Closing Bell - Closing Bell 10/30/23

Episode Date: October 30, 2023

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.

Welcome to Closing Bell. I'm Scott Wapner, live from Post 9, right here at the New York Stock Exchange. This make-or-break hour begins with a Monday rally for the majors as a critical week gets rolling. The next several days likely deciding where your money goes from here, whether a late-year rally is still in the cards. The Fed, Apple, jobs all in focus, and more than that, too. In the meantime, your scorecard with 60 minutes to go and regulation looks like that. Decent bounce for almost everything but the small caps today. NASDAQ down three straight weeks, getting a boost from its biggest players like Microsoft and Meta. Tesla, though, still down close to 5% in today's session.

That's something to keep an eye on. We, of course, will. Overall, communication services, the strongest of the sectors. Only energy giving some back today. Still a touch defensive. Consumer staple stocks performing pretty well today. Interest rates ahead of tomorrow's Fed meeting, largely holding firm. The 10-year, around 4.9%. There you go. Just shy of that. It does take us to our talk of the tape. Does the

biggest stock in the market now hold the biggest key to the market's next move? We are talking Apple, of course, holding a Mac event tonight reports earnings on Thursday the stock dicey lately as investors question the strength of the new iPhone and what's really happening on the ground in China we'll ask Morgan Stanley's Eric Woodring he covers the stock and we will do that he's here as you can see we'll do that in just a moment in the meantime we have breaking news to Steve leaseman Steve what do you have? Scott, the U.S. Treasury announcing its borrowing needs for the October to December quarter, saying they will be $776 billion. A couple of contexts, a little context on that.

It's $76 billion below the prior estimate made in July. However, it is record borrowing still for that quarter. The October-December quarter was held by revenues from deferred taxes in places like California and the IRS from some natural disasters that allowed them to defer taxes, and now they're being paid. It is offset, however, by slightly higher spending as well. On to the next quarter, the first estimate for the January to March quarter coming in at $816 billion, maybe a bit above some of the estimates I've seen on the street. That is record borrowing for the quarter.

However, the Treasury is going to maintain a balance of $715 billion, a cash balance for both quarters. That's a bit higher than I thought. So that ends up increasing the amount the Treasury needs to borrow. We have seen some estimates of $700 billion cash balance. The Treasury maybe being a little more prudent given the way the politics are going, keeping a slightly higher cash balance. So $776 billion, Scott, for the next quarter and then for the first quarter of next year, $816 billion. Both are records. The first one down a little bit from the prior estimate.

Yeah, Bondule's not moving all that much on that, Steve. It is one of two big events, though, this week from Treasury. Right. And the biggie comes on Wednesday. And boy, there are so many investors who are focused on this refunding announcement from the Treasury, probably unlike any other announcement that they've made. Yeah, the two announcements go in concert, Scott. This is how much. And then the next bit, which the market's really going to be focused in on, is how. At what tenors will the Treasury be borrowing? How much in bills? How much in coupons? What tenors in the coupons?

Two, five, three, seven, or ten? Take your pick. 20 and 30, obviously, as well, going to be in the mix. So the market's very interested in that. And we're in this phase right now where essentially the bond market and the yield on the 10 year is leading the stock market. And so there is some good news in this. We'll see what happens to revenue here, Scott. One of the puzzles, economic puzzles out there is why has growth been so strong, but tax revenue been so weak? Maybe it's going to come around and we will get some surprises on tax revenue.

It won't change the overall picture, however, which is the government needs to borrow an awful lot and borrow in record amounts. Yeah. Steve, thank you. Appreciate that very much. So maybe no big surprises. The market's near the highs of the day. Mike Santoli is with us right now. As I said, the issuance announcement on Wednesday is the one where a lot of folks are focused on to the point where on halftime today, I said to our investment committee, OK, big events this week, jobs report, Fed meeting, Apple. What's the biggest one to you? They said not on that list. It's the issuance announcement because that's gotten people all worked up because of what it's done to bond yields. Right, because from three months ago, people have learned the lesson that there's the capacity of this announcement when there's a lot of issuance at the longer end of the curve.

Basically, the Fed, the Treasury, rather, attempting to force a lot of folks to buy duration. That was what hobbled the market. That's what got Treasury yields spring loaded. I will point out three months ago, this equivalent announcement came in a quarter of a trillion dollars above the prior estimate. So that was the upside surprise in overall supply in July. That coincided with the low in yields and the move we've had higher. So I would characterize today's news with regard to the equity rally as a bullet dodged. You know, we got ourselves worked up.

