Closing Bell - Closing Bell: Tech Trade, December's CPI Report & DOT Sues Southwest Airlines 01/15/25

Episode Date: January 15, 2025

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

Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with a big sigh of relief following today's lighter CPI, the subsequent drop in yields, and of course, the big move in stocks. We'll ask our experts over this final stretch what it all means, including Fundstrat's Tom Lee. He'll be here in just a few. In the meantime, we'll show you the scorecard with 60 to go in regulation, been higher all day. You know that after that inflation print. Take a look at the NASDAQ today, up 2.5%. S&P is good for about two. News of that ceasefire in the Middle East adding to the positive sentiment, no doubt today. The VIX dropping back under 17. So we really do have a much needed drop in volatility as well. Standouts today include,

of course, the banks. Bank stocks are higher today after those strong earnings. J.P. Morgan and Goldman. There's Goldman up 6 percent. Take a look at Citi and Wells Fargo as well. Look at those gains. You don't see that that often. Most of the mega cap techs, they're higher as well today. Meta is one of the standouts, along with Tesla, which is higher by 7 percent as well. It takes us to our talk of the tape.

Can stocks get back on track and can this rally now resume? Let's ask our panel. Cameron Dawson, chief investment officer for New Edge Wealth. Adam Parker, the founder and CEO of Trivariate Research, a CNBC contributor. Both are here at Post 9. It's nice to see you both. Great to be here. Cameron, to you first. Are we all right now? I mean, we were worried. You know, these rates have been backing up a lot and we're worried about inflation moving higher and rates moving higher. And we did get that relief today and the market loves it. Yeah, we did think that rates moved a little bit too far, too fast. Look at the two year. It traded up to four point four percent, which is just slightly below where the current Fed funds

rate is at four and a half percent, which effectively said the bond market was starting to price in the risk of further hikes. And so you get this slightly softer than expected inflation data, which allows you to have this big relief rally, mostly in the interest rate sensitive parts of the market, which you're seeing the Russell 2000 outperform so much on that. Doesn't mean that we're necessarily out of the woods for things like small caps in the volatility that they've been experiencing. But the sigh of relief is welcome. Can we take a chill now on this whole the Fed is not going to do anything? Oh, my gosh, they may actually hike before it's all said and done because of what the

prints were today. That Goldman Sachs asset management today, while today's release is likely insufficient to put a January cutback on the table, it strengthens the case that the Fed's cutting cycle has not yet run its course. I feel like we had gotten to the point where we were like, oh, my God, they might not do anything anymore. Yeah, I guess with some perspective, I'd say I don't know if it matters, meaning at some point, if you think the Fed's half done, two thirds, three quarters done, you just can't argue you have as much of the accommodation in front of you as behind you.

So I don't think we're as bullish as we were a year or two ago. We could say, wow, we just started the cycle. The Fed's going to be there. What got a little weird to me was the market was going up late last year, even when people were still hawkish. So today makes sense. You get dovish, the market goes up a little bit. But I don't know if we're going to get only dovish data points for the next six months. If we do, it means the economy is disappointing.

So I would say there's pillars to the bull case. They look less interesting to me and lower probability than they did six months ago. But at least for now, people aren't going to think they're going to hike in the first half of this year. But what if we're getting so-called hawkish data points for the right reason? What happens if growth remains strong? And then if inflation remains where it is or even ticks maybe down? The stock market goes up. Answer that question, the stock market goes up.

Yeah. Why isn't that the base case? I just look at the world right now and I say, what made me super excited about equities two years ago and a year ago? I had early phase of the Fed no longer true I had massive US deficit which really was a fiscal stimulus now I got these guys coming in they're going to look to reduce that and maybe be more efficient with that I had a dream of a China stimulus that looks less interesting I had some bull things now that I didn't have before. Massive potential

M&A cycle, less regulation. I get that. And maybe some earnings proof cases on AI. You're going to have fiscal stimulus through re-upping tax cuts, if not even giving more tax cuts? Well, I think it takes less hikes off the table more than it takes lower taxes from here. So I think that's bullish skew. But I'm just saying if we're looking at all the things that make you bullish, margins are up a lot. I think I need revenue acceleration now. And I think what got in the price after the red sweep a little bit was more revenue acceleration than we're likely to see. So I'm not saying it's like sell right now.

