Closing Bell - Closing Bell: Taking Advantage of Tailwinds? 11/27/24

Episode Date: November 27, 2024

Can the market continue to rotate its way higher and take advantage of those holiday-season tailwinds? Trivariate’s Adam Parker, Requisite Capital’s Bryn Talkington and Ned Davis Research’s Ed Clissold map out their forecasts. Plus Laurie Goodman from Jefferies tells us where she is finding opportunity outside of stocks and bonds. And, top retail analyst Brian Nagel tells us what’s at stake as we kick off a critical stretch for retail stocks. 

All right, and Dom, come on down Friday, still doing Family Day. Welcome to Closing Bell. I'm Mike Santoli, in for Scott Wapner. This make or break hour starts with the indexes struggling to hold near record levels against a sharp turn away from tech stocks and other big year-to-date winners. Here's a look at our scorecard with 60 minutes to go in regulation. The S&P 500 dipping below the 6,000 level, modestly, before rebounding a bit right up there to the verge of it 59.98 and change the nasdaq 100 feeling the most pressure so far today you see it down almost one

percent in large part due to further weakness in semiconductors there's also nasty earnings reactions to some results out of software and the pc food chain companies. Still a solid GDP revision released this morning, and as expected, inflation readings keep the upbeat economic story of a soft landing intact as the Russell 2000 outperforms once again, a little better than flat on the day. And bond yields have resumed their retreat, and they will be down solidly for the week. You see the 10-year just about four and a quarter.

That takes us to our talk of the tape. Can the market continue to rotate its way higher away from danger and take advantage of those holiday season tailwinds? 11 months through a year that investors should be very thankful for. Let's ask Adam Parker, Trivariate Research founder and the CNBC contributor. Adam, good to see you. Great to be here, Mike. So we're starting to see, I guess, the consensus for 2025 coalesce. I mean, I guess general terms, market should be up 10 percent. If you listen to strategists, economy growing above trend again, yields here may be lower. Fed doesn't have to do too much and profits can go up double digits. Does that make sense to you? Well, the most worrisome thing hearing that is the very same people who were generally negative a year ago and two years ago and the market went up are now positive.

So if you romanticize you're a contrarian, it's harder to be, in fact, you cannot be a contrarian bull anymore. That's probably the worst part about it. I think the second thing would be it's a little bit talking out of both sides of your mouth to say, I want the Fed to be accommodated, but the Fed doesn't have to do anything. I think in the past we would have said we want the accommodation. So I think the bull story, you know, has some things going to it. We'll talk about those, I assume.

But I don't think it's as clean as it was a year ago, you know, certainly on the sentiment and the policy side. Yeah, for sure. Lower wall of worry this year. Although I guess you could also say, look, if you want to say that you're super bullish, that might be out of consensus in the other direction. Not you, but somebody could easily say, look, I think we're in the early stages of a massive acceleration across the board and and and therefore 10 percent looks light yeah i can see um the long-term bull case for sure which is that we're two years into investment in ai that likely will drive earnings higher for a lot of companies and probably the most bullish thing i could say about 2025 will be if i get a proof case from a real company, hey, in the past it would have hired X number of people. Now I didn't as my revenue grows. That'll cause a lot of optimism about, let's say,

2027 through 2030 earnings. So that's likely going to happen next year. That's the big picture, kind of market-wide story. But what's really been interesting recently has been the rotations and the way the market is just really shuttling over in a particular direction, financials and other cyclicals working. I looked earlier. I think only three of the biggest 10 stocks in the S&P are up today, and only three of the top dozen year-to-date winners are up today. So clearly there's a lot of, like, let's grab for some laggards and let's see what's unexploited.

I know you have some kind of likes and dislikes out there. What makes sense at the moment? Well, you know, we write that note Sunday, the level set every Sunday. We send it out. And I tried this week to say, okay, what's up that I like still? What's up that I kind of don't like? And then on the other side, what's down that I still don't like? And then what's down that I feel like is an opportunity.

And if I walk through those, I'd say quickly, you know, everybody in the world thinks equal weight is going to beat, you know, cap weight. So I think that's the most consensus trade. I don't think it makes sense for software to beat semis by this much for a very long period. So I'd probably start to shift in the other direction. Yes, semis are cyclical, but they're also more impregnable to disruption. And so I'm starting to think I got to sell some of the software stuff and own some of the semis. Within the financials, as you mentioned, I can still believe in the alternative asset managers. I like those a lot. I think we're going to see M&A that's going to benefit the big guys.

