The next phase in the Persian Gulf... Highs for stocks – and gas prices... A small housing thaw... Homebuilders aren't following... A dangerous disconnect... An inflection point for semiconductors...
The new state of play...
Despite ammunition flying both ways between the U.S. military and the Islamic Revolutionary Guard Corps yesterday, "right now, the ceasefire certainly holds," Secretary of Defense Pete Hegseth said earlier today.
The U.S. is not "restarting major combat operations at this point," Joint Chiefs of Staff Chair General Dan Caine said today. But the military isn't backing down from a fight, either... And it's leaving open the possibility of ramping up attacks in Iran.
Meanwhile, Project Freedom – the name given to the U.S effort to escort stranded commercial ships out of the Persian Gulf – "is defensive in nature, focused in scope, and temporary in duration," Hegseth said.
There are hundreds of ships waiting to pass through the Strait of Hormuz safely. But as of our last check, traffic through the strait is still moving at a crawl. U.S. forces escorted only two ships out of the Persian Gulf yesterday, and global energy supply remains seriously disrupted.
Still, after a spate of volatility yesterday, Mr. Market absorbed this information as a good thing. Oil futures fell more than 3%, and the benchmark S&P 500 Index and tech-heavy Nasdaq Composite Index traded back toward their highs today.
At the gas pumps this morning, there were new highs, too...
The national average for a gallon of regular gasoline in the U.S. is now $4.48, about $1.70 more than at the start of the year. Diesel is close to $5.66 per gallon, on average, less than 20 cents from its all-time high set in the summer of 2022. And pity the Californians paying $6.13 per gallon of regular gas.
But people are going to work. Trucks are going to jobs. At a gas station north of Baltimore earlier today, there were various folks filling up almost two dozen vehicles around me (Corey McLaughlin). "$4.20 a gallon?" one construction worker asked aloud. He started filling up anyway.
So did I, although I'm thinking it might be wise to start applying an investing concept – dollar-cost averaging – to gas purchases. Filling up regularly could help hedge against potential future higher prices.
As our colleague Mike Barrett wrote in last week's Select Value Opportunities update...
After seven weeks of war, energy analytics firm Kpler estimates that the global oil market has lost approximately 500 million barrels worth of oil supply.
That's roughly equivalent to the amount of fuel all vehicles worldwide consume in 11 days.
Mike noted that various nations – like South Korea, Pakistan, and Slovenia – are already rationing fuel. And "demand destruction" – "a sustained, and possibly permanent, decline in product demand due to changes in market structure" like limited supply resulting in higher prices – might not be limited strictly to oil...
"The Iran war has altered the market for food imports into Iran and the Middle East," Mike wrote. "That's destroying demand for the crops grown by American farmers..." In other words, we've only just started to see the economic impacts from the war in Iran.
Looking elsewhere, some good news...
In March, sales of newly constructed homes rose to an annual rate of 682,000. That pace is still in the same range of between 600,000 and 700,000 homes that it has been stuck in since 2023, but the rate was up more than 7% from February, and 3% higher than the year before.
This could be a sign that the housing market is thawing (which we've written about here), especially because it comes in the face of higher mortgage rates in March. But mortgage rates moved lower again in April.
However, related housing stocks aren't telling the same story...
The State Street SPDR S&P Homebuilders Fund (XHB) is down more than 1% this year, versus a 6% gain for the S&P 500 Index. And two significant stocks in XHB are down much more than that...
Home Depot (HD) and Lowe's (LOW) are far and away the two largest housing retailers in the U.S. They're also two of the top 10 largest retailers in the country by revenue. So you would expect these two companies to thrive as housing sales bounce back.
But so far in 2026, the exact opposite has happened...
Home Depot shares are down more than 8% this year and are 26% lower from their September high. The stock now sits near its lowest level in more than two years.
As for Lowe's, the stock is down 7% in 2026 and has fallen more than 20% from its most recent high.
Both of those companies will report their first-quarter results in two weeks. So we'll have to wait until then to see if their businesses saw the same bounce the housing market did in February and March.
But with how the stocks have been performing, investors aren't optimistic that these companies will ride the tailwinds. So what gives?
It's a disconnect between the 'real' economy and the broader stock market...
This is a theme we've frequently covered about various parts of the economy, like mounting consumer debt and the growing cracks in the labor market while headline stock indexes hit new highs...
This isn't totally unusual behavior. It has often been said that the economy is not the stock market and vice versa.
In other words, the economy and stock market can behave as if they're living on different timelines. Economic data represents the past, while stock prices are tied to investors' expectations for how companies will perform (or casino-like speculation in some cases).
We've seen markets rebound plenty of times before major risks to the U.S. economy are resolved... most recently, during the COVID-19 pandemic panic and rebound or the Liberation Day panic and rebound.
Today, war volatility aside, AI remains the biggest story for investors. And the strength in the top AI names during a multiyear bull market has allowed many folks to overlook what's going on elsewhere.
