Closing Bell - Closing Bell: Nvidia’s Record Run & Fed Reaction 6/6/24

Episode Date: June 6, 2024

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

Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the rally's next leg. Whether it hinges more on tomorrow's all-important jobs report or NVIDIA's meteoric momentum, we'll ask our experts over this final stretch. In the meantime, take a look at the scorecard with 60 minutes to go in regulation. Stocks are clearly waiting around for the day to dump tomorrow. NVIDIA, it's taken a breather today. A rare respite in that stock's incredible run.

It's at $1,200. We'll watch it. Several other mega cap names are green, including Meta, Amazon, Microsoft has been. It's dipped negative, though, as we enter this final hour. Lululemon, a standout following its earnings. A nice jump for a stock that's been pummeled this year. You know the story there. It's up 5% today, but it was down 40% year to date

going into that print. It does take us to our talk of the tape. Trim or continue to buy in? Yep, we're talking about NVIDIA because it seems everybody else is too. The Dean Evaluation called it the greatest momentum company ever built. Others suggest it's gotten a little too crazy.

So who's right? Let's ask Joe Terranova, Virtus Investment Partners Chief Market Strategist, a CNBC contributor. He is at Post9. He does have the Joe T ETF in which NVIDIA is the top holding. Absolutely. So what hinges more now on the rally's next leg, the jobs report tomorrow or this continued momentum or lack thereof from NVIDIA? Well, I don't think you could dismiss the premise that tomorrow's unemployment report is going to impact the tape. I think it clearly is.

And I think one of the reasons why it is is because there's so much uncertainty surrounding what the market is going to react to. Does the market know what it really wants? Does it want cooling inflation or does it want the cooling economy? I'm very, I think the market is unclear in that regard. So going in, there doesn't seem to be an expectation in either direction. And I think that's going to create a push-pull dynamic. I think the market will react to the unemployment report.

Now, if the market is to correct, I do think that you have to look towards the Super 6, which is led by NVIDIA, as the source of being support underneath the market. So if NVIDIA continues its momentum, the market's in good shape. If NVIDIA loses its momentum, is the market in bad shape? Is it that binary for one stock? Yeah. Well, all you need to do is look at what the beta score is for NVIDIA. It's above 2.25. That's double what Microsoft is. So we keep making the market cap comparison between Microsoft and NVIDIA. Yes.

And Apple. Well, but that has much lower beta as well. But Microsoft has a larger market cap, but NVIDIA has more power over the market because the beta is so higher. And a lot of the semiconductor names share that very high beta. So NVIDIA is going to really be, the market is beholden to the direction of NVIDIA for sure. Until when?

Like, is that healthy? I think to a certain, I don't see it as unhealthy because... Hinge to one stock? Well, okay, but is there evidence to support it? And the evidence is earnings. So let's look at the last earnings season. You have EPS growth of above 50% for the Super 6. The rest of the market, the other 494, flat EPS growth. So yeah, I mean, there's validity in the sense of you have the EPS growth. Now, yeah, I mean, there's validity in the sense of you have the EPS growth. Now, the bigger question is, what's the trajectory, the expected trajectory of the EPS growth for the Super 6,

in particular for a name like NVIDIA? And you're going to be seeing the deceleration over the coming quarters. You're not going to get that 50% EPS growth. Next quarter, you're probably going to get 25% to 30% EPS growth. So you're going to see the deceleration over the coming quarters. You're not going to get that 50% EPS growth. Next quarter, you're probably going to get 25% to 30% EPS growth. So you're going to see the deceleration. So to your point, at some point, the rest of the market is going to have to participate here in the second half of 2024 to hold the rally. I feel like you really need tomorrow morning's number to be in a sweet spot, right? The market does. Well, I was going to that's where I'm going with that. It's like it can't be too hot because then

the market's going to be like, well, we're reaccelerating again. Yields go up. We're back talking about that. You don't want it to be too weak in a week in which we've been talking about growth scares, rates falling and stocks falling. So there has to be a happy medium somewhere for that number tomorrow that's going to make everybody feel like it's a Goldilocks number. I don't know what that number is. We're going to find out how the market views it tomorrow. But is that the situation that we're in? Absolutely. And, you know, look, I don't think you're looking at the headline. What's the consensus expectation? 185. Goldman's at 160. Most people think the unemployment rate stays consistent at 39.

