Closing Bell - Closing Bell: Is the Correction Over? 8/29/23

Episode Date: August 29, 2023

Are stocks now poised to buck the historical trend and get back to gains as we turn the calendar to September? New Edge’s Cameron Dawson gives he expert market outlook. Plus, CIC Wealth’s Malcolm Ethridge and Lo Toney from Plexo Capital break down the tech trade. And, Bitcoin surging today. Kate Rooney explains what is behind that big leg higher.

Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. And this make or break hour begins with the market's newfound momentum and two big questions about it. Is it real and can it last? It comes with stocks on the rise again, just as a tough month about to end. Here's your scorecard with 60 minutes to go in regulation. We're green across the board. Some pretty good gains to the Dow getting a big boost today for the likes of Verizon and Intel Goldman Sachs as well. Apple also higher. The company announces a new iPhone event a couple of weeks from now. And speaking of Apple tech outperforming today with several of the biggest names in the index, seeing nice gains.

Meta and Microsoft, Alphabet, NVIDIA also higher. And how about another big jump for Tesla? Look at that. Almost 7 percent interest rates. Good part of today's story, too. A couple of key reads on the economy came in a little lighter than expected, and that pushed yields lower almost across the board. Ten year right now at 412. It takes us to our talk of the tape. Is the correction over? Was that it? Our stocks now poised to buck the historical trend and get back to gains as we turn the calendar to September. Let's ask Cameron Dawson, the chief investment officer for New Edge Wealth, here with me at Post 9. Welcome back.

So how about that? Yeah. Are we finding our momentum again? Well, I think that it is very a healthy sign to see this broad-based participation in the upside of the market. It is remaining to be seen if we can get through September unscathed. Our base case is that this will be in that short and shallow category, meaning it wasn't the start of something more nefarious as we looked at August. You mean the correction? The past correction that we had. We weren't expecting it to look like 2022, for example,

the beginning of something, because it wasn't ever about growth. It was about interest rates. It was about valuations and positioning. So that would say that seasonality likely means during this sideways chop. Does it mean we return to that up into the right market of May, June and July? Maybe not, but that's very different than expecting a big, deep drawdown. I think you were looking for a little bit more of a drawdown than we probably got, though, from our last conversations. You know, once we started to look a little edgy in the market, it appeared that maybe, you know, momentum was lost, rates were going up, that we may have a little bit of a problem, even if we, to your point, you know, still weren't predicting a big decline.

Yeah. And that we never really saw breadth wash out either, meaning that we saw some movement in the participation of things like number of names under the 50-day moving average, but they never got to the place of being fully washed out, which would suggest that, yes, we have seen markets bounce back. We've not made a new high. We've not surpassed that 4,600 level. It will be interesting to see how we interplay with that level. If we can get past it with momentum, then it's a very different story than if we bump up against it, roll over. Maybe you are still stuck in a little bit of a churn digestion. Why have we hung in there? What's been the determining factor as to why this

correction that we started a month thinking a lot about and the month thinking, well, okay, maybe that was it. Earnings, earnings, earnings, meaning that earnings expectations and revisions have actually gone higher over the last three weeks, not lower. You started the month at $218 a share for 2023. Now we're at $222 a share. You've seen a similar move higher in 2024 earnings. A lot of that is because economic data is coming in better than expected. Look at economic surprises, really strong over the last three months. That has started to roll over, roll over more today with the weaker jolts data. But I think as long as earnings hold up and you see this continued revision cycle upward, the market can remain supported.

The risk is that once you get into September, you get downward revisions on earnings. That's what I hear more people talking about. Now, maybe it doesn't come to fruition. To your point, that's going to be key. How about yields? Well, yields did back off today. And I think that does explain the leadership that we had, tech and growth doing better than the rest of the market. I think that the trend in yields for at least the 10-year is still higher. That is one of the few areas of the market that has a very resolute uptrend at this point, which means that I don't know how much I would count on a drop in yields in the very near term to be the ultimate boost and driver for this market.

