Closing Bell - Closing Bell: Tech Takes Off, Crypto Confidence Crisis & Sunny Days 11/11/22

Episode Date: November 11, 2022

Tech stocks rallying again a day after the Nasdaq soared 7% and the S&P 500 posting its best week since June on hopes the Federal Reserve will slow its pace of interest rate hikes. Strategas' Head of Technical & Macro Research Chris Verrone thinks the red hot energy sector is about to cool off and explains why he thinks cyclical stocks are set to rally. Jefferies Health Care Analyst David Windley on whether he sees buying opportunities in the sector, which is sharply lower today, but is among the best performers this year. Cryptos continuing to crash after embattled cryptocurrency exchange FTX filed for bankruptcy. Venture capitalist Eric Hippeau weighs in on whether he sees any buying opportunities among the crypto carnage. And Solar stocks were among the biggest winners this week. Sunnova CEO John Berger discusses how the potential change of power in Washington could impact his business.

This Nasdaq rally, can't stop, won't stop, up another 2% after 7% popped yesterday. This is the make or break hour for your money. Welcome everyone to Closing Bell on a Friday. I'm Sarah Eisen. Take a look at where we stand right now. More than 2% on the Nasdaq. S&P 500 up a little more than 1%. And the Dow up two-tenths of 1%, 59 points. Session high was up 82 points. It really is the growth stocks that are leading. And small caps also outperforming as well, up 1.3 percent. We've got to talk about the Nasdaq today, though, because it is up big again. The winners in the Nasdaq 100 include the pandemic darlings, which had been hit extremely hard in the bear market in recent months. You know the names, DocuSign, Zoom Video, Datadog.

Solar stocks are also soaring this week. Coming up, Sanova CEO John Berger weighs in on how his industry could be impacted by divided government in Washington as we await the results still of the midterm election. First up, though, let's head over to the market dashboard with Senior Markets Commentator Mike Santoli. Incredible that we're seeing follow through after the stunning day yesterday. And now the Nasdaq is having its best week since March. It shows you again how spring loaded we were, Sarah. And the fact that we've gotten past a couple of things, we had a tremendous amount of focus and perhaps anxiety around, yes, the election and the CPI. By the way, we had a crypto blow up this week, too, and it has not seemed to spill over in a way that's too relevant for the broad equity market.

So to me, it's a you know, what doesn't kill you make you stronger. We've talked about that before, Sarah. Now, what it all it really means is we've kind of cleared the thirty nine hundred level, the S&P yesterday. That was very much seen as a hurdle. It needed to get passed. And this market tends to rush to its next test. And, you know, a lot of folks, both those that have been bullish and bearish, would say, OK, there's probably room up to that level, the downtrend line from the whole year, also where the 200-day average kind of comes in. Maybe that's the real make or break or the idea where it becomes a little bit tougher

to decide if you want to continue to ride the rally. A lot of rotation going on below the surface today. Dollar getting crunched, defensive stocks selling off, and high beta, risky ones, real laggards getting bought. Now, take a look at where this NASDAQ pullback from the peak over the last 12 months has taken it. B of A put this together. This is a 12-month change in the NASDAQ composite. So we got to a 35% loss at the max in this pullback here. Obviously, we've had some bigger ones. That was the global financial crisis. And look at this. A couple of different episodes in 2000 to 2002.

Now, keep in mind, we're coming off a bigger high there, but not very much. This doesn't mean that it's just the market raced higher after these lows. What it means is the 12-month rate of change was not as bad. So, in other words, if NASDAQ stays flat, this line is going to go up just because it's coming off of lower levels. But it does show you the intensity of the pullback, and you've only really had it worse a couple of times. That's why perhaps there's some mean reversion means you're buying into some of the growth here just as a trade, Sarah. Yeah, and looking at the NASDAQ's gains, 8.3% this week, still 30% off the high. You mentioned some of the riskier

stocks are getting bought the most. I wanted to point out some of the most heavily shorted stocks in this market. The number one has to be Beyond Meat. It's like 40% of its float is sold short. Look at how they're outperforming today, up more than 8%, Bed Bath & Beyond, Carvana, which everyone hates, soaring double what we saw yesterday. What does this mean for whether we can expect this going forward to see this kind of short covering? It says that it's not yet determined whether this is really lasting. It's just a positioning shock right now, right? If you're basically on the wrong side of a market that's ripping, you have to cover shorts and maybe have to chase some strength.

