Closing Bell - Closing Bell: Chip Stocks Sputter 3/26/25

Episode Date: March 26, 2025

What could potential restrictions around exports to China mean for Nvidia and other chip stocks? We discuss with our Kristina Partsinevelos and Trivariate’s Adam Parker. Plus, Morgan Stanley’s Sherry Paul breaks down her high net worth playbook for Q2. And, we tell you what’s behind some big drops in the vaccine makers. 

Alright, thanks so much. Welcome to Closing Bell. I'm Scott Wapner live from Post9 here at the New York Stock Exchange. This Make or Break Hour begins with NVIDIA's new China worries. That stock's sinking today and dragging tech down with it. More on that just a bit. First, take a look at the markets here with 60 to go in regulation. We're obviously red across the board almost everywhere. NASDAQ is leading the selling. We are at the lows of the day for the NAS. Besides NVIDIA's weakness, other semiconductor names are ugly today too. Tesla is giving back some of its recent bounce and some of the momentum names also selling off hard today. Stocks like Vista, Inverter, Constellation Energy, Robinhood,

Palantir among them. Ford and General Motors also lower on those tariff headlines from the White House. We do have more on that coming up as well today. And worth checking yields, they're moving higher again, at least somewhat. And that perhaps is adding to some of that growth stock weakness today. You can see green across the board for the yield complex. It does take us to our talk of the tape. What potential restrictions around exports to China might mean for Nvidia and other chip

stocks, which are, as we said, sharply lower today. We begin with that story and Christina, parts of Nevalos. What's happening here? Yeah, well, it's not just about tariffs on Chinese chips. You got imports from Canada, Mexico, but also whispers of potential tariffs on Taiwanese chips, along with further tightening on chip exports, which we should hear about in mid-May.

So no wonder the chip hardware market, like you mentioned, is selling off. Nvidia taking a big hit right now, down about 6% after reports surfaced that Chinese officials might block H20 chip sales over energy efficiency concerns. This could force a complete chip redesign for Nvidia, but industry sources suggest Nvidia's already working

on a new, more memory-intensive chip to counter those challenges. TSMC, Taiwan's chip manufacturing powerhouse, down about 5% right now. The US tariffs could jack up production costs, potentially pushing customers to look at alternatives like Samsung or Intel. Their $100 billion US investment is promising,

TSMC that is, but it'll be years before those facilities can fully replace existing Taiwanese fabs. And the ripple effect are spreading with the SMH, the Sake ETF is down at least three and a half percent right now. And if chip production becomes more expensive, those costs will likely get passed down to customers like Qualcomm, Broadcom, Marvell, AMD, who are already seeing red in today's trading session. And then I'm just going to end on Arista because I noticed it was one of the worst

performers right now in the NASDAQ. It's down about 7%. It makes networking equipment as well. So it too could get hit with all of these tariff changes. Scott. All right, Christina, thanks for that very much. That's Christina Parts-Nevelos. Let's bring in now Trivariate Research's Adam Parker.

He's also a CNBC contributor. It's good to have you back. I mean, given your experience covering this space, what do you do with a stock like Nvidia and some of these other chips now Jonathan Krensky just putting out a note by the way from BTIG right before we came on that said quote semis remain heavy. Yeah I mean look you know our view since early February was to go underweight the mag seven. I'm still concerned about the recent sentiment to the positive, you've seen some firms try

to upgrade the MAG-7 again. The fact of the matter is the capital spending went up, the valuation's not that compelling, and the risk went up because there's disruption potential that's higher. So I think you have to be a little bit cautious heading into April earnings. I think after April earnings, it could change.

What I'm looking for is any sign, Scott, that a stock misses and doesn't go down. If you think about the last couple of weeks, like every stock that missed got killed. So nobody could say, hey, the misses are in the price and we're all set. We haven't seen that at all, Mike, Ron, Nike, down the line.

So I think there's a real chance for the first time in maybe two years, we could see some negative pre some negative pre releases the first week of April or disappointingly bad guidance. So I think you have to be a little bit cautious at least heading into the first couple weeks of April. You make the case in your notes that you really want to get bullish. I mean we've had a 10% correction and now we've had a 5% bounce notwithstanding today's obvious decline. But you suggest it's just too early. What's the principal reason you think that it's too early?

