Closing Bell - Closing Bell: Powell's Message to Markets & Framing Up the Housing Sector 8/23/24

Episode Date: August 23, 2024

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

And welcome to Closing Bell. I'm Contessa Brewer in today for Scott Wapner. We're live from Post 9 at the New York Stock Exchange. This make or break hour begins with the post Powell rally. Stocks shooting higher after the Fed chair said the time has come, signaling they're going to start cutting rates next month. Former Fed Vice Chair Rich Clarida joins us shortly to break down what he sees in terms of timing and the pace of cuts ahead. Here's a look at our scorecard with 60 minutes to go in regulation. We're green across the board, all three indices trading higher by more than 1% at the highs of the day. We're seeing that tech stocks are rallying on hopes of a lower rate cut environment. Tesla and Nvidia both jumping more than 3%. And look at small cap stocks also gaining on this outlook. The Russell 2000 advancing about 3% on the day. It takes us

to our talk of the tape. And if hopes of coming rate cuts can sustain this rally, joining me now is Edward Jones, Mona Mahajan, and Truist Wealth's Keith Lerner. It's great to see both of you today. Mona set the scene for me today because there was so much expectation going into Fed Chair Jerome Powell's speech in Jackson Hole today, the expectation of rate cuts. But he came out and he stated it fairly clearly. Yeah, thanks, Contessa. Look, the chair delivered on his message today, and I think they usually tend to use this Jackson Hole Symposium as a platform where they can deliver or signal a change in policy. And Fed Chair Jerome Powell did just that. You know, not only did he say the time is now for a change in policy, he also alluded to both sides of his dual mandate that have come now into focus. So, of course, the inflation side continues to deliver well as well. We've seen CPI inflation with a two-handle now, 2.9 percent. Powell commented on that, saying his confidence in inflation moving lower has actually increased. But, of course, they're now much more focused on the labor market as well,

and that has softened. And he noted that he does not want to contribute to further softening in the labor market. So in our view, net net, he has signaled a September rate cut. We still think it's a 25 basis point rate cut. We don't see the urgency for something larger. And we think two to three rate cuts are likely for the remainder of the year. Keith, what's your take? Well, first, great to be with you. I think Mona, I think she summed it up well. The market wanted to see the rate cuts and Powell's delivering. I mean, he was very direct. I think the market was already pricing in 100 percent probability of a rate cut, but they still wanted to hear from Powell.

And what you see this morning, maybe overdoing it a little bit, but now the market is now pricing in a 40 percent chance of a 50 basis point cut in September. I think the more important message is that the Fed has now shifted their focus to the employment side. And they should write the unemployment rate today is above what they thought it was to be at the end of next year. And as a result of that, you have an economy that is still is cooling. But this should probably provide some support as we move into later this year. And you're seeing the more interest rate sensitive areas of the market lead today. When you're looking at the Dow Jones up nearly a percent, the Nasdaq, the S&P 500,

almost a percent, and then the Russell 2000. Mona, what does it tell you about what's to come based on the this expected rate cut in September? Yeah, you know, we continue to feel like this broadening of market participation and leadership has some legs here. And we thought there would be two catalysts that drove that. One would be getting closer to Fed rate cuts, which I think we are notably closer now. We think September is a start there. The second one would be a broadening of earnings participation as well. So if you look towards what's happening in Q3 and Q4 of this year, it's actually the contribution to earnings is coming much more meaningfully so outside of tech than it is

within tech. And so, yes, tech is contributing, but certainly not more than 50 percent of earnings growth. And so we think both of those catalysts combined lead to this broadening of earnings. But we'd say from a cap structure, market cap perspective, we still like large and mid-cap as a way to play that diversification theme. Longer term, we're a little bit more cautious on small caps. They are more levered, and they tend to have less positive earners, you know, more of those quote-unquote zombie companies.

But all that being said, we think if you get more volatility in the weeks ahead, we wouldn't expect this pace of gains to continue at this pace for the remainder of the year. So if you get that volatility, it's really your opportunity to use that to your advantage to to get some diversification. Keith, I see that you have a bias for large caps over small caps as well. After we saw that dramatic pullback at the beginning of August, August 5th, I know that you went back and you had put the tech sector back to overweight after downgrading it in late June. How much more room do you think tech has to run here? Yeah, it's a good question. I mean, since we upgrade in early August, the tech sector is up over 10 percent. So, you know, what you're seeing with this market is kind of a ping-ponging back and forth. So short term, it does seem like we're

