Closing Bell - Closing Bell: Rally Catalysts Intact into 2025? 11/29/24

Episode Date: November 29, 2024

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

Welcome to this early edition of Closing Bell. I'm Mike Santoli in for Scott Wapner. This make-or-break hour starts with another month in the books, just about, with the numbers printed in green. Scott stocks capping November with another record in a shortened post-holiday session. Here's a look at our scorecard with 60 minutes to go in regulation ahead of that 1 p.m. Eastern time close. The S&P 500 levitating to what would be its 53rd all-time high of the year, up 0.65% right now. You also see the Dow above 45,000 will be its first close above that level ever. The NASDAQ is outperforming by a bit for a bit of a change. It's adding about nine-tenths of 1%.

Semiconductors in bounce back mode. They've been a real drag on the big cap indexes for a while and they are up nicely today. Yields pulling back further from what we're seeing as potentially challenging levels. The 10 year retreating to just about four point two percent, perhaps helped by some month end reallocations into bonds after that asset class has lagged a bit. That takes us to our talk of the tape. With the S&P 500 up 26% for 2024, year-end seasonal factors, they're still favorable. And the soft landing debate settled for now in favor of the economic optimists. Is there much left to impress investors heading into next year? Here to take on that question, Tom Lee of Fundstrat.

He joins me at Post 9, also a CNBC question, Tom Lee of Fundstrat. He joins me at Post 9, also a CNBC contributor. Tom, good to see you. Thanks for coming in. Great to see you, Mike. So we can stack up all the positives. I mean, I know you've been kind of in gear with that idea that the economy would power through, inflation would come down, the Fed could become friendly, your earnings are going higher. Big question to me is how do we set expectations for the year to come, given that? That's all in the books.

It's a great question because, you know, we have two back-to-back 20% years, and now investors are wondering how much good news is baked in. But if we look at the 2025 environment, it's a great setup because we have a new administration coming in that's maybe pro-animal spirits, you know, a Trump put. We have a dovish Fed. And as you're pointing out, interest rates are kind of calming down after rising. And we know there's still $7 trillion of cash on the sidelines. And I think sentiment's coming back into check. You mentioned that before with the AAII numbers. So I think it's a good setup for investors. I wouldn't be too worried about the next 12 months.

So don't be too worried. I mean, it seems that there are all these supportive factors. And when you mentioned the 220 percent up years in a row, history says actually, you know, the following year is up more often than not as well. What do you mean, do you think specifically by the new administration being pro animal spirits? First of all, it's true. You've kind of seen it at work. It seems to pull in that direction. But are there specifics that the market is fixated on that it's going to drive that dynamic? Yes, I think that the market's trying to figure out exactly how this animal spirit plays out in markets. But I would say we've got a treasury secretary that equity markets

approve of. We do know that the last Trump presidency cared very much about what stock prices do, and Jeremy Siegel said this is the most stock market-focused president ever. And I think that the uncertainty is around trade and the potential risks around tariffs, but we'll have to see. I mean, that's something markets are going to have to deal with it from an uncertainty perspective. It's interesting to me that the way the market has behaved in the last several weeks, but even going into the election, was we need to own more cyclicals. We need to own more financial stocks.

We're going to reprice this market for maybe a growth acceleration even, or at least maintaining above-trend growth. Meanwhile, though, we're only a couple months removed from a pretty big growth scare. Job growth has kind of slowed to a point. The housing market seems pretty locked up. It's kind of interesting how the sentiment has kind of jumped ahead. Is the economic numbers positioned to actually validate that view? Markets tend to be forward-looking, so I would expect this. I know there has been a recession in durable goods and in housing and auto sales, principally because of high rates, which have made affordability an issue. That's really on the come next year. I mean, I think the spread of tenures and mortgages

should come down, and the tenure hopefully behaves. And I think if there's more confidence and more supply, I think housing actually could lead this recovery. I mean, I think that's why homebuilders actually started to act better this week as well. Yes. They seem very sensitive, too, to yields, you know, sort of halting their rise as well. I guess the question is, if we believe it's still a supportive environment and pretty much all the things you can identify would suggest you shouldn't be too worried about next year. The second question is, is something like the S&P 500 the best vehicle to capitalize on that? I think investors are still trying to figure this out.

