Closing Bell - Closing Bell: Best Bull Market Opportunities 9/24/24

Episode Date: September 24, 2024

Where can investors find the best opportunities in this bull market? Trivariate’s Adam Parker, New York Life Investments’ Lauren Goodwin and Invesco’s Kristina Hooper break down where they are seeing strength right now. Plus, top technician Chris Verrone tells us which parts of the market he thinks are about to break out. And, Novo Nordisk shareholder Michelle Ross of Stempoint Capital gives her first reaction to the Novo Nordisk CEO testifying on Capitol Hill over weight loss drug pricing. 

All right, guys, thanks so much. Welcome to Closing Bell. I'm Scott Wobner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the Dow and the S&P, heading for more milestones in this final stretch. Let's take a look at the scorecard with 60 minutes to go in regulation. So the Dow is just a touch negative, but it's been up for most of the day, and we'll track every move here. There's the S&P. It'll be a new record high close there, too. NASDAQ's up about a half percent. Industrials, materials, tech, they're leading the way today. As China announces more stimulus measures, we're following that. And that is giving a lift to names like Freeport, Macmoran, and Caterpillar and others.

A whole host of China-based Internet companies, too. We'll show you a couple on the list here. They are having a pretty good day, like Alibaba, up near 8%. There's JD up more than 13%. It's been a mixed day for mega caps overall. Microsoft, Meta, Amazon have been lower. There's your picture there for those names. But the other side, Apple, NVIDIA, Alphabet, they've been staying green throughout the session. It does take us to our talk of the tape. Where to find the best opportunities within this bull market right now? Let's ask our panel that very

question. Adam Parker is the founder and CEO of Trivariate Research and a CNBC contributor. Lauren Goodwin of New York Life Investments, Christina Hooper of Invesco. Welcome, everybody. It's good to have everybody here. You're still defensively positioned. So you said probably sell the first rate cut. Well, we got the first cut, but why are you defensively positioned? We've been hitting new highs here. So the note that we wrote this weekend was there's nothing worse than being a consensus bearer and being wrong.

It's like the worst thing you can do is everyone's cautious coming in September. And instead of it being the self-fulfilling prophecy, it's like wrong. And, you know, there's some new news. Obviously, this China stimulus is a positive. Generally, when they do stuff, it helps, you know, energy materials and industrial. So that's incremental from, you know, maybe a few days ago, but I just, I'm trying to take a step back and say, what do I believe is like a reasonable scenario for the economy and for corporate earnings? Can I stretch it to get, you know, sort of 300 bucks in 2026

earnings for the S&P? Should I pay 20 times that? That gets me about 6,000. So, okay. I can see like, you know, I'm paying 20 times 20 26 earnings right now in a slowing economy while they begin to stimulate. Maybe. It's just really hard for me to walk in and say I think there's like 10, 15% upside justifiably. So I feel like I can pick stocks in this environment more than I feel like I want to just chase what's been a massive rally. Do you think statistically earnings tend to do better in a lower rate environment? Do stock prices tend to do better in a lower rate environment? Yeah. Is the answer yes? It's more the latter where, you know. I'm asking you that because you have a PhD in statistics.

I'm playing around with you a little bit, but you know what I mean. Yeah, what I wrote in the note is I think there's a 90% chance earnings come lower and a 10% chance they come up and a 50% chance the market goes up and a 50% chance it goes down. You know, like I know the earnings estimates are too high for Q4. And, you know, I thought FedEx and maybe, you know, we'll see. There's some bellwethers that are starting to show a little bit of squishiness. But on the other hand, you know, I'm less confident that we just won't have more multiple expansion because there are some things that I could dream about that can cause margin expansion, particularly around productivity, you know, AI deployment, et cetera. So are we seeing that? We are. And I think you'll see more of it. And I think what's in the price now is a pretty

healthy rebound in the 2025 earnings and continued growth into 2026. And I'm paying a pretty chunky multiple on that 2026. I think it's possible. I'm not like saying, hey, shortstop. But I think as we've been saying, like, I just don't know if I can believe 10% upside is more likely than 10% downside until I get a little bit more confident on how much the consumer is slowing. There's no question the consumer is slowing. Let's just take it, Lauren, base level, right? Let's go back to the beginning of when the Fed does what it's doing, right? 09, we learned from 09, don't fight the Fed, right? Somebody came up with that at some point and it's worked on both sides.

They start hiking, stocks fell sharply. They start cutting, aren't stocks supposed to continue to rise and isn't this a boost to stocks? That's what they say, are they right? I think in this circumstance, they're right for now. But the reality is that it's still all about growth where stocks go next. And it's actually true for profit margins as well. When the Fed is cutting historically, profit margins stay about where they are.

