Closing Bell - Closing Bell: Rate Cut Ripple Effects 8/14/24

Episode Date: August 14, 2024

Stocks cautiously creeping higher with easing inflation back on the table. Goldman Sachs’ Jan Hatzius and Wharton Professor Jeremy Siegel break down their expectations for the Fed’s upcoming meetings. Plus, Solus’ Dan Greenhaus and Hightower’s Stephanie Link share their strategies as the rally gains ground. And, a difficult day for shares of Alphabet. Deirdre Bosa digs into the move.

All right, guys, thanks so much. Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the rally for stocks back from the depths and where this market might go from here over the next several weeks and beyond that. We'll ask Wharton Schools' Jeremy Siegel in just a moment when he joins me live. We can't wait for that conversation today. In the meantime, let's show you the scorecard with 60 minutes to go in regulation. Another favorable inflation read, just the catalyst to send stocks modestly higher again today. The Dow back above 40,000, and it is holding there right around the highs of the day, too. Well, tech was briefly leading, but there's been a bit of selling today in some of the mega cap names. Financials, the top group out of the S&P.

We'll watch that closely, too. It takes us to our talk of the tape. What expected rate cuts will do for the markets and whether it is time to add to stocks or move money into bonds as that trade gets more attractive to some. Let's welcome in Jan Hatsias. He is the chief economist and head of global research at Goldman Sachs with us here at Post. Nice. Nice to see you. It's good to see you, Scott. So we're good on the inflation front, right? Is that your takeaway from the last couple of days? Now we just have to get our sights on this labor market and make sure that hangs in?

That's right. The news flow was good. PPI, CPI, we take it together. We get 14 basis points for core PCE in July. That's a continued encouraging number. It certainly gives the green light for a cut. And I think how much they will cut is going to depend on the labor market numbers. Our baseline is 25 basis points. If you see a somewhat stronger report than what we got a week and a half ago, no further increase in the

unemployment rate and claims consolidating in the sort of 230,000 range or so. Yeah, I think that would give you 25, but 50 is possible. What happened a week ago Monday? Was it a panic attack on the economy? Was it overdone? Are we making too much about one relatively soft employment number that wasn't even that soft? Well, it was soft, and we did think that it warranted increasing our risk of recession somewhat. We moved from 15% to 25% over the next 12 months, but at the same time, it is only one number. 25% is still not a high number.

It's below consensus. Continued expansion is still significantly more likely. So, yes, I would put it into perspective. Obviously, there have been some large surprises, large moves. We had a Bank of Japan rate hike the week before. We'd already seen some pretty sizable moves in some markets. But as far as the economy is concerned, most of the news, I think, is still very encouraging. But that one jobs number forced you to raise your recession projection from 15 to 25. It moved the needle

enough in your mind that now you're on alert? No. I mean, we're always on alert, obviously, for surprises. Yeah, but you go from 15 to 25, that gets people noticing that, you know, now you think there's a 25% chance we actually could go into recession when people think, you know, the economy is still reasonably strong. Atlanta GDP now was, what, 2.9? We still added 114,000 jobs in July. It's not like we added a handful. Yes, there's always some risk of recession.

So I'd never go too much below 15%. That's the unconditional probability. And we thought with the cumulative increase in the unemployment rate that we've seen since April 2023, 0.9 percentage points. Historically, that's a strong predictor of recession. I would put some weight on that. But again, I wouldn't put that much weight on it because 25 percent is still a pretty low number. Sure. So 25 basis points in September and then what thereafter? How many times are you going to go this year and by how much? We have three cuts of 25 basis points, so a series of cuts, and then probably continued

cuts in 2025, although there are, of course, a lot of uncertainties about what happens in 2025, the economy, what happens in the presidential election, what happens in Congress, what the policy consequences are. But the funds rate is high. Five and three-eighths is a high funds rate with inflation largely back to the target and the labor market rebalanced. There's no longer a need for a five handle on the funds rate and probably will end up being in the threes rather than in the fours. I mean, they're too restrictive now. Aren't they? That's right. What should they have cut in July? We thought so and I certainly think what everything that's happened since the July meeting has you

know strengthened that that view. We wrote a piece titled what wait why wait in the run-up to the meeting so So I think they need to get going. They will get going and probably move at consecutive meetings. Can they afford to wait until September the 18th? Yes, I think they can afford to wait. I also think the size of the initial cut is not the most important thing. What is important is the path. Markets are forward-looking.