So you look at the wage growth, and the wage growth is expected to fall. I don't know. I don't think anyone has a clue what the perfect number is. And let's remember something. The correlation between what yields do and what equities do seems to be lost in the last six days. This week, a couple days, right? This week, a couple of days. Okay, well, six days ago, a 10-year treasury was 463.

We're sitting here today, a 10-year treasury is 427. The five-year was near 5%. The five-year is at 471 as we speak. So you had a significant fallback in yields of nearly 30 basis points, and there didn't seem to be the correlation that you would expect with equities. Really what lifted us was NVIDIA this week. Now, what about the idea that Goldman puts forth yesterday that, let's look ahead to the second half of the year.

Let's look ahead to the third quarter. And a, quote, wall of money that is going to come into the market. And therefore, the cost of being short is really high right now or being negative the market. You put all that together with cuts coming later in the year. You really want to be negative the market. I absolutely agree with that. And it's one of the reasons why I've kind of personally been rotating my position around. I've been adding into the areas where I think if, in fact, growth is slowing, investors and speculators will find the premium, and that's in quality. It begins with the super six. You know I bought the XLG. We talked about that yesterday.

I think there's areas of health care that you want to begin to build positions in, whether it's Biotech or Merck or Amgen. These are names that I've bought recently. So I think the market wants safety over the coming month, but that doesn't mean just because it wants safety that it's going to correct. You're coming into what Goldman points out. You've got the two strongest days in the early days of July historically for the market. I don't think you want to push against that. Maybe the broadening of the market hinges on what happens tomorrow morning again. Let's bring in Max Kettner of HSBC Global Research and Marcy McGregor of Maryland Bank of America Private Banks. Good to have you both with us. Marcy, how about that note? I mean, is that what's at stake tomorrow? Maybe more than anything, the reemergence of a

broadening market? Yeah, I think the broadening of the market is going to be really important. If you look at the median forward P of the top five market cap, it's like 31 and a half times relative to the rest of the market. That's around 18 times. So I think we are in the first year of a multi-year investment cycle around generative AI. So I'm not overly worried about these big tech names. But I think the market broadening, especially on the earnings front, is a really big part of the story of how this bull market continues. Now, tomorrow's nonfarm payrolls, I think, are going to tell us we have a healthy labor market that is still normalizing. And I think we saw the hints of that in today's jobs data. Max, size the market up for me. What's hanging in the balance tomorrow? You can look

at that. Plus, I mean, NVIDIA has been the story almost all week. I'm trying to figure out what carries more weight for where we go from here. Not how we got here, but where we go now. Data that's supportive of buying stocks or just NVIDIA's momentum is enough to keep the S&P and the NASDAQ hitting records. Yeah, I think it's a bit of both. I think when we look at the NFPs tomorrow, you know, any number around 150 to 200, I don't think makes an awful lot of difference. Right. So if we get 150 or 200, both of that, which is going to look pretty goldilocks, probably a bit more important tomorrow what's going to happen on the wages side of things. So if wages really do accelerate again,

particularly on a month-on-month basis, that would be a bit of unwelcome news, particularly on the bond side of things, particularly after that rally from the last couple of days and in rates. But overall, I think, you know, it's a pretty, pretty strong likelihood that we're going to get some sort of Goldilocks number tomorrow. And that should help the overall market, right? It shouldn't just help NVIDIA, it should help the overall market really to participate a bit more in the next couple of days and weeks. I do think in terms of the broadening out story, when we look towards Q3 and Q4, you guys have been talking about the earnings of Nvidia and the Super 6.

I think one of the worries that I have from the third quarter onwards is that really the market and consensus are saying, look, by Q3, actually earnings growth of the Super 6 is really going to decelerate and the other 4. 94 are really going to take over right then it's really those kind of names that actually will be finally participating in much stronger earnings growth so the worry i have from the q3 reporting season onwards from october november onwards is perhaps growth is just fine but given that expectations are then for absolutely flipping fantastic growth you know it is probably going to be a little bit too strong. And that means, you know, there's a little bit of disappointment in ahead, but it's too early to position for that.

What about speaking of positioning then, Marcy? Wells Fargo today says industrials, materials, energy, health care, they have good long term growth potential. Their valuations are obviously cheaper than what tech would be. What do you think about that call? Yeah, we have a big overweight right now in U.S. equities over the rest of the world. And I agree with some of that. I like energy for their free cash flow. I like healthcare for the innovation that's happening over the next five years. So it's going to be about large biopharma and devices, I think. Sentiment is really tepid on the space right now, which perks up my interest. I like industrials, especially defense.

