Closing Bell - Closing Bell: Playing the Seasonal Choppiness 8/21/25

Episode Date: August 21, 2025

Is this bout of seasonal choppiness a helpful reset to refresh the bull market or signs of a more fragile tape emerging? We discuss with CIO of Merrill and Bank of America Private Bank Chris Hyzy, Payne Capital Courtney Garcia and Morgan Stanley’s Jim Caron. Plus, John Kernan from TD Cowen tells us how he is playing the retail space this earnings season. And, Disney launched ESPN’s new flagship streaming app. Julia Boorstin breaks down all the details 

And welcome to closing bell. I'm Mike Santoli in for Scott Wapner today. This make a break hour begins with the selling streak in stocks continuing the S&P 500 pacing for a fifth straight daily loss. That would be the first time that happened in almost eight months. The weakness though has been persistent but not pervasive or really particularly deep. You see the S&P 500 off right now about a third of one percent. It's actually off less than two percent from its record high, while the equal. weighted version of the S&P 500, it's flat for the week, showing you the majority of stocks trying to hang in there. The Russell 2000, Small Cap Index, is firmer on the day, just barely positive about a quarter of a percent as the market tries to relieve its over-reliance on the big AI leaders through rotation into some lagging groups. Now take a look at the two-year Treasury Yield. It is now at a post-jobs report high. That jobs report from August 1st. You see it there up near 3.8%. This says Wall Street entertains a few doubts about a potential rate cut next month as Wall Street awaits Fed Chair Powell's speech at Jackson Hole. That is tomorrow

morning. It all takes us to our talk of the tape. Is this bout of seasonal choppiness in stocks a helpful reset to refresh the bull market or signs of a more fragile tape emerging? Let's ask Chris Heise, CIO of Merrill and Bank of America Private Bank. Chris, good to see you. Did you like? We've been through versions of this before. Right, with the high momentum stocks, they hyper-concentrated index. A lot of these imbalances are presented. It happened at the start of this month. Market tries to just kind of take money out of one pocket, put it into the other, and cool off where it needs to cool off.

How are you reading this episode? So you try to parse it and you try to find out, is this like a true rebalancing that's happening with longer-dated money? Is it some of the systematic strategies trying to unwind a little bit of their overexposure? and there's not a lot of evidence to suggest either or. So it seems like it's across the board. It's a little bit of an exhale. It is obviously the last tail end, a couple weeks of summer in August. You mentioned seasonality.

This is when we should be buying on weakness. When you don't have any fundamental news, it's just simply the market got tired. And there isn't a lot of on the buy side to kind of pick up for some of the areas. And it latches onto any negative headline and sometimes creates them. So we would use this weakness as a buying opportunity. And, you know, it all stems from what are profits going to do. And we still think profits for the remainder of the year and into next year. That's your linchpin.

That's your catalyst. Well, yeah. And consensus earnings forecasts have been inching up for this year next. That's certainly a support. But to your point about how maybe the stories start to crop up when the price action gets a little bit less favorable, this is coincided with a bit of a rethink of the AI theme in terms of where we are, whether we've overplayed that hand, whether given companies have been granted a lot more credit in advance than they deserve. I mean, meta, down for days. You know, you keep having these negative headlines. I keep waiting for that stock to maybe

ignore some negative headlines and bounce a little bit. Now, it's obviously not down huge compared to how much it was up. But how are you now thinking about the AI kind of mega-cap tech trade if you're looking for places where you would want to buy this dip? Yeah, there's still a lot of people, believe it or not, that are waiting to see some of these names come back to Earth a little bit. But we all know this. The Cappex story for generative artificial intelligence is still going up. In other words, the hyperscalers are still increasing their growth rates of what they're adding into it. So until that crests, Mike, these names are still going to be additive and much higher growth than the rest of the S&P. So if you are in the short-term world of looking at momentum

in terms of earnings growth, and some look at three types of momentum. Price, news, and earnings, these are the names that still have that. So, yes, they're going to get ahead of themselves, for sure. We've seen it time and time again. Until the earnings story, until the CAPEX story crests, those are areas of the market that will still be the leader. Are we seeing anything in the way the market's behaved in this last little stretch to suggest there's a little bit of hesitation about just how strong the underlying

economy is? I mean, cyclical stocks have actually done pretty well going into this period, although you start to see some reawakening in some of the defensive groups recently. Absolutely. You're seeing in obviously some of the beaten down pharmaceutical areas is one, some of the consumer staples. But what's interesting is you mentioned small caps before. Small caps, one of the better performers in the last month,