They price a path. So the dot plot is going to be just as important in many ways as the move itself. But they do need to get going, and they need to signal that we're normalizing policy. When you heard people like Jeremy Siegel, who's going to come up right after you, suggest in the throes of this, you know, market upset a week or so ago, they need to come out and do something in an emergency fashion. Your response was what? Well, we thought it was very unlikely that they would do that,

given that there hasn't been a major shock to the economy. So there could have been, though, right? I mean, if you would have had a more dramatic market upset, I mean, even the former Dallas Fed President Richard Fisher, who was on with me that day, suggested, I don't know that they need to do anything today, but Chair Powell better have some remarks written down in the paper in his back pocket in case he needs to say something.

I mean, we look at it through a financial conditions lens. Our financial conditions index obviously tightened, but even at the lows of the equity market a week ago, it was still easier than the average of the prior year. So our calculation of the financial conditions impulse was still actually mildly positive. So yes, of course, you should never say never. And it's, of course, possible that you get intermediate moves. But the hurdle for that is very, very high. And I don't think we were close to reaching that hurdle.

OK, we'll leave it there. Jan Hatsias, I appreciate you very much. Thanks for being here at Post 9 with us today. Let's now welcome in the Wharton School professor of finance, Jeremy Siegel. Professor, it's great to have you back. How are you? I'm fine. Thank you, Scott. You, of course, made headlines and then some on that Monday morning when the markets were under some severe pressure. We were worried about the economy. We're worried about the unwind of the carry trade. For all of our sakes. Let's revisit this. I want our viewers to listen to you from that morning on Squawk Box and what you said. And we can talk about it on the other side. This may surprise me. I'm calling for 75 basis point emergency cut in the Fed funds rate with another 75 basis point cut indicated for next month at the September meeting. And that's minimum. All right. So I think you walked it back a little bit with our own

team on dot com. But do you want to do over on that? You wish you could have that back? Well, I think it came off that I thought the economy was falling apart, which I didn't. I wanted to shake things up. I didn't want Powell to make the same mistakes on the way down as he made on the way up. Listen, Jan is right. We are just about at balanced risks. If you're at balanced risks, the Fed itself says the Fed funds rate should be 2.8. I wasn't even moving anywhere near there.

All the forward looking models, you know, the the John Taylor model that you go on and on. They're all pointing to four or less. Now, yes, it isn't to do an emergency cut is is out of the normal procedures of the Fed. I just am saying that with risks balanced, why are we still at double what the Fed says is the long-term rate? And, you know, OK, we don't have to do emergency and then 75. I just don't want him, I don't want Powell to go too slow. Yes, the data came in better last week, but I think the risks are fully two-sided. Why aren't we down? I mean, we've all been there, I think, in life, right?

Professor, if you say something you wish you could have, you wish you could have it back. Yeah, I mean, I know when I came back, it said, oh, you know, Dr. Segal thinks a disaster is coming. And I just want and yes, that that I would have stated it differently now saying, listen, we should be down in the four percent. Now, you know, calling for emergency and in 75 is so out of the realm of what the Fed generally does, which, by the way, I think the Fed generally acts way too slow. So I was sort of trying to push them into some more speed. But yeah, I I wouldn't come on as as I did right there in the grips of the panic. And by the way, I didn't say there was a recession. I didn't say it's a bear market in say dump your stocks. I'm just saying that when I look at the risk today, I see very little, if any, inflation risk. And if there is risk, it's on the downside. And I ask myself, why have we not moved one basis point? Are you surprised, like many others are, at the magnitude and the speed of the snapback that we've had for stocks.

We're having this conversation that Dow is back above 40,000, for crying out loud. I don't know if many people saw that happening a week ago Monday. Well, certainly, I mean, we got great economic news. I mean, certainly the ISM service came out that afternoon, the East Fierce, and then the jobless claims, which had been rising, rising, rising. And I've often said that when it starts moving above 240,000 a week, I begin to get worried. And it was, and then it fell below. I mean, that did surprise me. So you can, you know, heave a sigh of relief. But let me put it this way, Scott, just because if you're going 90 miles an hour and don't have an accident, OK, you're lucky. But doesn't mean you shouldn't slow down. And it doesn't mean that the Fed should say, hey, you know, five and a third is just the right rate for the Fed funds rate.

