Closing Bell - Closing Bell: Pullback a Sign of More Pain Ahead? 8/4/23

Episode Date: August 4, 2023

The S&P 500 was looking to snap a 3-week win streak during the final hour of trade. So, is that a sign of a bigger pullback ahead? Fundstrat’s Tom Lee gives his take. Plus, we break down all of the analyst reaction to Apple and Amazon’s results.

And welcome to Closing Bell. I'm Carl Quintanilla. And for Scott Wapner, this make or break hour begins with this Friday fade. Bulls did have the ball midday, but they stumbled late in the session on the back of a 4% drop in shares of Apple. Bond yields do retreat on some fresh signs of a cooling jobs market. Dow was up 200 plus midday, now down 115. S&P got to 4530 or so, now 4483. Leads us to our talk of the tape. Is this week's pullback the beginning of something bigger as the S&P looks to snap a three-week win streak? Let's ask CNBC contributor Tom Lee. He is Fundstrat's head of research on a summer Friday. Tom, it is great to have you as always. Thanks for the time today. Yeah, great to see you, Carl.

I know you've been leery of the month of August in general. Did this morning's early tone do anything to change that? Yes and no. I think there are some constructive things that happened today that make myself and Mark Newton, our head of technical strategy, think we're actually in a bottoming possibly for the month of August. You know, the dollar reversed pretty sharply and yields turned down. And as you know, both would be pretty big headwinds for stocks. I mean, as we got into August, it's been a pretty rough four days so far. But I think the jobs number was pretty decent. And then I am kind of optimistic that we're going to get a good CPI report next

week. So that's kind of a roadmap to seeing stocks do better next week. Yeah, we've we've had a lot of chatter today about what CPI is going to bring us. I think you could maybe argue the tone is relatively optimistic, given what we think used cars and rent is going to do in the coming weeks. Yes, that's right. And I think, you know, and I heard your interview this morning with Jan. Used cars and housing are the two of the three biggest contributors to core inflation over the past year. But if it indeed is starting to glide path lower and, you know, used cars could fall another 30 percent and housing on the CPI could fall another eight or nine, that would set up the stage for, you know, three or four months worth of, you know, negative contribution from those pieces. So I think core

could print close to, you know, below 3%, maybe high twos for several months. And that's why it would look pretty attractive. Yeah. And you've been pretty vocal and early, I would argue, in arguing that inflation was going to, in your words, fall like a rock. And that was something investors were not necessarily positioned with. But I would imagine you would argue, too, that the sledding gets a little tougher from here. It does. I mean, the market's up, you know, almost 20 percent year to date. So less bad news is discounted. I'm still pretty surprised how many of our institutional investor clients lean bearish. You know, in the last four days, a lot of them have jumped on, again, to bet against stocks rising. I mean, there is some technical reasons to be a little bearish

in August, but I think people are really quick to flip bearish here. That's not a sign of an ebullient market. It's a sign of people kind of getting pulled in and there's still five and a half trillion dollars of cash waiting to get pulled in talk to me about what you think yields told us today um we've had some high profile announcements of short bets on the long end uh we got to 4-2 on the 10-year now 4-0-6 is there a sense do you think that that maybe uh this trend that we're getting this afternoon can continue? You know, I think that the logical side would take the side of like the Ackman's and what Jamie said, which is that, you know, long end rates should be rising because we might have higher inflation plus some risk premia and term premia. But as much as that's being said, we know that there's a lot of political considerations and the potential for the Fed to cut rates next year and the fact that rates are so low in the rest of the world that I think that those actually act as anchors to keep rates lower than we think they should be.

And Mark Newton, our technical strategist, does think we're actually going to get repelled from here. So if 10-year yields keep falling, I mean, it's actually good for stocks. Yeah. The other thing I thought was notable today, Tom, was some of the major macro strategists, B of A, title of their note, we see a soft landing. This is a firm that last fall was looking for negative payroll growth for much of the first half of this year. And then this afternoon, JPMorgan's Ferroli, the end is not near, arguing that a recession in 20, basically people who have been calling for a recession in 23 are running out of room, right? Yeah, I think, you know, I think that a lot of economists underestimated the dynamic ability of companies to adjust quickly. You know, last year, the Fed told every company to get ready for higher rates and companies prepared for that.