I think it's that the economy is clearly slowed. I don't think it's a gross scare. I think things have slowed. And most of the big firms, economists have taken down their GDP. But we haven't seen that earnings reduction yet. We know it's coming. And we haven't seen companies missing, like I just said, act okay. We know, you and I both know that all clear sign is you get like a sick local business that misses and the stock acts fine, and you sort of feel like, all right, that's the end

of the bad news. We haven't seen that at all. We've seen missing asymmetrically get killed. So I'm looking for any signs of a reset to earnings that are treated well by the market I think you know There is a fundamental bull case forming Scott and I just worry that that everyone believes it's gonna get better in the second half year everyone thinks we'll get into You know taxes and regulation and we'll get back to that growth trajectory that may people euphoric in November And we'll get on the other side of this terrorist up

My own personal opinion is I don't think the terror stuff's gonna Be that bad and the reason I say that it's just because particularly with Canada and Mexico, you know, our economies are Ten times as big as there. So if we do things pro rata it affects them ten times as much So there'll be some you know kind of you know stuff in the you know words But the reality is I don't think it'll be that extreme and hit that many companies for that long so You didn't mention China. You didn't mention China, right? That's the biggest tariff issue risk out there, isn't it? I mean Canada, Mexico, I get it. There are serious issues involved with both of those countries and tariffs and the impact it would have but I mean it's China that we really have to worry about

on the impact from more punitive tariffs, no? I think that's right. And I think it's a little hard for me to know the answer, which is one of the reasons, you know, we got cautious at the beginning of the year saying, I didn't think all this policy was in the price of why we thought it would be a volatile and down market. I'd like to be optimistic and say,

it's not gonna be that nefarious, but I'm not sure, which is why I think the market still has a volatile short-term path. I did some interesting work recently though, which showed that if you look at the last 20 times the market went down 10% or more, and you look at what happened to three months after, 19 of those 20 times technology worked. So if you want to get bullish, I just don't see how you get bullish without adding to

tech. And you can see today, like, it's still a little too early to go back to that playbook. And that was our view. Our view was if you want to get bullish on tech, but we don't think you should do so, I think today's a good example of that. It's just too early. You got to feel good about the tech tape, inventory, revenue growth, all those major KPIs and I don't think you're going to feel great about it until at least we get halfway through your board earnings. How closely are you watching interest rates and the fact that they've been

really staging this almost stealthy move higher? You look at the 10-year push in 435 today, we don't really wanna be having that conversation again if we get near four and a half. And the next thing is 5% possible because of tariffs and potential impacts? I think it's tricky. If I try to read what Mr. Besson's saying, I think he wants housing to get better

and he doesn't want the long end to back up. It's hard for me to see how the tenure doesn't go lower if we have some recessionary fears grow. So without the recessionary fears, it's harder to make that argument. At the current moment, I just don't think the Fed cutting is going to be that bullish for equities. So I think what we need to believe is that we're in a soft patch economically, a soft

patch because consumer confidence is weak, the CEOs are sitting on their hands. And we get through this uncertain period and talk about more pro-growth initiatives like taxes and regulation relief, then we get a growth trajectory. We look back and say, this was a great buying opportunity. That could be true, but I don't think it's the right time until I get more confidence that you know the Q2 guidance isn't a mess. You are though a don't fight the Fed kind of a person. I mean we've talked about this a number of times.

So even though it sounds to me like you're suggesting okay rates are going down for the wrong reason, the Fed would be cutting for the wrong reason because they have to because the economy is getting weak as you suggest. If I wouldn't fight that before, why would I fight that now? So look, that's an awesome question. I think this is the nuance.

I think every cycle, it changes a little. What did we learn at the end of 2022 into 23, right? If you and I were geniuses, we would have been short meta and Tesla like Nvidia like crazy in 2022, covered our shorts and got max long Jan 21st, 2023. Why would we have done that X post? Because the Fed was closer to being done hiking than they were starting, right? And so if I take that same logic that at some point in the cutting cycle, there's less oomph behind the cut and now it's more like worrisome.

The debate I think about fighting the federal BR, we close that point now where if they're cutting now, it's not just like stimulus would have been awesome from multiples. They're cutting because things are deteriorating. And then maybe that's like not all in the price yet. And I think that's the investment controversy. I got you. Stay with me if you would, Adam. We're about 50 minutes away from a news conference at the White controversy. I got you. Stay with me if you would, Adam. We're about 50 minutes away from a news conference

at the White House. President Trump scheduled to talk about auto tariffs. Our Amon Javers is here with what to expect. This seemed to come out of, I guess, a little bit of nowhere today. And it's gonna be happening, as I said, in less than an hour. Yeah, the president said earlier this week

that he would do auto tariffs at some point, probably before April 2nd. Now we know what that point is. It's 4 p.m. today. We don't know exactly what the president is going to sign today, what the rates are going to be, how this is going to be worked out, the details about how many times cross-border a particular auto can go without being tariffed, or will each border crossing count as a tariff? All those questions still TBD here at the White House.