going to have a little bit more momentum towards small caps. I agree with what Mona said. I think that's a shorter term phenomenon. I think longer term, we still like large caps. And with tech, I think as we get into the fourth quarter and you have focus on the iPhone upgrade around the artificial intelligence and then potentially an upgrade in the PC cycle, I think money will rotate back to tech. But right now, I don't think it's either or. I think it's both, right? We're seeing tech perform well today, but we're seeing participation from real estate,

financials, industrials, materials. So I think it is healthy that we're seeing things porting, but I do think we'll have that kind of back and forth continue. What about gold? Because I'm seeing gold up 1.2% now. It looks like Powell's comments had some impact there. How are you positioning gold with the recent highs that we've seen for that metal? Yeah, earlier this year, we added a position of gold in our portfolios.

And it has multi layers to that. One, I think part of the reason why it's moving up today is one, interest rates are moving down. So that's a positive. The U.S. dollar is weakening. That's a positive as well. At the same time, as we move into the election cycle, no one's really talking about bringing in the fiscal or the fiscal spending. So that's also a positive. And we're seeing countries around the globe, especially China, add to their gold reserves. And technically, it looks fantastic moving to an all-time high. So we think it has a place in a portfolio as far as diversification and the overall trends are supportive. In recent days, the yields have been so high,

Mona, that a lot of people have been very heavy in their portfolios in cash. If they want to do something with that excess cash now, what's your recommendation? Yeah, it's a great call out. Look, that reinvestment risk has certainly increased in recent days. If you do hold overweight or two overweight positions in cash-like instruments like CDs and money markets, you know, a year from now, those interest rates will probably be lower. You want to start thinking about that now in terms of really moving some of that cash-like position into more strategic allocations and equities and bonds. And if you think about bond yields in particular, yes, we may see somewhat of a move lower. But versus history, we think the Fed will not go back to the zero bound, probably end

their interest rate cutting cycle somewhere around 3%. You're still getting a relatively decent rate, you know, if you add some premium to that, to your 10-year yield or your corporate bonds. And so we think balanced portfolios still remain relatively favorable here. We think you can get good quality dividend players, equity returns, and balance that with some fixed income bond-like returns as well. So balanced portfolios here to stay, we think. Mona, Keith, appreciate your expert insight. Thank you. Thanks, guys. The Fed front and center as chair, Jay Powell gives his keynote speech at Jackson Hole. Let's send it over to CNBC senior economics correspondent Steve Leisman, who's in Jackson Hole, Wyoming for us today with a beautiful backdrop and really some remarkable statements

from the Fed chair. Yeah, this was a big deal, Contessa, you know, and maybe the right place with these big mountains behind us to tell that story. So after two and a half years of fighting inflation consistently, Fed Chair Jay Powell takes to the podium here at the Jackson Hole Annual Conference and lays out a new marker on monetary policy. He's declared now is the time to adjust interest rates downward. The time has come for policy to adjust. The direction of travel is clear and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks. There's a statement you don't need a Fed reporter to interpret. Powell suggested the Fed, with timely justice to policy, could stick that so-called soft landing, saying the Fed could get back to the 2% inflation target and do so with a still strong jobs market.

Powell's comments on coming rate cuts and the outlook for a soft landing made markets price in a somewhat greater chance of a 50, as one of your previous guests was just saying, for September or November. Not both there, but still looking for a total of 100. You could see that chance of a 50 up in September by about 10 points, near 40 percent, or the chance of one in November up as well. The dollars sold off and bonds and stocks rallied, as you know. Powell didn't specify the pace or extent of rate cuts, though he did say multiple cuts are likely on the way. So how do you know? Well, one of your guests there, Mona, was talking about this. Further job weakness could tell you is it

going to be 25 or 50. Does inflation continue on this downward trend? If it doesn't, the Fed's going to be more reluctant to cut. And of course, what the economy does is stick around potential like it's been. Chicago Fed President Austin Goolsbee, he said on CNBC he did have concerns about the job market and the consumers, but was generally upbeat. I do have concerns. There are concern warning lights as from parts of the job market and the consumer delinquencies, small business defaults. On the other hand, we also have wide pockets of strength in the economy. So I'm hopeful that a year from now, we're still chugging along. So the market reactions to Jess Powell was more dovish, direct, and definitive than markets

