Closing Bell - Closing Bell: Rally Rages On, Retail Rebound & Tech Too Cheap To Ignore? 5/27/22

Episode Date: May 27, 2022

Stocks staging a big rally ahead of the long holiday weekend. The Dow snapping an 8-week losing streak and the S&P 500 and Nasdaq ending 7-week losing streaks. Ironsides Macroeconomics Barry Knapp discusses whether the market has bottomed following a new report showing inflation is slowing, but Interactive Brokers' Steve Sosnick thinks there could be more downside. Investor Eric Jackson reveals the three tech stocks he says are too cheap to ignore. Charter Equity Research's Ed Snyder discusses whether investors should buy Apple's rebound. Energy also moving sharply higher this week. OPIS Global Head of Energy Analysis Tom Kloza discusses if there is more upside for energy prices. And Oppenheimer's Rupesh Parikh and BMO Capital's Simeon Siegel discuss the week's mixed bag for retail earnings and debate their opposing views on Ulta, which soared following its results.

Stocks rallying and putting the Dow on track to finally snap that eight-week losing streak. On new signs, inflation may be slowing. The most important hour of trading starts right now. Welcome to The Closing Bell. I'm Scott Wapner in today for Sarah Eisen. Let's take a look and see where we stand with one hour to go in this trading week. You can see we've had a nice day going and we are holding on to those gains. There are a lot of superlatives, you could say. I mean, the Dow is holding on above 33,000. It's been an obviously strong week for stocks. But if you really put into focus the fact of where we came from the intraday lows on last Friday, Dow's up better than seven and a half, almost eight percent. So that's the market picture right now. Technology, real estate, consumer discretionary are leading the gains today. All 11 sectors are in the green. Tech is having a huge week and coming up, investor Eric Jackson

gives us his outlook for that sector and the three stocks he thinks have never been cheaper. Let's get into the market right now. Stocks seeing a lot of boost today following some new government data that shows the pace of inflation slowed in April. The Nasdaq up more than two and a half percent, making new session highs. A new note, though, from Citi today says it is time to get defensive on U.S. equities. Let's bring in Jason Pride from Glenmead and Barry Knapp from Ironsides Macroeconomics. Guys, it's great to see you. Barry, to you first. Are we putting together something here to build on or are we just thinking of false hopes? No, I let off a squawk box a week ago Thursday and described how these Fed policy normalization related corrections are really your second best window to put money to work if you didn't buy the lows of the recession. So if you think back to the end of QE2 in 2011 or even QE1 in 2010,

these drawdowns on fears that the Fed's going to be tightening into a slowdown are generally way overdone, particularly early in the business cycle. And these are great entry points. So I thought there'd be a 12 percent forecast, which is the average Fed policy related correction this year. We went to 20, which is on the outside of those. It's as big as the one in 11 or the one in 18. But at this level, we'd have to have a deep recession. The median decline for recessions is 24 percent. We'd have to have a deep recession to justify further downside in particularly in cyclical sectors. So I think this is, you know, this is the start of

the recovery from the Fed policy normalization correction. Wow. Jason, do you buy it? Do you believe what Barry has to say? Look, Scott, I think actually this is a little bit harder than that. We started at a higher valuation. So, you know, the possibility of a decline being a little bit deeper is a little bit higher. We are now in the late stage of the economic cycle. Late stage tends to come with it. Lower returns for equities, rising yields and better returns for fixed income makes fixed income more competitive. It means you need to have a more balanced portfolio rather than just riding the equity wave. So we've downshifted risk back to neutral in this environment. And we're waiting for further indications that there's actually a recession coming, because truthfully, late cycle can actually last a long time. And we want to be positioned to ride that out if necessary. But we also want to be ready for the potential recession

if the Fed does take this too far, which I think is definitely in the cards as a possibility at this point. I mean, Barry, do I hear you saying that you think a bottom was in as of last Thursday? Now, remember, you look at where stocks are today and you remember where they were on an intraday basis a week ago at this very moment. I mean, the S&P at 3810. Here it is at 4135. The Dow at 30,635.

Here we are at 33,000 and trying to hold above that level. Are you calling the bottom? Yes, I do think that the bottom was in. And I'll tell you where I disagree with Mr. Pride a little bit around the stage of the economic cycle we're at. I thought the pandemic was two things that the global financial crisis and aftermath was not. That global financial crisis was a deflationary shock. This was an inflationary shock okay that's been clearly proven. But I also think the

the global financial crisis was a negative productivity shock. And this was a positive productivity shock that's part of the reason why. Margins have held up as well as they have. For all the concerns we have about retailers by the way.