I'm just saying we're going to chop around until we get a little bit more comfortable that your base case you're painting out, which is that growth is okay and inflation, that's possible, but I would say it's less upside than it was a year ago. Well, I mean, I feel like it can be your base case, albeit with elevated volatility at the same time. That makes it a little more tricky. We think that there are plenty of reasons to be optimistic about the U.S. economy as well as markets. However, optimism is a lot more crowded today than it was last year or two years ago,

which means that, yes, you can get upside, but there's a lot less buffer or cushion if you get downside surprises. So to us, what that translates to is a wide, choppy range for the year. We think that you could be up 10 percent or down 10 percent. It actually matters a lot less of where you finish the year in the overall return. It's what you do with the volatility over the course of the year, because we think you are going to get that volatility. What am I supposed to do if we agree that there's going to be more volatility for the first half? I mean, your playbook looks like, OK, expect more volatility, expect maybe a dicey, kind of squirrely first half, but then we could actually hit new highs in the second half of the year, right?

Yeah, I think the problem I have is I don't know when I'm going to see real proof cases that AI and predictive analytics are driving margin expansion for big companies. If I felt like that was definitely coming in multiple ways this quarter, I'd probably be bullish and just say, I've got a lot of earnings dreams and they're going to get. You don't think that's coming sooner rather than later? In some cases already is. You've got one or two, but I think it's coming in the next six quarters. But I don't know if it's coming enough now that people are going to say, you know what? My back half of your numbers look good. I think underneath the hood, I think the industrial economy might be bottoming.

And so we upgraded industrials as part of the outlook because I feel like after negative earnings growth last year, there's only been two other negatives, COVID and financial crisis. Probably I can get a little bit more activity. I'm just a little less excited that the consumer has upside. I think it's fine, maybe slowing a touch. And so I'm trying to transition out of some of the consumer stuff that's worked into some of the industrial stuff. So I think there's stuff to do in there. I'm not bearish on the economy, but I just, look, if you tell me what's going to make the market go down, it's probably tighter financial conditions somehow. The balance sheet doesn't expand as much. We had a little bit of a rate shock, which I think I agree with Cameron, it maybe went

up a little bit quick for people to get excited. So there's things that are going to cause the ball. But if I get a little bit of tepid guidance coming out of anything in the next two or three weeks with the big earnings, that could be the catalyst to get us down back to the lows of the last several months. I mean, earnings expectations, I get it, are high. Yeah. But so far, it looks pretty good.

I know we're just starting, but it often doesn't start with a bang. It starts with a whimper. In terms of the banks, now they're knocking it out of the park and the stocks are acting as a result. And they are a reflection of a strong underlying economy. There's two things to point out within earnings expectations for 2025. The first one is that there's a big re-acceleration expected in revenues as well as margin expansion. So that creates a bit of a high bar.

But the thing that's embedded in 2025 estimates is that the everything else is going to start doing really well. You have a big deceleration in MAG7 names, still great earnings growth, 20 percent earnings growth expected, but that's down from 40 percent in 2024. What's expected to accelerate is the 493 stocks. And I think that that very much still remains a show me story because that's been the key area of disappointment in the last two years. We'll come back to our conversation in just a moment, but let's go to Leslie Picker. She's following the banks today. And Leslie, it's good to have you. I mean, what was it about these reports today that has the gains that we're seeing, the likes of which we just don't see all that often? I know you pointed that out. It's really an outsized reaction in the market to today's earnings, Scott. I think it's less about what it was and more about what it wasn't,

which was essentially big concerns over credit, big concerns about certain businesses. I mean, everything was really firing on all cylinders. JPMorgan, Goldman Sachs, Citi, each beating on both lines. Wells Fargo on the bottom line only. But it's really kind of these several moving parts that contributed to the excitement. Wells Fargo providing 2025 guidance that resumes growth in net interest income, the profitability metric for loan making. Goldman posting its second best annual EPS ever and beat quarterly bottom line estimates by a whopping 45 percent. And JP Morgan, those wheels were in motion as well. Forty nine percent growth in investment banking fees,

21 percent higher trading revenue and 20 percent growth in asset management fees. Citigroup announcing a 2020 billion multi-year buyback. And we'll be sitting down with CCEO Jane Frazier tomorrow at 1.30 p.m. Eastern time from Citi's headquarters. Scott. Unbelievable move in that stock, among others today. We'll look forward to that interview. Leslie, thank you so much.

That's Leslie Picker. You haven't liked the banks for a while. Yeah, we're market weight the banks. We're trying to bifurcate between the ones that benefit from M&A, and I think those are the big ones, and also the alts, KKR, Blackstone, et cetera, which we like. And maybe a little bit more nervous, the ones I don't like are some of the smaller regional banks, which I don't think really benefit so much from the activity you heard her highlight in terms of trading activity and investment banking revenue.

