Closing Bell - Closing Bell: Tech Trade in Trouble? 8/20/25

Episode Date: August 20, 2025

We discuss what’s at stake for the tech space with Charles Schwab’s Liz Ann Sonders. Plus, Target named a new CEO set to replace Brian Cornell in February 2026. We break down that – and the broader retail sector – with our Courtney Reagan and Mizuho’s David Bellinger. And, Fairlead’s Katie Stockton tells us the key levels she’s watching right now. 

Welcome to Closing Bell. I'm Sarah Eisen. In today for Scott Wapner. We are live from post nine of the New York Stock Exchange. Stock dipping, pressured by a broad decline in technology ahead of the closely watched Jackson Hole Fed Symposium later this week. There's a look at the scorecard with 60 minutes to go in regulation. Investors continuing to take profits from several tech heavyweights, another down day for semis, Nvidia, Broadcom, all lagging. Palantir seeing its sixth straight day of losses. Megacap names like Apple, Amazon, Alphabet. They're also in the red. Target, also getting hammered today, one of the worst performing stocks in the S&P 500 after sales and traffic fell in the quarter. But the big news, a new CEO. What the incoming CEO did tell me about the state of the consumer and much more will bring it to you straight ahead. It takes us to our talk of the tape. Does this sell-off spell trouble for the tech trade? Let's bring in Charles Schwab's chief investment strategist Lizanne Saunders. Lizanne, what is sparking this rotation out of tech? And then how severe Is it looking?

You know, it's always hard, Sarah, to point to anything specific. Always valuation shatter when you talk about tech. A bit of a rotation trade, not so dissimilar to what we saw in the early stages of the downturn that began in mid-February where the profit taking was greater in areas where there had been profits. You've got a month so far where the winners were the decided losers in the first seven months of the year. You're seeing that at the sector level.

you're seeing that at the factor level, there was the report out of MIT that renewed concerns about whether maybe the AI spend had gone beyond what the benefits will accrue based on that. So I think it's a confluence of factors. I guess the question is, we've seen it before, as you noted, and the move was to buy a lot of these stocks down because they've made new highs. Would you recommend investors do that again? Well, it depends on the stocks, and I don't cover individual stocks. I think the buy-the-dip mentality still exists, but we may not have seen sufficient amount of downside in some of these cohorts.

What's also been the case is that there's been a lower-quality bias to what has done well more broadly since the intraday lows on April 9th. You see baskets like the meme stocks and non-profitable tech and heavily shorted stocks really were the power drivers on the way up. And I think that kind of low quality trade got a little bit exhausted and you've seen some renewed weakness there. But also, again, when any kind of profit taking kicks in, there's that look toward what has generated the largest profits. And you have a day like today where equal weight is up by a half a percentage point. S&P cap weight is down by a half a percentage point. I think this recent rotation is likely to persist a bit longer to, you know, exactly how long. I don't know. But I think this rotation has legs.

Well, it's notable the strength we're seeing today in consumer staple names, healthcare. I mean, some of the defensive groups, but also energy is doing well. I guess what does it tell you? Everybody's been waiting for the rally to broaden out. I don't know. Is that what's really happening? I think that that's what's happening. That was similar, although at the index level, more to the downside in that mid-February to early April period of time,

where the indexes suffered more by virtue of the mega cap names being under greater pressure than the rest of the index. We have a little bit of that right now. We just kicked in this rotation phase and there just was a shift, again, not just at the sector level, but the factor level, momentum taking it on the chin relative to other factor areas like low volatility, higher dividend yield, value performing better. So it's hard to pinpoint what the trigger was. But you got this desire, at least on the part of traders, to maybe take some profits down the quality spectrum and move into this combination of defense and maybe up quality, certainly from a value perspective. So is your recommendation still around quality instead of sector specific or group specific? We're still sector neutral and recommending you stay up in quality at the factor level.

