Closing Bell - Closing Bell 1/15/26

Episode Date: January 15, 2026

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. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Closing Bell. I'm Mike Santoli in for Scott Wapner. This make-a-break hour begins with record highs in sight. The S&P 500 and Dow Industrial's rebounding with a chance to eclipse their recent peak levels, as investors have aggressively bought the recent pullbacks in AI hardware and big banks, add in response to some reassuring earnings reports. Here's your scorecard with 60 minutes left in regulation. It has been a fairly broad rally spanning the mega caps down to smaller stocks, though. The upside has actually faded. in the last hour or so. Still positive across the board. The S&P, I put it up one-third of one percent. We were up three-quarters of a percent, not that long ago. The Dow up 315. The NASDAQ composite had been outperforming. It's up also just under 0.4 percent. Russell 2000 up more than 1 percent, though. Some policy pressure has eased with possible de-escalation with Iran driving a drop in oil prices, while threats to fed independents have gone more quiet. The volatility index reacting with a quick retreat from yesterday's one month high near 17, and we're down below 16. But the key shift today is the strong bounce in Nvidia, Broadcom, AMD, and the rest of the chip complex,

which takes us to our talk of the tape. What have we learned about the state of the AI buildout in the last 24 hours, and will this theme start to dominate the market narrative once again? That's where we begin. With that breaking news, Taiwan will invest $250 billion in U.S. chip making under a new trade agreement. Christine Parks Nevelas is here with me at Post 9 for more on that. And we just had a great interview in the last hour with Howard Lutnik, joining CNBC just some moments ago to break down the details. In his words, semiconductor manufacturing is coming home. Listen to it.

We're going to have hundreds of companies coming here. We're going to build giant semiconductor industrial parks in America, and we are going to bring semiconductors home to America. That's what this is. This is a $500 billion down payment on let's bring those semiconductors whole. And he's saying $500 billion because $250 is supposed to come from the Taiwanese firms, $250 from the Taiwanese firms, $250 from the Taiwanese government, two smaller firms. But from Taiwan comes really on the heels of a blowout quarter for Taiwan semi. The company is known for being very conservative with its guidance and earnings. And so when the company raises CAP-X to a record nearly $56 billion and says the next three years of spending,

will exceed the last three years combined, investors take notice. This is the world's largest chip contract manufacturer. Making chips are some of the biggest names in technology, including Apple, Nvidia, the likes. And customer engagement timelines are really now stretching beyond two to three years out for said customers like Nvidia AMD, underscoring just how tight supply remains. That massive Capax program flows straight to chip equipment. Makers like ASML hitting $500 billion in market cap today, while Lamb Research, Onto Innovation,

applied materials, lamb, Terradine, the list continues, all moving higher. And while the CEO did say he is, quote, nervous about how real AI demand is and how it'll be on the longer term, he did emphasize that customers have the financial firepower to sustain spending over the next two to three years, which was seen as a bullish signal for the market. I was going to say that it really is the time factor that seems like, like the swing in terms of whether you think things are overdone, underplayed, still room to run. The $500 billion, I mean, I guess it's just hard to sort out exactly what's being included in here over what period of time, how much we already knew about, how much we don't.

I guess directionally, though, everything we're hearing is this has a long way to go. Yeah, the $500 billion, to your point, I'm wondering, is a double counting, $250 coming from the Taiwanese government, $250 from the companies. TSM has already promised $165 billion to spend here. But to your point, long term, it's at least giving us visibility into at least the next three years. And these equipment deliveries don't happen overnight, right? So they would actually utilize that equipment even beyond that, which is quite a bullish signal. Yeah, obviously, and the market is voting in that direction for sure.

Christina, thank you. Thanks. All right, joining me now to discuss it all is Doug Clinton, Intelligent Alpha, founder and CEO, Taiwan Semi, is one of his top. Holdings, Doug, good to see you. So how does this all fit into and inform what you've been thinking about in terms of this group, as most of the big stocks had been in some pullback zones? Mike, it's good to see you too. I would say it actually doesn't change much of what we've been thinking at all because our view at Intelligent Alpha, where we do use AI to make our stock picks, our models view, I should say, has been that the AI trade is still alive and healthy.

