Closing Bell - Closing Bell: 5/29/25

Episode Date: May 29, 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.

Thank you, Kelly. Welcome to Closing Bell. I'm Mike Santoli in for Scott Wopner today. This Make or Break Hour begins with the broad market mostly squandering an early rally, unable to build on Nvidia's positive reaction to its strong results from after the close yesterday as investors rethink the prospects for trade deals

following a court's ruling that most of the administration's global tariffs appear unlawful. You see Nvidia hanging on to a 3% gain on the day. The major indexes now hovering just above breakeven after starting the day with pops of around 1% each. And of course, after Tuesday's sharp 2% gain, the S&P 500, you see right there,

just up about 1.7 to 1% right now, has mostly stayed green, but just modestly. The NASDAQ is pulling some support from that bounce in Nvidia, but it's being offset by weakness in the likes of Apple, Uber and Netflix. The latter two have been big year-to-date winners. Bond yields, they are easing back following a slight uptick in weekly unemployment claims this morning and a strong auction of seven-year treasuries. You see the five-year right at 4%, the tens at 4.43, which takes us to our top of the tape. Is the market in different responses? year treasuries you see the- the five year right at four percent the tens at four forty three which takes us to our top

of the tape is the markets in different responses some good news a simple sign of fatigue after the strong run higher from early April or maybe a hint of a tougher set up for stocks as we head into what should be an eventful summer let's ask

Adam Parker Trevary at research founder and a CNBC contributor Adam good to see you here thanks for having me. So you can kind of play this both ways. Either the market's kind of gone nowhere from early November, which is true, or it's up a ton from early April. Also true.

Are we just digesting things here? How are you viewing it? I think it's the second half of what you set it up. I think we're heading into some more concern. I mean, I thought we were funding the tax breaks with the tariffs. So like one plus one doesn't equal three, right? So do we want it to happen?

Do we not want it to happen? There's a little bit of a math problem. I think investors I'm talking to today, asking a little bit about the bond market, and you know, when equity guys start doing that, that's always a little bit worrisome. I generally think the consensus view is we're gonna continue to melt a little bit higher

until we get a little more clarity on October earnings season the July guidance for October people know the numbers are too high But they're sort of thinking hey the top 50 stock can maybe handle a little a little inflation Maybe the dollar weakening helps a little maybe oils low maybe input costs a low and so maybe the earnings degradation Isn't as bad as we thought a month or two ago. So I find like people are positioned for us to head a little bit higher, and they're just saying either a big slot on the consumer or bond yields will derail my current, you know, their current view.

In terms of the tariff piece of it, I mean, obviously, as you suggest, you can slice it any way you want in terms of what the implications are, what the goals are. But the bottom line is just that whatever you thought about this ruling this morning, you're not going to get resolution tomorrow. And it's like you thought maybe after the 90-day pause, you would at least know something firm about the rules from here and what we're going to settle out at. I guess you just have no hope of that. I guess, but to me, the bigger question is, what has the market already assumed? Cause we've rebuilt the valuations,

we're within 4% of the highs. I'm not saying that you're assuming great things, but you aren't assuming worst case. I mean, I thought we were taught somewhere here that uncertainty is supposed to be bad for the price to earnings, right? Like if I don't really know what's gonna happen, I probably should pay a little bit less

until I have clarity. So I could see the logic to earnings, right? Like if I don't really know what's gonna happen, I probably should pay a little bit less until I have clarity. So I could see the logic today being, hey, things are a little less uncertain today than they were yesterday. I thought we were 10%, I thought we were working on China 30, and it's a little more uncertain. So I can see the multiple probably, mark to market from yesterday, should be a little lower.

The earnings, you know, I don't know. And I think that's the part where did the perception about growth just get better because maybe there's less chance we're gonna implement things, I don't know. And I think that's the part where did the perception about growth just get better because maybe there's less chance we're gonna implement things? I don't know. I would argue either way, we created a little bit of a ripple effect here

where we're gonna do some things with pricing, with inventory, with capital spending, with delays in spending. And I think you'll see some of that impact stocks 100 through 500 at least for the July earnings period. So I think we're in a bit of a data vacuum here with Nvidia being considered

like the last big company that reports. Yeah, exactly. And so, yeah. Well, I was gonna say, that does kind of sum it up to a degree, right? You know what you had in the second quarter. You also had, you know, know what we had in guidance and it was probably less bad

than what it was gonna be. Definitely less bad. I think visas, print, people are looking for real-time consumer prints. You could say in the last couple weeks the low end consumer is slowing. I think you could say raw stores, little light, definitely considered a skew toward the lower end consumer, that the boxes, like physical retail boxes have disappointed. I mean if you strip out Target's online business, their physical boxes comped like down five and a half

against a down four a year ago. They're down 10% over a two year stack. It's 100 billion revenue. So there's definitely some consumer slowing at the middle to low end that's happening and some price sensitivity. But I think the S&P is a weird index where the Mag-7 is 25% of the earnings at 30 percent of the market cap

