Closing Bell - Closing Bell: Earnings Set to Send Stocks Higher? 10/24/23

Episode Date: October 24, 2023

Is the three-month market pullback driven by macro and interest rate concerns running its course as the final earnings season of the year gets underway? Adam Parker from Trivariate and Bryn Talkington of Requisite Capital break down their forecasts. Plus, Ankur Crawford breaks down her tech playbook and how she is navigating the upcoming mega-cap earnings. And, we count you down to the key reports to watch after the bell. 

All right, welcome to Closing Bell. I'm Mike Santoli, in for Scott Wapner. This make or break hour begins with stocks finding some traction after five straight losing sessions with old industrial economy stocks bouncing on decent results ahead of the crucial start of mega cap names. She will join us with her take coming up. Bond yields, meantime, they are steady. Remember, we had that 10-year click above 5% early yesterday. We're now down about 484, although no further real declines in the yield. Oil down for a third straight day, now back into the low 80s on WTI crude. Small caps have been outperforming much of the day. Banks, though, continue to lag. They have certainly been pulling up the rear for much of the last several months. We begin with our talk of the tape. Is the three-month market pullback driven by macro and interest rate concerns running its course as the final earnings season of the year gets underway? Or will the

bulls remain penned in by higher rates and fears of slowing growth and whatever else we can think of. Let's ask Adam Parker, Trivariant Research founder and CEO and a CNBC contributor. Adam, so I don't know. It looks like people trying to look on the not-so-negative side. Yesterday, a bit of a failed rally. Today, yields are quiet. Markets able to maybe seize on some of the fundamental news. Are we able to go from macro to micro at this point, do you think?

I mean, during earnings season, some stocks really only give you four updates a year, right? And the rest of it's all macro or factor betting. And I think we're getting some mixed to positive results in aggregate for the earnings season. So do I think we can get back in this Goldilocks period where we could dream that they're going to stop raising rates and eventually there'll be accommodation and in the interim growth is OK? Yeah, I do. And I think we'll end up the year higher based on that. The key question has always been, is it just another growth scare where investors are over anticipating a recession or a steep slowdown or are rate that's going to hasten the day when we actually have to bring it here and now.

And it's inconclusive evidence, but there's nothing to say that the soft landing has been called off. Yeah, of course. I mean, if you wait long enough and you just forecast 17 of the last zero recessions and then eventually you get one, you could say you're right. I mean, I'm not saying you, but one could say that. I mean, we'll see. I don't think rates, the 10-year doesn't keep backing up forever unless growth is good.

Right? And, you know, closer and closer that 2-year and 10-year are getting closer to the same level. And we'll see what that means. I could see people wanting to buy the 2-year relative to 10-year. And maybe that will ultimately get us back to a normal-shaped curve. But I don't see the 10-year backing up a ton while growth softens. Right. Yeah, you wouldn't think, or at least you wouldn't want it, certainly, if that were the case.

That's a bad cocktail. Something would be blown loose. That's a bad cocktail. We do have some breaking news, though, on Qualcomm. Christina Partsenevel is here with that. Hello, Christina. Hi, Mike. Well, Qualcomm aims to bring AI to the edge.

In other words, personal computers, local servers, and smartphones. And it plans to do so today with the announcement of two new chips. First, the Snapdragon Series 8 Gen 3. Long name, but for high-end Android phones. And secondly, the X-Elite chip for PCs and laptops. Both will help run generative AI applications without having to rely solely on the internet. My colleague, Kif Leswing, had an exclusive interview with Qualcomm executive who said the new smartphone chip can generate an AI image in less than a second versus last year's model which took about 15 seconds or so. So that means shoppers will no longer be asking, how great is my camera or how much memory

do I have, but rather what is the speed of these AI applications? No mention of Apple though in this report. The second product is going to be an ARM-based CPU chip for Microsoft-powered PCs, Qualcomm CFO saying it'll make them the new CPU leader in mobile computing, and says it's four and a half times faster than Intel's x86 chips, and will also be introduced in mid-2024. Recall just yesterday, Mike, Reuters reported that NVIDIA is also building a CPU chip for Microsoft-powered PCs, AMD as well. So that means a lot more competition, not only for Intel, but also Apple that is, you know, growing in the space with its own custom chip just over the last little while.