Margins in the consumer discretionary sector are above cycle peaks for the last three margins have held up as well as they have for all the concerns we have about retailers by the way margins in the consumer discretionary sector are above cycle peaks for the last three cycles so i think that the productivity part of the story is going to become evident in the second half of this year and it ultimately will mean the fed can raise rates farther than expected but the real limiting factor on how far they can go is federal government debt, not private sector debt. That's a very different dynamic. And it implies that we're not close to the end of the cycle. So, Jason, respond then to what Barry has to say, because he clearly said he disagrees with your view. I really hope that Barry is right on this, Scott. You know, if we do have the productivity cycle, if earnings continue going, look, that is the soft or softish landing that the Fed chairman is trying to engineer at this point in time.

But that is by far not a guarantee. And therefore, investors have to be a little bit more wary, a little bit more positioned for potential different directions rather than just singularly focused on the upward leg. Look, valuations still, even after this pullback, they do remain a little bit thick. They do tend to sit there in late cycle. But when recessions hit, you actually have lower levels. So we think this is the point in time where you build in some defense. You don't go over too far because the recession is not guaranteed. We have to recognize the fact that this is also not a guaranteed continued upward left.

Barry, we do still have a lot of issues in front of us, right? The economy is weakening. Inflation is still elevated. The Fed is still highly engaged. And there's no reason to believe at this point that they're going to pivot or grow more dovish or go anything other than what they're doing now. So how can you think that maybe the worst, in fact, is over? By the way, you've seen a lot of markets in your career, Barry. We have not had that typical moment of and I'm not trying to date you. I saw your facial reaction there when I said that we haven't had that historically typical capitulation moment.

You know, the VIX is like down to 25 now. I mean, it didn't go to 40. All the things that everybody says, yeah, but we didn't have that. Yeah, I'll project my friend and your friend's vice a little bit. I was at a conference last week in New York, heavily, it was a macro conference, but heavily derivative based. I spent, when Steve and I were colleagues, that's what I did in those days. And one of the things that was apparent to me was that the reason that the VIX wasn't so-called confirming the lows is the same reason why it

didn't do that in late 2018 was that investors were so defensively positioned. And you could see that in correlation, which implies long only investors were hugging the benchmark and that cash had been raised that there was no need for portfolio protection any longer. And as I listen to derivative based investors talk it was clear. They were quite negative. And so that cash levels are high. That's why you never had that impulsive moment in the facts. Just like in twenty eighteen we had the big spike in vixen. During the all-mageddon in February, but then in December, it never really confirmed it, but we still made

a bottom. And so I think this is quite similar in that sense. Investors had gotten positioned defensively, as Mr. Pride is implying, that they've done the same. So, you know, because of that positioning dynamic, I think that the market can grind higher. Now, listen, these recoveries off these Fed policy corrections take almost as long as it took or even around that length to recover. So I'm not implying we're going straight up. But I do think that we had a more than adequate adjustment to Fed policy tightening. And the markets have fully priced where the Fed is likely to go for now. We'll see late 23 how much inflation comes down. I'm of the mind it's not going to be anywhere near prior cycle trend lows, you know, one and a half percent core PCED.

But that's really a story for 2023 and more so than than right now. I can tell it's great to have you both with us. And I hope you have a good and thoughtful a long Memorial Day weekend. I could tell you, I mean, stocks have added somewhat significantly since we started the show. Everybody before I said the first word of the three o'clock show today, I looked down and we were barely holding on to thirty three thousand on the Dow. Now we're almost at thirty three one hundred. So we've got a four hundred and fifty seven point move Barry and Jason

we'll talk to you again soon. But we do have some pickup of steam here. With about fifty minutes to go. In this trading week in a good one it's been gap staging a dramatic comeback after disappointing earnings. And eighteen percent intraday

swing. It's not the only retailer making a big turnaround today either either. We will discuss the outlook for those stocks when Closing Bell returns. You're watching Closing Bell on CNBC. Another roller coaster ride for retail as we wrap up a very busy earnings week. Costco initially plunging after reporting a hit to margins, but shares have now clawed their way back into the green and we saw massive moves atAP. Shares tumbled nearly 20 percent after reporting its earnings. They, too, reversing course today. Joining us now, Rupesh Parikh

of Oppenheimer. He has an outperform on Costco and Ulta, also with us, Simeon Siegel of BMO Capital. He has a neutral on GAAP and Ulta. It's great to have both of you here. Rupesh, to you first. I mean, how would you sum up the state of the retail trade, given what we got this week? Because at times it was confusing. Yeah, no, it definitely was a very confusing trade. You know, I'd say overall consumer spending out there is still strong. I think you're seeing shifts out there in terms of where consumers are spending. So we saw a very strong spending on beauty yesterday from Ulta and Elf Beauty earlier in the week. So I think, you know, spending is overall fine, but clearly the retailers are positioned to, whether it's beauty, the reopening trade, they're doing much better while apparel companies are, you know, on the other side of it.