We did a survey with our institutional investors and our RIA clients last week. The majority of institutional investors don't think FANG is the leading trade. They're actually betting on cyclicals. But if you look at the RIA world, the majority are betting on FANG is the leading trade. They're actually betting on cyclicals. But if you look at the RIA world, the majority are betting on FANG. So I think the market is still undecided whether to be long the MAG7 or the cyclicals. I'm inclined to be more cyclical and bet even on small caps having a very big year next year. Yeah. I mean, small caps, they're trying, right? So right here, I'm looking at the Russell 2000. It's like seven points from its all-time high, which was set about three years ago,

but obviously it's been outperforming recently. You know the pushback on that, right? Oh, it's lower quality. Absolute yield levels are not really down that much. They have more leverage. And, you know, I guess there's also this idea that we've been promised for a while that they were going to actually be the place, and maybe they're not. So what changes? Well, one thing investors have to keep in mind is, you know,

small caps have over 100 years of history, so they didn't always just exist the last few years. And I think recency bias makes people a little bearish. But even in Q3 earnings, small cap earnings were up over 40 percent compared to 10 percent for the S&P. And we've never had six years of underperformance of small caps versus the S&P. We're at five years in. Right. That's a decent little tidbit. Although I do keep pointing out

that the last time you had this huge reversal higher in small caps versus large caps, it was also with big growth stocks getting killed in the early 2000s. Yes. I think the growth stocks, because in the 90 2000s? Yes. I think the growth stocks, you know, because in the 90s, I was a technology analyst. You know, ADPE was pretty common among a lot of these large cap tech. Even Cisco was 40 times and GE was 40 times.

I think Microsoft got to 60. Yeah, that's right. Today, people are complaining that you have a large MAG-7 at 30 times. So I think the MAG-7 still has a lot of PE expansion potential. And $7 trillion cash on the sidelines means the money will eventually get deployed. All right. Let's bring in Stephanie Guild of Robinhood and Scott Wren of Wells Fargo Investment Institute to round out the conversation. Stephanie, it's great to have you. What are your main thoughts? You did think the S&P could get to this zone around 6,100. Is it fair to expect

that much more to be piled on next year? How are you thinking about the expectations game? I think, I'm kind of thinking the next three to six months we could get to about 6,300 on the S&P, but I actually think you can see better returns elsewhere. I do think with a higher interest rate environment, even if it comes down a little bit from here, stays in this range, which I actually think could be a little higher from here, but I do think that actually means that, one, we've seen the bulk of the returns already from the top 10 of the S&P. And since the election, you're kind of seeing that the S&P top 10 are down about two and a quarter percent. And the remaining 490, which makes up about two thirds of the index, is up two and a half percent.

So I think you're going to actually see that continue. So my favorite place is actually mid caps. And that's why I'm sort of I've been saying for a while that I actually think we're in a stock picker's market. But what I really mean by that is the kind of paradigm of just owning the S&P 500 and that's all you need to do, I think, leaves opportunity on the table for the next, you know, three to six months at least. Fair enough. And Scott, I mean, I know you've been kind of holding your expectations somewhat in check in terms of what the overall market can deliver. Obviously, if you played quality, you've participated enough in it. Where does that set you up for the final month of the year and into next year?

Well, you know, Mike, you're right. And, you know, we've talked enough this year to know that, you know, stocks are higher than where we thought they were going to end the year. And saying that, you know, we think the S&P could be up near 6,600 by the end of 2025. So that's good. And I think there's some opportunities that are going to present themselves because, in our opinion, you know, you look at core PCE inflation. That's not where the Fed wants to see it. You know, if the risk, you know, we've got two cut in December, two next year priced in. But, you know, the risk is to the downside there.

So I think that some concerns about inflation, you'll probably have some concerns about tariffs. And so what we're actually hoping for, I mean, we're leaning towards stocks. Now, are we 100% all in, leaning towards cyclical stocks? We're not. I mean, we could certainly take another step, and we 100% all in, leaning towards cyclical stocks? We're not. I mean, we could certainly take another step,

and we would take another step if we get some kind of a decent pullback. And I guess really nowadays, if you think about it, over the course of the last 18 months, 12 months, I mean, really a 10% pullback is, even though it's common historically, few and far between. So we get some kind of pullback is, you know, even though it's common historically, few and far between. So, you know,

we get some kind of pullback in here. I think you'd see us take another step. I mean, we're optimistic, but, you know, the economy is going to slow a bit here. Earnings growth, you know, it'll set a record high next year. Our earnings will. Growth rate will probably slow a little bit. So I think there's some things that investors should pay attention to. One is, you know, have a plan. And if we get a pullback and you've got cash on the sidelines, which most retail investors do, you know, you need to be ready to step in. And then likewise, you know, we think there's a good chance 10-year yield could be 4.5%, 5% by the end of next year because we think there's going to be a little more inflation. And in the second half of the year,