As we wrote last week, AI-related spending accounted for more than 40% of all growth in the first quarter, according to U.S. gross domestic product ("GDP") data.
But while the broader stock market has been giving the appearance of "all clear" lately, all is not well under the hood.
Housing accounts for about 16% of all economic growth in the U.S., and the housing "freeze" of the past few years has been a headwind for the total economy's growth. Even with the two-month rebound in new home sales, that's still the case.
Existing home sales (which make up 90% of all housing sales) hit a nine-month low in March, and related stocks are among the worst performers of the year. You just wouldn't know it if you only follow the headline indexes.
But you might soon...
A signal of weakening health...
The S&P 500's advance-decline line – a measure of market breadth – has shown that over the recent three-week surge to new all-time highs, fewer stocks are participating in the rally.
As Ten Stock Trader editor Greg Diamond wrote to subscribers today, the Dow Jones Industrial Average looks weakest of the major U.S. indexes right now and appears to have "topped." The others could follow.
Home Depot and Lowe's are perfect examples of large companies not following the market. This isn't a sign of a healthy rally, but a warning that the market is ripe for another sell-off – especially if shares of the AI leaders powering the market falter in the weeks ahead.
An 'inflection point' ahead...
Thanks to the AI boom, semiconductors might also be at an "inflection point," according to Stansberry Research senior analyst Brett Eversole.
In this morning's DailyWealth newsletter, Brett noted that semiconductor stocks jumped a massive 47% in just 18 trading days amid the stock market rebound over the past two months.
Looking at this chart, "you might feel incredibly bullish... or fearful," Brett wrote. "History justifies both reactions."
This kind of semiconductors performance has happened only 10 other times since 1994. At a broad level, the results look good, showing a roughly 11% average return after six months and around a 19% average return one year later.
However, digging deeper into the 10 prior instances, the sector saw gains one year later only half the time. And you didn't want to be on the wrong end of the bet if these stocks went lower. As Brett wrote...
In cases where semiconductors rise, they soar an average of 76% over the next year. But when they fall, the sector crashes 38% on average.
That's why semiconductor stocks are at an inflection point today.
As investors, we should prepare for both possibilities...
Brett's staying put right now – riding the trend for semiconductors higher but being prepared for the sector to possibly head lower.
We're not saying it's time to go "all out" of semiconductors (or the AI boom, for that matter), but it's certainly not time to go "all in" either. Be selective, as it looks like these stocks (and the bull market) are nearing an important turning point.
New 52-week highs (as of 5/4/26): Atlas Energy Solutions (AESI), Amazon (AMZN), Alpha Architect 1-3 Month Box Fund (BOXX), CBOE Global Markets (CBOE), Chord Energy (CHRD), Ciena (CIEN), Cisco Systems (CSCO), Simplify Managed Futures Strategy Fund (CTA), DigitalOcean (DOCN), DXP Enterprises (DXPE), Emcor (EME), iShares MSCI Emerging Markets ex China Fund (EMXC), iShares MSCI South Korea Fund (EWY), FirstCash (FCFS), Flex LNG (FLNG), iShares Convertible Bond Fund (ICVT), Liberty Energy (LBRT), Lumentum (LITE), Marathon Petroleum (MPC), Pembina Pipeline (PBA), Roku (ROKU), ProShares Ultra Technology (ROM), USCF SummerHaven Dynamic Commodity Strategy No K-1 Fund (SDCI), and Viper Energy (VNOM).
In today's mailbag, some replies to a question raised in yesterday's mail... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"RE: Troy J's comment, 'what benefit would YOU like to give up to help the situation?'
"ALL OF THEM! I don't want any government help; I just want them the hell out of my life (and pocket). I've earned my Social Security 'benefits' and would have done much better if left to handle my own retirement. Those aren't really benefits, they're just returning some of the value they stole from me.
"The problem with this country is that everyone THINKS they can get (or are getting) more OPM (other people's money) from the government. It can't work with a behemoth in the middle, consuming a significant portion of the resources. TAKE CARE OF YOURSELVES!" – Subscriber Mike M.
"Since Troy J. asked in Monday's Digest, here's a short list of the 'benefits' I would like to give up to go back to gold money:
"The Internal Revenue Service... The Federal Reserve... The Ukraine war... Day care benefits for my 75 imaginary adopted Somali children... The social security checks I collect on behalf of my great, great, great, great grandparents... Cryptocurrency (a scramble for sound money that consumes much talent and computing power)... [Editor's note: Point taken, but we find value in cryptocurrencies too.] Un-affordable housing... Buying industrial production from abroad... Endlessly expanding government bureaucracy that may or may not be able to answer e-mail.
"Thank you for the invitation [for the list]." – Stansberry Alliance member Paul J.
All the best,
Corey McLaughlin and Nick Koziol
Baltimore, Maryland
May 5, 2026