Scott, I can tell you, you guys were just talking about Treasury Secretary Scott Bessen. He is standing about, I would say, 25 feet to my left here. So as soon as I unplug, I'm gonna go ask him all those questions, see if we can get additional clarity. But at this point, the White House saying simply that the event in the Oval Office at 4 p.m. is gonna be about auto tariffs,

but no specifics on what those tariffs will be, the rates or any of the details underlying that. We'll see what happens. Eamon, thank you very much for that. We will see the President as I said in about 50 or so minutes scheduled and we will see exactly what he has to say about that. Of course, the impact on auto stocks, you saw that immediately for General Motors, others lower. Let's send it to Phil LeBeau, who has more insight on what we can

expect and what the fallout might be, Phil. Depends on where the tariffs are, Scott. And that really is the bottom line here. If it's on Canada and Mexico, the implications are greatest for the big three, but all automakers would be hit because this is a regional setup in terms of auto production. It's not US, it's not Mexico, it's not Canada, it's North America. That's simply the way the system is set up, just as there is a European contingent of production, China contingent. In terms of the vehicles that are sold here in this country and where they come from, yes, more than half are actually built in this country.

By the way, the content of those vehicles, there's a good chunk of it that comes from Mexico and Canada, so tariffs would likely impact them. Then you see the other automakers and how they are impacted in terms of production. So what happens, and let's game this out, Scott, with some of the possibilities that we've heard about. If there is a 25% tariff that is put on autos coming in and auto parts coming in from Mexico and Canada, the expectation is that that would force automakers to ultimately raise prices by about $3,000 per vehicle. That's just a guesstimate at this point from people within the industry. Sales are expected to dip.

In fact, we had a couple of estimates brought lower today in terms of full year sales. And then foreign production, if you are a GM or a Ford, what do you do with your plants in Mexico or Canada or a region where it is impacted by a tariff? You slow down production. Maybe you take away a shift. You don't shut down the plant, but you try to see how long you can limit the impact of a tariff depending on where your plants are. So quickly let's run through these. You've got the big three. We've already seen those stocks. You were showing them earlier Scott. They're all

lower on the day. Then when you look at the European automakers, keep in mind we get about 6% of our autos in this country imported from Europe. They all by the way have plants here in the US but they import a lot of vehicles here and then there are the Asian automakers. Take a look at them. By the way, we're at the new Hyundai plant just outside of Savannah, Georgia Scott. Hyundai gets 58% of its vehicles imported from Korea and there is no tariff between South Korea and the United States. That's why South Korean imports in terms of autos have grown so much over the last, what, decade, two decades. Scott, back to you.

I go back, Phil, to Ford CEO Jim Farley who has certainly not been shy in sharing his view on what tariffs might mean, not only for Ford, but for the industry, where he said some weeks ago, quote, that they would, quote, blow a hole in the U.S. industry that we've never seen before. Does this suggest that the lobbying efforts of Mr. Farley and maybe to some degree Mary Barr as well, I don't think she's been nearly as public as Farley has in the commentary about tariffs directly, that the lobbying efforts have failed. It's too hard to tell, Scott. I'm being dead serious with you.

When I talk with people, executives within the auto industry, everybody says the same thing. Who the heck knows what the president's going to do? And that doesn't mean that they stop lobbying him. Jim Farley's just more public in terms of his statements than Mary Barra, but they're both being very aggressive talking with the Trump administration about the implications for the auto industry. One last thing to keep in mind when you look at the auto stocks and how they might be impacted.

The general expectation is this, Scott, if you see tariffs put in place and it impacts the domestic automakers, first thing they're going to do, they're going to bring down the incentives, which have been generally climbing over the last couple of years. They'll bring those down. Less spend on vehicles. That's going to hurt demand. People will say, wait a second, it's not as great there. But if that doesn't cover the cost, the next thing that they're going to do, they're going

to have to cut into their own margins. And that's the thing to keep in mind, Scott. North America is the profit driver. What profits there are for the domestic automakers primarily, North America is where the profit margins are. And they will have to cut into those if these are massive tariffs. Now look, if he's nibbling around the edges here and there, it's a far different story.

And we'll find out at four o'clock in terms of what he's planning on doing. You'll help us understand that of course on the backside of that. Phil thanks so much. That's Phil LeBeau for us on that still developing story. Now to Steve Leesman for the highlights from today's Fed speakers. The economy front and center as it always seems to be. Steve I want to get a couple things from you here. You heard Adam Parker I think in the top of our show suggest enough with the talk about the growth scare.