I mean, just, I mean, some apparel companies are doing quite well. It just literally comes down to what you've got in the store, whether you have the right fashion trends or the right things that people want. And Simeon, that you don't have too much of your inventory, because we have seen a huge inventory build for some retailers, particularly in the teen space. Yeah, so good to be here, Scott. So I think there's this interesting dynamic right now where people are have this perception. No, no one's talking about recession today because the market's green. But like people have been talking about recession, inflation, everything is abysmal. But to Rupesh's point, people are spending. And so I think if we look at who missed,

where the disappointing stocks were this cycle, it was not revenue misses. Revenue beats with margin misses took stocks down. TJX, one of the big winners of this earning cycle, missed on revenues, protected margins. And it goes to your point. Don't promote. What we learned in COVID was you could pull back. You could sell less, charge more, make more money and enhance your brand after years of being forced to grow for growth's sake. I think the question now is who takes that lesson forward. I want to find out why you guys disagree on Ulta the way you do, because it's certainly one of the stocks that we've highlighted today. Rupesh, your rating on it is

outperform, and Simeon, you have a neutral on it. Rupesh, why do you like it so much? Yeah, so for us, you know, as we came into this year, we viewed Ulta as a reopening play, and beauty has been challenged over

the past couple years. It started rebounding in 2021. Ulta's a big player in makeup, and our view was that makeup would undergo more of a renaissance this year. And if you go into Ulta stores, they've had a number of brands, so Fenty Beauty's now in stores.

And in other categories, well, Olaplex, Drunk Elephant. So between all the strength in their store within these different categories and the reopening trade, we thought you'd see more of a booming beauty backdrop. And you look at Ulta today, I mean, they put up an 18% comp on top of a strong performance last year. So I think all the momentum continues both at Ulta and within the beauty category. So, you know, this has been a top pick for us, and we still see double-digit upside from here, even after the double-digit move the past few days.

So, Simeon, what's the issue then? I like this. I didn't know that I was getting baited into a bowl there. I thought here I was talking about retail. So, listen, Ulta's pretty good. You don't know me well enough. Normally, Sarah and I are talking some other style here. I thought here I was talking about retail. So listen, you don't know me well enough. Normally, Sarah and I are talking some other style here. Now, this is fun. Here, now, next time I know. So no, but listen, I think that Ulta's a great company. I think at the end of the day, we're talking about stocks. And Ulta's putting up this great performance. Ulta has this reopening

trade. How long the reopening trade lasts, I think, will be interesting. But at the end of the day, we just watched an entire retail re-rating happen. Ulta didn't re-rate. All things considered, it's still a very nice multiple. So I think they're doing a very nice job, top and bottom line. I think they have a great category. And listen, we'll see what happens if people pull back discretionary. Ulta, all things considered, did well in the last recession. But at the end of the day, the stock is reflecting that. I got you, Rupesh. I got one last one for you. And why the discrepancy between TRI and General when it comes to the dollar stores? General, you got outperformed. TRI, you have neutral. Why? Yeah, so Dollar General is more of a longer term fall for us. They've been a consistent performer. Year in, year out,

they've been able to grow double digit earnings over the past several years. And we like the unit growth story here. We still see mid-single-digit unit growth going forward. Dollar Tree had a really strong quarter yesterday. It's very much on our radar. It is more of a turnaround story. So we are more bullish on a Dollar Tree banner. At this point, family dollar is a turnaround part of that story. It has gone backwards. So we need to see their plans in terms of revitalizing that banner. And I think it's going to take some time. So for us, I think Dollar Tree should be on the radar of investors, but I think it's still a multi-quarter turnaround story. While DG is a safe, resilient play, you want to own in both good and bad times.

And if the consumer does get weaker later this year, we think Dollar General will see a trade down. And that's the type of environment that they'll outperform other retailers and other consumer-safe stocks. So I think DG is still the one you want to own between the two. All right. We'll make that the last word. The moral of this story, Simeon, you've got to be ready to debate. That's what we do. We'll talk to you again soon. All right. We'll have you back, I'm sure. And we will reprise that. All right.