economic activity is going to be better. So, you know, I think there's going to be an opportunity to lock in some longer-term yields, and there's going to be an opportunity to buy stocks at lower levels. So, you know, we're not ready to be overweight small caps. You know, for a couple of years, we were underweight and overweight large cap, and, you know, a lot of other people were too, and that worked out pretty well. But we still think

it's going to be a large cap story here, at least, you know, in the first few quarters or maybe longer in 2025. So I like the way we're positioned. And we're certainly looking for better positioning and to take another step toward a cyclical allocations if we get any kind of pullback here. Now, Tom, you've been focused on the downside momentum in inflation for a while. It's gotten a little sticky in terms of the official readings recently. Scott, talking about the risk that it perks up again. How do you think that plays out from here? I think the Fed's comfortable that inflation isn't going to necessarily have a large wave that takes us back to emergency levels of hiking. But, you know, these reports are,

you know, I can kind of quibble with them because, you know, this most recent PC report, almost a quarter of the inflation was magazines for the month. And so, you know, is that repeatable or because it was in the last 70 years, the highest monthly increase in magazine prices. Right. I mean, you can usually pick an outlier on a one month basis, but sure. That's right. So I mean, I think the other piece of it that I think is maybe more long lasting has been the fact that portfolio management fees. Right. So basically, a stock market goes up. You kind of impute that there is this rise in portfolio management fees, right? So basically, the stock market goes up, you kind of impute that there's this rise in portfolio management fees, which really nobody pays out of pocket. It's one of these funny things where it's sort of like, how much do you want to fixate on?

Yeah, and the fees come out of your gains. It's not coming out of somebody's wallet. So that's a great point. And I think ultimately, consumer expectations of inflation have been really stable. And I think that's what matters more to the Fed. And I think if the Fed even just cuts one time next year, it's still a dovish Fed, and it's actually bullish because it gives us a lot more fuel. Yeah, I mean, historically, you don't want the Fed in emergency mode. And I keep pointing out, 95 into 96, I think you only got a couple, three cuts, and they went on hold for a while worked out. Okay, Stephanie, I wonder about your perch there and your window on what what individual investors are doing and how they're prioritizing the movement of their money. And I say that as a moment when it does seem as if there has been this rekindling of energy

within certain parts of the market. Some of these kind of retail trader favorites are flying again. And this idea that obviously if we are in a, you know, kind of higher animal spirits type environment, that that might run for a while. Yeah, I think our, you know, our customers, what we see them doing is they tend to own core position of things that they know and use.

And so some of that does land in that kind of large cap tech oriented space. But then they also tend to trade around the volatility. And I actually think we're in a great environment for that, where I do think there is greater dispersion among stocks and our customers should benefit from that. More recently, you've seen them taking lots of profits in names like Tesla. And then you have them, you see them putting money into names like NVIDIA because it hasn't been flying as much as some other names. Of course, MicroStrategy has also been like a favorite for them. But I do think the environment should actually be beneficial for the way we see

them behave and where they're putting their dollars. But they're certainly not selling. Not selling on a net basis. Yeah, that does make sense. And, Scott, just a final word here. I mean, Stephanie mentions microstrategy. that just this run in Bitcoin and crypto has created this bit of a coattails among some related stocks or some just kind of high-risk, high-reward situations where it seems like hot money is getting pretty excited. Is that something that you're wary of, or do you think you can harness?

Well, you know, Mike, I think that any time you've seen the stock market move from the October 23 lows to where it is now, I mean, that is a big move in one year. And it doesn't surprise me that a lot of these other high-risk assets have moved up as well. So that tells me that, you know, we probably have some more upside here in the near term because there's a lot of momentum in this market. But it also tells me that we could have, as I mentioned before, some opportunities to take another step. So, you know, I'm not fond of chasing the S&P 500 right here, but, you know, industrials, financials, communication services, those sectors look

decent. We like oil. We like energy anytime oil's at 65 or 70, which it is. So I think there's some sectors you can do some things in now. And then I think those opportunities are going to present themselves when people get a little bit nervous about the Fed and maybe a little bit nervous about what might happen with tariffs and things like that. So we're looking forward to 2025. I think it's going to be a good year in the end. Gotcha. I know you've obviously been bullish Bitcoin. It's obviously been on this incredible run.

