Closing Bell - Closing Bell: 5/19/25

Episode Date: May 19, 2025

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

Welcome to Closing Bell, I'm Mike Santoli in for Scott Wapner. This Make or Break Hour begins with the tenacious bid that continues to support the stock market. After an opening drop of about 1% in the S&P 500, that was a reflex response to Moody's late Friday downgrade of US Treasury debt. Dip buyers stepped in and have walked the index back just about to the flat line as you see right there. There you have it, It's flat as Treasury yields retreated from morning highs as well. Those also were basically last week's highs. The 30 year did click above 5%.

The 10 year was above 4.5. Again, they have come in so buyers also into the Treasury market. The scorecard with 60 minutes left in regulation has the Dow in the green. It is leading all the major indexes. You see it up there about a quarter of a percent, thanks in large part to a bounce

in United Healthcare shares. That of course had an awful week. Last week was a big drag on the Dow, up 7% as we speak. The NASDAQ has dug out of a pretty steep morning hole as well, about a percent and a half loss at the lows. And you see it just about again, up toward the flat line.

Microsoft, the biggest upside contributor, both to the NASDAQ and the S&P 500 on the day. The overall action continues a pattern of intraday strength from last week, and I'll suggest big institutions still rushing to rebuild market exposure following a powerful 23% S&P 500 rebound from the early April tariff tantrum loads.

That takes us to our talk of the tape. Is the big money correct to set aside these daunting fiscal issues and add risk to their portfolios as the federal budget is hashed out? And just how much is now being priced into stocks in terms of further trade deal progress and more sturdy corporate earnings? Let's discuss it all with our panel. Joining me, Hightower's Stephanie Link, Michael Bappas from Vios Advisors of Rockefeller Global Family Office, and Dan Greenhouse of Solace Alternative Asset Management.

Welcome to you all. And Dan, let me just throw that right at you here. Obviously, you can admire kind of the technical hurdles that have been cleared by this rebound rally and say, look, it's made the case that the lows are in and we've stabilized. You can admire kind of the technical hurdles that have been cleared by this rebound rally and say, look, it's made the case that the lows are in and we've stabilized. But what gets us to the next spot and what do you think we are now assuming in terms of incremental progress on trade in the economy? That's a much more difficult question.

Obviously, we have retaken the 200-day moving average. That's good. We're above liberation day levels, that's good. And we seem to be holding up at these levels in part, also because the earning season went pretty well. It wasn't the best earning season ever, but considering expectations going in, I think it provides a bit of a fundamental backdrop

to support the technicals. Now that said, what takes you to the next level? I think we might really be in a holding pattern right here until we get some clarity over the next couple of weeks on the tariff story. But thereafter, you get the tax tailwind. And while we're not reducing tax rates the way that we might have when the TCHA was first passed,

you are gonna get some benefit here to offset the tariff headwinds in the form of no tax on tips, some benefits and overtime. Yeah, I mean, obviously there's a lot of opposing currents here in terms of the macro influences and how it all is gonna interact with the budget. And Steph, I'll kind of kick it to you as well. I mean, we seem to be in this moment where everyone is sort of happy to have

the reduced threshold on tariffs with China, and you obviously have some backpedaling going on in terms of the trade aggression, but nobody's quite sure where it settles out. So how much conviction do you have that you want to either chase the market or look for incremental things that look like they can work? Yeah, I mean, sentiment is horrible still,

even with the 19% move from the April lows. I think what people are missing is that the economy is hung in there with all this stuff that's going on. The Atlanta Fed tracker is at 2.4 percent for the second quarter. Inflation is coming down. The labor market remains pretty firm. It's not all perfect. I get it. But those are really important things. And listen to what Jamie Dimon had to say from JP Morgan today. That business is incrementally better than when they reported the first quarter.

Net interest income could be as much as a billion dollars shy in terms of what they, well, more than what people were expecting, right? And so, and M&A, M&A is quietly coming back. All that is really good for equities, for risk on assets. The economy is really what drives this in my mind. I think this Moody's thing, this morning it was just an excuse to sell up into the strength,

and with the sentiment as negative as it is, that's why you're seeing a flat market. Yeah, that is true so far. And Michael, I guess the question is, we've been whipsawed in terms of the storyline, because you did have this very urgent, aggressive sell-Americ America trade, right? Bond yields up, dollar down, equities down.

That seemed to really hit a crescendo six weeks ago, or let's say. How much has actually changed since then? What are your investors either concerned with? Are they more believing where the markets have come to now, or the concerns that were manifest six weeks ago? Look, I think six weeks ago there was so much volatility, and that has subsided.

