Closing Bell - Closing Bell: Stocks Stage Late-Day Turnaround 9/27/23

Episode Date: September 27, 2023

Stocks dropped midday and staged a significant turnaround as we barreled toward the close. Ritholtz Wealth Management’s Josh Brown and New York Life Investments’ Lauren Goodwin give their expert market takes. Plus, star Wedbush analyst Dan Ives joins on the CNBC Newsline to break down his brand new Apple note, as that stock dropped intra-day. And, JP Morgan’s Jason Hunter reveals the key levels he is watching amid the market swings. 

Welcome to Closing Bell. I'm Scott Wapner, live from Post 9, right here at the New York Stock Exchange. And as Kelly and Tyler said, this make or break hour begins with this late day turnaround for the markets. We've been down for much of the day. We are fighting back as we begin the final stretch. Apple really at the center of a lot of the action today. There's your intraday chart. I mean, it did go below 170 a share for a bit. Took the rest of the market with it. It's trying to fight back, though. Will it go positive over this last hour of trade? We shall see, because we are indeed seeing a bit of a turn.

Some mega cap names, too, which were in the red. Netflix threatening to go positive. NVIDIA is now positive. Microsoft, Alphabet, Amazon, all now in the green, along with Broadcom. We'll show you some of these stocks here as we show you the scorecard with 60 minutes to go in regulation. So the Dow's coming off its worst day since March. Looks like that selling is going to continue. But as we said, positive as we speak. Crude oil, big story as well, jumping towards $94 a barrel. That is the highest level in more than a year,

making investors and you better believe the Fed a little bit uneasy as well. We're still pacing, though, for the worst month of the year. Take a look at the Nasdaq intraday as I've been talking about the pressure that it was feeling. We'll see how it progresses over the final stretch. It's now green. We'll see how long it's able to stay there. It does take us to our talk of the tape. How vulnerable is Apple? Really, what happens to the rest of the market if it continues to trade lower? Let's ask Josh Brown, Ritholtz Wealth Management CEO, co-founder, CNBC contributor as well. Interesting day, to say the least. Now, before we get to Apple, I can just get your opinion on this comeback that we've had

and maybe the idea that some have seen enough in terms of the selling in mega cap tech josh and they just decided that you know what i'm coming in and buying some of these names because some of the selling just got a little too much it's it's entirely possible and don't forget this is a really big index uh weight many indexes in in fact. So, you know, if you see a sea change, for example, in allocations, large pools of wealth, people buying ETFs, these are the stocks that are going to be the first to feel it. That's just the facts. And so we've had several weeks now of selling pretty much across the board. And these stocks have been hit. But I think it's worth pointing out Apple is like one of the strongest stocks still standing of its cohort. It's 12 percent off of an all time high,

but at least it made an all time high. It is the smallest drawdown of all of the magnificent seven names. The largest one is Tesla, which is 40 percent off its high and never made a new one. Amazon is 32% off its high, never made a new one. Meta, 22%, never got a new high. So at least Apple has held up better than the rest. But I think the bigger point here that's worth pointing out, a lot of times when you sell shares of Apple into a 10% decline, you're probably selling those shares right back to the company. Apple has spent $573 billion since 2012 buying back its own stock. In 2022, they authorized a $90 billion stock buyback. They executed on about $68 billion.

Then in May of this year, they did it again, another $90 billion. Last quarter, they spent $18. Another 90 billion dollars. Last quarter, they spent 18 billion dollars buying back their own stock. So you are very often on the other side of the trade as the company when you're selling into a decline like this. And I think that should be people should be reminded of that. Does this tell us today just even this price action that we've witnessed over? I mean, it's literally been the last, I don't know, 30 or so minutes that the market started to really turn. Is it definitively as goes Apple and the mega caps, so goes the market for now? On an index level, yes, or yes, for the most part, I'll qualify that. But, you know, we've been looking at the overall market of stocks,

not just the largest index weights to really try to get a handle on what's been going on. And when you go back to March of last year, when the rate hike cycle started, and then you look at what stocks actually have positive return, if you break the market up into deciles, what becomes really clear is that for most people and for most individual stocks, this has not been a lot of fun. Every decile is down since March of last year, other than number one and number two. So the 20% of the market with the highest market cap, that's where the gains are. That's where they've been. And on a day like today, you ain't getting a comeback like the

one that we're witnessing if you're not getting participation in the mega cap 50. It's just not going to happen. Well, because what Bespoke was talking about today perfectly rings true to what you're saying. You know, over the last four years, you've had bad Septembers. I could read you the declines. They're consistently bad. But the gains are consistently good in the fourth quarters of those same years. Part of your point is we're not getting a repeat of that unless mega cap tech is front and center. Well, stocks bottomed last October and they have a habit of of of bottoming in October. And then I'm not like a seasonality guy, but I respect the fact that there are some repeatable elements and that maybe seasonality does give you like one extra layer of backdrop for what you're witnessing. But it is very true that September is a sloppy month.

