Closing Bell - Closing Bell: Market Reading Powell Correctly? 8/22/25

Episode Date: August 22, 2025

What exactly did chair Powell mean to convey in Jackson Hole this morning and is the market interpreting his message correctly? We discuss with the Wharton School’s Jeremy Siegel, Neuberger Berman��s Shannon Saccocia and Metlife Investment Management’s Drew Matus. Plus, Randy Kroszner – a former Fed Governor – tells us what Powell’s speech might mean for the upcoming September meeting. And, HSBC’s Max Kettner helps us break down the final crucial moments of this busy trading day. 

And welcome to Closing Bell. I'm Mike Santoli, in for Scott Wapner. This make-a-break hour begins with stock stampeding toward record highs. The Bulls re-energized by hopes of a rate cut in a few weeks, thanks to Fed Chair Powell's speech, nodding toward the risks of a weaker jobs market. Let's check the scorecard with 60 minutes left in regulation. Take a look at the S&P 500 on track for a fresh closing record. It's been hanging around these levels. It's up more than a percent and a half, maybe 10 points off the high, about 90 percent of all volume to the upside here. With the Dow pacing for what would be its first all-time high since last December, we have not closed about $45,000 this year.

But the real action is in the more cyclical and racier parts of this market. You have the small-cap Russell 2000, quite a day, up 3.7 percent right now. Banks, other high beta stocks, also melting higher as the rate cut. textbook would suggest you see the financials up 1.7 percent and the high beta stocks the most volatile aggressive ones up 3.4 percent get a check on the bond market where two year yield excuse me have rushed lower to price in cuts sooner than later the 30 year yields been more of a subdued in their move so that further steepens the yield curve which brings us to our talk of the tape what exactly did chair Powell mean to convey in jackson hole this morning and is the market

interpreting his message correctly. We turn first to our Steve Leasman in Jackson Hole to help answer that, Steve. So when I see markets move in a dramatic fashion, so obviously in response to something like this from the Fed chair, it means some folks in the market had doubts we were going to get exactly this type of a signal. What are we fixated on? Is it as simple as that payroll report on August 1st was bad enough to tilt the bias within the Fed?

Yeah, I think that's right, Mike. And I also think the comment by Jay Powell that he did not see the employment market leading potentially to inflation, adopting an idea that's been behind Fed Governor Chris Waller's support for a rate cut. So he thinks that because of the softness in the job market, that the tariff price increases will not lead to broader inflation in the economy. He did, I don't know if it's quite a pivot. Let me just tell you, first of all, two comments that I've heard. I haven't canvassed everybody here, but two comments that I've heard in the hallways. One was that they were surprised how dovish or clearly dovish they thought Powell was. And the kind of offset to that is they were surprised how dovishly the market took.

This is from another person. How dabbously they took, the market took the comments by Powell. So those are two ideas. But still, I think where we're at right now is I'd say this, Mike. September, a rate cut is September's to lose at this point with the question being, will the August data support that September rate cut or will it take it away? I think that's where we're at right now. I think the odds on bet, the default position now, is a rate cut in September after the chair

has spoken today. It's interesting, Steve, because when you put together those two responses that you mentioned, one essentially explains the other, right? So if you thought that his comments were a little bit more doveish than we were led to expect or maybe had reason to anticipate, then maybe that's why. the market after a week when it was kind of on its heels is simply kind of repricing back to where we assumed the rate outlook would be, you know, a week or two ago. Yeah, I am also surprised, by the way, Mike, by the market reaction. It's pretty strong as if the Fed, they thought the Fed

was really holding back the stock market. And I think the stock market has been up and going and soaring for a whole bunch of reasons. And I don't think personally, I did not think personally, that the Fed policy was that much of a restraint on the economy, but I guess this also provides some downside risk against weakness in the employment market. There are people here who think that the Fed chair is wrong, that the Fed should not be cutting amid a high inflation rate, and most importantly, a forecast that inflation will remain high this year and next. The key here, as Powell said, there are a bunch of reasons he could cut, but there's one reason he wouldn't, and that's if inflation expectations become unanchored.