So to use trader lingo, we've been saying fade the lower quality. the areas like non-profitable tech and the zombie companies and mean stock type trades and lean into higher quality where you do get that ballast as you go through this period of rotation. And that's where leadership tends to find itself again. And that can span across sectors. That's the beauty of factor-based analysis or screening is you're not limited to any particular sector. You can find value in areas like tech. You can find growth in areas like utilities. Taking that factor approach sort of widens the lens, but that's also where performance has been more consistent. What are the key quality factors that you're looking

for right now? Strength of balance sheet continues to be one interest coverage. I think one particular one that's relevant to the current times is stability and profit margins, visibility in terms of forward earnings adjustments to the upside. And then for more yield-oriented investors, dividend yield this coming back into favor. The low volatility factor is one we've liked this year with the proviso that that's going to be an underperforming factor when you get into these sort of rip-hire rallies. But it does represent some ballast if you go through a bit of a pullback phase. Lizanne, stay with us if you would because the other big factor for investors right now is obviously the Fed, closely watching the summit out in Jackson Hole this week. A lot of Fed

speak. Also, allegations today by Bill Pulte, the federal housing finance. agency director, claiming that Fed Governor Lisa Cook committed mortgage fraud, this bombshell, casting a shadow over the event. We spoke earlier with Mr. Pulte on money movers. He says she should resign. Additionally, reports saying the president is considering firing her. We've reached out to the Fed, having so far not gotten a response. Steve, you're in Jackson Hole. I mean, some new drama on top of an already pretty politicized environment for the Fed right now. How does this complicate the issue? Well, it just really adds to the political pressure. I don't think that I don't think that Fed Governor Cook can respond at this point because if this becomes a legal

matter, I think that all lawyers would advise her not to say anything until there's actual charges filed. And it's worth pointing out there have been no charges filed at all against Governor Cook. And I think that's an important thing that needs to be emphasized in all of our reporting on this. But what we do have is you got that mixed out. look, Sarah, in the minutes about the outlook for rates, and it's reflected in our CNBC Fed survey. Take a look at this. Sixty-nine percent, say Fed Chair Jay Powell's speech will be neutral with 14 percent saying it will be doveish and 14. Even venturing, it may not be about policy or the economy at all. That could be a huge disappointment for markets real quickly on who

the next president will pick among the 11-named candidates. Kevin Hassett, the NAC director. He leads followed by Fed Governor Chris Waller, former Fed Governor Warsh, and former St. Louis Fed President, Jim Bullard. But there's a difference in who they think it should be. They think the president should pick Warsh, followed closely by Waller and Bullard. Hassett drops to fourth in that. So, Sarah, some really interesting things going on, including talk of the Fed's independence.

41% of respondents say the next Fed chair will conduct policy independently of the president, while 37% say it will be in coordination. 22% are unsure. I think the big question here, Sarah, is if Fed Chair J. Powell is going to make the case for cutting rates, he's got to do so amid an environment where inflation is running above target. And in this survey and in many others, the outlook or the forecast for inflation is for inflation to remain high this year and next. That's a tough thing for him to do. He may well be able to do it.

But the minutes reflected that conflict, that conundrum for the Fed right now. Yes, risks on both sides of the mandate. Of the mandate. Steve, I want to follow up on the Cook issue because, yes, I mean, you're right to highlight that there are no charges have been filed, only a letter asking from the FHAFAA director, Bill Pulte, to Pam Bondi, the attorney general, to investigate, which, you know, probably would happen given this administration and the pressure we've seen on the Fed. But what he's produced, I mean, this is very different than, you know, him and the president. saying Powell should lower interest rates and therefore she should resign because they want to see lower interest rates. As he made clear in the interview today on CNBC, this is about what he has found and what he is alleging is that she claimed primary residency on two different houses

within two weeks of each other in different states, which would be mortgage fraud. Again, just allegations here that he's claiming and we'll try to verify those documents. But I mean, And that's, that is potentially, look, it's hard to fire a Fed governor, as we've talked about, but it comes back to cause, right? I have a hard time. Well, yes, I don't know whether or not this would qualify for cause, but this comes back to me as strictly political. She may or may not have done a variety of things, but let's talk about process here.