I don't think that's a long-term tell because bear market rallies are going to look like this. And also, once the ultimate low is reached, usually lower quality, riskier stuff is going to rip. It doesn't mean it's the way that's going to be the leadership for the next bull market, but it's going to have an outsized jump. In other words, it's not necessarily bullish or bearish as a signal itself. It's difficult to say at this point, yes. Got it. Mike Santoli. Mike, thank you very much. Let's get to Chris Verone of Strategas, a bared company. What do you do after two days like this? Heck of a move. Market certainly has some breathing room, I hear, I think, to maybe 41.15, maybe 41.50 in terms of when the next big levels come into play. But let's take a step back. It's so tempting to want to go back to the old leaders,

to go back to the top of the market, the techs, the apples, the animals. I think that would be the mistake here. When we look at what are the stocks that are acting demonstrably different or demonstrably better than where they were earlier this year, it's industrials, it's financials, it's still energy, it's some health care. You get these big, ripping, mean reverting moves in the techs and the growths here. I think chasing those is a mistake. I think adding to energy, industrials, financials as they come in here makes sense. Why is that a mistake? It would seem logical that if you do think inflation is coming down and the Fed is going to do less, which is what the market is telling us this rally is all about,

wouldn't you want to buy the ones most beaten down by higher interest rates? I think when you look at the top of the market, let's say the top five stocks, at one point were 25% of the S&P. That's roughly similar to what the top five were back in 1999. That top five weight in 1999 ultimately bottomed at 5% of the index seven years later. I think this process, this secular process away from the top of the market back to the average stock is one that's going to be measured in years, not in months or quarters. And when we look at some of the, what I would call garbage,

that's kind of rallying off the low, the Carvanhas, the stuff that's down 90 plus percent. The highly shorted names. Some of those things are up 30 or 40 percent this week and are still down 80 or 90 on the year. It reminds me so much of how the real stocks in the market had to disassociate themselves from the beaten down dot-com stocks of the 2001-2002 period. You had to disassociate yourself from the stuff that I think is permanently broken, the lower quality, the ARK stuff, the IPOs, et cetera. You think that's permanently

not a good investment? I think for the minimum of the next cycle, we're not going to go back to that stuff as leadership. There has to be a period of purgatory or apathy or just neglect for that part of the market. I don't think we've seen that yet. So you like the value or cyclical stocks. Cyclical stocks, though, going into a potential recession here where the Fed is still raising interest rates into an inverted Yield curve? Yeah, and this is kind of what we wrote this morning. We're trying to marry in a very maybe nuanced way respect for the tape here because there's certainly momentum behind us with respect for the cycle.

And I think, Sarah, as you mentioned, three-month tenure is inverted right now, as it's been the entire cycle. I think negative 35 or negative 37 basis points this morning. So we know what's on the other side of that typically. You can get good rallies with inverted curves. We had it in, let's call it 2007, when stuff like industrials actually led. I also think the 01 experience with industrials is interesting. That was an anything-but-tech market. And industrials were leadership even into and through the 01 recession.

So you like industrials better than energy? Do you think energy still leads this market? I think energy is our secular leader. Now, I'm not so naive to think that in a recession energy would be immune. But what do leaders do? Secular leaders, when they correct, they're not immune, but they come back faster. Think about this summer. Energy got hit hard this summer. I think at one point, Ex-Lead was down maybe 25, but it came back faster. That's

how leaders behave. And I'm just still struck by the fact, if you look at the flows in energy, they're really not that extreme. And if you look at energy's weight, it's still only 5% of the S&P. The long term means 11. We're in a reversion through the mean business. I suspect kind of over the course of the secular here, energy is going to command a much larger weight in the index than it presently does. It's what, 5% of the S&P right now? 5.5% right now, Apple's 7%. So can those two lines cross? Yeah. I don't even think that's a bold call. Is there anything that could change that would make you feel more bullish on tech?

Well, I'm a chartist, so I guess prices, right? But I keep looking back, you know, the moves we've seen in the Apples and the Teslas and the Amazons and the Microsofts and the Googles this week are from very, very broken conditions. I think at a minimum, the amount of time to repair those charts is going to be measured in months or quarters from here. And remember, when NASDAQ bottomed and when tech bottomed in 2002, it still went on to underperform for five more years. So the price low was not the leadership low. I think it's a really important point here. So what about your crypto chart? Last question. How impactful do you think that is to the broader market? Did not stand in the way of this giant rally, as Mike noted. We have a rule. We always say accidents in this business happen below downward sloping 200-day moving averages. The accidents happen when you're already down 50 or

60 or 70, as Bitcoin was. I think much like I would view the ARKs or the IPOs, there is a period, a long, long period of purgatory and neglect in front of crypto before I think it's even remotely considered investable again. What are your secular periods you're looking at? I think years. I mean, talk about tech in 02. Tech bond 02 didn't lead again until 2010. Banks in 09, they really haven't led against since. This takes a long time. Yeah. Bitcoin, by the way, not joining the rally today, unlike yesterday. It's down 8.5%. Chris Ferron, thank you. Great to see you. It's great to talk to you too. Up next, venture capitalist Eric Hippo on the crypto collapse and whether he sees any investment opportunities amid this turmoil.