I'm less convinced that regional banks are a win, lower rates, they don't benefit from M&A. So I'm less convinced that regional banks are a win, lower rates. They don't benefit from M&A. So I'm seeing a lot of that. On the retail side, I still don't like the physical retailers. I've come on this show for two and a half years and said I don't like Target and I don't like Kohl's and I don't like Dollar General. And I still think that's true. I'm a little surprised how much some of the restaurants are up. Yes. I probably would fade things like Eat'n Cake and those kind of things.

The stocks are up a lot. And you and I were talking offline. Things are up. I probably would fade things like eat and cake and those kind of things. The stocks are up a lot. You and I were talking offline. Things are expensive. Things are expensive, but if you watch a ball game, all you see is $10 casual dining value specials. That's true. I think it depends if you're talking the lower end of the chain or not. If I look at some of the things like Darden or Cheesecake or Brinker, I mean, look at Brinker's chart. It looks like they're selling semiconductors.

Right. So I think that I probably want to fade going into next year among the winners. So I think there's lots of pair trading opportunities out there. And I'd rather stick with where I think there could be upper divisions. Probably the only thing I'd add is there's a lot of healthcare services stocks

that are down a lot. And I don't think that makes sense. They're going to grow their earnings next year and they're cheap. And I think there's a bit of an over-exaggeration about how much their fundamentals are going to be impaired. So there's lots of stocks like that, McKesson and Sancora and others, where they're going to grow their earnings and they're cheap. So that's probably the stuff that's down that I do like. When you mention that using the equal weight S&P as opposed to the cap weight is a crowded idea. And arguably, I would agree with that.

Does that mean you think that, therefore, it's kind of played out and you would actually prefer megas? Probably for now. But if you get back to the January earnings, that may change my mind. You know, I think it really is hard to think that the biggest 10 or 15 U.S. equities won't have decent earnings growth next year. I think in a big risk on tape, they will underperform. Today's, I guess I'm wrong in that S&P is down some and the Russell's still up. But I think if we look out sustainably, it's hard for the market to be flat to down and Russell outperform. I think that'll be hard.

Yeah. Yeah. I mean, in a bear market, it could happen because it happened in the early 2000s. But that was an extreme. Yeah. But that was a TMT valuation to 70 times imploding. I don't think we're in that situation here. And if we get that proof case I alluded to on AI productivity, that'll probably be the second leg of the the mag seven, you know, train. Yeah. Yeah. They would not be be immune to that. All right. Let's bring in Bryn Talkington of Requisite Capital Management and Ed Clissold of Ned Davis Research to the conversation. Bryn, of course, is the NBC contributor. So Bryn, weigh in here in terms of how you think the bullish consensus is shaping up and whether any of the market action that you've

seen recently makes you feel as if there's either areas that are overheated or stuff that's being unduly neglected. Perfect. Well, I love Adam's pair trades. And when I think when Adam talks semis, I suggest the viewers listen because he cut his teeth on semis. So I like his contrarian sell software by semis. And I would definitely listen to him. I think as it relates to the analyst, listen, we're probability-based investors. And a host of these analysts, whether they're at 6,600, 6,700 next year, if you go back and look since 1930, the S&P has averaged 10%. But Mike, if you look at any individual year, the S&P has actually only returned to between 8 and 12 percent in four years. That's

the average, but it's not the typical. So I would put my money that we're going to be above 12 or below 8, but I just very low probability that you actually get an 8 to 12 percent return. It seems like there's so much excitement with Trump and his eclectic group of cabinet members really looking to just disrupt D.C. And I think for the first at least six months or so, that's going to be a halo effect to the U.S. economy. But they're definitely going to be winners and losers right now. Obviously, crypto, Tesla and like a Palantir are the big winners. But I think it's going to get a lot a lot dicier next year, especially within defense and some of the pharma companies as RFK, Vivek and Elon. Elon set their their their crosshairs on on those sectors.

Yeah, I mean, no doubt of one of the big questions is just kind of how much slack investors give the market and the economy if they just simply hope that there are some growth supporting policies somewhere on the way or not. Ed, all the pattern work that you might do, and I know that you guys do, suggests that the upside is the likelier path from here, right, in terms of how market has performed to this point, all the trends, the idea that earnings are still in recovery mode. Sum up your work as it stands going into next year at this point. Yeah, if you look at the main drivers of the bull market for the last two years, they're really still in place. We still have disinflation. We still have earnings acceleration. And the technicals actually look really good. Despite all the consternation earlier this year over the MAG-7 dominating the

cap-weight indices, actually most stocks are going up. And so as long as these things are still intact, it makes sense to stay on the bullish side. Now, as we get deeper into 2025, I wonder how much longer those are going to be intact. The law of large numbers are going to start working against the MAG-7's earnings growth. And inflation may bottom out. The second half of next year may be a little bit tougher, and the Fed may have to end the easing cycle around midyear. But, you know, we've had, you know, you've had concerns over the last few years about inflation, about the economy. And if you got out too soon, you would have missed a really good bull market. So we're hesitant to pull the plug just because we have some concerns. And Ed, if that's the way it goes, in other words, maybe

