Closing Bell - Closing Bell 7/7/26

Episode Date: July 7, 2026

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Melissa Lee and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Brian, thanks so much. Welcome to closing bell. Scott Wobner, live from Post 9, here at the New York Stock Exchange. This maker breakout begins with the breakdown in tech. More than 80% of those stocks in a correction or worse, which is why we'll ask experts, including Schwab's Lizanne Saunders,

where that trade's heading from here. She'll join us in a moment. In the meantime, let's show you the scorecard with 60 to go in regulation today. Dow hitting another new high earlier today. It has reversed, though. We're below 53K. keep an eye on that for sure. J&J, Travelers, Merck. They have been among the top performers out of that group today. Apple as well surging towards a new high. We'll have a special report on that coming up in just a bit. It does take us to our talk of the tape.

The makeup of this market is certainly changing for more on that and what it all means. We welcome in Liz Ann Saunders. She is Schwab Center for Financial Research Chief Investment Strategist. Welcome back. It's nice to see you. Nice to see you too, Scott. Thanks for having me. Is that what you're tracking as well, that the makeup of the market seems to be evolving, if not fully changing? I think it's changing on a day-to-day basis. I think these regime shifts that cause these rapid fire rotations, the half-life them have basically collapsed. And I think it's, it is a more difficult environment for traders trying to get ahead of it. But I think it reinforces the benefits of diversification as somewhat boring that is to talk about, you know, equal weight relative to cap weight, small caps,

doing well, and not just recently with small caps, but actually small caps outperformance of the S&P goes back two years now. So I continue to think we'll see these rapid fire rotations, not just broadly within the market, but under individual sectors, too. I think that the new momentum trade is rotation. Oh, interesting. I mean, at what point do you look at the momentum factor, as we would judge it on a typical basis and say definitely regime change is underway? Like the space where we've seen these stocks, many of them chip names, and look, you throw Caterpillar into that mix, too, and some of the AI adjacent power names, they're all rolling. At what point you'll look at that and say, okay, this is a definitive shift? I think a more longstanding outperformance by some of the more classically defensive areas.

You know, you've seen a recent relative lift by the consumer staples, by the healthcare. I think some of that's just rotation, crowded trades, looking for our own. opportunity and less crowded trades. Also, maybe a view of hire for longer as it relates to monetary policy being supportive of segments of the market that tend to have higher dividend yields. But it could just also be a short-term trade. I think earnings season will be maybe a defining characteristic that helps define whether these rotations are likely to continue swiftly or whether we could develop leadership back in the tech and AI space. I think what's important to pay attention to during earning season, we always focus on how companies perform relative to what

consensus expectations are. Those consensus expectations are driven by the sell side, by the analyst community covering those stocks. But there's increasingly a focus on buy side expectations, which tend to be at times a little more pie in the sky. And I think that's where disappointment can sometimes kick in, not necessarily because of a lack of beat on the cell side consensus. but what the report is relative to the buy side, almost whisper number. You think we're setting ourselves up in any way for a fair amount of dip buying in tech? If I tell you, like I read off the top, 80% of tech is in a correction or worse, 60% of tech is in a bare market or worse, yet earnings expectations for growth, earnings growth, is expected to be 60 plus percent in tech. That is the case.

but keep in mind that even at the broad market level, but also specific to individual sectors, once you get to extremely high levels of expected earnings growth, the market can sometimes run into trouble because the market is a discounting mechanism. In fact, overall, when you look at periods where earnings growth broadly for the S&P has been more than 20% on a per annum basis, you've had low single-digit returns for the market. That's not negative. The negative returns tend to come when earnings are collapsing, but the biggest surge for the market tends to happen when earnings are accelerating off of a very depressed base. At some point, the market starts to discount that inflection point. And even if you go from 65 percent earnings growth, which is what

expected in the second quarter, down to 60 or 55, I'm literally just throwing numbers out to illustrate the phenomenon here, as you've heard me say many times, Scott, better or worse, can often matter more than good or bad. And I think it's that sniffing out of a particular potential inflection point that can cause some trouble for the market, which is maybe part of why we're seeing this weakness in tech. You suggest it's time to lean into less crowded derivative plays of AI, such as what? Where do we find the less crowded ones? It seems like everything AI related has kind of gotten picked over at this point. Well, you know, industrials as a sector moving into the number one spot year to date, a lot of people don't realize that at the GICC sector level, it is up about

20% on a year-to-date basis is through yesterday's close. You've got energy second behind that, and tech actually third behind that. That's a derivative, in a very broad sense, that's a derivative AI play. You can find that in materials. The materials sector has, I think, 33% expected earnings growth for the second quarter. That's just starting right now. So I think you can think outside the sort of tech space to find those AI build-out, the infrastructure, build-out opportunities that are clearly less crowded trades. If I know that earnings are going to be strong, which they obviously are, expectations, I think at this point for overall are expected to be like 24 and a half percent growth.