We didn't have an immediate need to be incrementally worried. And now we'll see if this is more than just a bounce. What we're doing today in stocks is essentially mopping up the mess left by Thursday and Friday. We're not even back to Wednesday's highs. But what do you think today is about in the real sense? I mean, you look at what's working. I said small caps are, you know, they're lagging. They're trying to pick up a little bit of steam.

You've got, you know, big, widely held stocks like Tesla are lagging and lagging dramatically. But what's this about? I think it's just about we pulled the rubber band pretty tight. And, you know, Fridays have been this occasion since the unrest in the Middle East, since the conflict started, to just get anxious ahead of a weekend. So we did see volatility bid. Look, we closed near yet another what could be support level, right? This area around 4,100. So it's a little bit of a make or break, you know, we're oversold. How much more negative do you want to get? Also, we have no real earnings reports today. So all the stuff that got the

market unsettled coming in, really not a lot of macro aside from the Treasury announcement. So I think it's very short term. You have to look at it in a narrow lens. And as I said, we're not back to Wednesday's close. Well, it's good to have you here to put this into context, what Leisman was reporting and what this market activity is all about. We'll see in a little bit when you come back later on in the show. In the meantime, let's bring in Ed Yardeni of Yardeni Research and Emily Rowland of John Hancock Investment Management. It's great to have you both with us. Ed, I'll begin with you because your note caught my eye today. For somebody who's been so positive on the market, S&P not likely to regain what's been lost since July over the rest of the year.

Still think a rally is possible. But between now and Thanksgiving, easier to see downside given the developments in the Middle East and jitteriness in the bond market. Explain. Well, the Middle East situation is horrible and it certainly has the potential to become a regional war. We've already seen the United States attack some facilities over in Syria and Iraq. And so it's not over by a long shot. And unlike previous crises like these, this one may last a while. So I think we are going to continue to have uncertainty with regards to how that plays out. Now, of course, if there is some disturbance to the flow of oil, the Saudis will probably produce more unless they get involved in some ways in this whole thing.

But meanwhile, the jitteriness that we're continuing to see in the bond market over the supply, I think we'll continue to hang over the market. But I do think we'll have a year end rally. And I was thinking 4600 by year end, which is where we were back in the summer. I think maybe we'll get to 4400. Well, I think a lot of people would take that in terms of the thing I was talking to Mike Santoli about biggest events of the week, Treasury, obviously, on Wednesday, Fed, Apple jobs, Which one carries the day to you? Well, I think the market is going to be focusing on the Treasury refunding announcement, how much will be in the various kind of securities. That's what the bond market is concerned about.

And these days, the stock market has to be concerned about what the bond market is concerned about. So that's where we are at this point. I think in terms of the Fed policymaking, Powell is likely to say on Wednesday that he remained fairly hawkish. I mean, it was only October 19th that he was interviewed and presented a fairly hawkish outlook on interest rates, higher for longer. But, you know, we've we've known this for a while, so I don't know that the press conference is going to matter that much. Yeah. Emily, I mean, we not we need a lot of things to go right. I think it's fair to say maybe this announcement that Steve brought us at the very top of our program is step one.

No great surprises. Stocks near the highs of the day, as I suggested. You get the beginning of the Fed meeting and then some key events, Apple and Jobs. Are you sanguine on the markets between now and the end of the year or more cautious? Yeah, I think markets, frankly, could continue to chop around here as we approach the end of the year. You know, on one hand, we're just really not seeing the type of liquidity event that we would normally see in the face of this much Fed tightening in such a short amount of time. But on the other hand, it's hard to identify a catalyst for the sort of explosive earnings growth that we've seen over the last couple of years. So I think that there's support there for higher quality areas of the market. I think as long as the labor market

dynamics remain OK, as long as the consumer continues to spend, as long as earnings are decent, I think markets could continue to see some support here. But again, I think it's tough to imagine an environment where you're going to see a lot of multiple expansion here, especially given the fact that 12 percent earnings growth is baked into the equation for the S&P 500 next year, which I think is overly optimistic given where we are in the economic cycle. But, you know, Emily, it's interesting. You say earnings have been decent, that maybe the difference maker this earnings period versus before, good earnings reports haven't exactly been rewarded this time like they have in the past. Does Apple help change

that this week? Yeah, I mean, potentially. And we've seen a lot of divergence across the earnings results for the Magnificent Seven here, you know, and I think it's an interesting point. We're seeing a 77 percent beat rate, which is solid. And on average, companies are surprising by 7.7 percent. But that's just not being rewarded. In fact, we're seeing stock prices on average falling around earnings reports. And I think, you know, the market is potentially sniffing out the fact that earnings estimates are overly optimistic. You look at the fourth quarter and estimates are being trimmed. They had been 8 percent. Now markets are analysts are looking for 5 percent. And I think that's one reason that you've seen such concentration in terms of market performance. I think, you know, tech, we got a lot out of tech

