Closing Bell - Closing Bell Overtime: Markets Shift Focus as Meta Leads and Investors Size Up the Next Move 7/1/26

Episode Date: July 1, 2026

Our Steve Liesman analyzes the market's reaction to the latest developments involving Fed Chair Kevin Warsh’s interview with our Sara Eisen. In the stock market, Meta takes center stage. Rohit Kulkarni of Roth explains why the stock stands out and what is driving renewed optimism around the social media and AI giant. Plus, key themes in healthcare and industrials. Ayako Yoshioka of Wealth Enhancement discusses where she sees opportunity as investors rotate across sectors. John Kolovos of Macro Risk Advisors analyzes the technical picture across the S&P 500, memory stocks, biotech and the U.S. dollar and identifies the levels investors should watch next. Plus, our Deirdre Bosa examines the growing trend toward owning personal AI models and infrastructure and what it could mean for consumers, technology companies and the next phase of the AI revolution. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The bells bringing in into the trading day at the NYSC. The field office of New York of the Secret Service is ringing the bell. And at the NASAC, it is ITG as that company goes public. Welcome to closing bell overtime. We're live from studio via the NASAC market site. I'm Melissa Lee, along with Mike Santoli. Stocks mixed today, falling actually late in the session, the Dow closing slightly lower, but hit an intraday high, small loss for the S&B 500.

Nazak losing more than half a percent. But the rotation within tech is the big story. Mag 7 leading meta, jumping on its AI plan. More on that coming up. Microsoft also a gainer, but the memory names of the big leaders in the last quarter, they're getting crushed. C.Mam Modi will have more in that story. Rick Santelli watching Bonds and the dollar for us. Pippa Stevens got the latest on oil and gas prices and a big interview on CNBC today with Fed Chairman Kevin Warsh. Steve Leesman will join us with his take on what Worse said about forward guidance or maybe lack thereof. Mike was interesting yesterday. You mentioned window dressing. All the winners of the quarter and of the first half of the year were bid higher. Today was a little bit of reversal of that. Very much so. Yeah, the sand discs and microns, intel's, all up 6% yesterday, kind of a markup move today.

Those exact same names down 7, 8%. So, I mean, part of it just tells me that the market is consumed with its own kind of dynamics right here. In other words, where have we kind of gotten overextended within the market? What themes already seem fully reflected and what don't? I guess the good news is money across the board does not seem to be exiting stocks, even if the S&P 500 first got to this level in mid-May. Yeah, a broadening of the market today. We had bids in financials and health care.

And also I thought Nike was interesting. We led the show basically with Nike yesterday. But that price action maybe encapsulates sort of this feeling of, at least for today, of looking away from what had been the winners, the clear winners, and looking for other opportunities within this market. We had Nike go down to the lows of the session and then bounce right back up. on very heavy volume. It was like 300% of its average daily volume in shares in Nike today. So I don't know if this is capitulation. We'll see.

Or if this sort of just captures this sort of this desire to look elsewhere outside of the first half winner. Absolutely was a tailwind that you had the left behind winning today. And even happening within sectors, so Walmart getting hit hard, it's a staple stock and a lot of the left behind food stock's getting a bid. So we'll see if it's more than just kind of a new quarter one-day phenomena. But it's fascinating. Let's get more in today's big mover. Sima Modi joins us now with that. Seema.

Hey, Melissa and Mike, software leading the comeback in tech with names like Paula Alto, Salesforce and Service Now on that analyst upgrade from Guggenheim, and zooming back a little bit, zooming out, I should say, the software IGV ETF on track to break a four-week losing streak, currently up about 6% so far in the week. It follows a pretty sizable drop that we saw in the semiconductor ETF at one point during the day, then came back by around 1.6%. If we talk a little bit more about the chip,

sector, the semi-equipment names out of favor today. KLA Tencore, Lamb Research, and Terra Down, all down significantly. News of meta building out new cloud business, sending Corweave and Nebius shares lower, as both companies provide similar compute services. We saw CoreWeave down nearly 14%. Nemias down 17. And Caterpillar shares, also retreating after short-saler Michael Burry announced a bearish bet on the stock. Shares of Kat have surged about 80% so far this year, as its generators and engines are increasingly used in the AI buildout, the stock closing down by 7%. And take a look at shares of Robin Hood popping after announcing its tokenized stocks will be available in more than 120 countries moving to its own blockchain rails and letting

AI agents trade crypto portfolios in the U.S. The new stock tokens will run on Robin Hood's new blockchain and allow for 24-7 trading, shares ending up by 8%. Mike. All right, Seema, thank you. Oil falling once again today, but price is. that the pump aren't falling fast enough for President Trump. Pippa Stevens has that story. Hi, Pippa.

