Closing Bell - Closing Bell: 6/4/25

Episode Date: June 4, 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.

All right guys thanks so much. Welcome to Closing Bell. I'm Scott Wopder live from Post9 here at the New York Stock Exchange. This make or break hour begins with drama in D.C. and stocks taking a very watchful eye today. The future of the tariffs, the tax bill, even the war in Ukraine all in focus and keeping a bit of a lid on the majors today. Let's show you the scorecard with 60 to go in regulation. A fairly mixed picture. The S&P trying to claw close to a new all-time high. Energy a decline or today it's the weakest of the sectors in terms of single stock stories today. Crowd strike is certainly one giving back some of its recent gains after its guidance failed to wow the street. Wells Fargo is green today after the Fed removed an asset cap after some seven years. It's barely green though and

that's worth taking note of. It does take us to our talk of the tape where this market might be heading after a May to remember and some new economic data today pointing to a slowing economy. It's been another busy day in DC as we said. We'll begin there Emily Wilkins and that big brawl brewing over the GOP's tax bill. Emily, what is the latest this hour? Hey, Scott. Well, yeah, Republican leaders, they are really scrambling to keep their narrow majorities in line.

After Elon Musk threatened to oust members who support the Trump mega bill, he actually just tweeted again, call your sender, call your congressman to kill the bill. Now, Speaker Mike Johnson told reporters today that Musk's assessment of the bill is flat wrong, but he added that he thought that he and Musk were actually on the same page just on Monday after they chatted. Listen to what he had to say. Elon and I left on a great note. We were texting one another, you know, happy texts, you know, Monday. And then,

and then yesterday, you know, 24 hours later, he does a 180 and he comes out and opposed the bill. And it surprised me, frankly. The House bill is expected to add 2.4 trillion to the deficit over the next decade. Now that is according to the nonpartisan Congressional Budget Office, the official scorekeeper of Congress.

Fiscal hawks in the Senate are pushing to try to find ways to reduce the overall cost of that Trump mega bill, but they are up against their fellow senators who want to remove some of the Medicaid cuts that the House put into place, as well as slow that planned phase out of clean energy tax credits. That's all going to add cost to the bill. Senators also want to make certain tax cuts permanent, and the business community is really pushing for that. But again, that could add some estimates say as many as a couple trillion to the cost of the package. So a lot that's in play here, Scott, and I think a long way to go to find a bill that's really going to get everyone on board and

of course remains to be seen exactly what Musk's pressure campaign is going to mean for some of these members. Appreciate the very latest from you. Emily Wilkins right there on the hill for us. Now to Eamon Javers at the White House for more. Because Eamon, you have to believe it's only a matter of time before the president responds directly to what Elon Musk has said. And there was other news on the White House front today too.

Yeah, absolutely, Scott. I've got to say there's a couple things that are out of character for President Trump that are going on right now. One is that we're in the middle now or the tail end of the third day that we have not seen the President on camera. That's unusual for a President who likes to drive the news cycle with press availabilities, you know, once or sometimes twice a day. That we haven't seen. And the other thing is that we haven't seen a punch back from Donald Trump against Elon Musk.

Trump is the master of the punchback. You could set your watch to the idea that if somebody insults Donald Trump, he will insult them back and fire back. You've got Elon Musk out there tweeting out just within the past couple of moments a picture of Uma Thurman in Kill Bill suggesting he wants people to kill the bill up on Capitol Hill. The president has not responded to that directly at all. His spokesperson shrugged it off on Monday. We haven't heard directly from Trump about that at all. That is unusual. And just a short time ago the president took to Truth Social, his social media outlet, and

retweeted Elon Musk's resignation announcement from Doge. Not clear what he meant by that. Didn't offer any commentary. And I can't find anybody here at the White House who can sort of explain what the president means by pushing that out to the world. There you see he just sort of retweets Elon Musk's resignation about his time coming to an end as a special government employee. So does that count as a direct response, Scott?

I don't know. I don't think it does. Yeah. I mean, there was also this overshadows really the other comment of the day, which is arguably the more important one, that the president talked about trying to do a deal with President Xi of China and how difficult that was. And here we are talking about Musk versus Trump again. Right.

I mean the president venting some frustration here. That earlier comment from the president came at 2 17 a.m. He was up late last night or early this morning really worried about this China negotiation saying it's difficult to get a deal done with Xi Jinping. He's got a lot of respect for him, likes him, but he's very tough and hard to work with. That's not an indication that things are going well behind the scenes in the trade talks. They've said here at the White House that they expect Trump and Xi to speak at some point this week by phone.