I just wonder about the round numbers that are piling up. We have 100,000 in Bitcoin, 6,000 on the S&P, 45,000 on the Dow. It just feels as if we have the potential for people feeling as if, wow, we made it. Is that a problem? Yeah. Well, maybe we're in a simulation, right? Yeah, there you go. You know, I think that the fundamental arguments for Bitcoin are even stronger now than they were at the start of the year, because I think we've gone from huge regulatory headwinds and governments hostile to potentially the US making this a strategic sovereign asset at a time when, you know, again, it's proven itself as a pretty good store of value. I mean, whether you look at three-year, five-year, ten-year.

And as you know, Bitcoin's total value is $2 trillion. Gold's network value is $19 trillion. So Bitcoin has a lot of room to rise. All right. I'm just going to use that as a chance to point out that every time we talk about Bitcoin fundamentals, we're actually just talking about supply and demand. To me, it's technical. It's more people have more ways to buy more of it. Yes.

But, you know, then again, that's how you talk about dollars. Sure. Right. Because a dollar is exchangeable for a dollar. No, of course. But it moves on economic dynamics and things like that. All right. We're going to definitely have this discussion again.

Tom, Stephanie, Scott, really appreciate it. Everybody have a great weekend. Thanks for joining me here on this Black Friday. All right, let's send it over to Christina Partsenevelos for a look at the biggest names moving into the close. Hi, Christina. Hi, Michael. Shares of advanced automakers or auto parts, I should say, down almost 7% after Moody's ratings downgraded the company's senior unsecured debt to below investment grade. Their credit rating agency said the move reflects their expectations over the next 12 to 18 months. Keep in mind that the auto parts retailer is closing over 700 stores as part of a turnaround plan just over the next year

or so, but no bankruptcy plans just yet. And Hasbro going in the opposite direction today after Elon Musk floated the prospect of acquiring the toy maker to secure the rights to Dungeons and Dragons. Musk posted this idea on X just a day after saying that XAI is going to start an AI game studio. Shares of Hasbro up just over 1% on just his tweet. Mike? Well, it's only a $9 billion market cap. It's a trifle, I guess, once you see what his net worth has done recently. All right, Christina, thank you. We're just getting started. Up next, the holiday shopping season is officially underway. Which retailers should investors be watching here? Top retail analyst Simeon Siegel is with us after this break. And

as we head out, a live look at the Mall of America on this Black Friday afternoon. We are live from the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back. Black Friday shopping underway, kicking off early this morning for some. Let's send it over to Courtney Reagan, who is live for us at the Garden State Plaza in Paramus, New Jersey. Court, how's the tracking so far? Hey, Mike, you know I'm always here early at the mall. It's like an annual tradition. Me, Black Friday, malls. But it's really interesting stuff that we're seeing here going on.

We also have some exclusive real-time spending data from Spicer given to us this morning showing that between the hours of midnight and 9 a.m., this is real transaction data. Brick-and-mortar retail transactions grew 4.3% over that same period last Black Friday. Online sales fell 4.4% compared to the same period last year. And that's not entirely surprising if you put it in context. Online sales may be weaker this morning, but that's because today's online shopping peak is supposed to hit sometime between 9 a.m. and 3 p.m. Eastern time, according to Salesforce. So before that Fiserv data was pulled for us and a lot of shoppers hit online stores last night.

Captified tells CNBC that searches for home and kitchen, the biggest increase over last year of 287 percent, while patio furniture and home goods, home furnishing, lawn and garden. That's down about 67% year over year. But we're expecting 132 million consumers or 72% of America expected to shop on Black Friday today in some form. So that's online, that's in store, or maybe both. And 65% of consumers specifically told the National Retail Federation that they would be shopping in stores on Black Friday. This mall has seemingly only gotten busier since it opened at 7 a.m., which is a real shame because I have my eye on some things, and I'm not excited about those lines.

I should have hit the stores earlier. I was going to ask you if there are particular clusters of lines or crowds in some areas. I just figured that's where people have a priority of saying, I need to make sure I get that one coveted thing. Yeah. So it was interesting before the mall stores opened, but the exterior doors were open. So some crowds were coming in. Lululemon actually had the longer line, which I found really interesting because you don't often see a lot of promotions at Lululemon, usually a bit of a clearance rack, but not a sale per se, and certainly not store-wide. But I guess those products were just coveted enough. And interestingly, this mall does also have an aloe and a number of other

Lululemon-like competitors. But Lulu had the longest line, at least this morning. All right. Well, I know on Good Authority, sometimes you get a particular model size style of a Lulu product that your daughter wants you to make sure you get. So, all right, Court, thank you very much. Give me your shopping list, Mike. Right. I'll text you. All right. Joining me here at Post 9 with his holiday sales outlook is BMO Capital Markets top retail analyst, Simeon Siegel. Good to see you, Simeon.