this year. We saw a massive rally to start the year in technology companies. So perhaps they sort of end up chopping around. Maybe we don't get a ton from them over the next couple of months as the year concludes. But on a relative basis, we prefer owning tech. It's higher quality, great balance sheets, good profitability over more cyclical parts of the market or unprofitable companies. That's where we would avoid chasing returns there. Ed, is the tech trade intact or is it troubled? I don't think it's troubled. I think it's an opportunity, quite honestly. By the way, on your question of what's the most important event this week,

it may actually turn out to be on Thursday when we have productivity reported for the third quarter. We had a very strong productivity reported for the third quarter. We had a very strong productivity number in the second quarter with the strength of real GDP. I think we could have another one in the third quarter. And I think we may very well be starting to see a resumption of the productivity growth boom that I think is ahead of us. And that can only happen if companies use a lot of technology to solve one of their biggest problems right now, which is a shortage of skilled workers. All right. Well, both of you point out the cross currents that we have to navigate this week. It's going to be a busy and an interesting one.

And we're starting off with a bang, at least on this Monday. Thank you so much. We'll talk to you both soon. Ed Yardeni, Emily Rowland. Now let's turn to Morgan Stanley's Eric Woodring. He's here, as I showed you before, with Apple's earnings top of mind for investors this week. It's good to see you. Thanks for being patient as we got through some breaking news and kicked around this hot market on this Monday. But you seem to underscore very well the sentiment around the name. You reiterate your outperform, but you also admit that you're tactically cautious.

How do you separate both? So, again, if we take a kind of page from the guest prior, Apple is still a high-quality company, a name that I'd want to bet on long-term. If I have duration on my side, I say at $169, I feel comfortable being overweight. But when we think about earnings on Thursday and the potential for Apple to guide the December quarter slightly below where consensus numbers are. Again, is it thesis changing? No, but tactically, given what we've talked about in terms of the setup for tech, this

earnings cycle, I think it makes me a little bit more cautious. Well, let me go a little deeper on that then. Why wouldn't it be thesis changing if I say, OK, new phone, we've had this upgrade cycle prolonged because of covid. Now they come out with the hot new phone, the latest and the greatest going into the most important quarter of the year when you have a new phone. And if it doesn't live up to expectations, why doesn't that change the thesis where the iPhone is still everything? So I think this actually is very reminiscent of the iPhone 13 cycle for us. If you go back two years, what happened in the iPhone 13 was there were production shortages,

I should say, component shortages for the Pro and the Pro Max. So we came into September quarter earnings, Apple's December quarter guidance disappointed. Fast forward three months, what we learned is that the component shortages that were impacting the December quarter actually loosened a bit. Apple was able to post upside to the December quarter

and guide to a stronger March, stronger than seasonal March quarter. This feels very similar. Again, the shortfall in the December quarter and guide to a stronger March, stronger than seasonal March quarter. This feels very similar. Again, the shortfall in the December quarter this year is not a product of weaker demand. We think it's a result of supply component constraints, mainly with the iPhone 15 Pro Max, where there's just not enough devices that can be built in the December quarter. That means some of that demand gets pushed forward. If that is indeed the same setup as the iPhone 13 cycle, what you get is a below below seasonal December quarter,

better than seasonal March quarter, which makes a tough, tough setup right now. But ultimately, in the big picture, it doesn't actually change our view. It is more supply driven than demand. I'm just wondering when it comes to demand, how you're thinking about China, you know, because we're talking 20 percent of revenues out of China. Now we have these headlines, reports, however you want to characterize them, suggesting that Huawei is taking share in China from Apple, which would be a demand issue, not necessarily a supply issue. Yeah. Yeah. No. And I think China, the commentary is fair. We have China units down this year. Again, Apple was the biggest beneficiary of Huawei going away. It does make sense to think of Apple then being in the crosshairs of potentially losing share. So we do think iPhone shipments are down in China right now this cycle. Again,

is China broken as an end market for Apple? No, but there's more competition, more risk to share gains this year. Again, directionally, I think it's down. The offset to that would be actually the U.S. and EMEA and emerging markets ex-China actually look a little bit better than we expected. So the world is a big place. China matters a lot. The rest of the world theoretically does matter more than just China. What about the stock itself? It's 170, almost 170 even. People I talked to recently on this program and the other one are like, chart doesn't look good. The chart just, this stock hasn't traded well. So it's almost a rarity when you come into a report where Apple shares haven't traded well, usually runs up into the