may have expected. But there's still data to come before the September meeting and differences on the Fed's committee about how far to go, Contessa, and how quickly to get there. Steve, thank you for the great reporting out there in Wyoming. Let's bring in former Federal Reserve Vice Chairman Richard Clarida now. He's Global Economic Advisor at PIMCO. It's good to see you today. First of all, the remarks, even with everyone factoring in a rate cut in September, it just was so clear. It was so easy to grasp. As Steve pointed out, you didn't need the economics reporter to do the translation for you. Does it in any way, shape or form box the Fed into its next action, given that we still have data points to come, a big jobs report, PCE out next Friday? Well, Contessa, thanks for having me on. A couple of things. First, the Fed minutes,

which were released two days ago, also were pretty clear that they're inclined to begin moving in September. So today was really reinforcing that message. Your question is, are they boxed in? Well, I do think they think we're going to cut in September, and for a pretty wide range of data, they will cut in September. I think the thing that stood out to me in the speech today was that sentence in which the chair said, we will do, quote, everything we can to prevent a rise in unemployment. That's quite a strong declarative statement. It's not a declaration of mission accomplished on inflation, but they do think they're close

and their attention is now turning to the labor market. We saw new home sales come in higher than expected by a pretty significant amount, 100,000 or more. How different does the data, would the data need to be in order for the Fed to change its calculation and its expected trajectory on action? Well, there are a couple of things here. First, the committee will, of course, have a policy rate decision at the September meeting, as they always do. Secondly, in September, they'll be updating their projections

and the DOT plot. So we're looking for not only a rate cut in September, but a change to the DOT plot from the June plot, which showed only one cut this year. Our view is that if they have enough confidence to cut in September, they're probably planning multiple cuts and they'll make that clear and I think at least 25 basis points of meeting would be our baseline for a pretty wide range of data. I think the data they're really focused on now Contessa is the labor market data. I think the rest of the economy will be focusing on as well but the labor market market data, I think, will be key here. And the speech today reinforced that. We heard Austin Goolsbee tell Steve Leisman that he has real concerns about parts of the job market, even though there are strengths in other areas. What parts of labor in particular and more broadly the economy do you think still present pitfalls? Well, you know, remember a year ago, the goals of Fed policy to reduce inflation

was to take some of the heat out of the labor market. So we've had a rise in the unemployment rate. We've had a slowdown in the rate of growth in employment. And so far, that was really part of the package to disinflate the economy. What was very clear today, Conceica, is that any additional softening in the labor market is not something they welcome. And that's the everything we can quote. You know, we did have a big downward revision. Eight hundred thousand jobs that we thought were there were revised away. And so I think right now their judgment

is that the labor market is in good balance, but they are very attuned and attentive, as we used to like to say at the Fed, to any further slowdown in the labor market. The chair did not go into details about the pace or the intensity of the cuts here, but maybe you will. You said that you expect 25 basis points. Do you think that we get to 100 by the end of the year? What would happen to Spark It to be more than that? And should they come faster? So what I'd like to do here is distinguish between the most likely or what some folks call the modal scenario and right now that still looks like twenty five basis. Point cuts per meeting for the last three

meetings for a total of seventy five however if that if that scenario was wrong it will almost certainly be wrong in the sense that they will cut. More they will start cutting in September I think as I said the labor market data- will will be

key more over suppose the labor market data. That we get in September's I think, as I said, the labor market data will be key. Moreover, suppose the labor market data that we get in September is OK, but it starts to slow down in October, then I could see them increasing the pace to 50. And so I do think that we're going to get at least 75. And depending on the rest of the data, it could be more cuts than that. What are you expecting to see in the PCE report next Friday? It should be a good positive report, Contesset, because we've gotten the CPI report and the PPI, and both of those would indicate we'll get a number somewhere between 0.15 and 0.18 monthly, so on core. So if you annualize that around two percent, which is right in the in the sweet spot, at least for that print.

Rich, we've heard some talk among the Republicans and Trump and his vice presidential running mate that the Fed chair ought to be subject to some input from the president, that maybe this should be an appointed job by the president. What's your take on that? Well, this is very clear in statute. You know, the Fed officials get to hear opinions and judgments all the time. You know, Jay Powell's term runs through May of 2026. What you've just suggested here would require a change in the law. The Fed is a creation of Congress, the Federal Reserve Act as amended. And so I don't see any really any change on the horizon as far as that is concerned. Should it change? Oh, I don't think so. I think the country's been served well by the existing statute.

You know, the Fed has what we call instrument independence to raise or lower rates. But the goals of the Fed are set by Congress. So price stability and maximum employment. Rich Clarida, good of you to join us on this Friday. Thank you. Thank you. Let's get right to Pippa Stevens for a look at the biggest names moving on this Friday. Thank you. Thank you. Let's get right to Pippa Stevens for a look at the biggest names moving into the close. Hi, Pippa.