There used to be a rule that we had even at newspapers, which is that you don't write about somebody threatening to file a lawsuit. you only write about it once the lawsuit is filed. That's number one. Number two is if either you charge somebody with it or you shut up. And I don't know the extent to which there are other people who may have been referred to the Justice Department that we don't know their names, how often it is that at the FHFA publicly named somebody. And we don't know also, Sarah, the extent to which there's been any investigation.

and they've taken an effort to get Governor Cook's side on this, which is the way we normally do things around here, because there could be certain exceptions, a letter from the lender, some disclosure. This is really hard-boiled politics. That's what this is. We know who Pulte is. We know what he's doing, and he has done it.

This is hardcore stuff, and it is only politics. She may or may not have these allegations. They may or not be true. But in the first, second, and third instance, it's about trying to remove Cook for the president. So are folks talking about it out there? There is some chatter about it. It's complicated. People are not necessarily – they're a little – I mean, look, I think they know now, if they didn't already, what they're dealing with with the administration when it comes to this.

And what they're doing is the hardest core, I believe, ever campaign to get the Fed to cut interest rates. This is the most weaponization of the politics of trying to get a rate cut that I don't know that anybody's ever seen. Even the idea of taking the Fed chair by Lyndon Johnson and throwing them up against the wall. This is dirty pool. Okay, Steve, thank you for the perspective from Jackson Hole, Wyoming. Lizanne, how do you think investors should be processing politicization of the Fed? I mean, we haven't seen anything like this in a while. We have not seen anything like it.

I think part of the reason notwithstanding very, very recent weakness in the market, I'm actually of the view that part of the reason why the market has done well is not because of an anticipation of the Fed cutting imminently, either because of political pressure or otherwise, but the fact that they haven't, that they have so far stood their ground, that they are focused on their dual mandate. And I think what was interesting about the minutes that came out today is that it was only the dissenters, Waller and Bowman, that had the view at that time that rate should be lower. Everybody else was focused more on the inflation side. Now, it's become stale by virtue of the fact that those minutes were from a time that predated the July employment report. So if we got mental

minutes from Fed members now, I think it would probably lean slightly more doveish. And I do think the labor market holds the key. But there's no question that sort of politicization. It's not just as it relates to the Fed, but the concern, I just did a client event last night. And I got a ton of questions on can we trust the data? What's the efficacy of the data? If we can't trust the data, what kind of sources can we rely on? So there's an error about this that could actually be a contributor to some of the recent rotation and market weakness. Again, it's hard to point to any one thing, but I'd be willing to put that maybe on a list of concerns that have impacted the market. You know, you mentioned the minutes. And so my takeaway was a majority of

participants still worried that inflation was the bigger risk than unemployment. But the meeting, the minutes came out on the meeting two days before the week, July, jobs report when June and May were revised. If you're able to get inside their heads now, I don't think it would lean quite as hawkish. And I do think that if the labor market, if we get another fairly ugly report, either at the headline level or inclusive of revisions, which was the, you know, the culprit in the last one, And I think you would see expectations for a cut really ramp back up again, even without inflation getting comfortably to the Fed's target. I think they have maybe a sharper eye on the labor market side of their mandate right now

than on the inflation side. I think the market's betting that way, too. Still high chance of a cut in September and then another one to follow. Lizanne, thank you very much. Good to talk to you. Good to see you as always. Lizanne Saunders from Charles Schwab. Target shares, big story, under pressure.

And the news, a new CEO, Brian Cornell, will step aside on February 1st after 11 years. His deputy, the current COO, Michael Fidelke, will take the top job. And he's got a turnaround job ahead of him. New numbers showing that stales are still falling at Target. Comps down almost 2% last quarter, which was actually better than expected, but still falling. Traffic also down for multiple quarters now. I spoke at length to Brian Cornell and Michael Fidelke about all of this, the challenges ahead. Fidelke telling me his focus, number one, is to return to growth.