number. And then maybe the risk is it sells off on the other side. It's sell the news. Not this time. No, it's been an interesting year. Again, we saw a high of almost 200 earlier this summer, let's call it. Stock's now down to 170. I think last time I was on with you, I talked about 160 being kind of that level where I would be more comfortable coming on here and saying, Scott, let's get more aggressive. What I want to do is kind of get September quarter earnings out of the way. Again, I think the September quarter is okay. It's the December quarter guide that I'm concerned about. But get earnings out of the way, see where the stock settles, and go from there. But I do agree that, call it over the last four months, Apple actually

hasn't traded as prolifically as it had, obviously, in the first half of the month. Still, year to date, it's my second best performer after Dell. But that guide is going to have the utmost focus, especially after last week's mega cap reports and some of the guides were Dell. But that guide is going to have the utmost focus, especially after last week's mega cap reports and some of the guides were questioned. Is that risk to get you to the 160, perhaps? Yes, exactly. 10 buck decline? That's what I'm looking for. Do I think that we're going to see a $10 decline in the stock immediately after the earnings report? No. But what it does is it shapes up for the potential negative catalyst event as we move further through the year. Remember, the DOJ Google trial is expected to end or at least we're expected to get headlines in the middle of December.

If that's the case, there is a bit of a negative catalyst calendar here between earnings and mid-December. That makes me a little bit, again, cautious into the print. But when I take a step back, again, the Google DOJ trial matters. But earnings to me is a short blip in this scheme of things back, again, the Google DOJ trial matters, but earnings to me is a short blip in this scheme of things. And again, more supply driven than demand. Apple's been sort of left out of the AI narrative, right? It's been about everybody else, but it. Does that change anytime soon? And if so, how? Well, I don't think it changes soon, but I do think it changes. Again, the iPhone is kind of

the ultimate device that we keep on our person. It has all of our details, whether that's financial detail, location detail. Again, safe, secure, that is Apple's way. But what that ultimately does is it gives Apple a ton of data to use. And to me, Siri as the personal assistant, the ultimate personal assistant, makes a ton of sense. Now, there's been reports that Apple's investing in AI. We believe behind the scenes they are clearly investing in AI. We know they're using some of that technology, for example, for smart dictation, better autocorrect. But that's not the end-all be-all. To me, the end in a new bill today talking about AI regulation. I think Apple wants to understand what regulation falls before they make a big bet. Ultimately, that can impact the monetization of that technology. How much patience, if you want to use that word, does the street give it to come with something substantive, whether it's Siri or

otherwise, just because, you know, tired of hearing about all of these other companies that appear to be further ahead in the monetization of AI. And now we need something from Tim Cook. Yeah, I think what we're going to wait for really is, and I know the market might not want to hear this, but is WWDC next summer. That's their big software kind of developer kickoff. Gen AI is very software driven. Again, you need hardware for it. But ultimately, I think that could be the next event where we really get a showcasing of the potential capabilities Apple's hardware can provide all of us as consumers. Until then, it would have to be a one-off special event. And you don't feel like

there's any deal-related stuff that could happen on the AI front just organically. It's not going to be good enough. You need to go out and do something splashy. It's obviously not the Apple way. We all know that. But at some point, you change your ways if you need to in changing times. No, I don't disagree with that. But I don't think you're going to go outside the Apple kind of ecosystem to go acquire something again. But to be specific, Apple does acquire smaller businesses. So over time, those have become roll ups that they have enabled or use the technology to enable their strategy going forward. Sure, but when you do your biggest deal ever is Beats. Correct. You know where I'm going. I'm on the same page as you. Exactly. I don't think we're going to get much bigger than that, unfortunately. It's going to be all organic. Lastly, speaking of bigger than

that, the current buyback is probably the biggest out there. Where does that go from here? And does that provide a floor of sorts as well? A bit. I think that's right. I mean, $20 billion a quarter, we've now seen that for several years, ever since the 2018 kind of tax reform. It's impressive. Again, there are quarters where it slows, like last quarter, where the stock actually edged up a bit higher. But I would say Apple is going to be in the market for $20 billion a quarter for the foreseeable future. They generate enough cash to be able to utilize that cash, eventually get to net cash neutral over time, while still buying back, again, call it $80 billion a year, $20 billion a quarter. All right. Well, it's going to be an exciting week. I

appreciate you being here. Thank you, Scott. Set us up for it. Eric Woodring of Morgan Stanley. Let's get to our question of the day. We want to know which event this week do you think is more important for the near-term direction of stocks? The Fed decision, Apple earnings, the job support. Maybe there should be another for something from the Treasury. Head to at CNBC closing bell on X to vote. The results coming up a little later on in our hour. We're just getting started and we could have a big final stretch here because the stock market is near the highs of the day. We're almost up 600 now on the Dow, right at 33,000. Up next, Sam Bankman-Fried. He's back on the stand. His cross-examination starting just a few hours ago. We've got a live report from outside the courthouse a few blocks from here. We're live from the New York Stock Exchange. You're watching Closing Bell

