The startup Musk named on page 146

KEY TAKES

• Three of the week's five best stocks in Morningstar's coverage were plain businesses that beat on earnings: Herc (equipment rental) +29.4%, Hayward (pool gear) +27.2% and Wingstop +25.3%.
• Most stocks rose in a down week. 62% of the 878 names Morningstar covers gained, while the S&P 500 lost 0.57% and the Nasdaq 2.00%.
• The biggest AI stocks just sold off, and one strategist says the next phase of the trade looks different (From Oxford Club)

The index lost the week, but most stocks didn't. Healthcare (+3.06%) and utilities (+2.00%) led the sectors, while communication services lost 5.47% and tech 1.80% (Morningstar), so the damage sat in a short list of very large names. Small caps held up, with IWM +1.30% against SPY -0.56% and QQQ -1.97%.

Rates helped the smaller names. The 10-year Treasury yield slipped to 4.94% from 5.00% and the 2-year to 4.56% from 4.69%. Monday brought a $13 billion all-stock gas merger, Tuesday and Wednesday brought beats in pool, rental and restaurant stocks, and the big-tech selling came Thursday and Friday.

THE WEEK'S TOP 5

1 · HRI +29.4% · $165.76. Herc posted Q3 adjusted EPS of $3.91, up from $2.22 a year ago, and raised its full-year outlook (Seeking Alpha, Oct 27). Up 22.8% Tuesday, then gave back 4.7% Friday.

2 · HAYW +27.2% · $16.12. Hayward earned 18 cents a share adjusted against 15 expected on $260M of sales, up 6%, and raised 2026 guidance. Up 13.5% Wednesday on 2.6 times normal volume.

3 · WING +25.3% · $149.73. Wingstop's adjusted EPS of $1.08 beat estimates even with domestic same-store sales down 5.4% (Oct 28). Buyers paid for a slower decline and 76 net new restaurants.

4 · RRC +20.0% · $54.63. EQT agreed Monday to buy Range for 0.987 EQT shares each, about $54.91 at announcement and a 20.6% premium (Reuters, Oct 26). A deal stock now, so it trades off EQT.

5 · PNR +19.8% · $66.26. Pentair earned $1.18 adjusted against $1.07 expected on $976.4M of sales against $963.7M. Up 12.8% Tuesday, its biggest one-day gain since March 2020 (MarketWatch).

Left off: the all-stocks weekly list was topped by thin names like Ultralife, ChowChow Cloud and OneConstruction (the last two under $5). Skip them.

THE WEEK'S SIGNAL

Earnings beats with a raised outlook got paid this week, and that money went to small and mid-size companies far from the AI trade. Pentair reported Tuesday, and Hayward, which sells into the same pool market, beat and raised a day later, so one report carried both stocks. Who's exposed: holders crowded into mega-cap tech, where communication services lost 5.47% for the week. Next test is the October jobs report, Friday Nov. 6 at 8:30 AM ET.

Wrong if: IWM gives back its 1.30% weekly gain before Friday's jobs report.

HEADLINE OF THE WEEK

“Pentair Shares Best Performer in S&P 500 Following 3Q Results”

MarketWatch | Oct 27, 4:18 PM ET

Pentair rose 13% to $62.29 Tuesday on a beat in a quarter when sales still fell 4%. The stock was down 41% for the year going in, so a modest beat moved it a long way. It kept going and ended the week at $66.26.

THE TAPE LESSON

A stock deal floats with the buyer. Range didn't get a fixed price from EQT. It gets 0.987 EQT shares, so its price moves with EQT's, and EQT fell 3.7% the morning the deal was announced (Reuters). Range ended the week at $54.63, under the $54.91 the deal was worth on day one. Last week's cash bids for Silence and Braze put a ceiling on those stocks. With a stock deal, watch the buyer's chart as closely as the target's.

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Signal over noise. A weekend read of Friday's close. Next cash session Monday Nov 2.