We obviously did have a pullback. We had kind of a reset, which I think was needed sort of at the end of last year. And in particular, some of the hottest AI names really got that reset. I think what we're seeing now in TSM, their report, is really the catalyst for this. It's a reminder to the market that we are still earlier than probably most people believe or are comfortable with in terms of this infrastructure buildout. They guided CAPEX 2 about 40% growth next year. And as they talk about their customers, I think this might be the important point. The MAG 7 is expected to spend something like 35% in new CAPEX growth this year. I actually think that number could be closer to 50. And so as TSM is building more fabs to meet

this demand, I think you're going to see the other big players, the spenders here, the builders, increase their CAPX as well. And what do you think the market's tolerance for that is going to be, right? We look at Microsoft's been a tough stock in the last little while. There are, essentially looking really expensive a lot of the Mag 7 on free cash flow because they're obviously not allowing the money to flow to free cash. So, they're spending it. So where do you think that places, I guess, the incremental investor dollar as they bet on this theme? I do think that value is important. And I would look to Amazon. That's been one of the names that our models has really liked since sort of the end of last year. If you look at their PE on forward basis, they're actually

one of the lowest P.E.'s, kind of mid-20s of the entire group now, which is almost unheard of if you look at Amazon over the last decade relative to this group. So I think you can still find value as crazy as that might be in the Mag 7. I think Amazon is that name. The other two names that we own, Vinduia, Google, I think both of their stories are probably well trod at this point, but I think for NVIDIA it continues to be this question of, can we get the incremental buyer? Maybe do we get Chinese demand finally when that sorts itself out. And I think for Google, you know, they now, I would say, are in the poll position for AI winner. And if they stay in that position, it's hard to see why the stock would stop working. And then I guess what are your models telling you about

what the market collectively has decided is a disrupted group, which would be much of software, enterprise software and all the rest. You want to talk about unusual to see, you know, Amazon in a mid-20s multiple. How about Salesforce at 18? It was like Salesforce doesn't know how to go up. The stock's always red. I think this is the benefit, actually, Mike, of kind of using AI to do some of our stock work because it makes you feel a little bit sick to buy software right here, which might actually be exactly what you should do.

And our models have been gravitating a little bit more towards software. Unfortunately, I think they were early. We do own names like Adobe, ServiceNow, GitLab. But the story is this. If you look at just the first couple of weeks of this year trading, the delta of performance between chip stocks and software stocks is about 10% already. It was around 35% last year. So we're already seeing a continuation of this trend. Investors don't want to own software.

They do want to own chips. I do think over time the value of some of these companies will become hard to ignore. And I also think the narrative could shift in terms of AI not being as bad as investors think for some of these names. but it might take another month or two a little bit longer than maybe our models and thought. Got it. Yeah. I mean, maybe your models are, you know, they follow that advice. You know, you can predict the price or a time, but not both, right, when something's going to come about. Doug, really appreciate the time today. Thanks for weighing in. Thank you.

All right. Let's bring in our panel. CNBC contributor at Hightower's Stephanie Link, Wells Fargo's Darrell Kronk and Crossmark's Victoria Fernandez. Steph. Hi, Mike. Hello. So we have this new push in semi-cap and semiconductors. It feels very 20-25. But up to this point, it's been a little bit of a different tone over the past few months. You've tracked it, right? The cyclical's doing well. Some of the lagger groups of last year doing well. And then we have the reaction to earnings so far. It's early. Where does that bring you?

What do you think is the key thing to focus on in all the cross currents? Well, earnings season is always silly season, right? And so we've had, a great run across the spectrum, a lot of different sectors, not just tech. And so expectations are high. And so the initial reaction, if they don't beat and raise by a mile, the stocks sell off. But you have to look at the underlying fundamentals. And so far, at least at the banks, the big sick, they've been really very, very good. Even not the banks, even Delta, for example, right? They had very good demand trends. So I look at the overall economy, Mike, is running at about yesterday. The Atlanta Fed track were at 5.3%. Before the data today. For the fourth quarter.

Right? And for the fourth quarter. But before the data today, and the data today was actually quite good with regards to the four-week moving average and weekly jobless claims, the lowest in two years. You have the Empire State and the Philly Fed, the manufacturing reports that came in, orders and shipments and prices paid, all going in the right direction. And of course, the consumer continues to consume. Yesterday's retail sales was certainly a good number and encouraging. And by the way, even the banks, talked about the consumer, how they have been very surprised at how resilient the consumer has been. And so that has been a big driver. So a lot of people say that this growth is coming from AI and AI only. It's not. It's consumer and its AI. And that's a great combination. It has worked. And Darrell, I mean, it's really interesting because it reminds me of if you go back to September, October of this year, Fed resumes cutting rates, and everybody decided that what we were in for was a re-accelerating economy with the Fed easy. into it, and then you had positive seasonals for the fourth quarter, everyone wanted a position