They're more interest rate sensitive and probably won't show the upside that you saw from these. So I want to clarify this then. I fear I'm setting this up wrong. You like the large banks and the private equity players, many of whom stocks have had a really nice move. It's just the regionals that you don't like? Yeah. So we're kind of market weight the totality long, you know, kind of banking and transaction beneficiaries. In short, the ones that I think went up a lot post the election, but really don't benefit as much in this rate environment, in this activity environment as the big ones. So look, the ones that are up today are the best companies, you know, Morgan Stanley, Goldman Sachs, J.P. Morgan. And those are the ones that benefit the most. And then obviously you've got KKR, Apollo,

Blackstone and others that are going to benefit from the transaction. So I think you want to stay long that because every lawyer I know and every banker I know is super busy. So as long as rates don't back up, I think per Cameron's point earlier, you're going to see a lot more transactions here in the next couple of quarters. Agree? We like the banks. Technically, they're in strong uptrends. The thing to watch is that you're now trading at one and a half times price to book for the entirety of the bank industry group, which was the peak in valuation in 2018 and 2020. So the question is, does regulatory relief, do things like an M&A boom drive enough of a step change in equity and return on equity that all of a sudden you get an inflection in earnings growth that makes those valuations look less stretched.

Isn't that probable? I mean, if you want to throw on top of that to an easier environment to lend into. Right. I mean, banks have been sort of hamstrung by by their by the lending standards. They haven't been able to return as much cash to shareholders as they've, I'm sure, wanted to get the shackles off. They'll say, let banks act like banks. The wild card will be the cost of lending. And there has been this notion of survive to 2025 with a lot of borrowers. The cost to borrow was so high in 23 and 24 compared to 2020, 2021. Now, if you get these interest rates that do stay higher for longer, what does that do to loan demand?

What does that do to people who are starting to refinance and seeing their loan costs go up? It's an interesting wild card for this year. The other thing I'd say is, and maybe this is just a little cynicism in the... From you? Well, you know, you like that. We kind of get going on, lather up on that. I got you.

But, you know, let's just remember, they compete on pricing in a lot of businesses. And when things are better, there will be more pricing pressure. And then they also pay people a lot. And so you'll see, you know, just like you said, things are good. You also saw Q4 bonuses looking a little bit spicy again. And competition for talent goes up again. And so this isn't a group of companies known for their massive discipline on cost control. So let's just wait and see what happens on the bottom line. I wouldn't get too

enthusiastic that, you know, they found God on cost control. So I think it's a pretty good risk reward because of the activity. And of course, asset management is an awesome business when markets go up a lot. But, you know, you get a choppier in markets and you get a little bit more volatility and we don't get the same banking stuff, it'll be, you know, the seventh inning of the trade, not the third. Yeah. I mean, how do we, you know, speaking of cost controls and things like that, we continue to get headlines around big tech and hiring practices, if you will, maybe getting a leaner yet again. Do you like this space? If I was to say, well, I know the economy is going to be good. AI is amazing. And that trend is going to continue for the foreseeable

future and beyond, perhaps. Fed is not hiking rates and rates have peaked. Yeah. Yeah. A third of the S&P is tech. So I got to own a third of the portfolio in tech, and I've got to own the ones that have the moats that are buying the new technology. So when I look at what looks like it's the new trends going forward, whether it's quantum or robotics or agentic AI or disinformation security or all those stuff, the big companies, the Mag7, keep buying and acquiring assets and technology in those areas. So I get pushback on my outlook. A lot of it is like, well, this is looking like 1999 for the MAG7.

I totally disagree. I think they're buying the technologies, adding to what they do. They're at the forefront of what's going to matter. And so I think they're going to grow at the market rate. I agree with Cameron. It may not accelerate from the massive level it was at, but it's going to be above market level. And I don't see their multiples contracting. So, yeah, I think you've got to own the high-quality growth stocks in the tech space for sure if you want to compete with the S&P.

But you also make the distinction between software versus semis. Yeah. You like semis a lot more than you do software, but why? Because they're… Aside from the fact that you are inherently biased. Yeah, I'm inherently biased. We always talk about that. Story checks out.

I used to cover semis. And I didn't know 20 years ago that semis were going to be this cool or I wouldn't have maybe left. Yeah, exactly. I was a lagging. Nice career move. Totally, as usual. But, you know, what I would say is if I wanted to start today and build a technology, like I don't think you can replace Taiwan Semi in the next 10 years.

I don't care what you do. Or NVIDIA. But the way AI is working with code development, I think technological obsolescence risk is a little bit higher for some of the software companies. I think there'll be more dynamic ways that big companies are analyzing their own employee and customer behavior. And it doesn't necessarily mean today's companies are going to dominate. I think Microsoft is different and Oracle are different. But, you know, I'm not convinced that Adobe or Workday or seat-focused companies are going to have this. Even Salesforce are really going to have the same presence five years from now as they do today,

where I kind of feel like I, quote, know Taiwan semi-well. Do you make a distinction between what parts of tech you like and what parts you don't? We do. We still are bullish on tech overall, but I would note that you do have an acceleration that is baked into consensus forecasts where tech earnings are expected to go from 16% this year in 2024 up to 26%. That's even with NVIDIA having its earnings growth rate cut effectively in half just because of the law of large numbers and tough comps.