It's not a growth scare. We're slowing. The economy is slowing down. It's the degree to which it fully slows. Also coupled with Mussolam today and the St. Louis Fed president's commentary, which to me came off as hawkish, where he suggested, quote, second round tariffs could require more restrictive policy, said he's, quote, wary of assuming tariff impact on inflation will be entirely temporary.

Give us your insights, if you would. Yeah, well, listen, all of this is related to exactly what Phil was talking about, because both Fed officials today were talking, embracing this idea of a pause saying they can't make any choices about monetary policy until the fog of uncertainty from fiscal and tariff policy until they get out of the way. And maybe there's some of that at four o'clock. Maybe it keeps going. You're right about Musil, though.

He's a voter this year. He expressed considerable concern about the potential inflationary impacts from tariffs. He said they could lead pretty specifically to rate hike. So he said you have these indirect and indirect effects of tariffs, Scott. So the Fed, he said, look through the direct ones because you can't do anything about those. The indirect ones, they could require this more restrictive policy. Here's the staff estimate.

10% tariff increase would boost inflation by 1.2 percentage points, half a point Scott from direct effects and 0.7 from indirect effects. So he's putting the market on notice here, Scott, essentially that we're watching this and we're not going to take it lightly. That is, I think you're right, more hawkers than we've heard, perhaps from the chair and other Fed officials. What's your take on the move that we've seen in interest rates, Steve? The fact that they, you know, after falling

for what some would suggest are the wrong reasons because the economy clearly looks like it's slowing, you have had them moving in the opposite direction of late. I'm wondering why you think that's happening and what the significance of it might be. I mean, obviously the market can move for any number of reasons, but I'm interested, Scott, I know this is potential heresy here,

the extent to which the stock market has come, or the bond market has come to understand that there is very little about the budget proposals of the Trump administration that are gonna bend the curve at all. The amount of deficit spending, the people I talk to who are serious about budgets think what's going on with Doge is essentially a sideshow to the real story and that when you talk about what's being talked about in Congress, there is no bending of the curve in terms

of what's going to be borrowed and the amount of deficits we're talking about. Maybe I'd be proved wrong by that. Maybe there's stuff I don't know that there's being discussed. But if the bond market and yields were going higher before President Trump took office because of concern about deficits, that story, as far as I can tell, really hasn't changed. Yeah, and we'll see it maybe reflected, Steve.

Thank you very much for your insight. That's Steve Leesman, our senior economics correspondent. With me now at Post9 is Invesco's Christina Hooper. Adam Parker still with us, of course. Take all of this, nice to see you again. In total, and what's your view? So I think we are certainly in a slowdown and we are heading towards a recession.

I would give a probability right now of 35 to 40 percent and growing every day because it's not just about tariffs because honestly tariffs can be adjusted rather quickly and we've already seen the Trump administration come out and say well it won't be as retaliatory there's going to be more flexibility there. So I'm less concerned about that although we do know that can have a chilling effect on investment, on hiring. We saw it the first time around in 2018. But I think the far bigger issue is Doge and the government spending cuts. Those are going to have what I consider to be a negative multiplier effect, rippling through the economy.

And I don't think we can ignore that. So the combination of the two is really a one-two punch with two being bigger than one and I think that sends us on the wrong trajectory and unfortunately I think what we're seeing today is is markets reacting to that maybe not the tenure because I think front and center right now is concerns that in inflation is is not as transitory as as Chair Powell suggested last week but again I think the jury is out on that. Okay, I hear language and a tone from you that I haven't heard.

I feel like you've grown more negative on this market as a result of the things that you just mentioned. Is that fair? I think that's fair. Now, having said all that, I think there is every reason to believe we can avoid recession if we pull back on the policies that are driving us to it. But you've been advocating for things like small caps and a broadening of the market. I can't imagine that you can square

those two views. We're heading towards recession. The probabilities in your mind have gone way up, but I still want to think that we're going to get this grand market broadening with all of these economically sensitive areas of the market doing well. Have you changed your view on that too? So I think right now I would put that on pause and say let's wait and see. Let's see how these policies shape up. I mean certainly we could see an administration that listens to what it's hearing from markets, from investors, and says maybe we'll pull back on these things. But the part of our outlook that has been positive on, for example, European equities still holds because that's actually where we're seeing the fiscal stimulus. That's where we're seeing the positive multiplier effect likely to occur.

