Closing Bell - Closing Bell: Strong Rally to End the Week, Amalgamated Bank CEO on Supreme Court Decision, Carnival CEO on Earnings 06/24/22

Episode Date: June 24, 2022

Stocks staged a strong rally to cap off a solid week of gains on Wall Street. Market experts JoAnne Feeney, Brian Jacobsen, and Dan Nathan weigh in on the pop, and if it’s the start of a broader summer rally. Meantime shares of Carnival surged despite largely missing earnings estimates. CEO Arnold Donald joins to discuss Wall Street’s reaction and the headwinds that remain for his industry. And the CEO of Amalgamated Bank breaks down her company’s decision to cover travel expenses for employees seeking reproductive health care, following the Supreme Court’s decision to overturn Roe v. Wade.

Thank you, Tyler and Kelly. Stocks are in rally mode. We're actually at the session highs, up 700 points on the Dow, adding to a strong week of gains. The most important hour of trading does start right now. Welcome, everyone, to Closing Bell. I'm Sarah Eisen. Here's where we stand right now in the market. Also at the highs of the day for the S&P, up 2.6%.

It's a broad rally with every sector in the green right now. The Nasdaq is zooming up 2.7%. Best performing sector at the moment is financials. Clean bill of health from the stress test yesterday. Also just a cyclical rally in general. Materials, industrials, technology, that is what's leading. Healthcare is the worst performing sector, but it's still up more than 1%. Check out some of the biggest winners this week in the S&P 500.

It's a very strong week, up 6% for the S&P, especially for Etsy, up double digits. A lot of the most hammered names during the sell-off over the past few weeks. And keep in mind, June is still a big down month for stocks. Got a big boost this week. The cruise line's right in there. Norwegian Clorox is in there as well. Really strong underperformers. Still for the month of June, we're down about six percent coming up on today's show.

Share speaking of cruises of Carnival surging today after posting earnings that missed estimates this morning, though cash from operations did turn positive in the quarter. We will talk to CEO Arnold Donald about the numbers, the outlook for the industry. It's his last quarter as CEO before he steps down. And then later, we're going to talk to the CEO of Amalgamated Bank following today's Supreme Court ruling overturning Roe v. Wade. Amalgamated was one of the first financial firms to say it would pay for employee travel to access reproductive services.

We'll begin, though, with the market rally. All the major averages up more than 2%. The Nasdaq is a big winner on the week, up nearly 7%. Christina Partsenevelos is at the Nasdaq market site with more on some of the winners. Christina. Thanks. So we're seeing tech rebounding after days of selling. Some good news, like you said, the Nasdaq is actually poised to snap its three-week losing streak. But that's only two positive weeks in the past 12, and the Nasdaq is still almost 30% off its high and on pace for its third straight monthly decline.

So pop that positive bubble. But let's home in on today's gainers on the Nasdaq 100. You've got Airbnb that's topping the list, over 8% driven by the notion that pent-up demand, especially in the summer months, is benefiting travel companies. Marriott is another example, also trending higher, almost 5% today. And we're seeing meta surge. And there's no catalyst specifically for the company, but it's going higher with broader tech after plummeting 50% over just the past 12 months.

We have several software players that are leading the pack today and the week higher. Take a look at Okta, DocuSign, Datadog as examples. DocuSign up 14.5% on the week. And then software IGF ETF over 2.5% higher, but flat on the month. And then we also have some semiconductors. Gotta talk about that. Positive today, but just barely making it on the week.

On semis, for example, only up half a percent just on the week. And then lastly, I'll end with the bad news. Lucid Motors, the biggest drag, but only down, but a little bit over, not even 1%, followed by healthcare names like Moderna, Biogen and Gilead, about a half percent lower. Sarah. Christina, thank you for more on the big rally. Let's bring in our market panel. Joining us, Joanne Feeney from Advisors Capital Management and Brian Jacobson from Allspring Global Investments. Good afternoon to both of you. Joanne, do you trust it? Would you be buying?