We haven't seen that penciled in on the schedule yet, so we're still waiting for that. I think the market's waiting for that as well. Yeah, only a couple days left for that to take place Amen, thank you. Amen. Javers North Lawn. You'll let us know if there are any new developments now Let's bring in CNBC contributor trivariates Adam Parker. It's good to have you back here So we're kind of fixated on all of this What do you think it means to stocks on both fronts the lack of progress as it relates to China, and then the maybe stuck progress of this bill. They're both bad directionally,

I don't see how anyone would take the other side of that. The main thing that matters in the entire tariff and trade war is China, given their comparable GDP in terms of size. So you have like two tensions, like you have this positive thing of like, you know what, retail flows, technicals, just seems like we're headed back to highs before we revisit it.

There's a big group of institutional investors who just think nothing's going to break this short of maybe big backup in bond yields or an incrementally slowing consumer. The negatives are the earnings estimates are only down year to date the same amount they are in a normal year. And the normal year that didn't include tariffs. So it kind of just feels like there has to be a set of bad downward revisions coming and you get the valuation sort of back up where they were.

So it just feels like you've got that kind of thing coming. So I think there's these two tensions out there and most people are saying, I gotta participate when the market's up so they're trying to find, is it the mega cap tech or something else that can get them there. So I think it's kind of confusing. I think my note last week said I have vertigo

about this whole thing a little bit just because I can see the bull and bear case over the next few weeks. You've been musing, I guess is a decent word, about potentially being wrong about the idea that earnings were gonna to take a bigger hit. Yeah.

And you know, you expected them to. I think many did. And maybe that's not going to come to fruition. So maybe you were getting too cautious on the market. Is that fair? Yeah, I love. I'll take the word musing. It's better than just, you know, you put out a slam in my head.

It's like I'll take that as a compliment. No, I mean, look, I did some work last week. Half of the gross profit dollars of the entire S&P 500 come from the top 50 names. The top 50 names proved after COVID that they're kind of inflation proof. They didn't really see any margin degradation when we saw kind of half century high inflation.

So if what we're worried about with the tariffs is inflation, we've seen these big guys able to pass on pricing, able to control their costs. So it's really the other half we're worried about. And I could see somebody saying, okay, well, the top half, the top 50 names are probably okay, right? That's why Mag 7 and others have rallied. Oil's lower, logistic costs are lower, generally commodities are lower. So that could help some companies. Dollar's weaker. Oil's lower, logistic costs are lower, generally commodities are lower, so that could help some companies. Dollar's weaker, that's certainly not a headwind.

And so maybe from where we were in early April, last two months, like the earnings sort of calculus is directionally a tiny bit better. I think that's fair. Let's address a couple things at how we started the program. Yeah. I mean, I can see it play out both ways. Is a smaller bill good or bad for stocks?

Because if you look at where the bond market is concerned, it would love a smaller bill, wouldn't it? But would the stock market be content with a smaller bill? I don't see how the earnings math works. I don't think the tariff hit equals the tax benefit. It still seems like a net negative to earnings for me, but I agree with you on the multiple, on the price to earnings.

If the bond yield starts backing up, people are gonna worry about the multiple. So I think from the equity perspective, a slightly smaller bill could be better Even though I don't think the earnings will be the dream will be as high I think the multiple will hang in better How much do we need a resolution with China whether it's some kind of deal or a capitulation on our part of? The current level of the tariffs I think a lot

I mean at these prices where we are with the earnings outlook, I think we need something some progress I just don't know every one of us has learned fade everything the president says it's never as bad as he says You know, he says it's Europe. It's it's 50% then you know that that doesn't matter He says we're working on something with the UK and then you look at the details and it's nothing So I think that the challenge or the risk is all of us have said don't really overreact to what he's saying Actually react to when we see what the companies are saying. But I think this China deal really matters. I suspect ultimately what will happen is the president will say he won the negotiation independent of the facts behind it.

And so that's what we all have to suss out as stock investors is like, what actually is going to happen? So what we're doing at TriVariit is we're searching every earnings call transfer for anything we can find related to tariffs and pricing. Meaning is there anything happening with price increases, with capacity? Well you believe that there are many price increases. I guess the biggest question is whether the tariff effect, if you want to call it that, is a lagging indicator even greater than people first thought, that we're not gonna see a lot show up yet, and we're gonna have to wait.

Now, we don't want it to show up, because if it does show up, then it's gonna mean bad stuff, that the economy is slowing further, that the labor market's starting to fall apart, because companies are so uncertain, they're doing no hiring whatsoever. Right, and there was a pull forward in demands with mass, some of the stuff.

