Closing Bell - Closing Bell: Reddit Partnering with OpenAi 5/17/24

Episode Date: May 17, 2024

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

All right, welcome to Closing Bell. I'm Scott Wadner, live from Post 9 here at the New York Stock Exchange. And this make or break hour begins with 40K and beyond. What needs to happen now to keep stocks making new milestones? We'll ask our experts over this final stretch. In the meantime, your scorecard with 60 minutes to go in regulation looks like this. And after that race to new records, we're taking a bit of a breather. As you can see today, the majors mostly mixed throughout much of the session. Interest rates, they're a touch higher, too.

That may be capping activity just a bit. And stocks, well, they could also be looking ahead to a busy week with Nvidia earnings looming, especially large next Wednesday. It does take us to our talk to the tape. What is next for stocks and how much rides on Nvidia's numbers next week? Let's welcome our guest, Jordan Jackson,

is global market strategist for JP Morgan Asset Management, Stephanie Link, Hight his global market strategist for J.P. Morgan Asset Management. Stephanie Link, Hightower's chief strategist and a portfolio manager and a CNBC contributor. Both here, as you can see, at Post 9. It's great to have you. Jordan, I'll go to you first. I mean, it's a momentous week, obviously, and I think the question on everybody's mind is now what? What do you think is next? I think we've got some further upside from here. I think we could see on another 5% to 10% upside from here. The reason being you've got three puts. You've got the Fed put, you've got the earnings put, and you've got the consumer put. The Fed seems explicitly biased

to want to begin cutting rates at some stage. It's not a matter of if, it's a matter of when. Earnings are coming in. First quarter earnings came in a bit better than expected. You've got double-digit earnings growth being expected for next year as well. Most of the performance in the market this year has been driven by earnings. Now, the wild card now is consumers. If consumers start to get a little bit more tapped out, which there's certainly some early signs of that, that could become a challenge. Steph, is that what sort of has confounded the bears, that earnings seem to have mattered more than anything else. And in my conversation yesterday right here exclusively with Rick Reeder, when I asked him

what happens next, I want you to hear what he told me, and you can react on the other side. The earnings are actually pretty good. There's stickiness to margins, the software development, AI implementation, etc. It's pretty impressive. Earnings are still pretty good. There's stickiness to margins. The software development, AI implementation, et cetera, it's pretty impressive. Earnings are still pretty good. And so anyway, I know we've talked about it a bunch of times. I think people underestimate. You've got incredible technical inequities. Could you get another 10%, 15% of the equity market this year?

I don't think it's much of a stretch at all. Could you get a bit more than that? Yeah, I think you could. I was pretty surprised by that pretty bullish view, right? I mean, somebody, you know, often called one of the bond kings talking about, look, he's the head of global allocation, so he has hats in many rings. But what do you think? He's brilliant, right? So I don't know if we get that much higher in the markets by what he's talking about.

We're already up 11%, Scott, year to date. And the long-term total return average for the S&P 500 is 7.7 percent. For fixed income, it's three. So, OK, it's great that he's excited about equities. He should be. I think not enough emphasis this week is on the economy, though, because we wouldn't have good earnings if you didn't have a good economy. So you had to get both of those things right. And we've been talking about the above average growth rate for the economy. We're running at about a three point six percent GDP number. And we got good CPI, PPI. It was kind of a wash this week. Retail sales was a disappointment.

But look at the six month moving average at three point one percent in retail. So you've got to smooth it out. It's too volatile each month. So the economy is growing because the consumer remains strong. Manufacturing we've talked about housing is actually stabilizing. And quite frankly that is leading to better than expected earnings. If you add on the margin story which is what Rick Reeder was talking about, everyone wants to call the demise in margins. But companies, especially U.S. companies, are so good at restructuring, reorganizing, in pricing power and in adjusting. And I think that's what we've been seeing this year. We're going to continue to see it. So are we up another 11 percent between now and the end of the year? I don't know. We are going to be higher, I believe, because earnings will continue. Higher than where we are now.

I do think so, Scott. Is it 5 percent? Is it 10 percent? I'd be surprised if it was 10 percent because we have had a nice year and a half. You know, if you look at what we're calling the everything rally, because over the last six months, it kind of has been. It's not just the Dow and the S&P and the Russell. It's metals, you know, gold and other things. Bitcoin is up a ton in the last six months. Are we surprised? Are you surprised, Jordan, that we were able to rally back as strong as we did from the April lows? I'm a little bit surprised because the market's been able to rally off of two very different narratives, right? Last year, the market rallied because the market's been able to rally off of two very different narratives.