Earnings stay about where they are until growth slows. And so that's an environment where the equity market can continue trudging higher. But it's difficult to see the real economic catalysts that get us a real upstart in growth without inflation that the market would be happy about. And so I'm a buyer of this rally until unemployment claims start rising, until earnings start declining, really until growth's a problem. But I think we're going to see a really volatile market between those growth and slowdown narratives until that time. We are trying to, Christina, make investment decisions in some respects based on historical

precedent. You've heard some of the commentary here and elsewhere. Well, when the Fed starts cutting interest rates, it typically does this. Or back in 1990, whatever, this is what happened when the Fed was cutting interest rates. And I know you step into a big pile of you know what when you try and suggest that this is different this time. But this is unprecedented. Has the Fed ever started cutting interest rates at a time when the economy was as reasonably good as it appears to be today? It is hard to find a place in modern times where this has happened. By 50 basis points, nonetheless? A crisis cut in a non-crisis environment. Absolutely. It's unheard of. And I think we have to recognize that the Fed is cutting into growth. Now, yes,

we are going to see a slowdown, but I think it's going to be very, very brief and that we're going to see a reacceleration. Not only do we have 50 basis points already, but we're looking out on 50 more this year and significantly more next year. In fact, if we listen to some of the FOMC members, we can expect more and more cuts. This is an environment, I think, where we're throwing a lot of jet fuel behind stocks. Now, it doesn't mean that we're going to see the stock market go crazy. But I do think, especially those areas that haven't had as big a rally, especially the cyclicals, where there is an expectation that if the economy does reaccelerate, they'll perform well. We'll see that. And what's happened today in terms of the China announcement, it's only helping that. I want to go back to that. Right. It's a good analogy.

Like you, we've been having this conversation as to whether the Fed is going to be able to land the plane safely or not. Christina's point is that they just refueled midflight. Right. She just said it added jet fuel to two stocks. So like they got one of those planes to go up and they refilled before they even had to land. Rick Reeder suggested yesterday with me that forget soft landing or this landing, that landing. Right now it looks like no landing. The economy is just going to keep buzzing along here. Yeah.

Look, I hate the 09 analogy because what was different and same in 20 is you had massive incremental fiscal stimulus and massive balance sheet expansion. And they cut the front end. So maybe there's a little fuel, but that was like an offshore discovery or whatever. That's a lot different. So the China thing I think is new and positive. I think it is positive for cyclical goals and those exposed, no doubt. And that's new information. And you've got to react to new information. And I think that does help some of the exposed cyclical goals. I totally

agree. But I don't think it's the same as getting incremental massive fiscal stimulus and expanding the balance sheet. And I know that when you say don't fight the Fed, and I espouse that thing a gazillion times, so I'm like partially responsible for that also. But I would just say it's different when it's just the front end and not also balance sheet expansion. That is different, literally. But I mean, central banks around the world are loosening policy. And now we just had one of the largest economies on planet Earth say that they're going to do that as well. And we already know that they'll go to the nth degree to make sure that their economy doesn't collapse, at least on the

surface. You know what I'm saying? Yeah. I mean, if I were smart, I would have bought Chinese value stocks two days ago. I mean, that, I guess, makes sense, I mean, for the first time in a long time. But my challenge, and again, I'm just trying to create a little perspective. I do think, if you look every Wednesday when the Fed reports it, the week-over-week change in the Fed balance sheet is statistically significantly correlated to the week-over-week change in the S&P. And if they're going to do a bunch of balance sheet expansion, then yeah, I'll be bullish. But what about- But what business is all of a sudden better? Because the front end's 50 bps lower. It's

all of a sudden financial conditions easing and loans getting none. I don't know. I think it's a little early, and I still think the stock market is pretty far ahead of the Fed. So let's say the Fed, Lawrence, pulling a little bit of liquidity out of the market, but investors continue to put liquidity into the market. That was a note today. Bank of America, largest inflows, like the third largest ever last week since they started collecting the data. That's the don't fight the Fed crowd, which has been sitting elsewhere, which says now, OK, that's what they told me to do. So don't fight the Fed. I'm going in. Yeah, look, I I completely agree with the idea that for the real economy, the impulse that 50 basis points, especially when we're probably still at a restrictive policy level, that's not the type of juice that completely reengineers the cycle. But where we're not fighting the Fed is in

acknowledging that even a 50 basis point cut is 50 basis points off of a cash rate. And investors are going to wake up in a year and realize that they don't have the same income generation opportunities that they had even just a couple of weeks ago. And so I think we'll continue to see flows into the market, especially, I mean, we've been talking about equity, but especially into the bond market, because locking in rates, even at the levels where they are now, is a significantly more attractive opportunity than what it might look like in a few quarters.