The thing that's been so interesting about 23 is high yields have not mattered for valuations or for the market. So how much will they matter if they start moving in the other direction? I don't know. Why would they start moving in the other direction higher? And what do you make of the move lower today? What were we just at, like 433, 431? Here we are 412, a couple of days. It does speak to how positioning is very one-sided within the bond market, meaning we have these very short futures positionings. Of course, some of that can be offset by positioning in other places. But obviously, what we have is an environment where yields are very sensitive to incoming data. Today was immaculate in the jobs data. This idea that you could see job openings continue to come down

and not have it yet show up in real job activity, not initial jobless claims popping higher, that will remain to be seen on Friday. We think the most important thing to watch is average hourly earnings. If that remains elevated, that will likely reverse these bets where the bond market started pricing in less interest rate hikes by the Fed, meaning you'll have that upward pressure again and maybe this yield move continues to drift higher. I mean, we need the data to be good. We just can't have it be too good in a sense. And that's what the JOLTS number was today. It was a little light. It still showed, you know, you've got a good labor market. Well, and I think that the big question for jolts going forward is that is it still a leading indicator? Jolts and quits are usually seen as leading indicator for things like payrolls and

unemployment. We've seen jolts and quits come down a lot. They've normalized back to towards pre-pandemic levels. Do they continue to fall, meaning that they are presaging something more nefarious in the jobs market? Or do we have this perfect scenario where we can see an easing in the jobs market, but no actual increase in unemployment, which is what, of course, the Fed wants. What about tech? Before we turn the conversation and bring in two people who really are in their wheelhouse when we talk about tech. What about your view of a trade that was looking really dicey? Yeah. And I don't know, it now feels like it's trying to get its momentum back and may have.

Yeah, we saw tech underperform from mid-July to mid-August, and now it's been outperforming since mid-August. And I think that we do have to ask the question of, can tech valuations move that much higher from here, meaning that they are back near their 2021 highs. That puts the onus then on earnings to drive the upside in tech, just because how much can you move tech that much higher above 2021, which was incredibly elevated multiples without the benefit of earnings growth, which we are seeing earnings revisions higher for tech, just like we are the broader market.

Multiples have come in across the board for the mega cap since the beginning of August till today. Now, obviously, you're going to get that when you had a little bit of the upset in the performance. But nonetheless, valuations have started to ease off a little bit. Let's expand the conversation. Bring in CNBC contributors, Malcolm Etheridge of CIC Wealth and Lo Tony of Plexo Capital. Gentlemen, it's good to have you here today. So, Malcolm, I look at the notes and it sounds like you want to run for the hills. Investors should be looking for opportunities to de-risk.

Why? I think, Scott, today is also giving investors that. My thesis, basically since Q2 earnings season started back in early August, was that investors were going to be shrugging off any positive news that we got out of earnings, even with revisions being slightly positive for some of the tech names that we wanted to hear from. If you just look at an NVIDIA, for example, the day after they reported, blew it out of the water as far as earnings were concerned, had decent revision, had decent guidance going forward as well. And the market responded still, the S&P, I mean, specifically with the sell off. So up half a percent when the market opened after NVIDIA, down one and a half percent. And it's because until we get some clarity following the next CPI report in the middle of this month and then whatever the Fed is going to tell us in September, the market is probably going to continue to trade sideways, looking for that specific guidance from the Fed of whether the end is here or they're not ready to declare mission accomplished.

And so I just think NVIDIA has almost gotten all of it back. And if anything, the stock was up 50 percent in three months going into the number. I would think that you would think that a bit of a cool down, if this even was one, was good. NVIDIA was supposed to take the entire market with it, though, as far as a rally is concerned, following such a bang-up earnings report, and it didn't. The market has been pretty flat in response to NVIDIA coming out with what should be celebrated and be the next leg of a bull market if the bulls are in fact correct, that the wave is still continuing, and those people like myself who are saying it's time to, you know, look for the exit ramp, de-risk a little bit here, and kind of cool your heels a little bit,

I'm supposed to be dead wrong. But the market is kind of confirming that thesis. All right. Lo, what do you think you know it's interesting i do agree with a couple of points that were made by my other panelists and in particular the market without question was priced to perfection we're starting to get back to that point now i do think we need to to pause because look the fed has to come back and make sure they maintain credibility looking ahead. So even though the market seems to be responding favorably so far to the jobs report, I think also just thinking about this thesis around a soft landing, the ability to be able to kind of still have the jobs pull back a little bit in

terms of that adding heat to the market, while still we've got one and a half jobs available for every unemployed person. So we're at a good stability point. But without question, you know, the Fed has signaled that, you know, more cuts, if more cuts are necessary, they will take that action. So I think the market just needs to see where the Fed is going to move. And to the comment just made, we do need to see performance to justify a lot of these valuations. Well, I was going to ask you about valuations. I mean, let's take NVIDIA, for example, though. The beginning of this month, NVIDIA traded 48 times forward. Today it's 34. A lot of people talk about these bloated valuations for stocks like that. Oh, it's so expensive. The 10-year average for NVIDIA is 34 and a half. So we're

right back to the historical 10-year average for a name like that. And so then that poses the question of was it overvalued to begin with? Look, I'm a big bull on NVIDIA, all of the magnificent seven. I believe that all of the hype that we're seeing around AI, which is largely driving NVIDIA, I think in hindsight, if we look ahead five, 10 years, we might even see that we had underhyped where we will land in the future. But for the moment, you know, I do think that it's fine to be able to continue to see the performance that we expect, continue to understand these macro conditions and how the Fed will make moves as a result of them.