For sure. Look, there was a note, I think it was this week, maybe it was last, I can't remember at this point, of one firm saying, forget about the idea of beat and raise for NVIDIA. You're just going to not be able to do that anymore to the magnitude even close to what they're doing. Well, if they didn't beat by $2 billion every quarter, people thought it was disappointing. But that's part of my point. Totally, no. Is like, temper your expectations. Does that matter for those stocks? If you need to bring your expectations down even a little bit.

I think it matters for the degree of outperformance. They've outperformed by such an extraordinary amount over the last two years. We don't think that that degree is as sustainable. Now, you could still see outperformance, but it's just likely going to be at a lower or at a smaller margin. At the end of the day, these are incredible profit-making machines that can take a little bit of good economic growth and turn it into fantastic profits. And so betting against that is really difficult. We do think you still have to remain valuation disciplined. So if you start bumping up above those 2020, 2021 peak valuations, it's likely a good time to re-underwrite that position.

Speaking of profit-making machines, much to the ire of some at this point, healthcare is one of only three sectors over the last month that's positive. And you've got the healthcare conference going on out in San Francisco. There's been some deal-making. There's always a lot of buzz around that event. Is this the moment after disappointment that I need to buy some of these stocks? We pitch it as one of our overweight sectors for 2025. You know, when you're contrarian, it just means you're wrong and then maybe you're about to be right.

It's been a bad call the last few months. As you know, I got sort of, you know, did a bunch of AI for health care, you know, academic work last year and got mesmerized by the potential for productivity. All the grizzled veteran healthcare guys, all of whom are out in San Francisco this week, kind of said, I've heard that story before. And you're like, you know, this, you know, newbie that's excited. Maybe the truth's in between. like the market took the election cycle and said, I'm going to totally disagree with the estimates in the healthcare sector, but I'm going to agree and underwrite the estimates everywhere else, as if the earnings are going to get decimated. The healthcare sector has very steady demographics, pretty good pricing, pretty stable growth, and looks kind of cheap versus what's in the price.

So I think you can own drug distributors, you can own PBMs. You can own hospitals. You can own life sciences and tools. I like the sector, but, you know, when I pitch it, people, you know, feel like it's, you know, unattractive, and they want to see some of the uncertainty get clarified before they get in. Real quick, and then I've got to bounce. Well, it was just such an utter disappointment in 2024. Earnings estimates started the year at 20%. They ended at 3%.

For next year, it's expected to be 20% once again. So it falls into that camp of it's definitely a show-me story, but because it's underperformed so much and it's cheap, it could be getting close to it so bad it's good. All right. We will leave it there. Guys, thank you so much. Good to see you, man. Cameron Dawson, Adam Parker.

Appreciate you guys. We'll see you soon. We are getting some news related to Southwest Airlines, and I want to go to Phil LeBeau, who has these details for us. What are we learning here, Phil? Scott, the Department of Transportation has filed a suit in California accusing Southwest Airlines of operating a couple of chronically late flights. According to the DOT, these flights were operated in the middle of 2022, one between Chicago and Oakland, the other between Cleveland and Baltimore, and they were constantly late. As a result, the DOT has sued Southwest regarding those late flights.

Meanwhile, the DOT is also announcing, as you take a look at shares of Frontier, that it is fining Frontier $650,000. The result of these fines or the reason for these fines, operating chronically delayed flights. Scott, send it back to you. Just real quick, Phil. So this is entirely unrelated to the prior penalty that Southwest was hit over that tremendous disruption that was weather related of a few years back. Oh, yeah. Hundred percent. Hundred percent.

Remember, the DOT put into place rules saying that if you chronically have flights that are always late and by chronically, we're talking about several months in a row. It's the same route. It's the same flights. They're always late. They're not in the schedule as they should be. Then they're going to fine you or they're going to take you to court. Interesting. Phil, thanks for the update of this activity around Southwest Airlines.