Well, yeah, Sarah. Clearly, it's looking like the markets and investors are finally recognizing how many interest rate hikes are likely in the future. The Fed still has a lot of credibility when you look at long-term inflation expectations are down around 2.3%. So it could be that we're seeing the 10-year at a reasonable level, which means a lot of the valuation pullback we've seen over the start of the year. And since early November might be in the rear view mirror and also I think investors are recognizing as we've been

advising for a while. Want to make sure to have some protection in your portfolios but you also want to stay exposed to some of those companies. They're going to be resilient to recession. That have really strong secular

drivers like in data centers and in five G. That can power your portfolio higher. over the longer term. And there are some very attractive opportunities out there right now. Brian, we'll get to some of those individuals. But, Brian, do you agree with that premise that maybe the worst of the tightening has already been priced in and now we're starting to go the other way? I like what I'm hearing from her. Yeah. And I do generally agree. I think that the market responded fairly favorably to Chair Powell, kind of suggesting and maybe hinting a little bit that if the growth picture does deteriorate a little bit too quickly, even if

we don't get a material improvement in the inflation outlook, that they could pause, not necessarily saying that they're going to cut rates in the face of weaker growth, but not that they're going to just be singularly face of weaker growth, but not that they're going to just be singularly focused on inflation. And then the day's University of Michigan data saying that, you know, we only had that 0.1 percentage point increase in long-term inflation expectations instead of that kind of eye-popping 0.3 percentage points. That also, I think, has kind of helped fuel things here, saying that maybe the Fed doesn't have to go as quickly. And as a result, maybe a lot of the multiple compression that we've seen is mostly behind us.

Now it's really up to earnings to prove that these valuations are worth it. Right. And we are going to get into earnings season. We had FedEx, which was decent. And it's actually one of the biggest winners in the S&P. We've got Nike on Monday, and then we'll get the banks. Joanne, where are the best places for you right now, keeping in mind we are going into earnings season? Right. You know, I think if you look at the market as a whole, the P.E. for the S&P 500 looking forward is around 16 times,

which is about at its historical average. And there's, though, a wide variety variety a lot of dispersion there. We should expect there to be different takes on earnings some companies are going to face more headwinds from inflation. As some segments of the consumer population have to cut

back. It's really a tale of two consumers. The wealthier set even mid income and higher probably aren't changing their consumption patterns very much. So earnings for something like a Williams Sonoma probably did does just fine. You know you go into

industrials GXO logistics we really like here it's actually performing very well providing more efficient warehousing and logistics handling for companies. Even if a recession comes along we expect the companies to try for more

efficiency. So you know earnings I think are going to be a really mixed bag depending on how well companies can pass your price increases. Because inflation, we're not done with it yet. And we should be prepared for some surprises and potentially negative surprises. So we see more volatility ahead in terms of positioning. We think you need to be a little bit defensive, build in some protection against higher inflation,

but also make sure to own good companies that have become extraordinarily cheap after this runoff over the last several months. Brian, what about you? What is the strategy for earnings season? All the equity strategies say earnings expectations are too high and the analysts won't budge their estimates. And I wonder if it's because companies still have pricing power. I think you're absolutely right about that. Yeah, we just released our all spring mid-year outlook with the theme of rolling with change. And one thing that hasn't changed much are those earnings expectations of analysts. And I think it's because they are assuming businesses still have a lot of pricing power. We question that assumption, which is one of the reasons we're expecting to see a bit more volatility going forward. We do think that, you know, we're finding a bottom with the market

to get some rallies here. But but really it's about identifying quality. And now, what is quality? You can't necessarily always quantify it. Sometimes it has to be done through boots-on-the-ground analysis of the companies that you're investing in. And that's why we work with a team of fundamental equity managers to really know the management and what types of decisions are they going to be able to make, not just have they made, but going forward, if we do get a change in the environment, higher funding costs as a result of the Fed rate hikes and perhaps slower economic growth, which is orchestrated by the Fed. That's why I guess you like staples as a preferred trade quality. Brian, Joanne, thank you both for joining me. It's good to see you.

With the Dow up now more than 700 points. After the break, shares of Carnival getting a big lift today after reporting results before the bell of more than 11 percent. We'll talk to CEO Arnold Donald about the quarter, the market reaction and the headwinds that are still facing this cruising industry. You're watching Closing Bell on CNBC. More business reaction to the Supreme Court decision overturning Roe v. Wade. Apple weighing in now. Let's get to Steve Kovach for that. Steve. Hey, Sarah. Yes, an Apple spokesperson telling me in a statement, quote, as we've said before, we support our employees' rights to make their own decisions regarding their reproductive health.

For more than a decade, Apple's comprehensive benefits have allowed our employees to travel out of state for medical care if it is unavailable in their home state. So echoing what a lot of other tech companies are doing, offering those resources to move people out of state to get the reproductive care they might need. Sarah? Yeah, all sorts of industries, not just tech. Exactly. We're seeing that. Thank you, Steve. Thanks.