He made clear that he would not abide a spread of tariff price increases to broader inflation. So that's the one thing that's the caveat. The other reasons are he sees downside risk to employment. He sees these tariffs as one-time price increases, and he does see the policy as modestly restrictive. So I would think of this, at least in the first instance, Mike, as essentially appreciating of a hawkish cut. That is he's maybe going to take moves to get rid of this restrictedness, do it gradually, and kind of see how things progress. And if you do see a spread of this tariff, these tariff price increases to broader inflation, they would stop. Yeah, obviously, all contingent on how things go from here in the future months.

Steve, thanks very much. Appreciate all that context. Let's start to bring in the Wharton School, Professor of Finance and Wisdom Tree Senior Economist, Professor Jeremy Siegel. Professor Siegel. Professor Siegel, it's great to have you here. What do you make of just the emphatic nature of the market response, both equities and bonds? And, you know, especially, I mean, I look at this. I look at the massive breadth. I look at the moves in the cyclical parts of the market and the lower quality stuff. It's almost as if this is early cycle and we've been in, you know, a growth

scare or something as opposed to we've already been at all time high. So how do you read it? Well, first of all, I thought it was very doveish. And I think the market reaction is perfectly right. Listen, a small stock's doing so well is textbook. A small companies borrow at the Fed rate, at the Fed funds plus one plus two. They are very sensitive to those short-term rates, which now we're going to go down. I wouldn't be surprised to see a 25 basis point at each of the next three meetings down to the low threes by the beginning of next year. I think it's appropriate. I've been saying

that for quite well on CNBC that the short rate should be about 100 basis points below the long rate and that does put it in the low threes and I'm not surprised at the reaction and I think this means more upside for equities.

I guess the question is, I mean, you say you thought that Powell was more dovish than maybe we were led to believe he would be. A lot of folks felt like he would not want to close off various options, right? You have Morgan Stanley, Bank of America. A lot of these big firms do not have a forecast for rate cuts this year,

which says to me that there is a relatively robust counters case to the idea that we should be cutting right now. I mean, I realize it's at inflection points. You're going to get this disagreement. But the idea that Powell is perhaps going to tolerate, you know, cosmetically high headline inflation numbers for the next few people. months. You think the market can continue to be good with that, even if, let's say, long rates were to leak higher? Well, first of all, the Fed never forecloses anything, for sure. It always does leave that option open. But it's the first time I really heard him say that the tariffs

are a one-time increase, and implying that as long as that doesn't spread to other sectors, just, you know, as Steve mentioned, that we should not be looking at that inflation and saying that that's one reason to tighten credit. I've often said, you know, tariffs are like a tax increase. Monetary policy says you should not tighten credit when increased prices is caused by a tax increase. And it seems like pretty much he was on board with that notion. He hasn't seen inflationary expectations go up. You know, my belief is that, you know, the inflation data in the future may not be as important, particularly if it comes from core goods and from tariffs and imports.

He'll be looking at the service side of it, and by the way, we know housing is a big part of that service side, and that's been very soft. We see that the prices and homes across the country are finally softened to the point of going down, I think, in a majority of states right now. So housing, even though it does get in a leg in the CPI and the PC deflator, doesn't seem like that big component is going to be a source of that service inflation. So I think that, you know, pretty much that opens the door for those lower rates. And I think that's pretty much the way it should be.

And, I mean, obviously anything can happen. but the market wanted it and they got it and it was more clear than I thought he would be like he was a year ago, a pivot a year ago. We saw a rate now. I don't know if it's going to be 50. I think 50 depends pretty much on what the August payrolls are going to be. If we got a negative print, it might be 50,

but I think 25 is certainly in a bag barring, you know, some sort of crisis we don't foresee at the present time. Yeah, that seems like the safe assumption. And I guess the other element of why we're seeing this springloaded market response, aside from it being a somewhat more clear message about the likely rate cut is the setup, right? We spent, you know, several days with the leadership parts of this market, selling off, rotating around a little bit of perhaps a reason to rethink things like the AI trade and whether, in fact, policy was going to remain as restricted.

as it is right now. So how do you think the stock market continues to digest this in terms of what parts of the market do better? Yeah. And by the way, you know, when we got those PMIs from, you know, S&P Global, that's surprise on the upside, I think a lot of people said, whoa, Hal does have some imagination to say things are not falling apart. I'm going to be data dependent. That did not deter him. I think that that was, that put a little bit more question. I think coming into the week, we thought, yeah, he's going to pivot. And some of the data actually was not that week. We do not see the economy falling apart.

