Closing Bell - Closing Bell 05/01/25

Episode Date: May 1, 2025

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.

All right, let's do it. Welcome to Closing Bell. I'm Scott Wabner live from Post9 here at the New York Stock Exchange. This make or break out begins with the countdown to Apple and Amazon earnings. In overtime, without question, two of the most anticipated reports of this season,

our experts will size up exactly what's at stake in just a few minutes. Let's show you the scorecard here with 60 to go in regulation. Pretty good day across the board as you see, and it is one that is led by the NASDAQ up better than 2 percent following Microsoft and Meta's big beats both stocks are getting a nice boost today look at Microsoft you don't see a move like that often up near 10 percent bond yields

they're up too so is the dollar we're watching all of that over this final stretch it does take us to our talk of the tape two down two to go with Apple and Amazon looming large. Kate Rooney is following Amazon for us today and the major questions hanging over that company. Big Technologies, Alex Kantrowich watching all things Apple. He's a CNBC contributor and Kate, we begin with you. So Scott, the biggest question today for Amazon investors is gonna be around tariffs.

What is the actual impact in Amazon's guidance? Any sort of forward looking comments around this trade war are going to be key. Investors have already been shaken up by the potential dent to profits as stocks been down double digits so far this year. E-commerce, of course, the most obvious hit when we talk about tariffs, half roughly of third party sellers on Amazon are based in China, at least according to William Blair. There's also been some chatter lately around advertising it and a potential drag from China. Politics are also now front and center heading into this report after Amazon's back and forth

this week with the White House on tariffs and the company now saying it does not plan to disclose tariff price increases on the site despite some reports that it was planning to do that earlier in the week. Investors of course always focus on that all important cloud business AWS 17.6% growth. That is the number to beat. Although the whisper number is a little bit higher today after Microsoft citizens and JMP this morning says investors are now expecting closer to 20%. Of course after the Microsoft cloud growth we saw in the quarter. Watch for any changes in CapEx as well.

Last count was $100 billion for Amazon roughly on what they're going to spend. Any updates on what AI is contributing to Amazon Web Services and possible bright spots to look for. So Amazon Prime, the streaming service, could see some momentum. And then currency tailwinds. Weaker dollar might help Amazon's quarter at least. That's what we're hearing on the street, Scott. Back to you.

All right, Kate Rooney, thank you so much. We'll see you in just a bit. Alex Kantrowich, as I said, is here. We'll get to Apple in a minute, but I want you to react to what Kate said on Amazon. 17.6% consensus growth estimate for AWS. Kate said, well, that number is probably a little bit higher now after what Microsoft did. What's your expectation and what you think is the most important thing to watch for?

Microsoft definitely put the pressure on Amazon after the earnings report that we just saw from that company. So I think 20% growth for AWS is massive. It's gonna be hard for them to hit it. But I think what the Microsoft earnings results underscore and the expectations for Amazon underscores is the economy was actually in quite good shape in Q1. So I do expect to see Amazon benefit from that. Now the only overhang for Amazon underscores is the economy was actually in quite good shape in Q1. So I do expect to see Amazon benefit from that. Now the only overhang for

Amazon is they didn't have the open AI models in the way that Microsoft has. Now I know AI isn't driving all the spend in cloud but that is important when companies think about the way that they're gonna expand they're thinking about that so Microsoft could be in better shape than Amazon on that front. The most important thing I'm looking for with Amazon is what they're gonna say about the ad spend. There could have been a rush of people buying products at the beginning of this quarter, or this current quarter that we're in,

because they're anticipating the tariffs will send the price up. So retail numbers might look good in Q2, but I really wanna hear from this company what is gonna happen with advertising, because that's a full quarter thing, and if they have such exposure to China, both in terms of third party sellers,

but also the other sellers in the United States that are importing from China, that could actually hamper ad spend, and that is an extremely important number for Amazon because it's super high margin. I feel like people forget when they talk about AI with this company, it's always about Microsoft and OpenAI,

but they have the big investment in Anthropic. And I'd like to hear more about that, wouldn't you? Absolutely. And Anthropic models are available within AWS. So if you want to build an AI application, you're going to go into AWS. You can select Anthropic, you could select DeepSeq, and you could be in good shape to build.

But I do think just from my perspective, model quality, the lead has shifted again to OpenAI. and you could be in good shape to build. But I do think just from my perspective, model quality, the lead has shifted again to OpenAI, the sheen has shifted to OpenAI. And remember, they have hundreds of millions of users of ChatGPT, and a lot of people that are using ChatGPT are doing it in a professional sense, and that influences the decision they make

in terms of the models they wanna build on. But Anthropic is definitely not, it's not a weak company. I mean, their models are good. Okay. Now Apple. The stocks run up into the number, which always seems to raise the bar just a little bit. There are multi-pronged problems here too, related to the trade war and tariffs and China. What are you watching for most here?