Malcolm, you have a lot of these stocks. When you say de-risk, would you de-risk from these? Well, as you might recall, I was actually selling, you know, trimming my positions over the last couple of months as we were getting these higher highs and notching these, you know, record prices, I've been taking chips off the table preparing for the opportunity to scoop these names back up at a bit of a discount whenever the inevitable downturn does come. I'm still in the camp that believes that the yield curve inverting is an ominous sign that just has yet to be proven true. And I also believe that the Fed is going to say something at some point that lets folks

know that they are dead serious about tightening until something breaks. So I believe that September we'll probably find out that there's another rate hike in the cards for us. If it doesn't happen in September, definitely in November. And I think those things together are going to provide folks like me who love these tech names an opportunity to come in and scoop them up at a bit of a discount compared to what I'd have to pay to own them now. You had the discount, right? They were on sale by some respects, right? They had corrected.

You don't think you missed that great opportunity? Because here we go talking about the NASdaq once again as the outperformer the one i will give you that i missed flat out as palo alto networks i really wanted to scoop that one up when it got closer to what 208 207 something like that and i got greedy waiting on it to get to 203 and completely missed the trade but i will say i don't think that today's rally is indicative of anything other than the pop that we just saw in Coinbase. I think that the Magnificent Seven, specifically Tesla and Nvidia, are directly linked to what's happening with the price of Bitcoin. If you look at how Bitcoin has been trading the last five or six days and compare that

against the Nasdaq, I think traders are buying both of those simultaneously. And so we're getting an artificial pop in Bitcoin because of good news on the court ruling. And I think you can make a direct correlation between a retail trader specifically buying that name as well as NVIDIA, as well as Tesla. I'm not even talking about just today. I mean, the Nasdaq's up three and a quarter percent over the last week. Cameron, to you, can this market take that next leap forward and avoid a historically bad month of September without tech? No, no, I think tech is really important, not just because of its size, but of course, for the psychology of the market. So having tech participate in the upside would be very, very important for the market to break into new highs. It does not mean that we have the

narrow market that we had going into this year. It's really good to see the broadening out. So things like industrials participating, energy doing better, that's more supportive of the market having a sustained move higher. But I do not think without tech, you can see a break into new highs that be sustained. You know, the other thing, Malcolm, I couldn't help but think about when when I was thinking about Alphabet today is I think we all remember because I think it happened on this show after the Microsoft and OpenAI investment. You were you were an unhappy Alphabet shareholder and you said, I'm thinking about selling this name. They dropped the ball. They gave up the lead yada yada yada you know where i'm going with that i looked back okay alphabet since the chat gpt day is up 37

microsoft since the chat gpt day is up 36 and a half percent year to date alphabet up 52 microsoft up 36. in other words the death of alphabet's ai aspirations were greatly exaggerated malcolm i can't believe it took you this long to uh to beat me up on that one i haven't seen you in a minute i was on vacation and i'm glad to see you were thinking about me on your vacation but what I will say is I did at least take the gains from selling out of that Alphabet position, which I will readily admit I got completely wrong. At least I could say I was too early. I still believe that there's no way that they can compete there without cannibalizing their one true business. But at least I got the next trade right, which was to buy Schwab and buy

shares of SoFi with the proceeds of that trade. But I will concede to you, I completely was way too early with that one, making that declaration when I did. Lo, did we write off Alphabet too soon in this whole arms race, which it clearly is? And they weren't going to just, you know, step aside and let Microsoft take everything, were they? Not at all. As a Zoogler, I know how competitive that environment is. And even though they might have misstepped and not taken advantage as early as they should have, when these jolts happen from a competitor or with the tech shift, they always seem to be able to come back. But, you know, I think to that point around their core business, we have been waiting to see how these other bets will play out. I think the good news is, you know, when we look

at the shift that we're seeing with AI, I think there's still enough upside in Alphabet's core business to take some of the pressure off and let the new bets begin to ripen and develop as well. Yeah. Do you feel like, Lo, that we're at a turning point in getting back to some semblance of a public offering market again? We're going to see IPOs. You've heard of some, Arm and others, and what that's going to mean for your space? Yeah. I mean, this portends something very serious so that we can understand how well the market will accept this new environment. We're no longer in the days of 2021 when Snowflake was able to get to market