for it. And market kind of peaked for all intents and purposes at the index level at the end of October. So I wonder how you think it's either different this time or if we just reloaded that same trade. Well, it's a great point, Mike, and it's spot on because we actually downgraded tech on exactly October 30th in our portfolios. Better to sometimes be lucky than good, right? Hit it spot on at the time. And it's basically traded sideways ever since. In fact, to what you're just talking about, if you look at the two sectors that even sitting here today, 10 trading days into the year, are flat to down of the 11 S&P GIC sectors, it's financials and it's tech, right? What's leading is materials, energy, industrials, right? So as that broadening out happens,

which it is happening, right, that pro-cyclical element is really taking hold. Look no further than small caps besting the S&P by six to almost 700 basis points, value outperforming growth, international still besting domestic. So there's a lot of those trends that are kind of the countercyclical trends that are taking hold here in January. Victoria, all of that makes sense. I guess maybe I'm a little skeptical of the idea that the year flips to a new number, and all of a sudden it's a new story, and that's going to tell us how the entire year is going to play out. I mean, I guess it tells us something. I just wonder if you see this as indicative of how this whole year is going to shape up.

Well, Mike, since I was raised up as a fixed income girl, I'm always skeptical on things. That's just part of my nature. So I'm with you on that. I think we are looking at the economy a little bit through rose-colored glasses. I agree with the fact that we're seeing this rotation, that there is this positivity in the market

because earnings are doing well. I mean, we just started this quarter's earning season, but the last couple quarters have been really strong. Profitability is strong. These are all really good things consumer continues to spend. But I do think we have to take a look at some of the warning signs that are out there. And we actually heard Brian Moynihan was talking about there are some risks ahead. Jamie Diamond talking about some hazards in the economy.

I mean, we have some things that could happen. The labor market could weaken some more. We could see inflation be sticky. I'm not saying it's going to go a lot higher, but not get down to that 2% level. It's not going to allow the Fed to cut as many times as perhaps the market thinks. We could get a government shutdown. There's different elements that are out there that I think we have to really pay attention to. And I think labor is really driving a lot of that.

Look at the labor differential that we're seeing. Look at margin debt, Mike. We have margin debt up 37 percent year over year. And I'm not saying that's a signal that there's a recession or a pullback, but it tends to go along with some of those elements when you have other catalyst in the market. So, yes, be in the market, but I think be choosy of where you're putting that money to work. Look at these rotations. Look at the sectors that have uptrends.

And when there's a pullback within that up trend, that's your opportunity to go in. Like we would go in and add to financials right now with a steeper yield curve throughout this year and solid balance sheets, good earnings. I think that's an area you could add to. You know, Steph, it's interesting. Sometimes I have to tell myself, just because everyone thinks good things are going to happen, doesn't mean they're not going to happen because I do have that instinct. But I'm looking at microcaps. The microcap ETFs have 9% year to date.

It's up 20% in two months. I think we saw coming into today the outperformance over the recent stretch of unprofitable tech relative to Mag 7 is at a super extreme. So I don't know where that fits into the overall cadence of what this market is doing. Because otherwise, you know, we have a good earnings outlook. All the kind of blocking and tackling elements are in place. And then you have like the lunatic fringe. Right. Well, microcaps, thank goodness that they're a small piece of the overall story.

But it's certainly something to watch. It's like the meme stocks and that whole thing, right? And unprofitable stocks, it's certainly not something that I'm interested in investing in. But it is something to watch, for sure. But you have all of these other sectors, and we're talking about the rotation, all of these other sectors beyond tech that are actually doing better the cyclicals. They should be because the economy is stronger. but they're also, the valuations are also easier to understand, right? So to me, that's really where your opportunity is.

I do worry that everyone's talking about this. I mean, I've been in the cyclical for a long time and expecting the economy to improve. So I'm mindful not to chase. However, something like, for the first time in a long time, I've been adding to energy. I think it's acting well, but it's only 3% of the S&P 500, so a lot of people can say,

well, I don't really need to pay attention to it. Well, now all of a sudden people are paying attention to it, but I still think it's under owned. So there are bits and pieces, the financials. Absolutely, I agree with you want to be adding to them for sure, because the fundamentals are quite strong. So there are places to do things, but you don't necessarily have to chase. On that note, on the financials, everyone stay with me. We're going to talk about some of those. Morgan Stanley and Goldman Sachs both surging after reporting results.