So they weren't tripped up over building or a bullwhip effect. And so we've had a pronounced slowdown. But then we don't have to have the contraction because there's no inventory, you know, to work off and no massive layoffs coming. I think that's why when rates begin to cool and mortgage rates fall and inflation cools, it could be, you know, pretty vigorous upcycle, too. That said, I wonder what your take has been watching names that do miss on earnings and how they've been significantly punished, I guess, and where that leads you in your playbook. I know you still like FANG. You like some elements of software. You like some elements of energy and I believe even industrials, right, Honeywell? Yeah. Well, Carl, I think if we're in a market environment where beats, stocks go up, but then

when you miss, you fall big. It generally happens in two times. Either you're at the end cycle, like you're about to go into a recession, or it's a market that has no oxygen. I mean, there's been almost no net inflows. Retail has taken $110 billion out of the stock market this year. Buybacks have slowed. Institutional investors are flipping bearish. So I think that means a narrow set of stocks have that support. That's really distanced and not connected to fundamentals. And I think if inflation is falling and fundamentals are turning, sponsorship of stocks is going to change. So I think that that's more symptomatic of just low liquidity. Right. Finally, you know, you've made a name for yourself, Tom, I would argue in recent years, making some outsized calls in either direction.

It's been a good year for you so far this year. Are you in the mood to up your target year end? Are you going to hold your cards closer to the vest this time? Well, you know, sometimes it's timing because I know some folks have been like raising targets at the start of this month. But I was very wary. I'm very wary about the month of August just because like in my anecdotal experience, I felt like it's no one's ever made money in the month. But as we exit the year, our 4825 does does look a little low, given if the Fed, if July is the last hike and financial conditions are easing and inflation is cooling and then there's another expansion cycle starting, you know, we pull forward a lot of that multiple expansion. So the S&P could be far higher than 4,800. Interesting. We'll see if we grow into that. Tom, stick around.

Let's bring in John Mowry of NFJ Investment Group, CNBC contributor Bryn Talkington of Requisite Capital. Talk about today's action, John. And I'm curious to know your reaction to Tom's comments, because I know you're still looking at this market through a defensive lens. Yes. Well, we actually entered the year very bullish. So back in October, November, December, we were actually moving away from defensives. We actually had our lowest weighting in utilities, health care stocks and staples that I can remember in over 15 years being in NFJ. So we were very bullish, and that was really predicated on very discounted valuations relative to defensives. What is fascinating now is what really has happened is CPI peaked back in June.

That has rolled over pretty significantly alongside M2. And what's happened is as investors have been forced to reconsider their recession calls, it's created more and more dislocations in the more defensive areas. So we now have actually been peeling back technology, peeling back industrials, and we've been adding to utilities, adding to staples. The one small difference in our positioning is we actually got pretty overweight banks after the clearing event back in March. And one little fact I'll share is that over the last three months, the regional bank basket is actually outperforming the triple Q's by eleven hundred basis points. So as those companies have reported better than folks expected, there's beginning to be a rewrite as those got very discounted after the event back in March.

Yeah, that's an interesting take. Bryn, I'd love to get your view on what Apple's trying to tell us this afternoon. First peak below the 50-day since January. I mean, four and a half drop in Apple is kind of hard to ignore. It's definitely hard to ignore. I think that's why the NASDAQ, which is such a big weighting in both the NASDAQ and the S&P. I think with Apple, it's interesting. I mean, we have the phones are so high quality. I think even the upgrade cycle is going to be longer because you just don't need that upgrade. People's phones aren't breaking the glasses better. I do think what was interesting and I think it shouldn't be lost on today, is that their services, which are so high margin, you know, they did over 21 billion.

And I don't know of any other company that has such a sticky ecosystem with such amazing brand recognition. I mean, so I think that ultimately what I think about with Apple or any company is what multiple is the market willing to pay for this stock? And for this quarter, when you have no revenue growth, they're going to see weaker earnings or weaker revenues next quarter. I think the company could easily just take a break and take a breather. But I would not be saying let's sell Apple here because I think Tim Cook is just so masterful with his team. But I do think technically also, if you look at the 10 and 20 day moving average, which is our shorter term, it's just definitely broken some technical trends. And so I think that could put a ceiling in the short term,

kind of dovetailing with what Tom's saying, if we're bottoming out here, that could continue to add weakness to the broad indices because it's just such a big weighting. Yeah. Although it is interesting, Tom, whether or not we're set up for not a departure of the FANG environment, but rotations within it. I mean, Amazon up nine in a tough tape today and at one point leading the S&P. I wonder whether or not you think any selling can be contained to just moving around within the space. Yeah, I mean, I think that's going to make sense, Carl. I mean, as you know, many of the things are up triple digits year to date. So I'm sure if I was a holder and I had an outsized position, I'd want to protect some of that anyways and maybe buy some of the laggards. I think that's even true for tech broadly.

