Closing Bell - Closing Bell 05/21/25

Episode Date: May 21, 2025

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

And welcome to Closing Bell. I'm Mike Santoli in for Scott Wapner. Today this make or break hour begins with the indexes breaking lower especially in the last couple of hours under pressure from bonds with treasury yields pushing to month multi-month highs in some cases multi-year highs after a tepid auction of 20-year bonds. Here is your scorecard with 60 minutes to go in regulation. You see the yield moves right there the 10-year just under 4.6%. Look at the intraday of that 10-year note. You see it popping right there at 1 p.m. Eastern time.

That's when those 20-year treasury auction results did come out. Also spooked the stock market. The S&P 500 cracking beneath Monday's low. That was near 5,900. You see we're about 50 points below that right now, down about a percent and a half at the lows for the session. NASDAQ also down slightly outperforming the broader market.

Now that's thanks almost entirely to a bump in Alphabet shares following yesterday's AI showcase event by the company. Those shares still up a bit more than 3%, but on the other side, Apple shares. The biggest downside driver, both for the NASDAQ and the S&P afternoons, that OpenAI has acquired the firm

of former Apple design chief, Johnny Ive. We will bring you a report on that just moments from now. Apple shares down 2.5%. So plenty to cover as we begin with our talk of the tape. Can the economy handle these higher rates? And what do they mean for what had been a resounding rebound rally in stocks over the prior six weeks?

Here to address it all is city wealth CIO Kate Moore and welcome, thanks for coming by. Yeah, great to be here. So yeah, we have a lot to kick around here. First of all, does it make sense that the equity market is so sensitive in the moment to these moves in treasuries? And describe this feedback loop.

Look, it's been uncomfortable for me, I'd say, for the last couple of weeks. We've been neutral on equities for a while at this point. To see equities grind higher on no positive fundamental news and no positive macro news. We're at a time when revision ratios are negative. Yes, there was some strength in corporate earnings that's backward looking and frankly really concentrated in tech and comms and not a really kind of broad based earning story. And we're seeing these cracks in the economy and the consumer slowing down, obviously the forward challenges around policy, trade and tariffs.

And I was a little uncomfortable with the market moving higher on all of these kind of technical factors. Today feels like everyone's kind of waking up, that the breadth in the market is narrower, frankly, than many people wanted. I want to get to a place where I'm excited about talking about adding equity risk, but I'm just not there. The breadth in the market, interestingly,

depending on how you measure it, is actually one of the upside attributes, I thought, right? If you look at the technical stuff, it's like you look at the cumulative advance decline, you look at the percentage of stocks which is shot above some moving average, and everyone said, okay, that's escape velocity from the lows of April 7th. Why is that not the case? Well, I'm talking about the breath in earnings.

Oh, for the middles. Maybe I should have specified there. Perfect, yeah. So the breath in the price movement was really strong, but the breadth in earnings, especially forward earnings revisions, was really, really narrow. In fact, when you look at the aggregate earnings

revision ratios, they're pretty low, many more cuts than there were upgrades. At the same time, the only places you were seeing upgrades were in tech and comms. And that's what I'm really talking about, is that most of the earnings are coming from these really concentrated places, and yet the entire market was rallying as if we're going into an expansion.

I guess that's true, although it was a round trip, right? We started up here. You plunged over the course of seven weeks, almost 20 percent. I guess that the bull case had been whatever you think about where tariffs ultimately settle, we rolled back from the brink of the maximum pressure. You probably have to lower recession probabilities from what they would have been otherwise after the China deal. And even the bond markets seem to be saying, okay we can price out the imminent recession risk, the credit markets

are fine, and therefore stocks were just catching up to that view. Yeah, well this is how I'm putting it to our clients. We've been past this point of maximum tariff shock, but not anywhere close past the point of tariff pain. In fact, we haven't even really felt it yet. So yeah, we've had this incredible round trip in terms of risk assets. People have been more sanguine. They put risk back on.

But that wasn't broad based, right? We saw some segments of the investment community stay more on the sidelines or hold their allocations. And frankly, at CitiWealth, we've been on that camp too, where we've been more neutral equities, rotating into the higher quality parts of the equity market. What I will say is this, because we have not felt pain yet,

I'm still curious to see if people will look through what we know is gonna be an air pack pocket in terms of activity over the next couple of quarters and just say, 2026 might be okay, because we're not gonna have 40% tariffs across the board. Or, you know, are people gonna say, pocket in terms of activity over the next couple of quarters and just say 2026 might be okay because we're not going to have 40 percent tariffs across the board right or you know are people going to say hey look there's going to be more durable threat to the margins of U.S. corporates and so we want to stay really concentrated in the high free cash high quality companies yeah there has

been this maybe one line of thinking that says you kind of get a free pass here a little bit on the data you know for a couple of months however long it might get a free pass here a little bit on the data, you know, for a couple of months, however long it might be, where the stakes are a little bit lower because maybe you think tariffs are going to get better. The other piece of it though, and this has probably been the key, is that big money positioning was deeply negative in early April, probably was slow to rebuild exposure to whatever degree they're now chasing it or have chased it, we're left with a little bit less of a tailwind from that. Yeah, a little bit less of a tailwind.