Leslie Picker joins us now with more detail. Hi, hi, Leth. Hey, Mike, that was the perfect segue from Steph there. A very solid quarter sending shares of both Morgan Stanley and Goldman Sachs higher today. Morgan Stanley notching record revenue in 2025 and Goldman had a record in their global banking and markets business, which houses investment banking and trading on the Wall Street side. There is a bit of concern, though, about whether or not this is the peak. A lot of analyst discussion on these calls about what inning these firms are in as it pertains to the capital markets upswing. I had a chance to speak with Morgan Stanley's CFO, Sharon Yeshaya, who said that capital market.

markets are open in that the backlog for IPOs is higher than a year ago at this time. And on the advisory and debt underwriting sides, she said they're seeing a broadening out of the deal flow in the pipeline. In response to a similar question on the analyst call, Goldman Sachs's David Solomon said, quote, I would bet you that 2021 is not the ceiling. He's referring there to the pandemic era surge in deals. Solomon said, quote, I think the world is set up at the moment to be incredibly constructive in 2026 for M&A and capital markets activity. Of course, it's some sort of exogenous or macro event could always change sentiment, Mike.

Yes, can change sentiment, could change reality. We'll have to see. And that's always a good reminder. Leslie, thank you very much. Dale, you mentioned financials. I wonder where within that group. We also got BlackRock numbers today. Yesterday, there was a kind of typical sell-the-news response in the big banks, but the regionals actually got a bid. Daryl, where would you go within financials in that world?

Yeah, we still like probably the big bank financials. We think they've got the Fortress balance sheets. They've got, you know, huge amounts of capital that have happened. Most of them have that investment banking piece, which I think is key. I mean, look no further than the fourth quarter deals announced in the M&A sphere. And it's the best quarter we've seen in probably five years running, even to David Solomon's point, if you include 2021. That steps us off into next year or into this year, I should say, in a really good spot. And then you throw into this idea that you're sitting on basically all-time highs with stock prices, which is what firms use to monetize an M&A deal, right, as they use their stock price as the currency to do that.

It's, you know, all the right things are there. So we would stay in the large quality, high-end financials. Insurance companies actually look good at this point and maybe not go after the asset managers as much and potentially the lower-tiered bank, small, medium-sized bank area. Victoria, when you hear about capital markets being wide open, obviously the consumer's not under any stress whatsoever. Corporate credit spreads are tight, where whatever Atlanta Fed GDP is going to land at,

we're above 5% for the fourth quarter now. Does that sound like a setup for a Fed that should be in a hurry to cut rates anymore? No, it really doesn't. And when you look at what the Fed might do going forward, you have to wonder, what would a quarter basis point cut in rates really do for an economy that has these characteristics that you're talking about? You know, they're really kind of subsidizing risk assets by cutting rates. And that could lead to a lot of elements that we don't want to see in this market. So I do think the Fed will be on hold in January because of some of the elements that you're talking about and probably even longer, depending if we continue to get growth. And we know we've got a lot of stimulus coming in the first half of this year from the one big beautiful bill,

from the Fed increasing its balance sheet, even though we understand why they did that. You still are adding liquidity to the market. And so I think there's a lot of pushes here that are coming that are going to support this economy, along with decent earnings and profitability and margin growth, that the Fed really doesn't need to go in and do anything at this point in time. I guess the question step is, you know, is the market a good to wait, right, if that's what we get, right? The economy still continues to hold up. Fed feels like there's no risk in just staying on hold. Is the Fed is the market going to act up if that's the case?

Well, look, we don't need to lower interest rates, but I understand what the administration wants. We are growing 5% plus without a housing cycle. And that is their goal to have a housing cycle because it is a case. shaped economy. If you get a housing cycle, at least you can get that lower end, middle end consumer to participate in a wealth effect, right? Because they don't own homes and they probably don't own stocks or bonds, for that matter. And so if you can get that to start to ignite, that is a big driver. Imagine what the growth in the economy will be. So I don't think that they need to cut per se. And I think that the growth is fine in the meantime while we wait.