Right. Last year, the market rallied because the Fed was going to cut rates. This year, the market's rallying because earnings are good. And you continue to see a lot of durability in the equity market. Right. Momentum tends to get momentum. The market's been more time rising than it does falling, even though the average yearly correction, peak to trough correction is 14 percent. The market's higher 75 percent of the time. So this is a market where, again, as was highlighted, companies are adept at managing margins. Consumers are going to continue to power top-line revenue growth.

And so you put all this together, and the Fed is willing to cut rates, step in and cut rates. So I think this is a market that continues to grind higher. What's going to lead us, Steph? I mean, I know that you're beyond tech. You own some tech, obviously, and you've been buying things like Apple. It's, I think, now your largest position. But whenever I talk to you, I feel like it's the cyclical X-ray. It's the industrials and the free ports. And we're going to talk about that later. Are we still going to be okay thinking that this broadening move is going to carry the next leg, or do I need to lean in large as I look ahead to things like NVIDIA next week? I mean, I think NVIDIA is going to be great. I mean, when you have $177 billion of CapEx from the hyperscalers this year, that's a huge number,

and that is going to benefit NVIDIA. But it's going to benefit many semiconductor companies and many companies in general. And that's a really big theme. It's so powerful because it extends to so many different sectors. We talk about industrials, which are cyclical for sure. However, they are benefiting from the energy transition into green, into clean, into grid, into power, into data center, and again, AI. And that sector has done quite nicely, by the way, just as well as technology year to date. Energy, that's also done better. It's taken a pause over the last month and a half, but I do think that sector is still ripe for higher action because those stocks are cheap and also because they're minting money. The free cash flow

stories are so powerful. So I also think discretionary, which is very debatable right now. Well, let's debate it. That's why I brought it up. That's not only debatable, that's controversial. Yes. Just given what we've heard recently from the consumer, why would I want to buy discretionary stocks right now? When I listened to Walmart, I was very encouraged. They're saying they are seeing a constructive consumer focused on value. By the way, who's not looking for value all the time? I'm looking for value. I'm sure you are as well.

So that's a consumer that's very, I think that sounds solid. Private label, there's opportunities there. You think the consumer is solid? Wait, wait. Do you really think the consumer is solid? Yes, I do. But wait a second. General merchandise, for the first time in two years at Walmart was up low single digits.

We haven't talked about goods in a really long time. And that was really encouraging to me. Yes, I do think the consumer is strong because we have the job market that remains very strong. Wages, we have higher home prices. We have higher equity prices. We have six trillion dollars on the sidelines in cash. Yeah, it's getting 5%. That's great. But the fear of missing out, if you talk to Schwab, you're starting to see money pour back into the market because the market's up 11%. Well, look, part of Rick Reeder's thesis here is that, to Steph's point, you have this divergence between the consumers. It's at the

lower end and the younger consumers hurting. Higher end, older consumers, baby boomers are going to fuel the next leg of the kind of market that he thinks you can still have because of all the spending and investing power that they have. And that more than offsets the fears that we have for the lower end consumers who are being hit harder than most on the higher for longer and why inflation has remained so elevated for so long? No, that's spot on. And we have to remind ourselves, remember, that 60 percent of consumption in the economy is driven by the top 40 percent of earners, right? So, so long as the affluent and the upper folks earning income earners are in still good positions, then the economy can continue to grow, right? These are folks where you've got income growth, they can grow their

consumption, and that's how you grow the economy. Now, certainly, when we look across our Chase universe and our Chase data, we can look at sort of income cohorts and how checking and savings account balances have changed since the fourth quarter of 2019. And unsurprisingly, the bottom quartile of income earners in our Chase universe, checking and saving account balances are down by 20% relative to the fourth quarter of 2019. So, look, those lower-income consumers are certainly feeling it, but the folks who are going to drive consumption growth in the economy are doing okay. Scott, you need to be really selective, don't you? I mean, to suggest that Walmart's commentary

means that the consumer is just great and strong, I'm not sure. I think the consumer is good. I don't know if I'm not sure. I think the consumer is good. I don't know if I would say great. I think they're good, but they are still spending on services. We are seeing it across the spectrum. Well, you have to spend on services. Don't you two exist?