So I know earnings are going to be good. Where then do the risks lie? Is it around interest rates? Is it around geopolitics? Is it around something else in your mind? Well, I think interest rates could potentially be a risk. But I would say, you know, the 10-year yield is the most highly correlated to what equity market does particularly longer duration segments of the equity market like tech.

I don't think that where the tenure sits right now from a level perspective is all that problematic. And I think even a slow move up would not necessarily be trouble for the market. I think it's the speed of a move in longer term interest rates. If we were to move back up to five in fairly fast fashion, particularly if it was not reflective of stronger growth, but reflective of ongoing concerns about inflation and what the Fed's reaction function would be, then I think that represents a bigger risk. I think where we sit right now. But I still think at an individual stock level, earning season will be important because we have seen in the last few quarters the misses get disproportionately hurt relative to the rewards accrued to the beats.

And again, the beats really only get, you know, amply rewarded if it's a beat relative to say, a whisper number or a by side expectation, not necessarily if the beat is just against consensus analyst expectation. Well, I mean, you raise a good point. I wonder if that is a little bit of what we're seeing in Samsung, for example. It's exactly right in any way. It beat on the sell side estimate. It missed on the by side estimate. That's a perfect example. And you see what the ripple effects are into many of the related names today. And I think that type of backdrop where You do get tentacles of it happened a, what, a few weeks ago when you had a little bit of a negative announcement from Broadcom and it took many of the related stocks down. So that kind of backdrop I think is likely to continue.

But we could see via rotation, not aggressive moves on the part of the index, just it continuing to be kind of a duck market, as we've been saying, somewhat smooth on the surface, but a heck of a lot of paddling and rotation and ripples under the surface. Do you think small caps, lastly, are getting their respect that they deserve or not? I think that it's important to differentiate the profitable and non-profitable segments of Russell 2000. Last year, the non-profitable Russell 2000 stocks outperformed the profitable 20% to 10%, so double the performance. He had a little bout of that sort of lower quality outperformance within the Russell, but more recently you've seen a catch-up and now a slightly better performance on the part of the profitable. I would fade the unprofitable moves in the Russell and definitely lean into the profitable side.

We'll talk to you soon. Lizanne, thanks as always. Appreciate it. That's Lizanne Saunders of Schwab. We did mention the run in Apple at the top of our show. Yes, it has turned negative. However, it is approaching a new high. Mackenzie Segalos has been watching that closely joins us now with a closer look. Hi. Hey, Scott. So Apple, now just $5 shy of its all-time high and only $20 billion behind Invidia in the race to be the world's most valuable. company. The stock getting fresh support from JPMorgan, which raised its price target on Apple to $345 this morning, 10% upside from here. The bank leaving its 2027 EPS estimate for Apple unchanged, adding that investors are overstating the demand hit from recent hardware price hikes. And while Apple's been criticized for being late to AI, investors are getting more wary of runaway compute

spending, making Apple's lighter KappX model look less like a weakness and more like an advantage over its hyper-scaler peers. That's part of why Josh Brown says Apple can go to $400. Other companies that are of comparable size are borrowing money in the bond market and spending over 100% of their cash flow on this Cappex buildout. Apple's getting paid by all of them.

This is the critical thing. Apple is the toll booth for consumer AI, period. Even with the stock trading at a rich multiple, the bull case is that investors are paying up for reliable cash flow, discipline, buybacks, and a 2.5 billion device platform already connecting consumers to the major AI apps and models. Scott? All right, Mac, good stuff. Thank you.

Mackenzie Seagallis. Now to our panel, CNBC contributor Trivary. It's Adam Parker. RBC's Lori Calvesina is here at Post 9 as well. It's good to see you both. That was a good segue for us to get back to tech. When I read those numbers to you, are they surprising? because those are pretty big drawdowns. 80% tech in like a correction or worse, 60% bare market or worse?

I mean, 60% of the S&P earnings growth comes from tech, and as you pointed out, the absolute numbers are high. So you can't be bullish on the U.S. equity market and bearish on tech. Those are incongruous concepts. Even if you have the kind of rotation that we've been seeing. Yeah, I mean, you can't sustainably say, I want to be underweight to grade aid, underweight semis, and I love equities, and they're broadening. I don't see how that's a sustainable trade. We've had people try to make that call and been wrong for the last three or four years. I mean, I think, look, I mean, we studied every company that's ever gone up 10x ever in a five-year window, and the median one of those has a 50% drawdown during the process.