And I asked him how he's going to do that. And he said, first, we're going to reclaim merchandising. We have big plans for changes in home, for instance. That's been a weaker category. Second, he said, we need to make sure the experience is better in the stores. And then third is the how. He said, we will use technology more aggressively. His main message is what makes Target unique is the design-led, on-trend, stylistic products

at a good price. The targe. Now, analysts, they're mostly disappointed, although I will say the stock is off the lows. The disappointment comes from, if you read the research reports and talk to investors, the fact that the company didn't bring in anyone new and outsider. The strategy isn't happening fast enough when it comes to the turnaround. Though Cornell did tell me that the board did consider external candidates and decided Fidelke was the best bet. There's also macro. Fickle consumer tariffs, not helping. Fidelke says the consumer has been remarkable. resilient, but with tariffs on their mind and inflationary pressure, they're choiceful. They're looking for value, but they do respond to newness, pointing to the champion clothing

that had just hit the floors and target working really well. Let's bring in Missouho, Director and Senior Analyst of Hard Lines, Broad Lines, and Consumer Internet, David Bellinger, and CNBC, senior retail reporter Courtney Reagan, who's been following this for us. So, David, what's your reaction to the CEO pick? Thanks for having me on today. Thank you for coming in. Look, it's a little disappointing to us, because we actually ran an investment.

survey about a month ago, and 96% of investors told us they wanted an external hire, someone who could bring wholesale change, do it aggressively, and we just didn't get that today. So Michael Fidelke, he's been at Target for about 20 years now, he's actually an intern, worked his way up. So he has a great knowledge of the business. It just seems that the reaction we're getting today is that maybe he's not the ideal candidate to come in and do this so aggressively and turn the business quickly. So I think that's where you're seeing the reaction in the stock today. So earlier, I drew a comparison. to Nike because Elliott Hill, the new CEO, was also an intern at Nike and worked his way up

through a number of jobs in that company. And, you know, it's obviously very different situation, but they're both retailers that are struggling to reclaim the glory days when they were cool, right? And the idea is bring in someone that knows the business really well and was there during that time and knows the special sauce of a Nike or a Target so that they can engineer that turnaround. Why couldn't that work? It's definitely possible. And Target has a tremendous this amount of potential upside. You can see the stock up 50% if they get things correctly. It's hard to go and pull that back that 10, 20 year ago feel of Target. You've got a very different retail landscape today with Walmart has been very aggressive in their investments.

They do a great job in grocery to get that frequency of order transactions. They have a great online business and marketplace. And then Target's definitely competing with the Amazon's of the world as well. So that's where they've lacked the investment, the proper investment to catch up to these guys. And looking forward, it's definitely possible that they can get there. Just screens that'll be incredibly expensive and it'll take some time for them to actually get some results on the board. Courtney, I'm curious what you're hearing about targets, challenges, and how you see the competitive landscape right now. Yeah, I mean, look, I echo what David has said. And obviously, Sarah, we spoke at length as well

to the executives this quarter and have in the past. I think we know Fidelke well. And no one doubts, obviously, that he has a lot of skills. But we also know he's been there when some of these missteps have happened. And so I think everyone wonders, well, if he had been in that topsy, what if he had made different calls along the way? And to David's point, I mean, Target actually has done a lot when it comes to changing up their shipping and their distributions and being able to ship from store and really cutting down the cost of that last mile to catch up to Amazon. In many parts of the country, you can actually get your items ordered from Target very, very quickly as quick or quicker than Amazon, particularly if it's filled from the store. Now, they don't

have as much of the endless aisle that Amazon would have. So that's different. And then Sarah, to the point that Fidelke made to you and to me and to many others that they want to get that or need to get that Tarjeie magic back. I mean, of course they do, right? Like, we all know that. And I think some of the disappointment might be with Fidelke is that he has held a lot of roles there. He's been the CFO. He's the current C.O. He's worked in HR. We talked about his experience all the way down from an intern all the way up. But it's that merchant prince, someone that really knows merchandise has that special touch, that sort of balance of art and science that everybody's looking for. I don't know if that person exists, to be honest, but I think

everyone was hoping that they could find that person. Yeah, merchant princess maybe is maybe they should be looking. The stock did bottom, David, or around nine, got down to 94 today and interestingly has rebounded. At what point does it look too cheap or too hated for you? Yeah, it's a great question. You have to look at the, I think the dividend yield will actually be a floor for this stock. You start to see that push five or six percent. But I would also say that I don't think Target's had its kitchen sink moment just yet. So you've had a new management coming in. Numbers haven't been slashed to a massive degree yet, but that poses risk for the back half.