We're in a world of red-hot geopolitics. I think international defense budgets are going to continue to rise. But I also think spending on infrastructure is a theme for the path ahead. And then finally, the consumer, you know, talking about the labor market, the consumer is going to go the way of the labor market. Our internal data is showing the consumer is quite resilient, maybe moderating a bit, maybe making choices. But if you look at air travel, Memorial Day weekend set records, broke records, and I think summer travel is going to continue that trend. So the consumer is still out there spending.

So I like discretionary as well when I think about U.S. equities. Joe, B of A today says they have high conviction in large cap value cyclicals and dividends. What are we talking about there? Like banks? You're talking about energy. Industrials? Yes, they are. But look, that's the 494.

And the complexity for the 494 is this. The 494 needs the rate cuts, Scott. And they're going to get the rate cut. In my opinion, the Federal Reserve is going to deliver the rate cut this year. The rate cut. I mean, a lot of these sectors are up pretty decently year to date. We haven't gotten any rate cuts yet. But there has been earlier in the year a very strong belief that the rate cuts were coming. So I think that's been a degree of a catalyst.

More recently, we've called that into question. The 494 needs the rate cut. I think the Fed delivers it. I think the Fed knows they're too restrictive. And if they didn't know they were too restrictive, they wouldn't begin to pare back the pace of quantitative tightening. Let's not forget they did that. But here's the problem with the 494. If, in fact, the Federal Reserve is delivering the rate cut because the economy is cooling too much, that kind of pulls the rug out of the premise that the 494 and the broadening effect can ultimately happen.

Because in that environment, the definition of what speculators are going to do is they're going to go right to where that safety is. And that's unfortunately. So even large cap, even the large cap stocks like that need the Goldman Sachs needs a rate cut. Stocks been trading at a record high. The large cap dividend stocks, The large cap dividend stocks do. I think the universe of large cap stocks, the value large cap stocks that will perform well, is small.

What about small? Speaking of small, what about, Marcy, small caps? Because UBS is talking about those today. They see particular opportunity there. Speaking of needing rate cuts, that has been the view. Don't buy small cap stocks. You can't trust it until you get rate cuts. I would lean up in quality in small caps until we get that first rate cut. And then I think you're going to see broader participation in that small cap story.

We all know the valuation story is in place for small versus large, as well as value versus growth. But I think there's four ingredients that let this bull market continue. And I don't think it's necessarily the Fed rate cut. I think it's liquidity, like you mentioned earlier, Scott. I think it's a solid earning story. And we're seeing positive revisions right now. I think it's going to be bond yields that stay pretty range bound between now and the end of the year. And then I'll bring it back to artificial intelligence. It's the innovation story that doesn't just impact tech, but it's going to impact every corner of the economy. And I think those four catalysts ultimately keep this bull market going, even though I think we all know in an

election year, it's very likely we get some volatility this summer. I would use weakness as a buying opportunity. Max, last word to react to that. Finish us off here. Yeah, I would slightly disagree. I think small caps to me in the U.S. The problem is that we started four or five months ago with very, very subdued growth expectations in the U.S. Recall that for Q1 and Q2, consensus said basically zero percent growth for Q1 and Q2. We're much, much more bullish now, right? Consensus is much, much more bullish. So the problem is, I think, from here on, the upside for growth for the US is really

very limited, whereas, you know, we could be seeing a bit more on the downside surprises side in the next coming months. And the problem with US small caps, of course, is that almost 40% of the companies don't make profit. You've got around 40% of the debt that is on a floating rate. So in the sense that basically, if growth is too strong and yields rally again, yields go up again, you're probably going to suffer through the rate channel. If growth actually starts to be much more lackluster, then again, you're going to suffer through that really weak profitability angle. To me, on the small caps, I'd much rather be looking at European small caps because that is where people have become much more bearish over the last couple of months and really the last couple of quarters, almost expecting nothing. And you're only now starting to see upgrades to consensus earnings and consensus top-down forecasts. So to me,