People have re-rest. You know, there are three big segments, as we know. There's the institutional, there's kind of the long-term asset allocation folks who didn't make many changes, and there's retail who've been all over the map. And on the institutional side, you've seen kind of the fast money the hedge fund community move pretty regressive pretty aggressively but I will say the real money kind of the mutual fund investors or maybe picking up shares of stuff they liked when things got really beaten down but we're not aggressively adding to risk I mean

everyone is before all this tariff stuff started was asking the same question how sustainable is the US equity market outperformance after these last two years? I have to say, I think in the medium term, it is sustainable because of higher quality companies, but there was a lot of doubt, frankly, around allocations. People were not really willing to jump in and sort of back the truck up.

Right, and even aside from those mutual fund investors, you had another segment of retail which has never quit, which is the kind of high-frequency trader. Kate, stick with me here. We're following, of course, a developing story out of the White House. A high-stakes meeting kicking off over President Trump's mega-budget bill.

Amon Jabers is there with the details. Amon. Hey there, Mike. We're not gonna see this meeting on camera, but President Trump is expected to be meeting shortly with the House Freedom Caucus. That's the most conservative group of House members in the Republican conference and they are the most conservative fiscally as well. They're not happy with President Trump's big tax bill that's moving on Capitol Hill. They say they want deeper spending cuts. Take a look at

some of the items that they say they'd like to see before this bill is passed. They want those deeper spending cuts. They want faster phase-out of green energy tax credits, and they want faster implementation of work requirements for Medicaid. The president for his part has been pushing them to pass the bill anyway over their objections, and the White House released a statement earlier today saying that any failure to pass the president's bill would be the ultimate betrayal of President Trump. That's pretty tough stuff for these members who of course are all conservative Republicans and most of them in conservative Republican districts who all depend on the president's voters as well for their own political support.

So a high stakes meeting here, Mike, we'll let you know how it goes. All right. Appreciate it, Amy. We'll be back to you soon. So, Kate, you know how it goes. All right. Appreciate it, Amy. We'll be back to you soon. So, Kate, you know, it's not always the case that the markets are intently focused on every step of a process like this, but it seems like the bond market is right now. So how does that play through to everything at this point with rates where they are? Yeah.

Well, I'll tell you, one of the big debates we're having is like, what role does long duration fixed income play in a multi asset portfolio right now because traditionally you've had this awesome ballast against risk assets and it doesn't really feel like it's in play at this moment with all of the concerns around the budget with concerns around international investors and how much they want to allocate to us assets, you know, we're not sure that we're going to get the same protection from long duration as we have in the past

so the way it's coming back to my team into to our multi-asset portfolios is really kind of questioning how we hedge against some of the risks and some of the air pockets in the economy we were talking about a moment ago. Got it. All right, Kate, you're going to stay here. We also have a big move hitting Apple shares. Steve Kovach here with more on that. Yeah, Mike, this was all from opening eye acquiring Johnny Ive's company IO, which is a design firm

that he started after he left Apple. And what we're really seeing here is Johnny Ive poaching his best designers from Apple in order to take on the iPhone, which ironically he also helped create. And look, this is a rough look for Apple here because they lost Ive, the sole of Apple products about six years ago. And then we had Ive go on and poach his successor

and several others from that iconic design group with an Apple and now you have the best designers working for OpenAI on this mystery device. This has been a quiet theme by the way at Apple since Ive's departure, the design team kind of taking a backseat to Tim Cook's operations mindset Cook's tenure though of course has been a massive success the numbers tell the story there just look at the stock but what used to be core at Apple that innovative new hardware and designs those are largely seen to

have taken a backseat to that and you can see it in things like the vision Pro which came out last year and kind of missed the mark it wasn't really the blockbuster product so many people at Apple had hoped it would be. And then of course there's artificial intelligence where Apple is still behind especially after failing to deliver the Siri update this year. So now you have Johnny Ive here saying his entire career led him to this moment building an AI device for open AI and a potential iPhone disruptor mic. Yeah, really dramatic.

You could see it in the stock chart and really inflames a raw nerve that people have about Apple potentially being left behind in this world. Steve, thank you very much. We're gonna widen out the conversation. We'll bring in JP Morgan's Thomas Kennedy and HSBC's Max Kettner. Kate Moore is still here with us from Citi.