Because I think given what I see in the labor market and particularly the inflation market, You know, we got two good readings certainly yesterday and today. The government itself has come out with several experimental housing shelter price indexes that don't have the lagged effects of their official ones. And when you plug those in, believe it or not, you are at or even below the two percent level if you put in those new indexes. So given all that, I'm just saying just don't rate why the risks are are on that other side, given you haven't moved. I'll take the analogy a step further. I mean, when you say, you know, going 90 miles an hour, I mean, some look at the market now and say we've gone 90 miles an hour all the way back to where we were before this slide even started. And it's just too too fast. It just creates a dangerous point to rally back so much valuations extending again. That's sort of the point of Rick Reeder of BlackRock, who was with me yesterday, who was very bullish, by the way, on the Monday sell off and came on and said, hey, I'm finding opportunity.

But now that we are where we are, he came on with me yesterday and says, like, tap the brakes. Let's listen to that. And you can react on the other side. Equities are going to be higher over a year from now. That being said, I think these valuations have gotten have caught up second half of the year. The seasonals aren't great. You got an election, let alone the Mideast dynamic. So, yeah, I like I like de-risking a bit at this point in time. Right. That's Rick Reeder with like, look, I like equities as much as anybody else does, but this is kind of uncomfortable. Right. And not unusual when you often towards the end of a bull market. I'm not saying this is the end, but you get a break and then, you know,

everyone says, oh, the end is here and they all start selling. And what happens, you get a bounce back, but you don't break the previous highs. For technicians, I think that is a key. You get a sharp bounce back, but you don't break to new highs. And then the weight of whatever is on the economy. And there are a lot of I agree with Rick. There's there's a lot of uncertainties going forward, not not the least of which are our political uncertainties. And, you know, that, you know, both the House, the Senate and the president could be all in one hand and all in the other hands. And we all know that the Trump tax cuts are expiring next year. That that could make a

huge change in taxes. We know that Trump lowered the corporate tax rate dramatically. If that's brought back, well, you know, it doesn't look like that is being discounted in the market again. You know, I'm not a bear. I'm just saying there are risks we should be cognizant of. And I think the Fed should also be cognizant of when they take a look at the economic developments. I've also had some suggest on the show recently that the first rate cut should actually be sold and not bought. How would you react to that in an environment since 2009 we've been taught pretty well don't

fight the Fed? Well, you can't fight the Fed even, but doesn't mean the Fed can't be wrong. Some people say, oh, yeah, you can't fight the Fed. The Fed knows what the economy is doing. You don't fight the Fed because if the Fed is wrong, you've got to be on that other side. They were very wrong on the inflation side going up. We all know that.

I mean, it's acknowledged there. We all know that, in my opinion, and I've been watching the Fed for, what, a half a century, Jay Powell is the most deliberate of all Fed chairs in the sense he has to tee it up a meeting. He gets everyone to agree before he finally moves forward. market in a fast-moving economy, that slow movement could, in fact, spell poor, bad policy that hurts the economy. And I don't want that to happen over the next six, 12 months. So we only have a few months left in this year, right? Less than a handful, obviously. What makes sense to you then for what you think the S&P can do between now and the end of the year, knowing all that lies ahead? We have expected rate cuts.

We have more reads on the economy. And then, of course, we have, as you already referenced, a presidential election that will be contentious, to say the least. Yeah, to say the least. So there's a lot of there's a lot of I think a lot of choppiness. Listen, you know, the long run average return on the market is what, eight, nine percent on the S&P. We're already above that. Given the uncertainties, I'd be surprised that we could double that, even with rates are going down. It's not always because they feel that earnings are going to soar in the second half. Speaking of earnings, and lastly, we have NVIDIA looming right on August 28th. How do you feel about mega cap tech