It's good to see you guys. Let's check the markets here. Again, the Dow Jones Industrial Average is poised to break its eight-week losing streak. It is now positive for the month of May as well. So it gives you an indication of just how far we've come from the depths of that sell off just one week ago. We're better than 440 on the Dow. There's the S&P as well. 4142, a strong 2% move. Bank of America is seeing the largest weekly inflow into stocks in some 10 weeks. Up next,

Mike Santoli looking at whether that means the bulls are back on Wall Street as we head to break. You can check out some of today's top search tickers on CNBC.com. The 10-year treasury making the top spot, followed by Tesla. Nice comeback there, too. Costco, we just talked about that. The S&P and Nvidia with a nice reversal this week as well, up five and a5 now. We're back after this. All right, we continue to rally. We are at session highs, but the Nasdaq's only gone up 1,000-plus points in a week. If you're not satisfied with that, then I can't help you out. It's a 3% gain today. Highs of the day, 355 to the upside, 12,095. At the lows last Friday, 11,035. So that's been quite a run as tech has staged a big comeback. As you know by now, the rally is continuing today. I just told you about the NASDAQ. The Dow is on track to break its eight-week losing streak. Mike Santoli is at the dashboard

looking at where Bank of America's private clients are making bets in the current market, and they're putting a fair amount of money back into the market. This is the interesting part, Scott. So the scene was set for this big rally we've had by depressed investor sentiment and really defensiveness among professional investors. Hedge fund exposures to equities, very, very low. Multi-year lows coming into this. Fear overtaking greed, all the rest of it.

This is the one area, individual investors' commitment to equities that had not really come in much. So every week, Bank of America publishes this. It's basically the old Merrill Lynch, wealthy clients. And they got to multi-year highs, really all-time highs, probably, above 66% equities in their portfolios. It's rolled over. Mostly, it's rolled over because the market has rolled over. It's not as if they pulled a tremendous amount of cash out of the funds. Where it leaves this is not too far above what you know more or less the highs of the post-global financial crisis period to me it's less of a headwind than it was and the other nuance here i don't want to rationalize any of these numbers but really investors hate bonds more than they love stocks. Their commitment to bonds is near historic lows.

Cash, which is a separate chart, the cash holdings is right back to the long-term average. So that might be a little bit of a wrinkle. This doesn't exactly signal some longer-term commitment by any stretch to the market. I mean, there are people who are still negative over the medium term who are putting money to work now because they don't want to miss a potential upside for the next however many days, weeks or whatever. I think the point here is some people who are bearish longer term, who thinks we're embarking on something a little more damaging in the market would say, you know what, until retail really cuts back and really capitulates in terms of their own exposures, their own portfolios,

maybe we don't really have a sustainable route. I'm not necessarily in that camp. I just think it's interesting that right now we're back into the zone where, look, I mean, 2014 was not a terrible time to own stocks and we were up at these levels. All right. I don't know. Right now we're calling it the Barry Knapp bounce. I don't know. He came on, he called the bottom. I mean, the stock market was great, but now we're up almost 500 points on the Dow. Mike, thank you. Yeah, that's Mike Santoli. We'll talk to you again soon. Energy is one of the best performing sectors on Wall Street, now up nearly 60 percent this year. We'll discuss if there is more upside for energy when closing bell comes right back. Welcome back. Transport's among the biggest winners this week.

Our Frank Holland looking at what's driving that group higher. Hi, Frank. Hey there, Scott. You know, it's really about concerns about disruption of the U.S. supply chain with negotiations between West Coast ports and the union that represents workers making little progress and now pausing until June 1st. You can see right here, as that news broke right around here, you see these stocks begin to move to the upside this this week and they continue to move to the upside.

These are a lot for large part stocks to focus on less than truckload trucking. That's putting multiple loads in the same truck. We could be in high demand as people go to different ports to move their goods this week. Ark Best up 10 percent right now spoke to their CEO. She says their customers are very much focused on performance, not price. The speed to market matters or really the predictability matters. And those two are elements of the conversation that we have more often than the cost right now. And we're seeing the concerns about this disruption play out. You're seeing China to the U.S. East Coast almost double year over year.

Also, trucking rates right now down 27 percent year over year. But Evercore says this so-called pause is really expected to be a catalyst that reverses that trend. Scott, back over to you. All right, Frank Holland, thank you very much for that. From transports now to energy, a big week for that sector, up 8 percent, outperforming the broader market. This comes as gas prices hit a record high of $4.60 a gallon as we head into Memorial Day weekend. A year ago, a gallon of gas was three bucks. Joining us now, Tom Kloza, Opus Global Head of Energy Analysis. It's nice to see you. Welcome back. Hey, nice to be here. You know, I'm looking at the notes here and it's a real startling stat. It really puts it into perspective, too, that you told us the typical family uses about 90 gallons of gasoline a month. It costs four hundred and fourteen dollars a month compared with about one hundred a month during the many pandemic months.