So Tom, I'll go to you on the kind of interplay of the federal budget with the bond market and how that seems to be pushing the narrative right now. It's sometimes kind of a tricky thing to say that this is about the fiscal structural situation, but now it seems like it might be. Yeah, there is magic around this 5% rate when you survey economists on Wall Street. Yes, then what's what's trend growth? That's the highest estimate you can come up with in a nominal sense

It's usually around 5% when you start to see interest rates come to that level You can't really grow your way out of the deficit anymore. So this becomes a problematic level now We can negotiate is at the front end the back end But as that back end is creeping up Mike We're getting to this level now where we have to think there'll be crowding out. And it's circling back to what Kate just said. The diversification benefits of long bonds,

core bonds is really being challenged here. And people like us, just everyone on Wall Street, when do we say the 60-40 portfolio is not quite the optimal portfolio anymore? And it's difficult, Mike, that's been 20 years where that's been the optimal one. What's a new diversifier? Is it real assets?

Is it real estate infrastructure gold? This is what we're all trying to figure out and optimize for investors. Absolutely, it's sort of the puzzle right now. And Max, it's happening at a time when that's a global debate that's happening. So you have folks who want to point to the dollar going down at the same time,

yields are going higher, US equities have pulling back here. Is it point to the dollar going down at the same time yields are going higher US equities of pulling back here Is it decisive to you that we're at some kind of inflection point max or do you feel as if you know? This is another one of these storms that will pass Yeah, I think you know that that too shall pass to be honest when I look at yield at the moment We've sort of described this a couple of months ago as the danger zone. So now our analysis where we're trying to figure out

what the level of yields is, particularly on the long end of the US Treasury curve, where really all asset class is starting to feel the pain. That to us is getting dangerously close. It's around 4.7% where the 10-year really at the moment is starting to really, really inflict some pain, not only on equities, but really on valuations across the board, whether that's equities, credit, EM, whether that's in high beta effects, so really across the board.

Of course, Mike, like you were saying, there's one difference now at the moment compared to previous episodes. In previous episodes, we would say, you know what, just be long the dollar. The dollar worked then as the ultimate hedge because as yields go higher, that of course helps the dollar go up as well. Right now, of course, that is very different because yields are going up for the wrong reason. It's term premium, it's the risk premium that is going up.

And as that is creeping up even more with these fiscal and debt sustainability concerns, frankly, I mean, it's extremely weird to say that, but one of the places, one of the very unlikely places where you actually can hide out at the moment is something like emerging market low-querades, right? Something like when you look at things like Brazil, you look at things like South Africa, even India bonds. They've been really, really well behaved

over the last sort of month, even year to date. Look at things like Brazil down the front end, two of the basis points since the start of the year, India down some 50 basis points, South Africa since we had the budget down some 60 basis points. All of that when actually the long end was steepening, not only selling off,

but also we had this massive bear steepening and the increase of the risk. So one of the unlikely places actually to hide out right now, not only gold, but actually also emerging market debt. That being said, Max, when it comes to equities here, you know, there is a line that says, you know,

the corporate sector is not particularly leveraged. There are rate sensitive parts of the stock market. They're not really the huge market cap weights necessarily. So how does that filter into your view of whether this is sort of a routine pullback in the S&P? I mean, I guess if you go into the danger zone for yields, maybe the equation changes a little bit, but we're not far from there, I suppose.

Yeah, Mike, well, we're not far from that, but let's be honest, that danger zone, higher yields starting to inflict pain onto risk assets is inherently self-defeating, because of course, once you start to hit a level that is too high for equities to stomach, what happens is equities go down, financial conditions tighten, people start having recession or growth concerns. What do you do when you've got growth concerns?

Yeah, you buy duration and yields go down again. So it's sort of a self-defeating concept. I really wouldn't be too concerned. I think this is some of these routine pullbacks. And these are exactly the sort of pullbacks that we've been waiting for in the last two weeks after that huge, huge rally. I would say also on the hard data, why is it such a routine pullback? On the hard data in the next couple of months, because we've got at least this sort of three-month truce between US and China on the trade side of things. I would say the next month or two, we've got at least this sort of three month truce between US and China on the trade side

of things. You know, I would say the next month or two, we've got this really this sort of free pass like you were describing it earlier, where any kind of data misses on the hard data side really can easily be dismissed as, well, that was before the deal was strike, so let's dismiss that. And if the data does meet expectations or even surpass consensus expectations, that's even better and then things actually can rally. And one last thing, why is it such a pretty ordinary pullback? At least on our measures, sentiment positioning is still quite like particularly systematic positioning.