Well, of course, but we root for that because that's 75% of consumption. So we want goods to do better. I was just mentioning that we haven't seen goods have any life in the last two years, and now we're starting to see it. So I just think that the job market is critical. If I worry about one thing, it's that deteriorating, but we're not seeing that yet. And let me just give you a data point on Bank of America. Bank of America does master trust data each month, and net charge-offs

are up to 2.49 percent, and delinquencies are 1.3 percent. That's hardly horrible, right? That's actually historically low. And yes, so we are seeing an increase, but it's so gradual. You were 9, 10 percent back in 2008 in these figures. So I just think that the consumer has a long way to go. It's all not perfect, but definitely there's places to make money. All right. So let's bring in CNBC contributor Malcolm Etheridge of CIC Wealth. He joins us once again, joins the conversation. It's nice to see you, too. So you've heard the commentary. You've heard some of the more bullish calls. And I'm wondering whether you think this Dow hitting 40K this week is a sign to get in or be a little more cautious? Yeah, I think investors probably see the Dow hitting 40,000 to be their signal to say, let the good times roll.

And to Stephanie's point, move some of that cash that's parked in the sidelines and those brokerage accounts into the markets. I'm starting to feel like a lot of my fellow skeptics have warmed to the idea that this soft landing has already happened and we can declare mission accomplished. But I am still concerned that what Powell is trying to accomplish, getting CPI down to 2%, is in direct conflict with the Biden agenda, right? So this is not a political statement. This is a statement of just common sense. I think that as we get closer to November, we are still in danger of seeing something in the system break because Biden

is going to be doing what he can to get cash into the hand of consumers. Consumption will continue to go. And I mean, he can't make, he just can't. I mean, I don't know. There is a thing called the Congress. I mean, trying to get, you know, more, what do you think more stimulus is going to come into the system? We're already worried about how high the deficit is now. I mean, what am I supposed to do with that? Hear me out on this, Scott. So we just got earlier in the week the report from the Financial Times that it looks like it's at least possible that the proposal on the table from Freddie Mac to go into the secondary market now extend HELOCs to homeowners who have $37 trillion, it's assumed, of equity trapped inside of homes.

And the estimate is within the next six months, that would unlock about a trillion dollars of additional equity out of homes. Where are those dollars going to go if not into the same consumption patterns, those services that you guys just got done talking about, especially at the top end of the market, where the consumers who are homeowners have the equity built into those homes. So those kind of measures are what I'm concerned about. That's in direct conflict with us ever getting to that two percent number and getting that interest, that first interest rate cut that we all covet. But I mean, inflation is coming down. We know it. The Fed is going to

the Fed is going to cut before they tell you that, OK, it hit 2%. We know that also. One positive report, one positive data point doesn't make a trend, though, Scott. So we can't necessarily say inflation is coming down and it is on its way of that 2% target anytime soon simply because we saw one good report. Steph Malcolm makes the case that, you know, rate cuts still matter. You make the case that they don't matter at all and you don't think we're getting any. No, I don't think we're getting any. I think that's because we have elevated inflation, but I'm taking it from the point of view we have elevated inflation,

Scott, because we are growing above trend. I mentioned 3.6% growth here. Whether we're actually that number or not does not matter. Is it 2.5%, 3%? That's above trend. And that plus the global growth, right? We talked about China growing 5.5% in their latest GDP. They actually just announced stimulus overnight. It's not big by any means, but it just shows you that they're willing to do something and do more, likely. had the OECD raise growth, global growth to 3.1 percent. We had IMF raise growth to 3.2 percent. So inflation is staying high because we're seeing better growth. And that to me, I'd rather take better growth and a little bit more inflation because that will lead to better earnings. It's not going to get you multiple expansion, but it'll get you better earnings growth, something like 8 to 10 percent.

What do you got? Do we need? Hold on, Malcolm. I'll come to you in a sec. I promise. What do you think? Do we need cuts? If you're a consumer, inflation is your foe. If you're a business, inflation is your friend. Right. So the fact that I think we're in this sweet spot where inflation is a little bit elevated, but it's not eroding consumption. It's not putting the Fed in a situation where they have to come back to hike rates. Keep in mind, since 1980, the Fed has never gone on a hiking cycle, then paused and come back to hike rates. They've always cut rates. So the bar is very, very high for them to want to hike rates from here.

Powell told you as much. Right. I mean, most recently. We wouldn't even be having this conversation in the manner in which we are if Powell didn't do what he did a few weeks ago, where he wasn't as hawkish as some people feared, where he said, you know, hikes are unlikely. That's highly unlikely, or whatever the exact wording he used. The data favors the bulls. Malcolm?