I do think the second half is a story of market expansion, people really looking for stories that can turn or valuations that they can live with or sort of uncovered opportunities. So I think there'll be more stock discovery in the second half. John, I think it's interesting the areas of the market that you think may be a little bit rich here. I'm looking specifically at chips and maybe some home builders. Can you talk about what you're seeing there? Absolutely. So the semiconductor stocks were trading at just very attractive multiples back in October. That had to do with, obviously, the perception around going into a recession.

It also had to do with concerns over the relationship with Taiwan. So those were trading at single-digit P multiples a year ago. Today, if you want to buy a basket of semis, you've got to pay a 10-year high valuation. So the fundamentals are no doubt great, but the valuations are aligned with those expectations. So any misses will be met with, I think, some challenges for investors. When I look over at homebuilders, those, again, really got blasted. What's fascinating about homebuilders, Carl, is they actually bottomed in June of last year when the 30-year hit 7%. So they've actually been rallying for well over a year, been very strong performers. And again, when I look at

those, I see very stretched valuations. So we were overweight homebuilders last year going in, and now we've exited all of those positions. And again, I would argue that investors should look at some of the forgotten areas like Tom mentioned, because I think that, you know, when I look through the rubble, you're seeing a lot of dislocations. And, you know, small caps are one example of this. I mean, another fun fact I'll share is the Russell 2000 value was the best performing of all the styles and market indexes for the month of July of over seven and a half percent. So we are seeing those small caps come to life, which are being driven by that heavy weight in banks, which are around 18 percent of

the RUJ. Yeah, I mean, that that bring that kind of gets to the the argument in the debate, which is going even now about whether or not we are early or late cycle. And your view on that is going to color whether or not you believe small and mid-caps are worthy buy. It is such a big difference. I mean, I just can't imagine we're just going to re-accelerate and whistle past the graveyard. So we were in small cap value from 2020 to August of 21 because you do have such a heavy regional bank exposure. But I still think that we are a consumer economy. I get jobs are good, jobs are a plenty.

But Carl, if you go look at mortgages, go try to buy a new car, even with an 800 credit score, new or used car, you're still gonna pay seven, 8%. And so I just don't imagine in this type of environment, Even with an 800 credit score newer used car, you're still going to pay 7, 8 percent. And so I just don't imagine in this type of environment we're just going to start and reaccelerate. I still think we're kind of like gliding to slower growth, even though we don't see that in GDP. I still think that's my base case.

And I wouldn't be adding to small caps. I think it's a great trade. But as like a one to two year opportunity, I would not be adding to small caps at this point. You know, we were talking with Tom a moment ago about Ackman's long bond short. And I wonder what your view is given the ideas that he put out there, meaning higher defense costs, entitlement, de-globalization, demographics. I just wonder, does that make sense, even though the trade doesn't look so hot, or didn't look so hot this morning? No. I mean, I agree with, I mean, I actually applauded Fitch for just saying what so many of us as citizens understand that our

politicians on both sides are spending like drunken sailors. So I just appreciated the note and say, raising the flag, say, hey, guys, let's let's take a chill here. But I think on that trade, though, I mean, that could be a widowmaker trade because we saw in November of 2022, the 30 year was right where it was two days ago, around 430. And then just a month later, we were down to 340. And when you have an 18 year duration on that and you're levered using options, that that is a really aggressive, aggressive trade. But he's you know, he's a great hedge fund investor, so he'll do fine regardless. But for regular investors, I would step to the side and buy some money markets or some six month T-bills yielding five and a half percent. Yeah, Tom, Tom, he did he did argue

it was it was it was a hedge with multiple benefits, multiple facets. But I do wonder long term what you thought. What do you think the lesson will be about the downgrade a few days out, even as we've had some time for some to say it either didn't break news or Schwarzman of Blackstone said this morning, sort of reflected what the numbers are telling us? Well, yeah, Carl, I think there's two important things that could happen, or two things. One is, of course, this really gets everyone engaged and thinks about whether or not it's appropriate for the U.S. to be a AAA-rated entity, given everything described.