it's the European growth story that actually in the next couple of months has some upside to price potential. I mean, you didn't even mention the rate cut from the ECB as a potential additional piece of stimulus that's going to help stocks like small caps over in Europe. I appreciate the time. We'll leave it there. Max and Marcin, thanks so much. Joe's going to stay with me because I want him to react to our next story. The FTC and the Justice Department set to open antitrust investigations into the likes of Microsoft, OpenAI and NVIDIA. Eamon Jabbers here with those details. What can you tell us, Eamon? Hey there, Scott. Well, multiple sources familiar confirmed to CNBC that the Department of Justice

and the Federal Trade Commission are in the final stages of a deal now to divide up antitrust inquiries into NVIDIA, Microsoft and OpenAI, several of the most dominant players in this rapidly emerging AI space. The deal was first reported by The New York Times this morning, largely covers investigations into the behavior of the company, as I'm told, not necessarily focused on the mergers and acquisitions by those companies. So two types of investigations there. I'm told that the Department of Justice will look at Taiwanese chipmaker TSMC in any upcoming investigation, according to a source familiar with the matter. Because TSMC has operations in the United States, it comes under the Department of Justice's jurisdiction, even though it's based in Taiwan. Now, that signals that the U.S. government investigative effort will be focused on the hardware and chip

piece of this industry, as well as the software and large language model side of the thing. So according to the terms under discussion, DOJ will take the lead on investigating whether NVIDIA has violated any antitrust laws, and the FTC will lead examinations of OpenAI and Microsoft. What's still unknown in all of this is what evidence, if any, the federal government would be able to produce to suggest that violations of the law have happened here. All of that's still a long way off. Scott, the way to think of this is, you know, we see turf wars in Washington all the time. This appears to be an attempt to prevent a turf war between the FTC and the DOJ

by sort of carving up the different turf in advance of any investigation. We'll see if that works. Seems like every piece, though, of the government perhaps wants a little piece of big tech. We'll see what they get out of it, if anything. Eamon, thank you. Eamon Javers with the latest there. So Joe Terranova is back with us. You do hold a lot of these companies within your Joe T ETF. It's not like we haven't heard regulatory noise before from DC. It hasn't really amounted to much in terms of stock performance. I'm not going decades back to the landmark Microsoft case. How do you think about this?

So you look at, in particular, NVIDIA, and they've been very clear that they've been directing their chips to their customers who will actually be using those chips immediately. Now, does the DOJ find that potentially that violates some anti-competitive law? Potentially. What's the ramifications of that? We know it's most likely a fine. That is not a reason for anyone that is holding the stock to think about paring back the position or moving away from it, nor does it impede the growth potential for this company itself. So, you know, we hear about these stories a lot. I understand the reasoning behind it on the part of the FTC and the DOJ.

This has been something that's been speculated about for several months right now. But I really want to be clear. It's not something that motivates you to move away from the positioning. I mean, but it's moving across almost the entire mega cap space. Right. We didn't even mention Apple in this latest report, but there's obviously news within the last month. Microsoft's a part of of two of these stories. It's not unsurprising. Europe has been investigating, looking into the anti-competitive dynamic of these conglomerates. I think this is a story that's going to stay with us on the other side of the election. Whichever political party takes control of the White House, Senate.

Well, that's the interesting part, too, is that, you know, here we are in the beginning of June. You have an election in November. We're, you know, opening all of this up at a time where who knows what the administration is going to look like, whether it's the same or different come the beginning part of the year and not that long from now. As a holder of these companies, that's what you begin to think about. Because look, Jensen Wang is in Taiwan this past week. We understand the importance of Taiwan. That is where the large supply is coming from for the parts that are needed to build these chips.

So that's the larger question. That's the big concern that a speculator, a money manager has to have when you're looking at holding these mega cap companies is what ultimately happens in Taiwan. We'll leave it there, Joe. Thanks for sticking around. That's Joe Terranova, Virtus joining us here to Christina Partsenevelis now for a look at the biggest names moving into the close. What do you see? Well, let's start with Salesforce getting a vote of confidence from activist investor Value Act, despite missing revenue estimates earlier this week for the first time since 2006. Salesforce board member and co-CEO of Value Act, that would

be Mason Morfitt, increased his stake in CRM, that's the ticker Salesforce, to just under $1 billion. The move was made earlier this week, but was recently disclosed in a regulatory filing, and that's why you're seeing shares up 3%. Speaking of boosting confidence, Instacart announcing a $500 million share buyback program. That's its third buyback round since last September. A buyback, we know, can add some stability to shares that now are unlocked or the IPO lockup period has passed, So that adds stability to those shares. Shares, though, are still only trading about $3.50 above its September $30 opening IPO price. Scott.