Yeah, Scott, I agree with what Stephanie just said about the unlikeliness that we will get a cut this year. But I disagree with the fact that they don't matter. I think that what does matter, we just got done talking about how strong the consumer is. And the tailwind behind that consumer at the top end of the income distribution is going to be the 5% plus that they're receiving on their deposits, on their CDs, on money markets, those kind of things. That they are spending those dollars on services today. And that is what is also helping to drive consumption. So as long as interest rates stay elevated, yes, they do hurt businesses' ability to consume, like Jordan is talking about, but they also improve individuals' ability to go and consume, which is a catch-22. It's six in one hand and half a dozen

in the other. Steph, can we talk about NVIDIA and what is really riding on this report next Wednesday for the overall market, for the AI trade? What do you think? It's going to be great. I have no doubt about it. I just mentioned the CapEx that we're seeing in cloud and Gen AI at the four hyperscalers. Of $177 billion this year alone, it's tremendous. A lot of that is going to Nvidia. The problem is Nvidia is up 210% in the past year, so the expectations are high. I think if you do get some weakness, though, I think you're going to see buyers come in.

Because if you believe we're in the second or third inning in AI, which I do, then they are going to benefit. But there are other ways to play it within technology as well. So I kind of have my shopping list ready. So if we do see a pullback in any of the stocks, Broadcom is, you know, the one, and Lambda is the other one that I own on that theme, I would be a buyer. But, I mean, I think it's super, super important. It's 5% of the S&P 500 in terms of the weighting as well. This may be the one conversation that involves portfolio managers on this network, all of whom do not own NVIDIA.

I don't expect you to because it's not your job to run a portfolio, obviously, but Steph doesn't own it. Malcolm, you don't even own it, which is kind of a shock to me because you own the other, many of the other MAG7 stocks. But I'm sure you have an opinion on what that report means for this overall market and perhaps the stocks that you do hold. Yeah, I have said it on the network before, and I think it bears repeating that our love affair with AI is nowhere near over. In fact, we're probably still in that early infatuation stage where we're just in love with all of the possibilities of what could even be and so I think that Nvidia will definitely come out and dazzle us no matter what they're gonna tell us about elevated demand levels and as long as their receivables remain at the level they are

in comparison to their inventory I think it's a two to one ratio right something like 10 billion in receivables versus 5 billion in inventories. As long as those numbers hold, nothing else really matters when we talk about NVIDIA. And as long as that trend continues, the AI wave can keep on rolling for multiple quarters before it finally gets interrupted. OK. You still like MegaCap Tech? We do. I certainly say we don't view the Mac 7 as one monolith. Very different business. Oh, they're proven to not be.

Right, sir. So that dispersion in performance itself is pretty significant. But one of the things I think investors can actually play on in this love affair with AI is actually sort of a second derivative, and that's in electricity. Electricity providers, power grid infrastructure players. Look at some of those companies underneath the hood. They're up double digits, well into the double digits so far this year. And if batteries, electric vehicles, chips, if we're going to be using more and more electricity in the years to come, I think those utilities are a great place to play. All right, everybody.

We're going to leave it there. Good weekend. Malcolm, we'll see you soon. Steph, of course, you're coming back in a little bit. We need to talk a little bit more leave it there. Good weekend. Malcolm, we'll see you soon. Steph, of course, you're coming back in a little bit. We need to talk a little bit more about those medals on the move. Jordan, we'll see you soon, too. Thanks.

All right, let's send it to Christina Partsenevelos for a look at the biggest names moving into the close. What do you see? Well, we have another restaurant warning about consumer spending. This is shares of Cracker Barrel.

They're down about 13% after the restaurant chain lowered its guidance, slashed its dividend because fewer people are going out to eat. We saw similar comments from Jack in the Box management as well as Applebee's management. But when you zoom out on just over the last 12 months or so, Cracker's stock is actually suffering a much steeper drop when compared to Olive Garden's parent company, Darden,

and then Chili's parent company, Brinker. And you can see that on your screen right there. Just Eat, for example, up 59%. There's a drastic difference between all of these names. And then, moving on, Doximity. It's an online networking service for medical professionals and shares moving in the opposite direction, surging 17% after announcing a better-than-expected current quarter outlook and a $500 million stock buyback program.

That's what's driving the results right now. All right, we'll see you in a little bit. Christina, thank you. We're just getting started. Up next, all those in favor say AI. Get it? Reddit shares are moving higher on a new partnership with OpenAI.

We have a top tech investor. And Reddit shareholder, Low Tony, he's standing by with his first reaction. Plus, how he's sizing up the sector ahead of Microsoft's AI event next week. It's all about AI. We're live with the New York Stock Exchange. You're watching Closing Bell on CNBC. All right, welcome back. Reddit shares are spiking today on a new deal with OpenAI. CNBC technology correspondent Steve Kovach has those details.