You talk about inflation. My goodness. It is really stiff inflation. And if you were to go to a California family, it's probably closer to $550. You know, back in the day, that was a mortgage payment or a tax payment. So it's, you know, it's certainly impacting inflation for everything. And, you know, diesel prices are even worse. Yeah. Any reprieve anytime soon? And if so, why? I think we're going to get a reprieve in June. Now, we're going to go up in the next few days and probably surpass $4.75 a gallon. You know, we're looking at the end of futures trading for June here now. And there's a tremendous bias in the futures market where speculators are about 26 to 1 buyers outnumbering sellers.

But I think typically history shows that you rise to a May peak and then you drop off about 15%. And that's in the futures price and the wholesale numbers. So that could be a little bit of relief or a respite in June. But unfortunately, anything goes in July and August this year. Why haven't we had any help on the gas tax side, either from a federal level or an individual state level? That seems to me to be an obvious. Why aren't we seeing any of it? Well, we're getting it on a state level. I think it was Georgia extended their state tax holiday. And we'll see some other states do that. And I'm a little surprised that the Biden administration hasn't done that

because it's easy and it's not as though it's an indefensible thing to sort of give people some relief and be perceived to be doing something about it. They've only got so many levers that they can really touch right now. But, you know, people want to see them do something. And I think they will. Yeah. I mean, amazing, really, where the prices are. Tom, I appreciate your time. That's Tom Closer joining us. Let's take another look at where we stand in the markets right now. Poised, as we said, the Dow to break an eight-week losing streak. S&P, NASDAQ poised to break a seven-week losing streak. And we're at the highs of the day.

That's a better than 600-point move there. Excuse me, a 500-point move for the Dow Jones Industrial Average, 33,150-plus. NASDAQ is higher by better than 3%. Hollywood hoping moviegoers have the need for speed this weekend as the highly anticipated and long delayed Top Gun sequel hits theaters. What that means for theater stocks is straight ahead. Well, after multiple delays, Top Gun Maverick is finally flying into theaters nearly 36 years after the original film helped make Tom Cruise a superstar.

Julia Borson looks at what the film means for the summer box office. Julia. Well, Scott, early numbers bode well, both for Top Gun Maverick and for the whole summer box office. Top Gun Maverick grossing over $19 million in Thursday night previews. That's a record for Paramount and for Memorial Day weekend, prompting Comscore to up its weekend projection to $115 million expected at the domestic box office. Now that is bolstered by a 97% positive critics rating on Rotten Tomatoes. And a hit would be a win for Paramount, whose stock is down about 22% in the past year. It would also be a win for all the media giants who have big

budget films coming out this summer, including Disney, Comcast, and Warner Brothers Discovery. Now, theater chains, of course, have a lot at stake as well. AMC shares are down 46% in the past year. Cinemark and IMAX shares down about 25%. And these theaters will have fewer wide releases this summer than they did pre-pandemic. They'll have just 35 wide releases down from 45 in the summer of 2019. Plus, movie theaters also have more competition from streaming content than ever. Today, Disney Plus is debuting its much-anticipated Obi-Wan Kenobi series and Netflix is launching season four of Stranger Things. So with those big franchises available at home and consumers facing inflationary pressures, this weekend is a key test of both theaters and streaming subscription numbers. Scott. OK, Julia, thank you. Julia Boorstin up next. Stocks ripping into the close. The Nasdaq is up three percent now. Interactive brokers chief strategist Steve Sosnick explains why he thinks most growth stocks need to be considered value stocks right now.

That story plus will the big gains from banks and the transports carry over into next week when we take you inside. You know what's coming. The Market Zone. We are now in the closing bell Market Zone. CNBC senior markets commentator Mike Santoli here to break down these crucial moments of the trading day. Plus, investor Eric Jackson on why tech stocks he thinks look cheap. And interactive broker Steve Sosnick on whether stocks can continue rallying. We are rallying into the close near session highs. The Dow is on track now to post its first weekly gain in nine weeks. And Mike, you've had a nice comeback this week.

Big jumps for energy, tech and financials, among other things. Yeah, very broad, pretty comprehensive. And Scott, I think the market is sort of building a case in the last three days that maybe this is a little more consequential, just in terms of building up a cushion here, right? The selling seemed to exhaust itself down in that 3,800 to 3,900 range on the S&P 500. As we've talked about for a couple of weeks, that's where a lot of folks were fixated. And then the last three days, more than 80 percent of volume in the New York Stock