Plus, investors rotating out of health care stocks. Take a look. They've been huge winners this year, not so much in the last two days. Some of the losers right now, including UnitedHealth, which is the biggest drag on the Dow right now, which has just gone negative, down one point. S&P 500 and the Nasdaq holding its gain. Nasdaq comp up 1.7 percent. We're going to talk to a top analyst on health care in particular, see whether he sees any buying opportunities. Closing bell back in a moment. Bitcoin selling off again today despite the market rally after FTX did file for bankruptcy. What a week. Kate Rooney here with the details.

So what next, Kate? Feels like there's still a lot we don't know. A lot we don't know, Sarah. We're expected to get more paperwork in the bankruptcy court in Delaware, so we'll keep an eye on that. But this was a rapid fall for what was a $32 billion company just a few days ago. Technically, CEO Sam Beckman Freed now stepping down. He says he'll stay on through the Chapter 11 transition. CNBC has also learned that Daniel Friedberg, FTX's chief regulatory officer and the firm's former general counsel, stepped down this week and stepped down on Tuesday specifically. This is according to a source familiar with the matter.

This bankruptcy filing does include Sam Bankman-Fried's quant trading firm, Alameda Research, as well as 134 affiliated companies all over the world in Uganda, in Europe, Hong Kong, Switzerland. The list goes on. And the estimated liabilities stand at between $10 and $50 billion. And there are more than 100,000 creditors listed in this paperwork. Sam Beckman-Fried and FTX had been bailing out a lot of others in the industry. And they'd raised money from some of the premier investors in Silicon Valley and in the world. SoftBank is on that list.

You can see some of the big names there. Coinbase Ventures and the venture arms of that business also saying that they are writing down that investment. A source familiar with that investment tells me it plans to write off the entire value there. This company, Coinbase, will also participate in the FTX bankruptcy proceedings and is seeking a claim on about $15 million in deposits that are at FTX right now. They also say the exposure is not material at this point. Sam Bankman-Fried tweeting about it this morning. He apologized and said essentially, I'm sorry that we ended up here. He says he's shocked to see how things unraveled the way they did earlier this week. All of this, Sarah, though, hitting Bitcoin prices.

You've seen the jitters this week about more shoes to drop potentially and other counterparties out there. Robinhood and Coinbase are higher today, but they are still down for the week. Back to you. Right. And CZ, the CEO of Binance, which passed on the deal in a conference overnight, saying this is like the 2008 financial crisis for crypto and we could see more businesses fail. So to be continued. Kate Rooney. Kate, thank you.

Thanks, Sarah. Let's bring in a veteran venture capitalist voice on this story. Joining us is Eric Hippo, Lera Hippo, managing partner. Eric, it's good to see you. So you are not, you didn't have any investments in FTX or anything affiliated, correct? But you do have some crypto investments. Does it make you think twice about them? Well, we, hi Sarah, we have crypto investments, but they're on the infrastructure. We never invested in exchanges or coins or, you know, protocols. And, you know, what's happening this week is very serious because it has the potential of contamination pretty much throughout the ecosystem. The total value of crypto assets just this week fell by about $150 billion.

The entire crypto world now is worth less than a trillion dollars when it was worth $3 trillion at the end of 2021. And so there are serious questions. And really, the main question is, can the trading market in crypto survive without regulation? What is your take on that? My take is that the industry should have gone through a serious self-regulatory process and that there's really no choice if the industry is to thrive to accept being regulated, because that's the only way you're going to bring trust back into the system. I think the ripple effect on the venture capital world is also interesting here, Eric. Obviously, Sequoia has been front and center, marking their investment in FTX to zero. And some revelations of papers seen by the Financial Times showing that it looked like there was a lot of self-dealing here.

Sequoia investing in FTX, using client funds then through its other firm, Almedida, to invest in Sequoia? Like, what do you think is the impact here on the venture world? Well, first of all, Sequoia is definitely a top-tier investor. And I think the fund that they invested in already has more than return capital. So that's not the issue. The issue really has to do with due diligence. And in this particular case, there were a lot of other investors, SoftBank being others, and some big, big pension funds, et cetera. But it doesn't seem like anybody took responsibility.