You've got the complexity of tariffs, slaring on top of this. So maybe you get some kind of revision downward in earnings, or even next year it turns out to be sort of a week year. this can tend to be pretty disruptive to earnings power as these wholesale changes start to take place. So that's what we're looking for is sort of a bottoming in numbers, and then how quickly can they get sales growing again, get those comps back? And like Courtney said, a lot of that is merchandising and the heart of the stores, getting those back to operate better. Right, just getting products that people want to buy.

Exactly. That's really, that's the simple story of retail, Courtney. So what else are you gleaning from some of the other reports? I know you've been following Lowe's today. T.J. Max had another really good quarter. about who's doing well and who's resonating and who's not. Yeah, it is really interesting. And we always compare Walmart and Target.

But I think we really should pay more attention to TJX. The market cap is huge. It's just a company that's a little quieter when it comes to telling their story out loud to the media or otherwise. They like the idea of being a treasure hunt, not having everything available online. I think many people thought that was never going to work. Look at the numbers.

It works. And TJX is definitely stealing market share from the likes of Target. also probably a coal. So we need to really be watching them from a competitive viewpoint, even if we don't get a lot of extra information beyond those earnings calls. And then I think it's very interesting

what's happening in the home improvement space with Lowe's and with Home Depot really going after the pro consumer. They're saying, look, homeowners are not ready to spend yet. They're deferring those big projects. But when they're ready, we're also going to have a bigger piece of that pro business so that we can get in on that action.

Yeah, okay, great summary. Courtney, thank you. David, good to see you. Thank you for joining us as well. We'll send it over now to Christina Parts in Evelas for a look at the biggest names moving here into the close. Christina. I'm going to start with chip stocks because they're sliding today on numerous catalysts that just go beyond the general tech unwind narrative. First, you have the Trump administration, I ain't equity stakes and other manufacturers beyond Intel like Samsung, Micron, and TSM.

Our own David Favor report struggling chipmaker Intel is in talks with additional investors beyond soft banks. So that is why you're seeing the stock down about 7% after the run up just last week. Micron. That is an outlier. Down about 5%. Doesn't necessarily have to do with this news following an article specifically in the Seoul Daily that indicated competitor Samsung's high bandwidth memory reportedly passed NVIDIA's quality test. So essentially that just means more competition for memory maker Micron is so that's why shares are down. Palantier shares also lower for a six straight a session down about almost 2%. It comes just really, again, amid that broader market sell-off and also a short-seller report from Citron Research that calls. the company, quote, detached from fundamentals and analysis. Ouch. That's why you're seeing shares down and are almost 20% off their all-time high, which was just reached last Tuesday. Gosh, things could change. Meantime, last but not least, Upstart holding shares are higher.

I want to end on a high note, an upgrade to overweight from neutral at JP Morgan. The bank says a favorable macroeconomic backdrop should benefit more seasoned fintech leaders like Upstart, and that's why you're seeing that one up 3%, Sarah. Okay, Christina, thank you. We are just getting started here. Up next, another ugly day, as Christina noted for tech. New Edge Welts, Cameron Dawson, and Wilmington Trust, Megan Shoe, are standing by to tell us how they're navigating this space. They'll join me after a break. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back. We are lower across the board here pressured by a broad decline in tech. Second day in a row. Investors are also looking at. ahead to Fed Chair J. Powell's speech on Friday from Jackson Hole. Joining me now is New Edge Wells, Cameron Dawson, and Wilmington Trust, Megan Shoe. Ladies, it's good to have both of you.