But for more on all of these products, Qualcomm's CEO is going to be joining us on CNBC at 4 p.m. Eastern for a first. Mike? Christina, thank you. Adam, you know this space really well. I mean, what's the make of it in a big picture sense where these companies are kind of trying to, I guess, go closer to the end user in terms of the AI capabilities? NVIDIA yesterday with the PC chip development news as well. Yeah, look, I mean, we're in the early phases of a 10 to 20 year trend and it's going to be a trend that's gonna help compute grow

and you're gonna have semiconductors at the center of it. So it's not, NVIDIA will be best positioned and will do the best over time, but there are multiple aspects to it and a lot of competition. I think the easiest thing to say is everyone wants to compete against Intel because they've been basically,

let's say the single worst steward of capital of any public company in the last 25 years. And on top of it, hubristic. So it's been very easy to go in there and gain share from them. And I'm not surprised to see NVIDIA mentioned that yesterday as basically a superior company over the last 10 plus years at a minimum. I think some of these other things on the phone, we'll have to see what the competitive landscape looks like. But obviously, there's a number of companies that will be participating. Yeah, at some level, you feel like, you know, the added capabilities are kind of table stakes. I mean, the things always get better. They always get faster.

So I'm not sure, you know, where the incremental share gain comes from that because somebody gets priced away. But I think it's fair to say if you came into this year thinking the semiconductor industry grew nominal GDP plus a couple, that that number is now a nominal GDP plus four or five just because compute is going to gain share of the total bill of materials for almost all these devices. And I think that's partially why these things are trading at higher multiples, because their long-term growth rate is just going to be higher. You know, there's a way of telling the story of this year in the markets in general. A lot of people are saying it this way, which is, you know, you more or less had just kind of a sort of a bear market rally or very strong rally off the lows a year ago. And then beyond that, everything else is kind of rolled over. Whereas you've had the AI storyline or anything that touches AI and mega cap tech has managed to keep things going.

We know this. Right. First of all, if that's true, it would seem to at least allow for the fact that the rest of the stocks, if not to carry the market, that there have to be some opportunities or at least some bad news already priced in on those levels. I think that's true. I get that question a lot more of like, hey, can we give a broadening rally? Small caps look super cheap versus large cap. If you look at our last couple of weeks we've written about this, I just don't think the small caps are that cheap because when I parse it out by growth versus value, growth looks a little expensive for both small and large, value looks cheap for both.

When I parse it out by quality, the mega cap quality are just much better than the small cap quality. They generate more free cash flow, they have higher margin, they command an asymmetrical higher multiple. So I don't think you get that broadening rally until we're closer or more in the downturn. You know, the old blood on the streets phrase, like you really need to have things much worse. Then you can dream that their margin expansion after that will be better.

In the interim, I think the big guys, we'll see with some of them in an hour or two here, are probably going to have just as good results, if not better, than the small caps. And what makes small caps work is their margins go up more. So which is it? Is it labor? Is it materials? Is it depreciation? Is it pricing and mix?

None of that looks like a great cocktail in the next quarter or two on a relative basis. So I'm in the camp that the market goes up and the big seven participate, at least pro rata. At least that's my view. It's pretty hard for it to be otherwise. Yeah. At least for now. Yeah. Agreed.

Let's bring in CNBC contributor Brynne Talkington of Requisite Capital Management. For more on all this. And Brynne, just in general, I mean, I know you're an owner of things like what Microsoft and NVIDIA. How do you think they are positioned as we're about to get this latest little update of fundamental news? I think when I start with the technicals, if you just look at the NASDAQ, the NASDAQ is firmly below both the 50 and the 100 day and continues to make those lower highs and lower lows. So technically, the NASDAQ in general doesn't look good. There's a few standouts like a Google and a Meta, which look the best of, we'll say, the Magnificent Seven from a technical perspective. So I go into Microsoft's earnings

today that when you look back the last two quarters, to me, the key word that Satya and team talked about was optimization, meaning that clients have been optimizing their spend, meaning to me spending less, while last quarter we definitely saw with Microsoft, the CapEx is picking up, mostly going to AI. And so I think you have this somewhat of a juxtaposition that overall the clients of Microsoft are optimizing while Microsoft is spending for the future. So they're going to spend more today to try to earn more in the future on AI. So I know that the street's looking for about 8.7% revenue growth. I don't think that Microsoft's earnings today are going to be the catalyst to get the tech trade back

up and running. I agree with Adam to say if we get a fourth, if we get like a rally November and December, I think tech will keep up. But Mike, when I look back, Microsoft is flat over the last two years. So although we love to talk about the year to date performance of some of these tech stocks, if you held Microsoft from November of 2021 to today, you're flat. So I think you've really just seen a reversion and a kind of a catch-up of being at that high in 2021. Yeah, there's no doubt. I mean, look, if you look at a longer-term chart, it looks like it could easily be this big double top. It kind of went right up to the old highs over the summer, and then it's pulled back from there. On the other hand, over the course of those couple of years, it's gone from like a 34 forward multiple down to 28. I mean, it's not cheap, but on some level, it seems like Microsoft for a while was almost