We don't see crazy strength by any means. You know, I think that, you know, Goldman Sachs and others think one and a half to two percent. I think the Atlanta Fed thinks two and a half percent for this third quarter. That's not a runaway economy. and with the supply of labor being restricted so much by immigration and other policies, as Powell mentioned, any diminution in demand is going to result in negative payrolls and rising unemployment. Yeah, and he did have that additional step higher in continuing jobless claim.

So the softness of the labor market pretty much on display against those PMIs. Professor, stick with me. For a moment, President Trump saying he'll fire Fed Governor Lisa Cook if she doesn't resign. Amon Jabbers here with the latest from Washington on this, Amon, what do we know? Yeah, Mike, we heard that threat from the president earlier today. Remember that the president's own administration members have been making allegations of mortgage impropriety by Lisa Cook on her personal real estate holding, suggesting she may have falsified some documents in relation to mortgages that she obtains.

Now, Cook has said she's going to put out information on this. The president today said if he's not satisfied with her resignation, he's going to fire her. Here's what he said. Are you going to fire Lisa Cook, the Fed governor over her mortgage fraud? He'll fire her if she doesn't resign, yeah. She's, what she did was a bad. So I'll fire her if she doesn't resign. So you hear it there, I'll fire her if she doesn't resign.

Now the question, Mike, is under the law, presidents have the right to fire members of the Fed Board of Governors for cause, quote unquote, which usually is, you know, said to understand, the understanding is it's gross negligence, impropriety, something like that, is an allegation made by your own cabinet enough legally to fire someone for cause, presumably that would get caught up in a legal challenge that might go as high as the Supreme Court. We'll wait and see if the president actually does that or if this is sort of more political pressure on Cook to resign under her own volition here, rather than that. than face a long, drawn out, and potentially ugly, personal, and legal battle.

Yeah, obviously, as you say, would probably end up in court, but also create a prolonged moment of uncertainty, Amen. Thank you very much. Professor Siegel, you know, I know that you had thought at one point, given the president's pressure on Chair Powell, that you thought it might actually be helpful for Powell to resign, to in a sense, sort of preserve the independence of the institution. Here you have the president, though, really looking for any lever to pull to exert influence over the Fed. At what point does it become relevant in a bigger way to the economy, to the market, to the market's confidence that Fed policy is being set for the right reasons?

Mike, do I remember correctly? It wasn't President Trump found liable of inflating property values in order to get lower borrowing? terms for his properties last year. Yes. Now, two rungs don't make a right, to say the least, but, you know, I look at this and say, well, are we going to weigh one versus the other in terms of looking at it? Now, listen, she's one vote out of 12. She's not a what I call a big mover that has presses one point, doveish, or, or, you know,

not dovish, and Trump is certainly, with Powell now on the downwards, could say, okay, I can tolerate him. But as soon as I heard this, I did remember that, I don't know if it was a conviction. It was a conviction found of liability for inflating values for favorable loan purposes. So I don't know. I'm just, I thought of that right away, and I'm just wondering, is that enough to fire a Fed governor. Well, obviously, what it would appear to be is that at least presents a pretext to attempt to fire a Fed governor and maybe use that as a test of the president's ability to do that.

You could say she deserves to be removed. Yeah. All right. Well, again, it's clearly the market is considering it not today's business, but let's widen out the conversation. Stay with me, Professor. I will bring in New Burger Berman, Shannon, Secocia, and MetLife Investment Management's Drew Mattis. Shannon, of course, also a CNBC contributor. Welcome to you all. Drew, let me just have you weigh in on what we heard from Powell and how do you think the market is metabolizing what it now expects out of the Fed. Well, I mean, what I heard was Powell say Waller was right and I was wrong. And I think that the markets responding to that. And the markets responding in a way that suggests that, you know, they are not worried about inflation, which is exactly what Powell had to wait for in order to basically greenlight a rate cut. So, you know, with the move towards the market, believing there's going to be a rate cut and you see the behavior of the 10-year yield with it moving lower, that's exactly what the Fed needed to see happen, because if the 10-year yield had moved higher on inflation risk, then it would have really created significant problems for Powell going forward.