Hey, Michael, oil is in the red today as the talks in Qatar continue. And while the steep drop has brought gas prices down, President Trump has repeatedly called for $2.50 on the national average. Right now, we're at $3.85. Now, the last time we were at $250 was February of 2021 when oil was more than $10 cheaper than today. Crude makes up about half the cost of a gallon of gas, but you've also got refining margins, taxes, and marketing and delivery costs. Big energy companies own just 5% of gas stations.

80% of fuel sales take place at convenience stores, and more than half of those are one-store operators. Once all of their expenses are paid, profit per gallon is only about 7 to 9 cents, according to Lipout Oil Associates Andy Lipout. If oil stays where it is, we will continue to see the national average come down. But if you look at gasoline versus oil futures, You can see Arbub is still up 70% on the year.

A flood of oil is hitting the market as ships exit Hormuz, but refining capacity remains limited. We probably won't see 250 anytime soon, but it could be in the cards for 2027 if the oversupply narrative that we've been hearing more about does play out. Guys? Yeah, Pip, you said that, you know, we'll still see gasoline prices most likely trend lower

given what's already happened to crude. Where are we thinking they'll set up? allowed, let's say if crude stays where it is? I mean, maybe we'll see them come down slowly to $350, maybe a little bit below. But the problem is that all of those one-store operators are, they are facing higher costs from everything from labor to rent to electricity. And it's already a razor-thin margin business. That's why we saw a big oil get out of the retail gas station business because they just

simply didn't have the margins. And it's actually the sales within the convenience store that really makes up the bulk of the profits at the gas station. it's not from the sale of fuel itself. And so for the time being, what's limiting this as well is the fact that we've seen a lot of Russian refining capacity come offline, thanks to attacks from Ukrainian drones. We've also seen some damage refinery infrastructure in the Middle East. And so that's why even though there's this flood of oil, we're not seeing, you know, an uptick in refining. And that's what's keeping prices here higher for the time being.

But we should still see that trend coming down. I mean, you know, Arbop two months out is at $2.50. And if you think about it, it's about 90 cents above that. are Bob price. So, you know, maybe we'll save $3.40 here in the next few months. Pippa, thank you. Pippa Stevens. Bond yields moving higher today. The dollar is still close to its recent highs. Let's get to Rick Santelli in Chicago for more. I mean, the move overall was higher, Rick, but the intraday move was fascinating.

Oh, absolutely. And when you look at what's going on with respect to interest rates, you know, virtually unchanged in the short end, it seems to have fully priced out the easing. The yield curve stopped flattening. Today, slight steepening. And we hit the big resistance in May and tens. We hit support today right around that 436, 437 actually yesterday in hell. Now, if you look at the dollar index, let's put a two-week chart up. You see kind of towards the middle to the left, that spike up. That was the 24th.

24th is the high watermark going all the way back to May of 2025. That level was 101.80. And we are indeed holding on to that level quite well. We're within striking distance of it. But what's very interesting is we really isolate when the conflict began at the end of February. Here's a chart putting the dollar index in tens together. And we could see one of the dynamics here, of course, is interest rates propping the dollar up. That's above them beyond the flight to safety that existed during the conflict,

which doesn't seem to be hurting the dollar indexes. We get closer and closer to wrap up what's going on in the Middle East very quickly. You know, it was a bit of a disappointment today in the jobs number at $98,000. But do remember, three-month average there for 80P is 108,000. Not too bad. Back to you. Yeah, Rick, yesterday we were talking about the Japanese yen being at 40-year lows or close to. Same situation today.

And that dollar chart really, it sort of encapsulates exactly what the problem is there. It's not just a matter of testing the credibility of the Bank of Japan. It's sort of putting more credibility into the Fed. Oh, absolutely. But do remember, the dollar. dollar index, the yen only weighs in about 20%, so it's small with regard to the dollar index. But yes, that dynamic, you need to pay attention to it.

I will continue to say that it's not going to be an intervention. The market's going to force the Bank of Japan to do what it needs to do. It needs to raise rates. Yeah, and we'll see if it gets its way. Rick, thank you very much. Well, Kevin Warsh, in his first interview as Fed Chair, speaking with our own Sarah Eisen and and central bankers from Europe, Canada, and England. Senior economics reporter, Steve Leesman, joins us with the highlights.

Steve, what do we learn? Fetcher Kevin Warsh, Michael, sticking with his firm commitment to bring down inflation, but leavening it just a bit with the observation that inflation risks have eased and the hope that AI productivity could help longer term. We don't want to over-determine things, but if there were people in household of the business sector and the financial markets who thought that this central bank was going to be comfortable with an inflation objective above 2%. Well, I guess they'd be disappointed.