and really have the shares run up in price. I think we're seeing a much more measured approach taken both in terms of look at Instacart with the additions to the senior executive team, new CEO, new CFO. They were able to kind of pull back and take more than a year to be able to get the numbers into a really good place. So it looks really promising. We'll need to watch for some of the other names. We're a holder of Reddit in the private market. That's one that we anticipate coming. Obviously, everyone's looking for Stripe. That will also be somewhat of a bellwether. And with regard to ARM, you know, who knows how that plays out. But I think what we might see is that that NVIDIA acquisition

looks pretty good right about now. How are you, Cameron, looking at capital markets, the improvement there, and what that's going to tell us about the overall environment for investing? It's really important because it shows you risk appetite. Because what we saw this year is that one of the reasons why IPOs are starting to come to market is because the IPO index is up about 40%. So that gives people who are issuing new stock the comfort that they can come to market is because the IPO index is up about 40%. So that gives people who are issuing new stock the comfort that they can come to market and it will be well received. We still really want

to see beta doing better if we broaden that out to risk-taking. So look at the high beta ETF. That has been underperforming the market over the past month and a half or so. It'd be really important to see that turn higher as well to give a sense that there is a broad risk-taking appetite in this market that could support multi-months of IPOs coming back versus a little flash in the pan. That would mean that the Fed would presumably, Malcolm, have to be done or close to done. It doesn't sound like you're convinced that they are. And I'll let you make the last comment here for our conversation about how much that matters to your perspective and what you really need to see to change your overall perspective,

which sounds pretty negative to me. Yeah, I'm negative as long as Jerome Powell is leaving it out there that we're going to remain data dependent, data dependent, data dependent, because as the saying goes among poker players, Scott, you can either play the man or you can play the cards on the table with the man being Jerome Powell and the cards on the table being the economy. I'm inclined to believe him completely when he says that getting to 2% is paramount. And I believe that he, as a student of history, is determined to prove that he's way more Vogler than he is Burns. And so he knows that he has to stay foot on the gas, take the slings and arrows, twist until something breaks.

And I just don't see us as being there yet with nothing having broken significantly enough, save for maybe Silicon Valley Bank. All right. And that was, yeah. And I mean, the Fed was a part of that story of why perhaps we haven't had a larger market problem in that cycle as well. I enjoyed it very much. Thank you, everybody.

Malcolm, we'll talk to you soon. Lo, you as well, of course. And Cameron, we'll see you back here on the desk one day soon. I'm sure of that. Let's get to our question of the day. We want to know, will tech resume its rally and outperform in September? Head to AdCNBC closing bell on X to vote. The results coming up a little later on in our in the meantime. A check on some top stocks to watch as we head into the close. Christina Parts and Nevelos is here with that. Christina. Let's start with PDD Holdings. Jumping today after handily beating analyst revenue estimates, executives said they saw a positive shift in consumer sentiment,

which fueled a rise in demand across several product sectors for the company. This is a Chinese discount e-commerce platform, and they saw a boost from price-conscious consumers. The company and its rivals like JD, Alibaba, have been investing heavily in discounting and coupons to lure customers. Does hurt margins, but shares are up 15, almost 16 percent at the moment. Let's move on to Citi because Citi seems to think the tides could be turning for Verizon and AT&T, upgrading both to buy. They say the wireless environment is starting to stabilize, which helps operating margins. Both stocks getting a bump today. You can see AT&T up almost 4 percent, Verizon up 3 percent.

Verizon, though, still trading near its lowest level in over a decade. And AT&T hit its lowest level since the 90s, just back in July when it was at $13.43, which you can see is not too far off this $14.73. Scott? All right, Christina, thank you very much. We'll see you a little bit later on. We are just getting started, though, right here on Closing Bell. Up next, five-star stock advice.

Capital Wealth Planning's Kevin Simpson breaking down his latest moves in his portfolio. We'll reveal how he's putting his money to work as the summer comes to a close, unfortunately. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. All right, we're session highs for stocks right now with about 35 minutes to go. Dow right now is good for 260. And we're green across the board.

Been a tough August, though. Getting better, though, and the month's not over. NASDAQ surging today. Tech is leading the way. It's still on track, though, for its worst month since December. Here to share his five-star playbook heading into September, Capital Wealth Planning CIO Kevin Simpson. Welcome back. It's been a tough month. It's been a tough month, but you know, I don't know. It's just doesn't it seems to be getting better by the day. Now, I'm not going to suggest to you that, you know, a certain number of stocks didn't have a pretty tough go of it for a period of time.