It's not going away. There's still gonna be volatility. Our investors, back when that was happening, were concerned that it was just gonna be a freefall. As we know, it never is. And we try to keep our clients focused on the long-term, focused on the plan. We have non-correlated assets.

You're seeing, you're getting some good yields in private credit. You're getting good yields in non-correlated alternatives, you know, hedge funds. And so the equity piece of the total portfolio is like 40%. The fixed income piece, let's say it's 30%, and then the alternative piece is another 30%. And that's what's gotten us through this volatility. That being said, you're still going to have volatility for the next six months, maybe 12 months,

until tariff stuff settles, until this Moody's downgrade settles. But I don't think it's an equity story right now. I think you're, you know, just what's really positive is earnings growth. I mean, you're looking at 12 percent earnings growth coming into 2026, probably eight to 10 going into the end of the year.

And I think, you know, like Stephanie said, the companies are strong, percent earnings growth coming into 2026, probably eight to 10 going into the end of the year. And I think, you know, like Stephanie said, the companies are strong and M&A is probably one of the most important parts of what's going to change this. And we haven't even started to see IPOs yet. Are those when you talk about non-correlated assets, things like private markets, are they non-correlated or are they just not mark to market? I think it's probably both. But you're getting yield from those.

You're getting 6 to 10% yields on these investments where you're not getting that in bonds and whether they're correlated or not, the correlation to what equities are doing and fixed income is doing is not there. Yeah. I mean, look, I get it. Even if it's just not marked to market, it allows people to kind of be more comfortable with with holding on to risk if they don't have to watch it every day. They don't have the choice to sell. No, of course. Right. I mean, I think everybody would would prefer it. And, you know, only Warren Buffett's the guy who

can kind of live with where the prices say they are and not really have it feed into into his emotions. But Dan, I am interested in the way that it's not so much a do-over, but we have round tripped in certain respects because we should remember before we even got the details of the tariff plan April 2nd, the market was already pulling back. We were down 8% and part of that was, you know, deep sea comes along and it creates an excuse to kind of rethink the AI investment theme at the same time, you know, that basically had all this crowding and some of the momentum stuff. So in other words, there's been multiple waves of reasons to test this market. Where do you think we are right now in terms of that AI theme, which seems like it's

pretty much gonna, you know, the bull market probably gonna live and die with it. Listen, the Deep Seek Monday threat, if you will, has already been refuted, at least in the short term. The issue when that happened was, oh, all the spending and hiring and investment that we think is gonna happen doesn't need to happen. And what happened after that? We've had an earnings report from all the major hyperscalers,

and they all said, in some cases, we're had an earnings report from all the major hyperscalers, and they all said, in some cases, we're ramping up capex. Again, Facebook is at $70 billion or something like that. So the deep seek, granted, there's a concern here in the medium term, but it's not here in the short term. And in the case of tariffs, you had something similar. Yes, we were down heading into the tariffs. Some of that was deep seek.

Some of that was worry about, hey, we're at an all-time high year and tariffs might be forthcoming. But even that story has been walked back a bit. We're not going to get 150 percent tariffs on a whole bunch of different countries, let alone China. And so you're at a situation where we find yourself now not too dissimilar to where you were before that, granted with some information that you have to be concerned with in terms of how exactly tariff implementation will affect consumer spending and profit margins for instance but in both of those cases the worst-case scenarios

clearly not coming to pass and frankly I would just add in terms of the tariffs listen I think everyone would agree we'd rather nobody have any tariffs on anything but but let's not forget that US consumer spending. consumer spending is 70 percent on services, which at least thus far is untouched by the tariff debate, and all else equal, that's going to be a positive. Right. Yeah, I do want to get to maybe a little bit of the macro picture and how it feeds into Fed policy. And I want to kind of play what Atlanta Fed President Bostic told us this morning here.

It really depends on how things turn out. At the beginning of this year when we were thinking about tariffs, we were not thinking about them at the level that has been proposed here or with the diversity across sectors and across countries. That requires a different kind of calculus and for me that's one of the reasons why I said, okay, we got to step back and pause because the details are going to matter as to what it means in terms of flowing through to an aggregate picture So for me right now, I'm expecting it's going to take a bit longer for that to sort out I am my SCP. I'm leaning much more into one cut this year because I think it will take time

This to me highlights that this kind of wait and see theme that's really everywhere, right? The Fed is in wait and see mode. They're in no hurry to move. They're kind of waiting for a couple of months of data to come in. Business executives also similarly, that's what you hear in terms of conference calls. They're just going to, you know, let's see how things shake out. Investors, you mentioned sentiment, at least survey-based sentiment, still seems like nobody's

quite sure what to think here. That could mean that we just have kind of a few months when we lower the stakes on the economic numbers because everyone is going to just kind of be idling for a while, or it could mean that something needs to be done and nobody does it. Well, we haven't heard about CapEx cuts yet. In fact... Not cuts, yeah. Right?