Hey, Contessa. Well, Intuit is the worst performer in the S&P today, down 7%. The company beat estimates for Q4, but weak full-year revenue guidance is hitting the stock. The company also adjusted its long-term growth ranges, including for its consumer unit. Evercore ISI noting this puts more pressure on the small business franchise to power growth over the long term. And shares of Warby Parker are jumping more than 10 percent on track for their best day since May after J&P Securities upgraded the stock to market outperform. The firm said consensus estimates for the glasses maker are too low as it's consistently gained market share. The firm added the stock has underperformed the broader market this year and its new $20 target is about 28% above where the stock currently trades.

Contessa? Pippa, thank you. We're just getting started here on Closing Bell. Up next, new data shows a big bounce back in the housing market. We'll break down how that could affect the sector in the months ahead. We have a quick break. We'll be right back. July new home sales posting their biggest monthly gain in two years today. And with Fed Chair Jerome Powell signaling rate cuts are coming, our tailwinds building for the housing and home builder stocks. Let's ask Tyler Vittori, who covers this space at Oppenheimer. Tyler,

good to see you today. Okay, so you got home sales coming in much higher than expected. What does that mean for home builders? Yeah, well, to be honest, the July numbers we got this morning almost seemed too good to be true. Our perspective on this, we think sales rates are not going to get better in August or September. I think it's certainly contrary to the view that's in the market right now. The rates are going to tick down. That's going to reinvigorate even more housing demand. What we're seeing from our channel checks, buyers are actually pausing their purchasing decisions right now. I think there's some seasonality at play, some uncertainty around the election. But there are a lot of consumers that expect mortgage rates to move even lower from here in the next couple of months. That's resulting in a lot of buyers hesitant to transact. And ultimately, I think should mean sales rates flatline, maybe decline. It's probably going to mean more incentives coming in from the homebuilder. So at the end of

the day, if you're a consumer in the market looking for a new home, this is a good dynamic. If you're a homebuilder selling homes, we actually don't think this is a great dynamic over the next couple of months, given potential incentive activity. I guess the conventional wisdom or the common sense thinking about it would be like, one, with mortgage rates sitting so high, so many people have been putting off either the refi or jumping into a new home. Two, because of this whole availability issue in housing, people have been putting it off, that once rates start to come down and mortgage, wouldn't that be the catalyst to jump it? I mean, it just seems so contrary to what you might jump to the assumption there, Tyler.

Yeah, I mean, there are a couple of points I'll make. On the new home side of things, again, I think there's just this short-term blip, this short-term dynamic where, yes, rates were so high, they've come down. There's just this expectation out there that we're going to see 6% or 5.5%. So why would we buy now if rates are going to go even lower? On the existing side of things, this whole golden handcuff dynamic, there's lots of people that have a low mortgage rate. Why would you trade that low rate for a higher rate?

Whether mortgage rates are 7%, 6%, 5%, that financial disincentive to sell your home is still very much alive and well. I think the bigger problem on the existing inventory side of things, a lot of the inventory isn't really that nice. I mean, the average age of homes in this country is over 30 years. If you look at a lot of millennial buyers, they're coming from an apartment, maybe it was built more recently, has lots of light and open floor plan. I think there's a lot of instances where that customer, they don't really want to buy a home that was built 30 years ago that still has popcorn ceilings or rugs in it or something like that. I think they're much more interested in what the new homes offer, what home builders offer in terms of their modern contemporary designs and

the ability to buy at that mortgage rate. So that is still a tailwind for home builders. I think right now, just on the new side of things, just a little bit of a digestion period, I think a little bit of a soft spot. And then I do think demand is going to reaccelerate later this year and next year, too, given the dynamic of mortgage rates going lower. Especially when you're talking about an aging housing stock. What we heard from Lowe's and Home Depot is that homeowners are also just waiting and putting off their big renovation projects because of rate fears, maybe recession worries, what's coming down the pike. What do you think turns that? What's the spark that's going to take to turn the psychology? That's a good question. I mean, our perspective on this, you look at