But those calls, Kevin, that, oh, this is the start of a big correction and we're going down at least 10 percent, if not further. What happened to that? Yeah, I mean, I think the fundamental story still remains intact. If you look at the labor market, the resiliency of the U.S. labor market, the resiliency of the U.S. consumer, I mean, it's hard to call for a big turnaround when anyone that wants a job can find it. I mean, you and I were having a conversation in the spring and you were talking about the consumer and the strength and the expectations of spending throughout the summer. I mean, you nailed it. It was spot on. Same thing's happening with back to school. And I have to imagine that the holiday spending season is going to be just as resilient. So it's hard to call for an economic turnaround when you've got this kind of labor market. I don't know. Like last week, it is a really, really good example of how narratives around this market change. NVIDIA knocks the cover off the

ball. Stock doesn't really do anything in the aftermath. And then the bears say, you see, I told you the market's tired. This is the sign. If the market doesn't respond to great earnings from NVIDIA, that's a problem. Then it was Powell a few days later. You see, I told you he was more hawkish. More hawkish than we thought. Yields go up.

Market's got a big problem. Well, here we are today. And neither one of those things have really come to fruition. Yeah, I can't comment on NVIDIA. I wish we owned it. I mean, what a story, huh? But the comments from Jackson Hole, Chairman Powell specifically, I don't think they were that hawkish. I don't think there was really any surprise there. The problem is, if you're talking about the bear narrative, when are they going to stop raising rates? Are they going to continue to raise rates in face of this inflationary problem and this labor problem? And they might. I mean, they might have another 25 basis point rate hike in

the fall, Scott, but that's not the problem. The problem is that anything that they're doing is pushing back rate cuts, which is where we can really build a thesis for another strong bull market to begin. And on Thursday of last week, the derivatives market priced in the first rate cut for May. Now, after the Jackson Hole speech, that's got pushed back to the end of the summer, probably around this time. So we're talking about a year out before we can have the conversation about rate cuts. Well, we'll probably have the conversation every day between now and then. But the expectation for rate cuts happening next year, it just makes this higher for longer narrative put in place. And that causes the challenge because you could have economic contraction. You could have a recession. You could have a hard landing. I mean, all of

those things become a greater probability the longer you keep rates higher. But the bear case, I don't think, has a whole lot of legs to stand on when you look at how resilient this consumer is and when you look at how resilient the labor market is. Yeah, we're going to keep our eye on that S&P 500, too, over this last 30 minute stretch, see if we can get that 4500 back, too. We'll be interested to see as the market ramps up a little bit, almost 270 on the Dow. So what do we do? What are you doing then, Kevin, in the market? Yeah, I mean, it's been the doldrums of August. So we've been just doing some finesse trading. You and I talked about adding to the Apple position, which we were able to do after a 10 percent sell off. The past few sessions, the only thing we've been able to really pull the trigger on have been some covered call writing, because even though

the vol, the VIX, has practically no pulse in certain segments of the market with certain stocks there's enough news around them that you can get some premium apple because it's a tech stock ups because of the teamster contract and that kind of settling in and merc because of the uh the the the 10 stocks that were the excuse me the 10 drugs that we saw today with respect to the Medicare negotiation. So we had some volatility around those. We didn't sell out of any of the positions, but we wrote calls out of the money very short term over the next couple of weeks. And we're bringing in option premiums that are annualizing out at like nine to 10 percent. So even if we're seeing a stock market that's not moving, we're owning stocks that aren't moving. And heck, most of the value names that I own haven't seemed to move in a year and a half. We're generating premium.

We're collecting dividends. We're trying to fight for every penny, even in a market where you're not seeing a whole lot of movement. And granted, there's a lot of people on vacation and it's still August. But, you know, back to business. We've got a lot of data this week. September starts on Monday. Time to get back to work, right? Let's talk about Apple, a stock that is moving up about two and a half percent today, almost 185. And you use the opportunity of the recent pullback this month, if I recall correctly, to add a little bit to your position, if not buy it back. What are we thinking about it here? We got the announcement today of the new iPhone event in a couple of weeks. What's your thought? I think the stock's fairly valued here at 185. So we did go and we wrote a covered call for 185. So there's a possibility we'll have to take some action there.

I don't think I would let the position get called away. We had been selling it all year into that strength. We did buy it back about a week and a half ago. I was on the show with you. We were talking about it, which worked out well. The iPhone events are super exciting. Maybe the new iPhone 15 will have some revolutionary things, although I'm not sure I'm expecting quite that much out of this phone. But at these levels, you start to get a little bit concerned about the multiples. You've done a great job all week talking about multiples and how, as the earnings have appreciated, these tech stocks don't look as overpriced as they have maybe even as recently as two months ago. But I still think over 30 on that P.E. with Apple makes me a little bit uncomfortable.