And so, quite frankly, he's got to be happy with the speech he gave and the market reaction to it. So you're not, I mean, obviously, we're just showing the 10-year yield is down. Now, it's not down as much as two, so we continue. to have the curve steep and 30s are down even less. You think that's still okay because everything is down on the day? It's okay because that's the way the market should be responding. The worst thing that could have happened was just 10-year yields moving higher, right? So just keep it very simple. Steeping curve helps a lot of companies, certainly helps the financial sector, and helps the economy, generally speaking. And so, you know, the movement we've seen in markets today is actually all positive. You know, what it's not going to do, though, this kind of rate cut story is,

you know, it's not going to have a significant impact on housing, right? I mean, you know, 25 basis points or a couple basis points on mortgage rates is not going to solve the problem that we have in housing, which is kind of a bigger issue. They'll take more to fix. But this is a start, and I think people are responding to the fact that the Fed's not going to be that intransigent. Got it. And Shannon, you know, I was just mentioning, if I just look at the specific of how the market is reacting, and the parts of the market that are leading, it is almost as if there was just this release of pressure from the cyclical and riskier parts of this market. And the market is almost like, okay, we're free to play a little bit here, price out,

anything like recession risk, price in a pretty high liquidity environment with stocks already near high. So how would you as an investor approach that from here out? Well, I was a little bit surprised, but, Mike, I thought this. was a bit more of an asymmetric likelihood today. And so the upside move I'm pleasantly surprised by it, particularly given the fact that we are a bit heavier positioned in the more cyclical parts of the market, whether that's small and mid-cap stocks or some of the more interest rate-sensitive sectors that we've been talking about, whether that's financials in particular. I think the other thing to really think about, though, is that I think what's important out of Powell's comments today, Mike, is I think he also gave them a little bit of latitude around those jobs numbers. So even if there is, you know, a bit of noise in the upcoming jobs report, Powell admitted the fact that we're seeing kind of a shift in demographics and a shift in that sort of curious employment situation that we see.

So I think if you're looking at your portfolios and you're looking to position here, you know, you may be able to take a little bit of that growth exposure off, lean into a bit of this rotation, but take advantage of any volatility over the next couple of weeks because we've got some big data reports before that Fed meeting. And so I would say that probability is going to move around a little bit based on those reports. You know, the other thing, Shannon, you know, it's easy to kind of just gloss past it in retrospect now. But over the last few days, we've been in a little bit of a rethink about the strength of the AI trend. Maybe that's just the story that crops up when the NASDAQ 100 takes a little bit of a dip. But I wonder if that's going to stay with us. We got Nvidia earnings next week and whether, in fact, that means we have the ability to either further rotate out of those stocks or simply just use this little wiggle lower as a buying opportunity.

I think you could see it both ways. I think we're moving out of earnings season, and Mike, as you know, it was a great earning season for some of those large-cap tech stocks and that AI trade. And so after NVIDIA, there's probably a bit of a lull in terms of company-specific information. And so we could use that as an opportunity to really lean into that first interest rate cut in September. Now, our view is that we get another one this year and likely another couple in the first half of 26. But if the market starts to feel as if maybe there's more to come on that, you could continue to see that rotation in through, you know, earning season for the third quarter.

So we have four or five weeks here where I think you could see some additional repositioning and reallocating as people look to factor in this potentially lower interest rate environment. Drew, you mentioned that, you know, quarter point cut and the way that the curve is reacting is not necessarily going to refresh the housing market in a big way. What do you think the working assumption is for the trajectory of the overall economy here, considering we do have this weird stall speed type labor market, low hiring, obviously have a cap-ex boom, but otherwise a little bit uneven. How do you read it from here through the end of the year? So, I mean, I think the best way to put where we're expecting growth to go is we're going to be growing, but it's not going to feel great.

And I think, you know, for a while there are people who were talking about recession. And it doesn't matter if we have a recession. or not, it's not going to feel good. And I think that consumers are going to respond in a way that's, you know, just everything is kind of okay. But on the flip side of that, you know, one of the things Powell's going to get the advantage of is, you know, are most consumers really going to see tariff price increases? You know, if the TV that you buy is only down in price from last year by 30% instead of 40%, are you going to think to yourself, well, that's highly inflationary? or are you just going to realize that the price of the TB went down by a little less than you normally would have?

And so a lot of the tariff price increases are going to occur in low-volume purchases for consumers, which means they're not going to necessarily recognize the price increases that are coming through the tariff channel. Right. Now, if you're buying PlayStation, we know that's a different story because they're raising the prices there. But granted, it's a kind of a diffuse price effect if we're going to get one. Professor Siegel, Shannon, Drew, thank you very much. Really appreciate you helping me break all that down. Intel shares are shooting higher right now. Christina Parks and Nevel is here with what's driving that big bounce.