Which we know there was. We know there was from the ports. So, look, I thought that there would be less lag. If you would have asked me, I thought we would have seen more of it during the earnings in July guidance than we did. And so now I feel a little stupid saying, well, we're gonna hear it for the October guidance,

but maybe it is a little bit longer for some companies. And I think that's a real risk. But I do think there's a very small to zero chance that we don't see more than normal down revisions this year based on what's happened. And we have not seen that so far. And that's why I can't say, hey, I'm bullish at these levels, because I need to see a chunk of companies guide down their earnings. And I think the consumer's slowing too,

and that's important to monitor. Are you bullish at this level of where tech is? Because we wouldn't be at this level in the S&P, some 2.5 to 3% away from a new high without it. Been an incredible run over the last five, week, four and a half weeks. There's no way the market can rally without tech. The challenge is, you always have a seasonally strong

second half of the earnings with tech. The estimates for Q3 and Q4 are higher than the normal seasonality for tech. So you need tech earnings to be the least impacted, and I think there's some places where they will and some they won't. Semis, for example, which is a big part of the rally, Nvidia, Broadcom, et cetera, they have, I think, if you look at the tool makers, they've seen a kind of a reduced outlook on their earnings, yet the stocks have rallied basically all the way back to high.

So I think in particular, the market will go as semis go here in the second half. I mean, there's a question about Apple, obviously, too. Yeah. And WWDC is coming up on Monday, which we're gonna be live at, just another reminder, for both halftime and closing bell on Monday. That stock getting hit with a downgrade today, days before that.

Steve Kovach is here with what Needham was saying today. What's the fear? Yeah, this comes from Laura Martin over at Needham. So let me go over some of the reasons behind that downgrade. It probably sounds familiar if you've been paying attention to Apple at all this year. First of all, app store competition now that Apple has to allow apps to use payments on the web,

which obviously can't collect those 15 to 30% fees from. She also says it's pretty expensive stock based on the Ford PE basis, says 170 bucks or $180 is a better entry point. It's above $200 right now, Scott. And no report, she says, of anything coming soon down the pike that will drive growth in iPhone sales.

Remember, the Apple intelligence debut at WWDC last year report she says of anything coming soon down the pike that will drive growth in iPhone sales. Remember the Apple intelligence debut at WWDC last year was supposed to spur that super cycle of iPhones. And then she says advertising. That is one area Apple does have room to grow. It's mostly done in the app store right now, but I will just say Apple has a really delicate balance there with advertising. I'll just tell you a personal story here, Scott.

I got an ad from Apple, Apple Wallet, because I'm an Apple Card customer, and they tried to get me to subscribe to the Uber One subscription through that, and that kind of stuff is really annoying to folks who are buying these $1,000 Apple iPhones, so they're very cognizant of that kind of stuff and only kind of experimenting now.

So advertising, maybe one day becomes a big business for them, but right now the services business is kind of relying on the app store, Scott. I can sense the annoyance in your tone as you were talking about that anecdote. Steve Kovach, we'll see you over the next few days, of course, and then we'll be together out at Apple HQ, Apple Park for WWDC.

Now let's bring in Keith Lerner of Truist Wealth. Adam Parker, of course, is still here. It's good to see you, Keith. I'm glad you're part of this conversation. WWDC, though, not speaking about Apple specifically, because it's not what you do, but you certainly understand its relationship to the overall market,

they better deliver something good given the weighting of the stock and how many people are invested in it. Yeah. Well, great to be with you, Scott. Hey, Adam, good to see you as well. You're right. Apple is important, but it's not the only thing that's important. And Apple has actually been underperforming here for some time.

I listened to the conversation earlier. It is a tricky market backdrop. I do agree that tech is very important for this market to move higher, but I do think we're moving back into tech outperformance continuing because a lot of discussion you all had around earnings, the strongest earnings part of this market is tech and communications. When you look below the hood or below market caps, the earnings for small caps for mid caps are moving down. And you're seeing the relative performance of mid caps and small caps continue to deteriorate. So we are actually seeing some of this weakness in this kind of muddle through economy, but it's more filtering down in market cap where big tech continues to reemerge as leadership.

I mean, the real headline from you is that you were one of the first and the earliest certainly to take down your rating of U.S. stocks. Now you're taking them back up as we're on the verge of a new high. You've upgraded equities from less attractive to neutral. So it's not like you're all in with both feet but you're certainly more positive than you were not all that long ago. Why so? Yeah, as you mentioned Scott back in February, we were close to new all-time highs We downgraded stocks when we corrected, you know, we were pricing a recession got more positive on the initial balance You know our work suggested the risk reward was somewhat less favorable. So we did take a modest step down