Exchange to the upside. It does seem as if you're going to have people talking about that being a display of demand and people needing to kind of, you know, get their exposures back up to stocks that will probably stick with the market for a little while. It doesn't mean back to the highs. It doesn't mean anything. But we are above last week's high. In fact, numbers stick in your head. Forty one twenty three was the intraday low February 24th when Ukraine was invaded and it stuck as the low for two months. So now we're back above that. We'll see if that if that might matter as some kind of psychological floor. We repaired some technical damage this week, which some are pointing to as well as a positive sign. Eric Jackson, to you, technology stocks really rallied

back. You've been buying some of the most beaten down names. I mean, some of the, you know, the higher, once high flying ones you've been dabbling back in. What do you make of the space right now? Well, I think there's still a lot to choose from. I'm not saying get in with the full position in all these names, Scott, but you have to look at them and say, hey, these have never been cheaper as public companies. Forget about just during the pandemic ever, you know, on a price to sales basis. So, yeah, this week I bought Zoom. I bought Zillow. I didn't buy Snap. But all three of those names have never been cheaper on a trailing price to sales basis since they've been public companies.

I mean, in the last couple of weeks, you want to add some names to your shopping spree, if you want to call it that Twilio and Upstart and Carvana. So, I mean, you've been really looking at the ones that have been hammered the most. Yeah. And not all I mean, most of them are cash flow positive, not all of them. But I definitely have this fundamental view that I think that the growth stocks and the small caps are going to bottom before the S&P or the NASDAQ bottom. That's what happened during the dot-com era. Some names bottomed a year or two before the broader markets bottomed. So I think you really need to take advantage of periods of dislocation

in some of these names and look to start positions in them because those, you know, for Snap, Tuesday might have been it. We might never see $12 again. It's up, I think, 26% since Tuesday. Why didn't you buy that one? I mean, you singled it out as one of those that you did not buy. Will you? It's one that I've owned in the past. I think I want to see how some of the other social media stocks do over the coming few weeks with their next set of earnings before I dabble back in Snap. With other names like Zoom, I mean, this is going to be around for a long time. It's a prodigious cash flow generator. We're going to keep using Zoom. They're going to keep doing

something with all that cash. So that's a name that I wanted to buy. Zillow is getting back to basics. It's getting out of the home buying business. It makes much more money in its traditional business. And if you look ahead to what they're going to continue to make from it, again, it's never been cheaper as a public company. I mean, the tech trade, I feel like there was a moment this week and maybe it was Nvidia, right? The earnings come out. Everybody has loved that stock. It's gotten, you know, it was down like 45 percent right from the high. Company comes out, it reports, the stock goes down and then it reverses and closes higher and sort of that was a moment. That felt to me that was

significant in terms of where the tech trade is- particularly around- sentiment. And then and they weren't the only one Scott snowflake yesterday. Down big after hours- was positive yesterday- far fetch which I own. Was down the kitchen sinks

the quarter. We're down 10 percent after hours last night. They were up 30 percent earlier today. We saw with Alibaba as well. So that makes me optimistic about the broader market, Scott, is that bad news, you know, and kitchen sinking the quarter is now actually being bought, not sold. Yeah. For all of you who might be listening and you can hear the clapping behind me, it's a significant moment on the floor and it always is at this time of the year when Fleet Week takes place in New York City and servicemen and women are filing right in front of our set here towards the podium. Members of the Marine

Corps, the Navy, the Coast Guard as well in celebration of that. So the big ships are in town and those who have made a very big sacrifice for the safety and security of all of us are here on the floor of the Stock Exchange. And that is why you hear the clapping from those on the floor as they gather ahead of the closing bell here. It's quite a scene and it always is. So, Eric, I'll get back to you. I just wanted to let everybody know about this moment that's happening right here, which continues to go on. You feel like this move in some of these mega cap names can be trusted, that it has legs. I still feel like some don't believe in it.

Well, nobody believed in the comeback after the pandemic lows. I mean, probably it took two months after the March 2020 lows before people actually believed in the rally. So we can we can climb that wall of worry for a while. We'll see. I mean, what again, another thing that makes me optimistic is if you start to look at some of these individual tech stocks that have really just been washed out and they basically lived this entire year below their recent moving averages, for the first time ever, just in the last week or so, a lot of these names are starting to get above their 10-day moving averages. And the composites, like the QQQs or the IWMs or the HYG,

they've all recently gone above their recent moving averages. So that can be some accelerant, I think, on this move into the first few days of next month. All right, Eric, I'm going to leave it there. We'll talk to you again soon. That is Eric Jackson. Let's talk shares of Apple, since we are speaking about big cap tech taking a nice leg higher today, up more than 8% this week. And that's despite reports earlier in the week of a slowdown in iPhone manufacturing due to those lockdowns over in China. Let's bring in Ed Snyder now, equity analyst at Charter Equity Research. Ed, it's been quite a move. I mean, we were down, you know, we had a 130 something on this stock,