And they're probably immune to a little bit of a stagflation fear. Sure earnings were good So I think there's some offsets enough that it's hard to get too bearish Right now and what makes you get more bullish will be anything on the consumer in the industrial front that look a little bit more benign you mentioned the clients, you know raising the industrial front that look a little bit more benign. You mentioned clients raising the specter of something going on in the treasury market that could be a headwind. I mean, what are we wishing for here? I wonder that to some degree,

because some of the backup in yields over the last several weeks has clearly been the economy sort of hanging in there. Yeah, better than people thought, yeah. Pricing out more Fed action for several months. And then people get fixated on the fiscal situation, but it's very slow moving, it's mostly unchanging, and we're kind of in the same range on the tenure we were

for eight months ago, a year ago, whatever. Yeah, the tenure's been super stable while the stock market's been volatile. I've noticed that. I think what I believe is true is that we don't want the Fed to do anything. If we just don't move the front end at all, we say, the economy is hanging in, we don't really need to cut right now, we're not seeing inflation pick up, or I'm not worried they're

going to hike. Then I think the market maybe has a slight melt up with a higher multiple. But if they have to cut one or two more times, I'm not sure it's as great as you want it to be. Oh yeah, the market just rips higher because they're cutting because I think they're likely going to be responding to sort of enough deteriorating data points that they think it's required. And you know, the market will lead the Fed on that. So that's the challenge I have. I think pause is like the best scenario.

Well, let's actually stay right there, Adam, because President Trump did meet with Fed Chair Powell earlier today. Megan Casella is here with the details, what we know from both sides, Adam, because President Trump did meet with Fed Chair Powell earlier today. Meghan Kasella is here with the details, what we know from both sides, Meghan, about that meeting. Hey, Mike, absolutely. We learned earlier this afternoon Powell was here at the White House at the President's invitation. It was the first meeting between the two men that we know of since 2019. The White House Press Secretary, Caroline Levitt, gave a little bit of a readout from the White House Press Secretary Caroline Levitt gave a little bit of a readout from the White House side just earlier this afternoon. Take a listen. The president did say that he believes the Fed chair is making a mistake by not lowering

interest rates, which is putting us at an economic disadvantage to China and other countries. And the president's been very vocal about that, both publicly and now I can reveal privately as well. That readout from Levitt coming just after we got a full readout from the Fed side as well which Levitt did say the White House agreed with the Fed saying in its statement that the two men discussed economic developments including for growth employment and inflation and that Chair Powell did not discuss his expectations for monetary policy except to stress that the path of policy will depend entirely on incoming economic information.

So looking at both of these statements side by side here, both men really sticking to their guns. The president telling the Fed chairman privately what he said publicly that he believes not cutting rates is a mistake. And then the Fed chairman, of course, sticking to the feds dual mandate saying it's required by law that they will remain data dependent and focused on both sides of that mandate. Mike? Yeah Megan thank you. So each each one essentially reasserting what they what they've been saying and maybe it's been somewhat diffused obviously right the Supreme Court decided they had to say

that the President can't fire the Fed Chair. We are getting a PCE tomorrow, so you're gonna have another inflation input. You think the economy, I mean, you implied earlier that Wall Street can deal with a wait and see Fed. I feel like Powell's words there were like AI generated. Like if you just typed in, what is Powell gonna say? It's gonna spit out, hey, we have a dual mandate that's data dependent. Like at this point, that feels like

that wasn't even the real Powell, you know. So, and I think he's gotta do that because when he finally does make a move, it has to be grounded in multiple data points that he can sort of almost prove he's independent, right? And so I don't think they're gonna cut as much as what's in the price, and I think if they do, the stock market's gonna act bad

before they do. So, yeah, that's my view. Look, they cut 100 basis points starting last September. That was because rates were way high relative to what they thought the neutral rate was and also where inflation had come down to. I mean, if you get a little bit of relief on inflation from here and we're trending below two and a half,

you still right now have the Fed funds rate of four and a quarter plus, right? So, in theory, there's room to bring those together a little bit by cutting without it being an emergency. I think that'll be hard for them to do with unemployment where it is, and that's the number one part of the dual mandate that we get data on each month.