We're going to deliver price stability in the U.S. So is that firm commitment at the meeting last month that prompted markets to more than double the outlook or the probability of a September rate hike from 32% to 69%? It's virtually unchanged today. But there's only a 27% probability of a July hike down a few points on the day. So there remains a chance the decline in oil prices in combination with Warsh's tough talk to bring inflation down and stave off these hikes. Worsh also held out the prospect that high productivity and the AI boom could help with inflation, but that's down the road. In the U.S., the AI shock is leading to a boom in capital expenditures.

We see that first and foremost in demand, but I'm confident we're going to see it in supply at some point. Worse repeating is long-held view that the Fed's $6.7 trillion balance sheet is too big, and he wants to conduct monetary policy primarily through interest rates, emphasizing, though, that any change would put in place slowly. So investors, the media, and banks, Mike, will have time to adjust. Yeah, exactly. And, I mean, there's no way to do it probably but slowly, given what might have to happen with bank regulation and all the rest

to really shrink that balance sheet much. But what's interesting, Steve, is that, I think the prior leadership of the Fed also felt as if the interest rate was the chief policy tool. In other words, they didn't view the balance sheet as necessarily being the marginal mover of policy tightness or looseness. Right. And I think the big difference here, Mike, is that Warsh sees it as an existing problem. Other people say Warsh's desire to bring down the balance sheet as a solution in search of a problem. many people don't think it's doing much of anything right now except for satisfying the demand for

reserves among banks and the key to bringing it down will be figuring out what that reserve level is and Warsh and other central bankers both talked about that issue of figuring out what the right demand for reserves is that's going to be tricky and other Fed chairs Powell and Bernanke and Yellen have erred on the side of let's have a lot of reserves out there and we'll figure it out later. Steve, thank you. Steve Leesman. Pleasure.

Meantime, check out the stock mover of the day. Meta posting its best day in six months. That is because Meta is thought to be planning a cloud business to sell excess AI computing power. It's something CEO Mark Zuckerberg has hinted at before, saying on May 27th at the annual shareholder meeting. It's definitely on the table. Almost every week, there are different companies that come to us from outside asking us a stand-up and API service or asking if we have compute that they could buy.

Meta's potential for hitting the neocloud stocks, Correweef posting its worst day since February, Nebius, recording its worst day of the year. Joining us now is Roet-Kalcarni. He is the senior internet analyst at Roth, MKM. Roet, great to have you with us. Thank you. You know, it's funny because every analyst on the street said, you know what? This is something that Mark Zuckerberg already referenced, and yet the stock is up.

I mean, how much do you think businesses like this could be worth to Meta? I think it's more about not just setting up a new line of business, but I think it's how meta is one of the most arguably capital-constrained company to fund the future CAPEX. This provides them a straight-up line of sight into immediate ROI and immediate ability to underwrite more CAP-X. I think that's where the real value is rather than making a billion dollars per month, which is not pocket change, but pocket change for meta,

but that helps them underwrite more CAPEX. There was a bit of a kind of eye of the beholder effect here in terms of people's interpretations of what might be motivating this. One was maybe they've overbuilt, and there's excess supply, and that means that the market for, you know, for compute is not as tight as we thought. Another is maybe it just shows you a gesture toward financial discipline, that you want to get a return on all this investment if you can down the road. and who knows, you know, anything in between, folks like you saying, it's just wise maybe to down the road feel as if you might want to have better access to even keep building compute.

I would say, like, I think the strongest rebuttal against any oversupply arguments is that look at what Amazon did earlier today. AWS raised prices for GPUs by 20%. There's the highest pricing hike that they have done in many, many months. in fact, a couple years. On top of that, SpaceX signed deals with Anthropic and Google at pricing for GPUs almost two or three times, kind of the market rate reported by some of the aggregators. So I think this is simply a strategy of like,

hey, I bought this house, somebody is willing to rent it for a year, and that is going to pay back my mortgage. I think why not? So I think that's what Meta is trying to do here, where they're waiting for new chips to come online. They have a lot of old chips that are underused, or they could use it for internal purposes, or they could just rent them out and make back their money that they spent in back in 24 and 25. We saw the definite reaction of the neocloughs, like the nebuses of the world, to this news,

but we didn't really see much of a reaction in the hypers, and I'm wondering how you interpret this in the context of it is now going to be effectively in the same arena as Google Cloud and Azure and AWS? I think, I think AWS and Microsoft and Google have almost five, maybe even more, years of Head Start here. I think, so it would be completely incorrect to kind of interpret that there could be a fourth

