Closing Bell - Closing Bell: Rally Running on Empty? 7/22/25

Episode Date: July 22, 2025

Blackrock’s Rick Rieder weighs in on the state of the market right now. Plus, meme mania is back. We drill down on the biggest movers with our all-star panel of Requisite Capital’s Bryn Talkington and Capital Area Planning’s Malcolm Ethridge. And, Intelligent Alpha’s Doug Clinton maps out how he is playing the tech space this earnings season. 

Welcome to Closing Bell. I'm Contessa Brewery and for Scott Wagner today, this make or break hour starts with a record rally. Taking a breather as earnings roll in and potential signs of froth emerge. Here's a look at the scorecard now with 60 minutes to go in the trading session. Right now we've got the Dow near session highs, the S&P 500 tracking for an all-time closing high. Once again, any close above 6305 would set a new record. The Nasdaq is now pulling back a bit as you can see at 20,929. Tech the worst performing sector while healthcare is leading the way right now. You've got the S&P Healthcare Spider up

one and a half percent. The homebuilders on fire following strong results from DR is leading the way right now. You've got the SMP Healthcare Spider up 1 1⁄2%. The Home Builders on fire following strong results from D.R. Horton and Poulty. Look at D.R. Horton right now up 16 1⁄2% and you've got Poulty grew up 11 1⁄3. I have more on that coming up, but let's start with our talk of the tape. Is this record rally running on empty?

Let's ask BlackRock CIO of fixed income Rick Reader. Rick, you came on Closing Bell in June and you said this is, and I'm quoting here, this is the best trading market I've seen in years. We're hovering around all-time highs again. How much of this is just glitter without substance because we have a meme revival on coals and open door technologies that they're soaring. Ethereum and Bitcoin touching new highs in recent days and SPACs are back. So a month after you said so,

do you still see this as one of the best trading markets? Yeah, so trading market doesn't necessarily mean we're going straight up. By the way, one of the reasons why I think the equity market, you know, multiples are not great. The amount of cash that's out there and the lack of supply of equities relative to buybacks, listen, the technicals in equities are extraordinary.

So I think that continues. That being said, the reason why it's such a great trading environment, you can sell, we sell a lot of call options against our equity positions, allows us to buy some downside. Selling volatility both in the rates market, the equity market, this is one of those things that people are buying insurance because they're worried about

the news. Doing things like selling volatility, you get like today, extreme movements in a lot of equities, the ability to go the other way on some of that and look at structurally what's mispriced. I think, by the way, the news flow is rapid and continuous and the ability to actually take advantage of it, I think is phenomenal. We have this whole macro backdrop of tariffs, trade wars, geopolitical instability, so much so that we had a report from Swiss Re,

which is this global reinsurer saying, there is likely permanent brand damage to the US being considered a safe haven, and that international investors may demand a higher premium for holding US assets. You have that, and then you have companies just on fire with reporting earnings. How do you balance those two sides of the scale? So you go back to the point about why this is an incredible investment opportunity. So you go back a couple of months ago,

people thought economy's going into recession, maybe deep recession, Fed's gotta start cutting in June, 50 basis points maybe, and then people realize, when you actually look at the data, including post-terrorists, U.S. economy is the most extraordinarily resilient economy. You can throw an awful lot out of it, and it just tends to move along. Today, we think about, we meet with international investors

every day, including today, and you think about, gosh, these technology companies, there aren't a lot of those in the world that have that sort of top-line revenue growth, throw off that much cash flow. The thought that people will divest from US equities, I think, is a challenged one. But one of the things that's interesting about we do a lot in the debt markets, you know, as you talk about the Treasury market and people say, gosh, if I'm an international

investor, it costs me because of the cross-current, because of the hedge of the currency. So you're seeing a little bit of, gosh, how much do I need to own in Treasuries from international investors? But the U.S. equity market, it is pretty hard to replicate. On that fixed income side, on bonds, how much are you looking at corporate bonds as the place to really get in there and enjoy the yields that we're seeing right now, the kind of income they're producing? A lot. And for what window?

How much longer? Yeah. So, I think a year from now, two years from now, you know, we've got a debate, you know, is the new Fed chair going to come in, are we going to drop rates? How does that? I think today, if you said to me, gosh, we can create portfolios that are six and a half to seven percent without stretching quality-wise. Credit is in, I've been doing credit, I shouldn't say how many decades, but credit is in the

best shape that I've ever seen. Company post-COVID, they turned out their debt, their free cash flow generation is great, their interest coverage is great. And so people say interest rates are higher, it's going to slow down some of these companies, particularly investment credit companies. They've termed all their debt out. It's not stressful at all. So I like just taking that yield.