Hi, Christina. Well, 6% bouts. Hi, Mike, by the way. And they're moving really on mixed signals from the White House. President Trump announced that Intel CEO has agreed to give the U.S. government a 10% equity stake in the struggling chipmaker. Part of discussions to convert Chips Act grants into an equity position. And he was very concrete with that, saying that in the White House earlier,

this afternoon. But the White House quickly walked back those comments telling our aim and javers that talks are still ongoing and key details remain unresolved, including the actual size of any government stake. Intel CEO is expected to be at the White House this afternoon, maybe going on right now, to continue those negotiations. So the bottom line is while there's momentum towards a government equity deal, nothing is finalized. The uncertainty is definitely driving the stock volatility as traders just weigh what a potential government partnership could mean for Intel's turnaround, maybe not necessarily addressing the issues of the manufacturing processes. Nonetheless, the market likes it up 6%, Mike.

Yeah, well, it likes a lot today, but it likes Intel a little more than the rest, it looks like. We'll see if we can get that shaken out as we go along next week. Thank you, Christina. We are just getting started much more on today's major market rally. Plus, former Fed Governor Randy Crosner here with his first take on Powell speech. We are live from the New York Stock Exchange, the S&P up a percent and a half. You're watching Closing Bell on CNBC. Welcome back. We're watching some big moves in the housing space.

Diana Oleg is here with more on that. Hi, Diana. Hey, Mike. For builders, it's all about the mortgage rates. And today, it's the potential for even lower mortgage rates that has the stocks rallying. The average rate on the 30-year fixed fell to 6.55% this morning, according to Mortgage News Daily.

that's the lowest since October. Now, it has been on the lower side all month, but really struggling to break out over the last few weeks. Today's rate is still in that narrow range, but it still has the stocks of Lenar, D.R. Horton, and Pulte all up around 5% so far on the day. Also, the ITB, which is the home building ETF that includes home remodeling companies, also up around 5% on the day. I would note, though, aside from today's quick reaction, if the Fed lowers rates in September, it doesn't necessarily mean more. rates go down. The first big rate cut resulted in just the opposite, in fact. Last September, after that 50 basis point cut in the Fed funds rate, mortgage rates moved a little higher and then really shot up much higher. Now, there are just a lot of other things weighing on those longer term rates, Mike. Yes, absolutely. So that's why we're so fixated on that 10-year yield,

which is down just a little bit today, to your point. Diana, thank you. For more on Fed Chair Powell's speech and what it all means for the upcoming September meeting, we're joined by former Federal Reserve Governor and Chicago Booth School of Business Professor of Economics Randy Crosner. Randy, it's great to have you join here. So kind of characterize your level of surprise in terms of the tilt of Chair Powell's comments and really the implications for, let's say, the next few meetings. So I think they were, you know, he was really in kind of a wait-and-see mode, and he basically said, we've waited and we've now seen relatively muted and we've now seen relatively muted impact of the tariff.

So we don't really have to wait much longer to potentially start cutting rates. Because the labor market clearly has been weakening. That data that came out, those revised data, came out recently, suggests that labor market's weakening. And he said there's really no sign of the tariffs causing inflation expectations to become unanchored. So it's really more of a one-off rather than an ongoing

inflationary cycle. And so I think he's, He's made it pretty clear he's ready to start moving in September. Now, presumably, that runs a little bit counter to at least some members of the committee. It felt like there was a pretty healthy split, a debate about this, about whether there was the luxury of being able to wait longer. Perhaps that payroll report we got on August 1st really did change the equation. I guess if you work under the premise that rates are right now restrictive by whatever, a percentage point or so, then I guess just that one, jobs report means you can overlook more inflation? I mean, it seems as simple as that.