So I remain positive on that space. You see, Adam, this really underscores the great reset, if in anything, expectations to where we came into this year thinking and where we find ourselves some three months through 2025. Wall Street Journal today headline, corporate America's euphoria over Trump's golden age in quotes is giving way to distress. A couple of days ago, Alan Blinder, formerly of the Fed, quote, Trump plays recession roulette with the U.S. economy. We couldn't have dreamt these

headlines on January 20th. And now they have become for some and maybe the market, a nightmare. Yeah, I mean, I want to get bullish because I hear that. Right? I mean, you know we were bearish at the beginning of the year. A lot of other people got bullish. We wrote policy wasn't in the price, we caused volatility. Other people saying they saw the economy accelerating. I want to be bullish as a counter indicator of that, but I can't be because I just have

worried about things slowing. But what can we do now anyway?'s stocks to buy man and like one thing I really think is interesting is looking at the whole metals complex the precious metals America's resources I mean maybe people should take a look at something like century aluminum right less than 1% of a production of luminous in the US we got to be what 15 to 20 percent of consumption so maybe you can find like a CENX or something like that by that like i just think it always things to buy relative to what the current view of the policy is that uh... even if

we're gonna be choppy and maybe lower before uh... before we recover still things we can all but what else do you like uh... besides you know one name out of the metals complex that many people probably have another that was a new one for you. I was trying to, you know. It was, and for many others too. And for many others too, which is kind of the point.

All the known stuff doesn't appear to be attractive to people. I still like healthcare, which has been our number one overweight. I'm still negative on discretionary, which is bigger, our number one underweight. I think the healthcare stuff is gonna have better estimated ability than other parts of the market in April.

I don't see pre-release negatively there. So I kind of think you can play the relative earnings as an achievability game by being overweight healthcare. You see it all performs a lot on down days. I think it can kind of participate some on up days. So that's still an area I like. We upgraded industrials in early January 1st. That really is because the earnings were so weak in the second half of twenty four

that we can comp them later in this year it looks like earnings will accelerate almost no matter what and so if the market anticipates by three to six months that acceleration I think I could take a shot at some of the industrials I feel much better about that economically sensitive part of the market than I do the consumer because the consumer was in good shape but is getting worse. So I think there's things to own, but it's too early to make the Mag-7 call or make the Semi's call. And I think the other thing that really worries me, and I know you've talked about it on the

air too, is just how correlated the growth things are. Like, Vistra and GE, Vernova trade just like Eaton trade just like Nvidia. And so that's worrisome. You've got to find things in housing or in healthcare to sort of balance that growth profile. Yeah. Just when you think the momentum unwind is over, you get selling into pops. What's your sense of what Adam had to say the

sectors that may work versus those that won't? I think that sounds right and I would argue that this is a time for active management because there are going to be individual stories that perform very well in the US I would expect despite some of these headwinds and perhaps because of some of the headwinds facing the economy. But I also think this environment makes the case for diversification. That means exposure outside the US and also exposure to areas outside of just equities and fixed income, lower correlating asset classes, real estate, gold, areas that I think could perform well.

So you don't think you don't think gold is a fade. That's another thing that Jonathan Karenski, by the way, had printed today just before we came on the air. I mean, you're't think gold is a fade? That's another thing that Jonathan Kerensky, by the way, had printed today just before we came on the air. I mean, you're pushing all-time highs, right? You've topped $3,000 an ounce. You really think there's a chart right there shows you the move that we've already had. So we're seeing gold prices being driven by,

first of all, price-insensitive central bank buying, but of course also those looking for geopolitical risk hedges. And so we're seeing a lot of investors who have exposure to equities and fixed income, and the way they hedge that beyond exposure to hedge funds is through exposure to areas like gold, where they can say, okay, this is a play on if things get wackier if things if uncertainty grows they tend to be more price insensitive as well but higher valuation names are coming under pressure right now the higher valuation equities because uncertainty does not bode well for that's what we were just talking about the vertives the vistras palantir the robin hoods the eatellations. I mean, all those stocks that were caught up in that whole group just continue to be upset.

We'll have you back soon. Continue the conversation. Thanks for being here. Christina Hooper. Adam, thanks so much. We'll talk to you guys soon as well. We're just getting started here on Closing Bell. Up next, Morgan Stanley Sherry Paul is breaking out her high net worth playbook for Q2 and the sectors that she thinks could work. We're back at post nine right after this. Welcome back. Fund flow suggests hedge funds are gingerly buying stocks again following that 10% pullback in the S&P. It's a time for you to do the same. Joining me now at

Post 9 is Morgan Stanley private wealth management's Sherry Paul. Welcome back. Thank you. I mean, I think everybody, I don't care what your income spectrum is, how much your net worth is. Everybody wants to know what is going on with these markets. This is not what I expected. And now is it time to get back positive? Yeah. Well, look, there's a lot of chaotic thinking out there.