the most important mega cap in there because everybody could make an excuse to own it for a while, right? You could be defensive. You could be a growth investor. You could essentially be playing the AI theme or just saying these are really good managers and I'm just going to get in the way of every digital trend that's out there. So how do you think that works from here? Yeah, well, I mean, if you think about investing for the future, ultimately the yield curve doesn't matter to companies that are executing and can grow through a cycle. I think with Microsoft on the positive side, you have Satya and team that continue to execute. I mean, he is very underrated, I think,

in his dominance of AI. And you also have Microsoft, it's definitely the closest publicly traded company to open AI because of the relationship they have. And so I think that investors are gonna continue to own Microsoft in that AI bucket. And also don't forget, Copilot in earnest launches the first week in November.

So while it's not going to even remotely be embedded in earnings or revenues for the foreseeable future, I think there's going to be a lot of excitement talking this quarter and next over how Copilot's being adopted by all of us that use Microsoft. So I still think it's a great long-term hold. But ultimately, I don't think this quarter is going to separate itself.

And you're going to see a big run outside of just the markets run itself because of these earnings this quarter. What do you say, Adam? Yeah. Hey, Bryn. Nice to see you. Yeah, I largely agree. I mean, look, I don't love the November 21st comparison just because that's when, like, the peak of, you know, remember, we didn't start raising rates until March of 22, right? So that was really the peak of people anticipating higher rates.

Fed fund futures going up a ton. And so a lot of the NASDAQ got killed. But I think, and Brent knows this, I think a lot of it just comes down to your investment horizon, right? If you're saying five years from now, I would like to have looked back and had something in my portfolio that benefited from AI, you have to own NVIDIA and Microsoft. There's no way you can get around owning those two. They're the best position. And I'm sure Anchor will talk about this next. She knows a ton about it, too.

So I think you'll want to own it. Whether you get upside enough, they didn't have upward earnings revisions their last report at Microsoft, and most of the other mega caps did. So whether you get it here, I don't know. But surely they're well positioned to benefit if you look out one, two, three years, you can start sketching out a scenario where they earn 20 bucks in two, three years and you're going to pay 25, 30 times that. So is this going to add another trillion market cap before it loses a trillion? Of course it is. And so it's all investment horizon. I don't know about the next two months, but I know you want to own that for three years. Yeah, probably not the trillion

in the next two months. But Bryn, you know, you mentioned Microsoft investing for the future heavily as its customers try to trim back. This is an area of sensitivity, I think, on the street with a lot of these companies. Meta, everyone fixated on what the operating expense guidance is going to look like. Even Alphabet as well. So this sense out there that, yeah, there's this great long-term opportunity. But in the meantime, we'd love for you to be maximizing margins. How does that play out? Well, I think, I mean, last quarter, they're spending a lot on CapEx. I think they're going to, as I said in the beginning, they're going to continue to while their clients are optimizing.

They are not because they're investing for one to five years from now. But I do think, we all understand Copilot is going to be $30 ahead. So you can do some math and actually see over the next one to two years how that actually trickles down to revenues. I don't think with the other companies that's so clear. And so I do think

between the very close relationship they have with OpenAI, Copilot being $30 ahead, which you could model out. And I think if there is broad adoption, that gives another runway for Microsoft over the next few years. Yeah. You know, more broadly, Adam, I mean, I was noticing the way ExxonMobil and Chevron traded

lower after making these acquisition announcements. Now, happens a lot with an acquirer. Crude has also been a little bit in pullback mode. But it seems like these companies in particular cultivated a shareholder base that says, just kick the cash back to us. You know what I mean? Like, that's what we want right here.

So it's a tricky thing for management. And I guess if you want to know what you own, whether you own an empire builder or you own a shareholder return focus management? Look, I mean, in the near term, you never like that kind of price action. Very tactically, you kind of hope that when you buy something, you know, that the market likes it. And I think they're getting assets at a pretty good price. They put a pretty low premium, like if you look at the Chevron Hess situation. But any medium or long term i um i believe you should own a lot of energy

and energy stocks uh demand looks to me like it'll be very steady with the install base of vehicles and new vehicle sales and capital spending is top left to bottom right it's very hard to call in a three to six month view you can have a lot of um random things happen but i think the probability that we uh have demand above supply for oil is very high in the medium to long term. So I would recommend investors own as much energy equities or actual direct resources they can. It's one of one of my two highest conviction ideas for for our institutional clients. Bryn, you're probably along for that ride to some degree. What's your thought about how these deals play into the