The risk, I would say, for Fitch is that the market ignores it and it actually diminishes the impact of their calls because they're making a call that the market doesn't think is relevant. So I do think there's a little bit of a risk being bold like that without a specific catalyst and then picking a specific window to do it. Yeah, or making the change years after the catalyst, which is certainly what the White House argument was earlier in the week. We'll see what next week brings. Tom, John, Bryn, great to see you. Have a great weekend. Thanks. Thanks. Let's get to our question of the day. We want to know what is the next catalyst for stocks? Next week, CPI, rising Treasury yields, maybe it's Jackson Hole. Head to CNBC closing bell on X,

formerly known as Twitter, to vote, and we'll share the results later in the hour. Let's get a check on some of the top stocks to watch as we go into the close. Seema Modi is here with that. Hey, Seema. Stocks may be making a turn here, Carl, but oil continues to power higher, now headed for its sixth straight weekly gain, the longest winning streak in more than a year. And because of that, energy stocks are outperforming on this. Pioneer Natural Resources, names like Marathon Petroleum, among others, not only higher today, but up by 5% for the week. And then there's one bright spot in the restaurant space today, Shake Shack, recouping some of yesterday's losses following a disappointing

outlook. But analysts at Raymond James, they see opportunity upgrading the stock to outperform today. You can see shares up about 5.6 percent at this hour. Carl? All right, Seema, thanks so much. We are just getting started. Coming up next, a rally roadblock. Top technician Jeff DeGraff raising the red flag on one key part of the market, why he thinks it's keeping a lid on a bigger move higher for stocks. And he'll make his case after the break. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. S&P near some session lows.

The index is set to snap a three-week win streak. And our next guest says rates remain the biggest obstacle to the rally from here. Let's bring in Jeff DeGraff, chairman and head of technical research at Renaissance Macro. Jeff, happy Friday. Great to see you again. I do wonder whether or not rates triggered anything for you this week. Yeah, look, I mean, we're in this zone where not only the rate of change, but also the level starts to work against against equities in our what we call our yield impact model. The good news is it's not disastrous. It's usually a consolidation. That consolidation is anywhere from a month to maybe three months. But I do think that we're going to visit this 4,300 level on the S&P and really just kind of

take a pause from some of the gains that we saw this summer. Huh. 4,300. I mean, that'll get some people's attention, although I wonder whether or how quickly the line comes out that this was a dip that's meant to be bought. I mean, it's a great question. And we have seen some of the sentiment, particularly in tech, some of the sentiment get a little frothy. So I think you have to cool that off a little bit. And usually when that froth starts to settle down, it takes more for people to become more comfortable buying things. So I don't worry too much about that. I just think that there are enough pieces of the data that are out there that keep the bears invigorated. And, you know,

it's still a pretty crowded camp on the bear side, even with the returns that we've had in the S&P so far this year. One tidbit I ran across this afternoon was looking at weeks, calendar weeks, with a lower high, lower low and lower close on the S&P. One argument was that we had to go back to February. Does that make sense to you? Yeah, that makes sense. I mean, that, it's been a pretty persistent, you know, not very volatile, which actually we look at as being good. When we have momentum and low volatility, that's usually a sign that you've got kind of this perpetual motion machine in play. And we've had that, which is good news. And that's exactly why I think this is just a consolidation and a pause versus something that's more nefarious.

I know some of the landmines that you have on your radar, at least, are some of the banks, maybe regionals, looking a tad vulnerable. And I know you're watching credit spreads in the triple B space, right? Yeah, those look good. I mean, it's remarkable. I mean, I think it's funny if you would have asked me, you know, a year ago with the Fed and the aggressiveness of the Fed and an inverted yield curve, where would we be on credit spreads? I'd have, you know, said an 80% chance that they'd be above, say, 300 and almost 100% chance that they'd be above 200 basis points. And they're just not. So, the availability of credit still remains, I think, a really important attribute of this market. It's something that the bears just haven't been able to really adjust to this entire rally. And

I think until or unless we see a meaningful change in that liquidity dynamic, that the market is going to be in a relatively steady uptrend. And I think that's good news, not bad. The banks do bother me. I mean, there's no doubt. And I think it's going to be a regulatory issue. But the banks were very oversold. We were early on that call. And I don't look at it as if we got it right because we were too early on it. We thought the banks would rally and go back into resistance. And now they're there. And they really haven't changed their stripes in our view. They still look to be vulnerable. They're sitting under these big top formations. And I think this overbought condition in the downtrend is a better place to be a seller of the banks than a buyer. I know they're cheap. They are cheap. But I think there's other things that are going to plague

those as we go into into the future, probably for the next couple of years, frankly. One of the tables that got circulated a lot this week came out of B of A, looking at years in which you're up 10 plus at the end of July. I think there's a few dozen examples. And almost every time you end the year higher, maybe not with big further gains, but the years like 87 sort of take the shine off of that analog. I wonder how you react to some of those historical trends and data. It's pretty consistent with the things that we've seen. We went back and looked, and I'm not a big fan of the 20 percent rule calls a new bull market or a new bear market. But when you go back and look at that, 20 percent off of a low after you've had a