It's what we call a party round where everybody comes in, makes their investment, but there's no lead investor. I don't believe that the investors had a seat on the board of directors. So there were some regulatory and compliance issues that the investors should have known better. Is there any opportunity here for you in the middle of this crisis of confidence in crypto and the ecosystem? Well, we're very big believers in the blockchain, and we're big believers that the blockchain will solve problems other than in the financial markets and we are continuing to look at opportunities to invest there. You know, other than that, we do a lot of investments. Most of our investments have nothing to do with crypto and that there's, you know, the world is full of opportunities at the moment. I'm also curious, Eric, what you make of the Twitter latest,

because I know you're watching this carefully. I don't think there's any investment there. But what's your feeling so far on what Musk is doing and where he is taking this company? Look, I've seen a lot of chaos in my career, but I don't think I've ever seen chaos on this scale. It's hard to fathom. In a matter of two weeks, half the employees were fired. Some of them were fired by mistake and rehired. The great, great majority of the senior management is out. A lot of the

advertisers are pausing their investments on the platform. They just launched this verification program, which is very similar to the one before. That was meant to really identify people that you could trust. Now everybody can pay into that. So Twitter is a very valuable platform. It's used by, I use it for professional reasons. It's really hard to understand where all of this is going to end. But do you have, would you invest with Musk on this?

Well, you know, I don't think I would have invested at $44 billion, which everybody, including him, admitted that it was overpriced. I guess Musk is one of these people that you don't really want to bet against. He's been hugely successful. So I think he'll do OK. But it's hard to see how this is all going to unravel. Eric Hippo, thank you for joining me on some of the hot topics in our world right now. We appreciate it. Bitcoin lower, Dow back in positive territory, up 10

points. The S&P 500 going strong. It's up a tenth of one percent. We've come off a little from where we started the hour, but you've still got strength in the most beaten down parts of the market. Consumer discretionary and energy stocks are actually leading, not so beaten down, but communication services, tech, materials, financials, they're all higher. Healthcare is lagging today. So are utilities and consumer staples. How about the U.S. dollar?

It's been having a huge year, but selling off hard this week. Up next, the big picture on what is behind the pullback and what comes next. As we head to break, check out some of today's top search tickers on CNBC.com. The 10-year Treasury taking the top spot again. Actually, the bond market is closed today, so can't really tell anything from that.

But people are still searching it anyway. Got that big buying yesterday with lower yields. Twitter, Tesla, Amazon, and the S&P 500 all green for the week and for the day. We'll be right back. In today's big picture, what a week for the U.S. dollar. Some serious weakness here after spending much of the year going up. The dollar lost 4% of its value this week, worst week since March 2020. Why? Lower inflation numbers pointing to fewer and

less aggressive interest rate hikes from the Fed. That's all a trigger for a weaker currency. Also, gradual easing of China lockdown policies and hope that Europe's energy crisis is getting better, all helping out the mood. And we know that's positive for stocks, too. Look at how tight that inverse correlation is. In other words, they move in opposite directions. Stocks like it when the dollar weakens because that strong dollar has been a big headwind for earnings from tech to health care to consumer companies. Just yesterday, Ralph Lauren said the dollar shaped 8% off of revenue and Tapestry cut its guidance, noting a 20 cent hit to earnings for the outlook for the year because of the strong dollar. So the question everybody's wondering is, has it peaked for now?

Bears say, sure, it got too strong. And as long as inflation comes down steadily and the hard landing chances diminish, the dollar could keep weakening here. Bulls say inflation is still high and the Fed is not backing down so easily and is still moving more aggressively than, say, Japan or Europe or China on raising interest rates. Longtime strategist Kit Jukes of SockGen says dollar bulls have been shaken this week. We are confident that the dollar will be significantly weaker in six months' time, but we remain wary in the coming weeks. There are still traps for overenthusiastic dollar bears. Watch the bond market for clues. Closed today, but

when we see bonds rally like we saw yesterday, the dollar does weaken. Weaker economic data, softer inflation prints, that will really be the key here, Mike. As it is the key for stocks, it does feel like it's all one big trade, teed off inflation. I think the question is, do we shift into weakening economic growth? And does that mean the dollar weakens or is it just going to be worse overseas so the dollar strengthens? It's hard to tell. It's fascinating because remember back when people thought the U.S. dollar index at 100 was going to be bumping up against the ceiling for the longest time? It seemed like that would be extreme. Now we're celebrating a pullback to 106. So it just shows you there was probably an overshoot. It did become a crowded trade. And I think the reason the inverse correlation with stocks has been so pronounced this year is