And it's also very true that in the third year of the presidential cycle, which is what this is, historically, September has been even more remarkably sloppy. And I don't know why that is, but that's what the backdrop is. And it doesn't matter if you believe in it or not. If enough other people believe in it, that's what makes a market. So maybe there's some validity to thinking about this in seasonal terms. I would just say I would think about it more simply as just a classic situation where you got more than half of the active managers, according to the Spiva research that S&P Dow Jones puts out each year, more than half of active managers trailing the market. We know why they're trailing because they're not overweight.

Names like Apple. How could you be? It's already such a huge weight. But we got one quarter left for people to figure out whether or not they're going to be competitive with the index or not next year. And if you can't beat them, join them. So this phenomenon is not that shocking when you think about it through that prism. 205 this afternoon, mega caps under pressure, apples under 170. And we're like, OK, how long is how low is this going to go? And then lo and behold, Dan Ives of Wedbush puts out a note with the title is now the time to panic for the tech trade. No, no, it's not. He joins us now on the phone. So people, I don't know what they think about where mega cap is going from here.

But we've had an interesting turn over the last 30 minutes, as I suggested. But why don't you feel, Dan, that MegaCap is still a little bit vulnerable here? Yeah, well, Scott, I understand the nervousness with macro, the tenure. I focus on what I see around growth. And I think we're going to have a phenomenal relative expectations 3Q tech earning season. I think when you look at Apple itself, ahead of plan in terms of all of our techs, including China. And I view this more as a golden buying opportunity, not the time to hide. And I think that, in our opinion, is how we're hand-holding our clients.

So I'm going to paraphrase something that Eric Woodring of Morgan Stanley, now he's an analyst and you all are entitled to your own opinions. I totally get it. You may look at the same data and come to different conclusions, and that's just the way the rubber meets the road sometimes. He said the last time he was on, and this was in the last couple of weeks, smartphone market week. What I've said, Apple's here to call it 175. That's about 25 times my fiscal 24 earnings. I'd like to see the stock derate even more. He talked about it going down to 160 or so before it really became attractive. Why is that such an out there view relative to yours?

Look, and Eric's a great analyst. In my opinion, it's more some of the parts. I think services is actually accelerating going into the next few quarters. The China story relative to expectations is actually outperforming. And I've come down to 25 percent of the install base has not upgraded their iPhone in four plus years. So I believe Apple is one that this is a stock of next six, nine months is going to see new all time highs. And I just don't view this as the time to go into the bunker and yell fire into a crowd theater, because Scott, what I'm seeing from the data going into next year, I believe this is, despite the macro, the start of a new tech bull market. And you're confident and comfortable with the forward P.E. that we have a little bit north of 27 times.

And my view there is this is a name on a services business that's worth $1.4 trillion. I think that is a big part of the re-rating. And I also think the margin story and what they're doing from a chip perspective is going to be a big part of the margin expansion story that we see in Apple over the next 12 to 18 months. All right, Dan, I've got to let you run because I want to stay on what's happening in the market as we continue to fight towards positive. By the way, Dow, as I literally said that, now green. Fractionally, but nonetheless, we have had this fight back towards positive territory. We're going to mix it up a little bit more. Let's bring in Lauren Goodwin of New York Life Investment Management, who's with us witnessing this late-day turnaround, too.

What do you make of this? Look, I have to leave the day-to-day tech story to Dan, but I do tend to agree that high valuations in tech aren't necessarily an indicator of the fact that they would need to fall later. We are seeing a cornering of the market on some really important technology from just a couple of companies. And you ask the question, if the market's going to continue to advance towards the end of the year, do these companies need to be a part of it? I think yes, and we would need to see broader market breadth. We need to see more growth, more quality coming from the remainder of the market. And so it's more of a yes, and than a only. Josh referenced the performance drag, if you want to call it that. And others have cited the fact that because of that, you're going to have a run to the finish line between now and the end of the year.

It speaks to what Bespoke was talking about with their statistics of, OK, September bad, get it. But the last quarter of the year, good. Is it going to repeat? Look, I hope so. But I'm starting to get concerned about the supports for the equity market moving forward. My base case is that we'll see a range-bound and volatile market. But the number one thing I'm looking at is market financial conditions.