CTAs haven't really re-leveraged an awful lot, and particularly things like volatility target funds and things like risk parity strategies, still with very, very light risk exposure. So to us, particularly, the systematic community can re-leverage quite a lot still. Yeah, it does seem like that's the holdout for the moment at least. Kate, I guess you also have to have a view on valuation

and how it breaks down because look, the AI trade has kind of inflated the growth rates of overall earnings, inflated the multiple of the market, but also kind of kept things on track in the absence of a pure macro cycle that we would be happy to embrace. Where does that stand right now? Yeah, so I'd say aggregate market multiples

are at uncomfortable levels in my view, right? And I don't use valuation as my only guide. I know some people get really triggered by certain levels. I will say like, where we sit right now in the US large cap space is a little uncomfortable given my expectations, as I was saying, for narrower earnings growth and frankly more challenges in the macro environment.

Now, at 22 times, we're at the top end of a historic range. The equity risk premium doesn't look super attractive at this point in time, given the risks that we're kind of outlining. And it makes me a little nervous. When it comes to more individual companies though and industries and secular themes, I'm less stressed about valuation

because I think some of them can grow into their multiple. The other thing I'm less stressed about valuation because I think some of them can grow into their multiple. The other thing I'm watching really closely is more and more earnings downgrades. I think we've seen a large number of downgrades, but the magnitude of those downgrades hasn't been great because we frankly don't know what end tariffs look like, what policy is going to look like. So as we get more of that information, I would expect to have like a stronger view on where multiples should be by the end of the year.

Some people get triggered by an absolute valuation level, and some people get triggered by people being triggered by valuation. I've seen both. Really quick, Tom, you mentioned that, okay, we have to kind of throw open the 60-40 idea and what's a good diversifier. Where do you come down on that in the moment right now? I think the era of globalization was a big part of why the 60-40 portfolio showed up. Inverse correlation stock to bond, that's what diversification looks like. It's been three plus years now. We have positive

rolling correlations stock to bonds. So we got to find a better diversifier. It can be gold. That looks to be the shining light of diversification right now, but that doesn't pay me an income. And I don't know really how to model it in this new world. So I think we need to look at other things. Things like real estate, things like infrastructure where the rents are going to nominally reset with inflation, might even have escalation clauses in them, and high interest rates are causing a supply shock

to this market. Aggregates starts in commercial real estate down 75% from the peak. In two or three years' time, we're gonna have a supply problem. So I think that has more diversification characteristics, particularly for long-term investors. All right, not as catchy as 60-40, but we'll figure it out.

Thank you very much, Kate, Tom, Max. Great to see you. We are at session lows, by the way. In the meantime, let's send it over to Christina Partsanevales for a look at the biggest names moving into the close. Christina. Well, let's, thanks Mike.

Let's start with United Health falling today after downgrade at HSBC to reduce from hold and cutting its price target to $270 from 490. So quite a slash there. There's a report also circulating today from the Guardian that United Health secretly paid nursing homes to avoid hospitalizing patients, which would have saved the company quote millions at a potential health risk, of course, to residents. United Health said in a statement to CNBC that the DOJ investigated the allegations and declined to pursue the matter. Nonetheless, you're still seeing shares down right now.

Palo Alto Network's falling also today after it missed on buy-side revenue estimates. It also missed gross margin expectations and missed its free cash flow estimates in its Q3 earnings report just last night. The company, like I mentioned, gross margins came in lower and it's having an outsized impact on this cybersecurity ETF bug, which is also down about 2%. Palo Alto down 7%. Mike. Christina, thank you. We are just getting started and we are all over this late day volatility The S&P is down one and two thirds percent to Dow off 820 up next Pimco Sonali peer tells us what she's seeing in the credit markets and where she thinks yields could be heading from here She'll join me at post 9 after this break. We are live in the New York Stock Exchange. You're watching closing bell on CNBC closing bell on CNBC.

Pull back in equities deepening this hour Dow is down almost 2% to the S&P off 1.7% NASDAQ almost as bad the Russell 2000 small cap is off almost 3% 2.9% and the story is yields they are continuing to rise this afternoon the 30 year again topping 5%. The 10-year rising further above 4.5%. And joining me here at Post9 with her fixed income outlook, PIMCO Managing Director and Portfolio Manager Sonali Peer. It's great to have you here, thank you. Thanks for having me.