hyperscale of being born here, but then there are those world champions running relay races that it could catch up. I think, realistically speaking, this is more like very similar to what Elon Musk apportionistically did with SpaceX, XAI, and Anthropic. I would interpret that exactly like this, where they bought a whole bunch of A100, H-100s. They need new chips to build the next generation models, and there is this stopgap, opportunistic way of making more money for the next six, nine months. You say it's kind of stopgap, but why is it not correct to interpret that both from SpaceX and meta as we believe somebody else will pay us more than we can get in return for profitably using

the compute ourselves? Because that was one of the ways it was spun with SpaceX. Yeah, absolutely. I think that definitely holds, in my opinion, that they can make money by renting out rather than using it for internal purposes because those chips are older and they have value in agentic inferencing workloads, not so much of a value in building the next generation models, whether for Grok or for new Sparklines as such. They would rather have Vera Rubens and better clusters and more powerful models. So I think whether that leads them to have a pathway towards building a fully functional AI cloud business, even comparable to Corvieve and Nibius, I think that remains to be seen. I think this is just a pure bare metal rental

opportunity and perhaps in this particular day and age where availability today is much, much more valuable than a contracted supply six, nine, 12 months down the road. So perhaps there is that air pocket of availability and monetization that these companies can take advantage on. Roet, thank you. Appreciate it. Roet called Carney. Max 7 losing more than $2 trillion in market cap. in the month of June, money rotating into other parts of tech, including memory chips, but also out of tech altogether into other sectors. Up next, a look at a couple of groups, which could be winners that the rotation continues. You're watching Closing Bell overtime, live in the

NASAC market site. Welcome back. Three more companies going public today, bringing the number of new issues so far this year to 82. That's down from last year's pace, but the amount raised is much higher thanks to SpaceX. ITG and Neutron Holdings, both with small gains in their debuts, bending spoons, gaining more than 30 percent. This company has caught the eye of some for its strategy of acquiring seemingly well or in a well-known brand. It recently acquired AOL, but it also owns Event Bright, Vimeo, and we transfer. So you thought AOL was, it's back. It's back to the company. Yeah. It's a reminder, I guess, that a lot of these digital businesses, even after they've stopped really growing, they've existed. And this roll-up idea, it's really a private equity approach

now that the company's coming public, it's not really private equity. But it is, interesting. I guess also, I mean, fourth year of a bull market, that's when IPOs that have been sitting around a while should have a little bit of runway to get done. Yeah, we've seen also a number of biotech companies, which is not surprising the sector, and also space companies surrounding SpaceX, and we do expect to see more of them in the pipeline. Talk to many VCs who fund space companies are like, you know what, it's time to go. No doubt about it. They have this umbrella effect from SpaceX, definitely. Well, it may not have been a standout quarter, but the health care sector was the standout of June, gaining almost 7% and posting its best month since November of 2025.

So will this momentum last? Joining us now is Wealth Enhancement Group, senior investment strategist, Aya Yoshyoka. It's great to see you. We've been talking for weeks really here about the market's attempt to rotate and rebalance away from its dependence on tech hardware. Is this something that you would be looking to play along with or maybe push against? Sure. I think diversification continues to be a boring theme, but we really do think having the balance of names within the healthcare sector as well as other industries really balances out the strong rally that we've seen out of tech hardware, especially, especially in the semiconductor space. How do you think about diversification? Because, for instance, so many industrials hit new highs and are doing well on the notion that they are helping to build the AI data centers. And so they are effectively leveraged to that story. Sure. So, you know, the industrial sector within the SFP 500 is a pretty diverse sector to begin with. It's got aerospace and defense. It definitely has some of those names that are powering the capital equipment. as well as the overall electrification of the AI and empowering data centers.

But there are other areas that continue to do well within industrials. And we continue to like that. And it was on a get-or-date basis actually outperforming the tech sector within the S&P 500. And when it comes to health care, we've talked here about how dramatic the catch-up move was in the last couple of weeks even. It's a very diverse sector, obviously, driven by a lot of different forces. So is there a storyline, do you think, at play here when it comes to people rediscovering health care? Or is it just about, you know, let's find things that have not yet had their run?

A little bit of both. I think, you know, when it comes to health care, you've got pharma that continues to do well. And unfortunately, there are, you know, areas such as oncology, cardiovascular diseases. there are med tech things that are getting solved by a lot of these health care companies. And so companies like J&J and Eli Lilly continue to do well within the space. I think if you look at managed care, that's been doing well as well. And you've seen Medicare advantage rates for 2027 set at 2.5%. That should be positive.

