Closing Bell - Closing Bell: Choppy Kickoff to 2025 1/2/25

Episode Date: January 2, 2025

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.

And welcome to Closing Bell. I'm Mike Santoli and today we're Scott Wapner. This make or break hour begins with an unsettled start to the new year on Wall Street. Stocks unable to take full advantage of new money expected to enter the market in January after December's pullback. But the index is on pace for a rare five day losing streak straddling the turn of a year. The S&P 500's morning rally attempts failed to hold with big Nasdaq names applying the heaviest pressure. You see the S&P down just over half a percent. Apple and Tesla, big winners in 2024, are leading to the downside today on a mix of profit-taking and concerns about product demands in both cases. You see them down three and almost seven percent,

a surge in the dollar index to a two year high. Also giving pause to equities as China announces new export controls on some U.S. companies within three weeks of a new Trump administration stepping in. That takes us to our talk of the tape. What does the recent choppiness suggest about the setup for markets in 2025 after two years where reward for index investors vastly exceeded downside risk. We'll start there with Lizanne Saunders, Charles Schwab, chief investment strategist in Lizanne. Great to see you. Happy New Year. Happy New Year to you, Mike. So, I mean, obviously, we don't want to make a tremendous amount, about a few days worth of choppy downside action in the markets. But I wonder what you think it might reflect just about the starting point for 2025 in terms of market field position, valuation, concentration of the

market. Well, you know, it's just to say, because we're only one day into trading in January, but that old adage of as January goes, so goes the year. There's some validity to that. Some people extrapolate that into a week December, suggesting something about how at least the first part of the year is going to unfold. And there hasn't been a strong correlation in the past. In fact, periods where you've had a weaker December and then a stronger January have actually been followed by pretty decent market returns. So I think it's a little too soon to tell.

I think the setup for some of this weakness was probably very sentiment driven we had really gotten to a lot of frothy conditions in the aftermath of the election that that post-election rally period especially what we went back into that concentration problem you know top 10 stocks are now 39 percent of the index and I think that was the setup for some of this weakness I don't think there was really any kind of prime catalyst. I think it was a little bit more of an exhaustion from a sentiment standpoint. Yeah. And actually, to that point, I should point out that, you know, market breadth is actually OK today. It's about 50 50. It's not skewed to the downside. It is the large mega caps that are weighing on the index. And obviously, that's a little bit of a shift, as you say, from December. Do you think that this sentiment reset is pretty much complete or kind of did what it

had to do here? I guess I ask because I'm still seeing some of the smaller kind of story stocks move quite a bit. You did see a bit of rekindling in crypto related stocks today. Yeah, I think that there's still pockets of fraud. The good news is, is that a lot of the froth you witnessed outside of just broad market type froth. So that's one differentiator, say, between the current environment and the late 1990s, where the froth has been a bit more

concentrated, whether it's in crypto or, you know, zero dated options or, you know, bananas and duck tape a couple of months ago. So I think that that's maybe akin to what we saw a couple of years ago when we saw it in the original meme stocks, we saw it in SPACs, and that's maybe a less fraught, frothy environment than one that is pervasive across the market. I think this is also part and parcel of many of these rotations that we've been talking about, these fierce rotations that happen within the market at the sector level, frankly, at times back into the darlings, the mag seven type stocks. And so I think that this is just a continuation of some of those rotations. And I think that's likely to persist at least the first part of

this year. Yeah, I guess in addition to just a general welling up of enthusiasm among investors following the election, you did also have this playbook that people tried to execute. So you buy cyclical stocks, you buy small caps. There was this template from 2016 and 17, but it seemed to really not have legs. And in fact, in December, you know, industrials were down substantially, like seven or eight percent as a group. Banks also down a similar amount. I guess that speaks to what you're saying about these kind of violent rotations. But what's the macro message, if anything, you know, as bond yields go up, for example? I'd be really careful about ripping out the pages of the 2016-27 playbook and applying it to the current environment. I think 2018

as a playbook in terms of tariffs, how they get announced via social media probably still has relevance. But the backdrop, particularly in twenty seventeen, is was entirely different, much more of an inflationary backdrop right now. There was the enthusiasm with regard to major tax cuts coming in twenty seventeen, which, of course, came to fruition at the end of the year. That's not on the table. Yes, you have the potential for an extension of the twenty seventeen. Tax cuts but that's not until end of year twenty

twenty five. And in the beginning of this year we're dealing more with the. Immigration policies and the tariff policies which all else equal. It's hard to argue against them putting some downward pressure on growth and