OK, I'm glad you said that, because it's the kind of conversation I had with Rick Reeder yesterday right on the set. I want you to listen to what he told me. We can react on the other side because it plays to that very thought about, OK, there's money. But where's the money going to go and where is it going to work best? Listen. Markets are crowded in a bunch of places. Look at what happened to semis. Markets get extremely crowded these days. So I just think you got to be really sensitive. You know, fixed income, I tend to diversify it where I like to concentrate my equities a bit more. But I think you got to be a bit more careful because the crowding in markets is severe. His point, and he's been making this point for long before the Fed actually cut rates, that it's a golden age, his words,

in fixed income. He yesterday, though he likes stocks, made it clear he likes fixed income better. And it's too easy to say, well, of course he's going to say that. He's the CIO of global fixed income for the world's largest asset manager. He made it clear he likes stocks, but he just thinks bonds right now, credit's better. I have to agree with that opportunity set. And again, it has to do not just with where the market is right now, but what that trajectory might look like and the opportunity set investors have for the next several quarters. Moving from, first of all, moving from cash into bonds is a no-brainer. Reinvestment risk is an investor's worst nightmare right now. And so moving, we particularly like the short duration

part of corporate credit, whether that's investment grade, high yield, or even the municipal curve, because that's an opportunity where the maturity wall looks good, buying in hold for a couple years, managing that income generation opportunity, locking in higher yield, I think makes a lot of sense. Christina? Equities and fixed income are not mutually exclusive. I think what's going to happen is cash is going to come off the sidelines. It's going to go into fixed income and some is going to go into equities. And perhaps some of the areas of equities that haven't performed as well in recent years. I think we'll see more going into international equities, more going into the value side, more going into small caps, as well as a lot of great opportunities in fixed income.

Agreed. Muni, investment grade, high yield, all look very attractive right now. Okay. It was the legend, Marty Zweig, by the way. We're investing rule number one. Don't fight the tape. Investing rule number six. Thank you, John Spallanzani, for sending this over to me.

Don't fight the Fed. Okay? That's from a legend. So that's where that comes from. Yeah, and that's why you get big retail networks piling in after the market's ripped and already at an all-time high. I mean, it used to be if you ask him when do people pile in from the retail networks, after it's ripped massively. So part of me thinks that's closer to a sell signal than a buy signal. And, you know, it's not like I'm a spring chicken.

I've been doing this for a long time too. So it's like I've seen that play too. You jam all the slowest moving guys at the top. I'm not super bared up. I just think that the risk reward like what I just heard is buy everything. Let's buy international. Let's buy small. Let's buy large. Let's buy value. Let's buy credit.

Maybe, or maybe what's happening is... We should buy everything. Well, I think we just like the bunch of things. We like bonds. It is worth everything. But between the two of you, it was like 90 percent of the liquid assets in the world. Think about it. This is not 2022.

You saw the opposite phenomenon where there was very little that looked good. You're right. Bonds and stocks can be correlated. I'm not disagreeing that that could if it's risk on trade, that that will be right. I just I'm a little bit more worried that the consumer's slowing. We're going to see some pretty big misses and guide downs in October for Q4, and that volatility point, that could be right. On the other side of it, I'll probably get dreamy again that there'll be some more AI-fueled margin expansion and other stuff.

But I just think that it's hard for me to think that the Fed's going to cut, let's call it, 1.5% more on the front end without a deteriorating economy that hurts or causes a growth scare. All right. How about this? What about the debate that we've had, and Christina, we've had it almost every time that you've been on because you've been advocating for small cap stocks long before the Fed actually cut rates. Fed cut rates, and they did a jumbo cut,

and the Russell really hasn't done anything. Why? It's coming. So I think there's still a lot of nervousness and apprehension about what is going to happen with this economy. To Adam's point, there are some signs that suggest that the economy is slowing. And I do believe that there will be outsized reactions to economic data points that are at all negative going forward.

We should see some kind of a slowdown, but I think there's a quick reacceleration to follow. I think small caps will discount that in advance. We just haven't gotten there yet, but I think it's going to happen sooner rather than later. What do you think? I think I'm the Goldilocks for once in this panel. I'm not bearish. I'm not bullish. I'm somewhere in the middle,

because I do anticipate that, look, there are risks to the economy out there. When I balance what those risks look like to the downside and the upside, I think we might see growth that slows maybe a smidge, but doesn't really go anywhere from here for a year. And if profit margins don't reacaccelerate, inflation doesn't re-accelerate, that's a really quite good economic environment, but it's an environment where maybe stocks don't do a whole lot, right? What gives you confidence in the acceleration? I mean, it's definitely possible. I'm just curious, what do you think? Well, and especially an acceleration without an inflation and therefore a Fed tightening concern? Anything's possible.

And like everything I say, I could be wrong. But it's interesting to me that you have some confidence in acceleration. Like, what are you looking at? So we have a really resilient consumer. Sorry to do you. In the economy you're talking about? Yeah, in the earnings. Sorry to do your job for you.