right here and how consequential, I guess the right word is, do you think that earnings report is going to be? I think it is. I think NVIDIA has to, NVIDIA always has to be a consequential report, you know, being at or near the highest cap in the market. I think the question in the back of everyone's mind is, is AI all that it is hyped up to be? Corporations are putting in AI a little slower. Goldman Sachs, John Hanses could say they put out a report saying a bit slower than we expected. If that narrative gets going and earnings don't keep on breaking records, we could see more of a correction there. Professor, I appreciate it as always. It's always good to speak with you. We'll see you soon. Thank you, Scott. All right. Professor Jeremy Siegel at the Wharton School. Let's send it over to Steve Kovach now for a look at the

biggest names moving into the close. Hey, Steve. Hey there, Scott. Yeah, shares of Cardinal Health are up better than 3% following its June quarter earnings report that came out before the bell today. The company beat Wall Street expectations on the top and bottom lines with an EPS of $1.84 on revenues of nearly $60 billion. Now over to Victoria's Secret. Those shares also surging today up about 16% now after naming a new CEO, Hillary Super. Super comes from beauty brand Savage X Fenty, and she starts her new role on September 9th. Victoria's Secret also provided some early quarterly earnings, with earnings coming in above its guidance. Scott. Steve, thanks. We're just getting started. Steve Kovac.

Up next, Fed cuts fast approaching, at least if you ask the professor. Two top strategists are standing by with their Fed playbooks, revealing the best places for your money right now. We're live at the risk today, I see very little, if any, inflation risk. And if there is risk, it's on the downside. And I ask myself, why have we not moved one basis point? All right. That was Wharton professor Jeremy Siegel just moments ago. Joining me now to discuss is Dan Greenhouse of Solus Alternative Asset Management and Stephanie Link of Hightower Advisors. Stephanie is a CNBC contributor. It's good to have you. Dan, I'll give you the first crack at this since you're sitting right here. I mean, he obviously wishes his words, the professor,

they came out differently than they did Monday morning a week ago when he said the Fed should do 75 basis points in an emergency cut. Sticking, though, to his point that the Fed's too restrictive now and they need to cut. Sure. And listen, two things can be true at once. The Fed, as Jan laid out in the previous instance, that five and three eighths is probably too high of a rate for the economy at this point in time. And some cuts should be put into place can be true at the same time that there was a panic in the market on that Monday, emphasized perhaps most acutely by Jeremy Siegel calling for not just a 75 basis point emergency cut, but an additional 75 basis point, at least at the subsequent meeting. So a

total of 150 basis points immediately. And again, not that Jeremy Siegel was alone. There were some people that were quite hyperbolic at that moment. But two things can be true at once. The rates are too high and calling for that level of rate cut was a bit hyperbolic. And Steph, here we are having this conversation with the Dow back at 40,000. We're pretty much at that level as we speak. Unbelievable comeback. But now what? Well, I think the volatility is here to stay, especially in the next two months, because we are at the seasonally weakest period of the year. So I wouldn't be surprised to see some back and forth. But Scott, you have to just back up. Last Monday was the yen carry trade on wide. It was not a credit problem. And the economy is still growing. I don't know. Is it

2.9 according to the Atlanta Fed? Maybe not. Maybe it's 2, 2.5%. ISM services is a huge part of our economy. It's doing quite well. Not only that, new orders and employment within that report was very reassuring. And so you add it all up and we just put up 11% earnings growth. And when you're putting up better than expected earnings because the economy is hanging in there, I mean, there's no reason for emergency cuts. And I'm not even sure you're going to see 100 basis points like Hatsias was saying between now and the end of the year. The 25 or 50 in September, it's all going to depend, obviously, on the labor market because we have made enormous progress on inflation. So let's watch the labor market. But Scott, the weekly jobless claims, your four-week moving average is at 240,000. And I remind you and I remind all of the listeners and viewers that 350,000 to 375,000 is recessionary.

So I understand and appreciate we have seen a gradual increase in weekly jobless claims, but it is certainly not in a dire situation for a lot more cuts than, you know, 50 at the most in September. I think I think Hatsias said 75, not 100, 25, 25 and 25, just just so we're on the same page. Dan Greenhouse, a buyer here or a trimmer of the market? You know, Rick Reeder making the point yesterday that, you know, his view from last Monday to yesterday had changed on that question just simply because of the comeback. Yeah. And listen, I'm probably closer to Rick in the sense that, well, listen, let's start with the economy is not racked with pestilence or the play. Everything seems OK to Stephanie's point.