I mean, maybe they just stay the same and that's okay and i just think headed into this year it was always going to be a harder year mike because we were growing three three and a half percent over the last two years and that was because of the enormous fiscal stimulus that we put in place fast forward to this year not going to have fiscal we're going to have tax cuts and deregulation that's going to be positive we have to get through the tariff issue and we're slowly getting through it. But if we wait for certainty, you know you're not making money when everyone feels good. When we're not worrying, we should worry, because that means we're complacent, right?

So to me, I think the Fed is behind the curve. I think they absolutely can cut. I don't think it's more than 50 basis points, but they should. I don't think tariffs, I think I can make a really compelling argument that tariffs are not as inflationary as most people think. Think about the productivity side of the equation. So to me, I've been, I mean, I, look, I was at 9% cash in February. I'm now at 1% cash today.

Could we be a little volatile here, sell and may go away kind of thing? Maybe, but I think that there's a lot of opportunities. Well, we do want to get a little further into what JP Morgan CEO Jamie Dimon said earlier today at the company's investor day. Leslie Picker has been there and is here with those highlights. Hey, Leslie. Hey, Mike. Yeah, Dimon fielding a lot of questions, as you can imagine, about the topics you were just discussing. The macro picture. He characterized the current geopolitical risk as being, quote, very, very, very high.

Diamond said people feel good because they haven't seen the effects of tariffs, calling the market's round trip essentially a, quote, extraordinary amount of complacency. He said even with today's current rates, the tariffs are still at, quote, extreme levels. And given all the macro uncertainty, he's looking at all sorts of scenarios and what they mean for the firm and the broader economy. We do look at the range of potential outcomes. I think the worst one for a bank and for most companies is stagflation, which is basically a recession with inflation.

I think the odds of that are probably two times the market thinks. I don't know what's going to happen. We will be fine. Okay? What happens in that is credit losses go up. They will not be like the global financial crisis. I think credit losses and recession will be worse than other people think. On succession, Diamond said the board has, quote, intent to think about succession.

He said it's up to his directors as to whether he's CEO for four more years and maybe two or three as executive chairman, noting that's a, quote, long time. Mike? I think it's a long time for some, considering how long he's been in the job. Maybe it's not that long. But very interesting stuff, Leslie.

Thank you very much for that. So I guess, Michael, we can say for sure we know that Jamie Dimon is kind of, he's the paid to worry type, right? He's kind of your wartime consigliere. He's looking at the dangers, not at the, you know, the happy upside. That being said, do you feel as if right now

we get back above 21 times earnings, credit spreads are tight, that the markets are overlooking the potential for some disruptions. I definitely think they're overlooking it. And everybody knows that you have to be in the markets for the longterm in order to capture that upside pop. There's gonna be some positive news that comes out.

There's gonna be something that no one expects that's gonna drive the markets higher. And again, we spoke about diversification earlier. It's important to continue to stay diversified, but stay in the game, stay in the markets higher. And again, we spoke about diversification earlier. It's important to continue to stay diversified, but stay in the game, stay in the markets, because anytime you like when it six weeks ago or whenever that big pop was like 10, 11, 12 percent, you miss those days, you miss a lot of upside in the equity markets. I don't think I'm not as concerned as he is. And obviously he's much smarter than me and in a different position than I am. But I just don't see the concern right now And I don't see the any reason to panic and and I think earnings are quality. They are gonna grow for the next 18 months

Yeah, I mean look Dan the other piece of it is of course He's talking diamond talking to investors in JP Morgan trying to convey that JP Morgan is gonna be you know the last castle That's standing if if things go really bad. On the other hand, I do think there's a way to kind of get a reality check and say, look, pretty much nobody's expecting 30% China tariffs. We celebrated 30% because it came down from 145 or whatever, but where does it have to go for us to feel as if there aren't going to be significant disruptions? Or can we just have comfort in the fact that in general the US is kind of not a trade dependent economy,

you know, goods imports from China is 1% of GDP and basically say it's just going to be lost in the sauce. I don't want to say it doesn't matter because it does, but I think your latter point is probably more valid than people give it credit for. But I do want to answer a question you didn't ask, which is just to say, listen, to Michael's point, Jamie is obviously the most accomplished bank CEO on the street, deserves to be CEO

until he doesn't want to be anymore presided over the expansion of the best banking franchise in modern banking history, I would argue. But that said, there's a camp of very smart, very accomplished, very rich people who have been very bearish for a long period of time, not just the last two or three years, but the last, call it eight or 10 years, to varying degrees. The market has been expensive.