The thought that we can, you know, the Fed will cut rates, but we're still sitting in a place today. By the way, not just in the US, you could buy a lot of European debt, swap it back to dollars and your yields are phenomenal. We're heading into another Fed meeting next week. Normally you see the Fed chairman and the Treasury secretary sort of in lockstep walking down to tackle whatever big monetary issues are facing them in the day. Right now we're seeing this interesting tug of war. And you've got the Treasury Secretary Scott Besson saying

that we need to take a closer look at how the Fed operates. Here's what he said on CNBC yesterday. What we need to do is examine the entire Federal Reserve institution and whether they have been successful. We should think, has the organization succeeded in its mission? If this were the FAA and we were having this many mistakes, we would go back and look at why has this happened?

There was fear mongering over tariffs and thus far we have seen very little, if any, inflation. We've had great inflation numbers. So I think this idea of them not being able to break out of a certain mindset, all these PhDs over there, I don't know what they do. Where can the Fed be most impactful right now? And how troubling is it, or should it be for investors, if the Treasury Secretary and the Fed Chairman are not on the same page?

So listen, I would say one thing. Our job is to interpret where the Fed's going to go. Surrounded by a lot of environmental data that comes in around what the Fed is going to do. Listen, I am sympathetic to the idea the Fed can cut rates. I think they can cut rates today. Do I think they're going to do it in this July meeting? I don't think so.

That being said, there are a couple of things that are, I think, incredibly important today. I think like Scott said, like Secretary of Treasury said, I do think inflation is, we're running the last three months, core CPI's running about 2.6%, it's a little elevated. With tariffs, you'll get a little bit of transmission into inflation. That being said, what the interest rate tool does today, the biggest influence it's having is on the housing market.

It doesn't, you think about when the Fed raised rates, 500 basis points, companies don't borrow, they certainly don't, they've termed out their debt, they're not that sensitive to it, banks are asset liability matched. The housing market, I was looking at the data, housing starts, building permits, applications for mortgages, surveys about a good time to buy houses are at lows of literally 40, 50 years. If the Fed got the rate down, and I'll throw one other point, I think you have housing. The other thing that is, if you're the Secretary of the Treasury, the debt in the country is

particularly given how much we borrow on the front end of the yield curve. That influence effect gets the rate down. It's real money. And I am sympathetic to that idea, given our debt burden. On housing, President Trump said today that he's considering removing capital gains on the sale of a house. Would that jumpstart housing, do you think? So I would say a couple things. One, I've not gone through it. I would say there are a number of things

that can be accretive to improving housing. Fiscal stimulus, it's one thing. The interest rate tool is a pretty blunt tool to move things around. We go through, if you move the funds rate down, how much is the mortgage influence? And then there's the affordability problem in the US around the cost of insurance, et cetera.

I think there's some fiscal initiatives you could do to create incentives. Home builders, you look at the home builder earnings, they can't, by the way, it was interesting looking at D.R. Horton today. What's happened is some of how they've been depressed price-wise is they have to subsidize the mortgage to build houses.

We don't build enough homes in this country. The inventory levels are too low and by the way it's what keeps shelter inflation high. But also materials are expensive, labor is expensive. It's very hard to build entry-level housing for the price that it costs for the materials and the labor. And then you add in things. I mean I cover insurance as you know and when you're looking at the cost of insurance both for the developers and then to turn around and for the buyers that it can get and taxes that can be all problematic. By the way the impact that has on particularly people that are trying to buy a house, build a family,

build wealth, it's very difficult. It's why they're a fiscal. You know the interest rate tool can help you but I think there's so many fiscal initiatives to help there. One more I know that you're very interested in the opportunities in technology right now. We're heading into Afflebet earnings tomorrow. What do you like about it? Why do you think there's as much opportunity there as there are in bonds?