Keeping track of some of the statements. Meantime, shares of Carnival sharply higher right now. The world's largest cruise line operator missing analyst estimates on both lines. STATEMENTS. MEANTIME, SHARES OF CARNIVAL SHARPLY HIGHER RIGHT NOW. THE WORLD'S LARGEST CRUISE LINE OPERATOR MISSING ANALYST ESTIMATES ON BOTH LINES, BUT CARNIVAL SAYING OVER 90% OF ITS FLEET IS BACK IN SERVICE AND REVENUE DID JUMP 50% VERSUS LAST QUARTER. THIS IS ALSO THE FINAL QUARTER FOR PRESIDENT AND CEO ARNOLD DONALD, WHO HAS BEEN IN THE ROLL SINCE 2013, AND HE JOINS US NOW. ARNOLD, WELCOME. NICE TO SEE YOU. HEY, GOOD TO SEE YOU, welcome. Nice to see you. Hey, good to see you, Sarah. Good afternoon. Good afternoon. Are you surprised to see this big jump? I know it's a good day in the market,

but it was a miss on both lines, and it sounds like there's going to be a net loss for Q3. Well, I think it's obvious that our company, our industry, probably most companies are trading on macroeconomic perceptions in the marketplace versus individual operating results, but we were very pleased with our operating results. We doubled revenue, as you mentioned, we have 90% of the fleet sailing again now during the quarter. We had 69% occupancy. A lot of that was because we obviously constrained occupancy in different situations because

of protocols, etc. And we have a brand, our Carnival Cruise Line brand, probably the strongest cruise line brand in the world, sailing in the third quarter at 110% occupancy. So we're coming back strong and we are looking for the other brands that will be following that lead soon as travel restrictions and protocols and other things mitigate so we're excited that cruise industry is coming back we sell 1.6 million people in the second quarter and we're looking forward to sailing many more and giving them the great vacation memories and lifelong moments that that people love when they

cruise well how are bookings looking for summer vacation memories and lifelong moments that people love when they cruise. Well, how are bookings looking for summer and into the end of the year and into next? Bookings are good. We had a record booking period at the most certainly since we've, since beginning of COVID for certain. And as we look ahead into 23, bookings are strong. We also have good pricing into 23. We've had, you know, the near term gyrations from variants and invasion of Ukraine and all these things, which extended out the wave period

and resulted in closer in bookings to time of sailing. And so we're benefiting from that now because as sailings come up, we, you know, the bookings are going up. But as you look ahead out into 23 and beyond, it's pent up demand for travel. People want to travel, as you can tell, by the airports and the terminals everywhere in the world. And as restrictions are lifted, we'll be cruising full steam ahead. Well, that's right. I was going to ask you, you know, the airports are so busy and the hotels are so slammed right now.

And they're having some of their best times ever. Why does it seem like cruises are not sort of enjoying as much demand and pent up demand for travel as we're seeing in other parts of the travel sector? Well, first of all, we are experiencing pent up demand. As I mentioned, the Carnival Cruise Line will be at 110 percent. To the same extent. You know what I mean. The stocks haven't done as well. Yeah. Well, we'll talk with the stock. But first of all, the demand situation is the ability to travel with certainty. So you have lots of airline terminals that are filled. A lot of that is domestic travel. Some of it is international travel. But when

there is testing and uncertainty about protocols, etc., that inhibits people's comfort in traveling. And for cruise, you have to have two things. People have to be able to travel and they have to want to travel. And with the uncertainty around, can I get back in the country, all those things were occurring at the time. Plus, of course, as the variants took off, people were testing positive. So they may have booked a cruise, but they tested positive and couldn't take the cruise. So all those things impacted us, but that's going away. So the good news is as society becomes more and more comfortable with managing the virus, which it is, and as countries and areas take away all the requirements

that previously were associated with trying to manage the virus, then the ability for people to cruise is there and they want to cruise. So what about the stock, which has lagged all the parts of the travel sector, not just yours, but some of the other cruise lines? The problem is all these things are happening, these tailwinds, the easing of restrictions and the fact that you don't have to test to get into the United States anymore at a time where the economy is starting to weaken and the Fed is really slamming on the brakes to try to slow down spending to cool inflation. You know, I think, again, I'm not an expert on the market. You are and hopefully others are. But what I can tell you is that the stocks are, in

my opinion, depressed because of perceptions of macroeconomic situations. Cruise has not been able to have the freedom for people to travel like other areas of the travel and leisure sector. And so as we are getting closer to that, we're beginning to see the promise. Concerning possible global recession, if it comes, we're not recession-proof, but we've demonstrated time and again we are recession-resilient. People, if they're employed, they want to take vacations. And right now, we have very low unemployment rates around in the U.S.,