and particularly in August now, we've seen that happen before, too, only to kind of fizzle out. But something seems to be changing a little bit there. It seems like some of the industrial side of the small caps is picking up because of, you know, we're not going to say a manufacturing renaissance, but certainly there's better news coming in the manufacturing world. And small caps are, you know, a big haven for that. So I think this rotation, this rebalancing, still can continue, even if tech remains that

corner ship leader that's within the market. I think you can have both sides. Well, maybe one of those things that's been helping the Russell 2000s, even though is below its late 2021 high is starting to price Fed rate cuts at some point. So speaking of the Fed, Chris, stick with me. We're less than 24 hours from Federal Reserve Chair Powell's highly anticipated speech out of Jackson Hole. Now hanging over this market moving speech is growing pressure on Fed Governor Lisa Cook to resign. Today, the DOJ sent a letter to chair Powell urging him to remove Ms. Cook from the Fed because she is alleged to have committed

mortgage fraud. She's responded by saying she will not resign and will not be bullied. CNBC Senior Economics Reporter Steve Leesman joins us from Jackson Hull. So Steve, obviously a lot of things in the mix out there. First of all, the market wants to know what it should expect out of Powell and how, if at all, this new pressure point from the administration bears on the Fed's job. Yeah, let me just tell you what my understanding real quickly about the Cook thing. Fed Chair Powell does not have the power to remove Cook. That's something only the president can do and do for cause.

And it's a good question, actually brought up by Sarah Eisen this morning to the extent to which what we're talking about here, this mortgage allegations happened before she was a Fed governor, whether or not would be caused. But there is a lot of talk in the hallways about Lisa Cook. A lot of people think this is a political thing. But the more important focus, as you suggest, Mike, for investors is the speech tomorrow by Fed Chair Powell and the difficult task that he faces. He really is in the hot seat. Among the issue is possibly discussing changes to long-term strategy. that could be announced as soon as tomorrow. Presidential pressure and the market pressure to cut rates,

higher inflation amid a softer labor market, and a divided Fed on rate cuts on that divided Fed, Kansas City Fed president, Jeff Schmidt telling CNBC yesterday that he's not decided, but expressed strong concern with inflation running closer to 3% than the 2% target didn't sound like a willing cutter to me. Powell could finesse the problem by letting the data talk,

letting market expectations adjust to the big data points before the Fed meeting suggests a cut as possible but not promised. Not abandon the 2% inflation targets so they're still fighting it, but that a cut would still keep the Fed in restrictive territory. Futures market, Mike, you alluded to this, now showing only a 70% chance of a rate cut in September and a 30% probability of no change. That's a high for this contract. Even for October, a first cut by October, there's an 85% chance of that cut.

and a 15% chance of no cut, it was 3% a week ago. So there's quite a bit of, I call it, hedging in markets now that Powell won't deliver the doveish guidance or the rate cut promise that are currently priced into markets. Mike? Yeah, absolutely. The market sort of allowing that ambiguity to filter into the pricing and maybe not expecting perfect clarity after we hear from Powell tomorrow.

Steve, thanks so much. Really appreciate that. We're going to bring in our panel, Payne Capital's, Courtney Garcia, and Morgan Stanley's Jim Karen, Chris Heisio, of Maryland Bank of America, Private Bank, still with us. And thanks to you all. Jim, let me just have your way in quickly on the Fed, where it finds itself right now and what you expect to hear from Powell tomorrow.

Yeah, so look, I mean, I think what Powell's going to clearly articulate is that there's two sides to this, you know, to the risk spectrum at this point. And I think the side that he's going to fall on is more likely to be on labor market weakness. I think part of what Powell's going to really try to express maybe implicitly is a movement in their decision-making process or their policy reaction function going back towards the Phillips curve, which is the relationship between the unemployment rate and inflation. Now, I think it's pretty clear that we're likely to see weaker labor markets in the months ahead, and I think some of that's just from revisions and everything else.

And I think the response that the policy response to that would be to think of the risk towards a weaker labor market as being more than the risk towards higher inflation. Even though inflation's above target, I think the Fed and what Powell's going to try to articulate and communicate is an explanation and a justification for the Fed to start a process of cutting interest rates starting in September. And I think that should be supportive for markets. Yeah, I mean, I guess just in a simplistic way, you know, in the prior, you know, summary of economic projections in June, the consensus on the Fed was two ray cuts the rest of the year. That was before we got a pretty weak payroll number. Maybe that did swing the balance of risks in the committee's assessment toward downside to the labor market. Courtney, how does this play into your view of what the market is contending with right now? First of all, does the economy and the broader stock market kind of need the cuts to be coming in four weeks?