Well, I think they've gotten more data to suggest that the inflation impulse from the tariffs is a bit more muted. And also, they learn more about how the tariffs are being put on, some taken off, some negotiated down. And so rather than the initial kind of a tariff tantrum that we had back in April, thinking that, oh my goodness, tariffs are going to go up everywhere, 30%, we can see it's much more muted. It's going to have more of an impact, slower impact over time. I think that makes Chair Powell and others feel more comfortable. That's not going to lead to inflation, becoming inflation expectations becoming unanchored. And clearly, those labor market, those data revisions, not just for the most recent report, but for the previous few

months, suggests that the labor market really has been weakening. The idea that we are now really going to be leaning quite a bit on inflation expectations as dictating whether, in fact, there's room to continue bringing rates down. I wonder if that becomes a little fuzzy. What specific inflation expectations would you think we'd be looking at? Sometimes, you know, over the course of the big tightening campaign, when the Fed was chasing high inflation rates, it felt as if they were using inflation expectations as a little bit of a cover to say, looks and don't expect us to stop anytime soon. So how does that play out at this point when they're looking to see if they have room to ease? Yeah, so that is the inflation expectations

of the holy grail in monetary policy making. And it's not clear what is the right number to use. Do you use the numbers that come out of the Treasury, Treasury inflation protected bonds, the tips? Do you look at measures of consumer surveys? Do you look at business surveys? And And so it gives the Fed a little bit of wiggle room there. And it's also a judgment call of which way to, you know, which piece to emphasize. But I think what we've seen is that initially there were some people who were concerned that, gosh, the Fed had said everything's going to be transitory a few years ago. It wasn't.

Now they kept inflation expectations reasonable anchored, but gosh, if we see another inflation impulse, are people going to continue to believe them? Well, at least so far people continue to believe them. Yeah, it does seem that way. And, of course, he did caution that even if tariff effects are one time, they don't come all at once. So maybe it is just going to be leads and lags, and you'll have to see exactly how it washes through the numbers over an extended period of time. Randy, I have to leave it there, but really appreciate your time today. Have a great weekend.

Still ahead. We'll run you through the biggest movers in the tech space on the day as we head to break a quick check on the major averages. The Dow is now still up at 845. on pace for a record. The S&P 500 still up 1.5%. Close the bell. Be right back. Up next, 314's Warren, Pye's standing by to tell us how he's playing today's big market bounce.

Closing Bell, be right back. Stocks rallying into the close, the S&P, just a bit off its highs in the last hour here, after Fed Chair Powell's speech at Jackson Hall raised expectations for a September rate cut. do what I mean now to discuss is 314s Warren Pies. And Warren, great to have you here. I mean, the market is acting as if it's a bit of a green light for risk and for cyclicals and for kind of leveraged plays and things like that. Do you buy into that conclusion or is this a fade?

Well, look, our price target on the S&P out the year end is 6,800. We've been more or less risk on through from May. and it's hard to fade. I think Powell gave the market exactly what it wants. So if the market stumbles from here, I don't think it's going to be about the Fed. It'll be more about the economy and growth and some of the other technical factors. But yeah, this is incrementally positive. I think Powell was more doveish than we expected, but this is what the market wanted.

Yeah, and what the market wants, just to maybe expand on that a little bit, has been, it seems, this rate cut on the way. and also for the rate cut not really to be medicine because the economy is still okay. I mean, you think there is more genuine downside risks in terms of growth in the labor market and things like that from here? Yeah, I do. You know, I think there's a real debate going on in the market. That's one of the things we highlighted yesterday in our note to clients is that there are really

two strong camps and stronger dichotomy in views that I don't recall very often in my career where one side thinks that inflation is this massive risk and the other side thinks that the labor market is. We're much more in the disinflationist or labor market growth concern camp. We think there's multiple cuts still coming this year. And when you dig into the labor market, it is weakening. I think just like the influx of immigration last year, obscured. It pushed the unemployment rate higher. And we call that a benign loosening. The immigration crackdown has really contracted labor supply. But when you look at hiring rates, firing rates, wages, job switchers versus job stairs, residential construction employment. I do think there's some, that the labor market is in a

real stasis. It's real stagnant here in one move in the wrong direction. You could be talking about a significantly higher unemployment rate. So yeah, I think that's a valid concern. Yeah, and obviously I think the market is kind of applauding the fact that Powell was not using the low stated unemployment rate as somehow covered to stay a little more hawkish and work against the idea of a cut from here. We've been dealing for, you know, eight days since the S&P was last at an all-time high around these levels with this idea that we were having this rotation out of the big leaders, this momentum reversal, a little bit of a reallocation toward laggards, and maybe the market was trying to kind of get away with,

you know, just using rotation to get away from an overbought condition. Where does that leave us right now in terms of parts of the market that look better and worse position? Yeah, I think that the broadening, everyone wants to believe in it. And it's been, the mega caps have consistently dragged the broader market along for this bull market, really for years. And so this is like a, this is a deja vu, this conversation a little bit that we've all been having. My look at it, even though we're constructive on the equity market out through year end, I just think that September through October is a tough time for markets. If you study history, it's about 50% greater risk during that period of the year for like a 7% pullback. And so, yeah, I think this is a good day.