I mean, the biggest thing for Apple is China demand. China made up 17% of Apple revenue last year, and you could tax or you could tariff all the exports coming out of China all you want. But Apple was already coming into this moment where demand from China was hurting. And that contributed to a number of quarters where revenue growth was stagnant or even declining. And now you're gonna see growth again this quarter.

That's good. But ultimately, this is the first moment we're going to hear Tim Cook speak about what the impact of tariffs are on his company. If that 17% ends up becoming 15, 14% of Apple revenue, if it doesn't grow the way that this company is expecting, that's a big problem because we're only going to see 3-4% growth from Apple, maybe 5% at the high end in this quarter that they're reporting. If you have a serious decline in China, then you could go back to revenue stagnation. That's not the place you want to be if you're Apple.

You think we hear significant commentary on iPhone demand, potential pricing issues for the iPhone related to these tariffs? I think so. And I think that last year, around this time, we saw a massive buyback from Apple. I don't think they're going to want to go to the market and say we're going to raise prices because if they do, demand is going to go down and we already know they've had this demand issue. So my expectation is maybe if there is a buyback, it's a smaller buyback or we don't see a buyback, and they keep the move for Apple would be, hey, keep

those prices the same so that this might blow over and you might be able to keep selling the way that you want to because that services segment is important. And if you buy the iPhone, the price, whatever, you're going to be contributing to services revenue, and that is important for Apple. Updates on supply chain, right? India, and then some of the reaction, frankly, from Tim Cook about what the commerce secretary, Lutnick, continues to say, and this belief that Apple can move a significant portion

of their phone production some way somehow to the United States. I don't think it's gonna come to the United States. I mean, obviously, the labor cost is an issue, but it's also expertise. We talked about this on Monday. The thing that really makes China so appealing to Apple is the tooling. The people have the tools, they have the expertise, they have the materials coming in, they know how to get these materials.

And that's why it hasn't been so easy to move to India. Yes, they've made a move to try to manufacture more in India, but we still know 80 to 90 percent of iPhones are being built in China. And so, could you incrementally, or even more than incrementally, move to India? You can. Can you totally separate US iPhone manufacturing from China? Maybe, but it's going to take a long time. And this idea that they're going to come to the United States, maybe it's assembled in the United States, maybe you have some components that are built within the United States, but you

would end up looking at a much more expensive iPhone and for a company that's looking to increase service revenue, that's just not the direction you want to go. All right, good stuff. I appreciate you being here. Alex Cantrell, which you've heard from our experts. Now let's hear from the shareholders. Malcolm Etheridge of Capital Area Planning Group, Jason Snipe of Odyssey Capital, both are CNBC contributors, both own Amazon and Apple. Gentlemen, it is good to see you both.

Malcolm, you first. Which one are you waiting on most? Yeah, I think that we probably already know the way the story is going to go as far as Apple is concerned. They're still behind on Apple Intelligence, and they're probably going to have a tremendous headwind that reports in this quarter that we're currently in with regards to iPhone sales, especially in China, as Alex just got done saying. So I really care more about Amazon's report right here.

Amazon really needs to show a number that's comparable to what Microsoft reported in order to just satisfy the street and those expectations that were actually higher for AWS than they were for Azure. Otherwise, I think we could actually see those shares sell off after, I guess at the open tomorrow, simply because the headwinds with tariffs related to the retail side,

we already expected to be pretty strong. So Apple's report is gonna be really important tonight. Yeah, Jason Amazon. Amazon. I hear you, I know what you mean. Jason Amazon's like, oh Microsoft, you really had to do that. You had to blow the doors off.

Yeah. Azure had to look like that. How about that? Because now we have something even bigger to live up to with AWS. You're right about that, Scott. I mean, Azure 35% growth year over year, I mean, that was a traumatic blowout quarter, obviously.

So for me as it relates to, and the reporter already mentioned it earlier, 20% is the whisper number, 17.6% is the number that we're looking at in research reports. But for me, they're the largest cloud player in the game, so that's definitely gonna be an important number. That's what the street is very interested in. As it relates to retail, I mean, my concern is around third party sellers looking to increase

pricing due to the macro and obviously tariff exposure. So that's going to be concerning. And then, you know, 50% of their third party sellers are in China. So that is also a concern from a macro perspective. So I'm curious to see how that plays out. The ad business has obviously been a nice business. It grew almost 20 percent last quarter and it's very accretive. It's obviously high margin business. And Alex mentioned, you know, some of the concerns there. So that's a number I'll be watching very closely as well, you know,

as we kind of see what this whole thing looks like as the print comes here. I feel, Jason, there's a much bigger unknown with Apple. And maybe it's just me, but all the issues that are at hand as we speak, demand, tariff, China, supply chain, the questions that Tim Cook's gonna get to respond to some of the rhetoric out of the White House and elsewhere.