whole repair, remodel, demand, home improvement, demand. At the end of the day, there was just so much pull forward given the COVID dynamic. Everyone was locked at home. Everyone wanted to do projects at home. And there was probably at least seven or eight years of spend that was condensed into a three year time period. So there was a pull forward back then. Now there's a little bit of a pause, given some of the uncertainty that's out there. I mean, look, if rates tick down and they stay down, that is really what I think is the catalyst. In addition, just time, right? If you're not satisfied with your home, you may feel uncomfortable renovating it today, given some of the dynamics. But as months go on, as time goes on, your perspective starts to change. That alone could motivate you to make some changes. I'm looking at your coverage group

here, and I'm curious why Toll Brothers is your pick out of the bunch. Yeah, so Toll Brothers has been our top pick for a long time now, and I think they're playing a different game than a lot of other homebuilders out there in terms of selling to an affluent customer. So their average sale price right now, right around a million dollars, almost 30% of their buyers are actually paying all cash. So it's a much different targeted consumer than a lot of the other homebuilders. You throw in a management team that I think has done an excellent job focusing on returns, buying back stock, adjusting how the underwrite land contributing to higher gross margin. A lot of factors here that are good. A lot of tailwinds that I think can continue to drive this stock higher in the future. But, you know, you've got D.R. Horton up 62 percent, Toll Brothers up 87 percent, Lenar up 57 percent over the past year.

How much more room do the stocks themselves have to run? Yeah, so Toll Brothers, we think there's upside here. In the short term I will say we're a little bit concerned. I do think the stocks have moved a little bit in front of fundamentals. Again we talk about this potential soft patch in terms of demand. I don't think that's really priced in. So maybe you get a little bit of a short term blip here. But when we look a little bit longer term at this entire sector overall if you're an investor that's fortunate enough to have a one year two year time horizon A little bit of a short-term blip here. But when we look a little bit longer term at this entire sector overall, if you're an investor that's fortunate enough to have a one-year, two-year time horizon, I think there's lots of good tailwinds here.

Demographics favor single-family ownership. There's still not a whole lot of supply out there. I think these companies, the home builder sector collectively, has done a really excellent job in terms of adjusting how they manage the business, lowering risk as well. So while there might be some short-term concerns right here, long-term, we're still very bullish on the sector. With no orange peel finish or popcorn ceilings in sight,

Tyler, thank you for joining us today. Up next, third point, Dan Loeb out with a new investor letter. We break down the details after this break. Don't forget, you can catch us on the go by following the Closing Bell podcast on your favorite podcast app. We sound a lot like we do on television, but there's less video. We'll be right back. Welcome back to Closing Bell. Billionaire hedge fund manager Dan Lowe published Third Point's

second quarter investor letter today. And Leslie Pickers at the Nasdaq with those highlights. Hi, Leslie. Hey, Contessa. Yeah, this was an interesting one. Third Point taking a new stake in Apple during the second quarter, saying in that letter that its own, quote, research led it to a belief that AI-related demand could drive a step change improvement

in Apple's revenue and earnings over the next few years. Loeb's firm notes that the stock has become, quote, increasingly under-owned by institutional investors and its relative multiple had compressed toward a multi-year low. Apple was one of the firm's top portfolio winners for the month of July. Third point, also predicting more volatility in the corporate credit markets. The letter says there's a broader opportunity set emerging belied by the underlying dispersion in credit spreads. The firm believes public credits will face increasing stress as the impact of higher rates hits fixed rate issuers that have to refinance at higher rates. Contessa. Leslie, thank you for wrapping that up. Stocks

climbing again today with some of the more defensive corners of the market trading at highs. You've got Staples and Healthcare, two sectors that are hitting all-time highs during the session. Joining me now to share how he's investing through the end of the year, Kevin Dreyer, co-CEIO of value at Gabelli Funds, also oversees the Gabelli Asset Fund. So you've got some value-oriented opportunity here. Yes, I think so. I mean, we are bottom-up investors. We have a value style. And obviously, growth has really led the way for a long time now. But you started to see this rotation in early July, and that was in line with looking at what we're all talking about today.

And that's the Fed finally cutting rates, And we've seen value and small caps start to do better. And we think we're poised to capitalize on that. It's hard not to get overwhelmed by the headlines of like since August 5th, you've got Meta up 17 percent, Amazon up 16 percent, Apple, Microsoft, Alphabet, NVIDIA. Those mega cap names that have driven us through the year are going back in, grabbing the spotlight again. Why should investors consider at this point something that is more value-oriented? Well, I think one thing to note is that as rates come down, that tends to lead to an upswing in M&A activity. So we just had an announcement of Mars buying Kelanova, for instance.

Food stocks have had a tough year. The consumer stretched. Inflation's been biting them, so they've been struggling with volume growth. But snacking has been a good area within food. So Mars is buying Kelanova, which the former Kellogg, they split up into two pieces.