some upward pressure on inflation so I'm not really sure that that 27 playbook is an applicable one, given the current macro backdrop now and the key differences between now and then. Yeah, I guess tax rate staying status quo in 12 months is not quite the same carrot that sort of held out in front of the market that it was back then. More broadly, though, in terms of how you would recommend positioning for this current environment, right, we talk about two great years coming into this. Obviously, valuations have been challenging, but hasn't stopped the market from going higher, where within the market still seems like it's a relatively good deal. So, Mike, as you know, we have been very factor focused, not instead of sector focused,

but at least as an additive to sector based investing with this rotation type backdrop. You're seeing huge week to week month to month swings in terms of sectors and which ones are at the top of the leaderboard, which ones are at the bottom of the leaderboard. And I think that is a fairly tricky thing to try to navigate, even from a trading perspective. But there's been more consistency in performance at the factor level. And one shift, not that the world or the market thinks in pure calendar year terms, is if everything shuts off on the 31st and we relaunch a whole new era. But from a factor perspective, as we think about over the next year, we still think you want to stay up in quality, focus on balance sheet oriented factors

you know return on equity and strong free cash flow. But also earnings oriented factors like positive earnings revisions that that forward looking positive trajectory. Maintenance if not growth in profit margins but I think the one subtle

shift that we may be in the midst of. Is one where level mattered last year you wanted you know strong versus weak in terms of balance sheet high interest coverage versus low subtle shift that we may be in the midst of is one where level mattered last year. You wanted, you know, strong versus weak in terms of balance sheet, high interest coverage versus low interest coverage on that factor. Now I think it's more rate of change oriented where you want that leverage to any kind of improvement in the economy, especially if we can get back to an environment where the Fed is in the easing mode. I don't see that very much near term. But I think that would be a force

that might unleash some of these rate of change. Benefits accrued at the factor level while still staying focused on those higher quality factors the last thing I'd say is going down the cap spectrum. Be really mindful of moves in

longer term yields- we're not seeing the same type correlation between. Moves in the ten year and an index like the S. and P. or maybe even the Nasdaq. When you go down to the Russell 2000, you go down the cap spectrum into companies that have more variable rate debt and they've got tougher interest coverage backdrops. I think moves in the 10 year is really going to be the key to either outperformance or underperformance down the cap spectrum. Yeah, certainly has largely been the case for a bit.

All right, Lizanne, stick with me. Let's bring in Bryn Talkington of Requisite Capital Management and Brian Leavitt of Invesco as well. Bryn, of course, is a CNBC contributor. And welcome to you both. So, Brian, I guess, how does all that sound in terms of where we begin this year? You know, I guess the kind of basic bull case was the economy is in decent shape. The Fed's going to be perhaps doing some cutting. Earnings are broadening out. And, you know, credit looks great. What else do we need to know? I think that all still exists. I think the broad backdrop still exists. The challenge we're dealing with right now is there's a little bit more policy

uncertainty than we were dealing with last year. And I really like what Lizanne said about this being more like 2018 than being like 2017. You know, if you think about 2018, there was uncertainty around the Fed. Of course, they've raised rates. They're not going to raise rates this time. But how quickly are they going to bring rates down? We're readjusting a little bit, as well as the uncertainty around what the trade policy is going to look like. So I think for investors, you know, what are we down here, 4%, 5% or so? We didn't feel a lot of that last year because there wasn't a lot of policy uncertainty. We've got a little bit of that now. To me, that doesn't mean end of cycle.

These markets will be volatile as long as policy uncertainty persists. But the backdrop, to your point, resilient economy, ultimately rate cuts, all of that should continue to be good for risk assets. Bryn, part of the story of the past year has been, of course, dominance of mega cap tech, but not all at once sometimes. And so they kind of rotated and sometimes some of them acted as defensive plays. Sometimes they were driving momentum higher. How do you think about that group within the overall market at this point? I think we're going to continue to see much more so in 2025 than we even saw in 2024. This dispersion of the mag seven, we like to call them all one homogeneous name. But, you know, Microsoft was up, what, 13% last year versus a Meta or a Tesla.

And I think that within that group, I mean, to me, Apple is by far the most expensive just because the lack of growth. And if you look at Apple's price to sales ratio, which is just one ratio, but still, it's currently got about a 10 price to sales ratio. I don't think they've ever had a price to sales ratio that high. The last five years, it's been about six and a half. And so I think Apple remains expensive as a name. I think Microsoft, you know, Satya talked about in last quarter that they've had 10 billion of AI related revenues, but they've spent what, you know, 50 billion going on another probably $40 to $50 billion. And so I do think investors are going to be more discerning within those names.