And we'll just have to say. But look, we're going to get a Dovish Fed chair, right? So probably more is coming. But we'll have to wait and see what the inflation side. Doverish Fed chair in like four months, which is an infinity for the traders today. Daryl, real quick before we go, you know, we're kind of, I mentioned losing Stephen the indexes. We made like three or four approaches at 7,000 on the S&P pretty close and haven't. really had the thrust to get over it. Is there any significant to that? Where does that sit with

regard to what you think the cadence of this year's returns might be? Yeah, it's a psychological level, obviously, but if you look at some of the technical indicators, the breadth is widening out, the S&P is sitting above the 20-day, above the 50-day, an upward sloping 200-day. I think it's just a matter of, you know, shortly till we break through that 7,000 number. Our midpoint, Scott, for year end 26 is 7500. So some nice upside yet with, you know, the dividend. But it is, it is noteworthy that the S&P is one of the laggards for the indices this year from a performance standpoint. I mentioned smalls earlier. I mentioned international, right? You know, when you look across the spectrum, the broad index is kind of struggling in comparison to its peers year to date so far,

which obviously hasn't been the case the last couple of years. So we'll see how that plays out in the rest of the year. It's a give back and it's a, be careful. What you wish for if you want a broader market if you own the index. That's right. It's been the thing for a little while. We're going to have to leave it there. Thank you very much, Steph, Darrell, and Victoria. Talk to you all again soon.

We are just getting started. Up next, a chorus of Fed speakers, what they're signaling about their next move. We are live in the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back. Let's sit over Christina for a look at the biggest names moving into the closed. Christina. I have a theme, and it's about health care.

Some shares of some of the biggest health care insurance providers are, higher after President Trump rolled out a framework that the White House claims will lower drug prices and insurance premiums, which would all benefit. It proposes sending money directly to consumers and the debate over extending the ACA's enhanced premium subsidies. Humana, Cigna, you can see on your screen, United Health, about 1% higher. Humana, the biggest, almost 4% higher. And sticking with health, shares of Eli Lilly are sliding on a report that the FDA decision

on its obesity pill is now due April 10th. The drug had been granted an expedite. expedited review by the Trump administration last year. So that delay is causing shares to drop. And you can see the news came out just in the afternoon down 4%. And last but not least, shares of Boston Scientific are sliding after it reached an agreement to buy MedTech company, PNumbra, in a $14.5 billion cash deal. The move is set to help Boston's cardiovascular portfolio. And that's why you're seeing Pinnama shares up about 12% Boston down almost four. Mike? All right. Christina, thank you.

A ton of Fed speak today, including some coming from Philly Fed President Anna Paulson. Our CBC Senior Economics correspondent, Steve Leesman joins us now to wrap it all up. Hi, Steve. Hey, Mike, yeah, three Fed speakers today, all affirming the market expectations, which you were just talking about for no near-term cuts, but holding out the possibility that those cuts resumed later this year. Philly Fed President Anna Paulson, she will vote this year, including at the upcoming January meeting, telling the Wall Street Journal in a just-released interview that rate cuts can wait. She favors modest cuts perhaps later this year, and she called Fed Chair Powell's statement this past Sunday, quote, strong.

Kansas City President Jeff Schmidt. He twice dissented from Ray Cuts won't be voting this year, saying he, quote, prefers keeping rates unchanged. The economy has momentum. Inflation is too hot. And cutting, he doesn't believe will help jobs much because there are other issues involved with the weak job market. He did not back future cuts. But in an exclusive CNBC interview Chicago's Austin Goolsby also a voter last year and a dissenter, said, take care of inflation now for rate cuts later this year.

The most important thing facing us is we've got to get inflation back to 2%. Everywhere I'm going out here in the 7th District, you're hearing about cost, you're hearing about affordability, you're hearing it on the business side and on the personal side. And so let's just make sure we're on path back to 2%. The market price was pretty much what these Fed officials were saying. The power won't be cutting much anymore while he's in office. Got a sub-50% probability rate cuts for January through April. No cuts priced in until the new Fed chair comes along in June.

Of course, in just the past hour on CNBC, Commerce Secretary Howard Lutnik, he called for the Fed to keep cutting rates, saying high rates were holding back the economy. And you can see from the comments I just gave you, Fed officials do not appear to share that concern, Mike. No, it does not appear that way, Steve. And I've wondered in the last several days if we've had this new kind of perceived threat to fed independence and all the rest. The way the bond market has been very placid about it. And maybe it comes down to, at least in the immediate horizon and what the market cares about, there really isn't that much space between sort of a median hawk and the median dove.

I mean, nobody really here seems to think there's a lot of urgency or necessity to do a lot on rates in the next several months. You know, Mike, I think you make a great point, but I will make this point, which is I went away for a few days, and the whole operation went to heck, if you can imagine. It's true. Put up that chart, guys, if you could, the last one you put up, I am not, I'm fascinated by what happened to the end there. The March and April percentages, they have come right off, and that seems to be a direct result of the Fed's challenge to the Fed Chair and these subpoenas that were out there. I don't know that maybe I missed some data. The inflation data came out. Everybody said it was relatively benign, but that's not the way the bond market took it.