Would it be a nice to have? Or would it dictate what kinds of stocks work and don't work? Yeah, so I think to answer your question, I don't think the economy needs this, but it absolutely would be a benefit to the economy. And the reason I say that is when we came into this year, markets are expecting, what, something like six rate cuts this year? And markets have held up very well despite the fact that that has not happened thus far. So I don't think that markets are dependent on those rates cuts. but it's going to be good, especially for any of your short-term interest rate-sensitive sectors. So think of your small caps, think of your value categories.

Those that borrow at short-term rates are going to be the one that's the benefit from this. So if we do, in fact, see those rate cuts happen, this is more of a reason of why you want to make sure you're broadening your portfolio. And I think it's the reason you're seeing a lot of that broadening happening in the overall markets right now, because people are starting to position for that in expectation of these rate cuts finally happening. So I think tomorrow is going to be a big indicator of what's actually going to happen next month. month. But I think we've seen this with Powell many times. I don't think he's going to show his hand before he's actually lowering those rates. So I wouldn't expect a ton tomorrow, but people are going to be listening to every piece of rhetoric that he gives. Chris, how would you, what

kind of weight would you assign to what we're going to hear tomorrow as it fits into the overall picture for the rest of the year? Five percent. Okay. Five percent. Yeah, five out a hundred because what Courtney said is spot on, which is we don't need it according to what the markets telling us, the economy ran into a little bit of a soft patch. It's more of a slowdown, only to go, in our opinion, to re-accelerate, most of which could be some benefits coming from the bill that was passed, some perhaps deregulation, but more importantly, a restructuring of the rate structure next year relative to this year. Now, the market did get ahead of itself, anticipating that a cut would likely come in September. So some of the things that were more low

quality perhaps kind of got a rise out of that. But the market itself, the structure of the market flows and in anticipation of what's coming next year, it really doesn't need it. It doesn't need any anticipatory great discussions. In fact, if we don't get that and you get weakness, that's the buying opportunity. Jim, I guess to just articulate what might be a little more the hawkish view, and maybe this is shared by members of the committee and the majority in the last meeting, you know, you're not any longer seeing the disinflation in goods and durable goods and things like that. We did see this little bit of an uptick in services inflation in the latest reading. And if you go back to just everything that Powell has said in the last couple of

press conferences, they still anticipate a lagged effect of tariffs, or at least they have to wait to see what that effect might be, let's say over the next few months, before they have confidence that inflation's settling out. So how do you make the case that you can set the stage for cutting when you've kind of already been on this course of wait and see on inflation? So the way I think the Fed will justify this is it's really about wage inflation. Wage inflation is likely to drive inflation broadly in the overall economy. Now, part of what is going to be discussed is some labor market dynamics. This is going to be what's discussed at Jackson Hole.

I think this is very important because what is starting to happen right now is we're starting to see a transfer of job creation that came preterm. primarily from the government sector that is now likely going to free up labor supply into the private sector. So essentially the strong growth in the labor market really came from government sector jobs that crowded out the private sector. So what that effectively suggests is that there's going to be a lot of labor supply coming into the markets over the coming quarters and even into the next year, that the private sector can actually start to absorb. These are higher skilled workers that can be, you know, that can enhance productivity across corporations. I think this is a really key theme, and I'm early on this, but I think the markets aren't really

fully appreciating it. The ultimate point here is that this ultimately should increase margins for companies going forward. So in terms of justifying why can the Fed cut interest rates, despite the fact that inflation is high right now, I go back to wages. I think wage inflation is going to stay relevant. relatively low and stable. And as long as that's the case, then you won't likely get sustainable, higher, durable inflation going forward. And that gives the Fed a pathway to think about cutting

rates despite some of the noisiness around inflation, headline inflation today. It's interesting because it was a few years ago, I guess, at Jackson Hole that Powell did kind of articulate this view, kind of harkening back to the 90s scenario where the Fed's sort of allowed the productivity miracle to happen and they didn't maybe tighten as much as some thought they might you think we're back there i do i think that we're moving towards that i mean look at what the tax and budget policy from the u.s that one big beautiful bill act in the deregulation that's coming through a lot of this is a very very big supply side boost to the u.s economy right so we're coming from a demand side boost which was largely driven by government spending and