but elsewhere in the world as well. And if people are employed, they want to take vacations. And people want experiences more than they want things right now. So and that's what we are. So we see and there's pent up demand. There's been a couple of years where people haven't felt comfortable because of the testing protocols and other things, their fear of being stuck in a country, not being able to get back home or whatever. And as that fear dissipates, we're going to see continued momentum, which we already see in the cruise sector. This is the last quarter as CEO. You're going to be stepping down to vice chairman starting in August. Arnold, you've been in the industry for nine years. You've been the face of the industry for a lot of it and have seen some pretty extreme ups and downs. How different is this

cruise industry from when you inherited this company back almost a decade ago? I think the industry has gotten closer together over this time because we have been through a number of challenges as an industry around the world and now globally with the pandemic and and what's happening and so um i i see advance in technology the ships have gotten even more efficient everybody's of course focused on sustainability and climate change and you know we're very proud of our track record when it comes to compliance, environmental protection, health, safety, and well-being of everyone and reducing carbon emissions. And so it's an exciting time for the cruise industry again. And it's wonderful to see the momentum and see the term.

We're looking at positive EBITDA for the third quarter coming up. And that's a big inflection point for us. And I just can't thank our tens of thousand employees enough for their dedication, their commitment, all of the guests who travel with us and everyone else who's a stakeholder, and especially our shareholders. And I thank you too, Sarah. We've got to get you on a cruise ship though. One day, maybe. Arnold, speaking of your employees and your stakeholders, I have to ask, we're asking all of business today the question for reaction to this historic decision by the Supreme Court overturning Roe v. Wade, 5-4 vote. How are you handling that as a company, and what are you saying about it?

Well, as a company, obviously reviewing the situation that just happened, I think our insurance policies will cover people in a way that you've heard similarly from other companies. I'm not positive of that. We're verifying that. But as a company, we're reviewing it. On a personal note, this is not the company. This is just Arnold Donald.

I personally believe in a woman's right to make a decision. Well, hopefully we'll hear more from you personally, Arnold, as you step down from CEO. Thank you for your thoughts, as always, and always coming on in good times and bad, I have to say. You have come on even during the worst of times when your company was on the brink, so we appreciate that. Thank you so much. Let's give you a check right now on the markets right now. We are sitting near session highs up more than 700 points on the Dow. The S&P up 2.6 percent. You've got groups like Arnold's cruise lines at the top of the market, hotel resorts and cruises just below casinos and gaming at the very top. But no shortage of winners today. Airlines, food distributors, some of the technology groups, including the semiconductors, the software company, the cloud companies, everything basically that's been under pressure, which has basically been the whole market, is lifting today.

Up next, a surprisingly strong new home sales number, sending the homebuilders higher today as well. We're going to dive into that report and look ahead to some data coming next week when we come back. Look at the homebuilders. They're jumping today following stronger than expected data. Diana Olick has the story. Where did that number come from, Diana? I thought it was all doom and gloom on housing. No, not with sales of newly built homes.

They were a lot higher than expected, up nearly 11 percent in May from April, but still about 6% below May of last year. These numbers are based on contracts signed in May, and that was before the most recent spike in mortgage rates. Some buyers may have rushed in, worried that rates would move even higher. Also, these buyers would have locked their rates in a few months earlier. Prices, though, were still up 15 percent from a year ago. One red flag is that supply of newly built homes is still historically high. So that will likely mean a continued slowdown in construction. And we saw that in the housing starts. Now, next week, we get more housing data pending home sales Monday,

which are a count of signed contracts in May on existing homes. And then the Case-Shiller Home Price Index. These are all before the big jump in rates that we saw at the start of June. count of signed contracts in May on existing homes, and then the Case-Shiller Home Price Index. These are all before the big jump in rates that we saw at the start of June, and that builders and real estate agents said marked a real cooling in the market. Rates have since dropped back a tiny bit, but not a lot. We'll also be watching the weekly mortgage demand numbers Wednesday, which did see a bump up in buyer demand last week. Sarah? All right. Thank you very much, Diana.

More and more companies are releasing statements in support of covering their workers' travel costs to access reproductive health care following the Supreme Court's decision to overturn Roe v. Wade. Up next, we'll talk to the CEO of Amalgamated Bank, one of the first financial firms to take such action. Dow's up 7.15. We'll be right back. In a historic 5-4 vote, the Supreme Court has officially overturned Roe v. Wade, ending decades of federal abortion rights and giving states now the power to set their own abortion laws. Companies and business leaders have been weighing in all day. Meta platform COO Sheryl Sandberg, for instance, writing in an Instagram post, the ruling, quote, threatens to undo the progress women have made in the workplace and strip women

of economic power. Many companies are also coming out in support of workers by now offering to pay for abortion travel expenses, including memos to employees from JP Morgan and Disney, assuring they will pay for those costs. Amalgamated Bank was one of the first financial companies to tell employees it would cover costs for those needing to travel out of state to seek an abortion. The bank calling the ruling a, quote, devastating and dangerous blow for millions of Americans, particularly underserved communities, people of color, rural families, LGBTQ individuals,

and immigrants. Joining us now, the CEO of Amalgamated Bank, Priscilla Sims-Brown. Priscilla, thank you for joining me today. Appreciate you speaking out on this issue. Why did you decide to be so vocal on it? For us, it's pretty clear. It's a workplace equity issue. Women make up half the workplace, obviously.