I mean, I got excited about it. If I had a problem with it, I would have told you to stop. Okay, all right. Thank you. I'm going to make the case for the U.S. economy. I think we have a very resilient consumer, especially on the higher end. Now, the question becomes,

how much pressure spreads from lower-income consumers to middle-income consumers, right? Well, right now, we have a very low unemployment rate, if we look at it relative to history. If it goes up significantly, then that's a different story. But if we can nip this in the bud and we can see really some kind of very modest slowdown followed by a reacceleration, I think the catalyst would be the election. Because what we've seen in the Federal Reserve Beige Book and consumer sentiment surveys is that is stopping people from buying and it's stopping companies from hiring. Well, the consumer confidence today had the biggest decline since August of 21.

I think it was the Fed chair on Fed Day who referenced the Beige Book as one of the reasons or at least part of the debate that was had in the room where it all happened, where they decided on 50. He mentioned the weakness that was in the Beige Book. But it could very well be caused by this political issue that could be resolved on November 5th. Yeah, I agree that you could have more certainty. I mean, assuming we know what happens in the election within some reasonable time frame of that day,

I think that could at least be... Weeks? Yeah, it could be some certainty. I think that could be a catalyst. I'm just sitting here with six weeks before that thinking I'm going to get a lot of pre-negs or guide downs. And, you know, like FedEx went down a lot when it missed. It wasn't like I'd have a different attitude if a company missed and it stayed flat.

Then I would think, okay, idiot, train left the station. What am I doing? I'm just a little bit more mixed about will the stocks act well between that. But if you're right that the numbers, the numbers embedded in consensus do accelerate big time in the second half of 25. If those numbers are achievable, the stock market is definitely going higher. I agree with that. I just, I'm like tortured about how much they have to come down.

What happens if mega cap tech sort of continues to take a bit of a backseat? It doesn't keep hitting the gas really hard. Is that a problem? Yeah, I think it's a problem. I mean, I guess in a framework where you're more bullish, then you'd say, okay, well, they're up 10 and everything else up 20 or 25, then that's not a problem. I mean, if you get economic acceleration and more stimulus from China and all that, and it's a risk on trade, small caps outperform, then yeah, mega caps are up 10 and everything else is up 25. And I don't

think anybody's got a problem with that. Are you worried about semis right now? They haven't traded well at all. I think that in the medium term, it's still wildly bullish. I think in the next October and January kind of guidance season, it's hard for margins to go up. It's hard for people to see, you know, proof cases from the hyperscalers. But ultimately... You say mildly or wildly bullish? Wildly bullish. I'm still very bullish on the whole complex.

Yeah. In like any... How can you be cautious on the market and wildly bullish on the semis? In any 12 or 24-month time frame. As you know, right now, gross margins peaking for NVIDIA. We've been writing for, I don't know, 25 years that you buy semis until the margins beat. I think on the other side of that, this is a new world. Semis grew GDP plus two for 20 years,

now it's like GDP plus seven or eight. And so the multiple's gonna be much higher in the future than the past. So I think you just have to get through this sort of challenge about hyperscaler spending. And on the other side of it, when you see more cases of companies being productive, you'll be back to trading those things. NVIDIA is only 20 bucks down from all-time high,

so it's not like it's acting that bad. But I think it'll be way higher in two or three years. What about this idea of mega caps? If they continue to take a bit of a backseat, is that okay? I think it can be okay because if mega caps are taking a backseat. Is that OK? I think it can be OK, because if mega caps are taking a backseat and the economy is holding up, then you can and the market can digest that backseat. That's actually constructive when it comes to sort of the balance of equity valuations. The way I see the next 12 months potentially unfolding is that if we don't have a major downside, there's not really necessarily a huge catalyst for reacceleration either. And if the economy stays about where it is at or a little bit below trend, valuations are high across the board.

That's an opportunity where investors really need to focus on how they can generate income. And so that's where we're focused as especially pre-election, the one thing I feel highly confident about. Last point to you. You want to wrap it up on the same thought? Absolutely. I think it's important to be diversified. I think it's important to think about alternate scenarios. That's why I think there's a lot of excitement about gold right now. But I do believe very strongly that we are going to see a re-acceleration. And so investors need to be positioned for that. Consumer discretionary stocks have been performing very well recently. And I think that's telling us something. I think we will see a revival of the consumer. Yeah, that's hard to really,

you know, Amazon, Tesla's now positive on the year. Those have such a higher weighting in discretionaries. See, I think these guys do cross-asset, so they know much more about stuff. I just talk to, like, equity PMs all day, and I think I'm just in that, like, hurt locker of, like, earnings season that's coming up and trying to pick winners from losers. So we may not be that far apart, actually. We'll leave it there. Adam, thank you very much. Christine and Lauren, thanks as well. Thank you. We'll see all of you again soon. We're getting some big news out of Boeing. Phil LeBeau has that for us. Hi, Phil.