So I was in Los Angeles last week, and I met with a number of technology companies, and I'm a little bit of a geek around tech, and I sit there and I am blown away by the influence of automation, robotics, the productivity enhancing dynamics that come out of technology. We know the AI infrastructure build, but I think people underestimate my day to day at work, the amount of time I'm spending using new technology tools that make us more efficient, data assimilation,

how we look at research, how we analyze everything. I think it's, I mean, I literally think, you know, I was asked the other day about the internet, development of the internet versus where we're going today, which has been more impactful. Hard to say, but one thing I will say, this is happening faster than the development

of the internet, but you take GPS technology, space technology, I think it's pretty remarkable. You know, part of why I love these equities that are in and around that space, I think you're going to see top line revenue, by the way, not just top line revenue, free cash flow generation in these companies quicker than historic technology. All right. You said it here.

We'll probably come back and play it in a month and ask you if you still feel the same. Rick, thank you. Thank you. Meantime, the meme trade is back. Christina Parts-Nelvelis is tracking some of the big moves in the markets today. Hi, Christina. Hi, Contessa.

But I have to say, here we go again. Kohl's shares spiked as much as 105% early this morning. Trading was temporarily halted right after the open, likely due to a rush of retail investors piling in. So you're wondering, why the sudden jump? Why is the stock price still 38% higher today? Well, short interest in the stock is near 50%, making it a prime target for short squeeze. That's when traders who bet against the stock scramble to cover their position

and that would send prices even higher. Kohl's is now the top trending ticker on stock twits, followed by NIO, the Chinese EV maker, which is also popping today 11% on a short squeeze momentum. And this really comes as the meme stock trade sees a revival of sorts with some, I guess, unfamiliar names topping the list, like the Children's Place and Kirkland. At least 50% of both of their floats are shorted and they're seeing some of the highest trading volume today.

You can see both of their shares up over 23%. And then you got to mention open door technologies. Another example, surging almost 160% just in the last week or so. But as you can see, plunging about 13% today. Guess they aren't huddling the open door. Combine these meme trains with a broader rally in stocks and crypto since April.

And it looks like retail traders are really just pushing further out on that risk curve, Contessa. Christina, thank you very much for that. Let's bring in Capital Area Plannings Malcolm Etheridge and Requisite Capital's Bryn Talkington, both CNBC contributors. Bryn, that part that Christina was just talking about, retail investors and their risky behavior, their risky bets, is that concerning to you? Well, I mean, I feel like we have a 2021 redo. We'll see if we get a movie out of it. But I think also it's not just retail.

You have hedge funds that are following these trends as well, which were in 2021, what started with, you know, people going, retail traders going against heavy short positions. Now the hedge funds are smart to that. So I think just to say this is a retail phenomenon is not the whole picture. You have a mass amount of hedge funds

following these trades as well, which to me is amplifying it. But yeah, I think it's concerning for individual that are gonna try to follow the trade, right? I mean, Open Door was at what, 50 cents a week and a half ago and now it got up to four yesterday. And so people saying, oh, I'm thinking you can buy performance.

So I just think it's a speculative part of the market that as momentum has taken a breather, investors are looking for these other, we'll say, 2021 type stocks. I feel really confident neither one of Coles nor Opendoor, I don't think will be at these prices a month from now. I think they'll be back to where they were. So you'd be a seller? Oh right. I just think there's zero. Maybe I'm just not aware of it. I don't see the catalyst for Opendoor. I don't see the catalyst for Kohl's. If you've been in a Kohl's recently. So I don't see the catalyst. And so yeah, I just think this, I just would stand aside.

I wouldn't short these names. I would just stand to the side and watch it play out and watch these stocks go back down. Malcolm, what do you think? Is there still money to be made in memes? It's very illiterate if nothing else. To Brynn's point, I think more of what we see happening is investors who did really well leading up to and following Liberation Day and they feel like they have massive gains in a lot of these tech names that are going to be reporting this week and next week through

Thursday. They're taking a lot of those profits. That's why we're seeing tech sort of fizzle out. We saw Bitcoin sort of taper off and start to roll back and then those dollars have to find a new home. And so where they're finding that opportunity is in these penny stocks that are being bandied about through you know stock twits and other different online forums and so I think that it's temporary I don't

think that it's a meaningful meme trade bonanza the way we saw in 2021 that had meaningful staying power with GameStop and AMC. I think this is a temporary blip, and I think maybe putting that timeline on it, something like a month or less, is probably realistic because the market will start to move in one direction or another and investors will put that money back toward some of the best widely owned retail names like a Tesla or an Nvidia or something like that.

All right, about 45 minutes to go until the close, and we're looking at the S&P trading above the area where it would set a new record high at 63.11 right now. Let's talk about some of those names that are reporting earnings to come. You've got tomorrow Microsoft, but next week, Malcolm, stocks that you own, Apple, Amazon, CrowdStrike, and the like.