longer term story? I think these as a, you know, we're very exposed to energy and as a long term investors, it's great to get the cash back. I get your point, Mike, and I agree with that. But ultimately, I think with both of these Pioneer and Hess, Exxon and Chevron are saying one plus one can equal three here. And I think that what we're seeing, if you look at Ford and GM, people don't want to buy EVs in aggregate. They want to buy a Tesla. They're wanting to buy an experience. And so I think that these companies are getting a read from the street. I promise you fossil fuels will be here five decades from now. And this whole peak oil peak, we're going to all go solar, all go green. I think that narrative is taking a backseat to the reality of how expensive

it is to go green. And people still are not going to have large adoption to EVs. I think they're going to continue to buy Tesla. And this is where, to me, that narrative for companies with high free cash flow, high shareholder return squarely sits in the energy camp. So I wholeheartedly agree with Adam's view. Yeah. I mean, look, there's still a cigarette business and they still make a lot of money. Last year was the biggest coal production in coal demand ever. So this peak oil demand is going to be several years from now.

I get it. But the oil intensity of GDP is going nothing but down and has gone nothing but down forever. But that doesn't mean in the absolute terms demand goes down. Just to be clear, I'm not talking about the environment. I'm talking about the stocks. They're cheap with low estimates, low inventory, tons of free cash flow, and everyone hates them. That's a cocktail that looks good to me every time. Everyone hates them minus two. Besides Brent and I, a lot of investors can't own them. That's a cocktail that looks good to me every time. Everyone hates a minus two.

Besides Brent and I, but a lot of investors can't own them or they won't own them. And so there's opportunity, I think, more for us. Fair enough. Good to talk to you. We'll catch up with you again soon. Let's get to our question of the day. We want to know which of this week's reports will have the biggest move post earnings. Alphabet, Microsoft, Meta or Amazon. Head to at CNBC closing bell on X to vote. We will share the results later in the hour. We're just getting started. Up next, your tech playbook. Alger's anchor Crawford is breaking down her expectations for the parade of mega cap earnings ahead. She will join me at post nine after this break. S&P 500 up near the highs of the day,

up about 80 basis points. We are live from the New York Stock Exchange. You're watching Closing Bell on CBC. The Nasdaq higher as heavyweights Microsoft and Alphabet gear up for earnings after the bell. Here to preview those report and those reports and metas later this week is Ankur Crawford, Executive Vice President and Portfolio Manager at Alger. Joins me here. Good to see you. Good to see you too, Mike. So we often talk about these stocks as one big blob, the Magnificent Seven or Fang or whatever it is, as if they're similar kind of energy sources driving them, as if the same things matter to all of them not always the case so as we sift among the ones reporting this week what matters i think what matters is different for

every single one of them in part because the end markets and the operating expense discipline is all different for each one of them so for microsoft what's going to matter is you know do they see stabilization in azure or their business? How do they think about, or how are they guiding us to how AI will ramp with the introduction of Copilot in Q4 and then 2024? For Meta, it's going to be all about OpEx. They seem to have a great revenue. We expect a revenue beat and probably a raise. But what are they going to say about their OpEx? Do they go back to their ways of pre-COVID, where they spend willy-nilly, or do they maintain the discipline? For Google, a little bit different. Google, it feels like,

you know, what is the product cycle? We're looking to see if they say anything about AI that can help us bridge the gap in a more uncertain economic environment for a product cycle. We're looking to see if they say anything about AI that can help us bridge the gap in a more uncertain economic environment for a product cycle. So I think it's different for each one. And so you may actually see a bifurcation in their reactions of each one of them. When it comes to Microsoft,

there's the, you know, obviously in the Azure business, that's a matter of, is demand settling out? Are margins going to be stable for a while? But in terms of what they're doing with AI, with co-pilots, we're going to sell X number of subscriptions, seats or whatever. But also, it's how are you running your business differently, presumably, your own business with all these tools? Yeah, so it's funny, because I think the software companies are not only the enablers of this entire AI revolution that we are embarking on, but they also are eating their own cooking.

So to some extent, they are increasing internal productivity. They're seeing how much productivity is increasing, and then they're selling it. So they actually get a benefit from both sides, whereas the rest of the market will benefit from the productivity increase. Some of these software companies will see a massive increase in pricing power, in part because they're enabling that productivity increase.