They're cereal business, WK Kellogg, and then Kelanova. So we think there could be other deals to come in that sector. My favorite is Bellring Brands, BRBR, which is kind of a mid-cap stock. Known for Premier Protein shakes? Exactly. Premier Protein, they're growing mid-teens right now in an industry that's struggling to grow at all. We've got mid-teens growth there. Most of their distribution through Walmart and Costco. So they've got a big distribution opportunity. And we think they'll continue to do great on their own, but somebody else might want to buy them too. What about Campbell's Soup? Yeah, so Campbell's is an

interesting situation. In this case, they just recently did a deal. They bought Sovos Brands, which owns Rayo's Pasta Sauce. Again, very fast growing. So they're doing a good job on their own, but now they've got a meals business that's a little better situated and then a snacking business. So they could end up following that Kellogg-Kelenova playbook. We'll see. They've got an investor day coming up in September. So they're going to outline their plans going forward. to look at the rise of the GLP-1 drugs and the impact, especially on snack foods or packaged foods and things like that. Are you discounting the impact of weight loss drugs on this sector? We're looking very closely at it. That has been a narrative over the last year or so, definitely. I don't think there's really been an impact yet in the numbers. I think it's been more just the inflation, the consumer stress. But that's where a company like Bellring with Premier Protein, they're actually a great GLP-1 companion because people need protein when they're on these drugs to avoid muscle loss. So that can be great for your product to use and convenient.

I'm looking right now at the Russell 2000 on track to close today up more than 3%. Talk a little bit about the opportunities in the small caps. Yeah, I mean, we see a lot of opportunities in small cap stocks, I'd say, across the board. Right now, they trade at a massive discount to their large cap peers. We're an all-cap manager, so we look across the capitalization spectrum. But I would say that, yeah, by and large, we've been buying more small caps lately, and we think they've got a long way to go. We have consumer confidence data coming out next week on Tuesday. Do you think that that will set the tone for investors in some of these other areas that are so exposed to consumer

discretionary? It could. I mean, my sense is the consumer is pretty weak right now. I mean, I know we've had kind of mixed data coming in over the last couple of months, but it kind of feels like it's lower. So I just think that that portends for rate cuts, which now we all know are coming. It's a question of how many and how far do we go? And we'll see. I cover gambling. I don't know if you're a bettor, but if you were betting, would you make a bet on how many? How many rate cuts or how big? We'll see. That's not really our game that we play. But I would say, you know, it's going to be probably successive rate cuts through the year.

We'll see how the economy holds up. I mean, there's nothing like making a bet when the opportunity is there. Thank you very much for joining us today. Appreciate it, Kevin. Thank you. Up next, we're tracking the biggest movers as we head into the close. And Pippa Stevens standing by to help on that front. Hello, Pippa.

Hey, Contessa. Uranium stocks are surging after an announcement from a key producer. We've got all the details coming up next. We have 20 minutes to go until the closing bell. And uranium stocks seeing some serious strength today. Pippa Stevens back with a closer look at why. Hi, Pippa. Hey, Contessa.

Well, uranium stocks are jumping today after Kazatomprom, the world's largest producer, slashed its 2025 production target by 17 percent thanks to construction delays and shortages of acid essential in the mining process. The company is state-owned with Kazakhstan controlling about 40 percent of the world's uranium supply. Segret Capital Management's Arthur Hyde called it a significant cut, noting that 2026 production guidance also wasn't given, with the company pointing to high levels of uncertainty. That's sending shares of Canadian-Canada-based Cameco, the world's second largest producer, up more than 5 percent.

Denison Mines, Uranium Energy and NextGen, among the other names climbing today. Contessa? Big moves in uranium. Thank you, Pippa. Still ahead, shares of Roku popping as one Wall Street firm forecasts more than 20 percent upside for that name. We'll tell you what's behind the bold, bullish call coming up. Closing Bell will be right back. Welcome back to Closing Bell. We're getting a check on shares of Las Vegas Sand slipping

after UBS downgraded the stock to neutral from buy. The bank cited ongoing challenges in the recovery of the Macau casino segment. I mean, there's some concern over the Chinese consumer and how much they're spending. The fact that visitation and spending in Macau has not rebounded to pre-pandemic levels at this point. One other casino that as long as we're talking about it, I'll point out Caesars today is up by 4 percent. A lot of excitement ahead of the launch of the football season as well. And also ongoing strength in Las Vegas. Up next, Kava shares soaring thanks to strength in one key metric. We'll drill down on what it means for the rest of the restaurant space after this quick break.