I think this is a bit of a relief rally after five straight down days in the market. And we want to believe in this broadening. But, you know, one rate cut's not going to do it. Like, the Fed's going to have to kind of capitulate and signal, you know, kind of codify all the other ones. So I think there are more cards to flip over. And there is probably a little more even data dependence in the Fed's path going forward than the price action today suggests. So, you know, I'm kind of cautious when we go into September and October. I think that's a sentiment's pretty stretched.

Positioning's dried up. Corporates aren't buying. And yeah, so I'm a little cautious. I'm not totally buying this move today in the near term. Yeah, no, it's a good reminder. You know, as I say, you know, eight calendar days didn't exactly relieve a lot of those excesses. I know you have a sentiment reading that suggests that maybe we can back off a little bit more. Warren, I really appreciate time today.

Thank you very much. Thanks for having me. All right. Up next, we are tracking the biggest movers as we head into the close. Christina, standing by with those. I'm back. You were talking about Jackson Hole, the comments from Powell sending financial stocks hired today, but it's not just about the banks feel and the love. When we come back, we'll tell you which travel stocks are taking off and why one tech giant is just bucking the trend right now. Hmm. Next.

Under 12 minutes until the closing bell, let's get back to Christina for a look at the key stocks. to watch. Christina. I'm going to stick with the theme because financial stocks are also hired today on those comments from Fed Chair Powell that signal the central bank could begin easing monetary policy next month. So when rates drop, companies and people tend to borrow more, and that's where banks big and small come to play a role. Goldman City, Bank of America, all more than 2% higher right now. But those regional banks also a bright spot. The KRE ETF that tracks the sector, that is up almost 5% right now. And you also have travel and leisure stocks, a big part of today's rally. Airlines like Delta, United, and American hire by more than 5%. Delta, almost 7% higher.

Other travel names like Carnival, Expedia, and Marriott. Also climbing today, let's talk about Marriott, almost 5%. Same for Expedia. But we have a few to the downside. Shares of Intuit. That's after the Turbo Tax and Credit Karma owner reported disappointing earnings forecast for the fiscal year 2026. Earnings and revenue for Q4 did beat expectations. But of course, that was not enough to boost shares. And that's why they're down 5%. Yeah, software remains a little treacherous. All right, thank you very much, Christina. Up next, HSBC's Max Ketner, standing by to break down the critical final moments of the trading day.

That and much more when we take you inside the market zone. We are now in the closing bell market zone. HSBC's Max Ketner is here to break down these crucial moments of the trading day. plus Steve Kovac tracking the biggest moves in the tech space today as the indexes are tracking for new record highs. Max, you've been oriented in favor of risk. You thought the markets had further upside. How does today fit into that, both the Fed policy part and the market reaction? Yeah, look, I think it fits perfectly well. We've been leaning into, like you said, into risk acids. And for us, really, it was a pretty broad-based risk acid overweight. So it was not one

where we'd say, you know what, maybe on the equity side, we've rallied too much, maybe earnings growth is not that good. We should have more of focus on carry. No, for us, it was really broad-based where we said the weaker dollar helps carry assets. It helps emerging market asset classes. I think that is validated by today. There is more downside for the dollar with today's Jackson Hole speech from Peral. So I do think that EM rates overweight is still very much warranted.

at the sort of promptend rallies that we've seen in emerging market rates that can continue. The same thing goes with carry assets, high yields credit. We put almost maximum overweight in the last couple of months. That still is really, really, I think, validated by today. And that can go further, even perhaps with further spread tankening, given that, you know, any, any kind of a little bit of disappointment by growth will be probably met by even more rate cuts. And obviously on the equity type, particularly from a broadening perspective, I think that is really, really probably the next step. All right.