This is all because of the Federal Reserve, et cetera, et cetera. And one of these days, something is going to happen poorly. There's going to be recession. Earnings are going to get cut in half, it's going to be a big deal and a lot of people in that camp are going to say something to the effect of I told you so. But for viewers of this show, that has done you almost no good for the last couple of years. And to Michael's point, if you were out of the market when the S&P was up 9% in a single day when the S&P, when President Trump sort of abandoned the worst tariffs.

You miss a big chunk of the gains. And so again, there's a lot to worry about, but there's always a lot to worry about. There's going to be volatility, but there's always volatility. And I just think people, and again, Jamie Dimon, better, more accomplished than me, not quite as good looking, but I'll go with what I got. I just think this idea that there's always something to worry about, it's just for a lot of viewers of the show, it's just not worth it.

Well, that's true. And so maybe the I told you so's are gonna be beside the point, but if things go really badly, so will the idea that the Bulls had it right for 10 years be worthless, right? At the Lows, we clicked for a moment in April to a level where we finished 2021 sure I'll take 10 years of gains if I have to give back one year I'll take that all day long that's three and a half years that's three plus years I know what you're saying

the average for the S&P 500 over the long term total return 7.7% No, no, exactly. So 20% in the last two years is not normal, right? That's right. So we just got to keep it all in perspective. Right, exactly. So in other words, over time there could be some payback. Of course. Mean reversion, of course.

I do think you're going to start to see M&A pick up and that's going to drive markets higher. That's going to drive a lot of activity. It's going to drive Jamie Dines stock higher too. That's a point I want to get to as well because it seems as if the market is maneuvering somewhat in that direction. Even last week, first of all, brokerage index hit their new high.

Overall S&P has not get back to a new high. You saw IPOs, recent IPOs start to fly, all the FinTech companies that couldn't get out before, they're filing again. So people want to kind of rewind and say, oh, we got the animal spirits trade back. However, at the same JP Morgan investment meeting, the CFO was like, actually, capital markets looking like it's a little bit rough for the current quarter.

Right. So I guess the question is, maybe you believe it when you see it in terms of M&A, IPOs? Yeah, I think, well, it just has to pick up. There's too much money on the sidelines. There's been too much money on the sidelines for so long, and the rates are not moving in a direction where it's worth it to hold the cash. And even though we've gotten higher rates than we've had in the last 10 years,

I just believe that there's so many people out there looking for so many deals on both sides of it, and you're even seeing value in technology companies where they've just shot up so much and now they've taken a step back. You're seeing these values, like in those IPOs, like you were mentioning. Dan, what is the credit market telling you at this point

aside from the fact that not very worried actually, and you would think you have the makings of some kind of capital markets driven transaction type phase here given where spreads are, but maybe the absolute yield levels are not necessarily a no brainer for LBOs and things. Yeah, there's a lot of truth in that but to answer the initial question The credit market is doing much of what the equity market is doing spreads are very tight But at least in high yield, it's it's a very high quality market relative to history

There's no signs of worry in any sectors. I mean obviously traditionally you have one sector in credit That's a problem whether it's energy or telecom or retail. You're not seeing a whole sector in trouble right now. Granted, the energy was a whole sector that was in trouble, but there's very little trouble left there. So I don't think you're hearing very much. You're seeing some M&A activity. Charter just recently bought Cox. So there's some stuff going on here, or is it attempting to. There's the ATT Fiber deal was just approved to close. So you're seeing some activity here, the SPAC market has opened up.

There is signs that things are game on, and to your point about we'll see it, we'll believe it when we see it, that might be a problem for markets in two months or something when some of the tariffs start coming into place, maybe it's more onerous than perhaps the three of us think. But right now things look okay.

You know, and Steph, it still remains a little bit of a large cap quality focus to a degree. I mean, you have the Russell down 7 tenths of a percent today. Obviously rates don't help on that front. So is that where your kind of stock by stock work is taking you, into more quality? Because you also have seen cyclicals do well. So I think it's cyclicals,

I think it's also some of the Mag-7 that got hurt. Still, a lot of them are not back to where they were, right? So I think there's an opportunity there as well. All of last year, unfortunately, I wasn't in the Mag-7, all but one or two, and I've actually been taking advantage of that because you can't ignore the strong free cash flows and the moats, and now all of a sudden, a little bit more negativity in them, so I think there's opportunity there. But I'm still a big, big believer in data centers

and the infrastructure, industrial companies that are going to benefit from that. Financials, I like a lot as well, especially if NII improves. Mike, no one's talking about that. And that will help a lot in terms of earnings for the banks. Yeah. Well, they have the quality indexes are full of Mag-7 and industrial, so that's kind of where it takes you.