Because one of the reasons why we've had so much buoyancy, at least in the early part of the summer, and some stability in the later part of the summer, has been because the disinflationary process has seemed pretty stable. We're now seeing a firming of inflation. If that's capturing markets' attention, if financial conditions in the market continue to tighten as they have been, that's likely to collapse with the tighter monetary policy and tighter lending conditions that we've been seeing all year. That's a real struggle for the market moving forward. So that's the number one thing I'm looking at. So, Josh, you know, rates, big story up across the curve today. Is that ultimately the determining factor? You could talk about oil, too. I said oil was approaching 94, highest level of the year. That's going to be a headwind for

some. That's going to be an interesting variable for the Fed in how they're thinking about things moving forward. If we start talking about $100 a barrel oil. Yeah, I think with respect to oil prices, I think it's a spike that you want to worry about. The gradual advance, obviously, it's not great at the pump, but it's also not the end of the world. I have a question for Lauren, actually. The Russell down 40 percent from its highs, not participating this year at all. Doesn't that represent the market already reacting in advance to the tightening conditions that we've seen and are currently seeing? Like, has part of the market already reacted to these tightening financial conditions in your view? I think it's a very fair perspective. And to a certain extent, yes,

that's true. But what we haven't seen is equity markets of any kind reacting to recession. And that's fairly typical for any economic cycle. While the market does tend to lead the economy out of recession, heading into it, it's not until we see unemployment claims rise, and it's not until we see earnings meaningfully decline, that we really see that reaction in the equity market. And so the answer to your question is yes, and I would expect there's more pain to come when those recession indicators become more clear. You know, the other point to be made here, too, as Marko Kalanovic made just past noon as we were on the air with halftime,

is why he's still negative to Josh's point. Small caps haven't done anything. Equal weight S&P. Ugly. We're talking about seven to eight stocks in his mind that have led everything. And that's one of the reasons why he's negative, because those have so dramatically underperformed cash-fed funds. You can get better gains, rewards for less risk elsewhere. That still remains the dynamic until it doesn't.

Yeah, it's absolutely the dynamic. And it's something that we're seeing meaningfully, especially with retail investors. This idea that if you're earning 5% in cash, there's no reason to be taking risk elsewhere. I do think that at least for the medium term, there is a risk of not taking any risk. And one of the things that we've seen, we did some analysis on the bond market just this week, that getting into the market a month, two months before the Fed is done actually outperforms in the medium term relative to timing the Fed perfectly. Just as an example, in the bond market, similar dynamic is true in the equity market. Again, when the market is feeling a little more confident around economic growth in those moments,

missing out on those days is a major detractor from long-term income generation. So it's something I think investors need to keep an eye on, that the opportunity in higher-yielding asset classes, including corporate bonds right now, that'll clip you a much more meaningful coupon even than the 5% you might get in cash. I love the way you put that, the risk of not taking any risk. Well said. Josh, the other thing that Marco says in terms of the risks, since we're talking about interest rates, QT headwinds, they're stronger than they were. You've got geopolitical factors have deteriorated. We're talking energy. Jamie Dimon the other day saying geopolitics remain the biggest risk.

Are we putting enough credence in those other risks that are out there just simply beyond what the day-to-day tick of interest rates has been? So I'm going to tell you what I think is the number one risk to the market right now. I think that AI saved the stock market in 2023. Sometime around March, April, people got really excited. And then in May, we saw that miraculous quarter from NVIDIA. And it was like a switch was flipped and it was risk on again in the biggest stocks that move the chains that really drive the indices if this AI thing were to temporarily flame out if we were to look at Amazon just did a deal for for for a company and then you

know we're hearing headlines about open AI thinks it's worth $90 billion. Okay, we're gonna see. But if there's any hiccup at all in this AI story, if we start seeing headlines like, oh, it turns out there was a ton of double ordering for GPUs, or we hear from like an Oracle or Microsoft that, oh, actually demand is not as big

as we thought it would be, or usage of these various large language models is tapering off. That's the biggest risk to the market. It's a twofold risk. Number one, we might have baked too high of earnings expectations into the cake because of all this AI stuff for the biggest stocks. But then number two, as those stocks come down, it's not exactly like you have great reasons to buy all of the other stocks. The economy is slowing. We know that. And financial conditions are tightening. So if you ask me, like, what are you most worried about? I don't want a pre-announcement out of any of the mega cap 50 tech names or large consumer discretionary names that have run up on this AI thing.