So I see what you're saying about January, but it's fascinating to me that two things. One is that these rate probabilities have come way down, but two is to answer a question you asked to the panel, which is the market seems okay with it. They seem pretty cool with the idea. You look at what happened today. The three Fed speakers saying don't count any near-term rate cuts. You see where the probabilities are priced, but stock's still getting a bid today. Yeah, for sure. And people should remember the Fed went on hold for nine months last year. Obviously, we had the tariff panic in the middle of it. But point to point, Margaret was fine.

And we've had that in prior years, too, where the Fed really does less than was anticipated in the way of easing. And we find our way around it because it's not for the bad reasons. Steve, thank you very much. Pleasure mind. All right. Coming up, stock buying binge. We're breaking down the state of the retail investor. what they're piling into and ditching when closing bell comes right now.

Up next, Newveen's chief investment officer, Sarah Malick, on where she sees the biggest opportunities right now amid rising geopolitical risks and uncertainty about the future of the Fed. $12 billion. That's the amount individual investors poured into equities this week alone, the most since post-Liberation Day sell-off last year. Kate Rooney breaks down what they're buying. Hi, Kate.

Hi, Mike. Yeah, so it is the largest weekly inflows in more than a year. from individual traders. That's according to JPMorgan. As you mentioned, another $12 billion in equity buys. That's near those levels of historic dip buying that we saw last year around some of the tariff turmoil analysts say the surge is being driven by rise in single stock picking. So single stock purchases hit a nine-month high this week. There's been a refocus on tech. So the mag sevens on net buying across all the usual suspects, except for Apple. That was the only of that group with net outflows. J.P. Morgan also points to what they call selective dip buying

of banks following proposed cap on interest rates, and then there's silver. So Vanda Research, meanwhile, points to the heaviest buying in history for silver-linked ETF, the SOV on day 169 of positive inflows. That's the second largest day, at least this week, that they saw in that fund's history. Vanda calls silver the most crowded commodity trade on the market. And it might feel like sort of a meme stock situation and moment, but Vanda says, unlike the social media-driven frenzy, saw back in 2021, today's activity. suggest silver is being treated as a core macro trading asset.

Some seasonality baked in here based on the past five years, at least. Retail tends to buy the most aggressively early in the year. And then around mid-February, we seem to see more of a pause. That's true. What meme stocks don't have is when the price gets high enough, people don't bring meme stock jewelry and forks and knives to be melted down to get the money for it. So ultimately, a commodity is a commodity. Not yet, right.

All right, Kate. Thank you. Join me now is a Nuveen CIO and head of equities and fixed income. Sarah Malick is here to discuss the markets. And Sarah, it's interesting because we heard that about retail investors, obviously pretty enthusiastic to put money into this market at the start of the year. It's a very generous liquidity situation. The basic fundamentals in terms of economic growth and earnings growth seem in place,

and yet we have to absorb these policy volleys from time to time. So where does that leave you in terms of what's going to most influence this market for now? The tug of war this year this year so far has been the macro versus the micro, and those are around three issues, which are geopolitical, Fed tensions, and of course, earnings. So we actually settle on earnings. We expect over 10 percent earnings growth in 2026. And that should be what supports the market going forward. But we do have to acknowledge the fact that we came into the year at a premium in terms of market valuation. So these ongoing geopolitical issues and Fed tensions could cause the market to be quite volatile. But we are seeing a very strong earnings season so far.

And in general, earnings tend to carry markets forward. And we have a good earnings outlook for 2026. They do. And I wonder what you're thinking about the composition of that earnings growth. because really for over a year, there's been this vigil for when, you know, earnings growth will broaden out to the majority of stocks as opposed to really being unduly driven by the very largest stocks. We now have a situation where we can see that potentially happening late this year, but still the best growth, certainly in aggregate dollars added, is in the large tech stock. So how does that inform your view? Well, that's been an ongoing battle for a few months now, which is tech versus the rest.

So the MAG7 versus the S&P 493. But taking a look at the data, tech earnings should be 2x S&P 500 earnings this year. So I follow the data. Tech earnings still looks strong. Question mark around them, of course, is how much of this AI spend will turn into productivity. That is a question mark. There could be somewhat of a lull between how much we spent on artificial intelligence and when that turns into real productivity gains.

But it will do that. And the earnings growth is still there. So we have tech earnings starting, and really in aggregate in a couple of weeks from the MAG 7, I think you're going to see strong earnings from companies like meta from Alphabet, and that's going to get this tech rally to continue, which we are seeing today. Earlier this week, it was more about defensive leading. It was a safety trade. Today it's switching because of TSMC to tech leading the markets.