That's Phil LeBeau on the beat, as always. To Christina Partsenevelos now for a look at the biggest names moving into the close. Christina. We have tech giants that are ramping up their quantum computing efforts, even if the technology is decades away. Microsoft just launched its Quantum Ready program this morning to help businesses understand the potential. And then NVIDIA is adding a Quantum Day to their March AI conference, bringing in leaders from IMQ and D-Wave, just to name. And you can see the shares up, what, double digits, 25% for Reddy, IMQ 35%. It's interesting timing, though, because just last week, Nvidia CEO Jensen Wong said quantum tech is still about 20 years out, sending quantum shares plunging. And the marketing push today shows that nobody really wants to be left behind when

quantum finally takes off, even if we're not sure exactly when that will be. Shares of GM up on a new multi-billion dollar deal with Norway's Vianode to provide the automaker with synthetic graphite material for its EV batteries. The deal runs through 2033, and that's why shares are up 2%. And lastly, Bitcoin did it again, now surpassing $100,000. A cooler than expected inflation reading may have helped, but there's also a lot of higher risk appetite. You talked about it earlier, Scott, and that's driving crypto names, including growth names like Quantum as well. We come full circle. Back over to you. I mean, just a couple of days ago, Bitcoin was below 90,000. And here we go again. Christina,

thanks. We'll come back to you shortly. We're just getting started here on Closing Bell. Up next, Fundstrat's Tom Lee reveals his top five stock ideas right now. Tell us what he doesn't like. Also, we're back right here, Post 9, with Tom Lee next. Session highs for stocks right now. Bond yields moving lower today on that better than expected December CPI print. My next guest says this morning's report could be a good sign for the months to come. Joining me now with his market outlook and his best stock ideas for this month is Fundstrat Global Advisors Tom Lee, a CNBC contributor. Welcome back.

Great to see you, Scott. First, your view right now on this market is what? I think that markets are showing some relief that CPI was dovish. And actually, I think some of the inflation prints the last two days have been dovish, including PPI. So it's setting the stage for yields, which kind of were close to touching 5 percent, to kind of cool. And at a time when sentiment's been negative, I think we should be rallying. Is the Fed back in the game, which means this report was good enough, these two reports, really, as some are saying that, okay, you're not going to get a cut in January,

but you could get one in March. And some people had written cuts off for many, many months. Yes. Into this CPI print, the whisper number for core CPI was over 0.3. So the market was bracing for a really hot number. And you could see it in the Fed fund futures where as of yesterday,

there was a 30% plus chance of a Fed hike. I think those sort of extreme views have been quelled. And I just think generally, without counting for the fact that the California fires could mess with inflation, the inflation print over the next three months is going to be a lot lower than what we saw November and October. And remember, January to March of last year, it was close to 0.4. So I think inflation is setting up for some good comps. Okay. How optimistic are you for the type of return we could do this year after

back-to-back 20 plus percent gains for the S&P? We've gotten some good harbingers so far because the first five days of this year, the S&P is positive. So I'd say there's an 80% chance of something over double digits for the year. And what's going to matter to a lot of people is how we do for the month of January. But as of January 15th, we're up 0.7%. So those are good harbingers for the year. Can we have a good year if the Fed doesn't cut until later in the year and bond yields remain elevated for a while? If bond yields get stuck here, it's a real severe tightening of financial conditions. And I think it's going to hit housing, and we're already seeing it now. So I think it is important for

yields to move directionally lower. That's a long way of saying stocks will not be good if bond yields stay where they are now? Yes, it's going to test the market's resolve. I don't think it kills equities, but it's hard for someone to be pounding the table if they think yields are going to be stuck at close to 5% for the next six months. Wow. So if yields, let's just say they stay near where they are now, you wouldn't be as optimistic as you are? I think it's going to raise concerns there's a policy error from the Fed, that either financial conditions are too tight or the bears will argue the Fed made a mistake cutting too aggressively last year.

But isn't this the base case? I mean, you have what is arguably a more inflationary environment because of some of the policies that are being talked about by a new administration. Sure, they may stimulate more economic growth, but with that potentially comes more sticky inflation, too. Well, there isn't necessarily a connection between growing faster and more inflation. There is some inflation that can be generated by tariffs, and that's the uncertainty. But that's what I mean also. It's like tariffs, it's inflating the deficit. It's just re-inflation. It's the re-inflation trade based on some of the expected policies that may cause that.

True. But to keep in mind, last year's inflation, first of all, a lot of last year's inflation was what they call imputed because it was just statistically catching up to the price changes of the years before. But it's housing and auto insurance were 80% of the inflation over the last four years. And the third is labor markets, which we know aren't in an inflationary position. So in order for new policies to generate inflation, they have to be powerful forces that fiscal spending hasn't generated the last three years. So I'd say that it's difficult for me to make the case inflation is getting strong. Okay. So let's talk stocks,

specific names. Your top five stock ideas for January of 2025. Nvidia is at the top of the list. Stock is not traded well. Why is it going to have a great January all of a sudden? Well, Nvidia has been mean reverting because it did have a huge move, and now it's cooling. And I think its burning season is going to just affirm, I think, visibility about how much companies are repositioning around the value creation around AI. So to me, NVIDIA is a name you want to own for the next three, five years. And the fact that it's at $130 I think, is actually an attractive pullback. Okay. You like Meta. You like Amazon. You like Alphabet. We don't even need to discuss. I think everybody probably knows the reasons why.