bear market, which we did, I think this was in May now, it was pretty convincing that you're better off saying that we're in a bull phase than still trying to fight the good fight as a bear. So most of that evidence is consistent. The breadth data that we look at is consistent with the new bull phase. It's not outstanding, but it's good enough. And I think it's better news for the remainder of 2023 than not. So if we do get the consolidation you're looking for short term, do you think Q4 begins to feel like a chase? I think there's some real risk to that. We thought

that that was going to be the case last year in the fourth quarter. So that played out very, very well. But I think people will maybe get a little bit more emboldened on the bear side. I think some of the data is probably troughing. So you're going to see some inflation prints that aren't scary, but they certainly weren't going to look as good as they have over the last six months in our view. And I think that that's going to give the bears a little bit of muscle and flex here. And then I think the market's just going to come back in and head to new highs at the end of the year. And that becomes a FOMO type of environment. And you get the seasonality. And if we get anything around the Fed, you know, actually pausing for an extended duration, I think it's off to the races. Yeah. Q4 potentially could

be quite interesting, Jeff. We'll talk many times before then and now. Good to see you. Have a great weekend. Jeff DeGraff. You too. Thanks so much. Coming up next, finding opportunity. Our next guest sees big upside in this week's best performing sector. He's going to make his case after the break and then later. Don't miss a CNBC special tonight, Taking Stock, hosted by our own Mike Santoli and Josh Brown. They're going to break down this week's market action and all the biggest stories impacting your money. It's coming up at 6 p.m. Eastern tonight. In the meantime, closing bell. I'll be right back.

Welcome back to Energy, the best performing sector this week. And our next guest sees big opportunity in the oil patch. Let's bring in Warren Pies of 314 Research. Warren, it's great to have you. Six weeks up on WTI and awfully close to 83 today. What do you see coming? Yeah, thanks for having me, Carl. We have an oil model that basically looks at the crude oil market from a number of different perspectives, and that model flipped bullish early July. And it makes sense to me as a longtime oil watcher. I think that we came into this year and everybody

had set themselves up for the recession trade, and this includes oil watcher. I think that we came into this year and everybody had set themselves up for the recession trade. And this includes oil speculators. So we saw hedge funds and other speculators in the oil market had layered on short positions and basically set themselves up for this recession trade that hasn't come to pass. Well, now we're in this window where the Saudis and the rest of OPEC has finally gotten their act together and are withholding supply. And I think their goal is to basically run these shorts out of the market. And by the time this saga is over, I think we end up touching $100 a barrel on oil. And ultimately, this is going to be a big driver for the energy sector in the near term.

Wow. We did get a lot of inputs today, OPEC, Oxy, Conoco. And I think it was Pioneer that said 80 to 100 going into year end. Sounds like you agree. Yeah, I mean, I would never listen to an upstream CEO on their projection for oil. I'd much rather listen to the downstream guys because they're the actual buyers. But in this case, I do agree. I do agree with Sheffield in this case. Yeah, I think we get triple digit oil this year.

As for the markets, it doesn't sound like you have strong feelings either way on equities at large, although you're not averse to the idea that some of these mega cap tech results could give us a short term pop. Yeah, I mean, one of the things we say at 314 Research is that we build conviction on fundamentals, but we manage risk on price. And to be honest, the market is quite overvalued here. And so it's hard for me to create a real strong conviction in this market. If you think about this as a market bottom and what we're projecting for earnings, even with the earnings projections that the analysts have for 2024, it's a really subpar rebound in earnings off of what would be an equity bottom. So fundamentally, I'm not a big fan, but we have to acknowledge the price action. I do think there's a huge

chase going on right now. And Jeff DeGraff just mentioned that. I think there's a rotation. And now all the laggards, everyone that came in this year expecting recession, they're now buying different pockets of the market trying to catch up. And so I think that's the game. I think that's most likely outcome for us for the next few months until we get some kind of softening in the economic data or something in the rates market that scares the bulls off. But you really have to be careful about where you play those lagging areas. Like you could play small caps, you can play energy, you could go other pockets. And I think it's really important that we don't get over our skis with risk at this point in the cycle. Right. Speaking of rates scaring people off, I think bonds are your biggest underweight since early June. A lot of discussion