not just the earnings effect, but it's because dollar strength has been a proxy for how aggressive the Fed has to be. And that's been the main pressure point. So here, so does the economy have to weaken for the dollar to stay tame? Or can the Fed just decelerate in its tightening program? That's the big question. It's finessing it. It's interesting today to see ECB officials saying that the markets overinterpreted the CPI decline yesterday, implying the data in the U.S., implying they're not prepared to become any less hawkish. I just feel, I think it's hard to say, but if the U.S.,

if the Fed becomes less aggressive, everyone else is going to become even less aggressive than the Fed because they don't have as strong a growth as the U.S. No, that's right. It's always against somebody else. Yeah, another currency. Solar stocks. Thank you for indulging me. Dollar was a big deal this week. Solar stocks rallying roughly 10% this week. And Sunova, one of the big winners in the group, a more than 20% gain for this stock. Up next, the solar company CEO discusses how recession concerns and the outcome of the midterm elections will impact his industry. Plus, the sequel to Marvel's Black Panther is expected to dominate the box office this weekend. And today's stealth mover could reap big rewards from that potential blockbuster film.

Details when Closing Bell comes right back. Check out our stealth mover today. It is IMAX. Stock is popping like popcorn. Wedbush adding the company to its best ideas list today, saying it could be a blockbuster winner from a slate of strong films, including this weekend's release of strong films, including this weekend's release of Black Panther, Wakanda Forever, the consumer shift as well toward premium

theatrical amenities and a way to position for a rebound in China's economy. Having a good month so far. Solar stocks also soaring this week after two key catalysts. First, the Democrats did better than expected in the midterm elections. And then yesterday, California regulators backed out of a proposal that would have reduced credits given to solar panel consumers. Joining us now for CNBC exclusive interview is John Berger, CEO of Sinova, a residential solar company. This talk has done very well lately, John. Is it tied to political fortunes, your industry? Well, thanks for having me, Sarah. It can be.

Certainly there is a perception that it is. And so when you look at the federal elections and then when you look at the action in California, quite honestly, the action in California has more meaning in terms of actual impact, especially on my portion of the renewable energy industry, which is on the consumer side of the meter, so to speak, or on the homes and businesses. So it can have an outcome. I will say this, that I think on the federal side of things, I think we landed. We don't know all of what happened yet conclusively, right? We don't know where the Senate is, and that's the major

point. But if you look overall, I think we actually ended up in a sweet spot for the industry, the renewable energy industry, and for the hydrocarbon industry. It's likely that we will, in my mind, less likely to get a permitting bill that Senator Manchin wanted, given the dynamic of what happened. It's not an overall crushing win for the Republicans led by Trump. It was actually Trump was fairly humiliated, as we know. And it's a small win, though, in the House for the Republicans, it looks like, and possibly the Democrats keep the Senate. So it's going to be more of a gridlock, and that's going to be constructive for both renewable companies. No new negative policies are going to be passed.

And then on the hydrocarbon side, we won't get the permitting and the pipelines that we should have. But you know what? There's not going to be any real action against them as well. So there's going to be, I think, a nice environment for energy over the next couple of years at least. I feel like conventional wisdom, John, around the solar industry and your stocks has been the Democrats' control is the sweet spot for you, right? That's where you got the Inflation Reduction Act passed, where there are loads of incentives and money passed for your industry. Well, there are, and there's also a growing amount of consumers across the country

that want consumer choice, and that is to be unshackled from the monopoly, the utility, and essentially have the ability to choose your power provider. And typically, the Republican Party is led in those kind of consumer choice, consumer focused areas in terms of opening up industries to competition and capitalism. And so that's favorable from the Republican side of things. And the Inflation Reduction Act has already been passed. And so we've got a 10 year plus runway on that already. So what else could we get? It's really hard to come to a conclusion

about what else is needed at this point in time. So I like the fact that we're going to have a more balanced political environment. Let's start thinking about things like how do you bring these new technologies, innovation, job creation, wealth creation into the U.S. power industry really for the first time and open things up and give consumers choices so we can get those power bills down even as they go out and buy electric vehicles at a pretty brisk pace. We need to find ways to unshackle the consumer and allow choice there. And I think this balanced Congress possibly gives us an environment to do that. Okay. So beyond the politics, John, I wanted to ask about your business right now, because on one hand, I know that we have very high utility bills and electricity bills, and that's

helping people go into solar. At least your industry positions itself as a better cost alternative. But on the other hand, the housing market is getting crushed right now, so people aren't buying as many homes and probably not as installing as much solar. How does it all shake out for you in terms of demand? Well, in our new homes division, we have seen a drop off, but it's not very significant. Remember, Sarah, in terms of solar service, we still make up a very small portion of the overall new homes business. So we can continue to pick up market share and quite a bit of it, even as the housing market comes off pretty hard, which I think you're aware. My view on this has

been for quite a while that the new homes market was going to be under duress given mortgage rates moving up because the Fed increasing interest rates. But overall, to be very clear about the vast majority of the solar industry and our business is really driven by existing homes. And so when you look at what drives a consumer to go out and get Sunova service, it's really about that escalating utility bill. It has really nothing to do with the value of their home or whether they bought a new home or not. It really has nothing to do with that or very little. It's all about those utility bills.