Well, you set it up as a kind of best case scenario for a global diversified investor. We'll see if that holds up. Hang on just a second. Max, want to get to Steve on some of these big tech movers, which some have been in the penalty box for a few days, Steve. Yeah, that's right, Mike. And we're seeing the NASDAQ up nearly 2% here, up about 400 points. Just a lot of optimism going on.

You got Apple up 1.2%. on the back of those headlines also today that is considering partnering with Alphabet to use its AI product, Gemini, to power that big update to Syria, expect to next year. By the way, Alphabet is up about 3% right now. It had hit an all-time high today, intraday. Some headlines that we saw recently there, that $10 billion deal with META to provide some cloud services for META's artificial intelligence, also potential beneficiary if it does become that AI partner for Apple. you see Apple up about 5% or so off the intraday highs after this comments from President Trump about the U.S. taking a stake in the company, although our Amman Javers reporting that that is still

being worked out and not finalized yet. Meantime, we got NVIDIA ahead of earnings next week, up 1.7% and some other notable ones. You got Microsoft up about half a percent breaking a five-day losing streak and meta still screaming up 2%. Amazon up 3% there, Mike. So just a lot of optimism and tech on the back of Powell's speech. Absolutely. Microsoft still stands out as the underperformer. We'll see if that one stays heavy into next week. Steve, thanks a ton. Max, I guess I would ask what you might be looking for for the situation to look more complicated from here. I mean, right now the market is saying we're going to get lower rates from the Fed, and it's not because we have outright economic weakness. It's almost an insurance policy. And we still have,

you know, a lot of the kind of more aggressive parts of this market, crypto, IPOs, meme stocks, et cetera, running. So what does that tell you about the sentiment set up? Look, in terms of the sentiment, actually, the surprising thing to us was how hated this rally really has been pretty much since Liberation Day. When we look at, for example, our proxies of long-only sentiment, long-only investor positioning, you know,

long-only investors really have cut their overweight inequities after Liberation Day, and we're not even back to half that overweight, not even back there. Higher credit, long-only investors have gone downgraded high-year-credit to the most bearish since 2022. They've just turned neutral last month. So again, I think that's been a rally that was very, very much hated. You know, we've seen that obviously in the last three weeks as well with payrolls. When payrolls came back, you know, the last three, four weeks, we've really just spent

our meetings with clients talking about how the labor market is passed. not as bad as it looks. And, you know, Jackson Hall was another sort of perhaps a stumbling stone really for risk acids. And particularly for the next couple of weeks, I think the next two, three weeks, I think there is a lot now clear the next two weeks. You know, let's face it, the next payrolls are only in 10 days. So the next 10 days, in particular, I think we can see quite a proper squeeze hire, again,

across the risk asset spectrum. So you're of the view that, in fact, we may be seeing a little bit of a greater firm and maybe even a re-acceleration in the economy here? Because part of the premise of, you know, the dovesh term from Powell was we're worried a little more about labor market risks. Yeah, but I do see when we look at high frequency indicators, in fact, it is quite interesting to see that high frequency

indicators for the US have sort of shown this front-loading of activity in March, April. There was a bit of a dip in activity in May and June. And really what we've seen in the last two months since the end of June is things picking up, whether that same store retail sales, whether that's credit card spending, whether that visa, for example, spending momentum index is up. Even on the labor market, the staffing index has been up, the weekly staffing index has been

up the last seven, eight weeks. And that leaves also, you know, for example, the Fed's aggregate weekly activity proxy up in the last seven, eight weeks. All of that actually tells us, look, the economy may actually be at least slightly reaccelerating, particularly, perhaps not how it's right, but particularly relative to very, very bearish consented expectations for the third quarter, where once again, just like in the last two and years, these expectations from consensors of a very, very sharp drop in activity for Q3 may not be fulfilled. And that, of course, that upside surprise, that tells us a bit more broadening in

the equity market. Yeah, that would be a little bit of a plot twist, I guess, consistent with what some of the retailers have said about some pickup and activity in July. Max, really appreciate it. Thank you very much. Have a good weekend. 30 seconds until the close. And we are going to be heading for record highs just a little bit of deceleration underneath the surface. S&P 500 is due to be up one and a half percent, just under or just about 90 percent of all volume on the New York Stock Exchange to the upside. Sometimes that's seen as a pretty good signal of momentum coming out of a minor full bath we have over the course of the week. That does it for closing down. It's been in overtime with Morgan Brett.