Yes, and that's been, you know, the market has actually benefited from that, you know, kind of on a given day, you know, have some new leadership, hold the market together, while other things take a rest. That has been valuable. On the policy front, there has been this consensus coming into this year that it was going to be very favorable in the way of fiscal tailwinds that were developing. And we could kind of do the math on how that was going to help growth,

put money in investors' pockets, and maybe generate even more corporate cap-ex. And then we come into the year, and it's a lot of these sort of policy suggestions, to put it lightly about, oh, certain industry shouldn't buy back a lot of stock or we're going to cap credit card interest rates. Can we properly ignore some of that stuff or do we have to take into account what the affordability push from the White House is going to mean for companies?

There's going to be continuing noise around policy for the markets. And what we can and can't ignore is going to be crucial in terms of volatility. Three themes for this year, though, affordability, deregulation, some tax relief are going to be positive. So we've been dealing with this K-shaped consumer where the high-end consumer continues to spend. lower-income consumer is struggling even more so because of high tariffs and inflation. So anything around affordability could be positive for helping to stabilize the entire consumer base. Deregulation positive for financials, which are reporting strong earnings again this week,

as we're seeing strong capital markets and M&A going forward. All of those should be positive as well as some tax relief. Those will be the longer-term themes, but I do think that within that we're going to get a lot of noise and volatility not only around policy but geopolitical issues. watching the Middle East closely to see what happens there, as well as other areas where there's continuing conflicts like Russia, Ukraine, and of course watching the U.S.-China relationship very closely. For sure. Who knows, we might get a tariff ruling at some point and all the rest of it as well. Apart from that, if I look at parts of the market that have seemed to be priced at a little bit of a discount or at least or less aggressively owned and loved, things like quality, things like defensive, things like low volatility and, and, and staples and such as that have definitely screened out that way.

Are they cheaper for a reason, or do you think they're worth having? Well, follow the earnings growth. We start with tech leading the pack for this year. Secondarily, where I would look is materials and industrials, which also have strong earnings growth. Staples tend to look cheap, but they tend not to have the earnings growth to go with them unless you're in a very recessionary environment. The economic data is not pointing to that.

Another area, though, that tends to be defensive is utilities. There's a company we like there, Nysource, which is an Indiana-based utility, as very strong customer growth, building out AI data centers are going to be beneficial for them. That's the Midwest is strong for utilities. That's a defensive stock that we like. I'd be a little more careful on consumer staples because they tend to just lead when markets are afraid. And the economy and earnings are telling you that the markets likely will have a lot of support from fundamentals this year. Yeah, and that real aggressive bounce we got in some of those, it seems kind of mechanical,

maybe some quant strategies, things like that. We'll have to see how that plays out. Sarah, great to talk to you. Thank you very much. Thanks for having me. All right, up next, we're tracking the biggest movers as we head into the close. Christina, Danny by with those. Mike, one Wall Street upgrades, sending shares of a gaming giant hire, while a crypto platform's opposition to new legislation is dragging it lower. We'll have those names and more right after this break.

Just about 10 minutes until the conference. closing bill. The S&P up actually less than two-tenths of 1% right now. Let's get back to Christina for a look at the key stocks to watch. Well, let's start with Coinbase shares, because they are about 6% lower right now. After the management pulled their support from a Senate crypto market structure bill. CEO Brian Armstrong said it includes a de facto ban on tokenized equities and amendments that would kill rewards on stable coins. I highly recommend checking out the interview with Emily Wilkins, our CNBC reporter. Shares are down about 6% on CBC.com. Meantime, Draft King's shares are a lot.

little bit higher on an upgrade to overweight from Equal Aid at Wells Fargo. The firm there likes the fact that Draft Kings is not spending as on promotional spending and expects the gaming giant to exceed the high end of its Q4 guide. And that is why you're seeing shares up three and a half percent right now. Of course, betting plays a big role. And last but not least, Spotify shares. Those shares are a lower after announcing it would raise its premium subscription price in the United States to 1299 month from 1199. Shares were up almost 4% earlier, but now you can see a big reversal moving completely in the opposite direction, down 4%. I actually just paid for my annual membership today.

All right. So you got in before the increase, you mean? I'm part of a family plan. Okay. We don't have to get into it. Anyway, congrats on that. Up next, we are counting you down to J.B. Hunt earnings out in overtime. What to watch for when those numbers hit the tape. That and much more when we take you inside the market center. We are now in the closing belt market zone.