The ISM services came out okay. Jobless claims have been ticking up, but the commentary from companies outside of the low-income consumer have been okay. We're going to have Walmart tomorrow, which will be obviously crucially important in addition to retail sales. That's right. So there's other data that will help color this in,

but nothing in the near term appears suggestive of an economy that's collapsing on the order of 150 basisive of an economy that's collapsing on the order of 150 basis points of immediate rate cuts. But with that said, and to touch on a little bit of what Rick got at, and as a reminder for the viewer, Steffi and I were here that day having this larger conversation. You can make a case that the equity market feels a little top heavy again, and that from an investment standpoint, there are opportunities, better opportunities to be realized outside of those top heavy names.

With the caveat, of course, that that argument for the better part of six months has not come to fruition. Steph, you've been more a buyer than a seller of stuff. In fact, more so than many who have come on the network. And, you know, last week you added to Eaton, Lamb, Energy Group, Bank of America, Truist, Amazon. CrowdStrike's a new position. But juxtapose that versus what Rick Reeder is saying, that this is a little uncomfortable because it's happened so fast. And now we're here talking about, as Dan said, top-heavy, valuations expanding. Do earnings really justify all of it. Does the slowing economy

justify all of it? How do you answer that? Well, I think you've had a big bounce back in the mag seven and in large cap tech and also in growth. All the names that I added to actually really haven't participated as strongly as those other that other that other group. So I think that there are always going to be opportunities, those stocks that have lagged. And the good thing is, is we just got earnings from these companies. We just got guidance from these companies. And it was really good.

Every one of the names that I bought, they beat, and they raised, and they had decent things to talk about in terms of just the overall environment, including Brian Moynihan at Bank of America. If he's going to see something falter, he'd be the first one to see it and he's not. So to me, I think there's a lot of opportunities in the kind of non-tech, if you will, or mag seven ish. And it goes back to what I just learned over the last couple of weeks during earnings season. I think, again, I go back to stocks sold off and they sold off

huge, not because of a credit problem. If it was a credit problem, it might have been a different story in my book in terms of adding. Sure. But I mean, I could I could find 15 different earnings reports where CEOs said the opposite of what you point to with certain companies. Right. There were many within the travel space and other areas all around the consumer, which point to a tapped out consumer, a slowing consumer. And that seems to be undoubtedly the case in the here and now, which is why this week Walmart and the retail sales report seems so critical. Yeah, retail sales tomorrow in Walmart will be really big.

But Scott, remember, and yes, there are definitely pockets of the consumer that are struggling. I'll definitely give you that for sure. But we do have lower interest rates. We do have lower commodity costs. We still have jobs. And I would also argue that now you're seeing a refi boom, right, because of the lower interest rates. And just wait until you get below 6% on a 30-year fixed. Then you're going to see pent boom, right? Because of the lower interest rates and just wait until you get below 6% on a 30 year fixed, then you're going to see pent up demand in housing. But my point being

if you refi, that means the consumer is going to have a little bit more money in their pocket. And then I think that is kind of bullish for the consumer. So I'm not saying it's all perfect, but those companies that I bought didn't have anything bad to say. There are certainly there's a mean reversion happening in the travel area, right, because they just exploded over the last couple of years. And I think you're just seeing, simply put, a mean reversion, maybe a little bit of a slowdown, but not hardly a disaster. To that point, and I agree with so much of what Stephanie said, I just want to push back on what you said about a tapped out consumer, although you did caveat it by, say, slowing. You look at a company like Costco, which is double the revenue of a target, which gets considerably more attention. And Costco is putting up same store sales, ex-gasoline in the mid to upper single, not upper, but the mid single digits, 5%, 6% or something. Chipotle, obviously an upper income consumer relative to, say, McDonald's, didn't really have very much to say.

There's clearly something going on at the low end. There's no doubt about that. But I reject the idea that the consumer is tapped out or slowing per se. Yes, relative to where we were late last year, the consumer is a little slower. The economy is a little slower. But in both respects, nothing other than slowing had to happen because the economy and the consumer was doing so great in the back half of the year. And just to reiterate what Stephanie said about company earnings reports, yes, we can all pick and choose X and Y and McDonald's versus Chipotle, et cetera.