And when you have companies as varied as us, those you mentioned, the Philadelphia Eagles, all of us have one thing in common, and that is we want to both on our diversity and inclusion goals. We know that women who are involved in reproductive health issues use that. The policies around that are big for them in choosing the employer and even the state that they want to live in. We know that these issues, surveys show a good number of them feel that these issues are critical to them making the decisions they need to make about staying in the workplace or going home. These are just important issues to women. And we have taken a terrible step back for half of America's workforce. What do you say, Priscilla, to those that may say it's not a business issue? It's a social issue.

It's a religious. It's a personal. It's a health issue. But why do we need to hear from business on this? Do you worry about what happened to Disney, where they did speak out and it was kind of clumsy, but ultimately now got punished by the local government in Florida and are accused of being woke. Look, 70 percent of Americans agree with us on this. This is not an issue that is isolated to a particular party. This is an issue that is

important to 70 percent of Americans, many, many women in the workplace. And I hear from my employees, my managers, just like every one of those employers have heard from theirs, that this is a critical issue to them. Women have a very special challenge, and they have the right. It is a personal, reproductive issue that they have the right to make decisions around. And that's important to them in the workplace. It's important to us in retaining them. It's important to us in hiring them. And it's important to us because we want to have diversity for everyone in the workplace. Since you're a bank, you also are uniquely positioned to talk about the economic implications of this, Priscilla.

Do you see this as a potential step back for the female participation rate? Absolutely. I agree with Yellen when she said that this is a major economic issue. It will be a step back. We're already in this country suffering from a labor force issue, and this is not going to make that any easier. It's going to make it a lot worse. We're losing talented people in the workforce as a result of this who have to make decisions

they don't want to make. How many states do you operate in, Priscilla? And what—I mean, how do you deal with the fact that now there are going to be different policies in different states around this for your employees? Yeah, that's right. So, look, we operate in four states directly. We know that 26 states have laws that are going to be affected negatively where there will be a negative effect for women around these issues. That's important to us. Our customers, many of whom are commercial entities, they are going to be affected in those states. And so for us, it's not a matter of making the choice

for women one way or another. We believe that women don't want to have an abortion. No one wakes up one day saying, I'd like to have an abortion in No one wakes up one day saying, I'd like to have an abortion in a month. This happens because of circumstances that are personal to an individual, and that individual should be empowered to make those decisions. Can business do anything else? By the way, I just want to point out for viewers, Priscilla, we're looking at a live shot next to you of the Supreme Court at the moment where the protesters

have been gathered all day, very peacefully, but clearly still there with their signs and, you know, voicing a lot of frustration and emotion around this decision. So, Priscilla, what else can business do? We've seen business get active on some various issues in the past, gender bathrooms in North Carolina, voting rights in Georgia. Is there any activism that you expect to see or could want to see from business? Sure. Absolutely. I mean, there are a few things that, in particular, those in the financial services industry can do. We have to support financially the expansion of reproductive health care clinics that are going to be in states that border the states where there

are onerous laws and laws that are harmful to women. We are doing, many of us, as you noted at the top of this, we are doing all we can to ensure that our own employees, and in the case of Amalgamated, not just our employees, but their dependents have access to reproductive health care services in other states if the states they live in do not provide that. So we will provide transportation. We will provide child care because many of these women have children at home. We will provide hotel not only for them but for a partner to support them through the process. And I think that is something businesses can do. They can support women who are going through this sort of throwback to many, many years ago, things that our grandmothers dealt with that many of us

thought we'd never have to. Priscilla, thank you for coming on today. Not a lot of CEOs want to come on and touch this topic. We appreciate it. Thank you. Thank you for covering it. Zillis and Brown from Amalgamated Bank. By the way, just getting a statement in from Nike on the Supreme Court ruling. Here's the quote. Nike offers comprehensive family planning benefits no matter where our teammates are on their family planning journey from contraception and abortion coverage to pregnancy and family building support through fertility, surrogacy, and adoption benefits. We are here to support their decisions. We cover travel and lodging expenses in situations where services are not available close to home and

