) while adjusted EPS improved to $0.17 (missed by a penny) from breakeven in the year-ago quarter.

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