and what have you, to now it's being shifted over to the supply side. The supply side tends to be, you know, the corporate side, tends to be the private sector, tends to be much, much more productive. That higher productivity is likely to lead better growth with lower inflation. At least that's the plan. And that's what's being laid out right now. And I think we have the tax policy that's there. We have the deregulation policy. Tariffs are a headwind, but we have to look at the net, right? this is this is a three-dimensional problem you've got tariffs you've got deregulation and and you also have tax reduction right so there's costs and there's cost reducers when we look at the net effect you could get with all the cap-x as Chris was talking about accelerated depreciation you could get a

very good boost in in the corporate sector and in spending and in GDP and even in private sector jobs growth which has been relatively flat over the past few years yeah Courtney it's it's funny that um you know we do have this buildup of expectation and argument for resuming rate cuts at a time when you have markets pretty much near highs, you got pretty full valuations, credit spreads are super tight, crypto's been strong, you know, the IPO windows wide open, private markets are flushed. In other words, financial conditions are really accommodating right now. So how do we think about maybe what would result if the Fed does start to resume cuts? Are we just going to be kind of off to the races, or do you anticipate a different?

type of me. Yeah, and I think that's actually a risk of these rate cuts happening, right? Because this could be stimulated to the economy, which actually could increase longer term inflation expectations. There's a lot of cash that sitting there on the sidelines because people are very happy with their four to five percent interest they've been getting on money markets. But at some point when the Fed starts to cut, a lot of that goes back in. So a lot of this is, in fact, going to be stimulative to the economy and to the stock markets,

which actually increases those future expectations and could create kind of that like melt-up idea where a lot more money goes back in. So I think that is one of the biggest. risk that you need to keep your eye on here. I guess the other quick point, Chris, would be what happens to longer-term rates in either scenario. So what would you expect? Pretty flat, actually, pretty flat. As Courtney said, unless there's a major adjustment to long-term inflation expectations. But it really just doesn't appear that. And Jim hit on a great point. There's a lot of balancing going on here. And there are some headwinds from, you know, price hikes because of

certain parts of the tariff spectrum. But when you balance that out and you run it through, the market's telling us that they're not worried about it. And then, as Courtney said, in terms of private sector growth coming through, it seems like any cuts, whether they come next year now, start now, whatever, is more of a rate structure adjustment versus something that is an emergency cut because we need it. Yep. The good news cuts, as they call them, if we do get them, if we're lucky. All right, Chris, Courtney, Jim, really appreciate the discussion. Thank you very much. Let's send it now over to Christina Partsenevilus for a look at the biggest names moving into the close. Hey, Christina. And one of the biggest names right now is Paramount Skydance. Those

shares are soaring and leading the S&P 500 just two weeks after the company formed as a result of a merger between Paramount and David Ellison's studio Skydance. The surge today comes despite an investigation by congressional Democrats over whether the companies acquiesced to illegitimate demands from President Trump to win approval for the merger. Shares, though, almost 14% higher, a lot of call option activity to people betting that the share price will go up. So that could be part of the reason why you're seeing it. U.S. shares of Chinese EV maker X. Peng, also in the green, after its CEO purchased an additional 3.1 million shares. This is according to a filing today.

It comes on the heels of a better-than-expected earnings report just on Tuesday, and that's why you're seeing shares up a whopping 12% and really sticking with double digits and up more than 15% this week. Meantime, Cody's shares sinking after the beauty retailer warned sales decline. declines will actually deepen this year. It comes as retailers just, you know, reduce their back orders and promotions intensify amid weaker U.S. spending. So you're really trying to get people to spend. And that's why shares are also down 21% double digits. Mike? Christina, thank you. Talk to you again in a bit. We are just getting started. Up next, we'll hear from a top analyst about how he's playing the retail space this earning season,

plus what he'll be watching from Ross results in overtime. T.D. Cowan's John Kernan joins me after this break. We are live from the New York Stock Exchange. You're watching closing bell on CNN. We are getting a news alert out of Washington. Amen Jabbers has that for us. Hi, Amen. Hey there, Mike. A new report now crossing from Reuters. Reuters reporting that the U.S. government is considering redirecting about $2 billion in Chips Act. funding for critical minerals projects inside the United States. Now, no one here at the White House that I've spoken to in the past couple of minutes can confirm this report.

But according to Reuters, the idea is that if the funds are redirected, then the Commerce Department will be able to direct mining, recycling, and other efforts around critical minerals. That's an area where the U.S. government sees an enormous strategic importance in having that industry active domestically and not be dependent on foreign sources, Mike. So we'll get you any confirmation of that as soon as we can from here. All right. Amen.