But when you look at the preponderance of the data, earnings season went pretty well. You've got earnings growth that came in. 11 percent. Yeah, a couple of percentage points ahead of expectations, as you'd expect, revenue growth in the mid-single digits. And I don't think anything on the commentary side of things was suggestive of anything out of the ordinary happening with respect to the economy other than it's a little slower than it was all right we'll

make that the last point great dan greenhouse thank you stephanie link thanks so much we'll see you soon he's feeling good about himself right now we'll see you soon. He's feeling good about himself right now. We'll see you soon. Up next, today's encouraging inflation report setting the Dow higher. Renaissance Macro's Jeff DeGraff is highlighting what he says are the three most important things to watch in the market right now. We're back on the bell after the break. We're back with the Dow and the S&P 500 rising yet again today and gaining even more distance from those lows set during last week's major sell off. Here to share what the charts are telling him about this market right now is Renaissance Macro Research Chairman and head of technical research, Jeff DeGraff. Good to see you. So what chart stands out to you more than anything else in the here and now? Oh, good question. Well, probably of most interest to your listeners would be would be tech and the relative performance of tech here over the last, call it two to three months, which is seeing a discernible deterioration in relative performance.

Really only one tick away for us in terms of our criteria from turning to a negative relative strength trend. So I think that one's pretty important. If we want to be really timely, we could say the S&P right here at the 50-day, bouncing right back into this resistance level at what's essentially 54.50 is a pretty key level and one that we're more interested in selling than buying right here. What do you do as a chartist? I hope you don't mind that term at all. Because I know you do more than just technical research. But I'm sure you could have made the case had you come on, let's say, in the depths of the Monday sell-off,

and the charts would have looked horrific. And it would have led you maybe to have a view on, you know, we breached this and we breached that, and this means that we could go down to something. And now we've had this rally back. So how much faith should I put in the charts if, in that case, it may have told you something that didn't really exist? I don't know if that question makes sense. And if it doesn't, my apologies. But I feel like I know where you're going. I know where you're going somewhere. Yeah, I know where you're going with it. Well, keep in mind. And I think this is important.

It's good for context. Right. The levels are less important to us than the dynamics. What do I mean by that? We look at oversold conditions. We look at some of these internal these internal measures. And by most measures, we had an oversold condition, regardless of what that of these internal measures. And by most measures, we had an oversold condition, regardless of what that price level on the S&P is. As long as you're in an uptrend, which our data tells us that we're in an uptrend, those are usually viable, right? So we might get it wrong by a few hours to days and maybe a few tens to 20s in terms of points, for sure. But getting in the zip code is really what we're trying to do. And that was pretty clear and evident last week. The problem that we have,

those oversold conditions and an uptrend viable, the problem that we have right here is that the momentum taking us higher from those oversold conditions really has not been that impressive. We had 190% day. Yesterday was 84% of the names advancing. It's OK. But there's nothing that really leaps out to us and makes that table pounding and saying, hey, we're right back into this resumption of the uptrend. I would say the things that concern me today, Scott, which are different than where we were, say, two months ago. One is this yen carry trade and the problems with that. Now, I think in the near term, a lot of that was put back on sides, right? We had some excesses there. But we're talking about a trade that's really been in place for 25 years. This isn't some new phenomena. So a lot of the financing that's happened globally, and we're talking about

trillions of dollars, has worked its way through the system, through the BOJ. And I don't think that we're done with that yet. I think there's still a problem with that. The other part of this is we're seeing cracks. And we actually saw a top formation in Ether. That broke. It looks to us like Bitcoin's cracking. Those are nothing more than, for our purposes anyway, are surrogates of liquidity. And so we're seeing that liquidity at the margin start to deteriorate. So that's what makes us more nervous. And we're sellers of this overbought condition or this resistance level here at the 50-day because we think that there's more backing and filling. We think that there's more testing that's likely to happen, particularly given this point in the calendar. And with that, all still within an uptrend. But with that,