Good to be back. Busy time for you, obviously. What are you most eager to learn over the next few days as it bears on your coverage? So I love that question because we just heard Court very articulately give a lot of numbers. That was a skill because I don't know what to do with that. There's a lot of surveys. There's a lot of opinions. I was right there with her at the Garden State Mall at seven o'clock seeing all these people. But at the end of the day, what you and I want, what investors want to know is how's the business. And it used to be that Black Friday was a great synopsis of the business

because Black Friday was the only thing that mattered for holiday. But now, to her point, people are shopping before, they're shopping after, they're shopping during, the phone changes the dynamic. And so what I want to know is I want to know, we're seeing divergence. We're watching winners and losers. And certain companies are growing revenues and certain ones aren't. And that dynamic has been fascinating through the earnings reporting season to a large degree. And I keep wondering if any of it was, or not any of it, but if it was predictable in a sense of, okay, here's a sweet spot for one particular chain that caught a fashion tailwind or something, or if it's just other normal execution? So I'll tell you what I love. For the better part of the last three or so years,

you and I have been talking about great environments and challenging environments, and it's all been macro, and it's all been everything, and it was a cluster. Companies were doing well because there was no inventory, and there was a lot of stimulus, or they were doing poorly because there was a ton of inventory and a lot of stimulus, or they were doing poorly because there was a ton of inventory and no stimulus. But that's not what business is. Business is supposed to be market share. I am supposed to win at my competitor's expense.

And that's what we're seeing. And so to your point, I don't know that it's a fad. I think we're actually seeing good operators do well. And so what the beautiful part of this is, we're seeing companies sell the exact same thing to the same people, see different results. Michael Kors and Coach, you can see drastically different results. Walmart, Target, different results. Michael Kors and Coach, you can see drastically different results. Walmart Target, different results. This goes

through every single sector. Adia, Nike versus Hoka and on. You just talked about Lulu. So what we're seeing is a healthy dose of business competition. Sure. I like the framing of an investor needs either to take risk that the great companies in retail are a little bit richly valued and take risk on the multiple, or you have to take risk that maybe the earnings don't come through if something looks cheap. So thank you to my team who hopefully didn't work too much on Thanksgiving. I think we were generally off, but we did publish a big report today where we were trying to isolate from my conversations. It feels like in this market, you either have to take risk of multiple and buy expensive for a reason stocks, or you have to take risk of numbers and buy turnarounds. And so what we're trying to do is do both, right? So we're trying to say, okay, TJX,

on the one hand, is this compounding business that is wildly expensive, but I can't justify the multiple based on any historical, but frankly, for the entire market, I'd probably say similar thing. And on the other hand, we're looking at an Under Armour. We've talked about a Peloton, where these are businesses that people have issued that they hate, right? That they've just moved along and they've said these are dead businesses. They're not dead. They have billions of dollars of revenue. They just have to fix the profits.

Sure. And so you take that duop, that's a very nice divergence in and of itself. And I think figuring out as an investor, do you want to pay for the risk of the multiple and say it's expensive, but it's a good business? Or are you willing to say, you know what, I'm going to take risk of numbers, but I don't really worry about the multiple because it's been so depressed. Sure. The ones that you use as examples, the Under Armour, Peloton, they are brands, right? They have some kind of brand profile, and I guess you're making the bet that it has some durability.

What I love, I'm not clever enough or fashionable enough to tell you what's going to be that latest trend. What hopefully I can do is look at what's actually happening and say the revenues are telling me what's the truth. And so if everyone's out there, there was a point not too far away, not too far in the past where people would say Peloton's broken, Peloton's dead, Under Armour's dead. I know that they're not. How do I know they're not?

Because people are showing me with their dollars. If Under Armour has $6 billion of revenue, it cannot be dead. I know that they're not. How do I know they're not? Because people are showing me with their dollars. If Under Armour has $6 billion of revenue, it cannot be dead. If it doesn't make a lot of money, it can be very sick. So I can fix, or they can fix sick. You can't fix dead. Are there any of those companies that are in that, you know, paying up for quality category that you think are particularly vulnerable? So that's interesting because I guess if I hold to my definition, the answer to that should be no based on the results, yes based on whether the market multiple moves. But I think that it is fair to say there are expensive companies. Lulu is a very expensive stock in parentheses, it has an expensive valuation.

And right now they're doing a very exciting Disney collaboration. If you are in the Venn diagram, people that love Disney and love Lulu, this is for you. But I think you and I have talked about historically, brands still have peaks. Brands still hit us. Every kid in second grade knows that when you have too much of something, it becomes not cool. Sure. And so I think they have to worry that they're expensive, they have a lot of sales, and they also have a heavy margin. Right.