What are you expecting to hear? Will there be a running theme, do you think, from these companies? Well, I do think there will be a running theme both in the earnings performance and the guidance from the companies, as well as the response from the market. I think the big bank earnings gave us

a little bit of insight where we expected that realistically the majority of the bad news was baked in the Q2, and whatever we found out as far as tariffs and guidance from the big banks related to that, that was gonna be as bad as it got. So the earnings that we saw from the big banks and as great as it was,

the market responded a little bit with a yawn. And so I wouldn't be surprised if one, the tech companies reported massive earnings partly helped out by the difference in the foreign exchange rates because the dollar has been down so much over that period. And that's a significant tailwind at the backs of companies like Meta, Microsoft, that do

more than half of their business outside of the United States. But then I think the market will still respond to a lot of those big numbers with a bit of a yawn and start to sell those shares just as they have been this week, simply because those dollars are rotating out of tech, which has been a great performing trade, and investors are just looking to take a little bit of profits there and hit the pause button. So, Bryn, you bought Tesla, which reports tomorrow,

at 293 when Elon Musk announced the American party and watched it sell off. Where do you anticipate this company going? What do you need to hear on the call? Yeah, I've owned Tesla for a long time. I added to the position just because I felt like the market overreacted, which it has. You know, Tesla is an interesting name because if you look at just the pure fundamentals, earnings are going to be down about 22 percent, revenues down about 14. And so you have the current business model has deteriorating revenues and earnings. Yet the market, because of the innovation of Elon and

his team with robotics, with FSD, cyber cab, they just opened up the Hollywood theater charging station which looks really cool. And so I think that the market is going to continue to give Tesla a pass on current revenues and earnings. But I do think as an investor, I think you better off more trading or selling calls against this name because the range has been around 270 to 350. And so I think going into this number, I would be surprised if the stock got about 350 right now just because those revenues and earnings are still going in the wrong direction. Do you do you want Elon Musk to be more involved in the day to day? I think he's incredibly involved in the day to day. I think this is just some narrative that people say. I mean, he runs, I guess now seven companies, six or seven companies. He's incredibly involved.

He sleeps probably a few hours a day. And so I don't think he's uninvolved. I think he has the ability to walk and chew gum probably better than anybody else in the world. And so I just think he needs to keep doing what he's doing and the market will continue to have panic attacks when he continues to tweet things that investors don't like. Bryn, Malcolm, great to see you both.

Thank you for your participation today. We are just getting started and up next next top strategist Ryan Dietrich tells us why he thinks this summer rally will push ahead and later we're getting you set up for the big tech earnings that need to be on your radar this week. We are live from the New York Stock Exchange. This is Closing Bell, everybody. We're on track now for a record close for the S&P 500. Our next guest says the summer rally still has room to run.

Joining me now, Carson Group's Ryan Dietrich. You are particularly optimistic right now about the summer rally. Can you talk about a little bit about what is going to fuel that even higher? Yeah, thanks for having me back and good afternoon everybody. So there's a couple things. I think the one thing that's fascinating to us, the Carson Group is this market's hitting

all time highs as we're talking. There's not a lot of optimism. I know some of the meme stocks are starting to do some things there, but when we look at just investors, sentiment polls, there's like 39% bulls, 39% bears, right? You look at big money. Last couple of weeks, they've decreased their bullishness. And the big one is hedge funds, which have missed the majority of this rally, have the largest short position on the S&P 500 since early April. All right, that's a lot of fuel,

in our opinion, to keep this rally going on good news, whether it be earnings or maybe inflation continues to improve or the economy avoids a recession, whatever it is, those lowered expectations to us. We said it'd be a summer rally. It wasn't popular. It's happening. We think it's not over yet. When you look at the sort of sentiment that is driving the meme stocks and driving the

momentum, would you consider that to be frothy or is it just optimistic? Yeah, I think more optimistic. I mean, listen, you talk to 10 people, get 10 answers on this one, and it's just started to flare up again. We all think back to GameStop, of course, in 21, and that was near a potential peak. But again, when we see what hedge funds are doing, large institutions, I mean, they've missed this rally. They have to get back in.

And what's like one of the best sectors this year? Industrials, industrials are like doubling the return of the S&P 500. It's not like that's a group everybody's jumping up and excited about with financials and technology, with the right groups, I guess we'll call it the offensive things leading. That's what matters to us.