Steph, Michael and Dan, thank you so much. Appreciate that. Thank you. All right, let's send it over to Christina Partsanevalos for a look at the biggest names moving into the close. Hi, Christina. Hi, Mike. Well, let's start with UnitedHealthcare, rebounding today up about 7% after the stock hit lows last week, Christina Parchinevalos for a look at the biggest names moving into the close. Hi Christina. Hi Mike. Well let's start with UnitedHealthcare rebounding today up about 7% after the stock hit lows last week, shedding roughly 23% after suspending its full year guidance, former CEO Andrew

Witte stepping down, and reports of a DOJ investigation into its Medicare Advantage business, the stock still down nearly 40% for the year. And Reddit falling after a downgrade to equal weight from overweight at Wells Fargo, expecting, quote, user disruptions to become more permanent, particularly among logged out users, as Google fully integrates artificial intelligence into its search, decreasing its price target, this according to the analyst, to 115 from 168. You see the share's down almost 5% right now, Mike.

All right, Christina, thank you. Talk to you again in a bit. We are just getting started here. Up next, investors gearing up for a big week of retail results. Top analyst Oliver Chen standing by with what he'll be watching when Home Depot, Target, and TJX all report.

He joins us after this break. We are live from the New York Stock Exchange. You're watching Closing Bell on CNBC. See the Dow up 70. President Trump targeting Walmart over the weekend, posting on social media that the retailer should stop blaming tariffs as the reason for raising prices, adding that the company should quote, eat the tariffs. The retailer said last week that it may need to hike prices to offset higher import costs. Walmart, not the only retailer feeling the pressure as we gear up for a busy week of retail earnings. Target Home Depot, TJX and

Deckard's among the names that are set to report. Joining me here at Post 9 with his outlook on the group. Cowan's top retail analyst Oliver Chen. Good to see you. It's a pleasure coming in. I mean, just to start off with Walmart, which is a stock that you do like, how do you filter in the tariff concerns to the thesis, the earnings model, and how you think it'll play out? Yeah, in terms of our earnings model, it could hurt earnings per share by 5% or more,

but Walmart has been a top idea for us because it addresses needs plus wants. It has a great value-leading grocery business. In addition, technology. Think about digital marketing, digital advertising, and the marketplace. In addition, Target, Walmart, ever since Sam has always had an everyday low price focus.

So the company's focused on value, but that being said, as they balance all these stakeholders, they will have to raise some prices. They'll have the lowest prices though. Yeah, it's interesting in a sense because it's never going to just be like, well, there it is, 30% on top of everything we brought in from China. They obviously are constantly in this dynamic process of figuring out where they can maybe capture some price and where they can hold the line. Do you see the kind of rhetorical, political elements of this being a little bit of an overhang on Walmart or not?

Well, I'm excited with Walmart's bargaining power. Also, this company does a very good job managing very much stakeholders across suppliers, companies, and the commitment to US. Doug McMillan is a great ambassador, and I think they're doing a great job managing. They'll also stay very value-focused on certain items like bananas, like coffee, like roses. Well they'll strategically keep those prices pretty low as they think about elasticity. So they'll manage carefully

within categories and they'll offer a great value. Another retailer we like a lot is Costco. And our top idea this year is BJ's. Because those are retailers that focus on membership and offering you the very lowest price possible. For BJ's, is that obviously just kind of the model, the warehouse club model, or is there something happening there at the company in particular?

Yeah, there are few things happening. They're really thinking about pricing analytics and being sharp there, also managing within categories. But that being said, it's a very attractive warehouse club model. As you think about Sam's Club, Costco, and BJ's, they're well positioned to win in this tight environment. BJ's also has 260 stores,

and Sam's and Costco have over 600. So that's, and to win because the prices are only at 11% spread, very, very small and it's more about keeping members. You mentioned this tight environment. So what's your assessment of the current consumer backdrop, the tone of the consumer? Yeah, it's a consumer that's on pause, really. A consumer that's featuring needs over wants. And a consumer that's really struggling and still impacted by inflation.