One of those things falls, right? There's three potential areas that you and I have to worry about. Interesting. Simeon, great to talk to you. Great to see you. Good perspective. Enjoy the weekend. Thank you.

Happy holidays. All right. Up next, top technician Ryan Dietrich is back. He'll tell us where he sees the rally heading from here and the sectors he's betting on right now. We are back after this break. Stocks hitting another record high on this shortened trading day with the S&P 500 closing in on its best month of the year.

And our next guest sees more runway for the rally from here. Let's bring in Carson Group's Ryan Dietrich. Ryan, great to have you on to really freshen up your view of what this market can do. You know, in so many respects,

this market's been kind of behaving as it's supposed to behave, right? Earnings have been going up. Stocks have been advancing as well. Seasonal strength has been redeemed. You got the post-election kind of tension release rally. Where do you think that leaves us on this perch heading into next year? Yeah, Mike, thanks for having me back and hope everyone had a great Thanksgiving out there.

So, you know, I was on, I think it was the Friday before the election with Judge, talking about all the VIX spike and all the puts coming in. We expected to see another strong November. Like you said, we're having another strong November, but this year has really played out. I mean, what do we know about December, right? We still think there's more to go to this overall bull market, but really more specifically over the next four to five weeks. We know December's up more likely than any other month, up like 74% of the time. It's the most likely to be up in an election year. It's the third strongest year overall, but the second

strongest in an election year only to November. Last thing here, Mike, to think about when you're up a lot going into the last month of the year, like we are, we're up 20% or more going into the last month, like we are. I went back like 40 years. The last 10 times this happened, December has been higher, nine of them, up 2.4% on average. So better than average returns. A lot of stuff I just said there. It's a bull market.

We still think there's going to be a chase into the end of the year is the best way to put that. Yeah. And that's that sort of, you know, underlines the idea that usually strength begets strength in markets. And it's not something that, you know, you pull forward gains and then you're left with give back necessarily. But how are you thinking about things like, well, sometimes the third year of a bull market, which we're just in now, is a little bit less generous. First year of a new president's term sometimes is choppy. And even after you've had these years like this year, we're going to hit the 53rd record high of the year for the S&P. When you've had those clusters of new highs, usually it's still a bull market, but again, often a little more of a turbulent period at some point

over the following year. You're right. And we're in that camp. We still think it's a bull market. Yes. But, you know, Scott, you had a great discussion earlier before I came on. Scott talked about some of those other areas that are taking the baton, right? Small caps, mid caps, industrials, financials. I mean, it doesn't mean just tech has to be the leader here.

There's going to be other groups, I think, is how we see this. And, you know, the other thing I think is so, I hate to say this time is different. Believe me, you hear that, turn off the TV, run the other way. What is happening right now, though? We have really strong productivity in our country for the first time since when? Since the mid to late 90s. When you have strong productivity, go back and look in the history books, everyone. You tend to have higher GDP, higher earnings growth, and better stock returns, right? We gained 20% five years in a row in the late 90s. We're not saying that's going to happen again. But when you have the higher productivity like we see here, Mike, we think, again, those are reasons to think this bull market's alive and well. Probably don't gain 20% next year, full disclosure. But listen, between 10 and 15,

maybe closer to 15, it makes a lot of sense still with the strong productivity and overall strong economy we still have here. Yeah, I mean, I guess if you're talking about a strong productivity and it goes to this notion of of a economic cycle, which has, for one thing, been unusual. I mean, I think we're working on two and a half years and the negative leading economic indicators and we haven't had a recession yet. But on the other hand, it's something that should give new life to it. And I just wonder about the starting point. I keep coming back to it. We just run that list of positives up there. Really tight credit spreads. You already have elevated valuations versus history. Yeah the Fed's going to probably be looking to ease but maybe not much. And I just wonder you know what is it out there that is yet to be improved that the market can seize upon as better than expected? Yeah, I mean, a couple of different things. I mean, the overall idea that this broadening out is alive and well. I mean, we are hitting all time highs on various advanced decline lines and have been for a while. Right. For the year, 11 sectors, 10 of them up double digits.

Right. We didn't have that necessarily over the last couple of years, as a lot of investors unfortunately realized. So that broadening out is there. You know, I mean, globally also, there are some, you know, look at our, since the start of the, I guess the end of 2019, U.S. economic growth, GDP has grown like 12 or 13 percent, right? Most of Europe's flat, all right? I mean, China, I don't think anyone trusts their data necessarily. They've had, they've got their big issues going on. The idea that maybe the rest of the globe starts to do a little bit better is something also that kind of brings in that have a diversified portfolio, look around different parts of the globe. We still like the U.S. It's still our favorite area, I want to be very clear.