And unless you see that deteriorate, unless you see large companies say, hey, we're gonna start firing people, I just think it's gonna be hard for them to do it. And I really do think it's the opposite of where we were at the end of 2022 when the street just sort of said, hey, I know you're hiking,

but I'm gonna start buying stocks anyway because there's only one or two left. I think we're on the other side of that now where I'm gonna start selling stocks if I think the accommodation has only got one or two left and or if I really need the extra accommodation. So I think it's really, got one or two left and or if I really need the extra accommodation. So I think it's really my view is that the interest rate path has less to do with whether

I buy equities or not or bonds or stocks or even US versus non-US. It's all just going to cause a big rotation within the equity market. So I think for most people I talk to who are institutional investors trying to beat the index, they're just trying to figure out when to rotate. Like do I get into discretionary that's got killed where the estimates are low? Do I take a shot at regional banks or other things that haven't participated?

To me, it's all in the market because I think it's just too hard to know what the Fed's gonna do, and they're gonna lag the data that I'm gonna get from the companies anyway. Well, that's the thing. I mean, saying that the job market's still okay is a kind of a formula. It's a lagging eventually

So we'll see Adam hang out for just a second. Let's enter Christina parts and Evelyn's for more on today's action in the chip stocks, Christina Well, let's start with the latest chip news Mike this afternoon synopsis is spending its quarterly and full year guidance after receiving a letter From the Commerce Department about new export restrictions to China and this really hits close to home for Synopsys since China represents roughly 14% of its total revenue. The company, much like Cadence, makes the essential software that designs advanced chips, basically the blueprint tools that chip makers really can't do without. The US government though is clearly escalating its efforts

to kneecap China's AI ambitions. Today's move targeting design software shows Washington realizes that just blocking finished chips isn't enough. Speaking of blocking finished chips, Nvidia proved that even major geopolitical headwinds can't slow down the AI boom. Nvidia projects it's going to lose $8 billion in Q2 revenue because of these government policies, but the company still managed to forecast $45 billion in second quarter revenue,

thanks to strong demand, specifically from its Blackwell products, or as you and Adam said, less bad, right? So Nvidia is more heavily weighted in the SMH and the S&P 500 Spider ETF, both of which are up marginally at this point, but Nvidia shares still stuck range bound. The 52 week high was $153.

Shares are up about 3%. So still stuck in this range, Mike. Yeah, for, I don't know, 11 months in a way, depending on how you define the range. Christina, thank you very much. See you again in a bit. Let's bring in American Century Investments, Mike Road and Ned Davis's Ed Klesshold.

Right there, it's Adam Parker, of course, is still with us. Thanks to you all for weighing in. Mike, you know, just this another volley of potential restrictions on these chip design firms, I really just adds to the noise level, I would assume. And I suppose creates a challenge in terms of how an investor is supposed to think about that as a friction point for markets for the economy,

or has the market broadly told you, look, we can absorb this. Yeah well if you look at Nvidia's results last night they clearly absorbed China not being in their guidance and put up in an incredible quarter. The interesting thing though is the

stock's up three percent right the question is where's the incremental buyer and our expectations so high. And on that expectations point you kind of hit the top of the show. You know we're up over the last six you kind of hit it at the top of the show. We're up, over the last six weeks, the market's up 20% off of the bottom.

VIX is below 20. You think everything is great, right? But the reality is, we could see the next few months with more volatility now that the S&P is trading at 22 times earnings, very close to an all-time high. A lot of this negative soft data that we saw over the last few months likely to turn into more negative hard data. So we could have some negative catalysts from a news perspective. And then finally, what's been driving this 20% growth or 20% rebound? It's been largely retail, buying the dip. Instit institutions really haven't participated.

And you've also seen hedge fund short interest really pick up in the last couple of months. So over the next few months, given valuation where we are today, you probably want to lean defensive and make sure you're really well diversified. But when you look out to next year, there are some more potential positive catalysts. Clearly, the Trump administration has pivoted and is focusing more on growing the economy, as opposed to doge and other cost cuts. And so from an earnings perspective, earnings may be flat this year, but in a normal year, which so far has not been, markets tend to look out. By the middle of the year, markets are looking out at next year earnings growth. So you could see acceleration next year and a lot of

the areas that has it that haven't kept up as much small caps mid caps the s&p 493 so I'll be interesting to see I would say near term you know given the run we've had to make sure you're diversified longer term next year things could look a lot more optimistic yeah it's true by halfway through this year our 30 next year in people's minds to a large degree. Hang on guys, we are getting some breaking news out of Washington. Let's get back to Megan Casella at the White House. Megan.