It's been a big week for AI, and we're going to look ahead to another one in the coming days. But tell us about this. Yeah, look at that, Scott. Reddit surging on some actual real news. This is not a meme. Reddit revealed a new deal with OpenAI yesterday, which lets OpenAI use Reddit's data to train its AI models. And Reddit will start offering OpenAI's tools to some of its users. And on top of all that, OpenAI will start advertising on Reddit. The deal is similar to one Google made with Reddit just a few months ago. And it all comes as AI companies are desperate for more quality data to make their tools smarter and

more capable. Reddit's a natural place for that. Of course, it's full of user-generated content with recommendations and opinions on everything from movies to travel tips to the best recommendations for buying your favorite air purifier. Also plays into the rivalry we've been seeing between Google and OpenAI. Google critics say search has gotten worse as the search giant stuffs more ads into your search results. And then next week, Google starts rolling out its new AI search product, AI Overview, to U.S. users. On the Reddit side, it's smartly leveraging its trove of data and making AI companies pay instead of giving it away for free, Scott. All right, Steve, I appreciate that. Steve Kovach joining me now to discuss

is Reddit shareholder and CNBC contributor Lottoni, Plexo Capital. Welcome back. Nice to see you on this Friday. Thanks for having me. Happy Friday. Yeah, you as well. Tell us about this news.

What do you think it means to you as an investor in Reddit? Well, you know, look, we're an investor. We're excited. But I'll focus more just on the overall landscape and some of the things that Steve mentioned, which is, yes, you know, given the way that there was really unwritten rules around how the data should be acquired and should there be licenses paid, I think we're going to see more of these deals where there are formal deals in place where the data is being licensed and everyone agrees on the access and how the data will be used. So what do you make of what happened this week then with OpenAI having their day,

which seemed to try and front-run Alphabet, and they had theirs? How should we assess all of this? Yeah, you know, I think the way to think about it is there's a lot at stake. Your prior commentator, I think, nailed it when he said we're in the very early innings. I think we're in the first inning. We might even be in the bottom half of the first inning, to use a baseball analogy. And so everyone's trying to position themselves. You know, obviously, the big tech companies kind of see this as the next shift. They absolutely understand how critical it is to make sure that

they don't miss anything. You know, Google really is having an existential moment, kind of thinking about how this new world could upend the search business. However, when we think about some of these existing players, like Google, they have massive customer bases that they can leverage. They've got vast amounts of data to be able to train their models. And they also have the ability to integrate a lot of these products together. And we see similar things happening with Microsoft and the way that they're positioning their products. So I would anticipate hearing some exciting things from Microsoft next week. You know, you say existential moment when you talk about Google and you just laid out the reasons why regarding search. But some would suggest that those fears are overblown and were from the very beginning. And maybe the stock performance over the last 12 months would suggest that as well. What do you think?

Yeah, no, without question, I think it is important to rattle the cage and get shaken up. I'm very confident that given those three things that I laid out, the ability to have the massive customer base, the vast amounts of data and the key products and the way they're integrated places Google in a very good position where they are able to leverage all of those assets. However, that said, I think it's good to have these moments because it can help the internal organization rally around thinking about how they need to compete. So I think it's actually a very good thing and yes to your point I mean look Google's not going anywhere anytime soon but these types of moments are very important within a large organization in particular that really has almost kind of not had to worry about a dynamic shift like we're seeing on the platform side today. Yeah, I mean, one of the reasons we even talk about Alphabet in the context,

and I ask you the questions I do in the manner in which I do, is because of Microsoft, obviously, right? And they hold their event next week. I want to look ahead to that. We were fortunate enough to have Mustafa Suleiman on our program, on Closing Bell. I think it was his first TV interview that he had ever did. And so we got to know him a little bit, right? Co-founder of DeepMind. What does he mean to their own aspirations? And then in turn, what does his positioning there mean for Alphabet, do you think, in the long run,

knowing that they obviously still own DeepMind and they understand what he is, quote-unquote, capable of? Yeah, that's a really interesting question. You know, I think these are some of the moments, again, where internally companies have to really think about the types of leadership. And, you know, when you have these movements within companies, it's, you know, it's akin to when a football coach goes to another organization and those two teams end up meeting down the road. It's kind of like one understands that playbook that's available. And sometimes people try to adjust their plans, but you can also over adjust. You know, I think, look, there's great opportunities for both