I continue to believe that one of the seven names that has the most clear line of sight is going to be NVIDIA, where we know Blackwell sold out. And so of those names, I think you're going to see dispersion. I think NVIDIA is going to do well this year. And I think, you know, valuations do matter. And the starting point right now is not great for a lot of these names. Yeah. And as we keep pointing out, NVIDIA really has just consolidated and bided its time in the last six months or so. We'll see if that's, you know, kind of a launch pad or a little bit of further churn. And Bryn, just while we're on this topic of, you know, the give and take within this group, Tesla today, obviously a big downside mover. I know you thought the stock kind of

got ahead of itself. How are you thinking about it right now? Yeah, I mean, I had been talking the last few weeks like, you know, fundamentals do matter. They do need to sell more cars. Right. And I think today we got a peek that, hey, their cars were light. The market wanted half a million in sales. And while China's sales were record for 2024, you still have in China, there's so much competition. And so I think this is a gut check for investors that, you know, valuations and fundamentals do matter. And so I think the stock probably has a few more days of weakness. This is a great time. I mean, last week I sold calls on the name. You get huge call premium. So I'm long term bullish. I'm happy the stock has come down, especially going into earnings at the end of the month. It's going to be a much better setup than if this stock had like mid 400s going into earnings. I think that would have just

been too lofty of expectations. Yeah. I mean, before anybody really stopped to look at it, Tesla's like 22 percent off its high. And I know there's plenty of call buyers willing to pay you for those contracts that you're looking to sell. Brent, Lizanne, you mentioned the yield effect on smaller companies and more leveraged companies. I'm wondering just in general right now about where, say, the 10-year sits relative to Fed funds rate and relative to inflation and whether it creates any kind of a restraint on the real economy or housing. In other words, should we worry about yields near this level for equities and the broader economy? I think there are thresholds, including psychological thresholds,

with yields that start to maybe cause some trouble within the market. But as we talked about earlier, I think it's more of a small-cap issue as yields are going higher. A lot of attention given to, rightly so, the fact that up the cap spectrum, larger companies, many of them turned out their debt. They've been earning more interest on their cash and they've been paying interest on the debt, which in turn means that if we go back into an easing mode and rates do start to go down, you can't assume that that is a fill up to larger companies. That's a benefit to smaller companies, but it doesn't work in both directions. In terms of impact on interest sensitive areas like

housing, we also know that a lot of homeowners essentially turned out their debt. They switched to fixed rate mortgages at the peak in mortgage rates with an eight handle or so. You had a three handle on the average effective mortgage rate. So it's going to take a lot more to really open up those interest sensitive areas of the economy. And given that the Fed appears to be in stall mode right now, we might have to be a bit more patient for that effect to take. Brian, you mentioned 2018 as a maybe resonant analogy for where we are right now. I mean, if you just want to, I guess, walk it back, it was a really strong year in 2017, very low volatility. And then you had that vol explosion in January of 2018. The market recovered from there. It was a really strong year in 2017, very low volatility. And then you had that vol explosion in January of 2018.

The market recovered from there. You actually had pretty decent upside into like the third quarter. And then things fell apart when it seemed like the Fed was too tight. You don't want to be too literal about it, but how would you try to navigate something that might have a similar cadence? Yeah, I would think about it from the perspective of the policy clarity that we ultimately got. And so at some point, you know, the market moves and causes the actors to adjust how they're approaching it. And what you saw in 2018 was the Fed back off their tightening stance. In this instance, it would be, OK, we're not just cutting rates twice.

We may need to continue to move on this. And you would need clarity from the Trump administration. The biggest challenge was it seemed that time, you know, every handful of days or weeks, we got a new tariff or some new exchange on that. And once we got the first round, the phase one of the trade deal, we were we seemed OK until we hit a pandemic. So it's going to be critical to get clarity. I don't think there's anything magical about that one having happened in the fourth quarter. It's this market's a little concerned right now because the Fed put a little bit of policy uncertainty into it. And we're waiting for the Trump administration. But, you know,

again, the the setup for the markets remains strong, even though we may have to deal with a little bit of uncertainty here. Sure. And, Brandon, I guess in terms of themes that seem a little bit more trustworthy or at least predictable, probably more dealmaking activity, obviously a little more latitude in terms of companies being able to combine with other ones. Is that something that you feel as if you can actively, you know, try and handicap and front run? I don't know about that because I'm not sure. There are certain areas during, you know, run up to the election where I felt, especially like a J.D. Vance was more aligned with like Alina Khan. And so I'm not I don't think I don't see a line of sight in being able to play an M&A.