regularly make adjustments to our benefits to ensure employees have access to quality health care they need. Just joining a number of industries and a number of companies here offering expanded benefits for travel expenses for women who have to go out of state to get legal abortions now in this country. Here's where we stand in the markets. We are building on the gains for the week and for the day. Up 720 now on the Dow, up 2.6% on the S&P. We're looking at a more than 5% gain for the week. Keep in mind, it's still a pretty sharp down month for the month of June, down quarter as well, but it's a rebound kind of week, whether it was an oversold bear market here or

maybe some signs that inflation is peaking out. We're going to talk much more about the rally and whether you should be buying in when Closing Bell comes right back. We are following this strong rally on Wall Street today to cap off a solid week of gains. As you can see, every sector is green right now. Energy is the only one that's down for the week, and now it's only down about 1%. The cyclicals are leading, materials, financials, and communication services. Let's drill down on some individual winners. Steve Kobach is back covering big tech, and Kate Rooney watching the crypto and payment stocks.

Steve, start us off. Yeah, so let's talk. First up, we got Apple. It's up 1% today. And by the way, there have been good analyst notes out this week, Sarah, talking about some optimism, a rebound in hardware sales in China. But app store sales do appear to still be slowing there and around the world. Then we got Microsoft up 2 percent, Alphabet up nearly 4 percent, Amazon 2.5 percent, and Meta, which is the best of the bunch today,

that's up about 6 percent. And we know our friend Jim Cramer has been pretty bullish on Meta this week after he talked to Mark Zuckerberg about all things Metaverse. Sarah, I'll send it back to you. All right. I'll send it over to Kate Rooney, who's looking at crypto and fintech stocks. Kate. Hey, Sarah. Yeah, these have been some of the hardest hit names in 2022. But fintech and those crypto stocks you mentioned staging a comeback this week. Affirm has been the big leader today. It's up roughly 26 percent on the week, followed by Block, formerly Square, up about 20 percent this week. Then you've got Robinhood up double digits as well. PayPal rallying about 5% today, also higher on the week. And then those crypto stocks getting a relief, a little bit of relief today after a tough year. Coinbase and MicroStrategy both on pace for a more than 20%

rally this week. Then you've got the mining stocks. So Marathon Digital, Riot Blockchain, Hut8 Mining all trading higher in sympathy with some of those cryptocurrencies, Bitcoin is back above 21,000 higher today. And then Ether, the second largest cryptocurrency out there, on pace for its best week since April. Sarah, back to you. Unclear whether it'll just be a blip on that really long downward chart for a lot of those names. Thank you, Kate. Kate Rooney. Up next, we'll take you straight inside the market zone. And all week, I'll be part of our CNBC coverage from the Aspen Ideas Festival. That's next week.

Huge lineup, including Jessica Alba, Ken Chenault, Eric Schmidt, the CEOs of Intel, IBM, PepsiCo, Wells Fargo, Bumble, and much more. We'll be right back here on Closing Bell with the Dow up now 760 in the market zone. We are now in the Closing Bell market zone. Risk reversal advisors principal Dan Nathan is back to break down these crucial moments of the trading day. Plus, we've got Frank Holland here for the rally in FedEx and Leslie Picker on the jump in the banks. We'll start off with the broad-based rally. Every sector in the green cyclical groups that are tied to the economy are actually leading today. The average is going for their first positive week for the month of June.

Dan, are you a buyer today? You know, not today. I think over the last couple of weeks, though, it's been clear that the market, at least least the stock market is kind of wanted to put in a near term bottom here we've seen rates come in we've also seen some commodities like crude steel copper even we have have really kind of come in pretty hard all setting the stage for a kind of relief rally in stocks especially as sentiment readings were getting really bad and then of course Sarah as you know here we are we week left in the quarter. It's been a horrible quarter, two consecutive down quarters in a row in the stock market. Doesn't happen that frequently. So I think that the conditions were set for a nice little bounce. And we've had three of them from a low in January, about nine percent. Just a bounce back to is that all it is to you? Just a bounce and then back to the downtrend? Oh, yeah. I mean, we are most certainly in a bear market and it really is going to be until we can see some light at the end of the tunnel when the Fed is the S&P probably bottoms out somewhere between 30 or so percent from its all-time highs, which would basically be round-tripping the entire move from the pre-pandemic highs from February 2020, which is just about 3,400 or so.

At that point, you can start contemplating when the stock market's going to bottom. It's not there yet. It's also another 10 percent, if you're right, from where we are now. We're about 20 percent off the highs. Let's hit FedEx, because those shares are at the top of the market after delivering strong results last night. What's really helping the stock is the upbeat full year forecast that the company issued, despite global slowdown fears. FedEx also reporting record revenue for its freight division and its new CEO, Raj Subramanian's first quarter at the helm. Frank Holland joins us.