on CNBC. About 35 minutes left in this trading day. Let's get a check on some top stocks to watch now from Christina Partsinovalos. Hi, Christina. Hi, Scott. Well, shares of data storage from Western Digital are popping about 7% right now. The company posted better than expected Q1 results, but it also announced plans to split the company into two separate entities to find value, something activist investor Elliott Management had pushed for just over the last year and a half. Western Digital will now be two separate units

that focus on flash memory and hard drive storage. Again, stock is up almost 8% at this point. Shares of silicon carbide producer OnSemi, though, plunging in the opposite direction, down 19% on a weak Q4 guidance. Management is turning a little bit more cautious because of weakness in EV demand, especially from Europe and higher interest rates. The company having its worst day since March 2020, and that may not bode well for Wolfspeed earnings that are out after the bow. Scott. All right, Christina, thank you. We'll talk in just a bit. Meantime, we're all over the latest developments in the Sam Bankman Freed trial as he takes the stand yet again today. Kate Rooney

outside the courthouse, a few blocks from here with the very latest for us. Kate. Hi, Scott. So the past couple hours in that courtroom have been all about questioning Sam Bankman Freed's credibility. We've seen cross-examination by the prosecution inside. We're in a quick break, but they've been trying to show some inconsistencies, pointing out times where Bankman Freed was saying one thing behind closed doors and then painting a completely different picture. Publicly, government attorneys are presenting him with a lot of old tweets. They're talking about a handful of media interviews. There was one example, an interview in which I spoke to Bankman Freed, and he told me that

his hedge fund at the time was a, quote, neutral piece of market infrastructure. In recent weeks, we have learned that Alameda was actually front-running trades, had a $65 billion line of credit, and then the ability to go negative banquet free. It says he only vaguely remembers telling me that. We've heard that about a lot of media interviews. He said that he didn't remember certain things that he said in the press. None of that about his hedge fund that I mentioned was disclosed publicly. He was saying the opposite to many reporters and on Twitter as well. They went through other media interviews. He said he just plainly did not remember. So they brought up Bloomberg, FT. So that brought some tension into the courtroom. They

also brought up the fact that he testified under oath to Congress. The jury has seen e-mails as well. And then, Scott, there was this, you could call it a cringeworthy kind of awkward moment. He was directly asked about private messages with a journalist. He called some crypto customers, I will paraphrase this, but dumb mother effers. He admitted that he said that, and then they had him read another part of the message where he said F regulators, to put it lightly. But that was a key moment in the courtroom today. Scott, we'll bring you any updates as we get them. You do. You do highlight

one of the key challenges, though, Kate, for the defense in which, you know, oft times in cases like this, the defendant hasn't said anything publicly from the time of arrest to the time of trial. And here we have Sam Bankman Freried giving so many interviews in that period of time, whether it's to you, I remember one with Andrew, our colleague as well, and so many others. George Stephanopoulos, they talked about Andrew's interview with him at Dealbook. And so it's really hard to say when you have print articles, when you have broadcast interviews, you have transcripts of exactly what he said. He is turning around now and saying, oh, I don't really remember that.

And the prosecution has said, so you're saying that the journalist misrepresented this? And then he's kind of had to backtrack and say, well, actually, no. And there's also interviews, but there's been books written. So the prosecution walked up to him with a book that was recently written and had Sam Begman-Fried hold the book, look at it, and then they talked about certain pages in the book. So there is so much evidence in terms of what he has said publicly, which in some ways now is kind of catching up to him that he has to speak to and answer to a lot of the things that he said in the year since his crypto company collapsed, Scott. Yeah, it's such a unique period.

Kate, thank you so much. Kate Rooney outside the courthouse. Up next, we'll tell you the key levels to watch. Top technician Jason Hunter breaking down the charts for us. He'll tell us why he's still staying defensive after this break. Closing bell right back. Welcome back. Stocks rallying to start the week.