That's really going to be the most problematic thing that could happen between now and year end. You want to address that? Because let's just take it as it is here. The last time the market, in my estimation, made this big of a bet on the future of technological advance for society, it didn't end well. We're talking 2000. Okay. So some of those companies are still around and doing quite well. Many are not. We have put all our chips on the table and said 15 to 20 stocks are the AI beneficiaries. No pun intended though, right? Right. Right. Seriously, 15 to 20 names we've said are the ones that are going to benefit.

Whereas, I don't know, maybe a couple of them are the only ones that are monetizing it today. We've placed a massive bet on the future. What's the risk in that? Well, there's of course a concentration risk. But I have to say, and I agree with Josh's perspective, if we do get news like that, I'm a huge buyer of that dip. And the reason is something that Josh also pointed out, the margin and the importance of the foundational layer that these 15 or really even seven companies are contributing to the real economy is so important.

And the ability for new entrants to come into the space is time-limited, right? The semiconductor supply chain is so delicate, it's so global, it's so complicated. And so I think that there really is a margin opportunity there that they're taking advantage of and is likely to continue. But the other thing I'll say about this trend is that we know that the foundational layer is not the beginning and end of a technological sort of level up like we're seeing with Gen AI. There's digital infrastructure that's required, and there's an application layer that's going to follow as these data structures and algorithms get built. So for an investor that's interested in the future of technology, you need to take that

broader perspective, looking at SMID growth, looking at infrastructure to complement the mega cap tech in order to round out the holistic investor perspective. You know, Josh, I just want to get you back to energy real quick before I wrap this up. I'm just looking now. It's up near 4% oil is WTI near 94, as we said. And there's a lot of talk in the market about, OK, tech falters a bit or even if it doesn't, what areas are going to have a catch up trade? Now, let's say tech remains stagnant for a bit. How even if it doesn't, what areas are going to have a catch-up trade? Now, let's say tech remains stagnant for a bit. How'd that work out for people last year when energy led everything? Not so well. The market had a horrible year. I'm not necessarily sure that energy is going to save

the day. Energy stocks are going to save the day. There's been a bit of a disconnect between the run-up in crude and energy stock performance as it is. There's nothing to suggest that these stocks are all of a sudden going to save the day. I think two things happened last year. Number one, you just had an imbalance of the amount of people willing to buy energy stocks versus how big they are economically, like what their true economic footprint is. The energy industry in the United States is massive relative to what its market cap was in the S&P 500. That imbalance came about as a result of a lot of things we don't have time for right now. But suffice it to say, we are now in a flipped situation this year. They've closed 23 ESG funds and counting, and people can't say that there's that same imbalance.

It's hard for me to see energy growing large enough, however, from here in terms of market cap to bail out the returns of the stock market. These stocks, outside of two or three of them, they're just not big enough. So you could have an energy stock rally that doesn't really do much for the overall S&P, but that people benefit from if they keep their at least an index weight in those names. And I think that's probably a good idea given the price action in the commodity. I got one more, Lauren, for you. It plays off our Delivering Alpha survey, Delivering Alpha is tomorrow, for all of you who don't know at this point in time. We asked one of the questions, is this, has this been all along a bear market rally or a new bull market? I don't know if you were asked for the DA survey or not, but I'm asking you now, what do you think it's been? Bear market rally. You really do. I really do expect that the collapsing of financial conditions

that we're seeing is important, that the reaffirming of inflation is important and that growth is slowing and is, and that we'll likely see employment in outright decline by the end of this year. Now, look, that leads us to a mild recession, but likely, even in mild recession scenarios, that can be an easy 15% off the S&P 500. And so I think we still have some volatility to come. Well, two-thirds of people said the same thing you did, 160%. Oh, I hate it when I'm so consensus like that. We'll see if they're right, though. That's the big question.

Lauren, thank you. Lauren Goodwin, Josh, thanks. We'll see you soon. Josh Brown, let's get to our question of the day. We want to know how low will Apple go? Will it go below 165, between 150 and 165, or below 150? Head to at CNBC closing bell on X to vote. The result's coming up a little later on in the hour.

In the meantime, a check on some top stocks to watch as we head into the close. Christina Partsenevel is joining us with that. Christina. Let's start with Miller Knoll. It's at its highest level right now in a year after the office furniture giant beat estimates and posted strong guidance.