So we do have a little bit of bond market drama to talk about. What is your read on this move, whether it is kind of a warning a message from the bond market about whatever is happening in the world in terms of the fiscal situation and policy or is it creating an opportunity or could it be both? I think it could be both right so I think the bond vigilantes are being quite clear here as we see spending deficit spending increasing and

all the while we're already above already above 100% debt to GDP. So clearly, from a backend perspective, as we think about the 30-year, there are concerns, and we're seeing term premium back in the market. That said, we do prefer the intermediate part of the curve. We think five to 10-year offers some value, and as we look at just bonds as a time where we say essentially bonds are back, right,

because the starting level of yields can produce a fair amount of income, and especially as we compare it to the equity volatility we've seen just even year to date, as well as cash which can come down if we start to see those cuts that the Fed is, we're expecting. It's interesting you mentioned bonds are back

and the long end is you're kind of getting paid to go out there at least for a long-term portfolio perspective because we just finished the conversation it's a familiar one about oh treasuries are no longer creating the kind of diversification that you would like for equities and therefore maybe you have to go elsewhere to kind of put together an efficient portfolio is that not the case you know I think the elsewhere is the question right so many are saying you know even though as we talk about US exceptionalism and the dollar, but where else is a much more difficult answer to give?

And I think the reality is that, you know, we are leaning into that curve steepener and, you know, highlighting that we think the 30-year still could weaken. All that said, you know, the starting level of yield, not only does it produce a good amount of income, it also can insulate from some level of either rates increasing or credit spreads widening just because you're starting at a good level and just the holding time makes it such that unless you're so precise on when to sell,

it's quite difficult. And can the economy, the real economy absorb where yields are right now, do you think? I think the answer is yes, but I think when you come look at the credit markets, you need to be selective, and especially as we go lower in quality. The more economically sensitive areas will be facing the most headwinds from higher rates

and if it lasts longer. Specifically, as we look at the Triple C cohort, not only do you see a lot of dispersion, so it's a target rich environment to be selective in, but it's also one where as interest expense ticks up and interest coverage drops below one, it does become difficult and the need to be selective is clear.

Broadly speaking, when you look at things like corporate credit spreads having been pretty tight, I mean they kind of wobbled a little bit to the upside in early April, but have come back in. Broadly speaking, does that mean that there's not much value there, or can you find it? Yeah, I think you need to be really disciplined on the approach, right? So, we particularly like right now high quality fixed income, so investment grade, agency mortgages, some areas of securitized mortgage market. As you go lower in quality, you know, picking up

that economic sensitivity means you just got to get paid for it and there that's where we got to be more selective because spreads are tight. Yes, the yield is attractive and it's part of why, you know, we haven't seen significant outflows even though we did see some through the April volatility, but that income is one where I think many investors are kind of flirting with problems potentially down the line. You mentioned you do still expect the Fed to be cutting.

I mean, I guess in theory that should maybe anchor rates across the curve a little bit from here. How much cutting, kind of when, what are they gonna be reacting to? Yeah, and so the Fed clearly shifted to that data dependence at the right time. It would be a really difficult environment to get forward guidance in.

And so while we have seen soft indicators show weakness, we haven't seen the hard data really show that yet. And yes, the hard data does tend to lag, but I think the Fed was going to wait through the summer, right, between the 90 days pause, actually going into effect, and then with the tariffs, and then kind of seeing a month or two of data. So likely we think the September meeting

is when the Fed is likely to cut, and probably we'll see a couple cuts. Bigger picture, I mean, you mentioned the bond vigilantes seem active again, and when we look at yields at the level they're at relative to the government's fiscal position and the projections how do we jive that with the fact that in the late 90s or 2000 we had a nominal surplus at the federal level and we were at five and a half percent on the 10s right in

other words it doesn't necessarily tie to a particular yield level now five and half was coming down from seven and you it seemed low at the time, but why is it, I guess, alarming if it is, when yields get up from where they are right now? I think also many in the market haven't seen that for so long. So you had to go back a few decades to share that. Not everyone's as old as I am. You're right. Yes.

I just more mean that the recency bias that's in the market and if we think about even some of the super secular secular themes you know around US exceptionalism around the US currency itself right I mean we could have a scenario where it continues to depreciate but it doesn't challenge the reserve status of the you know dollar. We just had our secular form and you know these were many of the topics we discussed. But part of why we still think that the steepener makes sense even though we have steepened, we continue to think that that 30 year is vulnerable

although we really do like fixing come over all. I guess the other answer is that the five and a half back then was on a base of much lower debt and it could easily be serviced as opposed to where we are right now. Snally, it's great to catch up with you. Thanks so much. Thank you.

All right. Up next, a vibe session. That's how Schwab's Kevin Gordon is characterizing where we are in the market right now. He'll explain after this quick break. Dow is down 875. Welcome back. Target shares slipping on some weak quarterly results. Courtney Reagan here with more on that move and what it might signal about the state of the consumer.

Courtney. Hi, Mike. Yes. So, Target CEO Brian Cornell told reporters he is, quote, not satisfied with the retailer's performance. Target missing the street's estimates for earnings, revenue, and comparable sales for the full year of the retailer also, lowering its expectations for sales and widening and lowering its earnings guidance range.