Yeah. I guess there's not a real handy way for investors to say, we're just going to play that trend. therefore they go to the providers right but do you think that as people look at other businesses as those companies adopt you know whatever these productivity enhancing tools are that it actually is making its way into earnings models and things like that I think that is going to be slow relative to you know how we we wanted to establish itself And in part because these changes take time. However, it takes time relative to the business model that we have on Excel. In the grand scheme of things, I think by the end of the decade,

we will probably see 40% penetration of Gen AI or AI-type products into mass market. Every single company will have to adopt this. It's a structural imperative at this point versus it being a choice. You mentioned for Alphabet, you know, one of the questions is what are they going to be able to tell us in terms of their position here and whether they're going to get payback on some of their investments. But as a business right now, it seems like, you know, they had a little scare. The street thought that they were going to be kind of a victim of the AI movement. And now it's back up toward its highs. It seems like it's kind of a consensus hold again. Yeah. And oftentimes I think, you know,

consensus is consensus. Yeah, right. And oftentimes what you have to do is look beyond this quarter. So they're going to be reporting in 30 minutes. And we're kind of looking forward six months and saying, you know, the economy is a little bit unstable. The 10-year is over 5% or close to 5%. The consumer is looking a little shakier than it has historically over the last few years. So the end market is advertising, which is driven by the consumer and the economy. And because Google, unlike the other magnificent seven, they don't have a product cycle that bridges them through this uncertain environment. It becomes a little bit, I don't know, a little bit more difficult to own relative to the other two that do have their product cycles.

And I'm looking over six months. I don't know what happens tonight. Sure. So does that imply something like a meta? I mean, all this focus on the operating expenses, that's because people just take for granted that, you know, that advertising engine keeps spinning? Well, it's not only the advertising engine that Meta has, it's the product cycles underlying their core advertising engines with Reels, with Direct2Connect, with the AI platform that they've just recently introduced and the monetization of all of these. That is going to drive the top line, but we just have to make sure that they don't spend it all away. Yeah. So we just have to make sure that they don't spend it all away.

Yeah. So we actually realize it in free cash flow. Yeah. No, that'll be that'll be the focus. And I don't know. Last time people panicked about the spending at Meta created a really good buying opportunity, but much lower. So we'll see how it goes. Ankur, great to see you. Thanks so much. You too. All right, up next, trading the uncertainty. Bank of America's Chris Heise is highlighting the three sectors he's seeing strengthened right now. He'll break down how you should position your portfolio after this break. Closing Bell. The major averages in the green today as Treasury yields stabilize ahead of a flood of earnings reports.

Here to share where he's finding opportunity in this current market environment is Chris Heisey of Merrill and Bank of America Private Bank. Chris, good to see you. Great as always to be with you, Mike. You know, how are you seeing the, I guess, the big picture action? You could have said coming into this week, markets maybe getting a little bit oversold. We're at a better seasonal period. We're near some kind of potential support levels. Maybe the yields can calm down a little bit and make way for something good seasonally as we focus on earnings. Does that make sense? Are you persuaded by the action today at all? You know, I'm not traditionally this stark

as it relates to what this week actually means, but this is a big week. The Magnificent Seven, the narrow leadership has been the news headline for a while. That passed the baton over to the 5% yield on the 10-year Treasury and then bouncing off of 4,200 on the S&P. And there's so many cross-currents, not to mention the significant rise in geopolitical volatility and risk overall. So this mountain of earnings this week, particularly in the tech sector, that has to drive some momentum and a little bit of tailwinds and some catalysts to get some of that.

I wouldn't call it risk on, but to get some of that move back into the equity markets to establish these long positions again to set ourselves up for next year. So this is a big week. What are we being set up for into next year, I guess, is also the question. It seems as if, you know, we're a year after there was a near unanimous consensus that there was a recession coming within a year. We didn't get it, but it still feels like you're kind of rolling our anxiety forward every few months that, in fact, finally there's going to be some kind of an economic payback period. What's your assumption at this point? Well, certainly the assumption is, is that it's a mixed bag. There's going to be continued to

be cross currents. The great debate we wrote this report not too long ago talks about is it soft landing or is it any kind of landing? And for what it's worth, I think if you talk to businesses, if you see what's going on, generally speaking, in the forward-looking projections, what gives us some comfort is the fact that, albeit there's slower spending at the consumer level and there's a little bit of relaxation of growth overall, we're not in that mode where we're falling down the cliff yet. The Fed hikes that we've already seen are beginning to bite, but there's tremendous resiliency out there. So what gives us comfort, Mike, is the fact that profits could actually re-accelerate