Underwriting has been positive for these managed care companies as well. And so we think there's a little bit of steam left in some of those managed care companies going into the second half. And when you think about the benefits of AI for this sector, I mean, I would imagine that health care and more specifically insurance would see, you know, some of the bigger gains from AI productivity. Absolutely. I think the AI productivity side really hasn't been fully vetted for a lot of these healthcare companies. health care is so complex, whether it's on the insurance side or just the drug discovery side, bioprocessing. There are so many areas in which AI could be a real productivity boost. And I think that's yet to be fully priced in to a lot of these health care companies. We get a payrolls report tomorrow. You know, the macro front has really been quiet in the sense that

investors have been able to kind of take it for granted for a little bit. Yields have not been blowing out, the Fed maybe still on hold, and the economic data has been okay. But where does it fit in when we see whether, you know, job growth might have accelerated or not this month? You know, I think the labor market continues to be an area of concern, as well as a lot of attention for investors. We need the labor market to remain relatively strong. It's been better than expected this year. And we expect that to continue. The trend is likely to be elevated. A lot of the concerns that we thought about in terms of AI really displacing jobs hasn't come to play yet. And so we'll continue to watch out for it. But we need the wage inflation side to remain

subdued as well so that it doesn't really build upon the likelihood that the Fed has to hike a lot more from here. Ayah, great to see you. Thank you for your time. Thank you. Well, Tex, inner turmoil continuing today, the hottest names in the market, memory stocks such as Sandisk, down big today. Up next, a closer look at the momentum trade. Stay with us. Welcome back. Shares of Bloom Energy turning lower after jumping to a high of $320 a share earlier in the session. The spike came on news. It was expanding its AI infrastructure partnership with Bloomfield asset management to $25 billion. This is a very volatile stock gaining 10% yesterday, 9% on Monday, but it fell 18% on Friday. And of course, it's one of the names that falls into that momentum basket, Mike.

For sure. And we see a picture here of that area of the market kind of cooling off or having a little bit of a stutter step. What I like here, so this is different characteristics of stocks. High beta, that's the most volatile stocks, momentum as well. HQ is high quality and then LV is low volatility. And it's great that they all had a similar starting spot right there back in April. And you see the divergence since then. A couple of things to note. One is how high beta and momentum became the same thing. They became semiconductors plus a little bit extra. And that shows you that this is a very kinetic part of the market that really was driving the action. Since then, I mean, quality has kind of participated. There's a lot of tech in there as well. Low volatility, not much of anything, but maybe a little bit of a subtle rebound at a time when the high volatility parts of the market have come in. Not suggesting this has to all come together again in any respect, but it just shows you that we got a little bit out of balance and maybe some of the real aggressive flows, the most leveraged trades, are starting to have a rethink right now. And in theory, the membership of these groups flip around, depending on it.

They do roll, yeah. So, I mean, whether it's on a quarterly rebalance or something like that. So it's basically a backward-looking thing that says, this is like, let's say, the 50 or 100 most volatile highest momentum names in the S&P 500, and they reshuffle them, absolutely. Like, is invidia still in momentum? InVita is probably not in momentum at this. But it's not purely what's up the most in the last few months, but I had imagined that the several months of sideways action in Vividia meets.

No longer there. Yeah. Time now for our CNBC News update with Julia Borson. Julia. Well, Melissa, three members of a four-person Navy Seahawk helicopter crew were rescued today after an emergency water landing in the Arabian Sea. According to Central Command, the search continues for the fourth crew member. The military says there's no indication the helicopter was shot down by hostile forces.

Actor Danny Glover revealed today that he has Alzheimer's disease and he has been living with it for several years. Glover, who rose to fame starring opposite Mel Gibson in the lethal weapon franchise and appeared in hit such as the color purple, received an honorary Oscar in 2021 for his social and political activism. The 79-year-old said he wanted to take his story public to challenge the stigma around the disease. And the White House is adding pandemic response team staff as it looks to address threats from multiple infectious diseases. A doctor and former top official at the FDA is leading the team as the opposite. response, the deadly Ebola outbreak in Congo, the new world screwworm threat to U.S. cattle, and the recent hantavirus outbreak. Back over to you.

All right, Julia, thank you. The S&P 500 today closing just below 7,500, less than 2% away from its all-time high, said about a month ago, what needs to happen to get the index back to setting record? We'll look at the charts coming up. And be sure to tune in to Fast Money tomorrow at 5 p.m. for Joe Cunneran's exclusive interview with President Trump. Welcome back to closing bill overtime. Live from the NASAC market site in Times Square. Stocks fading into the close. The doubt closing lower by 14 points,

but it did hit an intraday record earlier in the session. The SB 500 down 2 tenths of a percent. The NASAC down more than half. Six of the seven max seven names moved higher today. Only in video was lower. Meta, the big winner on its AI plans. Meta's move hit shares of core weave and nebius, momentum also working against high-flying memory names.