Thank you. Retail earnings season, meanwhile, in full swing. Walmart, the latest to report results, posting its first quarterly missed since 2022. The retailer also sounding an alarm on rising tariff costs. You see the shares down almost 5% on the day. Raw stores set to report today after the bell. That stock in the red as we head into the close as well. Joining me now is TD Cowan's senior retail analyst John Kern.

And John, it's good to have you here. What's the setup, I mean, into Ross and the remainder of retail season? We've obviously heard from Walmart, also, of course, heard from TJX a few days ago or a couple days ago. So how do things look from here? Yeah, sure. Broadly, retailers and consumers are showing decent strength as we head into the fall. We're almost through Q2 earnings season. We've had some good positive surprises to the upside, but also some nasty downside surprises.

the environment from both the top-down and bottom standpoint is extremely bifurcated at this point. And what are the implications of that bifurcation, let's say on Ross just to keep it immediate? Sure. Ross stores the cousin, TJX yesterday, beat and raised, stocked in an all-time high. It went to its all-time peak valuation multiples. Ross serves lower-income consumers. It has a similar financial algorithm to TJX. There's a huge valuation discount between.

between raw stores and TJX right now. It's about 25% on a PE basis. We think that can narrow. We like the initiatives, the new CEO, Jim Conroy has in place. And we think they'll report some upside to Q2, same store sales and EPS. And we think they will initiate full-year guidance tonight after the close.

It'll be fairly in line with consensus expectations. And what, in your view, has accounted for that wide valuation discount opening up between TJX and Ross? I mean, is it geography? Is it the customer segment that Ross is more exposed to? It's both. There's fear built into the valuation of Ross. We think it's related to 50% of other stores being in border like states, California, Texas, Arizona, Florida. They have a very heavy Hispanic exposure and lower income exposure. They're dealing with lower

income consumers than TJX. They have different brands in the store. They service consumers with different price points. But we do think comps can accelerate to 3% in the coming all quarter, and we think you'll see better gross margin trends. So that can close the gap, we think, the current valuation gap versus T.J.S. And then more broadly speaking, I know you were taking a look at how back to school is pacing and some of the trends and maybe change position to benefit from a little bit of an apparel cycle in particular. Yeah, two of our top picks, Ralph Warren, Amher Sports, have had tremendous innovation, the brand

management from the manager teams has been tremendous. We continue to see positive estimate revisions based on better than expected sales and gross margin. These companies are well positioned to deal with tariffs, and a lot of companies are not well positioned to deal with tariffs. My 20 stock coverage list, they owe the U.S. government collectively about $3 billion in profits. So like I said earlier, it's going to be a bifurcated environment, those with pricing power, those with innovation are going to win. And those companies you mentioned being better positioned on tariffs, is that, I guess, a lasting advantage in the sense that they, you know, can continue if these tariffs remain on, or has it been a front-loading an inventory management effect so far? Yeah, they've managed inventory very well.

They have pricing power. They also are internationally diversified. So in the case of Amher Sports and Ralph Lauren, less than 40% of their EBIT is coming from North America in the United States. so that's a help. And they also have brands with pricing power. And if you can raise price and realize that raise price increase mid single digits to high single digits, you can offset the tariffs and even see some margin expansion. And that's what we've heard from some of these companies, that they're in a position to mitigate tariffs. Now, on the flip side of that, there are many companies that are not positioned to do that. And that's where you've seen the

downside to earnings. And you'll continue to see that into the first half of next year because of higher cost inventory is going to flow through. I was going to mention, so, you know, where it seems like that the companies have it tougher. I mean, is it in footwear or is it particular categories? You know, it's broad-based across multiple categories. It's the companies without pricing power, without innovation, without enough demand that are over-inventory and are overlying on the U.S. market in particular. We've seen some big downside surprises from Under Armour, Columbia Sportswear, and others.

And I think you'll continue to see some downside surprises so we get into the back half the year from other. all right yeah but kind of a kind of a choppy environment but uh makes it interesting to watch john thank you very much thank you all right up next we'll take you inside disney's decision to shake up its espn streaming service that's after this break closing bell be right back welcome back disney launching espn's new flagship streaming app that doesn't mean the company's ditching its focus on linear tv julia borsden is here to explain. Hi, Julia. Well, this is a landmark moment for Disney as it offers unlimited access to ESPN via streaming for the first time. And Disney is also pushing its bundle with ESPN, Hulu, and