next year. Now, the question still is out, did we actually bottom in earnings? Some think we have. I think it's still a little bit of a mixed bag. But overall, when you look at next year, it should be that platform year again, more normal yield curve, more normal economic activity. And the thinking cap that goes on investors' heads should be more about the latter part of 4, 24, 25 and 26 to establish that long term sustainable bull market again. Yeah, I mean, it's a good ways to look ahead, although we'll see if people can maybe use that as a frame. Now, where within the market seems like it makes sense to try and position as we head into something like that? Yeah, I think if you look at market internals, we all know that you talk about the 493 other stocks

and how attractively valued many of them are. And we take a look at the cyclicals how attractively valued they are and dare we even talk about small caps on a relative and absolute basis and emerging markets There's so many ands ands ands but thinking forward when you think about what drives Long-term sustainable bull markets eventually you got to look through the storm. The wall of worry is high. When you get that blue sky, it's almost too late. So you stick through it. You'd be diversified. You stay high quality right now. But overall, it's productivity. It's a resumption of the profit cycle. And it's ultimately falling yields, not collapsing yields, but falling yields, which helps support that better attractive foundation in stocks relative to fixed income. We'll touch on fixed income very quickly. A more normal yield curve is on its way.

There's some pain on the way, and it's probably pain that's been extended longer than most people expected. But where real yields are right now, fixed income is also attractive. And you're not concerned necessarily that when you do get the yield curve returned to a more normal shape, everyone says, well, that's another building block of the eventual recession. Well, not if not if you're coming off of the severe tightness of overall policy and you're starting to come down. And if there's more normal monetary policy where rates come down a little bit on the front end after the back end starts to look through and see slower growth, then you get a more normal yield curve, something like 3.5% Fed funds, 4.5% to 5% 10-year treasury. That's the

1990s. And we had very good years overall across asset classes in the 1990s. They weren't absent of volatility. Sure. But that's more normal than post-global financial crisis days of low rates, low inflation, quantitative easing all the time. All right. We'll see. The Fed seems to be in no mood to cut almost two percentage points anytime soon. But things happen.

We'll see how it goes, Chris. Thanks very much. Thanks, Mike. All right. Up next, we're tracking the biggest movers as we. Thanks very much. Thanks, Mike. All right. Up next, we're tracking the biggest movers as we head into the close. Christina, standing by with that. Verizon having its best day since the great financial crisis and slow demand offset by higher prices from one conglomerate yet again. I'll have that name and much more after the break.

20 minutes until the closing bell. We have the Dow about 240. The S&P up three quarters of 1%. Let's get back to Christina for a look at the key stocks to watch. Hi, Christina. Well, let's start with 3M. Higher after beating expectations on earnings and revenue. The conglomerate also raised its earnings per share outlook, citing its restructuring and spending control efforts.

Plus, it raised prices. Those shares are up 5.5% today. General Electric is also in the green after handily beating estimates and raising its forecast, thanks in large part to increased demand in its aerospace business. Shares of GE are up almost 7.5% right now. And last but not least, Verizon is having its best day since 2008, after growth in wireless subscribers fueled an earnings and revenue beat. The telecom giant also raised its free cash flow forecast for the year. Shares up about 9 percent, but still down

13 percent this year. Mike. Christina, thank you. Another name we're watching this afternoon is GM. This as the UAW expands its strike to a crucial GM plant. Phil LeBeau here with that. Phil. This is a big plant and a big hit for General Motors. You're talking about the plant in Arlington, Texas, where they build all of their large SUVs. Let me give you some perspective on just how important this plant is. About 5,000 UAW members have walked off the job there. This is 20% of GM's U.S. production. It is the largest, most profitable plant they have in the United States. Not surprisingly, this is news that does not fit well as they come off of an earnings report where they said, look, we're already going to take an $800 million hit from the UAW strike,

at least $200 million a week going forward. And that was before the Arlington announcement came out. They've pulled back their guidance completely for the year because they don't know how much the cost will be from this strike. Here's CEO Mary Barra during the conference call talking about the state of negotiations. The current offer is the most significant that GM has ever proposed to the UAW. They've demanded a record contract, and that's exactly what we've offered for weeks now. A historic contract with record wages that have increases that are substantial, record job security and world class health care. It's an offer that rewards our team members, but does not put the company and their jobs at risk.