this week about the sell-off and whether or not that was due to Fitch or the idea of more issuance. You got clean thoughts on that? Yeah, absolutely. Bonds are, to me, the only path to a positive return for bonds from here is a recession. So we don't see a recession imminent. And that was reflected in the jobs report today. And so to me, bonds are overvalued probably by about 80. We're talking about the 10-year, probably by about 80 basis points. You can look at that versus nominal GDP, overvalued. Look at it on a term premium basis, overvalued. If you think the Fed has paused here, which I think it's most likely the Fed has paused, usually the 10-year is significantly above the Fed funds rate. And now

we're significantly below the Fed's fund rate at this pause. So I don't think there's a lot of upside for bonds. And then you look at what the Treasury has. I think the real impetus for the sell-off is tons of issuance, trillion dollar of issuance estimated for Q3. Who's going to buy that? The Fed's not buying it. Banks are definitely not in a position to buy it. Foreigners have been stepping away from the bond market. So ultimately, you're talking about levered hedge funds and households that have to do that buying, and those are price-sensitive buyers. So they need higher yields. That's where I think we're going. Right. As for the overall market, it doesn't sound like you feel like an all-time high is inevitable in the next six to 12 months. Absolutely not

inevitable, no. I mean, the momentum and the odds favor that we're going to continue moving higher. And it really comes down, in my view, of where that recession lands. If you look at our projection is that it's mid-2024. We've already had that kind of multiple reset last year. And so I don't think you get another just multiple contraction. I think the next move is going to be about earnings and the economy. And so that's where our focus has really been. And so I think it's really kind of a coin flip whether we get there before that recession. But I think you need to be looking, you need to be preparing yourself for the end of the cycle. There's this kind of theory that's going on out there right now that I would push back against,

that we're not going to land, that the Fed is not effective anymore. And I just don't see evidence for that. I think that the fiscal policy is effective anymore. And I just don't see evidence for that. I think that the fiscal policy is supporting the economy right now. The massive pro-cyclical deficit is supporting the economy. But I'm seeing evidence, if you look at commercial industrial loans, they're starting to roll over. If you look at housing starts, the idea that housing's bottomed, I don't see that. Housing starts are still off 40,000 single family homes a month. So I see the Fed's rate hike cycle working through the economy. And ultimately, I think that's what

we need to keep our eye on here. It would be classic if some of these strategists started pulling back their recession calls only to have one sneak up and hit them in the summer. Warren, we'll talk about that in the weeks and months to come. Good to see you. Thank you. Warren Pies. Thanks for having me, Paul. Coming up next, trading the travel space.

Booking Holdings popping in today's session. We're going to tell you what's behind that leg higher. Closing bell. Be right back. Well, it's happened slowly, but the Bulls have definitely had the ball taken away from them this afternoon. S&P down almost 60 points off of the session high. You got the 10-year back to 404 and the VIX back above 17. Let's get back to Seema Modi, get a look at some of the key stocks to watch this afternoon. Hey, Seema.

Well, we're still watching, Carl, the big move in travel, booking holdings hitting that fresh all-time high following upbeat earnings and bullish comments from CEO Glenn Fogle, who told CNBC this morning that he is not seeing any signs of a consumer trading down. The online travel operator also posting strong growth in Asia. Barclays' new price target on the stock, $3,740 a share. You can see it's trading just above $3,000 right now. Let's pivot our attention to one of the biggest losers of the day, and that's Fortinet. Down over 20 percent last time I checked, 24 percent. The cybersecurity company

disclosing that customers are delaying some purchases due to economic uncertainty from a technical basis. The stock is also getting attention, breaking below its 200 day moving average. Other cybersecurity names we should point out, like Palo Alto, among others, trading lower as well. Carl, back to you. All right Palo Alto, among others, trading lower as well. Carl, back to you. All right, Seema, thanks. Last chance to weigh in on our question of the day. We asked you, what's the next catalyst for stocks? Next week's CPI, rising treasury yields, or maybe it's Jackson Hole. Go to CNBC Closing Bell on X, although I still call it Twitter. We'll bring you the results after the break. Let's get the results of our question of the day.