Disney Plus, giving those apps to ESPN subscribers at no additional costs if they're already subscribing to ESPN. But rather than ditching its linear business, Disney is using these apps to make the pay TV bundle more appealing as subscribers to Comcast, Charter, and other pay TV providers will get access to the ESPN app. And Disney won't be reporting subscriber numbers for the ESPN app as it manages the combined TV and streaming business holistically. Take a listen. A number of other companies are exiting their linear business completely, meaning they're

selling off the channels that serve the linear television ecosystem. We're doing the opposite, actually. We're combining them, which gives us the ability to aggregate both subscription fees, and advertising on both sides and essentially end up with a business that's actually larger and more impactful than it would be

if we were to separate them completely. Bob Iger is referring to the fact that Comcast is spinning off most of its cable assets including CNBC into Versant, which starts trading separately in the new year, while Warner Brothers Discovery is spinning off most of its cable TV assets, including CNN, TNT Sports, and Discovery

into a new company called Discovery global, that deal is expected to close in the second half of next year. And when it comes to competing with a now more fragmented landscape, Eiger says he believes that they are positioned, quote, extremely well. He also has said he's open to bundling with other sports apps as they're bundling with Fox 1. Back to you. Yeah, exactly. So just different bundles in different places.

And I guess, Julia, you know, a company like Disney, the dream in this environment probably is to maybe almost be agnostic. as to how customers consume their content, right? Whether it's the way it's priced on a streaming app only or part of a bundle. I mean, are they at that point, do we know if they've achieved something like that? Well, it seems like they're agnostic as to how you pay for ESPN, but they have said, Jimmy Pater and Bob Eiger said they really want you to consume content on this new ESPN app because they think that's going to be the best experience. And if you have the best experience, if you're engaging more, if you're whether you're making

bets or tracking your favorite teams, getting all the data, watching all the content you could possibly want through ESPN. That's ultimately better for them, not just in terms of ad dollars, but also in terms of minimizing churn. So they said even if you're paying for ESPN through Spectrum or Comcasts, they do want you to be able to go to ESPN and watch and do all of your sports, all your sports fandom there. Sure. Yeah, on the run. And obviously, maybe greater propensity for sports fans to pay for things like the app than others. Julia, thank you very much. Up next, we are tracking the biggest movers as we head into the close. Christina, standing by with those. We have restaurants, a chain facing customer

revolts over brand makeovers, solar stocks cratering on Trump's renewable freeze and grocery delivery wars are heating up. Those stories next. 20 minutes till the closing bell. The S&P 500 down four-tenths of 1%. Let's get back to Christina for a look at the key stocks to watch. Cracker, Cracker barrel. Those shares sinking amid growing backlash over the restaurant train's first logo redesign in 48 years. The company announced Tuesday it would remove the image of a man leaning against a barrel from its logo sticking to a text-only format.

It comes amid a broader revamp for the company where they have remodeled locations to remove some country-themed trinket that line the walls, and that's why you're seeing shares down 8%. The solar sector also taking a hit today following a post from President Trump yesterday that the U.S. will not approve any solar or wind power projects. That came after the administration tightened federal permitting for renewables just last month. For solar and array, two of the biggest decliner, as you can see, down 6.5%. 6% also MFAZ, another name lower. You can see almost 4%.

So just read across the board. And lastly, though, I have some more red Instacart sliding on a downgrade to underperform from neutral at Wedbush, the firm citing the expansion of Amazon's grocery delivery service as a major headwin for this stock. They lowered their target to $42 from $55, which is really just an implied 7% downside from yesterday's clothes. In other words, they expected to keep falling 2.5% lower Instacart parent company Maple Bear. Mike? Yeah, just made a new high a couple of weeks ago, I guess that one. It's a turn of fortunes. Thank you, Christina.

After this break, we'll hear from top technician, Paul Sianna, the key levels he's watching and how he's positioning as we look toward year end. Closing Bell, be right back. Energy leading the S&P higher today with consumer staples lagging due to Walmart earnings the NASDAQ on track for its worst week since May. You see the S&P now down 0.4% on the day. share key levels to watch is Paul Sianna of B of B of A. He's B of A's head of FIC and Equity Technical Research. Paul, it's good to see it. Thank you, Mike. Good to be back. Thank you

for having me. Start kind of with a wide frame here on the S&P 500. I knew you guys had a summer rally target of 6,500. We basically got there pretty much at the highs this month. We're chopping around. People talk about seasonal weakness. What do you think the market is undergoing right here? Sure. When we look at the S&P 500 technicals, right, there's a few concerns. One is some of that seasonal weakness that comes into September, but also some of the oscillator divergences. So the rally into almost 6,500, slow down, according to momentum and trending indicators. So in August, what we recommended was trying to hedge S&P longs while we're hitting new all-time highs. And we still like that view. Okay. So at this point,

it's a matter of staying in the market, but maybe being attentive to protecting some downside. Yes. What would tell you that this phase is more than a routine pullback? Like, where would the S&P have to fall to for you to say, okay, it's a different trend now? Yeah, S&P 500 and round numbers were in a range between 6200 to 6,500. I think if we're breaking 6,200, which was a key low about six weeks ago or so, then we could be in a deeper decline in a worse scenario. But until then, you know, it looks more range-bound, consolidatory than it does look megabarish.