Evans May, wealth managing partner, Elizabeth. If Evans is here to break down these crucial moments of the trading day. Plus, Frank Holland on what to watch for when J.B. Hunt reports results at the top of the hour. And Pippa Stevens on the big slump in oil today. So Frank, set us up for J.B. Hunt. Hey there, Mike. Let's start off with this. J.B. Hunt shares.

They've surged nearly 50% since their last earnings. The transports have outperform and rates in the trucking market. They generally increased in the spot market due to administration efforts related to English proficiency and non-U.S. Enforcement efforts. The metric to watch will be pricing in the container business that generates a, about 50% of J.B. Hunt's revenue. Those rates have trended lower year over year since fiscal 2023. However, the company has cited that enforcement is possibly leading to an inflection and rates. Analyst are also watching the truckload business. Now, this is just a single-digit

percentage of revenue for J.B. Hunt, but Susquehanna upgraded the company last week, calling it a high-quality way to play the increased demand for truckload services where one customer fills up that entire truck. Frank, thank you. Pippa, so there goes $60 crude, huh? That's right, Mike. So oil is pacing for its first negative day in six after President Trump's de-escalory comments around Iran with WTI now giving back much of its gains since Iranian unrest started pushing crude prices higher last week. We've seen this time and again where geopolitics move oil and then supply isn't actually impacted. As RBC notes, calls cues spiked to multi-year highs. And then there's a washout when headlines hint in the other direction.

Now, we are also seeing a growing discount between WTI and Brent as the market awaits more. Venezuelan barrels in the U.S., which could lead to higher U.S. exports. Now, the energy sector is the worst performer today on the back of crude's leg lower, with SLB and Halliburton dipping. They're still up double digits so far for the year, though, since they are expected to be beneficiaries if there is a boost in Venezuelan production. They report earnings next weekend. Venezuela will no doubt be top of mind for analysts. Mike?

For sure. Up double digits for the year, which is two weeks, so not bad. Pippa, thank you very much. Elizabeth, what's your playbook, broadly speaking, going into this year? We've had three very strong years for the S&P 500, a lot of concerns about the index concentration, maybe what the Fed might do. So how do you describe the setup for clients at this point? Yeah, I think 2025 delivered a soft landing.

So the setup going into 2026 is very positive. We had solid growth. We have unemployment at 4.4%. earnings hung in there last year. So going, you know, the consensus is that we'll see mid 7,7,500, 7,600. So mega-cap tech has to continue to deliver. They make up such a big part of the market cap. But I do think we'll start to see a slow broadening out across other sectors. So when you say mega-cap tech has to deliver, that's for sure, I guess, if we're going to get to those index targets. Is that how you would advise clients to still position, or do you feel as

if they should be ahead of, you know, the broadening action, which we've really seen over the last couple of months starting. Well, you have to have mega cap tech. 35% of the market cap, and I think contributing 48% of earnings growth. But I do think you can be selective in other sectors of the market. We think financials look very interesting. Defense has done well. I think it will continue to do well. So I do think that this will be a stock pickers market. Okay. And, you know, when it comes to the Fed as a swing factor, it feels like there's not a ton of suspense very soon in terms of what they're going to do. And the bond market has been very calm about things. So how would you approach the bond market in that context? Yeah, I think you always have

to watch the bond market closely. So so far there's no flashing red. But, you know, right now the market's really pricing in the likelihood that we don't see a rate cut until we have the new Fed share in place. If we see two 25 basis point cuts this year will be close to the 3% rate, which many believe to be really the neutral rate. So all of that, again, bodes well for equities continue to move higher. We keep pointing to some of the excitable parts of this market, you know, options trading is surging, silver's gone wild, unprofitable tech. Do you feel that in terms of people's instinct to just speculate a little bit more?

Or what does that mean for the markets, do you think? That's a great question. I don't think we're not in a market of exuberance or really speculation. I think what I hear from clients every day is, gosh, we've had three years of double-digit returns. When's it going to end? So you look at equity inflows last year, they were 0.2% of the market cap of the S&P. So they've been relatively subdued, so we're not there yet. All right.

It's reassuring. Very good to talk to you, Elizabeth. Thank you. As we hit into the close, S&P 500 well off the time for the day. It is going to break that mini losing streak up about two-tenths of 1%. You see, the Russell 2000 is the outperforming. Once again, up a tenth of a percent. The volatility index has bled lower.

It is going to be under 16 as you head into the close. That fourth attempt at 7,000 of the F&E, not successful. That does it for us here to fit into overtime with Brian Sullivan.