But you know every month what we try to do is follow the way the evidence We did take a modest step down, but every month what we try to do is follow the way of the evidence, keep an open mind, try to not be too, you know, have too much hubris about the view and let the data lead us. And when we look at that, we look at the big picture and I think it's time to be more neutral, not overly bullish, not overly defensive. The first thing is you look at historicals when you have a sharp market decline and a sharp recovery that tends to be a good omen looking at about six months. The economy, before we had the news on the China de-escalation was pricing in recession,

and stocks were also pricing that in. I think at this point, our base case is more of a muddle through, not recession. And then as we look at the fundamentals, you guys hit on this already, valuations are certainly rich, but at the same time, the earning estimates, which were declining when we downgraded estimates back in February, sorry, downgraded the S&P back in February, they've inflected higher, mainly because of tech and communications as well. So we put that all together. It's not overly bullish or overly bearish, but I think a more of a neutral posture at this point makes a lot of sense.

And to be overweight tech, communications, services, we still like areas like, industrials and utilities as well. But if this market is gonna eventually go higher, it's gonna have to be led by growth in our view. Adam, follow the evidence, follow the market. I mean, the markets come back so much that, there's still a fair amount of people who are negative, if not cautious.

I mean, I've still resonates to me the conversation that we had a week or so, if not two ago, where you said you do these dinners with these institutional investors, like everybody is negative. Rhetoric's always negative, but they're position, because you know what? You always sound so much smarter when you're negative, right?

If you set me up and say, you're not at all worried about X, then anything I say after that, it can sound stupid. So I have to say I'm worried about it, right? So you always sound dumber when you're negative. I think there's a couple threads here. One, tech, communication services, and financials, those three sectors are 56% of the market. It's the most three sectors have been in like 25 years.

So you can't be bullish on the market and not own a chunk of those three sectors. They're just a big part of it. I like financials the most right now because I think there's some offense and defense in there. But you've got to, if you're an optimist, you've got to own some. There are four sectors that are combined less than 9%. Materials, reads, utilities, and energy. So you don't really have to have a view on these things

that are 2, 3% of the S&P to beat the index. You do have to have one on tech and financials. So I think what you said is right. If you're bullish, you have to own some tech. The second comment I make was kind of before Keith jumped on on this Apple downgrade. It just, every time I see a stock that's under before in a ton,

then somebody downgrades it and then there's an event coming next week, that makes me think it's a counter indicator. Like I don't want to sell Apple if it was down a ton when there's a big event coming. Well, it's not like, this is not the first downgrade of Apple. No, totally. It just seems late to me.

Everyone knows the tail risks that are out there. You got an event coming, they're not gonna announce late to me. Everyone knows the terrorists are out there. You got an event coming. They're not going to announce everything's terrible next Monday. You're flying out there. It's going to be, they're going to be optimistic. So I hate downgrading stuff after it's underperformed a ton right before an event. That feels worrisome to me. Keith, how much do we need?

I'll ask you the same question I asked Adam, because I feel like it's really the most relevant stuff. I mean, how much do we need a resolution with China? How much do we need the tax bill to pass? Yeah, this reminds me of a conversation that I had several years ago. It's called the carousel of concerns. Like, you know, we kind of move from one concern

to another. To your question, I think, you know, the market the last couple of months, it had been tariffs are the only thing that matter, and now technology is back in the forefront. So to answer your question, I think the market the last couple of months had been, terrorists are the only thing that matter and now technology is back in the forefront. So to answer your question more directly, I do think a resolution on China matters. If we went back and we go back to 145 percent terrorists, then this market is going to go retest the lows probably again, right?

I don't think that's most likely the case, but no one knows for sure. On the tax bill, at the end of the day, I think we're going to see a lot of sausage making. I think I know where this ends up. Big pictures that we have a bill that passes and we have some tax extensions. I don't know the complete breakdown. I don't know that's so important. I think at the end of the day, if we don't have this tax bill extension, the tax heights

will be so significant that it will be just too much. So I think eventually it may be messy. It may be sometimes in the market that gets sloppy. But I think that goes through. I think the big issue is do we get resolution on with China? No one can say for sure. But it does seem like that the more likely scenario is that we have some heartache, but we eventually kind of push through.

And the market starts continuing to focus on other things besides just terrorist fundamentals. The inflation picture, the Fed comes back into the picture. Maybe deregulation comes back into the picture later this year as well. You have any concern that people are overestimating what the tax bill will do for growth? Remember, Trump 1.0, you're talking about taking the corporate rate down from like 28 to 21 or whatever it was to 21. I mean, that's a significant amount of stimulus for companies.