Listen, Apple is absolutely in the eye of the storm. You know, 17% of revenue comes from China. You know, that is definitely a concern with all the geopolitical and the trade water that is going on. There's no doubt that supply chains potentially will be an issue. 90% of assembly is done in China.

So that's definitely a concern for me. And then, we talked about the probe earlier. I mean, we've been reporting about it a lot throughout the day. This could dramatically affect the services business. I mean, the services expectation growth is around 12% for this quarter, but there's a workaround to get out of that ecosystem.

There's another pay for somewhere else, that is a dramatic development for Apple going forward. So that is something definitely to watch for and see how that story continues to mature. Yeah, what about that, Malcolm? You didn't mention that at all. And few people have today because we're so hung up on the issue at hand of tariffs and the huge amount of revenue that this company gets out of China. We're not even up on the issue at hand of tariffs and the huge amount of revenue that this company gets out of China.

We're not even focusing on the courts. Yeah, so I think that it is important that we consider how much the regulatory issues that Apple and Meta and Alphabet have right now. But it's really tough to even look that far down the road because we're talking about potential breakups. We're talking about potential appeals that could overturn decisions or alter decisions that have been made. We don't even have the benefit of looking that far beyond where we are right now because the tariff situation is still

very alive and well and so we have to at least consider what's happening right now with a hundred and forty five percent tariffs against Chinese, sorry American goods for a company that its flagship product, about 80% of that flagship product is coming out of China. And that is the problem we have to focus on right now as it relates to Apple. Everything else is a fight for tomorrow. I want to hear from you both on this question, but Jason, you first. What have we learned do you think so far from the three of the five big ones?

We're not counting Tesla, it's already done, and we're not counting Nvidia because it's yet to come. But from what we've gotten so far about AI spend and the key questions that you both wanted to get out of this group, did you learn enough? So AI spend is obviously healthy. Both folks have kind of reiterated the capex there. And cloud, obviously, has been very healthy. So I think there was a little bit of concern

kind of coming into this courtroom, what that would look like. So I think that has been very productive. And I think that's why we're seeing some of the positives. The other thing I would say, which has been interesting, is search. Search and advertising has been positive as well. Hearing from Google, hearing from Meta,

those names have obviously responded to the advertising numbers. So in general, these names have responded very well and we're seeing that the ad spend and the advertising businesses have been healthy. So I think that's been a net positive for sure. Malcolm, how would you answer that same question? Yeah, Scott, I don't think that we're completely

out of the woods yet, right? There's not an all clear signal for the entire market or even the tech sector specifically, but I definitely think that we should at least get a big sigh of relief that these earnings so far have been better than feared, right? If we consider the fact that we were having a conversation maybe two weeks ago about whether guidance was gonna be

pulled or altered or adjusted, now we're talking about companies coming out and blowing it out of the water. You got a 50-year-old tech company in Microsoft showing double-digit top-line growth, also a 10% increase in share price in one day, that does not happen. And so you have to couple that with the fact that Metta actually stood firm and increased how much its capex spend is expected to be about $7 billion for the year. I think that sounds very good for a space that Wall Street analysts have had a number

of questions about whether they've gotten too far in their overbuilding and overspending and everything else. I think that we got an answer to that story. So for the long term, I think that the money they're spending to build out those suites are definitely proving it. I think that also there's the danger of underbuilding, which Apple might actually be experiencing right now. So I think that we're in a pretty good space, but I definitely don't think that it's an

all clear for markets broadly here. Guys, that was great. I appreciate it from you both. We'll see you soon. Malcolm and Jason, thank you. Now let's get to CNBC senior economics reporter Steve Leesman because there were other big stories today. There is a very big one tomorrow with the jobs report, Steve, and these comments today

from the treasury secretary on television talking about the Fed and whether it should cut rates. Yeah, not whether he thinks they ought to and he's pointing to the two year, which of course is up again today in yield. And so that sort of raises the question about where exactly the market thinks the Fed ought to be here. But Scott, there's obviously the big issue of the tariffs coming through and what effect they'll have. There's the Treasury Secretary's statement.

We're seeing that two-year rates are now below Fed funds rates, so that's a market signal that they think the Fed should be cutting. It is true that inflation expectations in the market are relatively subdued and have come down, but I was just looking, Scott, at a chart and what you see is that inflation survey expectations are through the roof in some of the highest we've ever seen.