Now traffic of transactions fell too. Margins were actually compressed from higher markdowns and the higher cost of digital fulfillment. Now Valentine's Day and Easter did drive sales and the limited Kate Spade collaboration was the strongest in a decade. On a media call, Cornell called out, quote, ongoing pressure for discretionary categories. five consecutive months of declining consumer confidence, tariff uncertainty, and

the reaction to its updated DEI program all as drags on the quarter. But when I asked the retailer why then all the worry that consumers may feel or the so-called soft data about what could happen is, in fact, translating to lower sales and traffic at Target, but not necessarily for others. Target pointed only to skew towards more discretionary categories for the reasoning. Now, Target execs acknowledge there are also issues that are unique to them and potentially in their control to correct, which may not give the best read

on the U.S. consumer overall when you're looking at just the Target results isolated. I think that's just important to know. Yeah, for sure. Very tough to pull apart all the threads, Court. Thank you very much. Thanks. Well, so it is, or maybe is not, just a target problem.

Consumer sentiment has been weakening broadly in May. Joining me here at Post9 to discuss all that and what it means for markets, Charles Schwab, Senior Investment Strategist, Kevin Gordon. Kevin, good to see you. Hey, nice to see you, Mike. We've been living in the jaws of this divide

between hard and soft data for a while right now. Obviously, whether it's a target issue or not, it seems like there's not quite enough consumer growth to go around for everybody at the moment. How do you think that proceeds from here? Yeah, that's the tough part is that so far, it's really this voluntary budget constraint on the part of the consumer,

because the labor market has held in and has been relatively healthy year to date. Even within the retail space and consumer discretionary, I find it interesting in this earnings season, there hasn't been this common thread as Courtney was just talking about. It's not as if the entire discretionary sector has been suffering because of anything tariff related or because of anything fear of tariff related. So there has been maybe more idiosyncratic risk for certain companies and you can see it in the earnings transcripts.

So I think that's going to be a pretty dominant theme moving forward. Because certain companies had stronger or weaker footing going into this, I think that's probably going to continue to be a theme. And so far in the aggregate consumer sentiment data, especially if you look at the University of Michigan results that we got most recently from May, most of the weakness and most of the anxiety was tied more around inflation. That survey tends to be driven more about inflation, but even the labor components, they didn't materially weaken from the prior months.

I think it's a good sign in the sense that labor is still holding, but bad sign for the companies that do, you know, depend a little bit more on the discretionary spend. Yeah, the perception of future labor prospects is one of the aspects of that Michigan survey. I mean, the way it matters most immediately to investors is what is it gonna mean for, you know, overall earnings, looking in the second half of the year,

and just the general risk reward for stocks right now as they're getting pinched by this move higher in yields? Yeah, I think, well, the move today is interesting, and I think it really speaks to the impact from the rate of change of yields versus just that drift higher, because yields were actually drifting higher this morning, even as the S&P and the NASDAQ and the NASDAQ 100 were also getting close to flat, even though the advanced decline statistics were pretty brutal. But I think it speaks to when you got that 20 year auction result and it was pretty bad,

then yield started to spike, that's when you got the big drawdown in equities and we're still suffering from that, you know, last I checked. So it speaks to me, even if you zoom this out over the past few years, the 10 year yield is broadly unchanged over the past couple years. Or even a couple years, yeah. But if you take it back a couple years, I mean the S&P is up over the past couple years. So even a couple years. If you take it back a couple years, the S&P is up over the past couple years.

So if this was a yields level problem, that wouldn't be the case, where the S&P was up, yet the 10-year yield was the same as it was a couple of years ago. So I think the second part and the add-on to that is probably just the reasoning for it. It's the why behind the move in the 10 years. So if it's driven by inflation concerns that are tied to the budget deficit that are then tied to the potential path of the dollar, I think that's probably the case today, then that's more of a worry.

Yeah, I always like to point out, look, at various times in the past few years, it seemed as if 4% was a scary level. You had to kind of test it, see if the economy hung in there, markets made their peace with those levels. And then you have a stock market, which arguably coming into this week,

was probably gonna be in search of an excuse to pull back a little bit. So is that all it is, or did the rally overshoot to the upside? Well that's the thing is that, right at this point, you had just gotten into a lot of the sentiment metrics we track on an aggregate composite basis,

compiling both attitudinal and behavioral. A lot of those had gotten deeply washed out, and then you launched right back into right near excessive optimism territory in a really short period of time. This is literally just coming, and the downgrade for Moody's is just coming at a time when you were looking for or waiting for that negative catalyst to jolt you in the other direction, and we got it almost at that perfect timing. It's a funny thing that happens with sentiment, but it does tend to be a pretty good contrarian tell. It's not a good market timing tool,