And what are those utility bills doing? They're skyrocketing. They're still going up. Even as interest rates come off a little bit here and even some natural gas pricing comes off a little bit here, the utilities continue to raise rates as recently as this week across the country and continue to push those prices up and up, just as people need to be able to have a little more cash in their pocket because the economy is getting a little more difficult because of the Fed rate increases. So solar is something that more and more people are finding that makes a lot more economic sense. And as they're focused on saving money for their family, they're coming in and they're going Sanova.

Yeah, well, we saw it in SunPower's earnings earlier this week. Talk to the CEO about that phenomenon as well. John, thank you very much. Good to talk to you. A lot going on for you guys right now. John Berger of Sanova. Take a look at where we stand. The Dow's up two points. It's underperforming certainly the Nasdaq today and the S&P and the small caps. Nasdaq's still going strong with a one and three quarters percent move higher. Apple, Amazon, Microsoft, NVIDIA, Alphabet, Tesla all leading the way right now. As far as the S&P, energy is the best performing sector, but consumer discretionary, communication services, and tech are having a strong day.

So first, Adidas slashes its outlook following the company's split from Ye. Now Wall Street is buzzing about another potential company that is facing fallout after this breakup. We'll share the details and the name next. More Kanye West fallout for corporate America. It's still coming. Analysts at Citigroup this morning slapping a negative catalyst watch on Foot Locker, citing a big Yeezy headwind.

Foot Locker, remember, stopped stocking the shoe when it cut ties with Ye after Ye's anti-Semitic hate speech last month. Foot Locker even boxed up and sent back all its remaining Yeezy products. Citigroup also pointing out this comes after Foot Locker decided to increase Adidas exposure after Nike scaled back its sales via retail partnerships, including Foot Locker. That means the company's going into the all-important holiday season quarter with significantly fewer Jordan Retros and no Yeezys, says Citi, which expects a, quote, significant guidance cut for Q4. Remember, Foot Locker's got a brand new CEO. Mary Dillon started the job in August. She was hired in part to help Foot Locker's digital operations.

E-commerce sales at Ulta, which is her previous company, increased by nearly eight times under her leadership. The market is very excited about her arrival at Foot Locker. The company declined to comment to CNBC on this story, but it is in quiet period ahead of third quarter earnings next week. Market doesn't seem worried about it, though. Shares are up nearly 8% since Foot Locker announced it would stop stocking Yeezys in late October. When we come back, AMD rallying on a new chip launch that analysts are very bullish about. Details straight ahead. That story, plus Chinese stocks keep surging and health care slumping when we take you inside the Market Zone.

We are now in the closing bell market zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of the trading day, as always. Plus, Deirdre Bosa is here on the rally in Chinese stocks. And Christina Partsenevelos on AMD and the chips. Let's kick it off broad, Mike, because all of a sudden we're at session highs. The Dow just taking a little bit leg higher, up about 80 points or so. Again, it's still lagging behind the S&P, which is up a full percent, and the NASDAQ up almost two. It looks like we're going to go out on the week strong, more than 8% for the NASDAQ, Mike, and 6% for the S&P 500.

Where does this bring us as far as levels and what we can anticipate next? Well, it's interesting. The S&P 500, just in the last half hour or 45 minutes, rushed right up to that 4,000 level, took a beat, paused, pulled back a little bit, and then regrouped and went over it. So there's definitely a little bit of a tactical orientation to this market. People trying to chase and figure out what the next barrier might be to the upside. Somewhere near 4,100, actually, just short of that, is probably where a lot of people are going to be focusing. Bigger picture, though, we came into the week talking about the tendency

for the market to exhibit some strength after Election Day in a midterm year into year end. We all knew that. There was a lot of skepticism around it because of the macro picture. But just getting through earnings season, getting through the election itself, and then obviously, you know, what's come since then with the CPI data is just, I think, reduce the blood pressure of the market a little bit, let the blood start pumping more freely. And that's where we are right now. It's a little bit less news-driven than it's getting through some hazards. I just wanted to point out, you know, we've been talking about this rotation in the market right now, a fierce one into tech stocks,

into pandemic winners, into heavily shorted stocks, into what you call the riskier stocks, right? That's underperformed. Not everything is winning in this rally. The money coming out of the safe havens. I just wanted to point out Hershey as an example, because it's kind of been a poster child for what has worked this year. The stock is up double digits still so far this year, but for the week, it's down about 6% or so, and it's the worst performing consumer staple today, 3%. It's considered safe. It's considered growth. It's considered domestic. Really, everything that the market has wanted all year long until two days ago. Yeah. So what happens to some of these? You can pick a health care stock or a lot of these food stocks in particular.