Certainly consumer confidence is very volatile. That being said, there's a bit of a dichotomy because we have low unemployment at 4.2% and $800 billion of savings on the sidelines. So the consumer has money to spend, but it's been very volatile, something we're watching. I'd say middle, low end customer under a lot of pressure. And where would that give you caution

in terms of the types of companies in that world? Yeah, unfortunately it's been much tougher in the shopping mall and apparel and discretionary. And as you know, Mike, the tariffs will have impact on appliances, anything you plug in and home. So we're watching that. Target, hopefully it's better than Feared, but we're on the sidelines at a whole.

There's still negative comping. Of course you wanna get positive growth. And then we're more cautious on department stores as well. Quiet Luxury's working. Our luxury idea is Richemont Cartier, but we're being very selective there as well. Quiet Luxury is working. Our luxury idea is Richemont Cartier, but we're being very selective there as well. I think the name of the game is being selective and thinking about this choiceful consumer

and winners and losers. Just thematically, you wanna own retailers that really focus on value and low prices, such as Walmart, such as Costco, such as Elf Beauty too. Okay, Cartier's Quiet Luxury? It is, it's quiet but loud, but thinking about Quiet Luxury, they've done a good job actually maintaining prices.

Some of the handbag prices have gotten insane, like two to three thousand, and you can get a Cartier ring around two thousand. It's also a little more discreet, it's gold, it's versatile, and it's timeless, and there's resale value. Right. So there's aspects of this that are less branded. I would say it's quiet loud, but quiet. Gotcha. Excellent, Oliver. Thanks very much. Appreciate the thoughts today.

All right. Up next, we'll hear from the COO of Toyota North America. We'll get his take on tariffs, manufacturing in the U.S., and more in an exclusive CNBC Sit Down. Closing bell, we'll be right back. Welcome back. Automakers caught in the crosshairs of the trade war and that is putting big pressure on a company like Toyota. Phil LeBeau is live at the company's U.S. headquarters with more. Hello, Phil.

Thank you, Mike. Mark Templin, the chief operating officer for Toyota North America. Big week for you here at Toyota. Introducing the new RAV4, your best selling vehicle, almost a half million you sold last year. But you also build it in Canada and Japan and a lot of those are the ones you sell here in the U.S. How are tariffs impacting what you're doing with the RAV4?

Well let me start, let me break that down in two pieces. You ask about the RAV4, we are excited about launching that this week. We're going to launch actually seven vehicles this week with many journalists, analysts, and investors that are going to be here. And we're going to show them seven vehicles including the new RAV4 and we're excited about the RAV4 because of the things you just described and that is it's the best selling compact SUV in the marketplace, has been for eight years. In fact last year The the rav4 was the number one Number one selling vehicle in the entire marketplace of any kind of car and it's at the end of its lifecycle

So we're we're excited to create a new one But let me tell you what the designers and the engineers had to do they had to say okay What's the benchmark in the industry? Well, it's not someone else's product. It's the current rav4 So they're trying to make the current RAV4 even better. But you build over 60% of the ones you sell here in the U.S. in Canada. You have more that come from Japan. How are you handling the impact of tariffs? Well, very carefully. Right now we're kind of in a wait and see arena.

But I will tell you, in terms of the RAV4, I want everyone to know that we have invested in the United States for 68 years now. For nearly seven decades, we've been investing in America. We've invested $50 billion here, in cell cars. We have 14 plants across North America. 11 of those are right here in the US. More of the RAV4s will be built in Kentucky with this next generation, but we will continue

to build it in Kentucky, Ontario, Canada, with some coming from Japan to meet demand in the marketplace. But pricing is still an issue, especially with inventories at the level. Look, you have 10 days inventory out there. You clearly are getting hit with tariffs. How are you passing along those costs? Or are you just eating it? Now, we're absolutely in a different place than the rest of the industry.

For the last 60 days, the industry's had a lot of cars on the ground, and so they've been able to sell cars that aren't getting those tariffs. In our case, because our dealers are selling through our inventory as fast as we can build it. This year, we'll build 200,000 more cars than we did last year, and the dealers are still going to sell right through it. They end every month with a 10-day supply of cars, and they're asking for more. So we're not worried about that piece of it.

We are a little bit concerned about what the future holds because the administration, they understand how complicated our industry is, how capital intensive it is, how long the product development cycles are, how long the product life cycles have to be to amortize the cost for that. They get those things. They also understand how complicated the supply chain is and how fragile the supply chain is for our parts makers. But the industry prices, be honest with me,

they will start going up at some point. Oh, absolutely. In June, when do we see industry prices, not just for Toyota, but everybody, start to go up? You're absolutely correct. 25% tariffs are unsustainable. Everybody's gonna have, nobody has profit margins like that,

so everyone will have to eventually. My guess is as soon as the other automakers run through their inventory and they get down to the level we are, there's gonna be some people that start taking those. And then once a few automakers do that, everyone else will have to follow. So when do we see prices go up? Well, you've already seen some of them go up. You've already seen- But widespread, would you say June?