but it lets you know at least when stocks become a little bit more vulnerable to any sort of negative catalysts. I would argue that we're sort of in that moment again right now. Has the composition of the rally or any characteristics of the market kind of revealed themselves as, OK, this is a thematic you know thing that we should latch on to or fade? I do think if you zoom out and at least take it year to date because there are really two

big phases of the drawdown. I mean as you know the first part was everything DeepSeek and AI, CapEx related. Second part was obviously Liberation Day and Tera related. But if you go back to the beginning of the year and you look at at least on an industry basis, so if you break it down one more level from a sector from the 11 sectors in the S&P, there has still been weakness in textiles and houseware, home goods and things like air freight and logistics. So I do think that the story under the surface of the market and what is being told, not just at the headline level, but what is being told at the

industry level is consistent with where we are in terms of the potential trajectory of the economy. If you don't see tariff rates come down meaningfully and if those aren't part of the negotiations and so-called deals with other countries, then I think there are more deleterious impacts for the economy down the road. But we're just at least now back to, or at least the market's back to, trying to price in what the effects are over time versus having to deal with that all at once liberation day announcement where it is, you know, probably more of a pull forward at the time of the recession risk. Now you push that out just a little bit. Meanwhile, you're getting kind of fiscal expansion, maybe with this budget at the same time, it's pushing yields to where they are. So it's tighter and looser at the same time. Right. Kevin, good to see you. Great to see you, Mike. Thank you very much. All right. Up next, we are tracking the biggest movers as we head into the close Christina standing by with those

Well Mike's we have shares of a GPU rental powerhouse jumping 16% after investors lined up to lend billions and a tech giant CEO Blasting us export controls as a failure while speaking in Taiwan. No stories next Speaking in Taiwan, no stories next. Sixteen minutes until the closing bell index is pulling up slightly off the loads of the day. Let's get back to Christina for a look at the key stocks to watch. Let's start with Nvidia because Nvidia CEO Jensen Wong is what everybody wants to talk about calling US chip restrictions on China a complete, quote, failure at a press conference in Taiwan.

Jensen Wong said these controls have backfired, pushing Chinese companies towards domestic suppliers like Huawei instead. You can see Nvidia shares down with the overall market, it was down 2% right now. But one name that isn't is CoreWeave. Those shares are popping 16% following news that investors are showing confidence

in the GPU rental company, strong confidence I should say, because the firm announced it has priced about $2 billion of senior notes due in 2030, with Barron's reporting that the deal size was actually increased by $500 million from initial plans and was five times oversubscribed, which really just indicates strong demand. Adding to that positive momentum, a big price target upgrade from Citigroup to from $43 to 94. They still maintain a neutral rating. And so you can see shares up quite a bit in this down market.

Mike? Yeah. And up like 200% since the IPO three weeks ago. It's quite a move. 160. Yeah. Yeah. All right.

Christina, thank you. Still ahead, Bitcoin touching fresh all time highs today. We will drill down on that move. And later, top technician Jeff DeGraff tells us what he's watching as we close out today's volatile session. Closing bell, be right back. Up next, we'll have much more on today's late day sell off. You see the Dow down 770 right now.

Plus, we'll run you through what to watch when Snowflake reports at the top of the hour the market zone is next We are now in the closing bell market zone Kate Rooney is looking ahead to Snowflake results after the bell Taneya McKeel on what is Bitcoin hitting an all-time high today and Renaissance macros Jeff DeGraff on today's big Market move Kate we will begin with you Snowflake kind of at the top end of a one year range to stock. Yeah, Mike, it's up about 15% or so far this year. So snowflake could give investors a little bit of a glimpse in a lens into the AI spending landscape out there. The data storage company expected to see a jump in earnings going to be the estimate at least 21 per share. That's on revenue of roughly a billion dollars. That is the street expectation product revenue. It's a key segment within that.

That's expected to grow about 22% year over year. Snowflake has benefited from enterprises spending big right now on AI. Executive commentary around that and the growth trajectory, that will really be key and the company has expanded some of its AI offerings by hosting both names like Anthropic and OpenAI. Outlook and commentary, that is going to be important.

It'll be key amid what may be an uncertain economic environment and backdrop. CEO Sridhar Ramaswamy did hit the one-year mark in his role as CEO back in February. That commentary is going to be key. Stock, as I mentioned, up about 14% or so, slightly lower ahead of our needs. Mike, back to you. right along with the market. Thank you, Kate. Taneya, another record for Bitcoin. What's behind that?