Yes, you know, you've got the optimism with the excitement, I guess we'll say with the meme stocks, but big picture. There's just a lot of money that will still push this higher in our opinion. We are about eight points higher than we were yesterday on the S&P 500. So if we stay where we're trading, it'll set another record day. Are you seeing signs that are particularly bullish on the S&P? Yeah, the first one, I mean I mean listen today's barely up right it

feels like we haven't a big day in a while we even had a down a 1% down day on S&P since before Flag Day okay that was in the middle of June what's the old saying don't short a dull market right this is pretty dull now one that's fascinating the S&P 500 has been above its 20 day moving average for almost three months now that's the longest streak since 1998. We're back 50 years. When you go about three months above that short-term trend line like we are right now and then you start the clock, what happens next? One year later up between 19 and 26 percent a year later higher every time and higher six months

later every single time. So the reality is this blast of strength the last three months in our opinion is extremely rare but it tends to take place you at the start of a new bullish phase and that sounds kinda crazy to say but that's what we're seeing here recruiter was just on with me and double down on this generational opportunity both he says intact and where bonds are concerned give me your view on what are traditionally seen as hedges right now and and how those fit

into your thesis. Absolutely. So we've been underweight bonds for a while. We added some treasuries earlier this year for the first time in a while, but the big thing we've had is diversify your diversifiers. Think about a 60-40 bugger. 60% stocks, 40% is the other stuff. We'll talk about the other stuff.

We added gold for the first time in our tactical models back in April of 2023. Just recently added some more gold to more of our longer term strategic models that we run for our Carson partner. So we like that we've got some managed futures in there. We have some cash. I mean we're not too warm and fuzzy on bonds but we do think there's other areas that can help you diversify your portfolio. But at the end of the day we're still avoid stocks which we still got the way to go. I don't want to admit that the thing that I'm really impressed with is that you know when Flag Day is. Ryan, great to talk to you.

Thank you. Thank you. We're getting some breaking news right now out of Washington, D.C. Amon Jabbers brings us that. Hello, Amon. Just posting on social media a short time ago, details of a trade deal with Indonesia. The president saying that the U.S. tariff rate on Indonesia will be 19%, that Indonesia will go to zero on what they say are 99% of U.S. exports to Indonesia.

They're also gonna lower, the Indonesians are, non-tariff barriers according to senior administration officials that Indonesia has agreed to accept U.S. federal motor vehicle standards. They're committing to removing export restrictions on critical minerals and a number of other items that the US considers trade barriers that are sort of non tariff related trade barriers. So a deal here being announced on social media by the president,

the president calling it a huge win for our automakers, tech companies, workers, farmers, ranchers, and manufacturers. Contestant back over to you. Certainly keeping all of the correspondents in Washington, D.C. busy as we track down to that August 1st deadline. Eamon, thank you for that. Up next, your big tech setup,

Intelligent Alpha's Doug Clinton, standing by with his playbook for the sector this earnings season. He joins me right after this break. Closing bell will be right back. Big tech earnings set to kick off tomorrow with Alphabet and Tesla reporting after the bell. Joining me now with what to expect, Intelligent Alpha's Doug Clinton. All right, so you've got these two big names. Will there be a similar fuel to what they report? So Contessa, at Intelligent Alpha, we use the major large-language models to

actually predict earnings for about a thousand different stocks that we track and potentially invest in. And our models think, to answer your question, that both Google and Tesla are worth owning, going into earnings. So we actually own them in two of our funds. On Google, our models think that they'll have both solid top and bottom line performance. On Tesla, it's a little bit funny. The model's concerned about both the top and bottom line, but it actually thinks that everything

is sort of priced in at this point. Everybody knows that Elon sort of created some trouble for demand in the near term, and it still likes the stock. So those are the two that, even though they might have different outcomes in terms of their actual earnings, we think they're good stocks to own. I'm curious about how much computing power it takes to ask AI about Google when, I mean, there's all of the speculation about whether AI is going to kill Google search. And it certainly seems to be having an impact on what advertisers are willing to spend considering

how much click-throughs have dropped. How do you balance that? Well, we, I think, won't get the answer to tomorrow in Google reports is, what about the GPT overhang? I mean, that's kind of how we think about it. If you look at Google's multiple, Alphabet's multiple, it's 19 times next year. The lowest other MagSix stock is 25 times, and that's meta.