We asked you, what's the next catalyst for stocks? Next week's CPI, rising Treasury yields or Jackson Hole? The majority of you saying that CPI print, which we're going to get on Thursday. And, of course, PPI on Friday. Coming up next, the tale of two tech stocks, Apple and Amazon, moving in opposite directions. We're going to break down the streets reaction to those earnings in a moment. That and much more when we take you inside the market zone. We are now in the closing bell market zone. CNBC markets commentator, senior markets commentator Mike Santoli is here to break down these crucial moments of the trading day. Plus,

Steve Kovac, Deirdre Bosa wrap up Wall Street's takeaways from Apple and Amazon's big earnings reports. And Contessa Brewer on the numbers driving DraftKings to a 52-week high today. But, Mike, let's begin with you on this day of a fade. Why the fade? You know, I don't know if there is a particular sharp headline reason or anything for the fade, except that we kind of came into this week to greet the seasonal little air pocket pullback coming right on time. So I think that's the backdrop. The loss of momentum in a previously bulletproof stock like Apple doesn't help.

And I also think this is the culmination of the responses to earnings that we've had for three weeks. Three weeks ago, right before earnings season, the S&P 500 traded just under 4,500. That's basically where we are now. A ton of back and forth in between. You have 80% of all companies exceeding forecast. The market says, yeah, we knew that. That's why we were up 20% heading into it.

You have JP Morgan and other banks getting on the soft landing scenario. Market says, where have you been? So I feel as if there wasn't really a capacity to capitalize on incremental good news because of how the market had come in to this week. I wonder if you were listening to DeGraff a moment ago talk 4,300 and whether or not that piqued your interest. Wouldn't be out of bounds at all.

Now, that would be a slightly deeper pullback than what I would call really the textbook, almost immaculate pullback, which would be down to 1% from here, 44, 30-ish. That was actually the level from which we popped higher on the previous CPI report. So the celebration of disinflation is in place. We would go back and visit that. The 50-day average is 4,400. Then, you know, that maybe is some kind of a support. The bigger picture is even down to $4,300, you're still kind of in an uptrend. You just have to probably chop around a little bit more and rationalize things. People complaining about valuations, people complaining about sentiment.

It's all legitimate, and that's the crucible where that stuff gets sorted out in a bit of a new trading range or a pullback mode. Yeah, maybe some payback a bit for July's performance. Apple shares, meantime, as Mike said, are down after posting its third consecutive quarter of declining revenue. Steve Kovac, the analysts have been all over the map on this. We see a couple calls saying the time period between the June report and the phone cycle beginning tends to be good. Yeah, that's right. But look, today the reaction is loud and clear. We're seeing Apple down four and a half percent. And the reason investors wanted to see Apple return to top line growth in the current quarter, but Apple warning about a fourth quarter in a row of declining sales.

If you're keeping score, that means Apple's full fiscal year will be a down year. Now, it's a tough environment for hardware demand, even as Apple sees growth accelerating again for services. Let's talk about what the analysts are saying. For example, UBS this morning saying some of the growth improvement Apple predicted for iPhone and services will come from better foreign exchange, not necessarily new iPhone demand. But Goldman analysts a little more bullish, especially on the services front, pointing to that install base of two billion devices and a return of advertising and sales in the App Store. Now, this report putting more pressure on Apple to wow everyone with the next line of iPhones coming expected next month. B of A analysts pointing out this morning the strong commentary about the iPhone guidance, though,

is likely due to those new iPhones and not necessarily a change in the demand picture, Carl. Steve, the bull case, I think Dan Ives probably is the tip of the spear on that one. Oh, definitely. At Web Bush going to 230, arguing that it's been years since people have upgraded. But you heard Brent Talkington a moment ago also saying, look, the phones are so good that maybe you don't need an upgrade even after four years. Yeah, and that's been the story with Apple for so long is these lifespan of an Apple device. It used to be every year or every other year you'd upgrade. You can hang on to them for three, four, or five years. What I'm really interested to look at in this

next iPhone cycle, though, is whether or not they're able to raise prices in this kind of environment. There have been some reports about that potentially happening on the Pro line. We know people are willing to pony up for those. But look, if demand is weak and sales on a unit basis are relatively flat, Apple's going to have to find a way to increase that revenue. If the services can't make up, if Mac and iPad can't make up for it, it's all got to be about the iPhone. So it's going to be really interesting to see, Carl, what this iPhone event looks like in a couple weeks here. Yeah. As you can see, looking to close at the lows of the day, Steve, thanks. Meantime, Amazon shares surging after the company's blowout quarter,

closing in on their best day since November. Deer DuBose has been watching what the analysts are saying. I hear a lot of tone about the new era of Jassy-led growth, Dee. That's one of them. Let me give you a sampling of some of the other headlines from Wall Street. Mizuho, pay dirt, finally the quarter in outlook, everyone waiting for wolf research, one for the ages, Evercore primed for acceleration, my personal favorite from Bernstein in Amazon, we trust. So that about sums it up in one word. Wall Street is very bullish.