Hey Mike, some moving trade news here. On that ruling overnight on the Trump administration's tariffs, the U.S. court of appeals for the federal circuit now saying that all of those tariffs that were found to be unlawful are able to stay in place at least temporarily while this case moves through appeals. So essentially the administration's request for an emergency stay, meaning that the ruling would not yet take effect, that stay has now been temporarily granted while they give both sides more time to respond. Now the court did set a June 5th deadline for the plaintiffs to then respond and for the administration to then respond

again by June 9th. So in the coming weeks we will see more movement on this but what this means Mike is that in the meantime its status quo on the tariffs despite that ruling last night from the Court of International Trade now the administration's request for an emergency stay or for some immediate relief has been granted. Trade negotiations can continue. Tariffs can continue to be collected as we see this case move further into appeals. Mike.

Okay, June 5th, one week from today. We'll add that to the list of deadlines we have to kind of keep in our heads. Megan, thank you very much. Ed, you know, just in terms of trying to wrap all together the market's actual behavior recently, as Mike was describing, right, you had this very strong rebound off of a pretty severe pullback. You have had volatility subside. You have retail investors that have been a pretty persistent bid. And, you know, maybe

institutions have some catch up to do. How does that fit into how you're viewing where we are in terms of the market field position? Mike, I think there's we have to really think about what the kind of action the market experience coming off of that April 21st retest and while every time we go through one of these air pockets in the market, it feels unique. Really, there's a consistent pattern that the market goes through. And what we saw was a good retest on April 21st and then nine straight days of the S&P moving higher. We got a huge percentage of stocks above the moving averages, making new highs,

advancing volume. These are classic things that happen at the beginning of a good uplay. And so we paused short term. But I think as we head into summer, that momentum can continue. And then that's where the hard data that may catch up to the weaker soft data could come into play. And the reality of the situation is, versus, say, we were at the beginning of the year, slightly higher inflation, slightly lower economic growth. So that could make for a little bit of a tougher second half, but I think if we move through the end of the second quarter into the third quarter, there's still some good momentum in the market.

You know, it's interesting, Adam. I mean, we went from people assuming that the hard data was going to give way, right? Because you had this profoundly negative swing in the survey-based stuff, to now, it's kind of been okay on the hard data side. And I think people are extrapolating that, even though we maybe have some pull forward of demand, there's a lot of noise in the numbers, you know, there's deceleration in the labor market, even if there is an outright weakness.

So, you know, can we be sure about this? I mean, I don't know, listening to what everyone else is saying and the whole tariff stuff, it's like dizzying. in the labor market even if there is an outright weakness. So can we be sure about this? I mean, I don't know. I'm listening to what everyone else is saying and the whole terror stuff. It's like dizzying. So now I assume it's not until June 5th. I mean, what am I supposed to mark to market my perception about growth for earnings estimates for this year?

Do I just ignore it? Because I think what the institutional investors are saying is take whatever Trump says and assume it will never be as bad as what he's saying. So just like fade any of his most negative comments, and like isn't today just another example of this, like I don't know, what do I do, probably nothing, I'm dizzyed into submission on changing my earnings estimates, so I'll just wait till the companies,

the real companies, the industrials, the consumer, tell me if something's slowing or not, and I assume, for sure there was some pull forward in demand, you saw that in port data and other stuff. I have to look for evidence of credit problems. I have to look for 90-day credit card delinquencies. I have to look for the credit card. So I think we're going to see slowing data.

I guess the one thing that I disagree with that I saw on the screen there, but I'm glad Mike's not standing next to me since he could post me up pretty easily. But I don't know if small caps can work unless we really do get the economic acceleration. So I think he's right. If people were looking at 2026, with an accelerating earnings, they are cheap. But I think in the today where we are now, it's going to be hard for them to work until we get a better understanding on the impact tariffs have on margins, et cetera.

So Mike, what is behind the thought that that small caps can maybe do some catch up here? Yeah. Yeah. Adam, I would never post you up. I know you're a pretty athletic guy. Yeah. So, okay.

So, they're really cheap, right? We know that that should never be a thesis, but a pretty bad outcome has been priced into small cap stocks at this point. And then talking about these potential positive catalysts later this year, if the Trump administration is really focused on dialing up growth, that will benefit small caps more than large caps for sure. Deregulation is coming. That's a direct, small caps are going to be the biggest beneficiary of that.