All you're doing now is just re-upping that at the same rate that it currently is. Are we overstating in any way what this bill is going to do for the growth side, the quote unquote good side of what we hope it will mean? Yeah, I think so. I mean, I think in our view, this is more of like, you know, it's not going to really add a lot to growth, but you need it to maintain growth. So if something wanted to go through it, then I think you have more downside risk. And really, if the big picture, if we zoom out, I think we know since the day after the

election, the market is flat, right? So we've gone through a lot of this kind of big market up, big market down on over-extraculating maybe the stimulus bill and some of these pro-growth policies, then now saying that the terrorists and all this negative is the main focus. So I actually think the market's somewhere back to where we started back in November. So I don't know that we're pinning our hopes on this too much. Again, downside risk if it doesn't go through, we think we'll eventually move through. And then maybe one other question going back to the tech conversation.

As much as we've seen a big move down in tech and a big move up in tech, if you go back to the peak of last July, you're actually flat there as well. And Adam touched us on this earlier. Semiconductors are still about 10% below the highs from July. So we've had a lot of movement, but we haven't gotten a lot in either technology, the border market or since the election. You gave me a research idea. We need to go look at the companies that had the biggest difference between what they were

actually paying and the statutory rate last time, because ostensibly they're the ones most vulnerable if this doesn't get extended, right? And I know a lot of the US-only consumer companies benefit the most because they were paying the full rate before and they got the biggest benefit on the bottom line. So we'll have to take a look,

but I don't think anybody is banking on or punishing stocks because they think it's not gonna get extended, and that'll be a huge problem for some companies if it doesn't. Oh, yeah, I don't think there's any question about that. All right, we'll leave it there. Yeah, good to see everyone. Yeah.

Adam, thank you. Keith, thanks to you as well. We'll see you soon. Thank you. Two Christina parts of Nebelos now for the stocks that are moving into this close. Hi, Christina. I have a big mover, Asana shares, Scott, plunging about 19% after the software firm warned of increasing buyer scrutiny as well as longer decision times amongst those buyers, which

could potentially cut their Q2 revenue, specifically from existing customers. You also have HSBC that added a sell rating, which is adding pressure, and that's why shares are down about 19%. Let's talk about Tesla, another mover, down about 3% on weak China and Germany sales data plus a public rift between the CEO Elon Musk and President Trump. Musk called Trump's budget bill a quote, disgusting abomination, signaling the end, maybe the possible end of their political honeymoon. Tesla down 3%.

Scott. We will be back to you soon. Christina, thank you. We're just getting started. Up next JP Morgan, private banks. Abby Yoder is back. She'll tell us her summer stock strategy, how she is playing, the uncertainty that still exists in this market. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. Music Music We are back.

Can stocks hit new highs while the future of both the trade war and the tax bill remain unresolved? Let's ask Abby Yoder, chief US strategist for JP Morgan's private bank. I think that's the question of the moment. Nice to see you back. Nice to see you.

What would your answer be? I mean, I think so. Yeah? I think the point is, is that we're past peak, like peak uncertainty, right? Like as we move through this, I think it's been a little bit confusing for investors who were saying,

okay, why is the market up the way it is in the past couple of months, even though we still have these negotiations going on? But remember, on April 2nd, the effective tariff rate was something like 28%. And now it seems like the ceiling is more like 15%, right? And there's downside risks to that. So I think that's something that definitely is playing into the optimism. And then you have in the background going on, you know, some deregulation.

And then also the reconciliation bill, as you mentioned. Yeah, what about that though? Now there seems to be this musk angle that no one really thought was going to come in at the 11th hour. This bill seemed like it was going to be fought over and maybe changed a little in the Senate, but now this musk mud that's flying all over place, and what if it has a bad resolution? Well, I mean, I think that's a risk, right? Like, for sure. I think the market,

and I was saying this like months ago, like even if we were talking about this before this process really started, like, again, if we think about expectations post-election, it was like these tax, like this tax bill thing, this is definitely gonna happen, right? Nobody really saw the tariffs coming, but the taxes were definitely there.

Yeah, that's a foregone conclusion. Yeah, but I mean, look, it's one- I mean, price still is, but- Yeah, I think it still is, given price action today. I think the expectation is, yes, that it's tweaked, but at the end of the day, it does go through in terms of the recognition. And that's all that matters. And as long as we've seen peak uncertainty from tariffs, we're good.

What about the lag effect, though, about the impact of the tariffs? So we have more certainty, but we kind of are uncertain as to whether there's a lag effect that's still gonna hit us. Yeah, well, I think, so the question really is, do you see the soft data moving up towards the hard data, or do you see the hard data collapsing basically

down to where the sentiment data is? And there's also an in-between, right? Like where they meet, and it's like soft data moving up towards the hard data, or do you see the hard data collapsing basically down to where the sentiment data is? And there's also an in-between, right? Like where they meet and it's like the soft data moving up, which is what we've been seeing, and the hard data catching down a little bit, but not like falling off of a cliff, right? Which is what we kind of think. And then, but more specific to companies

and their fundamentals is how they're navigating that, that basically that, the next couple of months as we work through the lagged effects. And what we heard, and I think we talked about this last time, is that there are a lot of different ways that companies are thinking about mitigating this. And I think, you know, they're high quality companies and that's why we're favorable. You've been focused a little bit on the divergence between tech and healthcare. Why so?

