Everyone’s attention is on Iran right now – and how could it not be?

This morning, President Trump posted on Truth Social:

“A whole civilization will die tonight, never to be brought back again. I don’t want that to happen, but it probably will.” 

The president has been escalating his threats over the past few days in the hopes of convincing the Iranian leadership to cut a deal and end the conflict.

Now, as I have said repeatedly, President Trump likes to make everybody very uncomfortable during negotiations.

But when the president uses language like that, investors are going to focus on geopolitics. They are going to watch oil prices, the Strait of Hormuz and every new headline out of the Middle East.

I get it.

And that is happening at the same time we are heading into a critical stretch for inflation.

Later this week, we will get fresh readings on the Personal Consumption Expenditures (PCE) index and the Consumer Price Index (CPI). Both reports could have a major impact on the market, especially now that higher energy prices are adding a new layer of uncertainty.

So yes, there is a lot for investors to process right now.

I’ll cover both in a later Market 360 issue this week. But right now, the bigger driver of the market is unfolding overseas. So today, I want to briefly discuss the current situation. Then, in order to help you position your portfolio, we’ll take a peek at my latest Stock Grader ratings before I tell you about the bigger shift I think will happen next…

Why Iran Is Driving the Market Right Now

The recent stock rebound has been fueled, in large part, by hopes that tensions in the Middle East may ease.

Investors are watching the situation in Iran very closely – particularly developments in the Strait of Hormuz, one of the world’s most critical oil transit routes.

There have been renewed hopes for a ceasefire and the reopening of the strait. And as those hopes have increased, so has the market.

However, tensions have escalated again in just the past 24 hours. Ceasefire talks appear to be breaking down, even as a key deadline approaches for Iran to reopen the Strait of Hormuz.

President Trump has set an 8 p.m. Eastern deadline for Iran to respond – and markets are essentially in a holding pattern as investors wait to see what happens next.

At the same time, the U.S. has stepped up its military response – launching strikes on critical Iranian oil infrastructure tied to a huge portion of the country’s exports. That’s raising the risk of retaliation and the potential for a broader escalation.

Right now, we’re in what I would call the “fog of war,” where uncertainty is high and headlines can shift sentiment in a matter of hours.

In my experience, markets can rebound quickly when war concerns begin to fade – but they can reverse just as fast when tensions escalate.

But there’s another side to this story.

The conflict has already driven energy prices sharply higher. Crude oil has surged above $100 per barrel, and gasoline and diesel prices have spiked nationwide.

That’s beginning to ripple through the broader economy.

Higher energy costs are pushing up shipping expenses, food prices and ultimately, inflation.

Some economists now expect inflation to climb back above 4%, putting the Federal Reserve in a very difficult position.

On the one hand, economic growth is slowing. On the other hand, inflation is heating up again.

That’s why the Fed is effectively stuck on pause.

And that’s also why uncertainty remains elevated, even as stocks attempt to move higher.

How I’m Navigating This Market

When markets are being pulled in two directions like this, it becomes even more important to focus on what’s actually working. When in doubt, you don’t chase headlines – you follow the data.

That’s where my Stock Grader system (subscription required) comes in.

Every week, it cuts through the noise and shows me where institutional money is actually flowing based on real fundamentals and quantitative signals, not headlines.

And I’ve just updated it with the latest data.

So, let’s take a closer look at my latest Stock Grader ratings for 112 big blue-chip stocks. Of those 112 stocks…

• Fourteen stocks were upgraded from Strong (B-rating) to Very Strong (A-rating).
• Thirty stocks were upgraded from Neutral (C-rating) to Strong (B-rating).
• Twelve stocks were upgraded from Weak (D-rating) to Neutral.
• Three stocks were upgraded from Very Weak (F-rating) to Weak.
• Twelve stocks were downgraded from Very Strong to Strong.
• Twenty-two stocks were downgraded from Strong to Neutral.
• Seventeen stocks were downgraded from Neutral to Weak.
• And two stocks were downgraded from Weak to Very Weak.

I’ve listed the first 10 stocks rated as Very Strong below, but you can find a more comprehensive list – including all 112 stocks’ Fundamental and Quantitative Grades – here. Chances are that you have at least one of these stocks in your portfolio, so you may want to give this list a skim and adjust accordingly.

Symbol	Company Name	Total Grade
AGI	Alamos Gold Inc.	A
DTM	DT Midstream, Inc.	A
ERIC	Telefonaktiebolaget LM Ericsson Sponsored ADR Class B	A
FN	Fabrinet	A
GSK	GSK plc Sponsored ADR	A
MKSI	MKS Inc.	A
MOD	Modine Manufacturing Company	A
NTR	Nutrien Ltd.	A
PSX	Phillips 66	A
SAN	Banco Santander S.A. Sponsored ADR	A

Now, here’s what stands out to me…

Earnings season is right around the corner, folks. A week ago, we were expecting 14% earnings growth for the S&P 500.

Now it’s 17%. That’s how aggressively analysts have been raising their earnings estimates. It’s the highest in five years, according to FactSet.

This tells me one thing. This market is not broken.

If the analysts are raising their estimates, the stock market’s going to go up. Period.

So, I don’t want you to worry, because there’s a silver lining, critical path we can follow as investors. If we invest in fundamentally superior stocks with strong forecasted sales and earnings, positive analyst revisions and good earnings surprises and guidance, the rest should take care of itself.

That’s the formula. And the list above is a good start.

The Bigger Shift in the Market

Remember, our best defense is a strong offense.

I don’t want you to worry about the latest news from Iran or President Trump. We’re on the verge of another great earnings announcement season.

I know you don’t like all the distractions, but with any luck, this won’t be a concern for the market a month from now. It’ll be old news.

In the meantime, we’re heading into a completely new phase of the AI boom, and I do not expect all stocks to benefit equally.

A handful of companies look poised to gain momentum as this shift accelerates. Others may struggle to keep up.

And because of all of the market distractions, hardly anyone is paying attention…

That’s why I’ve just released a brand-new presentation today.

In it, I explain the deeper AI reset I see unfolding now, why it could reshape the market in the months ahead and which kinds of stocks I believe investors should own – and avoid – as this next phase begins.

So if you want to stay ahead of this shift instead of reacting after the fact, I urge you to watch this presentation now.

Sincerely,

Louis Navellier

Editor, Market 360

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Alamos Gold Inc. (AGI), DT Midstream, Inc. (DTM) and Phillips 66 (PSX)