But maybe some better economic growth from the rest of the world is something a lot of people, I don't think, are talking about as we head into next year. No, I think that's totally fair. I mean, that would be a little bit of a contrarian stance if you said, look, they can catch up a little bit and those markets don't really reflect it. Ryan, great to have you on. Thanks very much. Have a great weekend. Appreciate it, Mike.

Thank you. All right, up next, we're tracking the biggest movers as we head into the close. Christina is here with those. Well, the FDA is refusing to approve a new drug, and one pharma name is plunging. Details on that and much more next. Coming up on 17 minutes till the closing bell, the S&P 500 up just about three quarters of a percent at record levels. Let's get back to Christina for a look at some key stocks to

watch. What do you have, Christina? Well, are you ready to start trading stocks until the wee hours of the morning, if you're here in North America? Robinhood is continuing to climb after the SEC approved the creation of 24-hour stock exchange, a 24-hour stock exchange, paving the way for around-the-clock trading.

The stock has been rallying since the election, with shares up more than 60% in November. Robinhood is just up, well, it was up 1%, so almost flat at this point. But let's talk about Applied Therapeutics. It's losing more than two-thirds of its market cap after the FDA declined to approve its drug to treat a rare genetic metabolic disease. The drug was set to be the company's first commercial product. Applied Therapeutics is reviewing the feedback and, of course, plans to fight back and immediately request a meeting to discuss requirements for resubmission.

And that's why you're seeing shares shed all of their year-to-date gains at the moment down quite a bit today. Mike? Yeah, welcome to binary biotech stock outcomes. That's how it goes. Christina, thank you. All right, still ahead, it is not just about the malls this Black Friday. Auto dealers making a big push to bring back holiday deals. We'll see how those companies are faring so far as we head out.

A live look at the Tanger outlets in Deer Park, New York, on this Black Friday. Looks pretty busy. Closing bell. Be right back. We are in the closing bell market zone. Wilmington Trust's Megan Shue is here to break down these crucial moments of the trading day. Plus, Phil LeBeau with how the auto dealers are faring this Black Friday. And Christina Partinello is on what's behind the pop in chip equipment stocks today. Megan, great to have you join us today. You know, it's been really tough to go wrong invested in U.S. equities this year, right? You had earnings up and then valuations of those earnings also up or up more than 25 percent year to date. Stocks really trounced

bonds. Where does that leave you as an investor in terms of whether to to kind of let that ride or make some adjustments? Yeah, thanks for having me. We have made some adjustments and I think we have to acknowledge the strong gains that we've seen. And in our view, I mean, if you think about how the market thinks about risk, more often than not, the market tends to price just really more to one side of the risk spectrum. So post-election, I think we've gotten a lot of euphoria around the positive elements of a Trump 2.0 economy. And I think that leaves us exposed, given the strength that we've seen, given extended valuations, leaves us a little bit more exposed to downsides. So we have trimmed risk in our portfolio, taking down our small cap overweight to neutral. And it's not just policy related. We're also watching a little

bit of weakness in the labor market, specifically labor demand, which is really key for the consumer. And we know that the consumer has been a huge driver of upside surprise to the economy. So do you think that the market's current perhaps blind spots, you know, given that it's focused on some of the the upside possibilities, is it mostly about, you know, not thinking that the economy is going to slow materially? I mean, I know that you think that the Fed's going to actually cut more than perhaps consensus does right now. One and three quarter percentage points next year. Is that going to be because inflation is down solely or because the Fed's going to have to take out some insurance on the economy? Yeah, well, and just to clarify, we're not negative. We just took down, we had a decent overweight to equities. We've taken it down. We're now just slightly overweight. And

again, it's really all about the balance of risks. As we look into 2025, we do think that inflation will hit the Fed's target by the first quarter of the year and that the Fed will be in a position to cut rates by more than Than the market is expecting so- another twenty five in December. And then a hundred to one hundred twenty five- or even hundred fifty thereafter in twenty twenty five so pretty consistent.