We will see you shortly. Christina Partsenevelos, thank you for that. We're just getting started here. Up next, opening arguments in the NFL's high-stakes Sunday ticket trial kicking off in Los Angeles today. We're going to bring you up to speed on the very latest, what's at stake, and the big names that could be taking the stand as well.

Plus, investors awaiting tomorrow's critical jobs report. We talk to a top strategist coming up about what it could mean for the future of this rally. We're live at the New York Stock Exchange. You're watching Closing Bell on CNBC. All right, welcome back. Opening arguments beginning today in the NFL Sunday ticket trial. Our Julia Borsten here with the very latest. Julia.

Well, Scott, this class action lawsuit filed back in 2015 claims that the NFL broke antitrust laws. Plaintiffs argue that the NFL and its 32 teams restricted competition by selling its out-of-market games exclusively through Sunday Ticket, a package which was sold exclusively by DirecTV. They say that this enabled them to charge artificially higher prices for out-of-market games. Now, plaintiffs estimate damages at $7 billion. And because this is an antitrust case, damages could be tripled to as much as $21 billion. Now, the NFL disagrees, saying they, quote, deny plaintiffs' claims and contend that the agreements challenged by plaintiffs ensure that consumers across the United States have broad access to watch competitive and exciting NFL games at various prices. So now we could hear from NFL Commissioner Roger Goodell,

as he and Cowboys owner Jerry Dones are among the big names that are listed as potential witnesses. So, Scott, a source tells us, though, that the NFL believes that it has a strong case. We'll be watching to see how this plays out. Any indication on how long this trial could last, Julia? You know, I'm not sure, but it's really remarkable that this was originally filed back in 2015. We're talking about about a decade, nearly a decade since this was originally filed. Typically, class action suits like this do not actually come to trial. And there was a sense that it was either good. There was originally a dismissal that was then reversed and a sense that maybe it would be settled. So the fact that

it's made it this far, not sure how long the trial itself will last. Not to mention the fact that DirecTV doesn't even sell this anymore. It's sold through YouTube TV, as those of us who have the Sunday ticket package understand full well. And just think about how much the whole media landscape has been transformed since 2015 when this is first filed. Not only has the rights to send a ticket changed hands from from DirecTV to over to YouTube TV, but we're now seeing the NFL stream games on Peacock or now coming up, they're going to have games on Netflix as well. So quite a different landscape than than nearly a decade ago when this all started. Yeah, yeah, yeah. Good points you make. Julia, thank you. Julia Boorstin. Up next,

four factors in favor of the Bulls. Ned Davis researches Ed Kleesold. He's flagging the key reasons why he's banking on more upside for stocks. He'll tell us after the break. S&P and Nasdaq both trying for record closing highs yet again today. Investors bracing for tomorrow's critical jobs report and what it might mean for the fate of this rally. Joining us now, Ed Clissold. He is chief U.S. strategist at Ned Davis Research. Good to see you. You say it's still time to just be bullish, right? Stay bullish? Yeah, there's not a whole lot of reasons to get off what has been so far a really good year. The Q1 earnings season is wrapping up with over 80% of companies beating estimates. It looks like Q2 is going to have an acceleration in earnings growth. We're looking at economic slowdown, no immediate recession.

The excessive optimism that we saw in March has been largely worked off, a little bit crept back into the market as we hit new highs again. But it's not as excessive as it was back in March. And the long-term technicals look positive. Two-thirds of stocks are above their 200-day moving averages. And there's been some short-term technical damage. You want to keep an eye on that. But for the most part, you know, it's a bull market until proven otherwise.

All right. So you say optimism is not as extreme as it was before. Some would chuckle at that, perhaps, and say, have you been watching NVIDIA lately? Well, yeah, there certainly have been pockets. And I think that's probably symptomatic what you see in the technical side as well, that you've seen more people pile into fewer names. The best rallies are the ones that are very broad, that have lots of stocks participating. So if you look at, say, when we made new highs in May in the popular averages,

fewer stocks were above their 200-day moving averages than they were in March. Now, it's still a high level, but you want to watch out that it doesn't become too narrow. These things usually unfold over several months, and you have a few cycles of new highs with worsening breaths. So we don't want to jump the gun here, but it's something we need to keep an eye on, particularly if you get these summer rallies that are a little listful with not a lot of volume that can lead to a bigger correction in the fall. So that's what's on our radar. Does the move in some of these mega cap names make you at all nervous that it's too much?