The company says it's benefiting from return to office mandates, which echoes commentary that we heard from its rival Steelcase just last week. That trend has Miller Knoll, which makes those fancy Herman Miller chairs, is heading for its best quarter since 1976. The stock is up 29% right now.

And NextEra Energy, let's talk about that stock. It's hitting its lowest level since 2020 after reiterating its earnings outlook for 2023 and 2024, both of which came in well below estimates. That's overshadowing even a $900 million sale of one of its natural gas subsidiaries to Chesapeake Utilities. Shares of Nextera now are down about 8%. Scott?

All right, we'll see you soon, Christina. Thank you. We're just getting started. Up next, trading the volatility. Top technician Jason Hunter is with us to break down the key levels he is now watching as we head towards the close. Bit of a different story, as you can see. Dow fighting again for positive territory. S&P, Nasdaq, Russell, they're all there.

We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back. Closing Bell. S&P on track for a fourth negative week in a row. Let's get the next key levels to watch now from Jason Hunter. He's the head of technical strategy at Morgan Stanley. It's good to talk to you again. I think my first question would have been different an hour or so ago. I'm just wondering, have we reached such an oversold level that the

buyers just said enough's enough? Oh, yeah. So thanks for having me again, Scott. And that's J.P JP Morgan, not Morgan Stanley as well. Oh, my bad. Oh, no problem at all. My bad. Yeah. So the S&P, we've been focused on two primary support areas. Number one, 4,200.

The channel that the market rejected at 4,600, the lower end of that channel, that's really defined the bounce from the October 2022 lows that currently sits just above 4200 the 200 day average right there as well and that's also where the market broke out from when the economic data first really started to surprise that that first blowout payrolls number in early june that's where the market gapped out from the 4200 area so naturally that's a spot where you could expect the market to find some footing and try and you know stabilize get a little bit of a bounce we

may be seeing a little bit of that today that That said, the oversold conditions, the amount of panic in the market just isn't there yet to say that we've made a low. In fact, you know, if you look one by one, starting with small cap, it's worked its way up the cap scale where you started with the Russell, broke down, then the S&P 500, most recently the S&P 100. What hasn't broke down, you know, as you talked about in your last segment, if you look at something like the FANG index, tested support today, but hadn't yet broken down from that multi-month distribution pattern. We still think that's to come. So you'll have to, you know, digest that level of volatility. We ultimately think you could get some bouncing in here, but 4,100s has been our downside target

as we head into the early fall, where we think the market could get something of a bear market bounce from that 4100 level, but we're not there yet. Does tech hold the key to everything? In a sense, it does, in the very specific pockets of tech. I won't go into individual names, but like I said, if you look at something like the New York Stock Exchange FANG Plus Index, that tells you all you need to know. You can see a multi-month pattern after the parabolic run-up earlier this year. It's testing, it's threatening that pattern support hasn't broken yet. That's when we think, you know, things like the VIX would really start to move up and you'll generate that level of panic and selling pressure that will establish at least a

tradable low that should come, you know, as we move through October, we think. Well, I mean, it's easy, obviously, to get all bared up, right? I read the stats that Bespoke put out earlier today of the string of four years in a row with a lousy September, only to have a positive fourth quarter every single time. Now, we'll see if history repeats itself now, but it does suggest that getting too negative at this time of year can be detrimental to one's financial health. Yeah, that's right. I think there's two things to keep focused on.

One is the short term and from a trading perspective, I'd still stay underweight here. Yes, 4,200 isn't that far away from 4,100 in the grand scheme of things, but also take a big step back and look at the macro cross-market setup here. You've had a curve that's been inverted for over a year and a half.

You are in a maturing cycle. You know, while the data was strong this summer and it's pushed forward, the probability of recession, you know, some even saying soft landing now, you know, the curve's been inverted for a while. You're seeing the typical progression where you get the rotation from cyclicals into growth, and then the market carves out a multi-month distribution pattern about a year and a half after curve first inverts the patterns playing out i think you've got to keep your eyes on the bigger picture as well where the risk reward just doesn't look that good so i would be patient and wait for those really ideal entry levels before even taking a trading long at this

point how are you looking at rates from here forward so that we're we think we're at that point now uh where you could actually see the rate equity correlation that's been in place during most of this, let's say, inflation-focused period, much like the 1970s. We think you could actually see that flip here. If the equity market breaks support like we think it will here and you see mega cap come under pressure, that, in our view, might be enough volatility in equity markets where you actually generate a flight to quality bid. So we're actually looking from a technical perspective for rates to top out somewhere in here. It's easier to make that call in the two to five year point.