Scott, take a look at shares of Boeing. One day after the company said that it was making its best and final offer to the machinist union and that there needed to be an approval for that contract to go through by midnight pacific time on friday night well now boeing has said we've talked with the union and we're going to give them a little bit more time there's no longer a deadline there remember the machinist came out after that proposal from boeing scott and they said we're not even presenting this to the members. You don't tell us when we have to vote by. We will do it once we've negotiated an agreement that we believe in. And so as a result, Boeing has come out today and said, we think that everybody

should have more time. So we've reached out to the union to give them more time. No deadline is the bottom line here, Scott. They still have their best and final offer out there. Let's see if it truly is the best and final offer or if there are more to come. All right. Yes, we will. Phil, thanks for the update. That's Phil LeBeau covering that story for us. To Seema Modi now for a look at the biggest names moving into the close. Hi, Seema. Scott, 38 minutes left in trade.

Visa falling today after the DOJ filed an antitrust lawsuit against the credit card giant focused on its debt card business. The DOJ cited that 60% of U.S. debit transactions run on Visa's network as part of that suit, but adding, quote, even these numbers understate Visa's monopoly power over debit transactions. Visa declined to comment when we reached out to them for a response. And Regeneron dipping after a bearish call from analysts at Learing, who downgraded the stock to market perform from outperform. That downgrade coming after Regeneron lost a bid in a U.S. district court to block Amgen's biosimilar for its blockbuster eye disease drug, Ilea. The stock is currently one of the worst performers on the day, down 5 percent, Scott. All right, Seema, appreciate it.

That's Seema Modi. We're just getting started. Up next, top technician Chris Farone is looking at the charts for us. He'll reveal the parts of the market he sees breaking out next. We are live at the New York Stock Exchange. You're watching Closing Bell on CNBC. We mentioned shares of Caterpillar at the very top of the show. Shares are up over 3% today. Industrials outperforming.

So what's next for the key names in that sector? Joining me now, post-9, is Chris Ferron of Strategas. Good to see you again. Great to be here, Scott. I mean, maybe the outlook for the sector was different two days ago than it is now, given what China's doing. You tell me. I disagree.

I mean, I think this has quietly been a leadership sector for two years. If you go back to when the relative turn really began, it was actually summer of 2022. So we've had two years of industrial leadership preceding what I now think is the next tailwind, maybe a hint of stimulus from China. And if you think about industrials in context of all this soft landing talk we hear, and one of the things I would push back on is the question, do you think we're going to have a soft landing? I would say industrials have been telling us for 18 months, we've been in a soft landing. Will it persist? So if you're going to change or deviate from the status quo, wouldn't involve the most consistent group over that time weakening? And we just haven't seen it yet. I mean, unless it's to come, right? Unless the certainly whatever's going to

happen with the economy, as some suggest it still is to happen, actually does. I thought what was notable last week, if you look at the new high data, what sector had the largest expansion in new highs? Industrials. Look at Caterpillar, Cummins, Carrier, URI. And then if you look within industrials, it's actually the more defensive names like Waste Management, Republic Services actually weakening. So there is a pro cyclical tone continuing to come from this industrial sector. And until it changes, I'm still inclined to believe this is the leadership fabric of this market.

You sound pretty bullish. I'm bullish on industrials and- Well, I mean, if you're bullish on industrials, you're not bullish overall market? Well, I think you have to be. What's the most important- That's kind of my point. Yeah, what's the most important piece of information the last week? New S&P high. What's the second most important

piece? 50 basis points, I would say, was the first most important thing. Sure, but it's continuing to be reinforced by industrials pretty good, financials on balance generally act okay, discretionary still outperforming staples, until what I think those tenets of soft landing have been for the last 18 months until they change, until credit weakens, until banks break down, until industrials roll. I think you have to maintain the status quo here. The interesting thing has been the movement in gold, which we've been talking about for a while because it's been trading around record highs. I asked Jeffrey Gundlach about it last week on Fed Day when we were out at Double Line in Los Angeles.

Listen to what he said. We can talk on the other side. I continue to hold gold, and I would dollar cost average into it at these prices. I'm over close to the highs of all time. But the setbacks are very small. It's symptomatic of a market that is in accumulation mode. And I think that the path of least resistance for gold continues to be up. Okay, that's the gunlock perspective. What's the Varun? We share a similar view. I think if people went back and looked over the last 18 months since the big NVIDIA quarter back in May of 2023,

they would be shocked to know that gold and the triple Qs have given you the exact same return. So concurrent with this big tech story, there's been an equally as compelling story from the precious metals. What I think is timely right here is silver finally starting to wake up. And if you look at particularly some of the miners, even some of the junior miners, big breakouts over the last couple of weeks from very, very kind of long bear markets. So I think this turning gold, which has been the case for the last 18 months, it continues. I think the status quo continues. If there's one thing I might be a

little bit mindful of in the near term, some of the sentiment the last week or two, I think it's getting a little on the hotter side. If you've got to pull back $2,450, $2,500, I think is very good support. I'd be a buyer there. What's going on with rates, right? It was noticeable, obviously, if the Fed makes its move and rates went up. And they've been higher now than they were before the Fed made its move. Where are they going from here? What's this telling us? In some places. I mean, we've seen 10s and 30s bounce in yield.