Maybe that maybe the hedge funds that do M&A can come back from the dead and actually make some returns. But I think in the public markets, maybe you'll see some smaller transactions. But I actually don't think that's going to be that's really a clear strategy that you can implement at this point in time. Yeah. I mean, I know the M&A bankers are saying they're busy, but they do like to say that's the case. We'll see if it does bear any fruit in the weeks and months ahead. Lizanne, Bryn, Brian, thanks so much for starting things off this year with us. Let's now send it over to Christina Partsneville for a look at the biggest names moving into the close. Hi, Christina. Hi, Mike. Well, shares of semiconductor design firm Synaptics jumping right now about 7% after announcing a partnership with Google on improving Edge AI for the Internet of Things, also known as

IoT. That means they would be combining Google's machine learning core with Synaptics hardware, as well as their open source software. Cybersecurity firm Cloudflare up about 4% right now, moving on a Goldman Sachs upgrade to buy from sell with a nearly doubling of its price target. This is a 12 month price target to $140. The stock is currently trading at 112 right now. So that signals over 25% upside for the next year or so. Shares are up 4%. The analysts point to improving sales, better marketing and traction with developers. Mike?

Christina, thank you. I do want to note the markets have firmed up a little bit here. The Russell 2000 on the verge of going flat. The S&P is down just over a quarter of 1% right now. We're just getting started. Up next, top technician Jason Hunter is breaking down the charts and flagging one sector that he thinks has more room to run this year. He joins me here post nine after this break.

For live from the New York Stock Exchange, you're watching Closing Bell on CNBC. Stocks starting off the new year on a volatile note with the S&P 500 giving back gains after being up nearly a percent at its highs this morning. Here to help chart out the rally's road ahead is Jason Hunter, J.P. Morgan's head of technical strategy. Jason, good to see you. Thank you for having me, Mike. Thanks for coming in. So, yeah, kind of a noisy, churning action over the last several days. Anything significant about, you know, where this market continues to kind of test this post-election range?

Oh, yeah, absolutely. I mean, we've seen a range since the election and even today coming back again to test the bull gap that opened up on election night. So the lower end of that gap, 57-80, give or take, for the S&P. We viewed that as a key near-term support. You know, thus far, knock on wood, it's held. If that breaks, then the next big supports, and really for the medium-term trend, are down surrounding 5,600. Yeah, which would get us back kind of to the middle of last year, right? It was kind of like most of that rally from the summer on took place above 5,600. And that would still, in your mind, you know, be in the context of a longer term uptrend? Yeah, that's right. I mean, if you look at that 5600 area, there's a couple of key things there. Number one, when you look at the spring summertime range, that was the upper end of that range where the market broke out after the September FOMC meeting. The 200 day average

has drifted into that zone as time has passed. And then if you look at, let's say, the November, December price action, even if you look at that as a short-term distribution pattern, that measured move objective sits right on top of that same zone. So I think that's likely to hold if we do pull back, and that's let's say we will. Sentiments already come off a good bit just with the December churn that you've talked about. AAII bulls down to 35%. Some of the lowest numbers you've seen since April when bonds were moving to higher yields again during that period. So the market's done a good bit of work with what's happened in December already in terms of taking some of the froth out of the tape.

And there's a lot of attention, as there always is, about market breadth and whether it's a broad rally or whether under the surface you're seeing wear and tear. And, of course, been negative for a while to the point where I guess it's kind of looking oversold for the majority of that. That's right. Yeah. Fitting with that, if you look at things like the percent of the S&P above its 50 day average back to levels that you saw in April again there, you know, and that corrective price action started earlier in December for a brief period in November. You saw small caps really outperform, you know, a reference back to the 2016 post-election trade. December, that gave up all of that and then some. And like you said, it took the breadth metrics down into oversold levels that we haven't seen for some time.