Accepting unsustainably high costs that would put our future and the GM team members job at risk is simply something that I will not do. As you take a look at the big three shares since the beginning of the year, GM, Ford, and Stellantis, keep in mind that we will get Ford results after the bell on Thursday. And Stellantis, remember it had a plant that was hit yesterday by the UAW, or on Friday, by the UAW. They're all kind of running together. They will now have 525 workers that they are laying off. This is the ripple effect, Mike, that we've been talking about. More than 7000 workers between G.M. Ford and Stellantis have been laid off because there's not work coming from a plant where there was a strike or is a strike going on. That shows you

that this is this goes beyond the people who have walked off the job. It is impacting others at plants that are still in operation, though at a reduced rate. Yeah, and that'll certainly start making its way into the broader economic numbers here. GM stock peaked today around 10 a.m. after those earnings. It's down like 4 percent since then as we're talking about this new plant closure, Phil. So, I mean, the question again, I mean, does this seem to just get everybody else dug in in the same positions, or is it moving the process along at all? Two arguments here, Mike. You will hear people say this is an indication that the UAW sort of flushing it out

towards the end, that we might be close to a resolution, if you will. But I get no sense that this is, you know, we're going to see something announced within the next week or so. I just don't get that sense from talking with people who are close to the process. And one other thing to keep in mind, Mike, GM shares also under pressure because of the news out of California with the DMV and Cruise. Cruise in the future potentially could be a big moneymaker for GM. This is not good news coming out of California. If you buy into the idea that cruise and autonomous driving will really help GM's bottom line. Yeah, excellent point, Phil. Thanks so much.

All right, last chance now to weigh in on our question of the day. We ask which of this week's reports will have the biggest move post-earnings? Alphabet, Microsoft, Meta, or Amazon. Head to at CNBC closing bell on X. We'll bring you the results right after this break. Let's get the results of our question of the day. We ask which of this week's reports will have the biggest move post earnings. Alphabet, Microsoft, Meta, or Amazon.

Microsoft in the lead. The largest of them all. 30% of you said that's going to have the biggest move, Amazon, right behind it. Up next, your earnings setup. We're breaking down what to watch when Alphabet, Microsoft, Snap, and Visa all report in. Overtime, all that and much more when we take you inside the Market Zone. We are now in the closing bell market zone as the indexes hang near the highs of the day. The S&P 500 up more than three quarters of one percent. There is a wave of major earnings out in overtime today.

We're bringing you what to watch for each of them. Deirdre Bosa has Alphabet. Steve Kovach is on Microsoft. Julia Boorstin on Snap. And Kate Rooney on Visa. Dee, Alphabet, it's only less than 2% from its highs. It's actually up 6% this month. Does that mean expectations are high? Set us up for this one.

It does mean expectations are high, but this is, you know, a stock that's favored by the long onlys. Bernstein calls it the warm hug of mega caps for this earnings season. So the first half of the year was characterized more by the promise of artificial intelligence, what it was going to do there. The second half has largely been back to basics, the fundamentals. And remember that Alphabet's core business, it is still very much so an advertising story. Nearly 80% of revenue still comes from search and other ads. So that's what analysts are really going to be looking at.

The street's going to be looking at, and we're expecting about 10% top line growth, which is really kind of the epitome of GARP, growth at a reasonable price. So when you look at an Alphabet, it does feel like sort of one of the safest stories in mega cap out there. Of course, these stocks have grown so large, so it could have an outsized impact if it does miss. And as you said, my expectations are high. And remember also that Alphabet does not guide. That's something important to keep in mind. Absolutely.

You know, I also wonder if there's anything to be said, any color on any of the various, you know, legal challenges they're facing or other, you know other big investments or something that could be beyond the advertising story? Yeah, their moonshot project in Google X, that X division, is interesting. This typically has been losing a lot of money for a lot of time. So you wonder if there's going to be more discipline there. I think what's interesting today is the headlines that came out of Cruise. Remember that Waymo, which is owned by Google, is a major competitor in that driverless car race. And the fact that its main rival here in San Francisco has had its driverless operation suspended. I wonder if that is a chance for Waymo to pull further ahead. We'll see if there's any commentary on the call. Absolutely. Dee, thanks so much. Steve, Microsoft, another

kind of consensus favorite, I guess. What are we expecting? Yeah, so look, it's not necessarily going to be about selling AI tools, Mike. It's going to be about talking about the demand for AI tools. So a week from today, Microsoft is going to start selling Copilot. That's that AI assistant we've been talking about for so many months now. It goes on sale for $30 per user per month. There are hundreds of millions of potential users for this product. We haven't heard too much specifics from Microsoft, though, on when to expect real sales. They said maybe sometime next year, but then again, they're launching it sooner than many expected. So listen to the call for any kind of color or commentary on how demand is stacking up for that product when it launches next week. But as for the core business and looking back, Azure cloud growth is still going to be very important for the company. We've seen it slip from that around 50% growth mark over about two years ago.