Frank, what were the drivers for the quarter and what did you glean from the CEO and other executives about where the economy is going? Well, hey, Sarah, the real driver for this quarter was pricing. FedEx clearly has really great pricing. When you look at the numbers, the volumes, they were pretty soft. For example, its express division, it saw price increases of 20%, even though volumes were down 11% year over year. And the real standout from this report was freight. Volumes were down 4%, but rates were up 28%. And as you mentioned, FedEx issued some very upbeat guidance. And then new CEO Raj Subramaniam, he kind of put his money where his mouth is, but in reverse on the call, he said this, we're already moving, making sure that there are significant cost controls and we're operating in a very constrained environment from that perspective. But we'll just adjust networks.

We're definitely not assuming a prolonged deep recession. And like I said, he issued guidance that was above estimates, even though he cited a bunch of headwinds. So FedEx clearly believes it's going to continue to have strong pricing. Analysts are excited about it, too. So are investors, up 7% right now. Frank Holland, Frank, thank you. The financial sector getting a big lift today with outsized gains for names like Wells Fargo, Goldman Sachs, and Morgan Stanley. The Fed, remember, announced yesterday that all 34 U.S. banks

stress-tested by the Fed did pass. Leslie Picker joins us. Leslie, what do the stress test results indicate about the big question for investors, buybacks and dividend announcements next week? Yeah, Sarah, you're right. That is the big question for investors. And after the close on Monday, we will learn from these banks kind of what they'll do with their dividend and buyback plans as a result of the stress test that we learned about yesterday after the close. So basically, analysts are saying they actually have pretty muted expectations, which is surprising given today's stock price reaction. But per KBW, they say that the stress test winners here as it pertains to capital distribution is Wells Fargo and Discover. The stress test laggards those that

could face some pressure on their potential buyback and dividend plans include JP Morgan, Bank of America, and Citi. And that's largely because the excess capital for those three was a lot lower compared to last year. So that's partly due, you know, in some cases to reserve releases. It was a tougher test compared to 2021, but it'll be interesting to see

what they come out with on Monday. Leslie Becker Leslie thanks Dan do you like any of these. Names ahead of that announcement on the cash return and ahead of earnings in a few weeks. No not right here I mean look let's be clear you

know some of the major banks topped out late last year in October even before the Nasdaq topped out before the Fed pivoted so something was going on there at, at least the way investors were perceiving the value there. And Leslie just mentioned the reserve releases that a lot of these banks had taken the prior year, right after the pandemic or the heart of the pandemic in 2020. You know, if that wasn't enough to keep the rally going at some point, if we have a recession and we have a weakening economy. We might see investors

start to expect. The banks to take reserves again and yet to you know China prepare for the potential for. Credit losses so to me I think the banks all year have been telling us what direction the economy is going and I think in the next few

weeks when we get corporate starting to kind of give. Their second half guidance I think it's going to be very apparent. To a lot of investors that the economy- at least S&P earnings for 2022, are still way too high at high single digits. Some might say that's already priced in with companies like J.P. Morgan and Bank of America, 30 percent off their highs. Dan, I want to hit Tesla, though. Those shares are climbing today, along with the broader market. They've had a

great week, despite a price target cut from Credit Suisse, writing that the long term bull thesis remains intact. But challenges loom in the short term, including Shanghai's covid shutdown, which Credit Suisse analysts say is hurting deliveries there. Joining us now is the analyst behind the call, Dan Levy. Dan, what what what are you looking at that gave you that kind of insight on China today? Thank you so much for having me, Sarah. Yeah, we've known that throughout the quarter, the Shanghai shutdown has limited Tesla's production in Shanghai. Shanghai is a really important factory for them.

In recent quarters, it's been as high as 60 percent of their total volume. In April, there was minimal volume. In May, it was roughly at half pace. And so that's enough to really drive the cut to our estimates. Although last quarter, everybody was, there was a lot of hand-wringing about the China shutdowns in Shanghai and didn't turn out to be that big of an issue. And in fact, some of the commentary on the call was pretty bullish on China. Last quarter, they didn't see much in the quarter itself. It was still a fine quarter for deliveries. Really, the big positive in the quarter was the margins. But this quarter, you started to see more of an impact on the volume. You'll also see the appropriate margin

hit because that is a very high margin facility. And then on top of that, there's also some margin impact from the ramp of the new facilities in Berlin and Austin. I'm looking at your targets here. You still expect this stock to rally, to outperform. You've got a $1,000 price target. You take that down from $1,125. Talk us through that decision. Yeah, we are positive on the stock. And really the key message here is that even with some of the near-term noise that you're seeing around Shanghai and the shutdowns, I think the long-term story is very much intact.