And the way that we're simply talking to clients about this is in sort of three viewpoints. We have a 20,000 foot view, which is this discussion around is it recession? Is it stagflation, maybe and possibly. And the bottom line is is that that's gonna we're gonna have that question answered in arrears because markets are forward-thinking and so if you think it's a we're sort of in a recession you could argue that the market already reset from the highest peak to trough north of 10%. Pullbacks typically would indicate some type of a slowdown.

And then the 10,000 foot view, the way we see it is the tariffs, which really then speaks to geography and supply chain. And then really what the sector rotation should possibly be in terms of where tariffs may land. But I think the most important thing that we're wanting investors to pay attention to is the 1,000 foot view, which is really what's happening in the market and the setup right now

is that the S&P is kind of flat. Mass acts down maybe what three or four percent in any given day. If you take out the top seven stocks out of the S&P you'd actually have a positive S&P and 80 percent of companies that reported in the fourth quarter actually had positive earnings momentum and so while we might experience a setback, we want to stay focused on what does that core portfolio need to be right now, and it frankly needs to be an all-weather portfolio to set in the conditions in which we're investing right now.

I'll get to the breakdown of that in a minute. But just to push back on one thing you said, which I think is a relevant part of the conversation, granted we had a 10% pullback in the S&P, but we were at what some would suggest was an extended multiple to begin with, right? 22 and a half times. Did the multiple reset enough in that 10% pullback

if in fact we have a recession? Because I could say, well, if 18 or 19 times was the reset, that's probably too high if you're going to go into a recession, isn't it? Well, is it though if, you know, 490 stocks didn't really participate in the momentum of the last two years where we had these enormous double digit returns? But aren't all earnings going to come down in a more dire economic predicament? Well, but a reset is not a recession. So course corrections are a normal part of investing,

and recessions are not to be necessarily feared. They're not catastrophic events, but I do think investors have some PTSD in America, because the last 20 years of recessions have been unexpected catastrophic events. This is feeling, in some ways, noxiously similar, because it feels so self-inflicted. And I think that that's the thing

that people are having a hard time grasping, and that's why we saw the consumer sentiment number kind of plummet in the way we have. And I think, Scott, that this is the most important thing for people to understand that's unique about the U.S. economy, is that what we think we manifest, we're a 70% consumptive GDP society,

so how we think and feel actually has a material impact on how we spend. And so I think that the chaos at the 20,000 foot level and 10,000 foot, if taken too far, could tip that consumer. And we saw what the CFO study came out today too about the expectation around secession. But if we continue to talk it up, then we're going to self-fulfill it. I mean, the Fed seems to keep suggesting that soft data, right, the surveys that you're really alluding to, don't necessarily translate into the hard data

of a slowdown in spending. You're suggesting that that's a mistaken view. Well, remember, economics and economic numbers, they operate in the same parallel universe but different time zones of the stock market. Because the stock market's forward thinking and economic data is trying to confirm what happened in the past that everyone's been speculating about. So as a portfolio manager, my responsibility is to find the corridor of opportunity in

every market condition to make money for clients. And right now, a balanced portfolio, all weathered, you're gonna get three to 4% on your bonds with a chance for some capital appreciation. If we hit that recession, then rates maybe go lower faster. And then the core portfolio setup needs to go back to that free cashflow of dividends. And I think we get a shot at buybacks.

If companies are feeling like they're stalling out on M&A, which is sort of where the big trade was at the beginning of the year, maybe they start raising dividends and buying their own stock back, and that's good for sharp. What does the, your words, all weather portfolio look like? I mean, what is the breakdown for people? Right, right down the middle.

So you've got consumer staples, things that people are gonna, in simplest forms for people who are watching this show for important information to improve their financial wellbeing, things that we know that people are going to buy no matter the cost increase. So it's very simply, it's going to be staples, it's going to be healthcare. It has on the long end the enduring thematic of tech.

I would encourage investors to continue to hold that as a position in the portfolio. It involves that core energy. It doesn't include consumer staples or consumer discretionaries and things that feel like they're not a must have, but a wow, I would love to have. And that's really the basic setup of a core portfolio and leaning into dividends and income. The dividends and income just become that free cash flow. And the way I describe it to people, it's like if you buy a house and you rent it out and the house price, the house fluctuates, but you're getting that cash flow,

it has meaningful impact for the market cycle. But bottom line is a bit more defensive tilt to what you otherwise might have had from your expectations at the beginning of the year. Definitely, it's more practical. People get stressed out when they resist reality, and the reality has shifted. And so we have to shift with it.