It slipped down. Analysts are now expecting 26% growth. And the real question about Azure, Mike, is whether or not that has bottomed out and we're going to start seeing growth accelerate again for Azure. And then finally, I'll just point out for a good read on consumer electronic demand, look at Windows revenue. That is the money Microsoft makes every time a third party like Lenovo or Samsung sells a PC with a Windows license

as a gauge of PC demand, which we know has just been cratering all year, Mike. Absolutely. Yeah, that's been certainly the soft spot. Steve, we'll catch up with you soon once the numbers are out. Julia, Snap, I would imagine, you know, investors really have a little bit of skepticism toward this one. What are you expecting? Well, Snap shares did gain nearly 3 percent today going into the close, but the stock is down about 23% since its last earnings three months ago on concerns about two consecutive quarters of declining revenue. Now, the company's earnings are expected to swing to a $0.04 per share loss

from an $0.08 per share gain in the year-ago quarter, while revenue is projected to fall by nearly 2%. So the key question here is when will Snap forecast a turnaround to its revenue growth? Analysts are looking for 2.6% revenue growth in the fourth quarter. The other key issue is user engagement in light of the ongoing popularity of TikTok and others. Now going into earnings, 73% of analysts have a hold rating on the stock, 15% have a sell, and 12% have a buy. Mike? Yeah. And Julia, I really do wonder about, you know, Snap's place in the industry. All the competitors have gotten

a lot bigger, especially relative to its to its own size. How, in fact, are they have they been saying they might be able to, I guess, either gain more scale or prove their resilience in the face of all that? Well, Snap has really been arguing that it's just a different use case than, say, an Instagram or a TikTok. Snap is where friends communicate with each other. Now it's offering people this AI assistant, this sort of AI tool that is integrated into that communication experience. But then they also have that entertainment element for when you're waiting for your friend to respond to you. But what Snap says is it's really about friends staying in touch, whereas Instagram might be following people who you don't know at all or don't know as well. And then TikTok is really more about pure entertainment. So they argue that they really have a different use case and they're

really digging deep into that. And they hope room for everybody for now. Julia, thank you. Kate, Visa has sort of been a bit of a proxy on overall consumer spending, but how is that looking? Hey, Visa. Hey, Mike. How are you? We're talking about Visa. It's a relative safe haven, or at least it has been lately. We're expecting 10 percent or so revenue growth for the quarter. Visa's fiscal year, Mike, also just wrapped up, so we're going to get some new outlook from Visa. We're going to get the annual outlook in this report today. You're going to get that glimpse, as you mentioned, into the health of the consumer. Amex reported on Friday really set the bar high. They delivered pretty strong growth. They talked about the consumer being resilient.

Look for any commentary by Visa on a similar vein, talking about consumer trends, health of the consumer. Amex gives us a little bit of a preview, but it tends to be that much more affluent consumer, that higher-end customer. So you want to see payment volume here, international and cross-border payments. That's a higher margin side of the business for Visa. And then that consumer spending commentary, that's probably going to come through. Guidance, we're likely going to need a little bit more of that color on the analyst call, Mike. Yeah, you know, Kate, in addition to it just being obviously this huge play, this platform that just goes up and down with consumer activity, there is a debate going on about its long-term place, you know, the payment networks in the whole industry. Maybe there's a little bit less leverage to overall consumer spending than there used to be because of alternative ways of paying.

And, of course, you've seen this boom-bust phase with challengers in fintech, but it's unclear how much that's had an impact. Yeah, that's a great call, Mike. Things like FedNow, the idea that you could move money in a cheaper, faster way throughout the banks with kind of getting rid of the need for an intermediary like Visa. You've had a lot of those competitive challenges, but also things like pricing pressure. There is that perennial conversation about fees and what the credit card networks are charging here. Also, regulatory discussion.

Visa had a major acquisition of Plaid a few years ago, though they had to call off because of DOJ pressure. So they're a little bit hamstrung when it comes to growth through M&A at this point, and that at least has been the consensus out there on Wall Street. So we'll see. But absolutely more competition,

more pricing pressure. And then you've got the macro environment too that weighs on payment volume. Yeah, you wonder if they're even sorry they weren't allowed to buy plant at those valuations. But we'll see how it goes, Kate. Thanks so much.

Appreciate it. About 30 seconds till the close. We're going to be going out with about a three quarter percent gain in the S&P 500. Right at this 42.50 area where we backed off from in the close. We're going to be going out with about a three-quarter percent gain in the S&P 500. Right at this 42.50 area where we backed off from in the morning, NASDAQ slightly

outperforming. We have oil prices in retreat, down a couple of percent today as bond yields have quieted down for another day. We have a 10-year down to 4.82% as we get ready for all those mega-chaps, growth stock earnings. That's going to do it for Closing Bell.

We'll send you into overtime with Morgan Brennan and John Ford.