Microsoft and Google to compete. I don't think this is going to end up being so much a zero sum game as it will be about, you know, maybe there's new businesses that emerge and there's going to have to be some shifts in business models. And then thinking about those leaders and the way that they're going to position the companies, I think just makes sense. I mean, these are good battles that are going to play out for the next few years, if not a decade. And so it is going to be exciting to watch. Yeah. And then let's turn our attention lastly to Apple before I let you go, just because we're going to, you know, as we get incrementally closer to WWDC, we're going to be talking more about it. We did have some reporting this week regarding their own aspirations as well related to Siri. I mean, how are you thinking about that

story? Yeah, so here are my thoughts. You know, look, we have been waiting for Apple to make some significant announcements. And without question, I think the perception is Apple has fallen behind when it comes to AI. Now, look, Apple has its own issues to address, you know, thinking about the hardware, the growth or the lack of growth in sales, the pressure within China and that market. But I think what we'll probably see

at their developers conference is we'll probably see a renewed emphasis around Siri and kind of thinking about how Siri can take advantage of some of the new AI technology to really make Siri even better than it is today. I'm really excited about getting more personalized recommendations, being able to have the autonomous agent incorporated in through the voice layer with Siri to complete some of those rote mundane tasks that everyone has to do. And here's what I think might be really interesting, Scott. When we think about using voice, you know, voice has the way to convey how we're feeling

in a way that might not always be seen within text. So I'm actually looking for Siri long-term to incorporate some kind of emotional intelligence to the product as well so that it can generate a more empathetic response in certain instances. Lo, we'll see you soon. You enjoy the weekend.

Lots to talk about in the weeks ahead. I'm sure we'll see you. Thank you. All right, coming up, banking on the bull case. Ed Klissel of Ned David Research. He's back with us highlighting four key reasons why investors should stay bullish even after this recent big rally. Down the S&P trying for record closing highs yet again. And we're on our way to doing that again, yet again in the final stretch.

And we have less than 30 to go. We've got a little bit of pickup in these markets. We'll see where we finish. We'll come back right after this break. Welcome back to Dow heading for another record closing high. NASDAQ retreating, though, from its own. Here to share where we could be heading next is Ed Klissel. He is chief U.S. strategist at Ned Davis Research. It's good to see you again. Welcome back. Thanks for having me. It is the big question, okay? Now what, right? We've just come back from these April lows in such a strong and fast fashion. But where do we go from here? And why do you think it's prudent to still stay bullish?

Yes, the way we do things at NDR is we put all of our indicators and data into four different buckets and all four of them look pretty good at the moment. So the most important, probably the earnings story from Q1 earnings season is pretty strong. Over 80 percent of companies beating estimates and and we're getting quarter-on-quarter acceleration in earnings growth. And then from a macroeconomic perspective, what's the concern? The economy is a little bit too strong for the Fed to cut rates as quickly as some had hoped. I mean, that's kind of a good problem to have. And then when you look at investor sentiment, some of the optimism that crept into the market by the end of March has been relieved. And then finally, the technicals look strong as well. Over three out of four stocks are above their 200-day moving averages. So, you know, it's not the narrow market that maybe some are focused on because of, say, the MAG-7 doing so well.

The fact of the matter is the average stock is doing fine, even if some of them aren't doing as well as some of the mega caps. So you put those four things together, and it's a pretty constructive environment. Yeah. I mean, it's a question of whether to, you know, continue to lean in or start to lean out when you hit these lofty levels and these milestones. What I find interesting is that you suggest we should still lean in to what's worked really well. And let's, if we take it from, you know, let's say the April lows, tech's been the best. Obviously, comm services plays a role heavily in that financials and utilities, too. So why do I want to stay in those areas specifically? Yeah, well, first of all, from a technical perspective, you want to stick with what's what's working until it tells you that it's not working. And over the long run, you're going to

get the better cash flow earnings growth from the tech sector. And this past earnings season, you saw a renewed emphasis on what we call shareholder capitalism. So returning capital shareholders, you've seen some companies introduce dividends, increase buybacks, and they don't have the massive debt loads either. So you put those three things together, and it's pretty constructive. Now, over the last few weeks, what we've seen is with interest rates coming down, two sectors that should benefit from that are financials and utilities for some different reasons. The Fed cutting rates may be a little bit steeper yield curve, good for financials. And then utilities, which have been battling against higher interest rates

and really underperformed during this bull market, are finally getting somewhat of a bid. And there's a little bit of an AI play with some maybe better top line growth as the grid needs to be built out to deal with all of the other growth in the country. But let's let's let's be honest, though, right? There's a little bit of an AI play. You just said those are the exact words you used for utilities. These have not been trading lately like there's a little bit of an AI play. These have been trading like there's a whole lot of AI play. Is that warranted? Well, I think it's a fair point that, yeah, if you're going to say, hey, let me list the biggest