inflation starts to flare up into the middle of next year and you think the Fed has room to do some cutting before then, I think the market would kind of take it. Are we now kind of questioning maybe it's kind of one more quarter point and not much after? I think December is still considered more likely than not. But what do you think about that scenario and how the market might absorb it? Yeah, I think futures are suggesting slightly better than 50-50 odds that we get a cut in December. And inflation is probably going to keep edging lower early next year. So that will allow the Fed to go perhaps a couple more times. And it really gets to the rhetoric. Is it more of a long pause or is it

something more significant where the Fed would have to reverse course like they did in the late 60s? They started cutting in 67. By mid-68, they had to start reversing course versus, say, in 1984, kind of a similar situation. Inflation was two years off a major peak. The Fed started cutting in late 84, and inflation kept coming down. The Fed cut rates seven times by 50 basis points every time. And you had this wonderful bull market that, of course, ended with the 87 crash. We've got two-plus years of a great, broad bull market.

And so that's what we're really keying in on is what if inflation is going to keep edging down. And we just suspect that what might not be as bad as the late 60s, it's not going to be an 84 case either. I don't think we're going to have that benign inflation environment for two more years. Yeah. And I was I mean, if we're throwing years around, I mean, I know it wasn't about an inflation spike, but 95, they just cut like a couple, three times and then went on hold indefinitely. Ninety six, one of the best years, you know, for stocks in memory, Adam. I mean, I guess you have to sort of do the OK, if there's a if there's a trade you have to make around the economic cycle, that's over here. If you're talking about kind of what's bubbling up in the corporate sector and if you just want to give credit to the fact that you have the AI theme still working. You know, B of A today had some interesting comments about,

from the equity and quant area, saying we're at the point in the AI theme where either you start to doubt it or it just like ramps into a bubble. Like there's kind of only two ways for it to play out from here. Does that make sense? I mean, I'm more it's going to ramp over the next three to, you know, I'll tell you this, the year it outlooks written two years ago for 2023 from the biggest firms, zero of them even mentioned the words AI. So two years ago, nobody knew what AI is. Now it's supposed to be all on the price. I don't think so. I think you're going to have to see a big company with lots of employees and low margins tell you that they're benefiting from predictive analytics, predicting their employee and customer behavior.

I think that'll happen next year with a real proof case, and then you'll get that leg up over the next two, three years. So I think we're going to get to the upside. I don't think we're at bubble territory for most stocks, particularly the MAG-7. I will say Bryn Togington, one of the best calls I've heard in the last five years was her uranium call two, three years ago. So, you know, people chase that three, four hundred percent after after her call. So, look, there's there's a lot there's there's lots of upside from AI left that I would not want to fade that trade in any way. At least for me, I think it's way in front of us still. Bryn, you know, just in talking about AI and the way it filters through a lot of different parts

of this market, there have been these efforts to try to anoint other big companies or some legacy companies as now their AI plays. Naturally, Dell has been one of those. It had a really good run, got sort of repriced higher in a hurry, and now a little bit of a gut check today. Stock is down, want some results. Now, it seems like its supply and kind of pacing of investment is some of the concern. But how are you dealing with that as somebody who's owned it? Yes, I mean, I'm a recent purchaser. I bought it at $130.

And, you know, I like to sell calls. So I sold the $140 calls, $ 145 calls in January and got $7. So I'll probably close those out. So I'll be basically flat on the stock. But here's where when you look at Dell, when I look at Dell's, listen to Dell's numbers last night, the sum is not as great as the part. The part being obviously the server spend, which on servers and networking, they had seven plus billion of 58%. But then when you look across the other parts, I am not a believer in this PC upgrade cycle. I don't think a button to

co-pilot is necessary when I can go to perplexity or co-pilot online. I think from a retail perspective, we're going to consume AI via software, not via a need a whole new laptop. And so I think with a company like Dell, there's been so much volatility around their earnings. I would wait for this stock. It's got good support at the 50-day at 115. But they were really clear that their network and their servers are once again growing 58%. That's not slowing anytime soon. And they're definitely dependent on Blackwell. So I think let the stock come down. And I think that 115 will be a good entry point. Because I do think these companies, the Oracles, these old tech companies, I think definitely have some sea legs.

If you listen to all of the hyperscalers, we're going to be building data centers for at least 10 years, right? Yeah. Well, there's no doubt about that. I guess the question is just, you know, how much we front-loaded the credit for it, right? I think there's going to be a big server upgrade cycle at some point. We use an NVIDIA chip at Trivarion. It's out of the data center of EQIX. I don't even know what box it's in.