2s are basically on the lows. I'm really talking about 10s and 30s. And I think we should. That's the more important part of the curve. If yields are going to send a message that the economy is set to weaken or about to weaken, I would expect you to see that from the 30-year yield. Draw a line at 390 on the 30-year yield. You start to undercut 390, I need to begin to question the whole idea that kind of the soft landing narrative is intact.

What I would point out, I think you've noted this, Scott, look at the European yields. They're right back on the lows, in many cases undercutting the lows. German 10s, German 2s in particular, that's where I think kind of our attention would have to turn for maybe more imminent risk. So what are we at? 57 and change on the S&P. Highest target on the street right now is 61. We got a lot of things still ahead of us. Data, obviously the election. What seems reasonable? I think 62.50 seems reasonable. That's just the technical breakout from the range that we were in for the last, I mean, really three months. The index kind of chopped from mid-July until last week.

We can get another 500 points. I don't think it's unrealistic. Now, how do you get there? You've got to still have some of the bigger stocks involved, but they don't need to be leadership. And I think they might be seeding some leadership here, but you can't have them going down. But you can still get that amount of gain out of the S&P without having those mega cap tech stocks be the leaders? I think absolutely. I mean, there's a difference between leadership and going up as a laggard or a market performer. I think they're transitioning more into the latter, but they certainly haven't broken. I mean, look at the new high list.

Meta, new high. Netflix trades great, very quietly. I think it's almost no attention. They dropped it from the FANG acronym, right, and they went to MAG7. And the chart looks still pretty good here. All right, we'll leave it there, Chris. Thank you. Appreciate it, Chris Ferron.

Up next, CEO of Novo Nordisk is textifying on Capitol Hill today. The big debate over weight loss drug prices kicking into high gear now. Novo shareholder Michelle Ross is back. We'll get her first reaction there. Talk about other health care stocks on the move. We're right back on the bell after this. The fight over drug prices heating up on Capitol Hill today as the CEO of Novo Nordisk faced harsh criticisms from lawmakers

over the cost of their blockbuster weight loss drugs Ozempic and Wagovi. The outrageously high cost of Ozempic, Wagovi and other prescription drugs is directly related to the broken, dysfunctional and cruel healthcare system in our country. While the current system makes huge profits for large drug companies like Novo Nordisk, huge profits for insurance companies, and huge profits for PBMs. All right, joining us now, StemPoint Capital CIO and Novo Nordisk shareholder, Michelle Ross. Nice to see you again. Welcome back. Very nice to be here.

This all election year politics and, you know, grandstanding and the like? Or what do you make of the calls? What do you think is going to happen? And what does it mean for the stock? Let's start there. So let's first start by saying that what happened today isn't anything new. I mean, we've heard many of these arguments before. They're very valid. The idea that there's a finite amount of dollars in the system for health care costs.

And I think that clearly there's a new market that's coming together and forming with the GLP-1s and what they mean for that system is troubling to many. And I think you can't just have one group up there talking about this and the inefficiencies. I think you did see Senator Sanders call out the PBMs and the distributors as well. And I think that if you look at the dollars that actually make their way into the drug makers' pockets, as he said, it's actually a lot less than many Americans would believe if they just saw these off the cuffs. So it's really something that I think needs to be understood from a multitude of angles,

as well as the preventative measure that these drugs are going to be filling in and the downstream effect of savings that's going to come at the later stages. Isn't it inevitable at some point and probably sooner rather than later that the prices for these drugs is going to come down? Price is going to come down? Yes. And so what's the impact then going to be for earnings on stocks like this? Exactly. So a couple of these companies have very, very deep pipelines. And we're seeing between Lilly and Novo, the depth of their pipeline is continuing to evolve. We're seeing phase one to phase three trials that will only enhance what they're already able to do, whether it's on the side effect profile, the duration of effect, or to your point on the cost.

I think one of the most important features of this is that there are a multitude of ways that costs are going to come down for the system. It's not only going to be in the shape of more competitors that do come into the market. Right now, you're really dealing with a duopoly. But as these drugs become oral compounds, and then furthermore, there is going to be that level in measure of cost cuts that are going to continue to go into effect from government agencies like Medicare. But we don't think that the best money has been made in the Novos or Lilies at this point. Not necessarily. I think we're going to be looking at very specific drug outcomes trials, whether or not these drugs continue to impact the long-term effect of patients' health.