winners from AI, utilities are not at the top of the list. But if you look at how oversold they have been, utilities don't do very well during the early stages of a bull market because they're low beta. But even accounting for that, up until a few months ago, it was the worst ever start for the S&P 500 utility sector to a bull market going all the way back to 1972. So there's some mean reversion potential here, even after the run that they've had. All right. We'll talk to you soon, Ed. Thank you. We're at session highs right now, at least for the Dow. We're trying to get back and close above 40K after hitting it for the first time ever this week. S&P back above 5,300

as well. And up next, we're tracking the biggest movers into the close. Christina Parts of Nevelos is standing by once again with that. So tell us what you see now. I'm seeing eight billion dollars in GameStop market value gone. Poof. And one pot firm looking to raise cash, weed and means next on a Friday. We got just about 15 minutes before this closing bell on this Friday. Back to Christina now for the stocks that she is watching. Tell us. Oh, well, how quickly shares can move.

Meme favorite GameStop are down double digits again today, 22%. This is the third negative day in a row after the video game company reported that its first quarter sales, it was a preliminary report that first quarter sales dropped. And it also said that it may sell up to $45 million in Class A shares. That's roughly $8 billion in market cap value gone from Tuesday's close. Tilray also needs some cash. The cannabis firm said it needs to raise money by offering up $250 million in common stock to fund acquisitions and expansion. The news just comes after the DOJ just yesterday said it's looking to reclassify marijuana, lessening the tax burden on state

legal cannabis companies, and also makes marijuana easier to research. So the stock was up, and you can see that on your chart, and then down about 6% today after that announcement. Alright. Good weekend to you. Thank you for everything this week. Thanks. Christina Partsoneva still ahead. The one named Stephanie Link is adding to it. It's already up nearly 40 percent in three months. I gave you a little bit of a hint earlier. First, though, a quick message as CNBC celebrates Asian-American, Native Hawaiian and Pacific Islander heritage. I come from India. I come in from a patriarchal community, you know, earlier where, you know, it was about

having a male child and I had two daughters. For me to lead by example was so important, but they really saw that yes, there's a legacy that lead for them. It's about financial independence, about being empowered to do what you want to do and really make an impact. I have some breaking news on a key union vote. Steve Kovach back now with those details. Steve? Yeah, Scott, that Mercedes plant down in Alabama has voted against unionization.

56% voting against, 44 percent voting for. That's according to official results we're looking at at the UAW election page here. This would have been the second Southern plant to vote to unionize after that VW plant in Tennessee, but this one definitely voting against. Scott, this is a much-watched one and a defeat here for UAW. All right. Appreciate the update. Steve Kovac, thank you very much. Up next, Robinhood shares having their best day in nearly three months. Taking a look under the hood to see what is driving that move. We'll take inside the market zone next. We are now in the closing bell market zone. CNBC senior markets commentator Mike Santoli

here to break down the crucial moments of this trading day and this trading week. Plus, Hightower Stephanie Link back to share one position that she has been adding to right now. And Pippa Stevens on YB of A is getting so bullish on Robinhood. Mike, I begin with you. We're going for our first close above 40K. A little bit of work to do. But yes, once again, how many times have we sat here and said, hey, look at this move late day in this market? Yeah, it shows that there is a little bit of, well, not just resilience, but comfort with maintaining equity exposure. I do think that, you know, the last week or two have shown that the don't overthink it rule still lies with the bulls in terms of giving credit to new highs, which is more bullish on a forward-going basis than worrisome. The fact that earnings has

more or less kept pace. The Fax had updated 12-month forecast is like for 256 in earnings from the S&P. So, I mean, you still have to be aggressive in terms of putting much of a multiple on that to talk about major upside from here but progress is here vix is a 12 or under 12. it shows you that we're we're kind of locked into a a moment where the macro seems friendly and it's hard to see something that's going to disturb it in the very near term and it's the you know the micro if you will of just earnings being good enough to continue to carry you higher the reader playbook if you will right exactly and um you know look it's worth remembering that at the end of march nothing bad really happened You just had people get too long stocks and

believe too much in the perfect soft landing story. We got a 30 basis point move in tens, and that was a quick 5% off the S&P. So that can happen at any moment. Sure. But it didn't really destabilize the real underpinnings of the bull market. Well, it was 30 basis point move in tens with the fear that it was going to be 50 basis points and then 100 basis points. No doubt about it. Right? And we cooled off that, too.