However, J.P. Morgan is on that list as the only of the banks. Now, obviously, it's having a great day today on the back of earnings. Why did you single out J.P. Morgan? You could have picked others, too. Why didn't you? J.P. Morgan is one of the best executing banks. To me, banks should be re-rating higher. I mean, they survived a gauntlet of stress tests over the last four years, and they're producing strong earnings in the midst of a yield curve that was inverted for a while and now un-inverting. And the company spends a huge amount of money on technology. So I actually think JP Morgan

should see its multiple expand. Do you like the banks in general? I mean, you see what's happening today. It's not just J.P. Morgan. I mean, Goldman Sachs up like 7%, Wells Fargo City up at least 7%. I think the big story arc is banks haven't really caught up since the GFC. So to me, there's a multi-year period where banks are going to do very well. And this is a risk on environment with animal spirits coming back and capital markets picking up. So it should be good for all banks.

Stocks to avoid. Intel, Airbnb, Alibaba, Verizon, and Nike. So Nike's just not going to be able to get out of its own way still, or what? Well, these are one-month views. And so, yes, I think it's in the absence of a fundamental catalyst. I think many of these have been already companies with not clear visibility and weakening fundamentals and poor price momentum. So I don't think they're stocks I want to be trying to pick up. All right. Good to catch up with you, Tom. Appreciate your time today as always. Tom Lee,

Fundstrat. Great seeing you, Scott. Right here at Post 9. Up next, we debate the fate of the tech trade. Vista Equity Partners' Ashley McNeil is standing by. She'll tell us how she's navigating that sector. We are back on the bell right after this. We are back. NASDAQ outperforming today following that cooler CPI report. Tech's been shaky lately, leaving many to wonder whether the recent volatility is here to stay and what that might mean for dealmaking and IPOs in the space. Let's ask Ashley McNeil, head of equity capital markets at Vista Equity Partners. Nice to see you again. Welcome back. You too.

All right. It's been volatile, as we said. You're not surprised by any of this, are you? No, no. 2025 is going to be predictably volatile. I think it's something we can anticipate. We saw last year a lot of the valuations being pulled forward, a lot of momentum and a lot of the macro decisions that are set to be made this year. So it's going to be a volatile year. But I also think it's going to be a very exciting year. Why so? I think software is really at an inflection point with respect to generative AI being integrated into the financial metrics.

And I think you're going to start seeing, I know we've talked about proof points, but I think you're going to actually see real data, particularly on the top line, on the revenue growth. And so you're going to see, I think, very interesting data come out of earnings on the growth side. Is it easy to tell the positive story around software when everybody seems obsessed and fixated over chips and semis? Look, I don't think it's an either or. I think it's an and. And so it's really where along the generative AI arc are you investing? I ultimately think that software is the beneficiary.

I do think that there is a first mover advantage. And I think that software companies that have domain and sovereignty over their data set are really going to be the winners here. So, yeah, it's easy to be positive about all of these tailwinds. The trade's been interesting. If you back it up, you know, I don't know, five, six months, you had this real outperformance, right? Software versus semis. And maybe more recently, software stocks have taken a little bit of a turn lower. Why do you think that is? Well, last year, between sort of the time period of May to, say, August, software wasn't the most

beloved sector. And that was really because of the impatience by investors to start seeing proof points around this generative AI. Look, generative AI implementation is going to be a multi-year cycle. This is not going to happen overnight. This is change that requires a fair amount of patience. And software is just starting to really start standardizing the metrics that we need to look for to understand how this technology is going to change our everyday lives. So when you say you're not surprised by the volatility and your outlook suggests that it's going to continue, you know, I don't want to assume everybody knows what your specialty is, but you guys are software experts, right? That's what you do. So how does that increased volatility and expectation of more impact what the end game

is going to be for the companies that you have, whether it's deals or IPOs or even beyond your firm, just the space in general? It's really about being okay and embracing the volatility that we're likely going to see in the public markets. Software is a very durable business model, and it's shown over the past couple of years that it really can withstand a lot of the macro dynamics that are going to be at play as well as what may or may not happen with the incoming administration. And so it's more about understanding that there are going to be certain implementations that take time and then understanding what you're looking for from a data perspective

to know are these changes working. When you see rates backing up the way they have, what's your reaction with the kind of companies that you watch? I mean, it's really more about understanding the cost of capital for software companies. The cheaper the cost of capital, the easier it is for these companies to implement innovation and to be willing to take risks with respect to their businesses and their product lines. And so I think rates backing up means that there's likely a cheaper cost of capital, and that is good for innovation. So rates coming down from the boil.