So the tax bill, again, that should also clear up. That should help stimulate the consumer. And then finally, just kind of getting the tariffs and the trade situation ironed out, trade deals and getting some certainty out in the market where CEOs can make capital allocation decisions to invest in new facilities and old facilities and actually do some reshoring. So all that could help drive small cap earnings, which have been negative to flat for the last three years. So at this point, it's kind of an empty room. Investors don't really care. It's a very small piece of the market. But historically, that's been a really good time to start adding if you

have a longer term time horizon. And what does your work suggest about whether it is time to kind of look for laggard areas or stick with what's been working? Yeah, really the time to pick up the laggards would be once you get through the worst of a big downturn or a bear market, which, you know, that's not where we are at the moment. In particular for small caps, you really have to come to the point where you're getting out of a recession and the only point I'd add on to that is I think there's this misconception about small caps

that was true a couple decades ago they get more their profits domestically than they get overseas versus large caps but in reality both the S&P 500 and S&P small cap 600 index get about 40% of their profits from overseas. So if you're looking for that domestic play, actually mid caps are a better place to go. The S&P 400 mid cap index gets less than a third of their profits domestically. So if you're gonna use caps to play what's going on

with the trade wars, I'd look at mid caps more than small caps. Yeah, interesting. Ed, Mike, Adam, appreciate it. Thanks for the conversation this afternoon. Good to see you. Let's head back to Christina for a look at the biggest names moving into the close. Christina. Let's start with C3 AI shares surging after it posted a narrower than expected loss, but Bank of America reiterated the Enterprise AI software company has an underperform rating,

according to them, because of lagging subscription growth. Investors who shorted the stock though likely contributing to this 24, almost 25% stock rise right now because 18% of the float is shorted according to FactSet. Elf Beauty also soaring. Earningsbeat may have helped, but the company also announced it would acquire Hailey Bieber's beauty brand, Rode, in a deal worth up to $1 billion. Keep in mind, Rode was founded in 2022.

$1 billion and founded three years ago. Elf did withhold its full year outlook amid uncertainty from tariffs, but investors, as Brian said earlier, and I know it's cheesy, are believers, and that's why the stock is up about 24%. They are. I did also mention Elf is among those retail names

that have a pretty hefty short interest too, which maybe they're getting chased out of this one. Okay, so they're not Beliebers. Thank you for killing the joke, the pun. Maybe they are now, but we'll see. Thank you, Christina. We are just getting started here. Up next, top technician John Kolobis reveals

the key levels that he's watching and the green flags he's seeing in the charts right now He joins us after this break. We are live from New York Stock Exchange. You're watching closing bell on CNBC Welcome back an early day rally. Losing some steam, though the index has affirmed up. The S&P up about 3.1%. Our next guest is seeing some mixed signals beneath the market surface.

Let's get a check on the charts with macro risk advisors, John Calovas. John, good to have you here. Look, as I see a lot of the assessments of this rebound rally the S&P had since early April, a lot of focus on, okay, really broad very quick powerful recovery we got to within like three percent of the old highs maybe that bought the market kind of the benefit of the doubt is that the case and where are you seeing maybe some

offsets to that okay very good question thanks Mike for having me of course I think what's going on here with equity markets there going to go into delicate balance here. Between being long term bullish and say street and tactically bearish of cautious here so you're right to point out these breath rust or these technical green shoots that occurred that

means the market is in a structural bullish uptrend- however the market is found itself into a position here where it's overbought sentiment is very complacent here that whether or not you're bullish longer term or not the market is poised for some sort of consolidation if not a proper pullback. Okay so it's certainly I mean maybe that's the process we've

been in right for week and a half or so I guess S&P was down almost 3% last week interested to hear you say that you feel that investor sentiment has become week and a half or so. I guess S&P was down almost 3% last week. Interesting to hear you say that you feel that investor sentiment has become complacent. I guess it kind of depends how you look. Definitely a lot of speculation in short-term option stuff. Some of the retail-driven names have been flying. On the other hand, the surveys still seem pretty soggy, not very bullish, and even institutional positioning is sort of in the middle. Yeah, and that's the trick here.

That's the delicate balancing act that we have here. Yeah, the long-term sentiment measures are still recovering from dire, if not apocalyptic, levels. It's the shorter-term ones, like implied volatility has gotten pretty darn low. Well, call ratios got pretty darn low. High beta stocks have gotten pretty overbought. That argues for some sort of consolidation or pullback. But another way to think about it is this, Mike, in terms of just how the market has

where it's found itself. I don't think that 98 analog is holding anymore. We don't have to do that retest. I think the low is in. We're doing a V-bottom. What's interesting about V-bottoms is that once you recover about 80% of the decline, you fall into this consolidation pattern. We saw that in 2018 coming off of that low, and we also saw it in 2020.

That was that first oh-oh moment after the COVID low. The market got shaken out pretty hard in June, went down about 7% or 8% consolidated, and then eventually broke out. Yes, the chart that I brought shows the 2018 example where like you kind of get to all time highs, but then you have a hard time sustaining it. The market needs to really digest things. Interesting, yeah.