What's the message in that? Well, I think like historically when you think about where investors will put their money if they want growth, it was always this, historically again, like this conversation, oh, is it tech or is it health care? And then starting in 2023, it really became tech over health care. And you've seen underperformance since then. This year is really, really stark,

in terms of the outperformance of tech versus health care. And it's driven by both sentiment and fundamentals, right? Tech has really delivered in terms of earnings. It was the best two-queue beat rate since, you know, 2023 for the sector. And healthcare has seen downward revision to their 2025 estimates. And then on top of that, you have a valuation

at 16 times for the sector, which is below its long-term average, but you've got policy overhang in the form of drug pricing, tariffs, like all of these different things that are going to weigh on at longer term. Does tech have legs? We do think so. Actually, our bullish outlook, which gets you to like 7,000 by mid-year 2026, is really predicated on AI. And it's really predicated on the rest of the market, really embracing AI, and therefore you see revenue synergies and you see

margin expansion as a result of expenses being high as well. Rising tide lifts all corporate boats because of AI. As it gets into money. Yeah, exactly, exactly. But it's okay if tech leads and you think it will get the S&P to 7,000 by mid next year. That's our bull case

for mid year next year. Yeah. Yeah. What's the bear case based on? When you think about what the bear case could be, what is that? I mean, that's a mild recession, and it wouldn't be inclusive of higher inflation, so it's not that stagflationary scenario, but it's a peak to trough decline of around 25% from peak to trough. And so it's just a mild recession because at the end of the day, when you think about where the Fed is, they've got a lot of firepower, right?

They are in a position to be able to cut rates and we do still believe right now They have a balanced approach right because they want there in wheat and seed mode But if you do see, you know labor market deterioration, they definitely have the ability to come in So at worst you get a mild recession and you get the Fed Stimulating so it's hard to get too negative on stocks You know kind of no matter the scenario in which you see, if things go a little south. Yeah, yeah, that's how I would think about it.

Will they cut this year? Our view is that they cut twice this year, but it's back-end loaded, right? Like, because they are in wait and see mode, so you wait until the end of the year to really get that. Like, maybe September the first one, get Jackson Hole out of the way. Yes, exactly.

And then see what happens. And again, because you're gonna go through this digestion period in the summer where you start to see the lagged effects and really how companies are dealing with what would be inflationary pressures. Are they passing them on to the consumer? Right now we're not seeing any evidence of that really.

So really paying attention to that in terms of what the Fed is thinking. All right, we'll see what happens and we'll talk to you again soon. I know that. Sounds great. Abby, thanks. Abby Yoder. Up next, Ed Yardeni.

He is back and he's raising a red flag on a big risk that he is watching right now. We will tell you what that is next. By all accounts, first quarter earnings were better than expected, but our next guest is not ready to declare victory when it comes to corporate profits just yet not with concerns still swirling about a slowing economy. Ed Yardeni is president of Yardeni Research he joins us once again now. So

it is true I mean first quarter earnings surprised pretty much everybody that that's that's fair to say but you don't think that means that we're gonna have smooth sailing here. Not really I think that the impact of tariffs is still going to be substantial on the second and maybe the third quarter as well look the surprise so far seems to be we're not getting that much inflationary pressure we're seeing some areas of like the ISM purchasing managers indexes that suggest that we could see some inflation.

But I'm looking at the Cleveland inflation now casting and that still suggests that May and June inflation is running around 0.1, 0.2%. So where are all these tariff costs going? We know that the duties that they're collecting have gone up. And so it may very well be coming out of profit margin so I think we got a couple of quarters where at least on a short-term basis tariffs are going to hurt the profits. Well that sounds like I mean you must think that that's going to cap stocks because you can't have you can't have the both. Yeah I think it probably

keeps us here I'm still using 6,500 for the S&P 500 by year end and that's mostly because as the year passes, as we get through the second, third, fourth quarters, the market clearly is going to be giving more and more weight to next year. And I think the market so far, I would interpret the markets ascent here as an indication that investors have come to conclude that this whole tariff thing will pass. It's not going to pass for the second and third quarter results, but I think the market is going to look past it. We'll see how the guidance plays out. Maybe corporate managers are going to be willing to start talking about 2026 as a better year than what they're likely to show

over the next couple of quarters. That's kind of the view of my prior guest, Abby Yoder, is that as long as we've gone beyond peak tariffs, we're okay. What could you possibly do now that would surprise us? I mean, I suppose something, but you know what I mean. Well, I'm kind of concerned that the president might be upset that Wall Street has said that, you know, he's not steadfast with his tariffs. And there could still be a tariff war. I mean, there is a tariff war right now between us and China, and that's a significant issue.