Or does it embolden you to just be more bullish that this is where the leadership is? This is where the leadership is going to remain. So let's keep riding it. Well, if you look at the earnings that a lot of these companies have produced, they've been fantastic. And what I really like about it is that they've refocused on shareholder capitalism. That is, you've seen a re-emphasis on buybacks, increasing dividends, which we haven't seen as much in the last couple of years. So it's amazing these companies can, on the one hand, put billions into AI and other CapEx, and on the other hand, return so much to shareholders. So the fundamentals support that. So in that regard, it's OK. Again, we just want to make sure they don't become the

only game in town, in which case, then when they inevitably have a problem, there's nothing left for the market to stand on. You know, when you listed some of the reasons why you're remaining bullish, one of the things I heard you say was, you know, the economy is slowing and that that's a bullish signal, presumably because you think that rate cuts under almost any circumstance are good. Well, thanks for asking me to clarify. It's predicated on a soft landing. You know, a hard landing would certainly be a negative scenario.icated on a soft landing. A hard landing would certainly be a negative scenario. And in a soft landing, the Fed would cut rates slowly. That's what they did, say, in 1995, and the market did quite well. When the Fed cuts very quickly, that is five or more

times in a year. That's what they started doing in 2019, 2001, 2007. And that's that we're doing that because something's gone terribly wrong with the economy and they're chasing their own tail, that's what we don't want to see. So a slowdown in economic activity that comes with a few rate cuts, that's a bullish scenario. The other scenario would be really problematic. That's when you get the really nasty bear markets around a recession. So if you feel like playing some defense or barbelling your

portfolio, your favorite defensive sector is utilities. Now, they've been sort of swept up in the AI hoopla. Obviously, what has been a more recent rally isn't a big rally over a long period of time. How do you see that space now? Yeah, there are our sector overweight at the moment for what you just said, that they have a little bit defensive nature to it. If rates come down, the competitiveness of the dividend yield that you see in a lot of utility stocks should look more attractive. But then there's a little bit of an AI kicker. We don't overemphasize that. We're still talking about an industry that's going to grow less than the overall economy, but they're going to be growing faster than they have in quite a long time.

And so if you want to get defensive and you want to add some stocks to your portfolio that maybe could hold up a little bit better during the economic slowdown, that would be a sector to look at. What would you avoid altogether? Yeah, so our two underweights at the moment are real estate. There's a lot of bodies still buried in that sector, particularly on the commercial office side that we'd be cautious of. And then consumer staples, another defensive sector that doesn't seem to be putting up the kind of growth and maybe the low-end consumer

where we're seeing a little bit more weakness in the economy may show up there in some of the earnings. So those are some areas we focus less on at the moment. But so even if, you know, as the consumer gets more bifurcated perhaps, you don't think that staples will do well? Well, yeah, so we want to get a little more granular here. If you look at the one that maybe some staples that have sort of high-end consumers would probably hold up a little bit better. Ones that are focused more on the low-end consumer would be ones we'd be a little bit less interested in. Ed, we'll leave it there. I appreciate your time. Thank you.

Thanks for having me. Coming up next, we track the biggest movers as we head into the close today. Christina Partsinella standing by once again with that. Tell us, please. Scott, we got one stock halted for volatility today and up almost 80% this week, while another plunging on an attempt to help its struggling balance sheet. I'll have those names and more after this short break. Thank you. We'll be right back. A little more than 20 away from the closing bell. Let's get back to Christina now for the stocks that she's watching. What do you see now?

Well, I'm watching a guy right now. His name's Keith Gill, the meme leader behind Roaring Kitty account. He's at it again, announcing a live YouTube chat this Friday afternoon, his first live stream in almost four years. Traders right now online are speculating he's going to talk about his massive GameStock stake, and that's why shares surged over 40% earlier today, were briefly halted, and are now up, what, 42%? 42% because of a YouTube live stream announcement.

Hertz shares dropping about 4% right now in the last hour on a report that it's considering the sale of at least $700 million in secured debt and a convertible note offering. This is all in an effort to help out its balance sheet. Recall that just in April, its new CEO promised to get the company back on track after a failed bet on electric vehicles. Smucker shares heading for their best day in almost two years on better than expected Q4 profit driven by what else?