But as Warren Buffett once said, be fearful when others are greedy. So I will maybe just highlight one metric that could be seen as potentially bearish, and that is online stores revenue. That missed expectations by more than $4 billion, and it grew 5%. Yes, that is coming off an absolutely gigantic base. But just positing here, could it be a signal that Amazon's dominance in e-commerce perhaps getting chipped away at by the likes of Timu and others that are pushing very aggressively into the U.S. e-commerce market? Dee, one thing we talked about earlier this morning was having lived through the pain of the cost cuts now getting reflected in better than expected margins, right? Absolutely. This is the story here. Amazon spent so much more than any of the

other mega caps during the pandemic to essentially double its logistics footprint. That was pain. It took its medicine. Now it's reaping the rewards, i.e. the efficiencies, the market's favorite word. Carl. Amazon's going to end up being the best S&P-er today if things don't change in the next five minutes. Dee, thank you. Deirdre Bosa on Amazon. Then there's DraftKings, 52-week high after Q2 results. Contessa Brewer has details on that. Hey, Contessa. Hi there, Carl.

Yeah, DraftKings CEO Jason Robbins really doubled down on the earnings call this morning. How much efficiency the sportsbook is achieving through better product offerings. It just is costing DraftKings less to acquire customers. It costs less to keep them. And those customers are more engaged, and they're spending more money on DraftKings. Plus, they're seeing improvement in keeping customers in the season's change from, say, NBA to baseball. Robin said 50 percent of the customers they have are crossing over between sports betting and iGaming. That's really impressive.

And while we're looking that online casino games are only legal in a handful of states, this is a very lucrative segment of the business. So when DraftKings claims the crown of iGaming leader when it comes to gross gaming revenue, it is worth taking note here. The stock retreated somewhat from its highs today, but still on track to close up almost 6% on the day. And of course, just on fire year to date. As we get into NFL season, literally the Super Bowl of their business contests are going to be fun to watch. Yeah, Contessa Brewer. Let's get back to

Santoli and his last word. Hey, Mike. Yeah, Carl. I mean, obviously, I do think a lot of things were lined up coming into this week, as I mentioned, to have a little bit of turbulence here. You've seen the volatility index, as you mentioned earlier, click back above 17. Everything is pointing in the direction of taking back some of that calm and a change of character of this market that we saw in June and July. So that takes you back to late May. Jeff DeGraff, you mentioned talking about maybe S&P pulls back to 4,300. That's early June. So really a test of this last phase, this summer rally, might be what we have underway. Of course, as I was saying earlier today, in mid-June, we had one of these wobbles as well. It was down all of 3%. We're down about that much from the

highs right now. So this is, aside from it being an intraday reversal on a summer Friday, I don't think the market is necessarily showing its hand except for the break in momentum and the fact that it points out how much air has kind of built up underneath the mega cap stocks as well as just the market cap weighted S&P. And then meantime, we mentioned at the top of the hour, Mike, some of the recessionary calls that have been pulled this afternoon. Late, it was J.P. Morgan saying, I think the title of their report is the end is not near. And I guess that cuts both ways. If you were counting on a more dovish Fed, maybe this adds a little more cloudiness to that outlook.

It does. And, you know, we've been talking about rising bond yields all week. Now, they're coming in off of those highs from yesterday pretty dramatically after we got a relatively, I guess you could say, mixed jobs report. Pretty benign in general, but not something too concerning. But even just that volatility in the yields of that magnitude over a couple of days isn't always that comfortable. There's no doubt that we have to maybe just absorb the higher for longer Fed posture. However, we're going to define that. I still think the market can live with whatever pace the Fed is on. You know, we're going here, I don't know, 10 or 12 weeks between Fed meetings because there isn't one in August.

So a quarter point every now and then shouldn't be the big deal. But, you know, it just brings up that idea for those who think that something has to break when the Fed is this active for this long. This is not going to disabuse them of that idea. Mike, I look forward to seeing you and Josh Brown tonight, 6 p.m. Eastern time, although I still think Mike and Josh sounds like morning zoo DJs. That's kind of the template. We'll see what we can do. Exactly. Good. We'll see you at 6 o'clock Eastern time. Nice summer programming for the next few Fridays. In the meantime, Dow is going to finish down about 160.

44.77 on the S&P going into the close. Don't forget, next week, extremely busy. CPI Thursday, PPI Friday. We'll get some Mannheim used cars on Monday. And then we'll wrap up some of the earnings of the June quarter with Paramount, Disney, Datadog, Lilly. That does it for Closing Bell.