EVs are really the megatrend for autos, and this is the best stock in autos levered to EVs. They have a large lead over others. And in fact, we think that even with all the supply chain challenges, this just widens their lead over other automakers, given how well situated they are with vertical integration and also with their prior experience in EVs. We cut the price target because there is a discount rate component to our valuation. Obviously, rates are rising.

So that's really what drove the cut to our price target. We still think attractive upside ahead. There's still a lot of growth here. We think this is the best leveraged story to EVs in our coverage. Pretty bullish. Dan Levy. Dan, thank you from Credit Suisse. Dan, it's up 13% this week.

It's had a good week. It's still significantly off the highs, about 40 percent on Tesla. What say you? Yeah. So if you look at the last two quarters, Sarah, you know, Elon Musk usually sends out a rah-rah email talking about how difficult the quarter has been. And if we really kind of hunker down, we can make the quarter. He's done that basically every quarter for the last three or four. And the stock usually rallies off of that. So we're rallying a little bit after being down more than 45 percent at its lows just a couple of weeks ago. And I suspect it continues to rally in the quarter end. Then we're going to get deliveries. I'm not nearly as optimistic as Dan Levy, but I don't look at the company the same way he does. I think they had a really bad

week. I think that kind of money furnace comment that he made about the Gigafactory in Austin and Shanghai, and not to mention what's going on in Berlin, I'm not sure it's the thing that a lot of investors think that they feel comfortable about paying for a $750 billion market cap company. I get it. It's a levered play towards EVs. I think there's a lot of competition. And I got to tell you, I think there's issues with China demand ultimately. And also, how much demand do you think is happening out of that Berlin? And, you know, to me, I just don't think it's a great story right now. And I think Elon Musk seems to be very distracted with what's going on with Dogecoin, with Twitter and whatever else is going on. Well, that's never stopped him before or the stock.

Dan, final thought here as we go into the clothes. And it's going to be about the Nasdaq because that is what's doing the best right now. It's up more than 3%. It's also what's done the worst, off almost 30% from the highs. We also have the Russell rebalance after the close where Meta, Netflix, and PayPal actually moved to the value index while their winnings in the growth index declined. So it's a decision from Russell there on valuation metrics. Do you buy some of these names? I think you do. I think that's a really bullish sign that they're going from this kind of growth quadrant to a value quadrant.

It tells you about just how much these stocks have come down. Sarah, in the market zone, the last couple of times I think that I've been on with you, I've been saying I've been picking at the Nasdaq because you get the concentration of the big names that make up 50 percent of the weight, and then you get dozens of stocks that are down 40, 50, 60 percent. So I bought some meta yesterday. I love that Mark Zuckerberg interview with Jim Cramer. I also bought some PayPal last month, some Snap last month. I'm thinking about names over the next two, three years that could be up 200, 300, 400 percent. Those names now in value territory are starting to pique my interest. Do they have to be profitable for you? Do you make a distinction? Yeah, well, it's funny. You know, no one's cared about gap

profitability for a long time. We have it in Meta. We have it in Facebook. I think expectations have come down low enough. Snap is a little bit more of an interesting one. But to me, with the enterprise value of just like $22 billion, far less than what Elon Musk is going to pay for Twitter if that deal does go through at $54.20, I think that's value. And ultimately, I do see them moving to greater profitability as they figure out different ways to monetize. I also like that Evan Spiegel endorses must plan for a super app. I think Snap is well positioned for that. Dan Nathan, pleasure having you. Thank you. Have a good weekend, my friend. As we go into the close, we're soaring here and we do have that Russell rebalancing into the close, which could make it a little more dramatic here. But so far,

it's into the upside. The Nasdaq is up three point two percent as we go into the close. There's the Dow up eight hundred eleven points at the highs of the session, capping off what was a strong rebound week for stocks on top of what has been really weak month and quarter to date. Only two Dow stocks lower today, and that's Verizon and UnitedHealth. What's contributing the most to the Dow gains? That would be Salesforce, Goldman Sachs, Boeing, and Nike. That gives you a picture of what's working the best right now. Technology, beating down cloud names, cyclical groups like materials, communication services are working really well,

meta is rallying, so are the media companies like a Disney or a Paramount Global and a News Corp. There goes the bell. The S&P 500 closing up 3% highs of the day, 6.4% for the week, and the Nasdaq soars more than 7% this week. That's it for me on Closing Bell. Have a good weekend, everyone. I'll see you from Aspen next week.