Higher prices. Like, I don't know if you noticed, Jif peanut butter has definitely gone up. Cost cutting. And lastly, it's acquisition of Hostess Brands. The company said also uncrustable frozen sandwiches are a hit. I've heard they're popular at festivals, marathons, and in some adult lunches at our work. You've heard. OK, we'll take your word for it. Christina, thank you. Christina Partsenevelos. Still ahead, Lyft shares are shifting into high gear. We're going to tell you what's behind that

pop. If the stock's strength can be sustained, that's coming up. The bell will be right back. One of the ways that I think we can combat anti-gay sentiment is first to understand what it means to be gay. For me, at least, it has been a transformative identity because it has taught me how to love people who might not love me, which is sometimes our family. And so out of that core, what I have learned to do is how to turn poison into medicine, to not burn down those bridges and tunnels. Tesla shareholders set to vote on CEO Elon Musk's pay package next week at the shareholder meeting. The company's board chair, Robin Denholm, joined Squawk Box this morning ahead of that vote. The ratification of the pay package is really about fairness, fairness to our CEO. If you look at what's happened at the company over the last six years, tremendous value creation. And he's led that. Obviously, the Tesla team has been instrumental in it.

But if you sit back, shareholders have benefited tremendously. Over $730 billion of value creation. Employees have benefited tremendously. They're all shareholders in the company, so their stock has risen. Customers have benefited by the tremendous innovation. And the only person who hasn't been paid is actually the leader of the company, Elon. For that full interview, you can head to cnbc.com slash ProPIC,

or you can scan the QR code on your screen to watch the rest of that. Up next, we'll get you set for earnings and OT DocuSign at the top of the hour. Everything you need to watch for when that print hits the tape. That and much more when we take you inside the Market Zone next. We're now in the closing bell market zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day. Julia Boorstin's back to share what's behind Lyft's pop today. And Kate Rogers looking ahead to DocuSign earnings out in overtime.

Seth Michael, this day that we've seen ahead of a big one tomorrow morning. Yep, idling kind of in neutral here, which is not the worst thing. It's a really interesting breakdown because you still see new lows for the last couple of weeks being made in treasury yields. Not a lot of traction in those parts of the markets that I've been emphasizing that have come to be beneficiaries of that sort of thing. But it also is an outright panic. I think it's a lot of trimming around the edges. NVIDIA continues, even as it's just down a couple of percent, to consume a lot of the energy of this market. It's right now on pace to trade $75 billion worth of its own stock today. That's like 12 times Apple today. It's 20 times Microsoft. What are we doing here? I mean, it's just obviously it's a lot of the echo effect of all of the public excitement

and mechanized trading and call options. But it just shows you that for now, that fixation is mostly acting as a support. It's also running in parallel to the whole macro story and the way the market's digesting the macro. Isn't it somewhat dangerous, though, that all of that activity is around that one name, as we sort of suggested at the top? I mean, dangerous is kind of a loaded word, but you know what I'm alluding to. I think it's a potential source of instability at the index level when you just have these huge stampedes. At some point, they crescendo and they pull back. Now, the thing is, it's acting in a way so much in contrast to the rest of the market

that index level volatility is so low. So people are feeling very confident betting on continued low volatility. So selling a bunch of index options. I don't think that's necessarily a trap right here, but it is fascinating as a dynamic because the rest of the market is willing to just kind of sit still as it happens. It is fascinating. It's a good word you use. Julia Borsten, tell us about Lyft today. Well, Lyft's year is gaining more than 1% going into the close, but this stock is well off its best level of the session. Today's gains come on the heels of the company's first investor day that was held this morning. The company gave a stronger than expected three-year outlook. Lyft announcing it expects gross bookings to grow about 15% at a compound annual rate over

the next three years. The ride share company also guiding to adjusted EBITDA margin as a percentage of gross bookings to grow about 4% in 2027 ahead of estimates. Lyft's CFO saying, quote, the financial targets we are announcing today reflect our expectations of healthy top line growth and margin expansion as we deliver on our strategic priorities. Now, with today's move, the stock is now up over 50 percent over the past year. Scott. Julia, thank you. Do you have a thought on this one? Well, it's really, there's so many charts that look like this,