And so there is this, I think, reality that's priced into shares of Alphabet already, that people expect them to have this gigantic headwind from the shift to AI. I don't think we're going to see that impact numbers dramatically. I mean, we've had a few quarters in a row now where we've had this kind of question about what does the future of search look like? And despite that, we've still seen strong spend, even if we've had volumes and CPCs, maybe vary a little bit.

And on Tesla here, what could be catalysts, especially when we're seeing the auto market somewhat pressured? I think you look around at some of the other stocks and things that have been happening even today. I mean, we've talked about Opendoor. We've seen the things happening with Kohl's that are quite interesting. I think Tesla, it's all about Opendoor. We've seen the things happening with Kohl's that are quite interesting. I think Tesla, it's all about the story. It always has been, but I think we're in a market environment right now where that might be more true than ever.

And so I think people will pay a lot of attention to what's going on with RoboTaxi, primarily. That's obviously been a big story for the last few months with Tesla. And also just updates on full autonomy, because I think everyone sort of knows at this point that the core auto numbers will be challenged and they might be challenged for a couple more quarters. But it's always with Tesla kind of what's coming next. And if we get a sense that maybe robo taxi is going better than expected, maybe there's more out there on FSD in terms of future launches that could be positive for the stock. We're seeing some of the other magnificent seven

rolling out earnings next week. I note that you don't own Amazon. Why not? We don't. So our models are concerned about Amazon on the top line specifically. So they've sort of noted that Amazon might miss on the top line number.

Our models, our AI models do still think that Amazon will be miss on the top line number. Our models, our AI models, do still think that Amazon will be fine on the bottom line, so they might have some solid margin performance. And I think the underlying reality for that concern is, you just look at what's going on with tariffs, I think there's still a lot of uncertainty in terms of how that's ultimately flowing through to retailers, Amazon being the biggest one.

And so our models are just sort of cautious going into this quarter about what that top line will look like, and then ultimately, more importantly, what guidance will look like to reflect what's coming with tariffs. NASDAQ right now is at 29.22, so just slightly below yesterday's all-time high that we closed.

Why do you think that there is still momentum behind the tech trade, that there's still opportunity on the upside? Well, Contessa, I think when we came into this year, the core narrative was sort of about the broadening. This broadening trade, everybody was sort of overweight. The MegaCat tech stocks and the rest of the S&P 500 sort of needed to catch up a little bit. I think we've actually seen that.

If you sort of look at the numbers, I just saw a chart on this. The top 10 stocks in the S&P 500 right now traded about 28 times earnings. The other 490 traded about 20 times. And if you look back at history the last 20 years, that 28 times for the top 10, it's elevated, but it's not as severe as we saw in 2020. It's not nearly as severe as we saw in 2000.

But that 20 times for the other 490 stocks, that's actually about as high as it's gotten historically. And so if you say, hey, this rally is probably going to keep going, I actually think logically then it would stand to reason that probably big tech needs to keep the fuel going because otherwise you're going to get into uncharted territory with the other 490. And we know that the big cap tech stocks are not only quality, but they still have this big AI carrot out there in front of them.

Your models sound like they would be a lot of fun to come in and spy on. Doug, thank you. Thank you. Up next, builders going bonkers. We're drilling down on some of the big moves in the housing space. I mean, these are big double digit moves. Look at Pulte Group up almost 12% and D.R. Horton up 17.

Closing bell will be back right after this. 20 minutes until the closing bell and we're watching some big moves in the home builders today. Diana Olick digging into that for us. What's behind all this momentum, Diana? Well, Contessa, the home construction ETF ITB is up over 7% on the day and it's all thanks to earnings beats from both DR Horton and Pulte, two of the nation's largest builders. Horton beat on EPS and revenue for its Q3 and had higher than expected gross margins. It did lower full-year guidance on closings and narrowed revenue guidance. The entry-level builder said they expect sales incentives to increase also during the fourth quarter. They noted getting a boost, though, from the brief dip in mortgage rates in June.