it'll require some more assessments as we go. The other thing I would just note, because I think it's important, is the spread between the Fed funds rate and the two-year treasury is about 125 basis points. That's a huge number. That's as big as it's been since 2008. And usually what it means is the Fed is very much behind the curve. So I think we are seeing these liquidity contractions take place. It's not just in the bond market, but we're seeing other residuals, or what we call symptoms of liquidity. And I think that's really important in where we are right now. I mean, the market's obviously priced a lot in whether it's over at skis. We're going to find out. Lastly, and quickly, the idea oversold versus overbought, what's making some people uncomfortable is that tech may have

looked like it was oversold, but it's come back so quickly that now it looks overbought. And people want to take some profits in these names because it's too much, too fast. That's what they say. What do you say? I don't worry about too much, too fast. It's usually momentum. But what we look for are the internals, how much volume is driving it, what are really

the characteristics of that. I don't worry about the rate of change. In most instances, a high rate of change is good news, not bad. I worry more that we had sentiment extremes. We talked about that back at the beginning of the summer. We've seen this crack in a lot of these names. Let's use NVIDIA as an example. We're coming right back up to the 50-day moving average. In many of these cases, that 50-day is now sloping downwards. And I think we're putting in a large consolidation. So for me, that's the bigger issue, is that we probably have to consolidate and these are going to stall out here. And I think that's going to be the bigger problem. They're probably viable sometime in October. But I think right here, you're better off being a

seller than a buyer. My chartist's comment was a compliment. I'm sure it was. I don't know if it came out that way, but that's how it was spent. Jeff, we'll see you soon. Thanks. Sounds good. Jeff DeGraff. We're getting some news out of Washington right now. Let's get to Eamon Javers for that. Eamon? Hey there, Scott. This information coming to us just now from Google. A little bit more information now on this attempted hack by apparent Iranian actors into officials with the Biden and Trump campaigns. Google putting out a release just in the past couple of minutes here saying their threat analysis group has stopped a number of these attempted hacks of officials' Gmail accounts

who are associated with the campaigns. We're getting a little bit more detail now on what the phishing emails that were sent to those individuals looked like. Google saying that in a number of cases they're imitating real groups, groups like the Washington Institute for Near East Policy, groups like the Institute for the Study of War and those sort of things, and then pinging officials who are associated with foreign policy defense and the presidential campaigns and seeing if they can get them to click on those links. Google saying that this targeted about a dozen people who are associated with the presidential campaigns and seeing if they can get them to click on those links. Google saying that this targeted about a dozen people who are associated with the presidential campaigns. They're saying that they blocked numerous attempts by this group, which they're calling APT 42, which is the Iranian National Guard Corps, to get into the personal email accounts of some of these individuals.

Google also saying, however, that APT 42, that is the Iranians, did recently gain access to the personal Gmail account of one high profile political consultant. And they're not naming that person. Scott, back over to you. All right. Not yet. Anyway, Eamon, thank you. I appreciate that reporting. That's Eamon Javers. Up next, we track the biggest movers into the close. Steve Kovach is back with us for that. What do you see now? Hey, Scott, hope you're hungry because we have two names covering everything from waffles to baby back ribs making big moves today. We'll show you when Closing Bell comes back after this. Less than 15 from the bell. Let's get back to Steve Kovach now for the stocks that he's watching.

Hey, Steve. Hey there, Scott. Yeah, Kelanova shares, they're up about 7% after Mars offered to buy the company this morning in a deal worth $36 billion. That's including debt. Kelanova is one of the companies spun out of Kellogg last year and makes popular products like Eggo waffles and Cheez-Its. And Brinker International, that's the company behind restaurant chain Chili's,

falling here about 10% on week guidance for the full year on top of some disappointing quarterly earnings results. By the way, Brinker CEO Kevin Hotchman will be on Mad Money tonight with Jim Cramer with more on those results. Scott. All right, Steve. Kevin Hotchman will be on Mad Money tonight with Jim Kramer with more on those results. Scott. All right, Steve, appreciate that. Thank you, Steve Kovacs. Still ahead, B is for breakup. Alphabet shares are under pressure today on a report of a possible DOJ intervention. We're going to unpack that move just after the break. We're now in the closing bell market zone.