And the amazing thing about the U.S. capital markets is there are a lot of different places for us to, because of the liquidity and the transparency and all the incredible companies in the S&P 500 for us to make that pivot. And so, yes, people should have that posture but not stampede and exit out of the market, which I would not recommend, which is that full air of timing. We're about 25 minutes away, we think, from that news conference at the White House where the president is likely to announce, we think, auto tariffs. You used the word self-inflicted before, why we find ourselves in this predicament.

You're alluding to what's happening in Washington? Well, you know, the conversation at the economic level is like, wow, we had such good momentum going into the year. I was actually down here, you know, watching in early January how excited the market and the economy was about the potential for a big tax bill, tax reductions, deregulation, and a reset, and instead we're in a conversation I think people weren't expecting that becomes like, in the way, again, the way I describe it to my clients, it's like you've been driving down the highway on a free highway and all of a sudden somebody puts up a toll booth.

And that has a consequence to traffic flow. It's the same thing with trade. And so it doesn't mean that you don't still drive that highway, you might drive it less. And so we just have to reset and recalibrate to what that means thematically for earnings, and then who wins and who loses, and where the side roads are.

Just to peel out the analogy, and I think that that is now staple stocks where everyone was in on these risk trades. I'll go with you on that, and say, well, I hear you, there could be tollbooths and potholes, but eventually you're gonna get to that clear highway of deregulation and tax cuts. At what point does you're going to get to that clear highway of deregulation and tax cuts.

At what point does the market start to forward think that? Well, you know, there's a possibility that the market's already done that in some ways in terms of having the earnings reset. I mean, a 10% to 14% pullback, whether it was the Nasdaq or the S&P, is pretty meaningful. That said, what I really want investors to know is that every year on average we get a 14% pullback. Every single year markets at some point go negative from where they started and 75% of the time they end in positive territory. So if you have less than a 25% chance, now I'm just talking statistics,

of ending the year in negative territory doesn't that seem like a good place to be invested? And on top of that, we have the transparency of the U.S. capital markets, which you look at corporate balance sheets and they've got so much money laying around that you wonder what they're going to do with it. Well, they'd like to be able to do something with it. We'll see what happens. I trust they're going to do something to benefit shareholders. Shareholders hope so. We'll talk to you again soon. Thanks for being here. All right. Sherry Paul with Morgan hope so. We'll talk to you again soon. Thanks for being here.

All right. Sherry Paul with Morgan Stanley Private Wealth. Up next, we're watching some big moves in vaccine makers today. We tell you what's behind those drops coming up. We're back on the bill right after this. All right. Welcome back. Some big moves today in the vaccine makers.

Angelica Peebles is going to tell us what's behind that red on our screen today, Angelica. Yeah, Scott, the New York Times is reporting that the Trump administration plans to end the US's financial support for Gavi. Now, that's an organization that helps low and middle income countries buy vaccines. The Times says that Gavi estimates the loss of US support could mean that more than 75 million children

won't receive routine vaccinations over the next five years. So some of the largest vaccine makers are down today. Take a look at GSK, Sanofi, Pfizer. Merck is actually up a little bit today, but they had a brutal day yesterday. And then the smaller COVID vaccine manufacturers, those are the ones that are getting harder.

Moderna shares down about 7%, Novavax down about 2.5%. And interestingly, Moderna telling me that its current financial guidance doesn't include any sales to Gavi, and the company doesn't anticipate any impact. We've reached out to the other companies, we'll let you know if we hear any other responses. Scott. Please do. Angelica, thanks so much.

Angelica, people's up next. We check the biggest movers into the close with Christina. Scott, thank you. Well, one company's stock surge after an upbeat forecast and another finally finds a buyer after a year-long search. We're gonna break it down next. All right, we're less than 15 from the belt back to Christina now for the stocks that she is watching. Tell us.

Centas jumping 6% right now as the firm raises its full year forecast. It supplies uniforms, first aid kits, and other services to businesses, and it's leading the S&P higher on the back of better than expected earnings. However, the firm did warn of foreign exchange headwinds, something we're hearing across the board for earnings this year.

And the year-long search for a buyer is finally over for Dollar Tree Family Business, or I should say Dollar, yeah, Dollar Business, the firm announcing that a group of private equity investors will acquire the discount store chain for one billion dollars the brand has struggled this past year as competition from big box and online retailers really increased and that's why shares are up over 3% for Dollar Tree. Scott. Alright Christina thanks so much for that. Christina Partsenevolo still ahead. Copper

hitting another record high today. What's behind that climb higher? We will tell you when we come back. We are now in the closing bell market zone. CNBC senior markets commentator Mike Santoli here to break down these crucial moments of the trading day plus Seema Modi on software and momentum stocks getting crushed today and copper hitting an all time high. Pippa is going to tell us exactly what's going on there. these crucial moments of the trading day. Plus, Seema Modi on software and momentum stocks getting crushed today and copper hitting an all-time high. Pippa's going to tell us exactly what's going on there. We begin with you, Mike. A couple things got us. I mean, we bounced pretty fast and pretty