Not everything certainly kind of flips like a switch on the turn of the year. I'm wondering, though, about some of these relationships. You've been looking at semis versus software. Obviously, semis, a leadership group into the middle of last year. Software then surges ahead. Where does that stand right now? Yeah, we've seen a couple of potential longer-term transitions. You know, small versus large has been basing for many quarters now, starting in early 2024. Semis versus software is another one where you saw a fairly clear base pattern. And different than small versus large, software versus semis actually broke out late last year. Now, software underperforming in the month of December,

those ratios, both for large and for small cap software versus semis, have pulled back to their breakout levels. As a technician, that's where it should find support from a risk-reward perspective. If you're going to set your stop, you set it just below the breakout. So an opportunity here that represents an interesting risk-reward setup. In software to resume its relative outperformance. Gotcha. You mentioned, you know, yield and having given the equity markets some pause over time. Where does that set us up right now? They've been kind of stubborn here, well above four and a half percent in 10 years since the Fed meeting. Yeah. So when you look at the yield, they backed up not just with the Fed meeting, but starting in September, you know, you've taken 100 basis points of priced eases out of the forwards. You've moved the intermediate sector about as

much to higher yields. And at this point, you know, as a technician, you look at the charts, the yield rise looks like it's getting exhausted. Some of our indicators, again, call ratios and things like that are at or near extreme levels. The trend has decelerated a good bit with key support just overhead for the 10-year note, roughly around 470. And equally as important, when you look at the shape of the forward rates curve, not to get into the nuance of that too much, but if you look at where the terminal easing prices is right now in the forward OIS, it's priced right on top of what some view as market neutral five-year, five-year OIS.

So unless you're going to start to think about the Fed pivoting to tightening, it seems like the front end's moved as much as it's going to move for the most part, in which case that pressure that really came to a head in December, particularly on small caps, that should start to abate now because rates should find a level and stabilize. Yeah, that certainly is, I think, what the market's a little itchy to see some evidence of. Final point, I guess, would be this dollar move. I mean, obviously, it's been an aggressive breakout. And does it seem like that's exhausting itself? Well, that's been much more aggressive, not quite parabolic, but more so than any of the

markets that we've talked about. Sediment certainly is starting to get lofty for the dollar at this point. It was already even before this last move for euro-dollar down to the low 102 handles. 102 has a lot of technical levels for euro-US dollar, which is one of the big drivers for the DXY. I'd be watching for that to decelerate and show further signs of exhaustion. We don't quite see the deceleration yet, so I wouldn't necessarily try and catch that falling knife for the euro. But this is a level where we think you could see some pause in stability,

at least on an on-your-term basis. And then just in terms of the dollar index, I mean, that would probably follow in a similar path, given how big the euro is. Yeah, euro is the biggest component. And when you look at dollar yen, that's largely, at least for the last several months, it's been a rate story. And if we've got the rates technical set up right, that should allow dollar yen to stall it as well. Yeah. All right. Guess we'll have to see how this sort of like early year kind of sloshing around of new flows impacts all this stuff.

Jason, great to see you. Great to see you. Thanks a ton. All right. Up next, one strategist makes his case for some serious S&P upside and tells us why he's betting big on some of last year's biggest laggards. That's after this break. Welcome back. Stocks losing earlier gains in a rocky beginning to the new year, though there is a recovery attempt underway in the last little while.

But while it's an unsettled start, our next guest is now betting on a broad rally in some of last year's beaten down corners of the market. Osin Kwong is B of A security senior equity strategist. He joins me now. And it's great to have you on here. So big picture, you've got a formal S&P 500 target of 6666, exactly 6,000 points higher than the 2009 low, which would be a great year for the index, you know, up 13 percent from here. But you think it might get there in a somewhat different fashion. Explain that. Yeah, thanks for having me today. So our target of

6666, I think the way we get there is through the market broadening out, which we haven't seen yet. Last year was also a very narrow breath market again for two straight years. I think, first of all, I think the macro cycle is still pretty favorable for equities. We are still in an easing cycle, although we might not get as many cuts as one might hope for. But fewer cuts because of a good economy. I don't think that's necessarily bearish for equities. I think that's actually bullish for stocks in general. And more importantly, earnings are accelerating. And also, we are expected to see more companies participating in that earnings

growth. If you look at consensus numbers, 96% of companies are expected to post positive EPS growth by Q4 of this year. And I think the biggest reason why the market was so narrow over the past two years was because earnings growth was there. We couldn't really see any positive EPS growth outside the MAC 7. The other 493 just came out of an earnings recession in Q2. So I think as the market,

as earnings broaden out, I think so should the market. And I think that's going to be the name of the game in 2025. Now, does that imply, I know I think you're sort of underweight tech, which has been the area of the market that's been driving the earnings story. You think the S&P can really do without technology's kind of big upside power and still get to that target of yours? Yeah, it's not like we are bearish on tech per se. It's just that we think there's more juice to the upside in the other sectors. So the sectors that we like are more cyclically oriented sectors, such as financials, consumer discretionary, materials, real estate, and utilities. It's kind of like our heads against things going wrong. Now, I think the biggest driver of that rotation, like I said, is going to be driven by earnings breadth broadening out.