Sandisk and Micron. Financials meantime up 2% as a group today. And Robin Hood, among the top stocks in the sector, the company rolling out a flurry of new products in Europe, including tokenized stocks and perpetual futures. Robin Hood's CEO, Blatenev announcing these products at an event in London. It's getting some attention online due to his shirt, his chair. I mean, he looks like a king sitting on a throne basically talking about tokenized securities, offering trading 24-7 and agents. which could help people trade. The firm name for Robin Hood famously anti-authoritarian, no friend to those who rule in England. Obviously, a little bit of irony there. I mean, also, the idea of tokenized stocks, it both fascinates me and it puzzles me in terms of why we need this. Clearly, it's overseas. You don't own the stocks. It's just another way to trade them and get leverage off of them.

And do we need right now new ways to trade short term and get leverage? off of equities because you already have, you know, single stock leverage DTFs and every other thing you might imagine. So, I mean, I guess the market loves it because it will probably create more hyperactive activity and that helps your opportunity. And just sort of a bigger picture. I mean, you take a look at perpetual futures and how certain contracts for crypto were approved here because it had existed overseas. Granted, it's a different regulatory agency for tokenized securities. But you have to think if there is a push in this administration to bring quote unquote innovative new products from overseas because it's happening overseas to U.S.

shores so they can regulate better. Is this the next thing? It could be the next thing. I just always go back to like literally the 1920s and 30s when they were like, no, no, no, you can't just bet on a stock price movement in a betting parlor called bucket chops, which is what they were. And this is a high-tech way of seemingly doing that, but we'll see. Maybe not. Well, tech stocks kicking off the quarter on a down note as the rotation out of those names has continued. but is this all part of the S&P 500's tricky road to record-breaking levels? Joining us now is John Kolova's from macro-risk advisors. John, you got a few charts.

Set the scene with the broad S&P 500 picture, if you could. Yeah, you got it. Absolutely, Mike. So let's start with the S&P longer term, thinking 7650. Right here is resistance right here. We're going to break out through that. I think we're going to hit around 8300 by early next year. But it's going to be interrupted by a corrective process.

We're currently in a trading range right now. But my best guess here is that we're going to wind up doing an ABC decline from this level here down to the Q1, the Q1 high. So I think we're going to do a bit of a correction that way. Reason being, too, is that we have momentum divergences in place here. We have extremes and sentiment data as well. So I think we have this period of chop in the summer spoon, I think, is still on the table before we continue to resolve higher. Is part of that chop going to be a pullback in these high-flying memory names? Yes, it will.

So that's actually the next chart that I brought, which is on the DRAM. And actually, what we started to see today on the DRAM was that actually we started to break down underneath the support level today. And what this is doing is it's completing a bit of a top pattern. And when you take the measured move target of the DRAM index, they actually get you down to about the lows from earlier this year. That's about another 15% decline from current levels, 30% peak to troth. So the market is wobbling for sure. And that's kind of one of the things I'm telling my clients these days is like, if you're really overweight these names, you've got to bring him in during the summer months. And John, I mean, obviously if these leadership groups do struggle a bit, some areas have been kind of stepping up.

Biotech, one of them, I guess you're suggesting those moves could be favorable but won't rescue the whole market in the short term. Yeah, yeah. And I think that's general the idea, too, is that we're trying to rotate. We're trying to navigate this summer volatility. and health here's been great. It's not just biotech, it's pharma, it's everything. Even today, there was a really strong move. But I wouldn't be a good technician if I didn't show you what a big base is.

And this is a huge, huge base for the ARCG. This is the genomic ETF here. And again, bigger the base, the higher into space it goes. You take this range, you break it out. This thing's looking at somewhere around 100. So this is a really constructive chart. And I think this is a chart here, and the stocks within it can be bought on polebacks over time. I think this is a really constructive area of the market.

John, why don't you come on over? I'm so happy that you invoked the saying of the legendary Louise Yamada, the longer the higher in space. That's a good one. In terms of the U.S. dollar, we were talking about earlier, but you're flagging the potential for financial conditions actually tightened. Correct. And maybe that's part of the sort of chop that we'll see. Yeah, absolutely. Yeah, absolutely. So the dollar broke out of a huge, huge base, right? And that the Dixie counts to about 106, 106 and a half. And it's a major retracement of the bear market that's been in for the last three years. And I think that is a sign of financial conditions, early starting to tighten a bit. But the tricky thing is, is like, well, oil's down. That's okay. Inflation expectations are down. That's okay. But nominal yields are still sticky. Real yields are still pushing up higher. And then credit spread started to spot. last week. I think that's something on the burner here. We've got to keep a very, very close eye on because once you take away liquidity from the system, you wind up popping a bubble of sorts. A small bubble or a big bubble. That's how you get it to come in. So I think the markets are telling us something right now with this dollar breakout. And this idea that the S&P 500 has vulnerability down to about 7,000, and yet you think we resolve ultimately higher off of that into 8300. usually what has to happen is that move lower has to generate a lot of a scare.