And the gap between what the market is saying about the outlook for inflation and what the public is saying is as big as we've ever seen it. So I think that's the reason why the Fed is pausing here to let this kind of shake out and see how these tariffs come through Do they come through as a bigger impulse to weak growth or a bigger impulse to inflation or maybe both? the Treasury Secretary careful to with his comment Steve that it's not It's not him who is saying that the Fed should cut He's falling back on what he thinks the market signal and that's the wording that he used. Of course, whenever I hear somebody mention the two year and the fed, I've interviewed

Jeffrey Gunlock so many times that I automatically go back to what he always says that the two year leads the fed. Yeah. Well, first of all, I think you could get away with that kind of one cool remove from the comment, or I could get away with it. I don't think the Treasury Secretary gets away with that. When he says something like that, it is the equivalent of the Treasury Secretary jawboning the Fed to cut rates.

Whether or not the two-year is the right way to to do this or the right way to follow it, I think the Fed sees it as an input, but not necessarily the be all and all, especially with this kind of uncertainty. I mean, just look at the two year today. It's a 14 basis point, Scott. So what does that tell you about where the market thinks that the Fed ought to set rates? The Fed's at 430, and if you look at their outlook, okay, they see themselves going down to 390. That was the March forecast. But then look at their inflation

forecast of 2.8% for the year. I don't know that the fed believes that's going to be the case. They're going to have another whack at these forecasts, Scott, come June. And we'll see where they go with it. But the market is expecting a rate cut in June. At the same time, the Fed will probably be upping its inflation forecast. That is something that could undermine the Fed's own credibility about fighting inflation if at the end of the day, they end up raising the inflation forecast

and cutting rates at the same time. The other thing, you know, it's one thing I guess for this president to muse about the Fed chair and that the Fed should cut rates and you know we've heard it before, it's not a surprise, presidents past have, you know, urged the Fed to do certain things at certain times. It does strike me at, I guess at at a different level, perhaps, when you have a sitting Treasury Secretary start to weigh in on what he or she thinks the feds should do, no?

Yeah. I mean, look, this administration rewrites the rules on it. I think it's bad form for the following reason. I don't deny their right to freedom of speech and say what they think I think it does undermine the feds independence and the question becomes will the Fed be cutting rates because the president and the Treasury Secretary pressure them to do so or because it's the right thing to do and if everything you do with the Fed is about your credibility and about your

do and if everything you do with the Fed is about your credibility and about your ability to sway markets and provide guidance forward guidance about where where mark where rates ought to go what their forecast is for the economy then the idea that somehow this is pressured by the administration I think raises questions and eyebrows I I would like to see the Fed to be able to come in and address potential weakness early. Don't get me wrong about that, Scott. I just think that you have to be careful here because of the idea that you have this, I don't know, guaranteed inflationary impulse coming from tariffs here that may be transitory, but I just don't see the Fed cutting in the face of that rise in the inflation rate.

Now, I just want to throw one other idea out, Scott, which is that if the bond market is so sure of the coming weakness from the tariffs or whatever is going to happen that the Fed will be forced to cut rates this June, can the stock market have the story right here? It raises the stakes for next week. That's for certain. I mean, we're in a blackout period, obviously, so we can't have any immediate reaction from any Fed speakers on the comment from the Treasury Secretary. We'll just have to wait till you ask them the question next week.

And I look forward to that. Steve, thanks. Yeah, just tomorrow's numbers, Scott, if it's remarkably weak, it will raise the stakes for next week's meeting. But if it's in line at that 130,000, I don't think it does. All right. Good stuff. Steve, thanks as always.

Our senior economics reporter, Steve Leesman. Trivariate's Adam Parker joins me now right here at Post9. He's of course a CNBC contributor as well. And you got a lot on your plate, right? Nice to see you. How are you? We have the mega caps, we have a market rally. Rally back pretty nicely here. And then we have a jobs report and a Fed meeting next week and these comments from the Treasury Secretary.

I've put a lot in your shopping basket. Which one stands out the most? I mean, the market's down 4% maybe year to date after being up 25% a year for the previous two years. So I mean, it's not that bad. You know, it's like I'm looking, I like the market less now than I did. You still like it less. I like it less now than I did a couple of weeks ago because I don't, look, the earnings

season has been better than I thought, better than anyone I talked to thought, whether it was the banks, select software, the tech so far. We obviously still have a little bit of meat on the bone during earnings season. There's a bunch of stuff that's in front of us the next seven, eight, you know, trading day. So we'll see. But we haven't seen what we call real companies

like Visa or somebody really tell us things are getting that much worse. So I think a big debate is like what is the actual lag between what's happened so far when it hits earnings, right? You see this GDP number and it's like it looks disconnected from what the SP500 is reporting, you know. So I'm still of the mindset that I think there's risk to the downside in earnings and I haven't seen companies miss at great. So I'm a little bit thinking down four isn't that much relative to

what I think the damage to the growth rates been but we've been we were down a lot we were but there is a thought that we've we've rallied back enough that now valuations like Rick Reeder told me the other day now valuations are too stretched again for an environment in which earnings growth is undoubtedly slowing and so too is the economy we got some proof from GDP then you're gonna get continued proof maybe even tomorrow from the labor market. I sort of, I guess I agree with what Rick said.