And I think the driver of that is going to be manufacturing cycle coming back. If you look at the manufacturing cycle, it's been in a downturn over the past two years. And the reason why that matters so much for equities is because half of earnings for the S&P 500 is tied to the manufacturing cycle. It's been the longest downturn in history for manufacturing. And as that manufacturing cycle comes back, because the destocking cycle is over, the election overhang is removed. And I think CapEx cycle is going to accelerate again. If that's the case, I think that's going to be a major boost for earnings for an average stock.

And I think that's really going to be the driver of the market broadening out. It is fascinating that essentially the S&P is at 220 percent up years with manufacturing mostly on the downswing and, you know, consumer confidence largely way below what you would expect. So clearly it's been an odd cycle in that respect. Do you think that, you know, bond yields at any level might be a threat to the manufacturing story or just in general to the cyclical upswing? Yeah, I mean, I think the current level of rates at around 4.5%, that's probably largely neutral to the manufacturing cycle. I mean, manufacturing obviously is very sensitive to the rate environment. So if we were to see higher rates from here,

that could potentially pose threat to the potential rebound in manufacturing. But at least in the near term, I think we are going to get that cyclical rebound in manufacturing, regardless of where rates are. I think tariffs are initially going to be positive because a lot of companies are going to pre-order and they could potentially kickstart the restocking cycle that we haven't seen over the past two years. And I think that this talking cycle was one of the biggest reasons why we saw a manufacturing downturn over the past two years.

Also, the election overhang being removed. I mean, if you listen to what retailers are saying in December, they're talking about how there was a lull in consumer spending before the election. And after the election, we saw a surge in consumer confidence and CapEx as well. So if that's the case, the election overhang being removed, I think that could potentially unleash both consumer spending as well as corporate spending going forward. And I think that's going to drive the cyclical rebound in manufacturing as well. Yeah, that was fascinating. A lot of those consumer companies talking about a little bit of a pause around the election. When it comes to financials,

one of your preferred areas, obviously been a pretty aggressive upside move in a lot of those stocks since the election. What's the basis of you liking the financials on a fundamental basis from here? Yeah, I think financials is still the cleanest way to play this cyclical rebound in manufacturing and the PMI cycle. It really feels like financials, especially the banks, are firing on all cylinders. So first of all, the capital markets are probably coming back after a couple of years of basically a recession. Trading is still doing good. Net interest margins are still pretty healthy. And valuations are still okay. I mean, it's not that expensive. And the yield curve continues to, you know, widen. So if that's the case, I think financial still looks

pretty attractive. It is basically the sector that you could play the cyclical rebound without being exposed to potential terrorist risk. So it's, yeah, it's one of our favorite sectors in 2025. Yeah, seems directionally things are favorable at that point. Osen, great to have you. Thanks very much. Thank you. All right, up next, we're tracking the biggest movers as we head into the close. Christina has them for us. I also have a doozy for you. That's a meme of Rick James, a kitty, and a stock caught in the middle. I'll make sense or at least try to make sense of it right after this short break. about 18 minutes till the closing bell let's get back to christina for a look at the key stocks to watch christina well it looks like Roaring Kitty's influence

is going to continue in 2025. Unity Software jumped after the meme stock leader, also known as Keith Gill, posted a GIF on X featuring a Chappelle Show sketch in which Dave Chappelle played the musician Rick James that you're seeing on your screen right now. Unity is one of James' songs, and some traders believe this was a reference

to the video game stock. It was actually doing this on the tweet. Unity software is up almost 7% on just this. Lyft Share, switching gears, also getting a boost after the information published its annual predictions piece, saying the ride share giant could be acquired by Amazon this year. The news outlet pointed to growth in robo-taxis and forecasted that ride-hailing companies could see disruption. The information wrote that Uber is preparing for a future of autonomous cars, but Lyft is, quote, a ripe acquisition target. Again, just prediction,