And don't miss a CNBC special, Taking Stock, hosted by our own Mike Santoli. That's tonight at 6 p.m. Eastern right here on CNBC. Get ready. The Market Zone is next. Just barely 10 minutes to go before the closing bell and we find ourselves in the market zone. CNBC Senior Markets Commentator Mike Santoli joins us to break down the crucial moments of the trading day. Julia Borsten on why Guggenheim is getting bullish on Roku. Kate Rogers on the quarterly numbers that are sending Kava shares higher. And Ned Davis researchs Ed Klisseld on what he's watching in these final few minutes of a roller coaster week for stocks. And let's get started with Mike Santoli.

What we saw today was fairly calm considering what the rest of the week looked like. Yeah, Contessa, really, it was just a bit of tension release. Clearly, there was at least enough suspense going into the Jackson Hole speech by Powell in terms of what he was going to say and how he was going to say it and what he would leave open and what doors he might shut, that there was a little bit of pressure taken off when he was, I would say, net on the dovish side and essentially validated the market's view that rates will be coming down, they should be coming down, there's flexibility to do more if necessary, but really gets the S&P 500 up another 1% and basically to the highs of the week. I mean, we hit these levels a couple of times in the last couple of days. We're just shy of the all-time

high set back in mid-July. It's very broad, too. About almost 90% of the volume in the New York Stock Exchange is in advancing stocks. That's usually a sign, obviously, that there's pretty full participation. One thing I'll note, obviously, that there's pretty full participation. One thing I'll note, really strong rallies, as you've noted, in the small cap Russell 2000, as well as the bank stocks. Everyone's going back to that mid-July effort to rotate into those areas. Rate sensitive. And the playbook says if the Fed's cutting, maybe it's time to buy those parts of the market. It didn't really work. It didn't stick last time. We'll see if that's going to be a change of tone this time around. All right. I'm looking at the big gainers here. You've got Builders First Stores, Carnival Corporation, the Cruise Lines,

in fact, Carnival Norwegian, all doing well as well. Warner Brothers Discovery with a big move higher. Is anything a standout to you today, Mike? Combination of laggard stocks that basically had some kind of a cloud hanging over them, something like a Warner Brothers discovery. Maybe that means there's a heavy short interest that's getting covered today. But the other piece of it is there's definitely been a bit of skepticism or concern around the pace of consumer spending and any stocks that were held back by the perception of a consumer that was sort of losing his or her grip is probably going to get some relief today. Also, the cruise lines, right or wrong, they're volatile. They swing all over the place.

They're pretty high beta stocks. All right. Mike Santoli joining us. I know you're coming up for closing bell overtime. Thank you for spending a few minutes with me before you get there. Let's turn to Roku shares rallying today. And Julia Borsten has that for us. Hi, Julia. That's right. Roku shares spiking up over 12 percent on Guggenheim upgrading its rating on

Roku to buy from neutral with a seventy five dollar twelve month price target on the stock. Now, this note from Guggenheim flagging key initiatives that should drive revenue acceleration and margin expansion through 2025. Guggenheim's saying that Roku is making progress towards broadening its inventory of ad sales by partnering with third-party platforms to sell their ads. This is a shift away from Roku traditionally selling all of its ads directly to buyers. Second, they note Roku is improving monetization of its home screen with new video ads and customizable displays. And Guggenheim projects that the competition among streaming providers will remain intense,

which should drive more advertising of apps and their content. Now Roku's on track for its best day of the year. We have to note though, it's still down about 13% over the past 12 months. Back over to you. Is the ad environment easing up in ways that make it possible for Roku to take advantage?

Well, the ad environment for the digital players continues to be robust. It's the traditional ad market, whether it's on the linear channels of the big media companies or when it comes to print outlets. That's where we're seeing a weakness in advertising and weakness in various areas. Now, when it comes to the streaming advertising market, that does continue to be strong. There are certain pockets of weakness, but certainly an area of strength of Roku is primarily getting these apps to market to consumers on its home screen. Julia, great to see you. Thank you. Let's get to Kate Rogers now. Kava tracking for its best day as a newly public company. What did those second quarter results tell us? Yeah, Contessa, the stock almost up 20 percent and continuing to gain throughout the day