So if we're in that mode right now of kind of churning and consolidating, what is an acceptable retreat from here on the downside to where you'd say, yeah, this is still pretty routine and normal. Yeah, so I'm advising clients that so long as we pull back to 5,600 and how we pull back to 5,600 is important. So I'm dip buying down to 5,600, still think we can get up to 6,600 by the end of the year.

So I'm holding onto that, but it's really how we pull back because I got a sense that as this market rally, there wasn't a ton of renewed fundamental buying at all. People just got to get something kicking and screaming. So it's the nature of the pullback will it be benign will be corrective in nature. So that will be the main level on the pullback 5600 is the line in the sand for me to stay structurally bullish here on the tape.

All right, that's a that's a 5% drop from here. Probably would get some folks attention attention, as you say, depending on how it might happen. John, appreciate it. Thanks for catching up today. Thank you. All right, up next, Intelligent Alpha's Doug Clinton tells us where he's finding opportunity

amid all the strength in big tech. Closing bell, we'll be right back. Tech stocks seeing gains today thanks to strong Nvidia earnings. The tech sector also setting up for its best monthly gain since November of 2023. Here to share his outlook and the best opportunities outside of the Mag 7 stocks, Intelligent Alpha founder and CEO Doug Clinton. Doug, good to see you. Good to see you, Mike. So coming in, so what have we learned

from NVIDIA's results, its guidance, and actually everything that built into it, because it felt as if we were getting a pretty decent picture thematically about where we are in this phase of AI. I think it was sort of the culmination of a lot of things we've been hearing from all the AI hyperscalers for the last quarter.

I mean, we've continued to hear this reiteration of, we're going to spend, we're going to build. Meta raised its capex guidance last quarter, and now I think we're seeing it play through in Nvidia's results last night, where even though we had this noise about China and how much could that impact mean, they still, I think, guided up.

If you sort of parse the China stuff out, about 5%, and to put that into context, look at the last year of their sort of raises post quarter and they've generally been kind of flattest to 2%. So this was a pretty strong quarter over the history of what's happened more recently. And what else are we coming to know about either uptake, usage rates,

how many iterations we're talking about, how clients are using this stuff, or is it just still in, look, headlong build data center mode? I think it's mostly sort of this headlong build data center mode, but what I would say is, I mean, in Intelligent Alpha, we're actually building on this technology.

So we're using all of the major large language models to do our stock analysis and portfolio creation. And I'll tell you what we're seeing is that every other week it feels like a new significant model release happens and we have to kind of go and update how we use the technology because the updates are significant enough where we can do new things every other week. And so I think for us we're happy to spend what we spend with the with the model providers and I think they're starting to see more companies like us, and certainly individuals, OpenAI,

adding 100 million users every month, it feels like right now, that are spending money as well. Are there now kind of these sort of spin-off and knock-on plays that are worth looking at at the moment, or is it still just kind of the obvious beneficiary? For our perspective, I think semis is probably still the main place to be. And it's funny, the beginning of the obvious beneficiaries? For our perspective, I think SEMIs is probably still the main place to be. And it's funny, the beginning of the year, there was this narrative about software.

This was going to be the year for kind of AI and software. It just hasn't happened. I mean, you look at some of the companies, even ones that we own in our Livermore ETF, Adobe, Team, Atlassian, they just haven't really shown that acceleration from AI yet. But I think that probably still will happen, but it might still be six, 12 months away. The semis are going to keep seeing this more immediate spend. And then within semis then, I mean, obviously we're showing, you know, Nvidia Broadcom. I mean, really over the last couple of years, that's been where the upside has come.

I know Marvell's going to report after the close. I mean, is there something else to be gleaned from what they say? Maybe, Marvell, we have also in our Livermore ETF, that's one I'm a little scared kind of going in tonight, to be frank about it. The concern there is just there's been this constant sort of question about are they going to lose

some of their Amazon business on the custom chip development side? And if we get a firm answer, and there's been sort of reports that they may have lost that, if we get a firm answer tonight, the stock might be ugly. I think you expand your horizon and you say,

are there other opportunities for Marvell? I think there are, and so that's a name that we still do on despite that concern. You know, you mentioned how Nvidia has managed to kind of completely plug the gap almost, if not entirely, of what might have been lost in terms of China. You also have these other sovereign AI plays.

What is this going to ultimately lead to? Could it just be all these parallel models and not one global standard? It's going to just be a lot of different versions of this thing? Can we even say yet? I think it's probably a little be a lot of different kind of versions of this thing or can we even say yet? I think it's probably a little too early to tell. I think certainly we've always seen in technology that you tend to have winner take most outcomes and I think the same will be true in the model wars. I think you could see a general winner in the closed source battle which looks like OpenAI right now. Google maybe is in the race, Grok also. And then you'll probably have a winner in the closed source space, which Meta is trying to deliver with Llama.