The S&P and Dow hitting session highs at this moment. Let's get the next key levels to watch from Jason Hunter. He is head of technical strategy at J.P. Morgan. It's good to see you again. I'm reading these notes and I'm like, man, Jason's negative on the market. Thirty five hundred is your medium term target. So we're going down 15 percent on the S&P from here. Yeah. So that's that's over the medium term and likely a first half target for next year. Over the near term, we've been talking about this 40-50 area as the base case target zone for the fourth quarter. And while we've closed most of that gap from where the market peaked out at 4,600 during the summer, even as we approach it, we're hesitant to put

money to work just yet for a couple of key reasons. Sentiment's not quite extreme just yet. And the relationship between price and sentiment tends to be a progressive one. So a lot of damage could happen in price to finish off that sentiment number. And we just don't see the typical patterns that you'd see at the high frequency level to suggest the market's basing just yet. Sentiment is pretty bad, though, isn't it? I mean, it's hard to find a lot of people who are bullish. Even the bulls seem to be wavering. Like Yardenny I had on earlier is like, well, we probably won't make back what we lost between now and the end of the year. Yeah, like I said, there's a couple of surveys that we look at. And when you look at the price action versus those readings, like I said, it's getting close. But that last step often could be a doozy.

And not to mention the NasdaQ and the big cap FANG, the Magnificent Seven, they're just starting to threaten and break support now. That's where individuals are crowded. We just want to see if that break, as it progresses, if that could lead to a crescendo-type selling event that ultimately causes the S&P to overshoot what our fourth quarter target was. At that point, we think you'll start to set up

for a fourth quarter bounce, a bounce in a bear market. Like I said, the medium term is still negative. But we think, you know, given the view, it's longer term, it's bearish. We want to be very selective and careful about where we would suggest clients deploy capital or take hedges off. I mean, the danger in the charts, of course, and, you know, looking back at history for that matter, is that it sometimes just doesn't match up. You know, many things about this current cycle have been out of the ordinary and haven't matched, you know, from historical standards. For example, going back to the October bottom, it's not like we had a crescendo of selling,

that last moment of capitulation that got us there. It was sort of a drip and a drip and a drip and a drip. And then just when you thought we were going to be even more in trouble, the market rallied back to some degree. It's been a confounding market in many respects. Yeah, but what was consistent then, even when we go back to that 3,500 bottom last October, if you look at our notes then, a number of our systematic pattern recognition signals triggered at that point. Sentiment did get extremely bearish. So there were consistencies with past bottoms that led us to actually get bullish on that reversal. Mega caps. How much does the market need them right now? What does

last week's trade tell you, if anything, as those stocks are rallying, trying to rally back? Yeah, I think you're seeing some of them have broke support. Some haven't. Some have benefited from from good earnings numbers with the Nasdaq trading where it is. It's really in a dangerous spot because you're right at the spring summer range lows. And if you look at how, you know, the AI theme that led to that, that pretty explosive rally, you know, where a lot of the FANG names are Magnificent Seven are somewhat linked to the rally. My guess is a lot of the longs bought in after the fact during the summer months and not before. So if you start to trade below those lows even the best buying you could have done this summer those individuals are going to be

underwater. That's like I said we want to be very careful because if you start to see wholesale selling from that very thin group given its cap weighting and even something like the S&P 500, you could take the S&P from where we think it could bottom at 40, 50 down to 3,900 fairly quickly if you see those particular stocks break. I mean, that's the danger in momentum buying, right? You're not there. You see a bunch of momentum. You get on the train and the train's about to run out of steam. And I guess a segue to the Russell off of that. You say that the small caps have already achieved your downside

objective. Now, some might take that as a contrarian indicator to say, OK, maybe the worst is over. Maybe the economy actually is going to hang in there well enough and that small caps now are a buy. Are suggesting that they're they're not i would think in relative terms maybe um the fact that they're at the levels they're at if i just look at the the russell 2000 in isolation even with the cross market dynamics and curve inversion you know i am tempted to look for that bottom pattern on the russell not quite there yet but this is where i expected to form the problem is if you're going to see that type of sharp selling in mega cap it's hard to imagine that small is not going to come under pressure as well.

So even then, it makes me hesitant in absolute terms to look at the Russell as a long. But in relative terms, it's starting to look attractive relative to the mega cap. You think yields have peaked? I mean, we're going to get the issuance announcement on Wednesday. We've got the Fed decision the same day. Jobs on Friday. Where are we on those? Yeah, so about a week and a half ago, we published a note, you know, the same idea where we look at systematic signaling. We've got a handful of pattern-based algorithms that identify, you know, trends in the market that give you asymmetric risk-reward versus random entry. And a week and a half ago, those suggested starting to buy treasuries. So we did suggest a long in the five-year note. We do think that that looks like a peak.