So, you know, of course the memory trade got overextended and you're going to get pullbacks, but ultimately, if I'm looking today and you're saying you get a six-month view on Micron, I'm buying the stock here. You are? Yeah. If you look at, We did some new work looking at thousands of simulations of what we think could make sense for their peak and normalized earnings. And I think it probably trades it four to five times peak and ten times normalized. It's probably too cheap for a business that is in this point of its cycle. Wow. So do you think then that the calls that the momentum factor has firmly cracked are overdone? So when fundamental people who have ignored factor investing for 20 years start trying to make factor timing call,

And there's like professors who've been studying that for years and saying it's hard. I get a little dubious that they're going to be like momentum geniuses. Like it's not that easy to call. You've got a million things going on here. I think what's going to happen is you're going to have a pretty decent earning season. It's going to be fueled by tech upside. And I think you'll ultimately get back to some of the winners continue to have good momentum. You're always going to get people, you know, taking profits.

The DRM trade had been such a monster. I'm not surprised you could get sharp sell-offs. We know the Liberty TS. We know Heinix is in Boston and, you know, getting their new. You know, we know that that trades there. But I think you're saying we headed higher before we're lower? Yeah, of course we are. How do you see it?

So look, you know, we think that tech just had a plain old-fashioned valuation problem, especially when you look at, you know, some of the cohorts that have been leading. So we look at the top 10 market cap names, which contains a lot of those hyperscalers, and we also look at the semis. If you look at semis and we published an updated chart on this today, we weren't at tech bubble highs on a median PE in the Russell 3,000, semi-equipment industry. But we had hit, you know, and kind of frankly just gone,

parabolic and surge to these new post-tech bubble highs. And we've come in a little bit. There's still some work to do there. Now, you are also sitting at peak rates of upward revisions on semis. And when I show that chart to clients, it scares a lot of people. But then we go back and look at the history. And you see that sometimes you get stuck there for years. So, you know, listening to Lizanne, listening to Adam, you know, I totally agree with the idea that earnings are critical here. And I think we've frankly been in an earnings vacuum, right? We haven't been getting all this good news left and right, all these upgrades. I think we've got to get back into reporting season and see where the earnings are.

We've probably past peak, you know, sort of earnings enthusiasm, but that doesn't mean that earnings have to go down. You might have a slower pace of upper revisions. I'll come back to this conversation in just a minute. I do have some breaking news out of Washington. I want to get to Megan Kassela, who has that for us. What are we learning here, Megan? Scott, we just learned in the last few minutes here that the U.S. Treasury Department

is revoking the general license that allowed for the sale of Iranian oil. Essentially, they're allowing for a 10-day wind-down period, but will be blocking any new transactions or any new sales of Iranian oil. And this comes just after three tankers were hit in the Strait of Hormuz earlier today, Qatar and Saudi Arabia, which had tankers hit, pointing the finger at Iran for those attacks. As for why the Trump administration now is taking this step, a U.S. official tells me this. They say, as President Trump and the administration have repeatedly affirmed, the MOU in effect with Iran is entirely performance-based.

Iran will only reap benefits if they exhibit good behavior. Iran's actions in the strait were wholly unacceptable to the United States and will be met with consequences. Our negotiators continue to work in good faith towards a final deal. So, Scott, negotiations continuing, as you can see at the end there. But this was one of the most tangible effects or outcomes of that memorandum of understanding sign just a couple of weeks ago between the U.S. and Iran, the lifting of these sanctions to allow for oil. Now that's being undone because of these actions we've seen in the street. Scott.

Nothing else, a reminder. This whole thing's far from settled. Megan, thank you. Megan Kosella. Just get a comment from you both on that. We upgraded energy two weeks ago under a thesis that it was probably not resolved, that there was upside to earnings for the companies, and that it has the lowest 40-year correlation of tech we've seen.

Stocks have very low correlation to tech, so I like that portfolio strategy. We're recommending tech and energy. So I'm not surprised. I think the companies, I want to own Conoco, I want to own stuff into earnings. They have a lot of cash flow. I think oil will stay higher for longer. But if you think that this is far from settled, it obviously hasn't really impacted your bullishness on the market.