So if we see a stock that rallies and runs into that September 12th event, we'll have to make a decision. Either to roll that call up or let the position go. But it's a good problem to have. I like it when a stock we own is moving in the green. It is, lastly, the one mega cap name that still trades at a pretty elevated level above its 10 year historical average of its P.E. as well. So even as it's come down a couple of points, it's still rather elevated above what has been around 18 historically. Yeah, for over the past 11 years, when we've seen this elevation in the P.E., we've sold the stock, I mean, completely outright. So I've been out of it

completely eight times over the past 11 years. And that and then we're kind of knocking against that ceiling right here. I like the stock. I mean, I just love what they're doing in terms of every aspect of the business model, the share buybacks, the free cash that they have on hand. I mean, it's a really special company. If we sell it at $185 after bringing in a dollar premium or out at $186, there would be the probability, the possibility that the stock came back down again, that we have an opportunity to reenter the position. And that's happened down again, that we have an opportunity to reenter the position. And that's happened quite frequently. And we'll see where it goes. But we'll

be talking in two weeks to get a sense on Apple. Yeah. Yeah. We'll see you soon. Kev, thank you. Kevin Simpson joining us once again on Closing Bell. Up next, we're tracking the biggest movers as we head into the close. Christina Parts and Nevelos is standing by with that. Christina. Well, even though Best Buy is dealing with a more cautious consumer, shares are jumping. Can you guess why? I'll explain next. We've got about 25 before the closing bell.

Christina Partsenevelos has a look at the key stocks that she is watching. We're right around the highs of the day, Christina. We are, and that's why I want to start with a positive name, and that would be Best Buy after earnings and revenues topped estimates. However, there's some red flags there. The big box retailer did trim the higher end of its full-year sales outlook, with the CEO saying the company expects this year to be, quote, the low point in tech demand.

On the earnings call, executives said the back-to-school season has been better than expected. They're optimistic that sales trends will continue improving, so that optimism helped push up the stock price about 4% right now. Shares, though, here's the downer news. Shares of NIO under pressure today after the Chinese EV maker reported a wider-than-expected loss and a revenue miss, a broader economic slowdown in China, which is hitting so many Chinese names, and the company's transition to a new vehicle platform, were part of the reason losses more than doubled from a year ago or the year ago period.

Shares are off their worst levels of the session, but still down 2 percent at ten dollars and eighty one cents. Scott. All right, Christina, thank you very much. Christina Parts and Nevelis up next. Stocks rallying as we head into the final days of August. Truist Keith Lerner is back with his forecast for stocks, how he's playing the recent volatility Dow good for near 270.

Watching the S&P 500 as well, which is looks to be back above 4,500 or right there on the doorstep. We're back on closing bell after this. Bitcoin shares seeing a pop today. We'll drill down on that as well. We're back. Today's rally eating into some of August's losses. Our next guest says the risk reward is, in fact, improving. Not enough, though, to play offense just yet. Let's bring in Keith Lerner, co-CIO and chief market strategist at Truist Wealth.

Welcome. Why not yet? What are we waiting for? Oh, great to be back with you, Scott. So we put out a note last week during the correction that said we saw the move down as a healthy reset. So our advice to our clients last week was if you're underweight equities, use that as an opportunity to increase equities towards targets. Markets went from the most overbought we've seen this year to the most oversold since March. The good news is it's responding, right? You want to see if you get an oversold condition, does it respond? And we're seeing that. And at the same time, we've seen

valuations come in still far from cheap, but we're seeing earning trends or forward earning estimates at a 52-week high. And so altogether, I think that's a positive, Scott. But I still think there's some challenges that lay ahead. I just think that things got overdone. And as far as the overall market, you have to respect the underlying trend is still somewhat higher. So that's how we're looking at things today. I mean, there was a point, I don't know, a couple of weeks ago where it felt like the trend was broken and that we were going lower. Now that the market's back up, now here we're hearing these calls that, well, the trend's still up.