The rare earth minerals is a big deal and are not buying Chinese goods because of the tariffs on them is a big deal. So there could still be some consequences from all that. But overall, you have to say, as your previous guest said, the hard data looks actually pretty good. Certainly the Atlanta Fed's estimates for the second quarter are spectacular. We thought a lot of the weakness in the first quarter had to do with really, really cold weather in January and February.

And it looks like that was right. The consumer's coming back strong in the first quarter had to do with really, really cold weather in January and February. And it looks like that was right, the consumers coming back strong in the second quarter. And the other thing is capital spending, for all the talk about how uncertainty depresses capital spending, the reality is it's gangbusters, particularly on technology. Well, I mean, technology's been unbelievable. Does that continue, do you think? The thing it does, I think that there's a kind of a basic need to constantly spend in technology. Because if you don't stay on top of the technologies, and your competitors do, you'll lose competitive advantage.

So I think there's a great deal of pressure in that regard. I am somewhat concerned that this kind of AI technology arrays at some point may create way too much access capacity particularly in data centers, but for now they just keep building these things and that requires a lot of concrete, requires a lot of steel, and it requires a lot of Nvidia chips.

Requires a lot of power as we learned yesterday with Metta's deal and Constellation Energy on nuclear power. Let me ask you, let me ask you lastly, because you follow the bond market so closely and you're so identified with commentating and thinking about it. What about this spat now over the tax bill, the fact that you have Musk in the White House on opposite sides of one another and the way that the bond market has reacted to this whole process thus far, not only with the tariffs, but now thinking about the size of this bill and the amount that it might increase the deficit over

time, and then we have to think about the cost of funding it at a time where you've got the Jamie Dimons and even today the Ray Dalio's of the world saying there's gonna be a problem it's just a matter of when not if. Well you know what you've got your optimist you got your pessimists I think a Dalio. Realists. I think you've got Dalio and Jamie Diamond they've been on the pessimistic side for the past few years. Ray Dalio smart he's a lot richer than I am and he's made a fortune obviously but he's Jamie Dimon, they've been on the pessimistic side for the past few years. Ray Dalio is smart. He's a lot richer than I am and he's made a fortune, obviously, but he's been very pessimistic about the bond market for a while.

Look, I think we had a mini debt crisis back in 2023 when the bond yield went from 4% to 5% between August and November 1st. And Janet Yellen, God bless her, Treasury Secretary, she said, you know, she said this to the bond vigilantes in effect. She said, if you don't like my bonds and my notes, I'm not going to issue as many as I'm not going to issue any more than I have been. But I'll issue a lot more bills. And Besant said Scott Besant thought that was a terrible idea until he became Treasury Secretary. And that's exactly what he's doing.

And he could do more of that. I call it yield curve control by the treasury. And so the bond vigilantes are not the only players in this game. The treasury and the Fed can certainly still have an impact. And besides we have the world's largest capital market. The dollar's not gonna go into collapse here where the bond market is gonna be fine. If we get back to 5%,

there'll be lots of people buying it at that level. And we'll be back at 4.5% in a heartbeat. Yeah, but you don't want to get to a point where you have either the Fed or the Treasury forced to intervene. Then you've already had a problem on your hands. Yeah, that would be troublesome for sure because that would maybe reduce some confidence. But look, like I said, we had that in 2023 and we survived that just fine. It actually worked. All right. We'll see you soon. Ed, thanks.

Thank you. All right. Up next, we track the biggest movers into the close as we always do. Christina Partzanevolo standing by with that. Tell us what you see. Yes, always. A major lawsuit though, sending shares soaring as allegations fly over AI training data and user privacy. Plus a massive nuclear energy deal that's got Wall Street a little skeptical.

We'll break down those stories when we return after the closing bell. Back to Christina now for the stocks that she is watching what's tops on your list? We have some drama startup versus social media a new lawsuit actually sending Reddit shares higher. The social media platform alleges AI startup Anthropic breached their contract and engaged in quote unlawful and unfair business acts by using Reddit's platform and data to train its models.

Reddit also alleges Anthropic used the personal data of Reddit users without obtaining consent. And that's why you're seeing shares up about 7%. Let's talk about shares of Constellation Energy fizzling out after rising over 7% yesterday. The company signed a 20 year deal with Meta to sell the Facebook and Instagram parent nuclear energy, but today Wall Street's a little wary.