You just put out your second half outlook today, which is constructive. Yeah, constructive. And earnings grow, multiple contracts, some to offset it. I think tech does fine. I like energy and health care to balance, you know, trying to find some diversification away from the tech that's not correlated. I just think when you looked at oil,

look, one of the main things that's changed this year is it isn't just change that's mattered. It's actually been the level, and that's unusual. If you go back to March, you know, Micron put up a monster print, stock went 500 to 350 on the monster print. There was a little bit of a visit over concept at the end of March. And then people took a step back and said, wait a second, the earnings were 50 bucks, and now they're 170?

Like the magnitude of growth is so high that even with a lot of multiple contraction, there's just too much upside. And I sense that we're still in the middle of that. So I think you're going to come back in a couple weeks and say, earnings are pretty good. I don't agree with Lizanne that industrials are uncorrelated or different than semis. I don't agree with that point that she made. I think Eaton and Kat are more correlated to my AI semis basket than Nvidia's.

I think they're the exact same trade, and I think you see that. Well, of course, there. But first of all, she didn't mention those names specifically. Right. I don't think that she was. I don't think it's an underappreciated way to play AI. That's all I meant. Are some industrials AI related, of course.

Not all are. Maybe too many. getting the benefit of the doubt is where they are. The ones that are up are. You know, I mean, I think the question is, are there are non-AI cyclicals industrials? Sure, there are. But, you know, I think the challenge is you've got to think about the market in three buckets. Your AI semi-exposure, your AI exposure, your non-AI cyclical, some of which are industrials, and then your defenses. And they're all sort of different and evolving over time. Today, with the sell-off and Mike in the last couple of sessions, down, you know, kind of $400 from the high a few weeks ago, I think

earnings out looks pretty good and I think you want to own those names on a three to six month view. The things you're most constructive on are not in tech or AI. No, we like financials and materials. Those are two of our big overweights. And I would say both have, you know, very palatable valuations. I wouldn't say they're super cheap. We've seen some strengthening earnings revision trends. And financials has actually been really fascinating because you've started to see an improvement in money flows. And to follow up on the industrials point, we had been seeing just monster inflows to that sector. And those have been slowing. They haven't turned negative. But you're sort of seeing.

financial is getting less negative while industrials are getting less positive. So we feel like within that sort of traditional value cyclical cohort, there's some rotation going on there. And another little fun fact on financials, it has tended to be a sector that outperforms when consumer confidence on the Michigan survey, or sentiment, I should say, rises. And I know all the headlines on that survey are terrible, and the consumer feels bad, but if you actually look at the data,

you can see some signs of stabilization starting to come in. So if you want to be a contrarian and look for something that's about to shift. Financials we feel like is something to look at. Guys, we'll leave it there. Appreciate it. As always, Lorraine and Lori and Adam. Thank you. A rough day for shares of SpaceX. It joins the NASDAQ 100. You know that. And several analysts calls come with it today. Sima Modi has that for us. Hi there. And Scott, several bullish initiations on SpaceX. The consensus is that its success really hinges on well on multiple factors, but specifically the deployment of SpaceX's Starship,

the reusable rocket Bank of America analysts, right? The central debate is whether SpaceX's rocket starship can achieve the reliability, cadence, and economics to unlock the next phase of growth. Raymond James with a street high of $800 a share. They're really underscoring SpaceX's dominance in the space ecosystem while J.P. Morgan sees orbital data centers becoming a reality by 2028.

But analysts at Moffat, Nathanson, they're less optimistic, initiating coverage. with a $131 price target, which implies about a 15% drop from current level, saying regulations, specifically regulators, could challenge the company's growing dominance in launch. We're looking at the stock trading just around 150, a share, down about 6% on its first day as a constituent of the NASDAQ 100, Scott. That's around the lows of the day. Seema, thank you very much for that. That's Sima Modi.

We're just getting started up next to Amazon, the latest hyperscaler to tap the debt market to fund that massive AI buildout. Well, Kate Rooney is following the money for us. Right here, post-9 next. All right, welcome back, Amazon, joining other hyperscalers now by tapping the debt markets to help fund its AI ambitions. Kate Rooney is following that money, and she's doing it from right here post-night. It's nice to see you. Yeah, great to see you, Scott. Thanks for having me.