and then here we are knocking on 150. What do you think of it here? Well, I mean, you obviously get a rebound with the rally in the Dow and the Nasdaq. Almost every one of our tech names is up strong here. And it's been a long, hard road down. So I think this is a small correction. We'll see how it chases out in the long term. But I think Apple, as with most of the hands of companies and the companies that supply them, have to really be concerned about the long term. Second half of this year and the beginning of next year with inflation and the U.S. GDP declining and China demand dropping off because of lockdowns, it's not going to be, I don't think,

a pretty picture for the rest of the year. How significant is the 150 level, if at all, in your mind? Well, you know, at some point, this looks like such a great value, especially for a blue chip named like Apple. There's really not a lot of risk. The biggest risk is that you're going to see a further fall off. Eventually, all the problems we're facing will be passed, and Apple's not going to be going anywhere. Same thing for some of the suppliers. In fact, if you go back to the global financial crisis in 2008, a similar thing happened with Nokia and its suppliers, and they traded off very heavily.

And within two years, they were up three, 400%. So I'm not calling a bottom or a rebound, but if you're looking at the fundamentals of the businesses we're talking about here, it's not really a huge risk to be buying at 150, 130. It's just how much downside you really need dirt before the turnaround occurs. Yeah, Mike, I mean, the 52-week low on AAPL is 123. I know people watch it closely for obvious reasons, and we typically ask the question, how can the market find any stabilization if Apple can't? What was, and remember, lost the title of the largest market cap company. It is back above $2 trillion

right now. So it's been a really nice recovery. Right. I mean, the market certainly can't have Apple fall apart and perform. The indexes are just too skewed in that direction. But, you know, Apple, in a sense, has done its job in retaining the vast majority of its two-year gains, even in this pullback. So, yeah, it went down, you know, 25 percent from a high. I just wonder what it'll mean if the market itself is getting its legs back under it. It would surprise me if Apple and stocks like Apple are the leaders for any

sustained period of time that was kind of that was that was last the last story of the prior couple of years. It's also Apple's know, Apple's kind of like your wartime conciliary. When things get bad, you rely on it. But then if peace breaks out in the market, I think there's going to be, you know, other faster moving stuff that maybe is going to take the fore. So, Ed, you know, you do start to hear that, you know, let's say energy, for example, great week and the stocks have had a great run. And maybe for that reason that you are going to have money come out of that space and go into spaces like growth and like tech, which some are trying to declare have bottomed and that could give that next leg higher. What do you think?

I think that's true. I mean, you've had a kind of a debacle of the last eight to nine weeks in tech. It's been done consistently. And so everybody's looking for yield. And if you believe that there's a bigger recession coming and it's going to last for a long, you look for some sort of, you know, hedge on that. And commodities and energy are probably an excellent bet given the current situation worldwide in the U.S. domestic economy. So I think there is something to be said for that.

I think that is true. OK, we'll talk to you soon. Ed, thank you. Mike Sartoli, of course, is sticking around. Let's talk bank stocks. They're soaring this week after J. Okay. We'll talk to you soon. Ed, thank you. Mike Santoli, of course, is sticking around. Let's talk bank stocks. They're soaring this week. After J.P. Morgan CEO Jamie Dimon told investors Monday that he'd meet a key performance target this year and possibly even exceed it next year. Citi, however, under pressure after Credit Suisse downgraded that stock to neutral from outperform. The analyst there thinks there is limited upside after Citi's nearly 12% rally last two weeks you can read that analyst call right now on cnbc pro but leslie pickard joins me right now some mixed messages for the bank stocks lately and even as

they get a downgrade jane fraser was on the network this week the ceo of city calling bank stocks undervalued and that was deemed to be one of the catalysts, too, this week, along with Jamie. Yeah, there's a lot of cross-currents in terms of news, Scott. Citi's main run was fueled by the disclosure by Berkshire Hathaway in its 13F that it had taken a $3 billion stake in Citi. So that's really why you've seen such a big run. On top of the news we saw Monday that you alluded to that JP Morgan increased its guidance in terms of net interest income, which is a really important profitability metric for banks like Citi, like JP Morgan, that do a lot of traditional consumer banking. They're helped by higher

interest rates. And the market had really been trying to assess kind of the push and pull between higher interest rates, which are a tailwind for that type of a business, and then just the issues surrounding the economy, the risk of recession, and so forth. And for much of the year, at least since mid-February, it's this idea that the recession risk was front and center for bank investors. This week, that really flipped. And you can see kind of in the week-to-date J.P. Morgan up 11.5 percent, Bank of America up 9 percent for the week, Wells Fargo up 10 percent. And that's because rates are back in the forefront for these investors and just the benefits that it could serve for these banks and the potential that recession risk has at least abated in the near term. And that's kind of the comments that Jamie Dimon and James Gorman later in the week