I didn't hear him say that. I just got back from three days in the West Coast doing a bunch of meetings and just like is always the case, the previous 10 days price action changes sentiment. Two weeks ago I did a dinner in New York. It was apocalyptically bearish. Everyone hated US equities. It was like, now we've had a monster rally from the lows.

And people were pretty bullish. Like, well, the second route of tariff news is gonna get better, and it wants to fix 50 and down. It always works. And the tech, you know. So it's like. Yeah, but what's your hangup? I mean, because you're not joining that group.

My hangup is what I know is coming is worse earnings revisions than people think. And so you've got to pick this barbell to invest, and it's a different barbell than history. History was, yeah, I buy utilities and I buy staples and then, you know, but now I think it's the businesses, what we previewed before earnings was it's the businesses that don't have tariff, don't have China, have some pricing power. It doesn't matter if they're cheap or not.

You own Waste Management or Republic or Waste Connection. You own Martin Marietta or Vulcan or Knife River. You own anything that's got McKesson or Sancora, things that have pricing power, margin expansion potential, whatever, that's the new safety, even if it's at 30 times, because who the heck knows? You saw, I think for the first time in my whole life,

or certainly my 30 years of looking at equities, that Pepsi and P&G missed in the same day. Or like you know that's if your defensive playbook of yesterday was I buy Pepsi and I buy P&G and I buy some Pharma like that that's not necessarily the defensive cocktail of success. What about this? What if and I think we're getting some evidence of this what if the pull forward because this was so well telegraphed, I mean, if you miss the fact that the trade war was gonna start and you were gonna get the tariffs,

you weren't paying attention. You didn't pay attention to the campaign and you didn't pay attention to anything from the campaign until now. What happens if the pull forward ends up being so significant, not to the same degree, but in the same texture that the demand on the other side of COVID was so significant that it carried things from a positive standpoint much longer than people thought. So if I'm loading up as a business or a consumer now,

and the numbers maybe look overinflated now versus where they look then, it's still good enough to get you through to the other side. I think that's low probability. I'll start by saying I don't necessarily agree with the way you teed that up that everyone knew the tariffs were coming, even though you and I were here. Not to the degree, no one knew the numbers. That's fair. Not just the magnitude, but on January 1st, I wrote my year ahead out looking at Trivariant.

Okay, the street was bullish after the monster rally after the election. We wrote the market will be down and volatile in the first half of the year because tariffs weren't in the price. That was a contrarian view in January. So when companies reported January and guided to April, it still wasn't how they were managing their companies. Forget Wall Street, which is totally wrong. So I think what shifted is it was worse than people thought.

Now you're the CEO of a company, you're trying to plan, am I gonna, what's my production gonna be? What's my inventory gonna be? And I think the KPIs, the key things you gotta look for this quarter are gonna be like, what happened to backlogs? What happened to orders? What happened to inventory? I think you're about to find out

that things got a little bit worse. And so I think what's about to find out that things got a little bit worse. And so I think what's happening is not everything's fine, it just got smoothed and pushed out the Q3 and Q4 a little bit. And so I think the risk is that Q2 numbers and Q3 guidance are a little bit worse than people thought. And so I'm with these folks that I think you've got to be more cautious now. Every meeting I did this week though, people said said, God I can't afford to not own something for offense because that day we were up 10%

in one day if I'm all locked into the conservative stuff I just lagged by so much what offense can I own? And so I spent a lot of my meetings going through that. I do think it's interesting to maybe take a look at a lot of these alternative asset managers that really got killed. For the private equity names? Yeah, KKR, Blackstone, Apollo, Ares, even Morgan-Cellion, Goldman. If you do believe that on the other side of this

is some economic improvement, I think they've sold off a lot. So I think there's some things you can add to the offense side. I just don't think yet that it's as easy as the train left the station and that was just a one-time ripple and we're all good. I feel you on that. I think people would agree with that. I mean, there's still a substantial amount of fog. People are more bullish than they were a week ago, though.

At least I think we did 17 meetings the first few days this week in the West Coast. Eight up days in a row do that to you. And that's what I'm saying. And you and I talk about this a lot, but that doesn't make what happens three months from now. I hear you. All right. Thank you for being here. Yeah, I love to see you.