So we've seen it in specific studies already, and the continuation of those studies and the depth of these responses is going to be something that can continue to really lift these companies and maintain their earnings potential. Last time you were here, we talked about the prospect for rate cuts and how beneficial that would be to some of the smaller biotech companies that rely on borrowing money for their R&D and everything else that they do. Now that we've gotten the 50 basis points, and we know at least we think what the trend is going to be from here,

how are we thinking about that? Same view. I think time obviously will tell. There's this idea of obviously the hard and soft landing, whether or not biotech's duration is going to really hold it up from the sector that is able to feel the benefit of this cut to that degree. We are in particular very positive on biotech based on the fundamentals and the outcome. And I think as dollars flow into the system, whether it's through secondaries, new IPOs, and new investors, all of those are positive to lift the sector.

But for us and what we do, it really is the fundamentals that are driving the change and where we think biotech can shine going forward. Let's talk about a couple of names I have on my list. IMVT, I-M-V as in Victor, T as in Tom. That's the ticker for wherever you're playing. Immunovant. Immunovant. Tell me about it. Immunovant is a company that has what I'd like to call a pipeline in a product. And when you look at specific companies, what has been so effective,

what is effective for pharma and really grown them over the course of their history is finding a phenomenal new target or new application and being able to use that for a multitude of different diseases. And we've seen this with drugs like Humira. We've seen this with drugs like Dupixent. And what we have understood so far is the new target called the FCRN pathway can touch a multitude of different diseases. In particular, there's 23 that we have basically sourced and understood could be utilized.

If this company continues ImmunoVac, continues to display the early success they have in the number of different indications, it could be a dramatic potential multi-billion dollar opportunity, something that has long duration and very importantly massive impact to patients in these rare diseases. Okay we'll follow that one. Denali Therapeutics, DNLI. Denali is very exciting because, dare I say, the platform that they're working on, there's something very unique to diseases that impact the brain, neuromuscular, neurodegenerative diseases. And we've had a problem historically being able to reach the brain and really make ultimate change to patients. What Denali proposes and have shown they can do in clinical testing is be able to pass

through that blood-brain barrier to really target the brain in a way that we have been unable to touch. In a way, it's the final frontier of medicine of sorts. And what they've been able to show historically and what they can, we believe, over the next 12 months is incredibly exciting and dramatic. Appreciate you being here once again. Absolutely. Good to catch up with you, Michelle.

Thank you, Michelle Ross. With StemPoint up next, we're tracking the biggest movers as we head into the close. Seema Modi is standing by with that once again. Hi, Seema. Yes, we are, Scott. China's rate cut fueling hopes of an economic rebound. We will tell you which stocks are making the biggest move on that cut coming up. Got about 15 before the closing bell.

Back to Sima Moni now for a look at the key stocks she's watching. Tell us what you see. Well, Scott, those Chinese stimulus measures are fueling a rally in companies with China exposure, starting with Wynn Resorts, which has casinos all over Macau. You'll see shares up 5% on the day. Hopes of a recovery in Chinese spending is sending a number of travel stocks higher as well with cruise line Royal Caribbean, hotel operators like Marriott, which has a significant presence there. And booking holdings among the online travel operators with international exposure up about 2%. Economists are now betting further intervention from Beijing.

And some of the larger cap Chinese names that are listed in the U.S., Alibaba, JD.com, the electric vehicle companies are rebounding strongly today. Look at NIO up over 10 percent. Scott, we'll see if it lasts. All right, Sima. Yes, we will. Thanks so much for that. Still ahead, NVIDIA shares.

They are popping today. We're going to run you through what is driving the bounce. We're back on the bell after this break. I grew up with my grandparents most of my childhood. And my grandmother was obsessed with beauty. So she would host beauty parties. I just learned the power of doing self-care together with other women and how amazing that feels. And I had brought that into my company since the beginning.

It's not something that it's boring that we all have to do, but that we all enjoy this aspect of self-care and taking care of ourselves that makes us feel good. Coming up next, what to watch for when KB Home Earnings hit the tape in overtime. And don't miss CNBC's Women in Health event. That's tomorrow. You can scan the QR code to register or visit CNBCEvents.com slash Women Wealth. Market Zone's next. We're now in the closing bell market zone. Seema Modi joins us today on what's behind NVIDIA's big pop. Plus, Steve Kovac has the key numbers to watch ahead of KB Home earnings in overtime. CNBC senior markets correspondent Bob Pisani here to break down these crucial

moments of the trading day. It's good to have everybody with us. Bob, I'll go to you first. Consumer confidence was not good at all. And yeah, we're kind of hanging in. Yeah, hanging in there today. We had a great little rally going right at the open, partly thanks to China. Thank you for the stimulus over there. That really helped. And then we lost 20 points on the consumer numbers. And frankly, it was really kind of surprise here. Ninety eight point seven. We were expecting one oh three. This was the biggest one month drop since August twenty twenty one. Two things. Big focus on jobs and a little bit less focus on inflation, but still there. So this tells me two things. Number one, we a lot of consumers are still rather concerned and negative on the economy and in jobs. That tells me that number one. And number two, it also tells me that the market reaction still doesn't believe the jobs hard landing story. So kind of two stories here. Discretionary stocks. I mean, do you see those today?