I mean, because when the Fed started cutting rates in September, you see rates just going straight up, you know, from up and to the right. And you're sitting there saying, well, this is the last thing that we need at this particular time, right? And we need the rates to start coming down. Maybe that's the relief you're talking about today. I, yes, but I, what I'm more focused on is, is, is access to capital and dry powder and making sure that we're still seeing capital being deployed in the equity markets. I mean, last year we had a record year of inflows for equities. I anticipate that will continue. And so it's really about making sure that software companies have access to capital to continue to

innovate and to continue to provide these really unique products to us. Lastly, have you pushed out your own expectations on when you see a real pickup in tech IPOs in 2025? I wouldn't be a bull if I did. Of course not. I believe that 2025 is going to be a great year for IPOs and for software IPOs. Last year, we saw 3x the number of tech IPOs as we had seen the year prior. Everything is sort of setting up for a really great year. Are we going to return to pre-COVID levels? Maybe. Well, we shall see,

which means we will talk to you plenty of times more. Ashley, thanks. Thanks. Ashley McNeil of Vista Equity Partners. All right, up next, we're tracking the biggest movers as we head into the close. Back to Christina Parts and Nevelos now. For that, what do you see?

We have coming up record highs for a company revolutionizing surgery with robots and a major upgrade for the world's largest streaming or music streaming platform i'm sure you all could guess by wall street's betting big on both those names next All right, we're 15 from the bell. Back to Christina now for the stocks that she's watching. What do you see? Well, we're talking about shares of Intuitive Surgical,

reaching an all-time high after the medical technology company reported Q4 and full-year results, topping Wall Street expectations. The results were driven by a growth in procedure volume as well as single-use accessories. Intuitive robots are used by surgeons for minimally invasive surgeries. They're very well known for that, and that's why shares are up 8%. Shares of Spotify are moving higher as well as UBS upgrades the stock to buy from neutral and bumped up the streaming giant's price target to $540. It's trading right now at $489.

Shares are up 6% after analysts said that after yet another strong year, Spotify is still primed to jump with new premium additions and ad trend improvements. They like this name. Scott. All right. Thank you very much, Christina Partzenavola. Still ahead, social stocks moving higher ahead of the expected tick tock ban. We will drill down on those names coming up. The market zone coming up, too. All right. We're 15 from the bell back to Christina now for the stocks that she's watching. What do you see? Well, we're talking about shares of Intuitive Surgical reaching an all time high

after the medical technology company reported Q4 and full-year results, topping Wall Street expectations. The results were driven by a growth in procedure volume as well as single-use accessories. Intuitive robots are used by surgeons for minimally invasive surgeries. They're very well known for that, and that's why shares are up 8%. Shares of Spotify are moving higher as well as UBS upgrades the stock to buy from neutral and bumped up the streaming giant's price target to

$540. It's trading right now at $489. Shares are up 6% after analysts said that after yet another strong year, Spotify is still primed to jump with new premium additions and ad trend improvements. They like this name. Scott.

All right. Thank you very much, Christina Partsinello. Still ahead, social stocks moving higher ahead of the expected TikTok ban. We will drill down on those names coming up. The market zone coming up, too. Up next, tracking some big moves today in the fintech space. We're going to break down what's behind the bounce inside the market zone next. Let's do the closing bell market zone CNBC senior markets commentator Mike Santoli here to break down these crucial moments of the trading day. Deirdre Bosa is tracking the pop in fintech stocks for us and Julia Boorstin with more on what is sending social media stocks higher today. Mike, I begin with you.

We said on halftime this is just what the doctor ordered, and this is a nice bill of health today. It's a pretty healthy showing. I mean, you did build on the midday lull a little bit in the indexes, so you've got almost a full 2% gain. I mean, one of the takeaways is at 60-50 on the S&P a month ago, a go-slow, wait- wait and see Fed is bearish. At 58-50, when we've spent a month churning around, yields going higher, yields in the dollar,

maybe sort of overshooting what the economic fundamentals would say on the upside, you have a little bit of relief. So I think that's a positive thing. What you are seeing within the market, though, is it shows you when people are concerned that it's starting to run a little bit, what do they grab for? The old stuff, the NASDAQ 100. From the open, NASDAQ 100 is up almost to 1 percent. Russell 2000, basically flat since the open. So it does show you that that's still the ingrained behavior. It probably makes some sense. Obviously, the earnings front end of it is positive. I do think it's going to be a little bit of give and take. It's not always a clean read through from the banks to everything else. But so far, so good.