after that great Q2 in this tough environment for the broader sector. Top and bottom line beats huge same store sales growth for Kava, up 14.4 percent, better than estimates of up 7.9 percent. Another rarity, it had growing traffic in this environment. The chain's traffic was up nearly 10%. The company also raised guidance for full-year same-store sales, profit margin, and EBITDA. CEO Brett Shulman said steak, which is its new menu edition, is significantly outperforming expectations. And he also weighed in on the value wars unfolding in the restaurant space, saying that value wars is actually a misnomer for what's happening in

the sector, adding on the call, quote, price is the cost of a meal, while value is its worth, and driven by a combination of attributes beyond the headline price, including quality, relevance, convenience, and experience. We should also note that stock, one of the best performers in the sector year to date, up around 180 percent. Contessa, back over to you. Earlier this week, we saw some headline-grabbing calls where analysts had said, look, these restaurants, especially fast casual, are going to have challenges in menu pricing as we move forward. Is that not a concern for Kava?

The analysts don't see it there? Definitely not for Kava, Sweetgreen, or Chipotle. Those are three that are really not having to discount in the way that some of the fast food players are, although Kava has also held off on price increases, namely in places like California. It doesn't have a huge presence here, rather footprint, but it hasn't raised prices as aggressively as some of its other competitors. And people are willing to pay exactly what they're charging for these meals, a little bit higher price tier than a McDonald's, a Burger King, you know, other fast food players. But again, it reminds me a lot of Chipotle, particularly in kind of its growth strategy, menu testing strategy, et cetera. Contessa. Kate Rogers, thank you.

Appreciate that. We've got a few minutes left to go with stocks tracking for another winning week. The S&P 500 and the Nasdaq heading for their 10th positive session in 12. Ed Klissel joins us here from Ned Davis Research Group. He's the chief U.S. strategist. What are you watching? Well, the main thing is have the bullish drivers of the market this year changed? And the pretty clear answer is no. Inflation is continuing to trend down. That's going to allow the Fed to cut rates starting in September. We think they're going to move slowly, which tends to be positive. And that means the economy moves towards a soft landing. And then finally, the earnings acceleration, which hasn't been

gangbusters, but quarter on quarter, earnings growth has been faster than it has been the previous quarter for several quarters in a row. That's the case in Q2. It looks like it's going to be the case in Q3 as well. So if nothing meaningfully has changed, there's no reason to change the bullish thesis. Do you expect this volatility that we've seen in August for the markets to continue into September, given now this expectation and the Fed chair has just reinforced what the market expects the Fed to do on rate cuts in September? Well, what we saw in August was really extraordinary. The spike in the VIX is something we've only seen a handful of times in the past 40 years. Interestingly, a lot of those times that happens in August when maybe there's not as much liquidity in the market. I think that the uncertainty of the Fed going to cut rates does provide another underpinning

to the market. Look, there's going to be some other concerns. Earnings estimates for Q3 are a little bit elevated, so they need to come down. We have the election coming up. There can be uncertainty over that. But the kind of volatility we saw in August is probably not going to repeat itself to that degree in September. We're about 10 points right now from an all-time closing high on the Dow Jones Industrials, led higher by Travelers and Boeing, 3M. Give me your expectations for these sort of blue chip stocks? Well, we think it's going to be a pretty broad advance from here, but there's a chance for catch up from some of the areas that maybe haven't done as well this year. Percentage of stocks above their 10-day moving averages is above 90 percent, means just about every stock has participated. And with rates likely coming down, we could see a broadening. So

it'd be more than just the AI mega cap growth stocks that may be the drivers of the rally from here. And what are you watching for in terms of even next week, we're getting PCE data on Friday, we get some view on the consumer and spending next week on Tuesday. What do you think moves stocks higher in the near term? I think what the market is looking for is soft enough data that it's going to confirm the Fed's going to cut, but not so soft that maybe the Fed has to panic. What really is a problem for the market would be if the Fed has to go 50 basis points and then goes 50 again later on in the year. When the Fed moves quickly,

usually it's because they're trying to avoid a recession. And at that point, they're failing at doing so. So we don't want the data to be too weak. So it's kind of the Goldilocks, continued disinflation and slower, but not too slow economic growth. That's what the market would probably be like. And what sectors are you looking for quickly? We actually like utilities, but I think we can get a broadening into some forgotten cyclical sectors as well. All right, there you're hearing it, the cheering and the applause that begins before the closing bell. The Dow Jones Industrial is just about 10 points, and it's all gone closing high. The NASDAQ is well by about the center.

The Russell 2000 up more than three. Look at the closing bell. Looking to go to the overtime. And Mike can't go away.