The long ends had a lot more volatility in here. So we're more comfortable there. But we are looking for rates to top out here and to stage at least a short term rebound. I'll leave it there. Jason Hunter, J.P. Morgan. My eyes are playing tricks on me. Embarrassing. I apologize for that.

No problem at all. Take care. We'll see you soon. I know we will. Up next, Meta's developer conference officially kicking off today. That stock initially selling off, now well off its lows as well. What's behind the move? We'll get a shareholder's reaction, too, after the break.

Closing bell right back. We're back on Closing Bell. MetaShares selling off today during its MetaConnect developer conference, though it has staged a bit of a comeback. You see they're trying to go positive as well with the rest of the market. Steve Kovac here has the details. So initially, we didn't like the headset. Maybe we thought it was too expensive. Maybe we didn't want to focus on the metaverse. We wanted AI. What's the story here? Yeah, let me break this down for you, Scott.

So shares were down nearly 4% during Mark Zuckerberg's presentation today. Here's what all he announced first is the MetaQuest 3. That's a new $500 headset launching October 10th. It's the third device in Meta's headset lineup, and they will all compete with Apple's $3,500 Vision Pro coming next year. Next up, AI chatbots. Zuckerberg announcing several chatbots trained on the faces and voices of celebrities like Tom Brady, Paris Hilton, and, yeah, Snoop Dogg. Each one has a different personality. For example, that Snoop Dogg one, it is a dungeon master you

can play role-playing games with. I am very serious here, Scott. Finally, new Ray Snoop Dogg one. It is a dungeon master you can play role-playing games with. I am very serious here, Scott. Finally, new Ray-Ban smart glasses. Those cost $300 and let you take pictures from its camera and share them to social media. It's also going to have Meta's AI assistant built in so you can ask it questions. So why the stock reaction? I know things are better now, but it was down quite a bit. Well, Meta is still focused on that money-losing metaverse. The Quest 3, Facebook has said, is going to cost billions just to get out the door. And it's updates to devices that just haven't sold well to date. And those AI chatbots, well, they were framed as experimental. And it's unclear how or if they'll translate to sales. Look, I was at the Microsoft event last week, Scott, and, you know, they have a co-pilot AI product that they're actually selling.

It's unclear how Meta really plans to make money off of this, Scott. Yeah, we'll see. I don't know. After Apple, look, we were both at the Apple event, too. And we were calling it a headset hangover, I think, when that stock sold off, when the pricing came out and it lasted for a bit. And, you know, here we are talking about other companies who are just trying to compete in that space with pretty expensive products, Steve. Yeah, and this was a point that Mark Zuckerberg was making during the presentation, Scott, saying, look, we're selling this thing for 500 bucks. He didn't mention Apple by name, but, you know, implicit in this is a $3,500 headset.

Now, I've tried both. I've tried the meta version and I've tried the Apple version. The Apple version is much more refined and better technologically. But Zuckerberg's thesis seems to be, let's make it cheaper, make it more accessible, and get it in the hands of more people and really build that platform power. To date, that hasn't worked out super well for them. These devices tend to be buggy, slow development, and of course, really expensive for Facebook to develop, Scott. Appreciate it, Steve. As always, Steve Kovach.

Now let's bring in a Meta shareholder and CNBC contributor, Stephanie Link of Hightower. Steph, it's good to see you. Look, every time we talk about Meta, you say, yeah, but I've been trimming the stock, which you've done on numerous occasions, I think. So how do you put today's announcement into context of how you think about the big picture? I mean, I think that this is just simply sell the news. I think the device, the Quest 3, was exciting. It's really cool, but performance, better resolution, almost 40% thinner than the other versions. So, you know, I think it was kind of expected.

Yeah, I mean, when are they going to make money on this? Well, we don't really know, but we do know that hardware total addressable market by 2030 is going to be $160 billion. And all things metaverse, by 2030, is expected to be a $750 billion total addressable market. So the growth is there, Scott. It's just not here right now, profitability-wise, unfortunately. I think the other reason that the stock is sold off is because the company announced

that the head of the AI division is leaving the company, right? And she's been there since they started to reorganize last year. And this is doing AI chips in-house. It was supposed to help them lower costs overall. And you know, a big part of the story is the cost cutting. It's the revenue reacceleration, but it's the cost discipline. And so I think people just got a little bit nervous on that front. So they're still committed to this business, to making AI chips in themselves. It's just going to take a long time. At what point do you stop trimming and start buying again? So I got as high as eight percent overweight in the benchmark and I trimmed that down to about five percent and that's where it is and so you know what the stock is I actually might think about buying but the stock is only down