What happens to this group? Well, in a sense, the defensive stocks have done their job. They've done what they're supposed to do. As the S&P went down over 25 percent at the lows, they've held their value. And what you're seeing today is just a repositioning out of the year-to-date winners, the quality areas that have worked well, that's defense contractors, insurance, lots of parts of healthcare, including pharma and healthcare services. Those are the weak spots, along with consumer staples. So it doesn't mean that it's game over and all of a

sudden people are going to rush back into the growthy stuff and the lower quality names. But it does show you that there's a sensitivity among investors to not wanting to miss that risk rally that might be taking hold. We just don't know. But it's a matter of let's not stay too defensive or too bearish if, in fact, it's going to happen that way. And you know what a lot of people say? Wait for the market to prove it. Wait for the market to start a new uptrend. Wait for the market to tell you that, in fact, it discounted all the bad news. That's a fair point. But when that happens, the market will be up 20 percent off the lows. It doesn't happen

at the lows. Right. You missed a big part of the move. Let's hit the China stocks because talk about a rally rallying again today after China's state media reported the country would ease COVID travel restrictions. Proposals include a shortened quarantine length, a positive for the group, certainly, which has been weighed down by extended lockdowns. The K-Web China Internet ETF, one of the best performers now on track for its best month ever. Deirdre Bosa joins us. Deirdre, so some light at the end of the tunnel on the zero COVID policy here for these stocks. Yeah, and if you have the risk appetite for it, China has been a great place to be this month.

Take a look at the month-to-date gains. The K-Web is up 25% versus 7% for the Nasdaq. So this outperformance really shining through. However, I always like to look at this chart as well, which goes further back to the end of 2020. And you can see what a terrible bet the K-Web has been. They have been such huge underperformers, not of the broader markets, but of tech as well. What's happening now, though, is foreign traders are embracing Chinese stocks. They kind of sat the rally out so far. But Sarah, as you mentioned, that relaxation and COVID policies that we got Friday Beijing time is causing those foreign investors to get back in to test that risk appetite once again. And some say that the fact that this policy relaxation

is coming from Beijing at a time when COVID cases nationwide in China have surged to a six month high, you've got major outbreaks in Guangzhou and Beijing, that makes us all the more significant, i.e. maybe this is a sustainable rally because certainly we've been here before, Sarah, in terms of is China investable or not? Is it going to open up or not? No, it'll be a test with those rising cases, Deirdre. Thank you. By the way, it's extending to names like Estee Lauder today, really strong with the China exposure. They got hit this quarter, remember, on China weakness. That stock up 4.3 percent. Some of the European luxury names like LVMH and Richemont also rallying big on this news.

Let's hit the chips, though. AMD, one of the top performers in the S&P, after launching a new data chip code named Genoa. And an analyst says it could be a game changer. Rosenblatt Securities calling Genoa a monster. Wedge Bush says it should have been named Domino's because it delivers. Christina Partsenevelis joins us. Christina, why are analysts so excited about this? I thought that was a pretty good joke, but the street likes this because this, for one, AMD has launched a chip that is supposed to be 54% faster and uses 54% less power than its competition. But the important thing is

that it beat out Intel. Intel has a CPU that was supposed to launch the Sapphire Rapids. That got delayed until January. So this is another opportunity for AMD to steal market share away from Intel. AMD also announcing with this launch of this new fourth generation chip that some of the customers are pretty big players, Microsoft, Oracle, even Amazon among them. So that's helping the stock as well. And then another factor just yesterday, TSMC put out their October sales numbers up 56% year over year, the second highest sales month in history. So that's showing that the market for some companies is still pretty strong. And that is also helping the SMH and the SOX. The SOX having the best week ever, the SMH best week since 2001. So again,

AMD chips, the new processors that they launched is helping that stock up 6%. Christina, thank you. Christina Partsenevelos. Mike, that's going to be your nickname, Domino's, because you also deliver for us every time. So what do you do with this sector, which is, as Christina said, having its best week ever, still about, what, 30, 25 to 30 percent off the highs? And there are concerns about the cyclicality and what's going to happen to earnings. First of all, I think it's the mailman is who delivers, if you want to go back to NBA nicknames. But look, it's obviously a good additional reason to decide that AMD can reemerge from this phase as a leader, aside from just, hey, they're down a lot and maybe the cycle is going to restart again pretty soon.