That it's not just a correction. And who knows, maybe the macro picture or liquidity picture will be a part of that. I totally agree. You got to scare everybody out. And I think that's what will happen relatively quickly. I think people are going to go from, oh, this is great to, oh, my gosh, right? Like in a heartbeat. We'll see Vick spike.

We'll see the pull-call ratio start to spike. And then we'll want that. So basically, what I'm advising clients is wait for the fat pitch. Still bullish the market. Still wildly bullish on tech. It's just not really timely here. And you just start to see things to be like, hey, you know, if you did well with tech, get closer to the benchmark for the time being.

Wait for the pitch. And in theory, in terms of the technicals, we should have a tremendous buying opportunity for everything. Third quarter, fourth quarter, and we should have a gangbuster next year, all else equal. Okay? So, like, yeah, the fear, bring it on. We want to buy that. Besides biotech, if you wanted to stay in the market, but not be exposed to those areas that you think going to roll during this sort of downturn, where would you go?

So on the charts right now, the financials are doing okay. You can do that. Banks in particular are doing all right. Industrials have been doing well also. So I would look there. You notice that those are more cyclical. I'm not saying, okay, buy staples. First of all, they're not very good charts,

and I don't think we're going into a recession and to our full-blown bear market. So I will look more towards that area. You could do, to an extent, maybe home builders, if interest rates, stay steady, but I don't think I'd more lean more. towards the financials, banks, industrials for the time being. But yeah, I wouldn't be buying like super duper defensive. Is there any analog that comes to mind in terms of the type of move, what we might be in for in terms of a year in the past or a part of the cycle?

So the market is reminding me a little bit of 23. So the NASDAQ started to put in a bit of head and shoulders top formation after it held above its 10-day moving average for like 30-something days, which we just did right now back in our back in May, head and shoulders. I think it's very reminiscent to that. I don't think it's 1999 or anything like that. Now, I think this should be relatively benign. And buy the pullback and wait for that fat. But there was definitely a correction that you felt going into the third quarter of 23. I mean, look, everybody gets freaked at all that. And what's that classic saying? You buy when nobody else wants to? And so we're kind of

looking for that. And I'd rather buy the pullback than be forced into it. But again, as a technician, we want a breaking out, let's say sustained breakout on the S&P above 7630 or so. I have no choice. but to be like, okay, we're going to go up and extend a little higher to 7750. John, good to see it. Thanks very much. All right, Salesforce and Service Now have been getting crushed recently, but both stocks rallying today on upgrades. Up next, why one Wall Street firm thinks now is the time to jump in on the software swoon. And Lockheed Martin getting a pop today,

city upgrading the defense contractor to buy from neutral, citing valuation. Stocks down more than 20% since the beginning of March just after the start of the war with Iran. Closing bell over time. We'll be right back. Let's take a look at the staple sector today. General Millstock is up 7% after reporting strong earnings results. The company said its efforts to adjust product prices have started to show positive results and those results lifting the rest of the sector as well with Canagra, Campbell's Kraft, and Pepsi all closing higher.

Meanwhile, Walmart chairs are down 4% today, extending its decline to a sixth straight trading day. It is a second worst performing stock in the Dow. The stock's been under pressure for a while, down more than 19, percent since it's 52-week high. That was reached in mid-May. Another way of saying this is, you know, the stock that is expensive and people love, which was Walmart, on a decline, and the cheap-neglected food stocks are on the rise. So maybe there was a little bit of an extra bit of torque in this trade based on the mean reversion we've seen, you know, in the broader market today. Exactly. But as John had put, I mean, the charts have been horrible in the

staple sector. I mean, that is just a bombed out sector. Let's get to software here. Service Now, Salesforce are moving higher today after Guggenheim upgraded both companies from neutral to buy, saying current levels present an attractive opportunity for investors. The firm sees opportunity in Service Now from evaluation perspective. Does not believe the company or the AI will be the company's death now. On Salesforce, while the analyst sees AI's significant risk, he believes the Armageddon scenario currently priced into the stock is misaligned with reality. Both Service Now and Salesforce are down more than 30 percent year to date. It's not exactly a bang on the table sort of call here. It's sort of like AI is not going to kill these things.