CBC Senior Markets Commentator Mike Santoli breaking down the crucial moments of the trading day. Giorgio Bosa on what is putting pressure on shares of Alphabet today. Sima Modi looking ahead to Cisco earnings out in overtime. Back at 40,000 is where we are as we speak. Yeah, 40,000 on the Dow. This 54, 50-ish area on the S&P 500, also very interesting. It's basically where relief rally needs to be picked up by resumption of the uptrend, because relief rally up 4%, up to the 50-day average, essentially back to the level from right before the jobs report. This is where we are.

And by the way, also where we are with the volatility index. It's cracked below 17, down another point and a half plus today. And I was just seeing some numbers. It's the fastest drop from a close above 35 to below 17 in history. So the depth and severity and speed of that little panic we had has been extraordinary and has had its effect. What I mean by that is the patient's gone from critical condition. To serious to now stable and by stable its balance table we have the

retail charged well almost and we're almost back to normal in the sense that I'm. Brett is kind of. Unimpressive yeah and yet the S. and P. is doing fine on and you know you have a little bit more of the reliance on. The very largest stocks

which has protected the market over time. I guess the point I would keep emphasizing is at the highs, up 4% from here, it's pretty demanding. The conditions that got you there are relatively pristine. And, you know, could we just get there because the big caps decide to be defensive again and run? Sure, absolutely. But I still think that you're going to need a lot more assurance on the soft landing case, the Fed moving for the right reasons at the right time and everything else holding together. But, you know, look, it's a bull market. It always was. I'm just a little surprised at how quickly we've gotten back to this point.

You and so many other people, too. Speaking of big caps, Dee Bosa taking a look at Alphabet today. What's the story? So the story is that the DOJ is suggesting remedies to the court, the judge that decided that Google is running an illegal monopoly in terms of its search business. And the word breakup has been raised. That is what they're going to be asking the judge to consider. This comes a day after Google's Made by Google event where it showcased its latest hardware. But really on display, we talked about this yesterday, Scott, was the integration, the ecosystem that makes Google such a powerful competitor in this new age of generative AI. So the idea that a breakup could even be on the table could spook

investors because everything works so seamlessly together right now. And Google is going to be first market to get AI into people's pockets on their devices. All right. Good point. Down a couple percent today. Deirdre Boson, thank you. To Seema Modi now on what to expect from Cisco in overtime. Seema? Well, Scott, Cisco will need to prove to Wall Street that even though it's not a favored AI play, that it's continuing to invest in artificial intelligence and data centers. Morgan Stanley expects demand for Cisco's networking business to remain muted and

questions around its acquisition of Splunk, which closed in March, to get some attention, as well as efforts to streamline costs and rumors of additional job cuts, plus any loss in market share as it fends off competition from Juniper Networks and Arista. Shares of Cisco have underperformed, down about 10% this year, versus the S&P tech sector's 23% rise. And don't miss an exclusive interview with CEO Chuck Robbins on Squawk on the Street tomorrow. Now we await the numbers, Scott.

We do. All right, we'll look forward to those and that interview with Mr. Robbins as well. Seema, thanks so much. We'll turn it back to Mike Santoli. Got a minute left, so now it's about the economy again. It is. Retail and jobless claims. And Walmart.

And claims in particular. I mean, retail sales, of course, is very important. But I think it's very much internalized among investors that July was pretty soft on the consumer side. So to me, it's pretty tough for that to surprise in a meaningful way to the downside that has a big market impact. What Walmart says, and of course what Walmart says about the economy, if it's rough, sometimes it's to the benefit of Walmart. But jobless claims, I think that, you know, exactly whether we're inflecting higher or not, unemployment rate is now very much the benchmark of how we feel about the economy

as opposed to, you know, inflation, which is essentially taking care of things. I'd be surprised, to be quite honest with you, if Walmart comes out and has a lot of great things to say by virtue of, I don't know, was it a month ago their CFO was at a conference and made some reasonably cautious commentary about the consumer. For sure. And they're gaining share and they're leaving on price. So for them, they always feel like that's the right way to go. Two weeks can make a difference, but we'll see.

I'll look forward to seeing you tomorrow. We'll go out with a 40,000 on the Dow in overtime with Morgan Dunn.