But, you know, so I think she's right. It's probably, I agree with Brent. I don't think there's a massive PC upgrade cycle like it's 2000 or whatever. I think it's more a server call, and it'll be higher eventually. But the stock's acting like 3 beta to the semi-trade. It's going a server call and it'll be higher eventually. But the stock's acting like three beta to the semi trade. It's going up a lot and down a lot. So that's that's the part that you got to size the position correctly. For sure. Ed, I'd love to get your thoughts here just about the way the mood seems. I know you were you put out a piece today about the various ways to

read whether sentiment is getting a little bit ahead of itself or if it's just what we should expect at this phase of a bull market. Yeah, it's not surprising after a two-year bull run that investors are feeling a lot more optimistic. Adam mentioned earlier that the strategist community, which has been doubting the bull market, is now getting on board two years later. And that's just a symptom of what a lot of people are feeling are feeling so our sediment composites which take a lot of this information kind of put it together are showing you a fair amount of optimism now in a bull market that tends to happen and it can stay that way for a while so we don't want to sell just because people are feeling a little bit more jubilant we want to wait for it to reverse, and we haven't seen that yet.

And usually there's a catalyst along the way. It can be a macro front or a fundamental driver of it. And that's when things get tougher. And so that's part of our thesis for next year is that maybe the second half is a little bit tougher than the first half as some of these macro concerns come to light. We have high valuations. We have a lot of optimism. And that could just lead a little bit more downside than what we had, say, the last couple of years when you hit a little rough patch and there was a lot more money still sitting on the sidelines. Yeah. And, you know, and of course, third year of a bull market, if you believe that that history, sometimes a little bit a little bit of a tougher risk reward, even though it's mostly positive. I also was looking at this. So we had 52 new highs, new record highs in the S&P this year. Only a handful of years have had that many or more. 95, 21, 1964, 17, 2014, and 1961.

I just looked at, did the next year have any kind of significant correction? And I'd say, you know, four out of the six did. So we're probably due for something like that. Maybe. I mean, the statistician said we need like 10,000 more years. An 8% drop. Look, I think the biggest risks are one, and they're correlated. But I said a few months ago, when the Fed's halfway done, I'm going to get worried. And so now we could be.

We've done three 25 bips, you know, 75 bips. Do we have more than 75 in front of us or no? If CPI picks up in the second half of the year, the reason that's a problem for stocks is stocks go up when their gross margins go up. And most companies can't handle rising CPI. That'll be the call to get back into mega caps on a relative basis.

And given stocks are, let's say, three to six months anticipatory, if that happens in the middle of next year, it's three to six months anticipatory is like the inauguration date or something like that. So that's what we got all monitor, I think, a little bit. Worry when you're halfway through when you don't know how long it is. That's exactly the trick. Adam, Bryn, Ed, thank you very much.

Happy Thanksgiving, everyone. Happy Thanksgiving. Enjoy the holiday for sure. Let's send it over to Christina Partsenevelis for a look at the biggest names moving into the close. Christina. Well, let's talk about big moves in lesser-known tech stocks today. Semiconductor manufacturer Ambarella surging after beating Q3 estimates. The company makes tips for autonomous driving, assisted driving, video recordings.

It continues to grow its product offerings and market share within vehicles, helping it guide higher for the third quarter in a row. The market clearly rewarding this name right now up about 5%. On the flip side, shares of warehouse automation company Symbotic short-circuiting after it delayed its 10K filing due to accounting errors. It also reduced its first quarter guidance on those errors. Today's move is the largest single-day drop for the stock since June 2022, down 39 percent. Mike. Wow. All right, Christina, thank you. We are just getting started here. Up next, with stocks sitting near record highs,

how should investors be positioning their portfolios into year end and beyond? Jeffrey's Laurie Goodman is standing by with the pockets of opportunity that she's seeing right now. So join me at Post 9 after this break. We're left in the New York Stock Exchange. You're watching Closing Bell on CNBC. Stocks trading near record highs with the major averages on pace for 20% or so gains this year. But our next guest sees more opportunities outside a traditional portfolio of stocks and bonds. Laurie Goodman is the Global Head of Investment and Wealth Solutions at Jefferies. She's here at Post 9. Good to see you.