So Cameron, on the tech unwind, you know, it's hard to, people were so loaded up in these, but they delivered on earnings, and it's hard to knock them on the fundamentals. Is it an evaluation story? I think that's exactly what this is. This is more about a positioning rotation, evaluation, digestion. This is not a growth story, because what you see is that 12-month-4. EPS numbers for tech names and for the market overall are still hitting new all-time highs but we had run so far so fast we're in a tough seasonal stretch it's not

surprising to see this volatility mostly in names that are higher momentum and higher beta that just exhibit more downside when you get a little spark of the catalyst so nothing all too surprising we would think that this would be rather short and shallow versus something more deep and protracted if it was actually about why why what makes you think that because if we were seeing growth estimates get cut, that's when we would see something that would be 10, 15, 20 percent of a downside. We think this is more of your normal short and shallow, that it's just about that digestion of a big move and digestion of high valuations. Megan, do you agree with that

kind of characterization? I do. We still like the tech names that are at the heart of the sell-off currently. And what we're seeing is, I think, really just a little bit of profit-taking and momentum consolidation. As Cameron said, we've had a very strong year. We've had a very strong year. We've had a very strong move in the markets, but those companies continue to deliver on earnings. And we are entering what we think will be a period of higher volatility with a lot of potential catalysts. And any time you have stocks that are priced on the rich side, which whatever metric you want to look at, it's hard to argue that they're anything, but at least fully priced, you set yourself up for a little bit of additional volatility, whether it's potentially

hawkish comments from Chair Powell, Nvidia earnings next week. or the payrolls to come thereafter. There's any number of things that could just make investors a little bit more nervous, but we wouldn't see it as anything really that would require action in the portfolio. We stay fully allocated and expect to ride through any of this volatility. Do you make any moves here? So we stick to quality. One of the things that we've been telling our investors all through the summer

is that what's led the market for the last few months has been low quality, speculative, junky parts of the market, so we didn't chase that. We didn't chase that. And we think that as we move through the end of the year, it is quality's time to shine. So we look for good free cash flows, strong balance sheets, good interest coverage, all things that really provide that ballast in uncertain economic times. That's what Lizanne Sanders was saying, too. Do you think that Nvidia earnings will be a catalyst for the group?

It certainly is going to be a key driver of sentiment. And if it disappoints to the downside, if you don't see the kind of growth that everybody's expecting, you could see further unwind of some of these AI trades, which again, you're in that high beta, high momentum part of the market, which just means that could be a further catalyst for downside. But we would expect them to beat and raise. That's just what they do these days. Yeah. Megan, and you mentioned the Fed as other catalysts and sort of the macroeconomic environment. I'm curious how big of a pull that is on this group in particular, because, you know, if anything, over the past few sessions, we've seen rates come down. That should be good for the long

duration stocks. Yeah, absolutely. So I think it's a little bit to do with rates. But again, I think there's a number of factors here affecting the tech trade. As we look forward, I think it is important to think about what the Fed might do. We do have a little bit more of a dovish take than the market, expecting about 150 basis points of rate cuts over the next year. But more important than how many rate cuts the Fed is able to do is really why they're cutting. And I think that could dictate the direction of the market, whether we get a return to quality, because I thought Cameron's comments were great there as well. And I completely agree. It's been a historic period of underperformance for higher quality names. But if we were to see the Fed cutting because we get

another very disappointing payroll report and inflation is also coming down because consumers are pulling back, then I would expect for those higher quality names to do better and to maybe see a little bit more strength and resilience from those growth names, which have become a little bit of a defensive part of the market over cyclicals, which have more economic sensitivity. Do we need Cameron Fed cuts to get the market back on track? I think the point is it's the why the Fed is cutting. If the Fed is cutting for a good reason, then the market will take it. They'll say we don't necessarily need it, but we love it.