All right. That's Adam Parker, Trivariate. All right, to Christina Parts-Novellos now for a look at the biggest names moving into the close. Hi there. Hi, Scott. CVS shares are surging to a 52-week high after beating earnings estimates and boosting their outlook for the year.

Even better news, for weight-conscious patients, they're actually going to be expanding access to Novo Nordic's popular weight loss drug, Wigovie, through their Caremark Pharmacy Benefits Program. Shares are up over 5%. Quanta Services also making gains with shares up more than 10, almost 11% right now. The electric power infrastructure firm posted beats on the top and bottom lines in the first quarter and said that demand remains strong, quote, despite macro uncertainty. Scott? Christina, thank you very much.

We'll see you soon. We're just getting started here up next. Morgan Stanley's chief US equity strategist and CIO. Mike Wilson is here at Post9. He'll tell us where he sees this market going from here. All right we're back. Stocks kicking off May with another push higher. Our next guest though says we need to see four key developments to indicate a more sustained

recovery from April's lows is in fact intact. says we need to see four key developments to indicate a more sustained recovery from April's lows is in fact intact. Let's bring in Morgan Stanley, Chief US Equity Strategist and CIO, Mike Wilson. It's nice to see you. How are you, Scott? So I'm good, thank you. And it's great to have you here.

So we need to see four things. I don't like doing lists like this because I mean, it puts you on the spot. If you forget something, it's on you, not me. But what's the four? Yeah, so I mean, it's not all four, but we need to see some combination of these four things. I say the first one is some deal on tariffs with China.

That's the one that matters. All right, check. Okay, number two, dovish fed, where they kind of get off the stick. Okay, number three, we see rates come down in a more meaningful way at the back end of the market without growth really deteriorating. Okay, and then the fourth one,

which is probably the most important for stocks, is earnings revisions. Earnings revisions have been on a downward trajectory for quite a while, but that would have turned up. So maybe one or two of those together, we could see a breakout of this range we've been stuck in. Does that suggest that you're not yet convinced that this rally back, what, eight in a row

I think we're going today on the S&P is sustainable? Well, I would say this. The lows could be in. Okay, we priced a lot of damage say this, the lows could be in. We priced a lot of damage at 4,800 on April 7th. There was a capitulatory move. I think the wild card now is, are we gonna have a recession? And I think our economists would say it's a coin toss.

It's a 50-50. I think most of your guests are probably in the same boat. I mean, I think most commentators, we just don't know. If you don't get a recession, the lows are in, okay, for the year. If we get a recession, you probably gotta do a full retest, maybe a slight break, okay, and that would be a labor cycle. That's the only way to define a recession,

it's a labor cycle. All this stuff about negative GDP, I don't care about that. I care about, do companies start laying employees off in a way where then you get a next round of revisions that become more serious. We both know for obvious reasons, we're not going to have an answer to that question for a while. Does that mean that we just chop around things?

We may have some volatility come back. We feel like it's been this nice little sanguine move higher. Everybody's feeling good as Adam Parker was just saying. Everybody was so negative now. Everybody's feeling so much better about everything. But are we due just for more choppy? That's basically our call. It's a range trade, right? So the low end of the range is sort of 5,000 to 5,200.

Upper end of the range now is 5,500 to 5,600. That's a pretty good range to think about in S&P terms. Now, a lot's going on under the surface as usual, right? So a lot of the economically sensitive parts of the market have been correcting for almost a year. They've been in a downtrend for quite a while. That's where the value is. The problem is you can't really step into a lot of those

stocks if a recession is still 50%. So yeah, it's going to be a trading environment. There's probably some franchises you can kind of go back to that look a little bit more interesting. The weaker dollar is helping the multinationals now. I mean, that happened with Microsoft and Meta last night for sure. And that was sort of our view coming into this week that, you know, don't forget about the dollar. The dollar has made a big adjustment and that can help earnings growth.

If it stays, the dollar index is up quite nicely today. I mean, like, it's a pretty big move for a single day. But the trend is down. I mean, I think the trend is down. I think we've made it probably a multi-year top in the dollar. The dollar is overvalued. That doesn't mean we're going to crash in the dollar. But gold's been telling you now for a long time that all currencies are somewhat overvalued,

and the dollar in particular relative to other currencies. So that's probably the thing I have the most conviction in is that the trajectory of the dollar is weaker. And you just, you can't get too bearish on the multinationals because that is, that's helpful for earnings growth. I mean I find from people saying now you just can't get too bearish on anything because there could be a deal whether in quotes or not I mean anything could could happen that flips the switch to a more positive outcome just as people

feel like they're foggy well the fog could fog could lift pretty quickly, don't you think? Well, I think that's what we got, right? So we had a pretty nasty sell-off. We did see some pivoting on the tariffs, some headlines that were more favorable, and that's why we're up 7,800 points in a straight line. So I still think this range will hold for a period of time. I'm not convinced that this is a sustainable rally

beyond 5650, which we wrote about this week. I think retesting the low end of the 5,000 range is feasible even without a recession. And of course, if you get a recession, then all bets are off. What about the Fed? I mean, what role does it play in terms of when you think it may actually cut?