Hi, nice to see you too. First with the premise of, let's say, you're an investor, long-term time horizon, the traditional mix of 60 percent equity is 40 percent bonds. I mean, it's come in for some stress over the last couple of years. But why would you say that that's not enough at this point? Yeah, I mean, I think we've been in an era of complacency. If you look from the period of the global financial crisis up until one blip in 2022, the 60-40 portfolio really worked. But if you look, that period was also anomalous in that we were in a low and declining interest rate environment. If you think that the populist agenda, which really got

Trump elected, and the rhetoric that he has around it related to tariffs, related to immigrant deportation, it's hard not to imagine that there could be an inflation spike. If there is an inflation spike, the 60-40 portfolio breaks down. Equities and bonds correlate, and they correlate to the downside. So what we're really looking for are what are ways that we can help clients preserve capital, compound capital in any environment, because we don't know what's going to happen with inflation. So you're essentially looking for a more durable inflation hedge or a source of returns that can perform in

that type of environment. Where does that bring you specifically? Sure. So we focus a lot on alternative investments. Private credit has been a very interesting space for some time. And we really like to play in the part of the market that's relatively liquid. You know, we haven't been on the side that a lot of wealth has been on where they're going into the semi-liquid products. We think that those structures are complicated. They're untested in a major liquidity crisis. But we still want to have liquidity. We want to have liquidity inside of three years. So that as markets change, you can be dynamic with your portfolios.

And so in that vein, we found really interesting opportunities in asset-based lending, so inventory receivables and things like that, where you have the benefit if there's inflation, then these assets will benefit from that. But also the loans are floating rate. So if rates come up, you're going to get that benefit as well. We like strategies that are focusing on infrastructure with operating assets. And we've been continuing to look at private credit broadly and direct lending.

And when you say you would kind of look for these structures that are more liquid, so you have a manager that says, OK, you can actually have access more frequently or is it actually a traded product? So it's that there's access more readily available. So we're really, really careful to avoid asset liability mismatch. We saw what that did to the hedge fund industry during the GFC. We saw what that did to some of the banks in the U.S. very recently. And so we want there to be real liquidity in the underlying assets. And we want the liquid terms of those funds to match that.

Do your investors kind of buy into the idea that they ought to be in principal protection mode right now. I'm really looking for signs that people have gotten excited about the returns. I mean, three years, you know, maybe not that great in terms of equity performance, but every other time period, it's mid-teens or better, pretty much, until you go back to 20 years. And yet, bonds have done not much of anything. So I'm kind of curious about the idea that if you had a 60-40, it's the bonds you should be worried about. Yeah. Yeah. Listen, it's a fair point. Our clients are coming to us. We work with a lot of family offices and we're working with them on a case by case basis. A lot of the clients that are coming to us are focused on capital preservation and compounding. Markets are markets are strong

and they've been strong. And you have to realize that if markets continue to be on this tear, you may give up some of the upside if you're diversifying. But for clients who want to really focus on that capital preservation and compounding, we're really recommending this diversified approach. You mentioned the potential for these populist policies of one sort or another to make their way into the economy. How much of a role should that play? In other words, your assessment of where policy is going to end up, given how many offsets there might be and a push-pull of what gets done and the lags and everything else. Yeah. I mean, that's the big question, right?

Will the policy match the rhetoric? And that's the big unknown. And we don't have a view. We have the humility to say we don't know how this is all going to play out. And there's a lot of other dynamics that go into inflation. And look, we've seen labor striking and getting wage increases. Against that, we've also seen that there's going to be a focus on increased energy production in the U.S. that could put pressure on energy prices. There's advancements in artificial intelligence, which you've just been talking about. And we know that tech can be very deflationary. So we're not making the call one way or the other.

We're really trying to say, OK, if you want to preserve, there are opportunities that we think that can give you reliably double-digit, low double-digit compounding returns, some of them in tax advantage structures, where you don't have to make that bet in one direction or the other. All right. Sounds like a decent trade-off. Lori, good to see you. Thanks so much. Thanks so much for having me. Happy Thanksgiving. Up next, your retail rundown. Tomorrow marks retail's fifth biggest, biggest, excuse me, five-day stretch of the year. So who's expected to come out on top

this holiday shopping season? We'll discuss with top retail analyst Brian Nagel after this break. thanksgiving kicking off the busiest season for consumer spending this comes after a mixed read from the retailers in their most recent quarters here to share where he sees bright spots in that space is oppenheimer oppenheimer senior analyst covering consumer and e-commerce stocks brian nagel brian it's good to see you. I mean, we had some pretty good aggregate numbers, I guess, in terms of personal income coming through. The monthly retail sales figures have sort of generally been OK. And then you get this choppy back and forth

with the individual chains reporting. What do you think the general tone is going into this season? Well, look, I know there's a lot of debate on this. I mean, I think at the end of the day, we're going to have an OK, but not great holiday selling season. And there's a lot of puts and takes here. I mean, you, Mike, you mentioned a number of them in the opening. I mean, we can't dismiss. I know this sounds silly to most people, but this is a shortened holiday selling season. There's the fewest days possible between Thanksgiving and Christmas. And historically, that's bad because that because that's one negative. We also have, you know, I see this with all my companies that are reporting lately.