If the market is cutting because payrolls are really disappointing, that's something that would suggest that you need to cut earnings estimates, you need to cut GDP estimates, which risk assets do not like. So the why is the most important question for the Fed. Right. But if they cut in September, we'll get one more jobs report before then, even if it's weak. It'll still be, you know, to preserve, to try to preserve what's left of a good job market, right? And we think that we get the cut in September because the non-farm payrolls we already got, gave them the air cover.

But we are watching that we think we could get some spicy inflation prints over the next couple of months. You're seeing it not just in goods prices, but core services X housing was ticking higher. That suggests that maybe inflation becomes more of a headwind to them delivering all the cuts that maybe they had hoped for. Right, which is why I guess we'll watch for what Powell says about that, having that new information. Cameron, Megan, thank you both very much talking through the trade today with the Dow of 67. Up next, we are tracking the biggest movers as we head into the close. Christina Parsinevillis is back with that, Christina. Yes, let's start.

I'm smiling, but a furniture giant shares are crashing pretty much double digits right now on weak consumer demand. while a medical device maker surging on better tariff outlooks, those movers and more, I promise, after this break. Let's get back to Christina Parts in Nevelas for a look at the key stocks to watch here into the close, Christina. Let's start with lazy boy shares, because they're seeking right now after the company reported worse than expected earnings,

and they were very cautious with their guidance for the current quarter. The CEO said, quote, a challenged consumer impacted store traffic and same store sale. That's why you're seeing shares down more than 11%. This is their worst day since 2022. Meantime, better than expected guidance is boosting shares of medical device maker Medtronic. The company now expecting a tariff impact of roughly $185 million compared to the prior range of $200 to $250 million.

So that's a little bit better. And that's why you're seeing shares up almost 4%. And lastly, Avis shares. Those are sliding right now. Rare double downgrade from Bank of America, the firm going to underperform from buy, also lowering their price target to $113. That's a 28% downside from yesterday's close. Bank of America says the car rental companies' fundamentals

just don't support its stock price. They expected to face demand pressures in the U.S., and so that's why you're seeing shares down 6%, Sarah. Okay, thank you, Christina, Prasnevless with the Dow, positive, and a number of sectors green, energy, staples, financials, health care, real estate, utilities, materials, and industrials are all actually working right now. It's tech that's dragging us lower.

Up next, Fairleads, Katie Stockton. standing by with the key levels she's watching, and the sector she's betting will see some serious strength. Closing bell, we'll be right back. Tech and discretionary names. Again, taking a leg lower, weighing on the NASDAQ for a second day here in a row, here to share the key levels to watch. Fairlead strategy is Katie Stockton. It's a good day to have you, Katie, because we're starting to see some real declines with the Palantier, for instance, down 20%.

I know it's been the biggest winner on the way up, but how does the damage look to you at this point? It's definitely some rotation out there from the leaders into the laggards. And with that, we are seeing a pullback in the large cap indices. It's really just a several-day pullback at best at this point. So it's hard to say whether this is the start of something more serious or not. But our bottom-up work does show more intermediate term overbought downturns. That means on the weekly bar charts, we're seeing downturns that we haven't seen the likes of which in some time. So there is some sort of deterioration in the underlying.

And now if we lose the support of the mega-caps and the, these leaders like Palantir, well, that could be problematic and it could put the market in a position to see that correctional sort of activity that attends to this time of year. But what about the fact that much of the market is holding up well? And there's energy is up one and a quarter percent today. It's defensives like staples, but it's also cyclicals, like financials and materials and industrials. They're all working on a day like today. It is pretty interesting. If you look at the very short-term sector rotation, as we see the rotation out of technology primarily, it occurs to the benefit of really most other sectors, or at least

other sectors that would be considered relatively oversold. The cyclicals in our very short-term work do look poised to outperform. It doesn't necessarily mean that they're going to rally while the rest of the market pulls back. That's pretty unusual. But their relative performance can certainly do better. And also a complex like energy can do better just by the nature of crude oil prices, seeing a bounce, that type of thing. So there are external influences there as well. But we feel that