And then this whole notion that, well, don't fight the Fed. Irrespective of whether the economy is in a weakening state, if the Fed's gonna start being more aggressive in cutting And maybe that's bullish too. It is bullish, but they're not doing that So it's the right question just like last fall when the feds started cutting rates We got pretty bullish on the cyclical move we rotated but until they signal they're ready to do that I wouldn't count on the Fed doing something proactive. The Fed will cut if markets become unstable,

okay, that's not gonna be good for stocks, or we have a recession. Those two things, they'll definitely start cutting rates. What's gonna get them to cut rates without those two bad things happening? I can tell you easily. I mean, if tomorrow's labor report is pretty nasty, they're not gonna wait around for a recession.

I'm not saying they're gonna cut next week, but June becomes super live. But it needs to be pretty nasty. It needs to be like close to zero on payrolls. And that's not going to be equity friendly in my view. I mean, I wonder sort of what role that they've already sort of telegraphed this idea of the mandates coming into conflict with one another.

And some have speculated that they'd be willing to tolerate a little bit higher inflation. They have no tolerance for the labor market unraveling, like people expected it probably will, at some point, if the tariffs remain in place. I totally agree with that. So in other words, our bear case is our bull case over 12 months. So the way I think about it is, if we were to get a recession, I don't think it's gonna be one of these

calamitous type recessions, why? Because a lot of the economy's been in a soft recession for several years now, right, except a few areas. So that means that the earnings degradation in a mild recession isn't gonna be that severe. And to your point, which is the right one, the Fed will definitely respond to an unemployment cycle. So that's why you got to be on your toes here.

It can happen really quickly. Look what happened on April 7th, right? It was three days from liberation days, three days, 16% correction, crash really in the S&P 500. A lot of other stocks were down more, and if you blinked, you kind of missed it. So that's the lesson of the last really 10 years. These corrections come fast, they come furious,

there's a reflective response from policy makers but not at these prices. I think these prices, you're pricing in more goodness than what you're talking about. All right, it's great to see you again. Thanks for being here. You too. That's Mike Wilson with Morgan Stanley. Up next, Eli Lilly's leg lower today.

The weight loss drug maker having its worst day in some five years. We'll talk about that move and what's behind it next. Welcome back. Take a look at Eli Lilly. Those shares are plunging in today's session. Angelica Peebles is here with exactly why. Hi. Hey Scott, yeah, Lilly is on track

for only its ninth double digit decline since 1972. Now what's going on? The first quarter results were just fine, and that's the problem. Sales of GLP1s, Manjaro, and Zeppound coming just barely ahead of estimates, and Lilly reaffirming its full year revenue outlook. But expectations are high,

and investors wanted to see more from this print. Plus, CVS announced that it will prefer Novo Nordis Spagovia for weight loss after negotiating a lower net price for that drug. And that's only for the standard formulary. So not all patients CVS manages drug coverage for. But this morning on Squawk Box, Lilly's CEO Dave Ricks brushing off that announcement and some of the other recent moves that we've seen from Novo. There's been a couple things our main competitors announced this week.

You know, that's in the error bars of what we plan for, so not too concerned about it. These things happen and onward we go. But the deeper concern is that this is just the start of a price war. Novo's been losing ground to Lillie in obesity and of course cutting the price is one way to fight back. And we don't know how big of a discount Novo is actually giving, so we'll have to see if this price war really does materialize. Scott.

Angelica, thank you. That's Angelica Peebles. Up next, we track the biggest movers as we head into this close today. Christina Partsanevalos is standing by with that. Tell us what you see. I am standing by. We're seeing shares of a smartphone chip giant falling despite solid growth. I'll explain all those details and much more next. About 15 from the close.

Back to Christina now for the stocks that she's watching. Tell us what you see. Qualcomm, second quarter chip sales showed strong year over year growth, but shares look at that on your screen, down 8% after the maker of smartphone chips posted a lower than expected revenue forecast. Qualcomm's CFO admitted on the call yesterday that the direct impact of tariffs was, quote, difficult for us to predict. And switching gears, carrier global surging right now to the top of the S&P 500 right

now after the company posted Q1 results that beat estimates and hiked its full year guidance. This is an HVAC company and the CEO said they are quote, mitigating tariff exposure in part by increasing prices and added that all imports from Mexico are compliant with US trade agreements. Shares up 12%, Scott. All right. Christina, thank you very much. Christina Parchinovlo, still ahead. Block shares down more than 30% over the past three months and that's into earnings tonight.