Yeah, yes. They're up. Yeah, they're up. Right. And partly due, partly due to China. Partly due to China. But I think it's a very good sign that the market kind of read through this very, very quickly. In other words, a certain number of consumers really do have a lot of concerns about the job market right now.

But the market, the stock market itself, is not believing that hard concerns that they have right now. So what absolutely this tells me is what matters for stocks in the fourth quarter, the number one issue is the jobs data. Is there going to be a bigger drawdown in the jobs market? Some people think there is. The stock market doesn't seem to believe that right now. That's the number one issue. Number two for me is how much more is the Fed going to cut? And are we going to get clarity in the months ahead? And then after that, there's issues around, certainly

around the election. But you're right, Scott, you look at the new highs. I see littered with big industrials, Caterpillar, Cummins, GE, Parker Hannafin, Dover at new highs. Materials doing well, like Freeport. Freeport was great today. All roads on this day seem to lead back to China. And with good reason. Given the amount that they consume in terms of materials, given the amount of copper that they consume globally, they're going to move immediately. But we also saw luxury goods move significantly.

We saw commodities move significantly at all. So this just reminds us all about how important China is in the global economy and even how it can move our stock market on a day when we had not great piece of economic news. Yeah, you said Estee Lauder, for example, I just looked up as you were saying that 6 percent. So to your point, luxury goods. Sima Modi, tell us what's behind NVIDIA today. That stock's having a pretty good day, up almost 4%. It is. A couple things happening here. We have NVIDIA CEO Jensen Wang completing his pre-planned stock sales

that amasses over $700 million from mid-June to mid-September. That's according to a latest SEC filing. Worth noting, Wang is NVIDIA's largest individual shareholder, owning about 4% of the company stock. Separately, UBS Intelligence out with a new AI note today. They believe that semiconductors like NVIDIA, Broadcom, and TSMC remain the biggest beneficiaries of Big Tech's robust spend on artificial intelligence. We sort of already knew that, but they think that trend continues, Scott. Just looking at the price action, NVIDIA now up about 13% from that dip earlier this month.

The average Wall Street's target on NVIDIA, 148, and I would point out shares are trading at 120 and change. Yeah, I appreciate that. Real quick to you, Bob, semis have not traded well of late. That's been one of the areas of concern in this market. Yeah, thank you. We're going to see Micron could change that. That's going to be out on Wednesday. Of course, that's in a very specific space, the memory space,

not necessarily the same spot that NVIDIA works in. But look, just the fact that we've had this dip in semis and the market is sitting at new highs shows you the rally, the rotation that goes on. Some days we see consumer stocks, consumer staples do better in health care, defensive names, and tech tends to rise. You get this beautiful rotation that's going on on a daily basis. Yes, semis are down here, but that is not an awful chart. That is some consolidation to me. That is sideways to the last month or so. I'm not that worried. All right. Two-minute warning there. Steve

Kovac, we're looking ahead to KB in OT. Yep. Those earnings are coming after the bell here. And the big thing to watch here, Scott, is commentary from KB Homes about the Fed's rate cut last week and how that's expected to affect housing demand. Last week, homebuilder Lenar said it's expecting more affordable mortgage rates to drive demand. There will also be some focus on sales incentives over at KB, which can eat into margins, though that could fade as those mortgage rates fall as well. As for the numbers, streets expecting earnings per share of $2.06 on $1.73 billion in revenue. We'll have those numbers in about 15 minutes or so. Steve Kovach, thank you very much for that.

We'll look ahead to that as we approach the close. Anything positive today for the Dow and the S&P p is going to be new closing high for each yeah and so the big next data data point is going to be the pce i think we're getting out on friday uh what we had what 2.6 year over year last month we're moving towards that two percent level uh this is core pce and that's of course is the is the fed's key gauge here i I think we're expecting 0.2% month over month. I don't expect inflation numbers to be surprising. I am, again, as I said, more concerned with perceptions on jobs and the direction of jobs. If the fourth quarter, that's going to be the number one issue for the stock market. Where is the job market going? You answer that question,

I think we can answer a lot about where we're going to end up at the end of the year. Been watching yields since the Fed made its move. It's amazing to me that we are looking at yields in the 4% and high 3% range for some treasuries. And yet the market is still incredibly sticky. People seem to love particularly short-term treasuries and money market funds. We're going to talk about that this week on ECFA. Bob, thank you. We're going to get 100 points or about that on the Dow. We're closing high there.

S&P positive, so we manufactured a pretty good day, given everything that hit us in terms of consumer confidence. Into overtime. See you tomorrow.