but shares are up 5%. Mike? Interesting thought. Yeah, totally normal market that stocks are moving on this kind of stuff. I guess we still have to see what the half-life of a roaring kitty tweet, you know, stock move is. It's the new normal though, because markets are moving on similar things last year too. So new normal. It's true. I guess it goes back to early 2021, so maybe it's not even new normal. It's just what it is. Christina, thanks so much. Thank you. All right, after the break, shares of Numora Therapeutics plummeting in today's session. We'll tell you what's behind that big drop next. Closing bell, we'll be right back. Welcome back. We're tracking a big move in Numora Therapeutics. Angelica Peebles here

with what is behind that. Hi, Angelica. Hey, Mike. That's right. Numora is down about 81% after its experimental depression drug failed in a phase three trial. Now, the drug didn't show any improvement over placebo, and this is the first of three late-stage studies that Numora is running for this drug, but it's obviously not a great first look. RBC analysts calling this the worst case scenario. We should get the results from the other two trials later this year. And we're also watching for results from an experimental drug from Johnson & Johnson that they're testing also in phase three. And like Numora's drug, J&J's works differently than the depression medicines that we currently have.

And of course, there's a huge need for drugs that are more effective and come with fewer side effects than what we have today. Numero is saying that it'll share more later this month at the JP Morgan Healthcare Conference. But for now, a lot of disappointment out there today, Mike. Yeah, for sure. Certainly bad news for patients and shows you the binary nature of some biotech investments, Angelica. Thank you. Up next, Tesla shares sinking. We'll break down the data that's driving that stock lower that and much more when we take you inside the market.

We are now in the closing about market zone Portland glass a gas exploration stocks on track for an eight positive session in a row that the Stevens has the details, plus Philip Oh on Tesla's first decline in annual deliveries and a cautionary historical trend for Apple. Steve Kovac will discuss that. Pippa, feels like energy is a pretty popular

comeback candidate so far working. Yeah, that's right, Mike. And energy stocks are continuing that recent run of outperformance. Once again, the top sector today with all but one component in the green and pacing for the best week since November as WTI hits a nearly three-month high. Now, the XOP, which tracks the drillers, is on track for its eighth straight positive session for the first time in a year as oil and gas prices move higher. And it's now on the cusp of overtaking its 50- and 100-day moving averages. The refiners, though, a point of weakness with Valero, Phillips 66, and Marathon Petroleum

all down double digits in the last month as we approach a seasonally weak period for driving demand. Now, finally, over in the youth space, take a look at shares of Constellation. They are popping today after the company announced a new contract to supply nuclear power to the U.S. government. The news also lifting shares of Vistra and NRG. NRG, and of course, Mike, those trades were big winners last year. They were, absolutely. So that is not the reversal trade. That's momentum. Thank you, Pippa. Phil, a miss for Tesla. Put it in context. It wasn't a huge miss. They only missed by about 9,000 vehicles compared to what the street was expecting in terms of Q4 deliveries. Here are the numbers. They delivered 495,570

vehicles for the quarter. The estimate was for just over 504,000. The one bright spot in their report on Q4 deliveries, they now are reporting energy storage deployments with their deliveries, 11 gigawatt hours. That is a record for any quarter for Tesla. But the deliveries get the most attention because people can sit there and say, well, how far has this company come? And is it continuing to grow? We should point out, as you take a look at shares of Tesla, that for the year of 2024, they delivered 1.79 million vehicles. That is the first annual decline in deliveries, just 20,000 fewer than in 2023. But it was a decline nonetheless.

As you take a look at shares of Tesla over the lastbo taxi and how the Trump administration looks at autonomous vehicle technology. January 29th, after the bell, that's when we get the Q4 results from Tesla. And during the conference call, you can bet there will be plenty of questions for Elon Musk about what's happening with the robo taxi. Oh, no doubt about that. I mean, it's anybody's guess exactly how much of Tesla's one point two trillion dollar market cap is really attributable to the current car business as it stands right now. But, you know, the stock's only back to where it was like the first week of December, even after being 22 percent off its high. So clearly the storylines are far bigger than I guess I would

ask. And I continue to ask this question. What at the federal level really is there to be done in the foreseeable to, I guess, unleash this robo taxi story on a regulatory basis? Well, I think you could see the Trump administration say, look, when it comes to regulating autonomous vehicle technology, we're going to take a very hands off approach, whether it's through the National Highway Traffic Safety Administration or any other way that they might be able to regulate that technology. But Mike, this is ultimately going to come down to states rights versus the federal government. I am convinced that you will see states like California say, you know what, we can still