And then just in terms of the parts of the market, that were the most stretched, right? Whether it's the NASDAQ 100 or something like that, is there more to give back? Probably. Yeah. You know, I think one way to look at the equity market is in order for the rally to keep going, we need rotation, we need breadth, and we need some really simple breakouts. It's really disappointing to see that the Dow Jones Industrial Average still is not through

$45,000. Yeah, it's still struggling under there. We're just sitting right near that. So without the big cap blue chip stocks joining the rally, we're not really going to push that much further broadly. Yeah, I guess the Dow first touched 45,000, like in December or something. So it's been a while. Let's talk about the 10-year treasury yields.

Broadly speaking, pretty range-bound, but where do you see it potentially heading from here? I would say we're tactically bullish treasuries, cyclically bullish treasuries, but secularly bearish. Okay. So what we've been telling clients is that we think 10-year yield in the shorter term probably gets down to about 4.05%. We like buying it here at about 4.3. we just don't want to see the high on non-fawn payrolls day back on August 1st of 4.4% broken. Right? Because that particular candle is really the control in the chart. We know that was a bullish day and a bullish view, and we're trying to continue with that in the short term.

Right. Bullish day for treasuries, obviously. So if we were to go much lower on treasury yield, that's probably not a great signal for the economy. Maybe we shouldn't celebrate that. It could be. You know what? There's a lot of different ways to slice this. Lower yields could support the tech narrative, right? Which may allow something like the Dow to break $45,000, finally. Quickly, platinum, what's it doing in relative to gold? Gold has been stuck in a range for six months, right?

And I think if you ignore some of these mega charts that have ranges on them, you can find other charts that are going to break out and start trending. And platinum was one of those that we recommended buying platinum back near 1,000. I had some big breakouts, and it's dipping now. And we like to say, buy the dip and get ready for the rip. It's going to say, it's all up 35% from there. Yeah. Paul, great to see.

Thank you. Thank you. Appreciate it. All right, we are getting a news alert. Julia Borsden has that for us. Julia. Hey, Mike, the Wall Street Journal reporting that NBC Universal and the MLB are nearing a three-year deal that would be worth nearly $600 million.

And also that Netflix is in advance talks to the leak to stream the home run derby and a deal that would be worth more than $105 million over a period of years. Now, we've reached out to Netflix and NBC Universal. No comment from either, but a source close to the situation tells me that while the deal is not done, not as done as Wall Street Journal article indicates that the talks are advancing and they are very close and directionally close. I also want to point out that my colleague, Alex Sherman, has been reporting that this type of deal has been in the works. It seems like we should be expecting some official news soon

as we hear that those deals are moving directionally closer. Back over to you. All right. Yeah, new bidders for baseball. All right. Gillian, thank you very much. Up next, Requisite Capitals, Brent Talkington, standing by to break down the critical final moments of the trading day. The Market Zone is next. We are now in the closing bell market zone. CNBC contributor and Requisite Capitals, Brin, Talkington, is here to break down these crucial moments of the trading day. Plus, Christina Parks and Nevelas on a new piece of reporting that has investors on edge. Bryn, good to see you.

Just your take on what we've been witnessing in the markets this week. Obviously, some of the overheated parts of the market cooling off. You have some rotation into some of the laggards, maybe a little bit of hesitation ahead of Jackson Hole and Nvidia earnings. So how are you reading it and how are you playing it? Well, I think it was a healthy hole in the balloon on some of the growth-year growth stocks like the Palantiers, et cetera. That's healthy to have that somewhat of a pullback. I think the rotation, I have a big question mark. What are you rotating in?

I think if you're going into small caps, that will continue to be the widow maker trade. I just think there's too many cross-currents for that to be anything more than a, we'll say, a three- or four-day trade. And so I think that we're going to have this settling out. Obviously, tomorrow is a really big day with Chairman Powell speaking. And then next week, we've got NVIDIA earnings where they saved the best for last. Right. So that would suggest that you're not necessarily taking what the market's been doing as a queue to kind of race toward what has not been working.