Absolutely, I think when you get to June or the end of June at least, you're gonna see people have to, they're gonna feel the pressure and they're gonna have to do it. Mark Templin, COO of Toyota North America. I told you it would be a quick interview. Good to see you. Good to see you. Thanks. Guys, we'll send it back to you. All right, Phil and Mark, thank you so much. Up next, we are tracking the biggest movers as we head into the close. Christina, what are you watching? Well, we are looking at a streaming giant facing a Wall Street reality check plus a vaccine maker stock soaring on a conditional FDA approval. Those names after this short break.

Seventeen minutes until the closing bell, the S&P 500 hovering just below the flat line. Let's get back to Christina Parchinevelis for a look at the key stocks to watch. Christina. Let's look at Novavax shares, jumping more than 14% after the company secured a long-awaited U.S. regulatory approval for its COVID-19 vaccine, but not without any conditions. It can be administered to anyone aged 65 or older, as well as to individuals aged 12 to 64 with at least one underlying condition. That contrasts with Moderna's spike vaccine, BioNTNTech's vaccine available to everyone over 12 regardless of risk factors

But at Novavax as I said up 14% Netflix stock dropping right now after JP Morgan this morning an analyst downgraded it to neutral while also raising his price target to $1,220 despite maintaining his long-term bullish outlook on Netflix streaming dominance, the analyst cited the company's elevated valuation following its 30% rise this year and nearly 400% surge just since October 2022. Separately for all the parents out there, Netflix just picked up Sesame Street worldwide streaming rights along with PBS after HBO didn't renew its contract, so it's been saved. Mike?

Just another reason I guess to hang on to the Netflix subscription. Katrina thank you. Still to come, solar stocks sinking in today's session. We'll tell you what's weighing on those names. Closing bell, we'll be right back. We are now in the closing bell market zone. Solar stocks getting slammed. Pippa Stevens has the details. Plus Diana Oick on the housing fallout of rising rates and fair lead strategies. Katie Stockton on the critical level.

She's watching, heading into the close. Pippa, let's start with these solar names. I think it was just last week where they were flying. Yeah, that's right, Mike. So solar stocks are slumping today as the new draft of the reconciliation bill could lead to an earlier phase down for some of the key clean energy tax credits, although no timeframe for that possible step down has

been released. The credits have helped spur record clean energy deployment in the U.S., but have drawn ire from some Republicans, including President Trump, who has called the Inflation Reduction Act the green new scam. First Solar is the biggest loser in the tan solar fund today, falling more than 9 percent. Sunrun, SolarEdge and Array Technologies also in the red. But today's weakness does come after the group surged last week after the text of the initial tax bill was not as bad as people within the clean energy industry feared, with JP Morgan

saying it was at the more bullish end of investor expectations. But with all this uncertainty around the crucial credits, the group is likely going to trade on sentiment and remain volatile, still Goldman upping its target on first solar today to 255. That's 56% above where it currently trades. Mike? Yeah, volatile and sentiment driven.

Pretty familiar for the solar stocks, Pippa. Thank you. Diana, kind of the bond market acting as a gatekeeper for housing yet again. Pippa, thank you. Diana, kind of the bond market acting as a gatekeeper for housing yet again. Absolutely, Mike. Yeah, the average rate on the 30-year fix went back over 7% this morning, 7.04 to be exact, according to Mortgage News Daily. That is the highest rate since April 11th. It did fall back slightly, along with bond yields this afternoon to 6.99%, but still higher than it was on Friday. Rates began rising sharply at the

start of April after President Trump announced wide-ranging tariffs. They then began coming down a bit but really they haven't moved much at all this month despite the announcement of a 90-day cut in Chinese tariffs last week. We did see a pullback from buyers though in April pending sales of existing homes that signed contract down 3.2% compared to April of last year according to Realtor.com. We did see a bit of a comeback in mortgage demand in the first two weeks of May but that was when rates were sitting right around 6.9% and believe it or not there is a difference Mike between 6.9 and 7% in people's heads. That's right more than one-tenth of one percentage point it would seem Diana. Thank you very much.

Katie, great to have you here. We have the market. Look, it's acting pretty resilient. Again, we had an opening drop, and then we've clawed back to the flat line. But overall, this rebound rally we've seen from those lows in early April, it's definitely impressive.