So Amazon, as you mentioned, raising $25 billion in debt. This is in part to fund Amazon's AI Data Center build out. And those ambitions, sources telling our David Faber this morning that that was happening. That was according to sources again, Amazon will not issue more debt this year, according to those people. The company did publicly disclose plans for capital raise but had no dollar amount in that disclosure. Amazon did tell us a loan is going to be used for general corporate purposes. Investors did widely expect that Amazon was going to be next in this spree. We've seen of tech companies leaning on credit markets. Amazon had filed a shelf offering early this year,

which is basically the SEC paperwork that lets a company go out and do this pretty quickly. The borrowing move does follow what we've seen from Google. You had SpaceX, Oracle, meta, all doing major debt deals this year. And one thing that does, does separate Amazon from that pack, though, is that the e-commerce and tech giant is expected to see negative free cash flow this year. So Amazon has a long history of depleting cash in order to invest in big swings, in big projects, and then having that payoff. The most recent example is its logistics build out during the pandemic. The growing reliance, though, on borrowing has added some volatility to the big tech names. The big question around all of this growing CAPEX is the return on that spending.

See, Amazon shares up slightly today, though, Scott. All right. Well, they're joining the club. Yeah, and the debt markets are wide open, so I guess people are just going to tap them until they're not. Well, the sunshides. Yeah, all right, good to see you here. Good to see you. All right, that's Kate Rooney. Now let's bring in CNBC contributor Plexo Capital's low tone.

It's good to see you as well. Good to see you. So what do you make of or how should, how do you think we should look at this Amazon news today? Any differently than we've, you know, discussed what the other hyperscalers are doing, whether it's, you know, from cash burn or tap in the debt market? Yeah, the Amazon. Bond deal tells me something much bigger than just the size of the issuance itself. AI has moved beyond just being a software story and it's become really an infrastructure asset class.

And companies like Amazon, they don't issue 30, 40 year debt chasing a one-year cycle. So clearly they see the benefit of being able to get the return on what's required for the data centers, the networking power, all those different things. I mean, this is very similar to how utilities, railroads, telecom networks have historically financed their long-lived assets. Where do you think we are in the cycle? I think we're still early in the cycle itself, but what we've moved from is from a user perspective for evaluating AI. We're beyond the experimentation phase, and we're entering the phase where we need to understand what the return looks like, and whether that's for revenues or whether that's for cost savings. And one of the

challenges has been, you know, aside from, you know, the complaints that we're hearing about the cost of the inference, it's more around the ability to measure that return on investment. So I think we're in this second phase. People are asking the right questions. And it's up to the infrastructure providers, the model companies, to be able to come to a solution to provide those answers. Well, what's interesting is, as you're right, investors are increasingly asking that question. When are we going to see the returns? We want to see something tangible so we know this is all going to eventually pay off, whereas the companies don't seem to be anywhere near as concerned as investors are because they keep reaffirming.

their spending plans, if not doing what an Amazon is doing today and others are likely to do as well. Yeah, so the hyperscalers, the folks, the neoclouds, the folks that are providing that infrastructure and intelligence, they are without question according to the metrics and the forecast they're looking at. They see it. I think, you know, the enterprises that are actually using it and paying for it and the investors want to better understand. You know, R-O-I. this is a moving metric, and there's been a lot of talk about, you know, open source models and where we actually should look for a value. And one thing to think about when you try to calculate ROI, when you look at frontier models, when a new frontier model comes to market, it can typically

do new tasks. So the work surface increases, and people are willing to pay a premium for those tasks. And then when you look at the prior model, in theory, that model should open up. itself up to a wider audience because now that price should come down. And so then you have the Jevins kicking in. So you've got this prior generation model that now should be cheaper and more people can do those tasks that formerly only folks that were interested in paying a premium for. So at the end of the day, I think what we need to see is the ability to have some type of orchestration or routing so that we can route tasks that need to only. go to the frontier models where people are willing to pay a premium. And then if it's just as

simple as writing an email, you don't need the latest version of Fable or GPT5.6 to write that email. That can go to a lower end model or even an open source model. And then if you have that intelligence for routing, it will make it a lot easier to be able to calculate ROI as well. So overall, those are the types of things I think we need to see. Before I let you run, I'd love to get your thoughts on how you think SpaceX is reacting since it went public. It's, you know, down more than 6% today, gets into the NASDAQ 100. Obviously, the analyst community, which has come out today and mass, you know, giving their commentary on it. No surprise there. I don't think that, you know, they're bullish. Yeah, absolutely. And so you have these different parts of the market looking at

at SpaceX differently. You've got the folks that are, you know, the programmatic, the index folks, you know, They need to buy it. You've got the folks that are doing the underwriting. You know, they're looking more towards a longer-term vision for SpaceX. And then you have, you know, there's some short activity that's out there. We don't know all the details, but, you know, clearly there are people that think the valuation is a little bit ahead of where it is today. Now, what's interesting is in the minds and the calculus, all these things can be true in the