Is that correct? In other words, you wait for the leaders to come in as opposed to go, you know, go go kind of dumpster diving? I think so. I mean, obviously health care is really cheap, but there's a big asterisk by that in terms of if you break down within pharmaceuticals, what's going to happen with the White House in terms of the rulings and the tariffs on pharma. We still don't have that, so I think that needs to clear. I think energy is really cheap, but I think Trump administration wants it to stay cheap, so I think it'll stay cheap for a while. And so I just think you have to look at, like, individual companies. You know, I recently added to Salesforce.

So that's where it's been an unloved software sector. I think it's just thrown in with the adobies, et cetera. So I think there's some individual names. But I still say stay at the high end, the cues, the S&P. We love selling calls right now. So that continues to be, you know, I think an all-weather strategy for us. That's not only, you know, timeless, but I think very timely right now to have a good covered call strategy.

Got you. Bryn's stay with me. Christina, what do we have here on NVIDIA? Well, we have Chinese municipalities that are accelerating. efforts to cut NVIDIA from the AI supply chain, with Shanghai targeting 70% self-sufficiency by 2027, and Beijing pushing for 100%, this according to a Niki report today. The drive really intensified after Commerce Secretary Howard Lutnik's July CNBC interview with Brian Sullivan, where he called H20 chips for China, Nvidia's fourth best.

The FT reporting today that senior Beijing officials were, quote, insulted by those comments and prompted Chinese officials to continue their crackdown on H20 purchases. And so that's why the stakes remain high, Mike. China represents roughly 10%, some they're saying it's even lower now of total revenues as of last quarter. It's been dropping quickly, but still contributes substantial dollars to NVIDIA's bottom line. While most analysts aren't expecting major China contributions to this quarter given the April H20 men, CEO Jensen Wong must convince Wall Street that near-term Blackwell demand and the recent Trump deal, which allows H20 sales in exchange for a 15% revenue cut

would outweigh longer-term risks of being phased out of the world's second-largest AI market. Yeah, it seems a bit of a tricky balance, Christina. Thank you very much. And Bryn, how does this play into the overall thesis with Nvidia? We've been through different versions of the story with Nvidia. Of course, you know, one, it was massive supply constraints. They can't make it fast enough.

Now it's each generation getting better. The sustainability of the AI theme, Where does China fit into all that? So I think it's important when we talk about what the White House is doing. It's not 15% of just sales, of like, NVIDIA sales, it's of China sales. And so I think that's a win for NVIDIA, and I guess AMD as well, because they were going to be totally banned, right? They already rode off the H20 last quarter. So I think for NVIDIA, having 85% of the revenues from China is way better than the alternative of a complete ban.

I think you have to take a step back. I mean, this is a $4.3 trillion market cap that come next week is going to deliver plus 50% revenue growth, plus I think it's 43% earnings growth. It's really just rarefied air. And so, I mean, I don't see any company ever in history having this type of consistent, very high, high double-digit revenue and earnings growth. So, I mean, I just think Nvidia continues to be, once again, in pole position versus all of their peers. No, it's fair to say that no company at that scale of revenue is ever grown quite that fast. I mean, this year we're talking about, you know, $130 billion or thereabouts in revenue. I guess the question, of course, is how many years we can extrapolate out growth like that.

And I do want to kind of circle back to Palantir, which you mentioned. And again, it seems like kind of the center of this market debate of certain parts of the market ran pretty far, pretty fast. They may not have the fundamental evaluation support that you might like, but Palantir pulls back like 17% off the high. It's trying to stabilize today. How should we think about it? The last time it hit its 50-day moving average, which is where it is right now, was April. So in hindsight, that was an amazing time to buy back in.

But what's the big difference, Mike? It's like the rest of the market had sold off. So I think this will be interesting to watch to see what happens to Palantir because the market is, you know, the market's at basically an all-time high. And so for Palantir to start moving back higher, I think it's going to rest here for a while. I think that so much good news is priced in. This is a great company there at the center of AI, but at a certain point, what's not priced in? And so I wouldn't be buying it here.

I mean, once again, I sold most of it around 40 points ago. Yeah, which is really not that long ago in time. So obviously, it's gone a long way. Brent, thank you very much. You'll want to mention Nvidia, current fiscal year is going to do $200 billion-ish in revenue. 130 was last fiscal year. You see the S&P 500, but it's still down about 4 tenths of 1%. It's going to be a fifth straight down day, although very mixed and rotational underneath.

The Russell 2000 may eat out a game for the day as Wall Street waits for Dave Powell to see the Jackson Hole tomorrow a bit uneasily. That's up to the closing bell. We'll sit in its overtime with Gordon Brennan. Thank you.