about eight percent from its highs it's still up 147 percent year to date so I just think it can tread water for a little bit maybe on the overall macro right but it's actually held up much better well I say much better, but better than Apple, Amazon and Microsoft. They're down 13 percent from their highs. I think if this thing gets down 15, 20 percent, I think you go right back and I buy it because the valuation is very attractive. And I do believe in the reacceleration story for revenues. And you don't think that, you know, big tech more broadly is in any kind of danger of trading significantly lower from here well i think it could and there's it's entirely possible but i am looking for opportunities right

you know i bought cisco last week uh you know i added cdw a couple of weeks ago i would look for some big tech bought amazon as well so i i would look for some of these other big techs if they were to pull back more. They're just not down enough. But of course, they can be more volatile because of the macro environment in general and higher rates for longer. And we've talked about the headwinds that presents to long duration and growth and technology assets. Steph, thanks. We'll see you soon. Stephanie Link, Hightower, joining us here on Closing Bell. Up next, we're tracking the biggest movers as we head into the close. We're back with Christina Partsenevelis, who's standing by for that. Christina.

Well, it's time to play Pictionary with an AI bot and a new partnership between Meta, boosting shares of one cloud service provider. Details next. Fifteen minutes before the closing bell, market can't make up its mind. As you see there, is it going to go positive? Is it going to stay negative? But that's why the last 15 minutes matter so much. Christina Partsenevelos is watching the stocks that are on the move as well. Christina? That's why it's exciting to be watching.

But let's talk about this stock, call it an AI goody bag, but Cloudflare making a number of AI product announcements today, like tools to better monitor AI deployments and a new partnership with Meta to make Llama 2, which is an open-source large-language model. That means developers can build all of these AI applications on Cloudflare's platform, and why the stock is up almost 7%. Morgan Stanley thinks toy maker Mattel is turning a corner and can continue to benefit from licensing efforts

related to the Barbie movie. They are overweight with the stock, and they have a price target of about $27. The stock is currently trading just under $22. Separately, though, Mattel is releasing Pictionary vs. AI, the first time Mattel has added AI to a classic board game. In this case, AI would guess what you drew instead of your friends and family that happen to be playing the game with you. I just thought it was interesting. I thought I should share.

I appreciate that very much. Thank you. Christina Partsenevalos. Last chance to weigh in on our question of the day. We asked, how low will Apple go? Not below $165, between $150 and $165, or below $150? Head to at CNBC Closing Bell on X. The results are coming up just after the break,

as that stock is literally sitting right now 170 on the nose. Back after this. Let's get our question of the day now. We asked how low will Apple go? Most voters say not below 165. Well, it's been teetering around 170 all day, and that has the market a little bit unsettled. Do not forget, delivering alpha tomorrow.

I'll be there with some key guests, Brad Gerstner of Altimeter, Bill Ackman as well, both one-on-one. Scan the QR code on the screen to get your tickets. I know you don't want to miss that. Up next, we're setting up for Micron earnings, a rundown of what to watch when those numbers hit in overtime. We're right back. We're in the closing bell market zone now. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day. Plus, Bank of America CEO says higher rates beginning to affect the consumer.

We chat what that could mean for markets, of course. And Christina Partsenevelos looking ahead to Micron earnings out in overtime today. Michael, begin with you. I'm looking squarely at Apple. Has not closed below $170 a share since May the 4th. It is flirting with that today. Yes. I mean, look, everything, the overall market is more or less retraced back to early June.

So Apple having a little bit of a deeper one. It's coming for selectively for the big index names, this correction. I do find it interesting that we did get that intraday rally in meta. Alphabet has been firm today. So it's not really one of these across the board, throw everything overboard type of days. But, you know, some of the intraday action, you can see how things have wound very tight. Everybody knows and is passing around all these different indicators showing how oversold the market is on a short-term basis.

We got to within 1% of the 200-day average and somebody of course always decides they're gonna try to front run it in case that's the support level. You get one of these kind of quick silver rally attempts and then it doesn't come to anything. That's the twitchy action you get in situations like this. Bomb market sort of slowed but hasn't stopped.

And I think that's one of the issues. If it continues to be this messy, kind of essentially bond market crash in slow motion, the market's not going to be able to get comfortable even if we do bounce, even if, again, sentiment is reset very well, valuations are off the boil. If the economy is good and rates are higher, we can live with that. If the rates kill the economy, that's the problem. Tracking the 10-year a little bit, you know, in terms of the S&P. 461, you saw it, the highest levels of yields today, the lowest levels for stocks.