Is it convincing in your mind, in terms of, does it mean that we are resuming an uptrend? I would say the short answer is no, because usually when we see these violent relief rallies, they're more often found in bear market cycles. So that's the bad news. But the good news is we are almost back to where we started, almost around trips.

So we have this nice 23% gain over the last few weeks for the S&P 500, and it's given us what I feel like is a bit of a gift. For stocks that have broken down, people now have an opportunity to reduce exposure into that strength. So you would be more inclined to look for something to sell up here because you think the overall market

is vulnerable to backsliding? We are generally in that kind of sell into strength mode, and we're still comfortable holding core long exposure. We like that long exposure right now to lean more defensive, like on the sector front and even outside of equities on the asset class front. But the high flying tech stocks,

in fact, most of the stocks that exhibited upside leadership off of that April low, we would imagine will probably exhibit downside leadership, just that high beta nature, and that's going to include most of the mega caps, including Microsoft as one example. A great move from Microsoft is right up near its highs again, but it does have, as of today, a counter trend signal,

the first of its kind since the rally began. So with that gap that we saw on Microsoft a couple of weeks ago, it does start to feel overextended. There is this sense out there, and it's the way the market seems to act, that it just feels as if there's just a lot of money that feels left behind by the rally, and maybe there's just this catch-up instinct out there.

I know a lot of the analyses of institutional positioning shows them having been very, very underweighted stocks. Maybe that's back toward neutral now. But I wonder what the evidence is telling you about whether we've seen a culmination type move in this rally, because sometimes there are things to look at that say, okay, we've kind of squeezed all we can out of this rally. We like to look to the VIX to that end. The VIX is a great transactional gauge of market sentiment, and I would argue that the

VIX being inversely correlated to the S&P 500 is now on support and quite oversold showing some signs of stabilization. In fact, this morning we had a little bit of a gap up that I'm sure you noticed. That gap up does hint at a shift in volatility, a shift in market sentiment that is more likely to yield a pullback in the S&P. And can you handicap in terms of whether are we going back to the former lows if we do lose this bid or is it just kind of we have to chop around? I would say that we have a good chance of going back to the lows. I can't assign a probability but when you refer to the monthly charts, the monthly indicators, things like the MACD which is very popular as a trend falling gauge. These are pretty new sell signals, so

they have implications for the most part through year end and it would be hard to imagine that the bear market cycle that we think is underway is going to have already culminated with that April low. So we're mentally preparing for a lower low. If we see signs of downside exhaustion arise above that level, that'd be great. Our initial support for the S&P 500 is just shy of 5,500. That would be like, to me, best case scenario. Would love to see that. I think more likely is a return to an important Fibonacci zone of support, which is closer

to 5,125. Yeah, I know that is a pretty widely watched area. You mentioned some of the higher octane, higher beta stocks that did lead off the low. The inverse of that, I guess, is some things that look like they really got overdone to the downside. UNH is bouncing today. I know you've taken a look at that.

What does it look like to you? That's right, and listen, healthcare even more broadly has really taken a beating, especially in relative terms. And all of the pharma names, a lot of the big biotech names like Amgen, Regeneron, they look really oversold. And it goes both in absolute and relative terms. We highlighted a counter trend signal today in UNH. It's not for the faint of heart to buy it necessarily into this weakness, into this

big downdraft, but for a relief rally in relative terms, and for the most part, in absolute terms, in the healthcare arena, I think it seems very likely. And it would be natural if you think about it as associated with the pullback in the S&P 500, where you do tend to get that more defensive sector positioning. And is healthcare where you would look if you felt as if you wanted to shift back

toward defense at this point? I, you know, right now I'd say from a short-term perspective, you would look if you felt as if you wanted to shift back toward defense at this point? For the most part? You know, right now, I'd say from a short-term perspective, it's definitely high on the list. I wouldn't say I'd limit exposure to that. A lot of these names still look pretty terrible from a technical perspective on their long-term charts. They have not established basing phases. But if you look at Johnson & Johnson, even Merck and Pfizer look pretty oversold and they do show some

Indications that they should release themselves from their doldrums just a quick word on the bond market 10-year Treasury yield Do you have a target? Well, we do think it can reach about four or 74. That's a resistance level It's a strong resistance level but looking for more choppiness really more but looking for more choppiness, really more of a neutralized outcome. Great, Katie, appreciate the time today. We recovered a lot here. As we head into the close, we do have another relatively firm close, the S&P 500, crossing just over into the green at 59.54. We did open up about 1% lower to Dow. We're going to finish up by 1 third of 1%. Even the Nasdaq composite is managing to finish above the flat line.