Rates are now higher again, but not as high as they were in May. DR Horton is up over 16 percent on pace for the best day since March of 2009. Pulti also beat on the top and bottom lines for its Q2 with new orders above estimates. The stock is up over 11 percent on the day, but Pulti CEO Ryan Marshall said on the call that feedback from home buyers still showed

big concerns that couldn't just be fixed with a lower price or bigger incentives contessa. So Diana one on the calls how much was said about tariffs and how much of a factor or concern that is. What's the concern over the greater economy and that's what Ryan Marshall to was talking

about and also David Alden's of D. R. Horton he was saying that it's concern over the broader economy interest rates tariffs how that's going to affect the consumer and that's why consumers are sitting on the sidelines and that they're so concerned about getting you know it's not that there's no demand it's that this concern is weighing on consumers so much that they're saying I don't want to make such a big purchase right now. Yeah Rick Reader was on earlier and he said that that's the one thing that he thinks the

Fed lowering rates would really do is juice the housing market. What's your sense that that mortgage rates are what is causing buyers to sit on the sidelines? Well that's been part of it for the last couple of years since rates went up from those historic lows we saw in the first couple of years of the pandemic, you know, three percent around up to seven, even eight percent. So now we've got rates still hovering in this narrow range in the high 6% range on the 30 year fix. If they came down to 6.5% that's when you do see a boost and D.R. Horton noted that boost when we saw rates come back towards 6.5% in June very

briefly. But if they were to stay low come down even lower you would get all kinds of demand. The problem is when you get all that demand then prices start to go up again because it's a supply-demand balance. It's not that demand's not there, it's just that rates are still high. We're getting news today that the president is considering ending capital gains on home sales. How big a factor is that, do you think? And is that something that could then increase buyers appetite well look it makes homeownership more attractive

seller's appetite right see and that's what I was gonna get to is that it makes homeownership more attractive and for sellers who might want to list their homes especially on the very high end of the market it makes them more willing to do that but that's not what the problem in the housing market is about right now it's about affordability for the entry level buyer and capital gains taxes on selling a home has nothing to do with that most first time. I mean you're talking first time buyers they don't own a home and they're

never going to own a home as expensive so that you know capital gains would really matter to them it's more about affordable housing. So I don't see where, you know, getting rid of the capital gains on a house is really going to help the overall housing market where most people live. Right. And at that level, most people are, if they sell a house and they make money, they're reinvesting that again right away. Right. Most people aren't going to hit that capital gains threshold that is hurting the higher end. Diana, great to talk to you.

Thank you. Sure. Still ahead, we run you through what to watch when Texas Instruments reports at the top of the hour. Closing bell. We'll be right back. Up next, we get you set up for all of the big earnings out in overtime. The Market Zone is next. Don't go away. We are now in the closing bell Market Zone.

Two earnings releases we're watching out in overtime today. We have Pippa Stevens on Baker Hughes and Christina Parts-O-Nevelis on Texas Instruments, plus Kate Rogers with the latest on small business sentiment. And UBS Global Wealth Management's Julie Fox breaks down the crucial final minutes of the trading day. Let's get things kicked off with you, Pipa, on what we're watching out of Baker Hughes. Hey, Contessa. So Baker Hughes is the last of the big three services names to report, and expectations

are muted after Halliburton's CEO said this morning that the market will be softer than he previously expected over the short to medium term, while SLB reported weakness in international markets. And this, of course, comes against the backdrop of what many see as an oil surplus for the back half of the year and into next year, meaning drillers could cut back on spending, hitting the services company's revenue. Still, JPMorgan, reiterating its overweight rating on Baker Hughes, pointing to strength in the company's industrial and energy technology division, which should offset softer oilfield

services spending. And finally, just quickly, take a look at shares of Enphase because they are up some 8% ahead of that quarterly print. It's the first time we'll hear from the company after President Trump's one big beautiful bill act stripped key incentives for the solar industry. And Tessa? All right, we've got Baker Hughes up 0.4% on the day. Pippa, thank you for that. One big beautiful bill act to strip to key incentives for the solar industry. Contessa. All right. We've got Baker Hughes up point four percent on the day.

But thank you for that. Texas Instruments reporting after the bell as well. Christina, what are you watching for? Well, Contessa, expectations are pretty high for Texas Instruments. Shares are up almost 50 percent just in the last three months alone. Analysts say inventory levels have fully normalized, not just in the distribution, but among Texas Texas's direct buyers which really makes up most of its revenue. Continued demand pull-in over tariff concerns and a stronger Chinese market specifically in auto could set the stage for a stronger print and even stronger guidance just in