We'll tell you the key metrics to watch for. Closing bell comes right back. We're now in the closing bell market zone. CNBC senior markets commentator Mike Santoli is here to break down these crucial moments of the trading day. Plus two earnings releases out in OT. We're watching the Kansas gala song block your to both set on air be and be Mackenzie we begin with you. The block heads into earnings with 2 big focal points for investors whether square can hold its ground against rivals like toast and clover and how cash apps credit products are performing now square is coming off a slower quarter

pressured by tough comps and FX headwinds but international markets now nearly 18% of volume, are a bright spot. And a recent SMB survey showed strong satisfaction, even as pricing sensitivity and tariff risks grow. Now on the consumer side, Cash App is leaning deeper into banking, rolling out after pay on its debit card

and expanding borrow, just as Venmo reported a 20% revenue jump, intensifying that peer-to-peer payments race. Still, block shares are down 31% this year. Morgan Stanley calls sentiment broadly bearish, but sees upside if Square rebounds. And Deutsche Bank is watching whether Cash App can deliver the growth that Block promised later this year.

Scott? Mackenzie, thank you. D, what about Airbnb? Well, learnings from Airbnb. Tonight it could offer a fresh read on the state of the consumer watch for a booking volume, summer travel trends, any signs that travelers are trading down or cutting back. Investors will also be looking for insight into global demand like China outbound travel, European bookings as a check on macro conditions, certainly here at home as well. Elsewhere in the online travel space, booking.com beat expectations for

its quarter, but says there's uncertainty ahead. So we will watch for any similar commentary from Airbnb. Shares are underwater by about 5% this year, down 20% over the past 12 months, Scott. All right, Dee, thank you very much. That's Giorgio Bosa. I got Mike Santoli with me now. Let's do three things.

First, Amazon Apple, then Jobs, then Berkshire. Look ahead. Amazon Apple, look, they got Berkshire. Look ahead. Amazon Apple, look, they got some of the benefit. Amazon certainly did from what Meta and Microsoft did last night. I think you have won back a little bit of the support of the mega caps. They led you down. They underperformed into Tariff Day, and now they're kind of coming back more. And the equal weighted S&Ps farther from its April 2nd level than the market cap weighted one is. So you kind of need them to play along

if we're gonna continue with that dynamic. What do you think expectations are after what we got yesterday? I would say for Amazon cloud they're higher just based on what Microsoft was able to tell us. In terms of Apple, I think it's a noisier story and it's right in the middle of its post pandemic valuation zone here.

Jobs report. Yeah, anything but outright weakness I think you can live with. Nobody's going to believe it's the real run rate. Obviously, everyone's waiting for the shoe to drop. The market's been doing well and taking advantage of the fact that you haven't seen alarming hard data reports, aside from the ISMs, which are kind of semi-soft. And so I think that's a net positive. But look, this market, it's very attentive

to the fact that we're into a resistance zone here. You get a very exuberant high midday driven by those mega caps, and you bled lower throughout the day. Breath is nothing special. So I think you have to be aware that some things you have to squint and say, okay, treasury yields are up, stocks didn't like it. VIX, it's been very reluctant to come down. People are very hedged up. Maybe that's a net positive going out a little bit, but it shows you, look, the VIX is priced for a percent and a half daily S&P move. We may get that. It may just be the half-life of a mini crash, but it's worth noting that we're up into an area where you probably need more genuine affirmative good news than just the lack of the worst case scenario.

What a time to have the Berkshire meeting. This stock has just crushed it. It's been incredible. The stock has crushed it. It's been incredible. The stock has crushed it. It's not been penalized for his conservatism. Buffett hasn't. They haven't made any bold moves. In theory, value should be working. It's only been intermittent.

Very interested to see whether, you know, Buffett conveys a sense of satisfaction with having all that dry powder or if he's itchy to do something with it. And of course, I'm sure he's going to have plenty to say in terms of characterizing what tariffs mean, what they can do. And, you know, we'll see how diplomatic he decides to be or not be about those things, because I think we have a sense of really what he really feels. Also, the insurance business is easy to overlook. It's the most important piece of Berkshire.

Insurance stocks have been great. We'll see if the happy times are still going to be here in that sector for a while. Good stuff. Thank you Mike. We'll look forward to Mike of course at the Berkshire meeting with Becky. Mike's gonna be on the air all day tomorrow. You'll see him in half time with a big interview with us as well. The bell is ringing and we have some huge earnings looming. Can't wait for that. I'll send it into OEC as Morgan is done.