Cutting of rates down to what we see is the neutral rate of about three percent. But the tricky part is that as we look at things like G. D. P. as we look at things like job growth. A lot of the indicators that we have that give us comfort that we are in a good place are very lagging and they're backward looking. And if you look at some more forward looking data specifically around the labor market, we see some signs of weakening in job demand. And that's going to further allow the Fed to be in a position to cut rates. Next week, we obviously get payrolls, which will be very critical for the Fed, but we

also get jolts. And so that job openings, that job demand will be very critical to watch because it's been on a very steep downward trajectory. Gotcha. And where does that leave you with regard to bonds at these levels? I mean, they've kind of done their job this year. They've sort of held their value. But obviously, it's been a little bit of a tougher ride. Yeah, bonds are difficult because you have to have them as part of the portfolio, don't get me wrong. But in terms of overweighting bonds, I think you have to have a sizable recession risk in your forecast in order to justify justify that and we have been in the soft landing camp- we've increased sort of inched

up our recession risk a little bit but still do not have it as the base case- and given the volatility around interest rates. We're more comfortable holding a neutral. Allocation to bonds here- and looking for spots in in other areas to be

defensive we did take that small cap allocation and move it to hedge other areas to be defensive. We did take that small cap allocation and move it into hedge funds, which we think are obviously lower beta than small cap and can be defensive there as well. But we've had interest rates come in pretty nicely. And I think that now there's balance to some upside risk as we look at some of the policy adjustments that we could see in 2025. So that's an area where I'd be allocated, but not taking large bets in either allocation to fixed income overall or even in duration. Yeah. Megan, thanks so much. I appreciate you running through it all with us. Have a good weekend. And Phil, you know, the big bow on the hood of a car has been a feature of,

you know, auto commercials forever. What do we think about that trend right now? I'm not sure we see too many big bows, but this is a nice end to a month that the auto industry and the auto dealers have needed. In fact, the pace of sales is going to be one of the strongest in terms of a monthly pace of sales this year. And that's what the industry needs as they head into December. This is what is expected according to J.D. Power and Global Data. You're looking at higher incentives and greater sales. So those incentives moving up now is important because you've got the price coming down to just over $45,000.

The incentives as a percentage are still about 7.7, 7.8 percent of the price. The estimated sales rate of 16.5 million. This would make November one of the strongest months of this year. And for the auto dealers, as you take a look at the big three auto dealer stocks, they are looking for this because they're looking at incentives up anywhere between 45 and 60 percent. That helps drive the traffic, helps close the deals. And you also see auto loan interest rates edging a little bit lower, not dramatically lower, but any movement lower is going to certainly help in terms of closing deals. I want to talk a little quickly about the automakers, Toyota, Honda, Ford.

Why? Because we get their monthly sales, November sales next week, and we'll get a sense of just how strong November is. But overall, Mike, I'm hearing positive commentary from dealers when I've checked in around the country. Yeah. All right. Well, got those gas prices down, too. I don't know. That probably doesn't hurt in terms of the larger vehicles. I feel appreciate it. Thank you so much, Christina. Semi cap equipment has struggled for a bit, but but popping today. Popping today because U.S. semiconductor sanctions on China may be less severe than initially anticipated. This according to a report from Bloomberg.

The sanctions are expected to be announced early December, with the market largely pricing in that timing of the potential impacts. So they kind of knew that. But if the U.S. actually plans to tone it down, that actually bodes quite well for chip equipment makers like Lam Research, KLA, Applied Materials, ASML, which you can see all higher today. And the new restrictions may actually be even more targeted, focusing on Chinese chip equipment makers rather than those firms in China that manufacture the chips and fabs. That's why you're seeing other names higher like Texas Instruments, Broadcom, NVIDIA. They're all just getting a boost today. Overall, the chip sector is leading the S&P 500 today. The SMH, a good barometer, breaking its four-day losing streak, which really we can say

maybe is a relief rally after recent chip turbulence and overall investor fatigue in the sector, which I know you've been talking about a lot, Mike. Yeah, for sure. And Christine, I mean, you mentioned investor fatigue. And also it's a reminder, though, that this is probably going to be an area that's going to move around on trade headlines for a while. Precisely, especially wafer fab equipment, which is not doing well and still not expected to do well in the short term. So it may be a short blip up and then back down when it settles over the next few weeks. All right, Christina, thanks so much. As we head into the close, remember, 1 p.m. Eastern time close in this abbreviated market day.

We are headed for a new record on the S&P 500. We're up about six-tenths of 1%, just modestly off the highs. The Dow Jones Industrial Average up close to half a percent, but it is below that 45,000 mark, which it has never closed above. The Nasdaq Composite outperforming a little bit. Russell 2000, not much happening today. It is pretty much a large cap story for the moment. Market press, very strong volatility, and that's going to go out under 14 as we head into this quasi-holiday weekend.

And another winning month for the S&P 500, up more than 5%.