Then you look at the countries, right? And each country, I think, wants to have influence over how these models are going to function. So whether that means they create a variant, perhaps, of some of these models that's more localized and trained on specific data there, or they use some of the open source models, I think that's kind of what it looks like.

So you might have some big winners and then they spider web out and then use other applications. How much time did we gain confidence about in terms of being able to say, okay, we can extrapolate this spending level, this particular pattern of build out? Is it two quarters, is it through next year?

I think we still have at least a couple years, I would say, from my perspective. And the reason I think that is some of what Jensen highlighted on the call last night, which is this idea of kind of moving from a training paradigm, where we're sort of teaching the models how to act, to this inference paradigm, where now it's how are the models thinking, how long do we want them to think about the questions we ask them? And again, I'll go back to our use cases. We use all of the reasoning models and we let them think for very long times when they make investment decisions.

So I think we're gonna continue to see more and more applications that benefit from longer thinking time, and they're gonna need more chips. So that just translates directly into higher usage rates, need more capacity? That's right. Gotcha. More thinking is more chips. All right, as the old saying, right? All right, Doug, thanks very much.

Thanks, Mike. Appreciate it. I still had wheel drill down on all the moves in the energy space. A quick programming note, if you missed Jim Kramer's sit down with Nvidia CEO Jensen Wong, you can catch the entire thing on CNBC Pro. Just head to CNBCPro.com slash Wong or scan the QR code on your screen. Still ahead, we'll tell you what to watch when Dell reports in overtime. Closing the bell, we'll be right back, the broad market up about a quarter of a percent. We are getting some fresh news out of NVIDIA. Christina Parchenevales is here with the details. Hi Christina.

Hi Mike, never dull day with chips. NVIDIA and Dell helping build a game-changing supercomputer called Doudna at Lawrence Berkeley National Lab, which is set to launch in 2026. And this is important as countries really race to build these powerful computing systems for national competitiveness. Doudna represents America's latest push to maintain its scientific edge.

And what I mean by that is unlike traditional systems that work separately, this supercomputer merges simulation data, AI into one platform. They're going to be using Dell infrastructure and Nvidia's Vera Rubin architecture. to right now in California. Supercomputers, though, are important, have become critical national infrastructure with China, Japan, Europe investing billions in next generation systems. This new US supercomputer really aims to compress years of discoveries into days with the goal of maintaining, of course, America's position in the global race for scientific breakthroughs. Jensen Wong will be speaking at 3.50 in about seven minutes and he's gonna have a press conference after this. We'll come with you with any breaking news from that.

Mike? All right, yeah, we will absolutely listen up for that. Christina, thank you. Up next, we'll run you through what to watch from Costco and Dell when those numbers hit the tape in overtime. That and much more when we take you inside the market zone with a Dow just about at session highs of three tenths of one percent.

We are now in a closing bell market zone Pippa Stevens shares what's behind the swing lower in oil prices plus two earnings reports out in overtime that we're watching. Christina Parks and Nevelolis is back with Dell and Melissa Repco on Costco. So first Pippa, a little bit softer crude prices today. Yeah, that's right Mike. So we did see oil dip as OPEC plus members could decide to hike July production by more than 400,000 barrels per day

when they meet this weekend. That's according to sources who spoke with CNBC international. Now it would be the fourth straight month of larger than expected hikes, adding to supply just as demand concerns really started taking hold amid the trade uncertainty. On the heels of that, energy is the second

to worst sector this year. And if oil stays in the low 60s, at some point companies might have to start cutting the hefty shareholder returns investors have become accustomed to. Last year, the international majors paid out a record 119 billion, that's according to Ristad, with shareholder returns as a share of corporate cashflow

from operations rising to 56%. Now, if this year's buybacks and dividends remain at 2024 levels, that ratio will top 80%, a level, Mike, that the firm called unsustainable. Yeah, absolutely, I would perhaps be pushing the limits. And Pippa, in terms of the potential for OPEC to, again, kind of increase supply, what seems to be the motivation there?

Is it just market share at this point? It really seems to be that market share gain. Now, of course, the OPEC Plus overall has said it's about compliance with some of the members, like Kazakhstan, that have consistently been producing above their quota. But it really does seem to be more about market share when you read between the lines. The group has said that this is a very strong market, which all the data points suggest is really not the case at the moment and that it's really an inopportune moment to start

bringing back production. But after years of keeping more than six million barrels per day on the sidelines, some of the larger producers, of course, Saudi Arabia, that does have the lowest break-even cost, they seem to have said, you know, it's now too much. And so they decided that now is the time to bring back more production. All right, Pippa, thank you. Christina, we got a little news on Dell before, but now we're looking ahead to the results. Yeah, the numbers.