Right, not right away. It'll get their businesses. And it's reflected in the valuation. Exactly. So almost to the same, you know, sort of theme of bombed out sectors, looking for value where you can find value. And maybe the valuation reflects all the, you know, the bad scenario. Sure. I mean, some of the news flow would seem to also work in favor of this trade, meaning big company saying, hold on, we've been spending indiscriminately on tokens,

It's probably not the way to go. Let's be smart and rational about how we approach it. Maybe we can even use somebody's help in implementing some of these things. That's at least service now's proposition. Exactly. Well, when it comes to AI models, more businesses are deciding it's better to own than rent from companies such as OpenAI or Anthropic details and the impact it could have on the big tech player straight ahead. And here's a check on some S&B 500 stocks hitting new highs today.

Travelers, Chub, PNC, Palo Alto networks, and Quest Diagnostics. Closing bell overtime, live from the NASDAQ market site. We'll be right back. Welcome back. The market is starting to price in less expensive AI, and a big part of that is the transition companies are making from renting AI models to owning them. Dear Jervosa explains. Hi, Dee. Hey, Mike. So companies, they first turn to open source models because they were cheaper than renting AI from Anthropic, Open AI, or Google. The next leg may actually be bringing that model in-house. So you take an owner. open model, you train it on your own data, and you customize it for your own business. Now, banks, financial services, they have been early here building internal AI platforms,

even if many of those still relied on outside models. China, however, shows where this could go next. Meituan, this is a delivery company over in China. Food delivery company built its own competitive model in-house using open source and says that developers have already been adopting it. Now, there's a number of companies looking to capital. on this trend. Together AI is one of them just raised $800 million. And the CEO Vipple says that they're betting that more companies will want to do the same. I think you have advantages of control. You're not giving out your data to any other company who may use it to train a model. You have, you can actually make the model more efficient. You can take a smaller base model and train it to

do exactly what you wanted to do, which means your inference costs or your cost per token, you know, more intelligence per dollar that way. So Mike and Melissa, that may be the next shoe to drop for the frontier labs. First, open source showed companies that they can get AI cheaper that is still very capable. The next step may be that they want to actually own it themselves. Deidre, can you sort of piece this in with what's going on with meta and the report that they want to actually rent out their models? Because it seems like if companies are going to actually bring an open source model in-house

and train it on their own, then there's not a problem. place for that sort of business model. Right. I think that's a really smart connection to make. And what this really shows us is that the model business turns out may not actually be a great business because that layer has been commoditizing so fast. That is what the Chinese open source models have shown us, that you don't necessarily need to pay the frontier labs to get very, very capable AI that not only is good enough, but may actually be very, very good. So meta is in an interesting position. They have worked on their own family of models like Lama. Now they're going

closed source. And it turns out, though, that actually renting compute capacity may be the bigger business. SpaceX showed us a similar thing, right? Elon Musk is developing Grop, a chat box, but renting out that compute can be extremely lucrative. And it tells you that maybe that's where the returns are accruing right now. And that's where investors see the returns coming in is actually from that infrastructure layer still, while the model layer is getting very, very difficult to actually capitalize on. All right. Deirdre, thank you. DeJerbosa. Thanks.

Let's get you set up with tomorrow's trade today. There are no earnings on the calendar, but we do have a big economic event with the June jobs report. Economist expecting non-farm payrolls to rise by $115,000. The unemployment rate to hold steady at 4.3% average hourly wages, increasing by 3.5% year over year. We'll also get the latest reports on durable goods and factory orders, as well as June auto sales data. Wall Street will also be listening to remarks

from San Francisco Fed President Mary Daley when she speaks at a conference in Spain. And do not miss Joe Kernan's exclusive interview with President Trump. That is tomorrow 5 p.m. on Fast Money. Huge day. A very big day. The payrolls report somewhat set up by today's ADP data. It was a slight shortfall just under 100,000 private payrolls.

But I think in general, the expectations have been building for what jobs can do here. We'll see if that's wrong-footed or not. not, but the bomb market at least has seemed to be, at least generally bracing for something like that. Right. And will good news be bad news as you had mentioned yesterday? Because that's going to be the key debate here. I think this is the big question. Yeah. And, you know, Warsh didn't really give a lot of guidance on how that's going to translate into his thoughts about monetary policy. But Mary Daly and the rest of the committee, you know, certainly you're going to say, hey, we don't

have to worry about, you know, the payroll side of things. And inflation is the only, only enemy we have at the moment. We'll see how that goes. That's going to do it for overtime today. That's when he starts right after this quick break.