So it makes sense. Right now, it does seem very much like, you know, oversold former leadership group coming back hard. But there's some there's some traction here. And, you know, the valuations have become much more reasonable across the board in this area. So probably gives people a little more faith that there's more to it aside from just, you know, strictly buying the stuff that's beaten up the most. Let's add health care. It's the worst performing sector in the S&P 500 right now. The biggest losers in the group, the managed care providers, United Health, weighing on the Dow, Humana, Molina, Centene.

They're all sharply lower. Let's break down the move with Jeffries Healthcare analyst David Winley joining us by phone. Is it just because, David, it's been such an area of strength for the market so far this year and that's reversing now? I think you're exactly right. I think you and Mike have framed this really well, that these stocks have done their jobs. They're defensive. They've beaten numbers every quarter this year. They've raised EPS estimates by 4% versus an S&P 500 that's going the other way. The stocks have been a safe haven. They've outperformed the S&P 500 35% year to date

until the last couple of days. And now they're giving some of that back because they've done their job, but they're not really where people want to rotate to at this point. Should they be wanting to rotate to them? Do the valuations still look attractive, given what's happening with fundamentals? Right. So fundamentals are really good. The companies have set themselves up for another strong growth year next year. You still got to believe that investor or that customers don't want to exit their health insurance with a pandemic still kind of the lingering elements of a pandemic still going on. However, the valuations are eight to 10% still above historical averages. So they're not cheap stocks. They've been,

you know, they've been safe havens. They've been comfortable places for people to hang out and hide money. And so from a valuation standpoint, they probably need to find a new base. And then, you know, and then earnings can deliver upside to the stocks into 2023. I know you have buys on Humana, hold on UNH. Why has this been one of the strongest part of the health care sector? What's going on with managed care? Well, there's a couple things. The pandemic, some government-sponsored support and policies during the pandemic have actually increased membership in managed care plans. So protections in Medicaid, for example. So membership has grown. But at the same time, concerns about COVID have kept people out of

the hospital to some degree. And nurse shortages have also impacted the ability for people to get elective procedures. So that's actually good for managed care. So those things combine to make earnings even better than what they might normally be. And when you add that to the defensive nature of the businesses, naturally, they've really been an attractive place to be. Well, thank you for joining us to talk about some of the calls and evaluations in this space. We appreciate it. David Winley from Jefferies. We've got just about two minutes to go in the trading day. Hanging on to a nearly 1% gain in the S&P. 1.8% for the Nasdaq takes the gains to 8% this week.

Mike, what do you see beneath the surface in the internals? Yeah, it's another broad rally, Sarah. Yesterday, it was something like 85% upside volume. It didn't quite click to that overwhelming 90%. Today, again, it's pretty strong. It's 75%, let's call it. So still broad. The equal-weighted indexes are beating the market cap weighted ones again. So small cap strength there. Average stock participating.

We were talking about semis as well as the equity markets ability to shirk the pressure, perceived pressure from what's going on in crypto. Take a look at Bitcoin relative to NVIDIA on a year to date basis. Now, over multiple years, of course course it doesn't link up as well. But until very recently this was the same chart. And look how they've gone in different directions. Adjusting the last little week right here for obvious reasons Nvidia sort of the same kind of tech stock. That people exposed to crypto would own it has a fundamental link there as well so. At least a slightly hopeful sense there. That the- the crypto carnage is being. Fire walled off at this point. The volatility index coming in hard under 23 right now. Low 20s, maybe 19, 20 has been where it has based out and equity rallies have rolled over.

We're not quite there yet, Sarah. So this strong day coming on the back of a huge rally yesterday. Just want to show you what's happening right now. The Dow is up about, well, not too much, eight points or so, nine points. But the strength is really in the tech land where the Nasdaq comp is up 1.8 percent, up 8 percent, as I said, for the week as a whole. The bond market, remember, is closed today for Veterans Day. But the dollar always trades and it's weaker. Again, a 4 percent decline for the U.S. dollar index. That's got to be helpful for stocks, along with the fact that we saw softer inflation reports

and decreased odds of aggressive Fed tightening in the market. All of that is leading to a rally in some of the hardest hit parts of the market. Consumer discretionary, communication services, technology, energy today. Those are all your leaders. For the week, it is tech. The tech sector up 10% on the week. Communication services up nine. Have a great weekend, everyone.