strong, so we were due for something, and then we got a tariff headline on top of that. Right, so the overarching premise is that most corrections involve some kind of a retest.'t mean you go back to the exact low but it means you have to constantly sort of figure out if there are buyers below if that latest stage of the bounce was for real actually the action today in the S&P 500 was in some ways kind of textbook went back toward last week's highs we were playing around that range for a while that's also the election day levels didn't all the way go all the way back to Friday's close, but the point was you had to see if these pressure points were gonna have it buckle.

Now, it also shows you though, the complexity of the things we're dealing with, right? You have the ongoing draining of enthusiasm or a challenge to the AI infrastructure bulk case that's been going on for a while. That was such a clean and popular story, and it continues to get chipped away at with Microsoft News, with the tariff stuff. Obviously Fed speak you know it shouldn't

really matter that much right now but the St. Louis Fed president was another leg lower in the market when he kind of had the hawkish end of the spectrum airing out there and saying don't look through tariff inflation and then obviously the tariffs themselves and what we're gonna do with that. So I think all of it is it's okay it's not like it's changing the story that we got a pretty decent, you know, kind of surge off of that low, but it does show you that it sort of has more to prove along the way here as we, as we try to figure out,

you know, how we're going to close out this quarter. Yeah. I mean, we want yields to come down, but for the right reason, we don't want them to start backing up for the wrong reason. So it's very tricky dynamic that the market finds. Absolute levels of yields are probably okay right reason, we don't want them to start backing up for the wrong reason. So it's a very tricky dynamic that the market finds. It is. Absolute levels of yields are probably okay right here, but you don't want them to really take flight too quickly.

And I think, Seema, maybe it's some of the infrastructure plays out of momentum, but rising rates are hitting probably a lot of these stocks too, just something else to throw into the mix. Sure. It's rates. It is also the China narrative news of that expanding entity list, not helping lift sentiment. Take a look at the IGV software ETF Scott down again today by 2.3 percent. Some of the large and mid cap software names under pressure.

And it comes as Morgan Stanley released its CIO survey, which shows IT budgets are expected to grow 3.7% this year compared to last. That's up from 3.4% in 2024, but below the longer-term average. Still, analysts say the headline metric appears positive against an increasingly volatile macro backdrop. Speaking of volatile, the momentum-driven names like Palantir, AppLovin, dipping around 5% to 6 percent at this hour and MicroStrategy falling on use at GameStop will buy Bitcoin as an investment which is sort of what MicroStrategy does. Take a look at the ETF though that tracks momentum names you'll see it's down about 2% on the day Scott. Alright Seema thanks for

that. We'll go to Pippa Stevens now Pippa I mean precious metals are getting all the love these days, right, with gold above $3,000, but the industrial metal like copper hitting an all-time high today. Why? Yeah, that's right, Scott. So it's not just gold. Copper hit another all-time high today, going back to the contract's inception in 1988. This is the third straight day of records, and this does come on the back of reports

that President Trump is weighing putting tariffs on copper in a matter of weeks Rather than months that has pulled forward some buying which is clearly reflected in the price difference between US copper and prices on the LME Meaning we could see a bit of a you know, buy the rumor sell the news type phenomenon Still though increasing domestic production has become a focus for this administration in a bid to move away from supply chains domestic production has become a focus for this administration in a bid to move away from supply chains heavily controlled by China. But the Defense Production Act recently invoked to boost copper production. Copper is now on pace for a 16% gain in March. That is the best month since 2016 with the COPX also up double digits.

But two names to watch are Freeport and Rio Tinto, given they are the largest domestic producers. Scott? Pippa Stevens, thank you very much for that. Mike, I'll turn back to you. I mean, the market's got some hurdles in front of it. 4 p.m. today. Yeah.

You know, we expect the auto tariffs. You got PCE coming, job support not that far away, earnings just beyond that as well. We're going to fill in some of the blanks, obviously along the way. You know, it seems as if the market really has been attempting to build up some resistance to every tariff headline. And so it's not just about, you know, are they going to be on or off, but any degree of clarity we can get. I don't think the market likes the suspense.

The market doesn't like the suspense when we're kind of having some soft economic numbers. So if we can get some help on that side of things, the Parisians have to be blunted for something to do. Thank you for that. I'll see you tomorrow. Mike Santoli. Again, moments away from that news conference at the White House, overtime we'll have it. Morgan and John, take it away.