If we're right on the equity call, and equities do come under acute pressure here, if you do see that aggressive selling in MedCap, that's only, I think, going to help. You're going to break the bond stock correlation. And in our view, that'll confirm the more durable bullish reversal in the bond market. But for right now, the technical signals are there,

and we're acting upon it. Jason, we'll talk to you soon. I appreciate it so very much. Jason Hunter joining us from J.P. Morgan. Up next, we're tracking the biggest movers as we head into the close. Christina Parts and Nevelos is back with that. Christina. Well, one biopharma firm getting some love from an analyst who thinks the stock drop is an overreaction. I'll reveal that name and obviously much more after this break. We're about 17 minutes from the closing bell.

Let's get back now to Christina Partsenevalos for a look at the key stocks she is watching. Christina. Well, let's start with AbbVie. Higher today as the biopharma giant gets upgraded to overweight at Barclays. Analysts over there say that Friday's 4% drop came in the context of overall weakness in biotech and overshadowed solid results from AbbVie itself. In other words, overreaction. They say there could be more near-term choppiness, but they see promising momentum down the road. Shares are up 2.5%. And XPO is higher after the logistics giant smashed earnings expectations today. The firm cautioned that the freight

market remains soft but still managed to post revenue growth and expand its margins. And that's why shares are up 16 percent. Scott. All right, Christina, thank you very much for that last chance now to weigh in on our question of the day. We asked which event this week is more important for the near term direction of stocks. The Fed decision, Apple earnings or the jobs report on Friday. You can head to at CNBC closing bell on X. The results after this break.

All right. The results of our question of the day. We asked which event this week more important for the near term direction of stocks, Fed decision, Apple earnings or jobs. Fed decision gets the most votes. Near half of you voted that way. All right. Up next, Pinterest results out in just a few minutes. We'll bring you a rundown of what to look for when those numbers hit an OT. That and much more when we take you inside the market zone. There we go. We're in the market zone, the closing bell market zone. CNBC senior markets commentator Mike Santoli here to break down the crucial moments of this trading day. Phil LeBeau on the sell-off in Tesla. Other EV stocks today.

Julia Forsten looking ahead to Pinterest. Those earnings out in OT. Michael, I begin with you. This is a nice little move we've had. What do you think it's about? Pretty good little snapback. I think it's relaxing after tensing up so much on Friday. I mean, the drop in oil, the drop in the volatility index.

You had the small cap, Russell 2000, you were just talking about, really retesting its bear market lows from last October. So not insignificant in terms of the field position of the market and whether, in fact, people wanted to start to back off of it a little bit on the sell side. So that's what's been going on mostly. You do want to see, I would hope, more than one day of pop in things like the regional banks, which are up today. All the beat up areas and consumer cyclicals also getting a little bit of relief. So it's impossible on a one day basis to distinguish just a kind of a reflex oversold bounce that's going to fail from the start of something real. But this is the way, you know,

all the recoveries do eventually get going. All right, Phil LeBeau, to you. Tesla, ugly day. Other EV stocks, too. What's going on here? Yeah, it's a rough day to be in the EV automakers right now, Scott. Basically, when you look at these shares, they were all under pressure today. Tesla shares under 200 for the first time since back in May. Three things driving these stocks lower. First of all, much more cautious commentary over the last couple of weeks regarding the demand for EVs, that it may be slowing down. The growth rate is not going to be as great. Then you had On Semiconductor coming out today saying they see pockets of softness,

particularly when it comes to EVs. And then Panasonic cutting its battery production. And by the way, what does Panasonic supply batteries to? The Model S and the Model X. So as you take a look at shares of Tesla, I mentioned that we are now under 200 for the first time since May. Not a good looking chart, but Scott, not a surprise given what we've seen and the commentary we've seen regarding EVs and the demand slowing down.

Yeah, no doubt about that. Appreciate that very much, Phil LeBeau. And Mike Santoli, I just wonder if something else is at work here. You know, there was the headline that Fidelity writes its Twitter position down by 65%. Another report that an ex-internal note said the company's worth $19 billion, not the $44 billion that Elon Musk paid for it. And I'm like, hmm, I wonder if the market thinks that Musk is going to have to sell more Tesla shares to deal with the ex-debt. There's all the bank issues and

all of that. And that is why this stock is down 5 percent, more so than for some of those other reasons, however legitimate they may be. But Musk selling again would be an overhang again. There's no doubt that it's in the air. There's a lot of focus on that. And also, if you look back to the fourth quarter, when he was actively selling a lot, it also did coincide with a time when people were radically cutting their estimates of what volumes are going to be at Tesla. So it seems like it was coming around together.

It wasn't just two independent things. And similarly now, I mean, Tony Sackenaghi at Bernstein, another kind of skeptical note about whether, in fact, Tesla might have to come off of its targets for 2024 volumes. So I think a lot of things probably are weighing on sentiment right now. Mostly, though, they've had a cut price a lot just to keep their 2023 volumes on track. How much are they going to have to do next time? Are margins expectations too high? I would say, though, in terms of if he has to sell stock, this is stock that trades 25, 30 billion shares worth of shares a day. So it's hard for him to sell so much that it's going to swamp demand.