way that people are playing this. But I think without question, people need to have a long-term view. for SpaceX. I think it's going to be much too volatile to try and trade. So if you're going to buy it, I think think about the long-term vision. And I think it is one of the more impressive long-term visions the way that we're seeing in the infrastructure side of the AI market play out. All right, Lowe. We'll see you soon. Thanks as always. Thank you, Tony. Coming up next, Goldman's second half playbook, the firm's head of public investing right here at Post 9 next on the areas of the market to bet on for the rest of the year. All right, welcome back. We'll see if the Dow can

close above $53,000 again, has some work to do. For more on where the markets are heading in the second half, we welcome in Greg Kowland. He is head of public investing for Goldman Sachs asset management and is here at Post 9. Welcome. It's good to have you. Thanks. Good to be with you, Scott. So your trading desk today said that the makeup of the market is changing. Do you agree with that? And if that is the case, what are the implications do you think? We do think that the market is evolving, certainly. So the first half was marked by high macro volatility and a very powerful corporate earnings drive. We see a shift in the market that's occurring over the last couple of weeks, and maybe that's what my colleagues were referring to, where that macro volatility is reducing.

And it's reducing because of events in Iran. It's reducing because of the straight, the price of oil. It's also reducing a bit because of the jobs report last week has taken the pressure off of the Fed a little bit. So the macro picture and the macro volatility has come down, and that's shifting all of the attention to corporate earnings over the next few weeks. Part of this undoubtedly was talking about what's been happening with the momentum part of the market. And the rollover we've been witnessing and, you know, people trying to think, well, okay, if that trade's going to be done for a while, does money go into all of these other areas of the market? Do we continue to see a broadening? Do things like the equal weight S&P 500 continue to set records? How do you see that? We have been seeing a broadening over the last

couple of weeks, but it also really been for the last, I would say, six months, right? So if you look at the returns of the Magnificent Seven year-to-date, it's up a couple of percent, maybe it's flattish after today. The S&P 493 is up 15 percent, right? So we used to think of the AI trade being dominated by the Magnificent Seven. Now it's a much broader picture. That's not just limited to the U.S. large-cap equities. If you look at small caps, they've had their best six months of the year since 1991. Beating everything year-to-date. Beating everything year-to-date. We've also seen strong returns from emerging market equities, emerging market debt. We're seeing good returns out of Japanese equities.

So the AI theme is definitely playing itself out over all parts of capital market. Are you pretty positive on where the markets can go in the second half as you put out your outlook? We are generally positive because we see the picture of corporate earnings being strong. Well, they're supposed to be. I mean, earnings growth this quarter is going to be almost 25%. and in subsequent quarters almost to go. So our forecast is 22%. Scott on.

The median, though, so the full market, 22%, the median is 9%. Right? So you have to be mindful of that. The largest companies are producing some of the highest sets of earnings growth. We think the median is 9%. That's all good.

The backdrop, though, is there's significant single stock volatility that's happening across the spectrum. Right? So look at what happened to Samsung today. Sure. 19-fold increase in operating profits. Stellar, stellar results.

Stellar's not always good enough, down 7% today. So I think that's the other piece of this is the market has an expectation, and you have to meet that. So we do think that the earnings season will be positive, but it is a complicated backdrop. I feel like, you know, in the prior months, it was by the sectors that are going to deliver you the greatest amount of earnings growth, tech, comm services, right?

50 plus percent were projected to go over 60. percent the current quarter. Now I wonder if it's changing to to buy the single digit earnings growers because that's where the greatest catch-up is going to be. And the ones that were leading before, there's no way they can sustain the kind of momentum and the growth that they already had exhibited. But I think that's what you've seen already a little bit, right? Like that's why you're seeing the broadening of the market. It's not just concentrated in the hyperscalers. And in fact, like we just said, they haven't done that much this year. So it really is the other parts of the market that have begun to catch up, I think what will be interesting to see over

the next couple of years is the companies that really aren't necessarily AI beneficiaries per se. Do they use AI within their businesses to expand margins and benefit from, you know, what this technology can do more broadly? That's where we're going to the beneficiaries. Exactly. That's where we're trying to suss out. That's why things like probably healthcare has picked up. You say, I think this is interesting too. The traditional 6040 portfolio still has a role, but investors have more tools than ever. I find that people that come on the program, I end up hearing more about the 6040 has morphed into like a 70-30, or broken down even more because of now the access to alternatives,

and just other things that people have at their disposal that they didn't have before. Make the case, though, for the 60-40, if it still does, as you say, have a role. I wouldn't make the case necessarily for the 60-40 so much. I think what it is is a thoughtful asset allocation between stocking, and growth-oriented parts of your portfolio, which shouldn't just be limited to stocks, and then 40% designed for the downside protection. So that 40% doesn't necessarily just need to be bonds, right?