I mean, it was a different story not two weeks ago. Yeah, well, if we looked at our note from last week when the market was going down, we actually said that was an opportunity. And our title was, this is a healthy reset. Because what happened coming into August is you had high expectations, right? The economy this year has surprised to the upside,

earnings have surprised to the upside, and inflation has been better than expected. So what you saw is you saw a lot of optimism coming to the market, which you're bringing up, and the bar for positive surprises became too high. That's why August has been so much challenging. But in two weeks, before this rally that we've seen the last couple of days, we saw all of that reset, again, a healthy reset. And that's why we think things are overall fine. I still think it's going to be a choppy move forward, but in a higher range. And then when you're thinking about equities overall, there's still relative opportunities. We're still seeing communication services today, looking at a new fresh relative high to the overall market. You're seeing discretionary

act somewhat better. So there's still opportunities. One other thing, Scott, outside of the equity market, I know that's where we tend to focus a lot, just this week within our fixed income portfolio, we added to longer-term bonds as yields got to 4.25. You know, of all the things that have surprised to the upside, which you mentioned, the other thing and maybe the most important thing and why the market had a bit of an issue, rates, right? Rates surprised to the upside, maybe not so much in moving up, but in the magnitude and speed in which they did. And that was upsetting to the market for a bit. That's right. And I think just having some stability and today, the big part of the rally today, we have that jolts number that comes in weaker than expected. Consumer confidence

a little bit weaker. But the Fed, the market's looking at that as, hey, the Fed can ease off a bit. And the 10-year is coming down. Look at the two-year Treasury, the most sensitive rate to the Fed funds futures. And you're seeing that come down double digits today. So I think that's why we're seeing this overall rally as well. But again, I mean, the picture right now is, I think, modestly positive. We have inflation that's come down somewhat. Valuations corrected a little bit. Sentiments come in. And from a technical basis, what you're seeing, of course, the S&P and technology stocks and the Nasdaq, because you're breaking above the 50-day moving average. So that's wildly looked at. And I

do think we make a run at least closer to that 4,600 level, which was where we peaked out a few weeks ago. Yeah, right on the doorstep of 4,500. So we'll see. Keith, thank you. We'll see you soon. That's Keith Lerner. Good to be with you. Of Truist.

Last chance to weigh in on our question of the day. We asked, will tech resume its rally and outperform in September? That adds CNBC closing bell on X. The results after the break. All right, the results of our question of the day. We asked, will tech resume its rally and outperform in September? And the majority of you said yes, in fact, it will. Two-thirds, as a matter of fact.

Speaking of tech, Alphabet shares rallying. We'll tell you what has the tech giant soaring and what it could mean for the rest of that sector. That and much more when we take you inside the Market Zone. This is the Closing Bell Market Zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of the trading day. Plus, Deirdre Bosa on the rally in Alphabet shares. Kay Rooney on the court ruling that has sparked a Bitcoin surge today. Michael, I turn to you first on the doorstep again of forty five hundred on the S&P. And we're just off the highs of the day overall. Reinforces the observation all along the way all month that we were in mostly routine

pullback zone until Until further notice, it was probably mostly just a little bit of a retrenchment on the valuation positioning technical front. Now, we are only at a two week high in the S&P 500. You haven't necessarily set aside all the challenges, but the sensitivity to bond yields was underscored again today, which shows you the main thing we were afraid of, I think, is yields going runaway on the upside, choking off growth or forcing the Fed's hand because inflation was going to be the main story. I don't really think we should be wishing for a run of softer than expected economic numbers. Yes, we got the sort of loosening of the labor market evidence today. That was comforting. That takes a little bit of the pressure off the Fed side. But I don't think

we want the Fed to start cutting. Fed starts cutting. Then you're on recession watch historically. Now, you can cut and still orchestrate a soft landing. I just think we're OK where we are. We never got super washed out, though. So I'm not sure we really pulled the slingshot back that far to the point where we're going to shoot higher in the market right from here. But you've definitely knocked over some of those roadblocks ahead of us. You know, we got above this little downtrend line, the 50-day. D. Bosa, I'm looking at Alphabet up near 3 percent. All that chatter. Boy, we remember it well. They lost the race in AI and it's Microsoft and Nvidia's game and everybody else is playing for third and after. Meantime, Alphabet's had a better year

than Microsoft from a stock point year to date and from the date of that GPT announcement. And Scott, we also thought that maybe the AI hype cycle calmed down a little bit, but I think what today showed us is that it is still intact. Now, as part of its next event here in San Francisco today, Google had a suite of AI announcements, including pricing for AI tools for Gmail customers, 30 bucks a pop, same as Microsoft's Copilot, which when it was announced in July, sent its shares to fresh highs. Now, after Microsoft later tempered expectations, you might think that markets would like to see some more uptake first, but nope, Google shares, they are higher on that pricing, as well as expanded or new partnerships with NVIDIA,

GM, Ginkgo Bioworks. Ginkgo Bioworks, by the way, up more than 20% today, suggesting that this enthusiasm over AI still very much has the ability to drive markets and not just the megacats, but some of the smaller names as well. Now, how long this lasts? Scott, that's still anyone's guess. We've been saying for months investors want to know how all of this computing, all of these NVIDIA chips lead to actual applications. For now, however, markets seem happy to trade on that future promise. It has been a ride.