Stephanie Link, the one position that you've been adding to, I mentioned copper at the top of the show, is a little bit of a tease. All these assets that have been absolutely ripping, and that is one of them, and it plays into Freeport. Yeah, I mean, the stocks had a nice run year to date. It's up 26%, but it trades at 7.5 times EBITDA. Its historical average is at 9.1 times. And I like their end markets, EV, housing, data center, grid. We talk about the grid every single day. It plays right into it. And then, of course, you also have the China exposure. They do about 5% EBITDA in China, Scott. It has a personality based on China, though. It trades with the Chinese

economy and data points. And we know we got stimulus overnight, which is positive. But it's really the operating cash flow that's exciting to me. They did almost $2 billion in operating cash flow in the first quarter. At $4 copper, they can generate $7 billion. At $5 copper, $11 billion. Copper's at $5.06. So that's very positive for them to pay down debt and to do what they do, their operations. Shiny metals, Mike. It's gold, it's copper, it's silver. Yeah, I mean, it's obviously that there is a true supply-demand issue here. There was a definite short squeeze in copper this week, too, in terms of people having to deliver in New York.

But it just shows you that supply is tight, whether it's China buying it or it's just the fact that all these other uses. I think that there's a sweet spot for the companies rather than betting that copper, the commodity, is going to go flying from here. Because it's had one of these vertical moves and you don't necessarily want to bet it's going to continue. But the companies can do very well around these levels

when you do have the underlying demand. All right, Pippa Stevens, Robinhood, tell us. Yeah, Scott, Robinhood is jumping after Bank of America double upgraded the stock from underperformed to buy. Analysts cite the resurgence of retail trading, which they expect to continue through 2026, driving payment for order flow at Robinhood, adding that the company should also benefit from positive operating leverage after large expense reductions. Now, B of A also lifted its price target to $24 a share up from 14 and said the macroeconomic picture is, quote, almost the complete opposite of 2021 when the firm initiated Robinhood coverage with an underperformed rating. Now, shares have more

than doubled over the past 12 months, gaining 130 percent. And with just a few minutes left of trading, the stock is hovering near its highest close since December 2021. Scott. Pippa, thank you. Pippa Stevens. Mike, do we consider Robinhood a meme stock? I wouldn't say Robinhood itself is a meme stock. It's kind of the first derivative of meme stock. First derivative. All right, that's better. Leave it to you to put it perfectly. Because the meme stocks, I mean, one of the characteristics of them were that they were these kind of, you know, declining businesses that somehow because of the life of the stock

and a fake story about a short squeeze, we're going to go higher. But Robinhood is, it is fascinating to see the volume eruption in these types of stocks. Oh, yeah. There were various indicators I was looking at yesterday. Stuff that's based on how much NASDAQ volume versus New York. All those kinds of things were showing, wow, we're in a speculative frenzy. But it was just a handful of small stocks. A lot of it flowing through retail brokers like Robinhood.

It is a reminder to me that Robinhood is still just a play on overall retail volumes and engagement as opposed to, you know, a financial supermarket that's, you know, sort of really warehousing people's retirement money at this point. Plus the memers, if you will, they got mad at Robinhood the last time. Oh, exactly. They were villainized by Robinhood. And by the way, by the looks of GameStop, it was a quick unwind in this little version of the meme trip. Yeah, we'll see where all that goes from here. Okay, you know we have to talk about it. It's NVIDIA, and it's going to be on Wednesday, but it really matters. unwind in this little version of the meme. Yeah, we'll see where all that goes from here. OK,

you know, we have to talk about it. It's NVIDIA and it's going to be on Wednesday. But it really matters. It matters because the stock has had a big ramp back from what, 750 back above 900, as tech has as well. It's look at that. So there's a shelf up there in the low to mid 900s. It dates back to February when we first got to these levels. That was basically the last earnings report, right? February 21st, I believe it was. So it will matter. There are some reports of more supply on the secondary market of these GPUs. Are they going to be able to really kind of beat and raise as they normally do in terms of the underlying demand? Yes, it will matter for NVIDIA and for the overall S&P 500 earnings.

It's not clear to me, though, that the entire market is now just an AI play because you have had things like banks working well, global markets are doing fine. So it seems to me you have a little more balance in there. Take a look at that. Thirty nine. Oh, there it is. Well, all right. So we're going to you know how this works. It takes a few minutes to settle out. And we'll see if we can get that first close above 40,000. Perhaps John Ford's going to have to tell us in overtime. Looks like it, John.