And, you know, you're doing some of the technical work. By the way, we had a proper 5 percent reset lower in the S&P from intraday high to intraday low. So, you know, that's often the formula for some relief. Getting half of that back today. We just needed rates to come off the boil and we needed volatility to settle down, even if it's just for a few moments. Exactly. And so there you get a little bit of a shock that says that, you know, the downside was tested. I keep saying that, too. We've tested the election day levels multiple times. At this point, it looks like they were defended. You didn't have to talk about a new a new range. But obviously, look, we're going to need reassurance along the way that the whole interplay of growth and inflation is acceptable here. Well, how about this?

I mean, the MAG7 stock's adding more than $550 billion in collective market cap today alone. That gives you an idea of what kind of day it's been. Thank you from our markets desk for that. Fintech is doing well today, too. Deirdre, what's going on? Very well today, too. Deirdre, what's going on? Very well today. Well, first of all, they've been helped by those strong bank earnings that we've seen indicating a healthy financial environment. Digging into some specific names, you saw Affirm and SoFi higher in particular after Blair initiated coverage at Outperform

for both of them, saying that Fintechs could win in a changing financial landscape. Now adding momentum for SoFi, which also saw its price target raised by both Citi and Barclays earlier this month. And remember, it was the best FinTech performer last year. The broader FinTechs ETF up about, let's see, two and a half percent almost today. And remember, too, sort of this bigger macro environment, too, potentially less harsh regulations, easier regulation landscape will be good for these names. Back to you, Scott. Thank you. That's Deirdre Bosa. Julia Borson now on the social media stocks today.

What's happening here? Well, Metashare is gaining about 4 percent today. Snap shares up more than 4 percent. Pinterest and Alphabet shares both gaining about 3 percent today. Now, most of these stocks are now in the green for the week after falling yesterday on rumors that Elon Musk might buy TikTok. With those rumors shot down and no Supreme Court ruling yet, the TikTok ban is set to go into effect this weekend.

Now, if TikTok is banned, these companies are expected to gain both users and ad dollars. Morgan Stanley is saying that Meta could see as much as 9% upside in earnings per share next year. Meta also bolstered today by Deutsche Bank, naming it a top 2025 pick. Now, Snap, which had the largest move higher today, is seen as getting the biggest percentage boost from TikTok's ad dollars moving elsewhere. Now, Scott, of course, we'll have to see what the incoming Trump administration does about this TikTok issue. All right. Yes, we will. Julia, thank you. Julia Borsten, which I guess leads me back to you, Mike, on we could just take it from the new Trump administration. I mean, on the other side of the holiday weekend, we're going to have the inauguration. We're going to start learning really quick.

Executive orders, what really some of the early plans seem to be, and then the market's going to have to adjust to that as well. It's been quite a road, too, if you go back, you know, just a couple of months and a week to Election Day and you had an immediate attempt at a rerun of the standard Trump trade playbook, got completely unwound. And now it's more about maybe front loading some of the potential concerns. You know, I don't know necessarily that there's going to be one signature moment where people say there's some kind of an all-clear, whether it's against tariffs or the immigration restrictions or anything like that. But if that's going to be the case,

having the median stock of the S&P trade 12% below its record high coming into today is a little bit of a less demanding setup for it. So I think we're still going to be, we're going to be trading headline to headline. And I don't know that that there's any one destination everybody is has high conviction in. Also, you know, Bitcoin back up to 100K today. It shows you there really wasn't a real ringing out of risk appetites. Now, it's it's actually speaks to Bitcoin's resilience for one

thing, but also to see volatility. I mean, what was it, like 89,000 a minute ago? Yes. I mean, it just, it does. It just springs around in huge chunks. That said, the quantum stocks flying today, you know, it shows you that it just doesn't take much to have a little bit of daylight shown to the short-term traders and they'll run for it. And, you know, that's the way bull markets act. I guess it's okay until it gets us really over our schemes. We've gotten the jobs report out of the way. You get the inflation data out of the way. And now we really can zero in on earnings front and center. But as you said, of course, the incoming administration, too. But it's really earnings have to live up to some some of the immediate earnings. And knowing what we know

about just the macro backdrop coming in earnings, there's really no reason to think that there should be major disappointments in big sectors of this economy. That's good. But again, because everyone expects the two or three percentage point beat relative to expectations, you know, you don't know exactly how high the hurdle is until you get the reports and see the stock reactions. I do think, though, the draining away of volatility is a positive. The VIX down two and a half points today, down around 16. It's a much more normal level, and that probably does put people on firmer footing. A lot of relief today, clearly, in this market.

Michael, thank you. Mike Santoli, we'll see him coming up in a bit. But we're going to go out better than 700 on the Dow. That's the kind of day it is on that cooler than expected CPR report. Race off the boil, stocks off to the racers, and we'll send it into overtime before we're going to die.