Analysts at Citi saying that estimates show nuclear plant owners might not actually receive that high of a price premium for their electricity. So throwing some cold water on that one. Go. Christina, thank you. Christina Parts-Novell still had CrowdStrike sinking today. We'll tell you what's weighing on that name when the bell

comes right back. We're now the closing bell market zone CBC senior markets commentator Mike Santoli is here to break down these crucial moments of the trading day plus CrowdStrike is selling off today and Steve Kovac has all

the details why Julia Borristen looking ahead to MongoDB earnings out in overtime. But Mike, we begin with you. You sat down and said, well, been in a tight range. Yeah, that's kind of story. And that's almost a win, a tight range, only because the manage the markets managing to absorb a little bit of wobbly economic numbers, maybe hesitation before the jobs report.

Look, coming into this week, this market had overachieved in terms of the magnitude and the breadth of the rally coming off that early April low. All it did is after a 23% gain, pull back 3%, and then regain it all in a few days. So it's due for a rest. I do think we're priced for more things going right, and that's why maybe we're having to stop and look around a little bit.

Steve Kovach, you knew, you just knew it was going to be hard for CrowdStrike to live up to the hype of a stock that looks straight up to the right. Yeah, that's, that's exactly right, Scott. It's not good enough to meet or beat expectations when your stock's been on a run like CrowdStrike has. You've just got to annihilate them. That helps explain the downturn in shares of CrowdStrike today off about five and a half percent.

Results did meet or beat expectations. Revenue was up over 20 percent, and they announced a billion-dollar buyback. Also today, we talked about this on your other show, CrowdStrike set in a filing. It received inquiries from the Department of Justice and the SEC related to its financial disclosures following that big outage it served as cause last summer, said to expect significant legal causes because of that.

However, that did not impact the shares today. It was really that earnings report. Couple of downgrades on the street for CrowdStrike this morning as well. Canaccord and Evercore both noting the company's impressive growth following last summer's outage, though they need to see more evidence the growth can accelerate, Scott. All right, Steve, thank you. Software has worked of late. I know we're just talking about CrowdStrike related to cyber, but Julia, Mongo reports in OT. Yeah, well, Scott, after last quarter, MongoDB shares plummeted despite a revenue beat.

Those shares falling on earnings guidance and fell short of expectations. The question now is whether the database software company can assure investors that it is on track. Now, analysts expect revenue to grow 17% in the fiscal first quarter and then to slow to 15% growth in the fiscal second quarter while earnings per share projected to grow 29%. Then analysts expect the company to guide for earnings to shrink in the fiscal second quarter.

Now, the stock is up 30% in the past two months, but still down 14% year- date. After its last earnings report, the stock did lose nearly 27% for its worst day ever as that outlook overshadowed in earnings beat. Now going into earnings, analysts are bullish. 68% have a buy rating, 32%. Have a hold. Back to you, Scott.

All right, JB, thank you very much. Julie Borson, Mike Santoli, last word to you. We're looking for the jobs report, especially after you got some data points today that were concerning. Yeah, I mean the market has learned over the years you don't want to directly take the ADP report as a good proxy for what's coming two days later

in private payrolls, but it was weak enough and I think the market craves reassurance on the labor front to a fair degree. Now what's interesting today, yields down, dollar down, that's kind of a financial condition loosening, kind of dovish type market reaction. It is supporting parts of the market. You do have home builders up 2.5% after an awful run,

but I don't think that means we're rooting for weaker economic data. Look at, again, the strength of the rally, I think has gotten the grudging respect of investors and some feel like maybe they're under-participating. You see the sell-side analysts kind of boosting their targets but only really marking them to market. So I think we're in this interesting neutral spot right now

where maybe we should expect more of a pause. We'll see if the data are gonna come through in a way that's gonna require a little more of a pullback. Yeah, to your point, it's like, you know, ISM non-manufacturing under 50, yields drop, market doesn't really fall out a bit over, because to your point, in the back of its mind, it's like, all right, well, I mean, if the Fed has to cut,

they're prepared to cut, they'll do what they have to do. If the Fed's prepared to cut, and I don't think anybody wants to be caught wrong-footed if, in fact, you do get something that looks like trade deals, something that looks like de-escalation, where all of a in fact you do get something that looks like trade deals, something that looks like de-escalation where all of a sudden you're going to have that shadow clear away and it's a different type of a backdrop. You're going to get it but you have to be ready for it.

Thank you, I'll see you tomorrow. This is Mike Van Coley, fellow Rangers out. We will be mixed, not much going on for the S&P today. We may be eke out a few points in the green. I'll send it into overtime. John Cook. That's that. We'll be right back.

We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back. We'll be right back.