I mean, there are clear indications of a stressed consumer. Now, the consumer is still showing up for big events. So that's maybe a positive for the holiday. But in between these big events, you're definitely seeing signs of a stressed consumer. So I think that's going to all together weigh upon at least somewhat on discretionary spending. Yeah, I mean, it's clear it's not necessarily lifting all boats. So what parts of the industry or what areas of your coverage seem like they're better positioned? Well, let's talk about Dick's Sporting Goods.

So they reported their fiscal third quarter results yesterday. I spent a lot of time talking with their senior leadership. They had a nice quarter, very good quarter. And what they're seeing is continued solid consumer demand for the better brands, particularly in footwear and apparel and some other categories. So I think that's going to be a bright spot, so to say, with the holidays. Consumer electronics, I think it's a little more hit or miss. I was talking to Best Buy yesterday. They're seeing good consumer demand for really large flat panel TVs. But other than that, the consumer is probably waiting around to see what happens with AI. There's not a lot of consumer-facing technologies in AI yet, but you could have some bright spots in consumer electronics. And then one product I want to

mention here quickly, and a lot of people may not be aware of it, but Lovesac. Lovesac's a smaller company, very much a disruptor within the home furnishing space. Just recently, they introduced this new reclining seat for their Saxonal platform. I visited one of their stores here recently. It's a great product. Again, still very much a niche type item, but I think Lovesac could get a benefit here for the holiday season as people buy this reclining seat. Yeah, it was funny. I was just I was looking at that chart. It obviously has had a pretty aggressive move. It's a somewhat smallish market cap. But I mean, when you say it's a disruptor, I mean, is it is it kind of following in the in the path of a wayfarer? Is it more specialized in that? Well, it's similar in wayfaring that it's online. But but love sacks of manufacturing love sack has its own products. It's similar in wayfaring that it's online. But Love Sack's a manufacturer.

Love Sack has its own products. There's really only two lines, a sack and a sectional. But it's very similar in wayfaring that one way it is disrupting is bringing online capabilities to what has been traditionally an in-store experience with home furnishings. Home improvement. I mean, obviously, we got the results from the big ones. And you see the housing data kind of flit all over the place with every move in rates. What looks like is the trend there? Because I got some people very excited about, you know, the breakout in the Home Depot chart. Yeah, well, I mean, look, that's that. I mean, it's evident it's going to this is

going to go obviously beyond the holiday spending dynamic. So, look, what we need for home improvement, and I talk about this a lot on your network, is we need a better housing. We need a stronger housing market. We need more housing turnover. And that's very dependent upon rates moving lower. Now, so far, obviously the Fed now has started to lower rates. We really haven't seen much in the way of moderation where it counts in that kind of 10-year treasury. But I do believe that that will be happening. I think that's going to be a big theme for 2025. That's a positive for Home Depot and Lowe's. We need rates

to move lower. We need the housing market to unstagnate and have people start once again buying and selling houses, moving houses. And I think that's going to be a big positive over time for Home Depot and Lowe's. And the holidays, you know, funny enough, there's a lot of – both companies, Home Depot and Lowe's now have done a great job with holiday assortments, trimetry, those silly blow-up things you put on your lawn. They sell those really well. And also tools. I mean, look, the tool category has become a big giftable category.

Both companies sell very well the tool category. Sure, for sure. And just quickly, I mean, just back to the more traditional holiday theme, you favor both Lulu and Nike. I mean, do you basically think that those brands are back on the upswing? Well, no, look, I think those names set up really well for 2025. Interestingly, I mean, both Lulu and Nike are in a similar position where I think their product innovation lulled. They lulled post-pandemic, and now we're reinvigorating that. Lulu's probably less, there's less of an issue there. I think they've just got a little lax within the women's category domestically. I think Nike needs more of a revamping,

but look, Nike has a new CEO, a person who was historically at Nike, has come back to the company to run that company. But look, Nike has a new CEO, a person who was historically at Nike, has come back to the company to run that company. But I think really, I think those names, Nike and Lululemon, set up very well for 2025, not necessarily the holiday selling season. Got it. Brian, appreciate you running through all that with us. Thanks very much. Thank you. All right. Up next, we're checking the biggest movers as we head into the close. Christina is standing by with us.