the next few minutes. Some are looking for up to 8 to 10 percent increased quarter-over-quarter growth which would put revenue around four point seven billion dollars above the fax it that number we use at four point five billion for the quarter. Worth noting though, just yesterday evening, NXPI reported solid numbers, but the stock still sold off as investors clearly wanted signs of a cyclical recovery, specifically in auto as well as industrial. So Texas will need to show more than just a beat. Investors want improving trends in China, stable gross margins, strong demand from industrial and auto customers. They just

want it all, Contessa. I mean, but that stock is on a tear over three months, up 46%. Pretty remarkable. Christina, thank you for that. Kate, what's the latest on small business sentiment? What are you looking for? Hi Contessa, RCNBC Survey Monkey. Small business surveys out for Q3 today. It shows an increase in optimism on Main Street. Now the overall confidence score for the quarter increased to 56. That's up five points from Q2 as outlooks on the economy improved. We found nearly half of small business owners said the economy was excellent or good up from 30% last quarter.

Fewer small business owners in this quarter think the country is headed for a recession from 70% in Q2 to 61% in Q3. The big reason for the shift concerns over inflation have somewhat subsided. Inflation though still the top concern for owners with one in five saying rising prices are the biggest risk to their business right now. Nearly a third believe that inflation has peaked. Two thirds expect the price of goods to rise. President Trump's tariffs still top of mind, but fewer small business owners, Contessa,

are concerned embracing for impact. A little over half say they're worried about the impact of tariffs. 59% expect tariffs to impact their business now or in the future. Back over to you. It's really surprising how resilient the small business owners are, even with that overhang. I know you're monitoring that closely. Thank you for that, Kate.

UBS's Julie Fox, let's start there. When you think about the way small business fuels this economy and that overhang for tariff and the fact that this August 1st deadline is looming. Are you surprised how optimistic these small businesses are? Well, I think right now the markets are in the tug of war between earnings and trade headlines. Earnings so far, they've been strong.

They may not be enough of a catalyst really to propel the market meaningfully higher in the short term just given the headwinds because of the August first trade deadline which I think remains an unknown but we are optimistic on the markets are twelve month price target. On the S.

and P. is sixty five hundred that's a modest upside from current levels but it's enough of a game that I still think it makes sense to stay invested in this market. When you're looking at the I mean we're on track right now for a record close again the S&P would have to close above 6305 to set a new record. What's putting the pedal to the medal? What's the accelerant? I think the game really now and over the next year is gonna be driven by earnings, some Fed rate cuts,

and then some of the long-term structural themes that are currently playing out on markets, such as things like artificial intelligence. Okay, so you're looking at tech as one of the big drivers of this in the future. Is it AI that you're interested in? Is it the big seven names that we've been focused on for several years now? Where do you think that there is the most opportunity for investors?

Well, I think the AI story remains intact and there is still some opportunity in that space. And that's primarily because companies are still spending big on AI. And I think that that is the center of this opportunity. So we recommend investors focus on the long-term fundamentals and look for some diversified exposure and looking at areas like semiconductors, software, internet platforms, rather than concentrating your risk in any single segment or any individual stock. So I think still an exciting opportunity. You don't want to be overly exposed though

to any one particular company. You're also interested in utilities and financials. Why? Well, utilities is a sector. It's involved in the artificial intelligence story. We're going to need more power and electricity to develop A.I. So I think as that A.I. story takes shape, that's a sector that's very much tied to this theme with the utility sector you also have companies here that pay strong dividends and they're well diversified and financials they perform well this year it's a key sign of the market's performance- once again becoming a bit more broad. And beyond tech and so it's interest rates come down I wouldn't be surprised to see more M. and A. activity and deal flow and I think that will help the sector as well.

surprised to see more M&A activity and deal flow. And I think that will help the sector as well. Okay, Julie Fox, it's great to talk to you today. Thank you for joining us on that. What we've seen today is a mixed bag, really, with not a lot of movement on either side, but you've got the S&P 500 at 6,315. Again, the close, this would set a new record for this close, 10 points higher.

So not smashing the record, but certainly surpassing it. The Dow Industrial is up half a percentage point at 44,528 off of the record high set on December 4th. And the NASDAQ, we saw a new record there yesterday, 20,974. And right now you've got the Nasdaq just about 50 points or so off of that. So not going to set a new record for the Nasdaq and the Dow, but the S&P 500. There it is. Also I wanted to mention that Bitcoin is also up 2% today. We've seen a run in these crypto stocks as well as some of the meme movements today, cold, open door and others. There you're seeing the bell ringing.

That's it for us. Here's Overtime and Morgan Gremmel.