You put it well, Scott. Yeah, I mean, Mike's here as well, D. I mean, it feels like this quiet move that Alphabet has made because it was all about Microsoft and then it's been really all about NVIDIA. And that stock has done awfully well. Sure. I also think that, you know, Alphabet is a stock that is priced and valued in such a way that it doesn't require you to make heroic assumptions about how grand the ai opportunity is you know for this year this calendar year earnings estimates are up like 10 in the last five or six months it's trading at 21

times forward earnings barely now uh back to a premium above meta the point is there's a lot going on in the here and now in terms of earning support where this can be just an accelerant or a kicker down the road. So this also argues against the we were in some kind of an AI bubble a couple of months ago. Yes, you had a lot of enthusiasm. Maybe some stuff got mispriced, but we didn't see an IPO rush yet. And stocks like Alphabet and Microsoft, yeah, sure, they were getting a little bit of a tailwind from it, but it's not as if they got to silly levels in terms of absolute valuation. And by the way, an important interview coming up, an exclusive, in fact, with Google Cloud's CEO. That's in overtime and it is just a few minutes away. Don't miss that. Kate Rooney, to you. Boy, I'm looking at grayscale Bitcoin Trust today up 17 percent as

we speak in this battle with the SEC. Yeah, that's such an interesting investment vehicle, Scott. So that Grayscale is the company at the center of this, but they have this GBTC that really was the first publicly traded vehicle for Bitcoin and the way to get exposure. At one point, it was trading at a huge premium to Bitcoin. In the past year or so, it's actually been trading at a discount. So you see that try to kind of catch up to the price of Bitcoin. So that's sort of the dynamic there. But to set the stage a little bit, Grayscale, this company we're talking about, had multiple attempts to convert that $20 billion Bitcoin trust into an ETF. They'd sued the SEC. This D.C. Court of Appeals today siding with Grayscale in that lawsuit against the SEC.

And the judge essentially is saying that the SEC's decision was hypocritical. They called it capricious, arbitrary. They said that the commission failed to adequately explain why they approved the listing of two Bitcoin futures products, but they wouldn't approve the Grayscale proposed Bitcoin ETF. They say that was unlawful. So this ETF approval, it's got mostly about optics here. It's really seen as the final step to getting crypto into mainstream finance. It would get the world's largest asset managers on board. You got BlackRock and Fidelity among those that are now in line still for a Bitcoin ETF as well. And it's seen as this way to really broaden out the crypto investor base by unlocking some exposure to Bitcoin and brokerage accounts.

Although Fidelity now offers it and so does Coinbase. But it's seen as this way to really, really broaden it there. And then lastly, the spot Bitcoin ETF is considered a bit more accurate in terms of tracking underlying prices than a futures ETF. So a lot of excitement around that. And you can see it in Bitcoin prices, Coinbase, a lot of the other crypto related stocks. Yeah, no doubt. OK, Rooney, thank you on that. I want to talk about as we hit the two minute warning and now we're under that the one sector green for the month, albeit slightly, is energy. I keep hearing more calls like this is primed. A lot of stocks are above their 50 and 200 day moving averages.

Like they are primed for a bump here. Yep. People love the charts and for decent reason. And, you know, energy mostly held on to the big year it had last year, 60% gain. Continues to outperform crude. So it feels like this mix of, you know, obviously good chart support, but also there's a cyclical element. And if nothing else, the oil and gas staying range bound keeps you comfortable with the cash flow figure. So everything feeds together. I think more broadly, one of the things during this little

pullback we've had in the broad market is you didn't see cyclicals buckle against defensive. So it wasn't about worries about earnings growth and worries about the macroeconomic cycle. If anything, it was the opposite. So that's one of those things in favor of this was just mostly a decent little pullback to get valuations and sentiment off the boil. I'm not sure if it's fully accomplished, but that has been the case. Credit markets, of course, also ratified that point of view so it also we have the broadening of the rally which is also in place yesterday and today could be back to back 80 percent upside volume day from the stock exchange some people say that's a pretty good sign of demand the overall

volumes are low we haven't really seen a momentum stampede into the market just yet some big events to still come this week pce job support jobs report, but a pretty resilient market. Now it's going to go out near 300 in the green. S&P bumping right up against 4,500.