Thanks, Mike. Well, coming up, can you guess which Bitcoin miner is nearing year to date highs today? The clue, a quintillion hashes per second. Next. Coming up on 17 minutes of the closing bell, S&P still down about half a percent. Let's get back to Christina for a look at the key stocks to watch. Christina, what do you have? I'm hoping our audience did guess, but let's start with SolarEdge. Popping on news that it's shuttering its energy storage division. It'll reduce its workforce by around 500 employees, which equates to roughly 12% of its workforce.

The stock is getting some relief up over 7%, but still down nearly 85% year to date. Now for that guessing game. Shares of crypto mining company Iris Energy. Yes, Iris Energy surging on Q1 results despite missing estimates for Bitcoin mining. The real story here, though, is the company's Bitcoin mining speed. CEO Daniel Roberts saying the company is weeks away from its goal of 31 exa hashes per second. That's 31 quintillion hashes per second. Do you know how many zeros are in quintillion?

I didn't. I had to Google it. It's 18. A hash is a string that is used to validate Bitcoin transactions. The company will also benefit from higher Bitcoin prices, which Bitcoin is back around, what, $96,000, almost $99,000 right now in Bitcoin proxy. MicroStrategy also almost 12% higher on this news. I'm sure many of our audience members knew that a quintillion was 18 zeros. I didn't, but I wouldn't be surprised if some of them did know that. But thank you for the reminder that this is all about, like,

forcing computers to do math problems that don't have any reason except to create a fake coin rolling off the assembly it's fascinating and it's worth almost a hundred thousand dollars you're sharing your opinion on air i'm observing what this industry is but uh hey uh i'm not exactly uh in the uh you know i can't exactly say that i got that one right let's put it that way our christina thank you so much. You missed the boat. OK, I got it. Thanks. We'll drill down on what's behind the weakness in the software space today. And don't forget, you can catch us on the go by following the Closing Bell podcast on your favorite podcast app.

We'll be right back. Get the power of CNBC Pro with the best deal of the year. Join CNBC Pro today to get exclusive stock tips, essential tools for wealth management, and more with our special Black Friday offer today. Just go to cnbc.com slash pro offer or scan the QR code on your screen. Up next, Urban Outfitters and Nordstrom moving in opposite directions as investors gear up for the unofficial start to the holiday shopping season. We'll tell you what's behind those moves, that and much more when we take

you inside the Market Zone. We are now in the closing bell market zone. HP leading some big movers in the software space today. Sima Modi has the details, plus Diana Olick on surprise upside in the latest housing data, and Courtney Reagan on urban outfitters rallying and Nordstrom selling off. Sima, let's get us started with some rough moves in tech here. Yeah, let's first start with HP falling as PC sales failed to meet Wall Street estimates for the quarter and margins deteriorated a bit more than analysts were forecasting. I spoke to HP CEO Enrique Larez, who said enterprise PC demand remains stronger than consumer demand as companies look to replace and replenish old technology. But the stock

has had a nice run going going into this report stock down 11 percent today. It comes as software stocks are selling off after a big run following the U.S. election workday earnings overnight. A softer guide last night weighing on sentiment. Next week, we'll get a better read as to whether IT spending levels will hold up going to 2025 as the market is expecting when Salesforce and Box get set to report. Mike? Yeah, and obviously the setup might have been a little bit tough with the rally in the software spaces, as you mentioned. But when it comes to HP and maybe some weakness on the consumer PC side, Seema,

I think it's coming as part of a lot of questioning as to whether the AI laptop phenomenon is really going to be a thing. Yeah, that's a great point. We know there's so much spending going into artificial intelligence, but the AI PC number not holding up as well as you would expect. Loretta has told me it was about 15% of total sales in the past quarter, but they do expect that number to grow. So maybe it just takes some time for the customer, the enterprise, and personal computing customer to

become more understanding of what that AIPC can bring them and what the return on investment is. Yeah. Starting to see some ads trying to persuade people. We'll see how it goes. Seema, thank you. Diana, a little wrinkle in the home sales numbers. But in a good way, right? Look, pending home sales actually rose 2% in October, month to month, according to the realtors. The street was looking for a slight drop. Sales were up 5.4 percent compared with October of last year. And this is the highest level on the index since March. And that came even though mortgage rates rose sharply in October, starting near 6 percent and ending near 7. This count is based on signed contracts. So it's people out shopping for a home during the month.