It could be alternatives that are protecting you on the downside. It could be strategies that are meant to generate income, which could include call-writing-type strategies within equities. It could include buffered type of equity strategies. So it's thoughtful to have a robust portfolio like a 60-40, but there's different tools that you can use instead of the sort of classic 60-40 stocks, bonds mix. Enjoy your time ringing the bell. G. Sam's going to do that today. It's good to see you.

Thank you, Scott. Good to see you too. Great counting. He's the Goldman Sachs Asset Management head of public investing. Up next, the biggest mover is as we head into the close today, Christina Parts of Nevelosa is standing by with that high. Well, Scott, we have an industrial giant making a, what else, big AI bet, a major cloud partnership fueling the AI race. And a biotech, or blockbuster biotech takeover really sends shares of one main. soaring. We've got those market movers next. We're approaching 10 minutes before the closing bell. Back to Christina

now for the stocks that she is watching. What's on your list? I got to talk about Caterpillar because it has such a big impact on the industry, but it's dropping about almost 4% after announcing it acquired Skycatch a mining tech company. The company actually didn't disclose any financial terms, but says its

AI abilities will help improve safety, speed, and accuracy of mining operations straight from the release. Now, switching to cognizant tech, That name is jumping over 5% right now after saying it's going to expand its partnership with Google Cloud, specifically aimed at accelerating enterprise adoption of Google's Gemini AI.

Cognizance Frontier certified engineers, as well as Google Cloud's teams are going to work with clients to just reevaluate how AI can assist them, and of course use Google products, shares up over five. And then you had a pharmaceutical name that is nearly doubling after Vertex Pharmaceuticals agreed to buy this crime.

genetics pharmaceuticals, tongue twister, for roughly $10 billion, Vertex looking to expand its presence in treatments for rare hormonal diseases. Vertex, though, just lower by what? Not even a percent? Yeah, percent down. Scott. All right. Christina, thanks.

Christina Ports and Nevelas. Coming up next, big news out of Walmart sending that stock higher. That and much more inside the market zone, which is coming up next. We're now on the closing bell market zone. Mike Santoli and PNC's Young Yuma here to break down these crucial moments of the trading day. Oliver Renick, as always, standing by. live from Cebo Global Markets in Chicago with some options action for us. Brandon Gomez is tracking that move.

We talked about in Walmart, the company cutting prices on thousands of items. And Philibault, looking at the action today in shares of Ribby. And Michael, I'll go to you first on what you make of this market. Yeah, I mean, it's another day of kind of sector and factor pinball. We get the reversal of yesterday's semiconductor bounce. I think the market in general is doing a commendable job of kind of holding together while the sector that's 18% of the S&P, which is Semis, moves like 4 to 6% a day. I still think it's too volatile.

I still think it shows you that these erratic flows have the possibility of knocking something else off track. So far it has not happened. And everyone is able to take comfort in the fact that the equal weights making new highs. We are in another interlude where the average stock is outperforming. I think that's fine as long as it's an interlude. And that ultimately the kind of the AI earnings leaders can resume the, And I think that's sort of maybe happening in a subtle way, but in the form of the Mag 7, which, of course, has had a real bounce this past week.

Yeah. How are you going to tackle it at top of the hour? I mean, because yesterday, it's the, like literally today is the exact opposite of what we were talking about, right? We handed off a first close above 53K. We wondered, hey, is this momentum saying we're not dead quite yet? And then we're below 53, and momentum is rolled. What does that leave you with?

I mean, I think these momentum unwinds, you only know in retrospect if it's kind of enough, if they have more to go in terms of resetting. But I do think that one thing we're benefiting from, and we'll talk about this, is the underlying earnings story hasn't changed. Macro is very steady. There's not a huge debate of recession, no recession.

That's allowing the market to be preoccupied with its kind of internal extremes and trying to rebalance itself. We are going to talk to Bob Greifeld, former NASDAQ, CEO, and chairman about all the capital that's kind of rushing into the market, into the indexes, S.K. Heinex, along with SpaceX and all the rest, and maybe what impact that might have. All right, five minutes away from you and Mel. Look forward to it. Mike, thank you very much.