And Dell's AI server businesses really has been booming thanks to NVIDIA's powerful chips making their infrastructure solutions group, ISG, the fastest growing segment. Just last quarter, management said deals with XAI and others pushed Dell's server backlog to $9 billion. That backlog should continue to grow after Dell's manufacturing partner, Wishtron, noted improved rack shipments just at Computex a few weeks ago, so that was a positive sign. However, Dell remains heavily exposed to traditional PCs and servers.

Management said last quarter, they're still waiting for this AI PC refresh cycle while consumer demand stays challenged. And HP Inc's earnings from last night reinforced this concern. They lowered their 2025 PC industry growth outlook due to uncertainty around consumer and commercial purchasing decisions.

And that sent HPQ shares down 8%, you can see on your screen. So some people are wondering if that's gonna be reflected in Dell's numbers. Dell's AI server strength though, and needs to offset continued weakness in their traditional PC server business when they report. Very soon, Mike.

That is of course, their abiding hope. Christina, thank you very much. Melissa, Costco, obviously it's been a very well positioned company, been an investor favorite. What are we looking for in terms of the results? Hi Mike, yes, when Costco reports quarterly earnings results today, Wall Street expects the company's revenue and earnings to be up year over year.

For the warehouse club, known for competitive prices and bulk discounts, tariffs could help drive more customers to its stores and keep its membership sticky. Yet tariffs could also add costs, which could mean higher prices even at Costco. Best Buy CEO Cory Berry said earlier today that prices have already gone up on some consumer electronics. And earlier this month, Walmart warned of higher prices coming to its stores, too. About a third of Costco's U.S. sales are imports,

with less than half coming from China, Mexico, and Canada. Costco CEO Ron Vacker has set on the company's earnings call in March. He said uncertain times tend to benefit the company since customers typically seek value. Wall Street's taken a rosy view on Costco, Mike. Shares are up about 10 percent this year, outpacing the S&P 500. Yeah, and certainly Costco's valuation is also quite a premium to the rest of the space.

It is interesting. There are comments about how obviously the customers seek value. And Costco kind of culturally and and by strategy has always kept its own margins relatively low. I wonder if that means they'll have to shoulder more of the costs and just hope that they make it up on the memberships or how that might play out. That's a very good point. One advantage that Costco has here is that it could pivot away from categories that are more exposed to tariffs. It has a lot of treasure hunt type items in the middle of the store. And so, for example, if certain categories like toys are more exposed to tariffs. It has a lot of treasure hunt type items in the middle of the store. And so, for example, if certain categories like toys are more exposed, it could switch to another supplier,

it could switch to other kinds of merchandise, and that gives it some flexibility. Right, and then, you know, we've actually had this full week of retail results. You mentioned some of what people have said about pricing. What has been the main takeaway about the state of consumer appetites right now?

You know, one thing that struck me, Mike, is just the similarity to the last few quarters. We're just hearing about this consumer who remains more selective about their spending. It's been a recurring theme ever since inflation. Now it's for a little bit of a different reason, with tariffs being a fear of consumers and potentially some uncertainty

about whether they'll be paying a higher bill. But it's been much of the same when it comes to retailers contending with a really choosy shopper. Yeah, and I guess just given where expectations had gotten down to in April, maybe more of the same is pretty comforting, at least for the moment. We'll see how it develops from here. Melissa, thank you so much, appreciate it.

We're coming up on one minute to go into the close. You see the major indexes there, sitting on gains of more than a third of 1% on the S&P 500. The NASDAQ has been the leader all day, up 410 to 1%. Did weather a little bit of an intraday pullback, but we are firming up into the close. Nvidia is on track to be up a little more than 3% on the day.

That is a few percent below where it did open. At the time of the day was 143.49. We're at around 139 at the moment. So that does continue a pattern of a little bit of a sell the news response. Market breath has been positive all day. Twice as many stocks up as down on the New York Stock Exchange.

So the average stock outperforming the big cap indexes in general. And also treasury yields have managed to come in just a little bit. Slightly softer weekly jobless claims this morning and then a pretty good seven-year treasury auction has helped on that front. I would also just mention the volatility index is still hovering around 19. Even though we had a pretty quiet session with firm indexes, most stocks up, market is still on alert for the possibility of who knows, maybe more trade headlines.

That is the end of regulations. We are going to send it over to John Ford with overtime.