Sales rose in all regions of the country, even the South, where we saw back-to-back hurricanes. Sales of newly built homes, which are also based on signed contracts, actually fell sharply in the South in October. Now, the bump in existing sales recently is probably because there's just a lot more supply on the market. Active listings are now up 29% year over year, according to Realtor.com. And here's my favorite stat, the lockbox indicator. This is a count of how many of those little door key boxes are open to show a home by the real estate agent. The Realtors say openings were up 7% year over year in October, which suggests much more demand moving ahead into the usually slower winter months, right? Yeah, that's fascinating, Diana. If that's really what we're seeing, you know, greater supply, creating more traffic,

as you say, through this lockbox indicator. But it's really been tough to sort out exactly what the trajectory here is of housing. I had a lot of focus earlier in the week on people saying completed homes are way up, but new starts are not up as much. And therefore, it seems like the backlog's being depleted. And I don't know, people thought that might have meant that 7% mortgage rates were going to lock this market up. Yeah, but remember, the builders can buy down the mortgage rates. So they're buying down into the 5% range.

And the trajectory is really going to be whatever the trajectory of mortgage rates is going to be. If it gets even a little bit lower, there's so much pent-up demand out there. Yeah, it does seem as if there's high sensitivity to any potential backing up of those yields. Thank you very much, Diana. And Courtney, two more retail names that are swinging around today. Yeah, lots of moves this week for lots of reasons, Mike. So Urban Outfitters shares, those are soaring, actually on track for the biggest one-day gain here in more than a year after putting up a strong third quarter report and giving positive commentary going into the holidays. CEO Richard Hayne calling his customer, quote, remarkably resilient. That's much more upbeat than we heard from a lot of retailers this week and last.

Citi actually upgrading Urban shares to buy, calling out improved profitability, improving comparable sales, and a fourth quarter comparable sales guide to mid-single digits on strong margins. Jefferies, however, reiterating it's underperformed. It's concerned about negative comps at that namesake brand, promotions, and, of course, increased competition. But by contrast, you're seeing Nordstrom shares lower here after commentary on its conference call casting worry about the holiday quarter on the consumer. The retailer put up better-than-expected sales and profit for the third quarter with strength in women's apparel, shoes, active. But CEO Eric Nordstrom told investors it saw, quote, a noticeable decline in sales trends towards the end of October. So

that then led Nordstrom to give a more conservative holiday quarter forecast, incorporating sort of that downward trend and really kind of pulled the wind out of its sails with that commentary. Back over to you. Yeah, for sure. And, Court, I'm trying to see if there's any patterns here in terms of some of the winners versus some of the ones who had a rougher time and are giving weaker guidance. I mean, Abercrombie, whether it's just right place, right time, right fashion, and they're in that window, they were very confident.

And you mentioned here Urban, too, seems to think their their consumer is in pretty good shape. I know it's so interesting, Mike, even if you're talking about categories and apparel, of course, is the big category. And most of these retailers that we're talking about play in it, either solely if you're Abercrombie or in part like a Target or Kohl's. Kohl's a weakness in apparel. Target's a weakness in apparel. But Nordstrom said it was good. Urban Outfitters said it was good. So is it good or is it not? I guess it depends on what you're offering, who your customer is, and how much you're asking them to pay for it. So it's really going to be time to do some homework if you're looking at stock picking retail stocks right now into the end of the year, because there are very clear winners and losers, and a rising tide with a strong consumer is not lifting all boats.

And, Kourt, I know you're all set up for Black Friday. I mean, where is the suspense in terms of whether it'll be, you know, still a continuing big phenomenon and where it's going to move the needle for what types of retailers? I think it's so much harder to tell these days, Mike, really, because all of these sales and promotions are stretched out over longer periods of time. So you have consumers shopping a little here, shopping a little there, shopping a little in store, shopping online. We often get more data online

because of the availability of technology to track certain things and less in store. It's hard to tell, but with your eyeballs really gauging foot traffic because the patterns are so different now. So it's hard to know exactly where the suspense is because I think it's just so much harder to predict. But we're going to be in stores for you on Black Friday. So we're going to

try to figure that out. Cyber Monday, we're going to be in a distribution center. So we're trying to cover all the bases, see what we can record as things are going on. Yeah, absolutely. Well, I'll be here watching it with you, Court. Thank you very much. All right, as we head into the close, the S&P 500 remains under some pressure, down about four-tenths of 1%. It really is being weighed down by some of the mega cap leaders of the first half of this year. The likes of NVIDIA down another 1%. NVIDIA actually down close to 5% on a week-to-date basis. Market breadth really not that bad, though. There are more stocks

up than down on both the New York Stock Exchange and the Nasdaq. So it really is a mega cap phenomenon underneath the surface. Volatility index around 14. That cracked below 15. That's sort of the low normal area. And that's been a little bit of a benefit, keeping this market not too far from all time highs. The 6000 mark on the S&P 500 is in play into the close. It does look like it's going to fall short. Now, don't forget to tune in on Friday. It is a shortened trading day, but we'll be live here from 12 to 1 p.m. Eastern time on CNBC. That does it. Over to John in closing bell overtime.