Software stocks stage a comeback. Plus, why Boeing's CEO going to China matters

An important development from the financial markets: Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. The S & P 500 is retreating from record highs Thursday, and the losses picked up steam in the afternoon after The Wall Street Journal reported Saudi Arabia and Kuwait lifted restrictions on U. military use of their bases and airspace.

The news added to uncertainty surrounding negotiations between the U. and Iran over a peaceful reopening of the Strait of Hormuz. Oil was lower for most of the morning but reversed midday.

Economic Details

oil standard West Texas Intermediate crude climbed back above $97 per barrel. Same goes with interest rates, with the yield on the benchmark 10-year Treasury note nearing 4. The AI buildout trade is taking a much-needed breather after parabolic moves in many names.

As the AI enablers fell, software stocks staged a comeback, especially those related to cybersecurity. CrowdStrike briefly crossed above $500 a share for the first time since December, and Palo Alto Networks traded above $190 for the first time since January. Both CrowdStrike and Palo Alto Networks are now firmly in the green year to date, breaking away from traditional enterprise software and the dreaded iShares Expanded Tech-Software Sector ETF (IGV).

That basket of stocks has been a popular way for investors fearing AI disruption to bet against software stocks. We believe it's added unwarranted selling pressure on CrowdStrike and Palo Alto because they're in the ETF but have wider moats around their businesses. Elsewhere in the portfolio, Arm Holdings is the biggest laggard after its earnings Wednesday night, which failed to clear an extremely high bar.

Analyst Views

One disappointing aspect of Thursday's action is that even as money rotates out of AI-related tech and industrial stocks, it's not making its way into healthcare, much to our dismay, given our recent buys of Cardinal Health and Johnson & Johnson . Boeing is bucking the down market. Shares traded higher after CNBC reported CEO Kelly Ortberg is expected to join President Donald Trump on his trip to China next week.

This adds to the growing evidence that a major China order will be announced at the Beijing Summit. One could argue the anticipated order — reportedly up to 500 planes — is already priced into Boeing's stock price. Just last week, Boeing shares sold off hard when its main rival Airbus secured an order of more than 100 jets valued north of $20 billion before discounts, according to the South China Morning Post.

The Post also called Boeing's potential deal with China "elusive" due to previous uncertainty around the timing of Trump's planned to visit China. What this tells us is that the market still has some doubt and is holding a "we'll believe it when we see it" attitude. Keep in mind: The summit still has to go well or else an order could slip.

Financial markets are tracking the development closely as investors assess the likely impact.