Yeah, Bitcoin, a little bit off its highs, but it did rise to a new record over $109,800 this morning, Mike. And it's been really a steady climb to the new all-time highs this month, and that's thanks to growing interest on Wall Street and from corporates. There have been strong inflows into Bitcoin ETFs with just two days of outflows in May,

and they've been pretty minimal. And Bitcoin held by public companies is still rising, not to mention this week, you know, the Senate voted to advance what would be our first official crypto legislation and Coinbase joining the S&P 500. Coinbase and strategy even still under pressure, however, with the broader market. Now, at one point, Bitcoin did also give back all of its earlier gains. That's because it can act like a risk asset and a safe haven. Today, the combination of rising yields and deficit fears push traders out of volatile assets. So even if you see Bitcoin as a hedge against bad fiscal policy

long term, tightening financial conditions dominate near term. That said bitcoin does seem to be coming back now possibly finishing in the green here. Mike. Yeah obviously it's owned by a lot of the same folks that own a lot of the kind of fast moving tech stocks so it does react that way. Thank you very much Taneya. Jeff great to have you to weigh in here talk about I guess where this market had found itself at the start of this week. I think you basically thought that the rally had sort of won back the benefit of the doubt for the bulls. How does today's action play into that? I think it's pretty typical, Mike.

I think, you know, given the overbought condition, and that really for us just developed over the last, I'd say, five trading days, that, you know, you'll get a consolidation. I think it's really important that historically, after we get some of these escape velocity type of moves, that most of the overbought conditions get burned off through time, not price. So I wouldn't look for something really, really deep or steep in terms of the correction. I think it's probably more of a yawner, frankly.

You'll have days like today, but I think there are gonna be one-offs. And I think there's a ton of support at 5,700. In fact, I don't even think we can get there. I think that's too deep, probably. But I do think that we'll consolidate, we'll burn off some of that enthusiasm. And this is the place where we're gonna start separating

the wheat from the chaff, in our view, from just everything goes up in that off the bottom type of move to now really establishing leadership. And where would that take you in terms of what is now showing itself to be leadership? Yeah, you know, it's always a hodgepodge. We're looking for relative strength breakouts. We're looking for things at new relative strength highs. Aerospace and defense is certainly in that.

That's global in nature. In fact, most of these are global in nature. I can tell you where it's not is semiconductors. I think that's one of the beta areas that has rallied really, really hard. A lot of those are what we call optimal exits. Those are overbought conditions and downtrends. So I think those are vulnerable right here. Some of the security software names like CrowdStrike,

like Snowflake, et cetera. Those actually look pretty interesting coming out of this. Maybe a little bit of a head scratcher would be some of the apparel retail name, the TJ Maxx's of the world and the like, actually look pretty good. So, it's hard to create or weave a narrative throughout all this and it'll become clear

in the next several weeks and months, I'm sure. But right now, what we're really focusing clients on is, hey, pay attention to the message of the tape in terms of where the relative strength is, where the relative leadership is, where those are at new highs, because those are gonna be the names that drive the next move for the remainder of the year.

And then in terms of the influence of treasury yields on all this, I know that you know that's been one of the areas that it seems like it could maybe complicate the picture. Yeah, look all the things that we look at and we look at a lot of things, I would say the the yield story is the one that just isn't quite fitting as neatly into its place as we'd like it to, particularly on the long end on the 30 year. The 10 year still is below 475, at least last tight look, maybe it's above that right now.

But, you know. Yeah, it's below 460, yeah. Okay, thank goodness. So, the 30 year, you know, peaking at set above five is really a breakout, and that looks distinctly different than the twos, it looks distinctly different than the tens. But I think, you know, a couple important things around this, it's easy to say there's a level and once we get through that level it's a disaster. The market doesn't really work like

that. What we're really looking for is, hey, this is now an uptrend, now let's look for signs that this is having an impact on the aggregate demand of the economy. Now, there's no doubt that that's happening in housing, we can see that, but it's not happening in say delinquencies through maybe the data, but not through the the stock performance of say the banks. It's not happening in even some of the mortgage banks versus say the insurers. So we look for kind of symptoms of this tighter rate environment having a detrimental impact on the parts of the economy as measured through the stock market that we would expect. The good news is we really don't see much of that.

So, 475 is certainly a level that starts getting our palms sweating, but I'm not seeing the other residual evidence that that's really a problem yet. But that's one thing that we're watching. Yeah, it seems like the damage is sort of contained in pockets for now. We'll see how it goes from here. Jeff, thanks very much. Appreciate the time today. As we head into the close, about 30 seconds to go, we are going to have a decidedly down day. Dow Industrials off 1.9%.

The S&P 500 on track to lose more than a percent and a half. It's the first 1% or greater down day in the S&P in exactly one month. The volatility index up 2 points, popped back above 20. So the market is a little bit agitated by that yield move, which has 30 years above 5%. That's going to do it for Tozien Bell. We'll send you into overtime with John Forbes.