But the psychology of it is something that's inescapable when he's backing away further from his commitment to Tesla as an owner. I mean, he could certainly do it over multiple periods of time. Of course. My point being, theoretically, the market should easily be able to absorb whatever he had to sell to top up the creditors or whatever he might have to do, inject equity into Twitter. Oh, sure. But there have been air pockets in the stock before. He sold $40 billion. This also comes at a time where mega caps know, mega caps are being scrutinized.

Sure. Maybe more heavily than they have in the past. So we shall see. Julia Borsten, Pinterest coming out in OT. What do we expect? Well, Scott, Pinterest is expected to accelerate its revenue growth nearly 9%. That would be up from 6% revenue growth in the prior quarter. We are watching to see here whether Pinterest echoes comments from Meta, Snap and YouTube about a strengthening ad market in the quarter.

We're also listening for any concern about uncertainty in the fourth quarter in light of the Hamas-Israel war. That's something that we heard from both Meta and Snap. Now, Pinterest's partnership with Amazon is very much in focus. They opened third-party ad selling on Pinterest at the end of April, so this will be the first full quarter with the partnership's impact. Stiefel upgrading Pinterest to buy in part on bullish Amazon commentary, writing, quote, Pinterest is the most unique of any of the social platforms because it is so brand safe, unlike TikTok. It's a place to showcase products. It's so commercial focused.

So we're going to be focused on Pinterest guidance for Q4 when the company reports shortly. Scott? All right. We will see what, in fact, they deliver. Mike, let's turn back to you. We have, you know, a handful of minutes left here. Dow's up 535. It's been an interesting snapback day. What do you make of the Twitter poll? Fed meeting still commands the room, but you could easily make the argument that these other events happening this week, whether it's the issuance, step one came today. Apple earnings will come on Thursday, and then the jobs report on Friday are going to, you know, play the biggest role in deciding whether there is a little gas to be pushed between now and the end of the year. Yeah, I think it's the combination of the Fed and the Treasury announcements giving us a little bit of a reality check on our yields now in the right place. I think those two things, whether how Powell characterizes where we've gone

in yields, how much financial conditions have tightened. And I think the supply story in terms of yields has been taken for granted, but we kind of don't know. You have to test this yield move for has it really been about mostly supply getting in higher than expected. So all of it matters. In terms of Apple, I've always said it's less of a bellwether for other companies, but the stock tends to be a huge contributor to investor psychology. And if the market's going to have a recovery move and it's really going to be persuasive, you would think Apple's going to be a part of that, or at least people feeling as if the worst fears they had about the fundamentals of Apple were not realized. So I think all of it does

get into the mix. And it's happening at a time when, more broadly, we're asking, you know, was it just a bear market rally? And, you know, do we care what we labeled it? But I find it interesting that a lot of the folks who were skeptical on the way up in the market cap weighted S&P have had things go their way, right? The index has come back. Not a lot of the market looks like it's in bull market mode. And nobody is saying declaring victory because they think downside, more downside to go. Whereas you could make the case that we've also gotten a little bit washed out and we're at that seasonally strong part of the year. And so I think the debate remains no matter which direction you came at it. Yeah, I thought it was interesting listening to somebody who's bullish like Eric Woodring is, top of our program, suggest.

Yeah, I mean, I'm a little cautious in the near term. Stock could go down to the 160 level. I would say that if Apple goes to 160, the overall market's not going to look so great just because for the obvious reasons of how big it is and widely held and where it spreads its tentacles through the Dow and the S&P and the Nasdaq. Well, it also means that the market is therefore not in a mood to give credit to the highest quality companies to figure things out down the road. They're going to try to discount the valuations across the board on lesser companies as well. Now, a lot of that's already happened. You know, Apple was at like 125, like Labor Day of 2020. So if you're down to 160, all of a sudden it's not up that much on a multi-year basis. So it is an interesting moment to say, yeah, maybe it got ahead of itself

trading to 30 times earnings. But now that we're back down a few multiple points lower, can you take a shot? Yeah. Looking at yields today, everything is up except for the three month T-bill. Yeah. But I'm small. Stability. They haven't come down that much, but they haven't gone up a lot anymore either. That's right. So, therefore, it's about waiting for Wednesday with the Fed and the Treasury announcing. Which is why our viewers are so smart and said Wednesday matters more than anything for the Fed meeting to the near-term direction of stocks.

I'll see all of you tomorrow.