set the rules of the road. And Tesla may say, you know what, we can still set the rules of the road. And Tesla may say, you know what, maybe we should go to federal court and fight this out. I suspect some way down the road, not in 26 or 25, but somewhere down the road, that's likely where this plays out. A lot of Waymo vehicles operating in the state of California. So clearly there's a way through it. Yes, there are. Yes, there are. But, you know, that depends on how much regulation that Tesla wants to fight against and what rules may be set up there. Yeah. No, obviously a lot of hurdles to jump through. We'll see how it plays out. Phil, thank you very much. Steve, Apple, tough start to the year and maybe not that unusual. It's actually looking at, you know, those years when we've been in a bull market

and Apple has had a really strong run to finish a year. It has had a bit of a give-back trade with, you know, 9%, 12% pullbacks from high to low in the first quarter of the following year. So that's the big picture. I guess what seems to be at work today with this sell-off? Yeah, let's talk about what's going on here, Mike. So Apple shares are starting this new year. It's some pessimism around the name that's following its big run last month. Shares are off nearly 3% right now going into the close. This is off a UBS

note from the analysts over there that came out yesterday. They're now predicting fewer iPhone sales in December quarter than they originally thought. That's after seeing some weakness in iPhone sell-through for the month of November. Let me just break down what they're saying here. They're lowering their iPhone revenue estimate for the quarter to $67.2 billion. They did have it at $69.7 billion. That had come out to about 3.5% drop in year-over-year iPhone sales, if that does play out. That is not the story investors want to hear, Mike. This was the first full quarter of iPhone 16 sales that December quarter, along with the launch of Apple Intelligence. The hope was, of course, that the AI launch would drive sales growth for the iPhone because you need the iPhone 16 in order to use Apple Intelligence. But on the

positive side here, the services business, everyone sees that growing at just this remarkable clip. UBS, in the same note, raised estimates for services business on the strength of App Store sales. There's some data in November, very positive there. Not going to get the full results, though, until app earnings. That's going to be late this month or maybe in early February. Only guidance we have for the company is what to expect. Top line revenue growth will be in the low to mid single digit percentage points. Yeah, Steve, it's funny.

You wonder just exactly how much traction this story might get in terms of, OK, maybe we're going to have to deal with somewhat disappointing iPhone sales. Because we've seen this before with Apple. When there's a little bit of a near term shortfall, people say, well, that's just that many more phones that are left to be upgraded in future quarters and here we are in a situation where it's increasingly believed that the way to play you know consumer interaction with ai is going to be through the device and so therefore whenever it does come the notion is apple will be right there yeah and and by the way there's more to come and we're not done, or Apple's not done, rather, with the rollout of their artificial intelligence features. We're still waiting for that final bucket of features with that big upgrade to Siri that can talk to your third-party apps. That's not expected to come for another couple more months.

And by then, we're going to be at least halfway through this iPhone 16 cycle. We're already going to be talking about the iPhone 17 in the fall with some different kind of devices and form factors expected there. Usually that drives sales a lot more than these artificial intelligence features we're seeing so far. So it's going to be interesting to see how that dynamic plays out. If estimates change, if we hear anything from Tim Cook about how Apple intelligence is or is not driving demand, it's going to be a really interesting earnings report in a couple of weeks here. Yeah, for sure. And I recognize, of course, that Apple intelligence is not going to initially be available in China and the iPhone sold there. But I do wonder if we've kind of are lapping some of the really weak China results for Apple in the

coming quarter. Maybe not, actually. So that same UBS note I was talking about, they noted that Apple continues to lose market share in China. That's according to their research. And also just having trouble getting this Apple intelligence off the ground there. And not just losing market share, too, just sales overall in China are down. You've got competition from Huawei. You've got this holdover of when Apple intelligence

does come to the iPhones in China that the Chinese government needs to approve. down. You got competition from Huawei. You got this holdover of when Apple intelligence does come to the iPhones in China that the Chinese government needs to approve. So it's going to take a lot of work out. Seems like not the immediate growth engine. Steve, thank you very much. As we head into the close, the S&P 500 is still down just about a quarter of one percent, although up off the afternoon lows. We do have one day left in that so-called Santa Claus rally period tomorrow. That started with the S&P at 59.74, so we're more than 100 points below that right now. See if we can get rescued in tomorrow's action. That's going to do it for Closing Bell. We'll send it into overtime. It's Morgan Brennan and John Ford.