As that softened a bit, stocks were able to recover and are now fighting it out. Bank of America CEO Brian Moynihan says he's seeing signs the Fed's tightening his dampened consumer spending. Take a listen to what he told Becky Quick at the New York Economic Club today. For all of 22 versus 21, they spent nine and a half percent more. For year to date, they've spent about 4.8 percent more. Now they're about four and a half-ish, to give you a sense, just for the month of September. So what you're seeing is they've slowed down. So if you're trying to engineer a soft landing, which people have or something close to that, and balance it, when you look in the current data, they've won against the American consumer.

All right, that's Brian Moynihan, as you saw there, Bank of America CEO. We're all trying to gauge where exactly the consumer is in this fight. The message has been pretty consistent from the bank card data that, you know, people are spending what they're making and maybe a little bit more. Four and a half percent sounds like a comforting number. It's also basically keeping up with inflation. You know, so it's not exactly like the consumer is all that energetic. But the consumer is also typically not really a leading indicator of a downturn. They're going to kind of keep spending it as it comes in the door.

So I don't think there's really much to be alarmed with now versus what we knew a month ago. It's really about what's on the come. In other words, mortgage rates, where they are. We are seeing some stress a little bit on lower income consumers. But that doesn't seem to be the main issue. It's all about the market trying to extrapolate what it's going to mean as rates reset higher, energy prices act as a drag. And, you know, is it still an economy as we thought it was in July in need of slowing down? Remember, that's how the narrative has changed. Wall Street said after

July numbers came out, wow, this thing's overheating. Then it started to cool off a little bit. And then the Fed has its meeting last week and says, wow, look, did you notice how hot the economy is? And we were like, we're already past that. We're not worried about going the other direction. And you're telling us higher for longer. That in a nutshell, I think, is how the market has ingested what the Fed had to say. But really, it's the long end of the curve. And it seems like it's moving on really non-fundamental reasons. We're not repricing the Fed. We're not responding to inflation expectations.

It's not about economic acceleration. It's about supply and downside momentum in bond prices. Oil prices may be a new variable to think about, too. It's an element, yeah. Christina Partsenevelos, Micron in overtime. Those earnings couldn't come at a more interesting time, huh? Yeah, because Micron sets the bar. It's one of the first chip makers to post their earnings the earliest, I should say. And memory prices, they've been turned in a corner, but Micron still has a major overhang, and that's China.

At the end of May, the Cyberspace Administration of China moved to ban certain Micron products. Micron Management estimated that half of its China and Hong Kong revenue exposure were at risk. So that's almost 13 percent of total revenues. This August quarter, though, will be the first quarter to actually show the impact of the ban. Despite this ban, though, analysts are still expecting an improved environment for Micron and why the stock has been a little bit higher compared to the SMH ETF since its last earnings report on June 28th. You can see Micron shares are up about 35 percent year to date, but flat to the positive

today. There are three reasons. You've got three memory makers, Micron, SK Hynix and Samsung, that have been cutting supply to under-shipped demand. That's helping memory prices. And then also at a conference just this past August, Micron management said PC as well as smartphone inventories are actually in good shape, even if data center revenue still remains challenged.

And then last but not least, Scott, another potential driver for higher guidance, AI. Micron is working on these high bandwidth memory chips that are strong enough for AI infrastructures. And Micron expects meaningful revenues from that segment in fiscal 2024. So expect a lot of commentary on how that's going to help the future on the call. All right. Yep. You'll be on it. And we'll look forward to your reporting on those earnings in just a few minutes in overtime. Mike, as we go to you, as we wrap it up, less than a minute to go. Mega cap is going to be an interesting question.

It's like an air pocket really really, between now and their earnings, and that's not for about a month. Yeah, there's not a lot to drive it, aside from a little bit of the meta news today. So I wouldn't necessarily look for that to be the key. It's honestly to me, you see small caps outperforming today up by 0.8% to 1%. They're going to be a creature of how people are feeling about the market in general, whether we feel as if we've more or less digested what the bond market has to do, if we feel as if this was mostly just a typical seasonal correction, that obviously remains to be seen.

They will either ride along or lead the way out of that. I don't see them kind of deciding what the next move is. Glad you said the Russells, right? You called her up 1 percent, leader today. And Dow's going to go negative. S&P, we're going to fight it for the last second. I'm glad you said the Russells, right? You called it. Up 1%. Leader today. And Dow's going to go negative. S&P, we're going to fight it for the last second.