because if you want to pull up the five-year, I mean, it was up in the 60s not that long ago. Pull up from when the Fed started hiking rates. Yeah, well, exactly. It actually had kind of crashed into that that point. But yeah, right. The last part of 2021 when it peaked. What is interesting, though, is a lot of them also have these kind of slow, gradual bases that they formed over the course of literally two years. So I think that there's probably something real to the fact that people are seizing on incrementally positive signs fundamentally. It really reminds me of the old, old days when it was thought that Intel had to keep AMD around

so it wasn't accused of being a monopoly in PC chips. Like, Uber kind of needs Lyft to be sort of, not that they're helping them, but the world needs Lyft to be an alternative in this. All right, Kate Rogers, tell us about DocuSign as we look ahead to earnings and OT. Hey there, Scott. Analysts are looking for 79 cents adjusted on revenues of $707.1 million. When DocuSign reports after the bell, Piper Sandler saying in a recent note, quote, a shift toward focusing on becoming an intelligent agreement management platform makes sense in our view, but will take time to materialize as DocuSign builds out functionality and trains the GTM org. We are expecting results to come in modestly ahead of expectations and guidance to see a slight raise as well, consistent with recent performance.

Reminder, on May 31st, DocuSign said it had completed the acquisition of Lexion, a leading AI-powered agreement management company, but the stock is down nearly 8 percent year to date, although it is up right now just under 2 percent. Scott, back over to you. All right, Kate Rogers, I appreciate you. Thank you. What do you think about this one? Yeah, it's a very similar story, but this one is more the pandemic pull forward. So it's got the kind of Zoom issue, which is the pandemic had them prove to everybody why they were necessary and it was a big deal. And therefore, lots of copycats, lots of pull forward demand.

And again, it's been a rough spot for, I guess, more enterprise related software as opposed to somewhat more distributed consumer stuff. So no grand thought except that look at the kind of the mountain to the sea chart that we have right there. So top of the show, you know, I asked Joe about tomorrow morning what's really hanging on on this and how much of a sweet spot does that number really have to hit? Just given some of the fears maybe you had this week of growth scares and yields falling and stocks falling for that reason. Now it has to really thread the needle with the perfect number. I think that's fair in the sense that we are really sensitive to the idea that things could be faltering more quickly. So I still think bad news is kind of bad news, meaning, you know, something way below 100,000 net new jobs last month, unless there's some, you know, asterisks in there as to why it happened.

And then there are folks looking at the unemployment rate and saying, you know, we're not that far if it ticks a couple of, you know, a couple of increments to where you start to trigger those, hey, this looks recessionary. Again, I mean, those are ifs. Right. I think in general, even though ADP missed, you did have claims come in a little bit higher than expected this week. And you did have jolts. I think, in general, we're still in the mode of forgiving a loosening labor market that is not really showing a lot of job loss. Because, you know, the jolts number, openings were down a lot, but so were, you know, separations, which is both quits and firing.

So I feel like we're okay in this. The question to me is, has the bond market already sort of priced in a really benign or weak job number, in which case you might get a little bit of a look at those yields right there. Right. They've come down so much from the highs of not that long ago. No. So 428, 29 on the 10 year. I mean, May 15th, I think we were 462 or thereabouts. So it is interesting. The actual level, though, 430, it takes you back, as the chart shows, a couple of months. OK, so a couple of months ago, what were we doing? The city economic surprise index was kind of blowing it away to the upside. We were actually talking about a first quarter reacceleration.

My point is 4.3 percent is not saying, oh, the economy's in trouble. It means maybe soft landing. We're sort of on the fairway of thinking that's a possibility. Let's see if the number tomorrow morning is hotter than expected. Then we have to consider a whole bunch of other scenarios. Well, that's why I don't think the bond market is leaning in that direction. So that would be a surprise if, in fact, it starts to look inflationary. Because you've got a lot of good disinflationary indications this week

between what's happening with oil, what happened with unit labor costs reported this morning for the first quarter. So, yeah, I feel like people are feeling better about inflation. And therefore, the need to worry about something brings you to worry about the pace of growth and worry about whether NVIDIA is going to eat the entire index. We're watching towards the bell here as it rings. Whether we're going to put in another S&P closing high, I don't think we're going to quite get there. We're a couple points high. We've got a settlement and all that takes a little bit of time to figure it all out.

I'll see you tomorrow. End of the season with Morgan and John.