Let's go to Chicago now. Some Options Action with Oliver. Scott, Barish options flows persist in chip stocks while traders try to rotate into more bullish positions in the software group. It's a tradeoff that's negative for the major indexes today. but if we do need to sell off, there are some reasons to think it could happen in a manageable fashion. The software ETF IGV is up 8% since the Semiconductor fund SMH peaked on June 22nd. Chips are now down 14% since then, but the S&P 500 is perfectly flat, thanks in part to those software stocks rallying. There was also a hefty amount of hedging going on in semiconductors the past month, starting in late May when put open interest surged and traders piled on selling calls, and buying puts last month in SMH,

that should create some support as bears take profits along the way, perhaps like what we saw around midday today. One other thing to watch is in Nvidia. We're seeing the second day of bullish flows with calls almost triple puts in that stock, and if there's one chip maker, you want to hold fast, Scott,

it of course is Nvidia. Okay, Oliver, good stuff, as always. Thank you very much for that. Brandon, what's happening with Walmart today? Hey there, Scott. Yeah, Walmart coming off its worst quarter in four years down 10% or so. since April 1st and struggling to stay in the green for year-to-date.

Turning higher today, though, on an announcement that it's rolling out summer price cuts across grocery. Now, everything from ground beef and produce to summer essentials, including private label, and select products from Coca-Cola, PepsiCo, and Frito Lay. The news came just before President Trump claimed credit for the move on Truth Social, though Walmart's release made no mention of the president or his administration. For investors, though, the big story is the consumer. Walmart recently said shoppers are increasingly looking for value.

rival Kroger is also testing lower prices to win consumers. Bottom line here, the battle for groceries heating up, and the value is the key here, Scott. All right, Brandon, thank you very much for that. That's Brandon Gomez, Phil LeBow with more on what's happening with Rivian today, Phil. The sell-off continues. It started after the bell yesterday when the company made an announcement about a capital raise. To give you some perspective on the sell-off today, it is the worst one-day sell-off for Rivian shares since February of 2024. Here's why. The company has decided it's going to sell 75 million shares raising about $1.5 billion. By the way, there is the underwriter option of another 11.25 million shares. And again, we don't know the exact proceeds, but it'll bring in

about $1.5 billion. The company also pre-announced or gave more narrow guidance of Q2 revenue between $1.55 and $1.65 billion. Yes, that's above where the estimate was yesterday. Doesn't matter to shareholders today, Scott. They see that capital raise and say, who no? And that's price shares are down almost 20%. All right, Phil, Phil, good stuff. Thank you very much for that. That's Phil LeBow, Young Yuma, sitting right to my left here post nine. You say today's action is probably a sign of what's to come.

Expand on that. I think so. Look at what's doing well. The S&P equal weights doing well. Health care is doing well. Some areas that might be AI beneficiaries are doing well. I think that's where investors start to look. Move away a little bit from where the bottlenecks are in that consideration.

And think about who's actually going to benefit. We've been saying a long time that the beneficiaries of AI should be broad-based, and that's what the market is starting to show you now. But you still say that you think the hypers are going to outperform. So how does that match? Well, they're the big spenders, too, right? And I think also what the market is telling us is that maybe they don't need to spend as much as was previously presumed.

And I think some of the bounce that we're seeing is the idea that these hyperscalers might be able to increase free cash flow in the coming quarters or coming years, if those huge expenditures that have been kind of baked into the numbers actually level off, or maybe even pull back a bit in the coming quarter. So I think that's the bounce. I'm sorry. Why do you say that Q2 earnings should provide stabilization, not a catalyst? If earnings are going to be as strong as people suggest they will be,

why wouldn't they be a catalyst? Well, there's more to the market than earnings, and I think that a lot of what's expected is already baked in. We know that those big KAPX numbers are just filtering and cask. down the AI ecosystem, and that's going to really stimulate those numbers. But the question is, is that durable long-term? And that's what's causing this push and pull, this tug-of-war in the marketplace now. I don't know that we're going to learn much new in Q2, even though the numbers are going to be strong.

I think it could provide support. I don't think it's a catalyst for the next leg up, though. It sounds like you're almost calling for an everything rally. I mean, if you're pointing out the fact that the equal weight is going to be the thing that works well, but then also the hypers are going to outperform, which theoretically is going to help the S&P 500, then what does it work?

Well, I think some of what really worked in the last couple of quarters, what we saw the last year, some of the semiconductor names that are up two or three times over the past 12 months, I think what was really juiced earnings in some of those spaces

starts to moderate. We're not going to close above 53K on the Dow again today, but we have come off again below.