and Jane Frazier were all alluding to. Yeah. Mike, how closely are you watching these for a barometer on the health, if you will, of the move? They're still considerably lower than their 52-week highs. I mean, at minimum, 22 percent, and in some cases, 30 percent plus. Yeah, it's still, I would say, just in bounce mode at the moment. I'd say that, you know, the bank's index up 11 percent off the lows, but had been underperforming for a while before that. I see him basically as a gauge of perceived recession risk and therefore, you know, a proxy for credit conditions more than anything at this level. I mean, as Leslie was saying, the kind of the yield story carried them for a while and then was

superseded by what people are expecting in terms of, you know, credit erosion, perhaps. Right now, it doesn't seem like an imminent threat. But also there was concern about as bonds sold off, treasuries sold off, it was slowing down the pace of bank share buybacks. They own a ton of Treasuries. There's all these kind of capital rules that require them to keep some cash aside. So I think that's something that might be able to get cleared up over the coming months as well. All right. Good stuff. Leslie Picker, LP, thank you.

We will see you soon. Stocks are higher and heading even higher, heading into the of this uh last day before a long holiday weekend nasdaq is outperforming the major averages up more than three percent at session highs let's bring in steve sosnick interactive brokers chief strategist we got something to build on here steve what do you think um well scott today was a today was a great day but remember it was on light volume and the type of activity that i saw was just people buying spider calls, riding them higher, pushing it higher, and then rolling them up. And that's now that we kind of pushed through 414 on SPY into the expiration close, because it is a weekly expiration.

I think that's all been good. But I think it's more of an oversold bounce than the bottom, which is not to say that some of these moves have been phenomenal for for investors. You are as I think it's fair to say a traditionalist at least when it comes to looking for signs of a bottom as I mentioned earlier in the program. You don't think we've seen the classic sign that you can say the worst is over. That is true. I wish I could. But right now, we haven't seen that sort of get me out moment. We kind of came close. We were very oversold last week, but we never really had that

get me out at all costs, nor did we have sort of the idea that we're done. I can't own stocks anymore. We've all thrown the baby out with the bathwater, which of course means that there's nobody left to sell. We've had customers continually buying the whole way down, which means that there is no capitulation yet. And that's the, you know, it's been working out great for our customers who bought recently, but it's tough. You can't just reflexively buy the dip right now with the Fed being a headwind in your face. But you've had a couple of 90 plus percent, you know, volume down days. Maybe we're not going to get that classic sign because there have been some signs during the sell off and it felt pretty bad. Oh, absolutely. And yeah, we may not have.

And but the problem I see is we've've not yet begun. Q. T. the fed has at the fed has not yet begun to shrink its balance sheet. And stock markets tend to react. With a lag to monetary policy. It's bizarre stocks are great at at discounting earnings sales.

Events but they're not particularly good they're more. Responsive to- to monetary changes rather than anticipatory. And so that is just a nagging worry I have in my mind, is how will we react when the Fed actively is taking money out of the system? All right. We'll leave that last word for you there, Steve Sosnick. My thanks to you, the internals, to you, Mike Santoli. Yeah, well, as you were alluding to, the breath has really swung

to the positive side. People are going to be talking about there being an upside breath thrust probably after these last three days, as I mentioned. So you see there another day where, you know, 80 percent or so of the volume is to the upside. That's the third day this week. That sort of collectively starts to win back the benefit of the doubt to the bulls in the very short term, if nothing else. Take a look at some of the cyclical bellwethers over the course of this month. Semiconductors, homebuilders now still deeply lagging the S&P 500 on a year-to-date basis. But you see, they're pretty much in sync this year. The cyclical trade got some traction, and that's something I think is also a net benefit. The volatility

index you were just talking about, we never got some kind of real headlong rush for the exits, as evidenced in the VIX. Well, we didn't get up to 40 this time. But boy, we've been up at above 25 for quite some time. There's been a kind of a slow motion, you know, kind of capitulation, arguably, over time. And you don't always have to see the rush. Here we have before a three-day weekend. You're going to always see volatility come in, anticipated volatility come in. So 25, it's noncommittal, but it's definitely moving in the right direction in the last few days. As we do head in for the close, the S&P 500 kind of going into this pre-holiday air pocket to the upside,

up 2.4% right now on the day. For the week, up 6.3%. The NASDAQ composite basically keeping pace with the S&P 500 for the week. Also up about 6.8% and now sits down about 25% from its all-time high. So it does show you how deep a hole we have been in for some time. As we go into Memorial Day weekend, you see the Dow up 1.7%, 564 points, so we're going to be at multi-week highs and up for the month of May as we close it out.

That does it for Closing Bell.