the loss of relative performance from technology is pretty meaningful in something that will stay with the market for a few weeks. Is there a level NDX NASDAQ, NASDAQ, that were you would step in and buy? Well, there's two levels that we're watching. The first support is around 22,300. That's the breakout point. It would be a natural place for buyers to step in. If we do see those overbought downturns become widespread now amongst a major indices, then the 200-day moving average and also some support from the cloud model is closer to 21,300. I wouldn't rule that out. We're looking at at least about 4 to 5 percent to initial support. And the catch is when you look at the measured move objectives from the breakouts that preceded this so-called pullback, the risk reward isn't great

for new long. So I think what we'd like to see is not only a retreat closer to those support levels, perhaps, but also some improvement in the momentum, which has been deteriorating at least on a short-term basis. Are there any sectors that look particularly interesting to you outside of tech, either to go higher or lower? We are overweight currently utilities, which isn't always the most exciting sector necessarily. But there are some positive technical catalyst unfolding there, again, from a bottom-up perspective within that space. And the relative performance is kind of intriguing. We have rotations that are positive short-term versus the S&P 500 and also oversold conditions that should give way, I think, to some stabilization. They may be closely

tied to yields, but we feel yields are somewhat neutral at this time, just backing and filling. What do you see in the usually in the league? The market's pretty confident that we're going to get a recut in September. So let's see what Pet Chair Powell says about it this week. Not sure it's a certainty. But what do you see in the lead up if we do, sort of kick off another cutting cycle, even though it's unclear how this cutting cycle will even look? Right. I mean, if we do see them cut rates, we would expect the 10-year yields to go that same

direction and take out support, which currently is around 4.2 percent. I would actually see that as a negative for the equity market potentially. If you just go back at the start of past Fed rate cut cycles, it tends to be more market negative than market positive, even if it's more positive for the economy. So we are watching that as well very closely. The range right now is about 4-2 to about 4-4 on yield, so a very tight range that we have at least very well-defined boundaries for. Okay, Katie, thank you.

Good day to check in with you. Katie Stockton. Still ahead. McDonald's moving higher. What's behind that bounce? And what it might mean for the rest of the food stocks when closing bell comes right back? Up next, Hertz shares popping, thanks to its latest partnership.

All the details, and we take you inside the market zone. Next. We are now in the closing bell market zone. CNBC, senior markets commentator, Mike Santoli, here to break down these crucial moments of the trading day. Plus, Billabot, what's driving Hertz today. And Kate Rogers is watching some big changes happening at McDonald's. First, though, Mike, I will say a lot of talk about rotation out of tech.

But things have actually rebounded nicely. The S&P 500 climbing back after a deeper dip earlier. Yeah, these kind of swirling currents that had everybody off balance earlier in the day and yesterday, they've calmed down a little bit. We don't know if that's just kind of a pause in this reallocation. You're still seeing, you know, the high momentum, high beta parts of the market, but really not as dramatically as they were. And even all day, the market never let it get too disorderly. You know, volatility never really spiked. The S&P 500 was never down more than about

three-quarters of a percent. So it's one of those periods where the market's trying to relieve some of the extremes that have built up in terms of how concentrated we were on the AI trade and how neglected some of the laggards for the year had become. You can't always just get away with that. Maybe you're going to need more of a pullback. But right now it feels as if there was no macro reason for a lot of it to intensify, so it's calm. I know. I was asking Lizanne Saunders, like, what was the catalyst? Hard to pinpoint any one thing. If anything, we've seen rates come down in the last few days. It's been really hard to pinpoint an economic or really fundamental catalyst. You know, if you look at the pressure on meta over the last three

days, that almost seems like it was the initial wedge because it was such a, you know, a crowded stock. Everybody loved it was up so much. It was down, you know, on its rethink of its AI thing. And then it just seemed to sort of have this cascade effect of people deciding it was time to sort of reallocate. And that's what's going on. We've seen it a couple of times before. Remember Walmart's guidance in February triggered that big momentum reversal? We don't really think back to that being important fundamentally or economically. But that's what did at the time. All right. Well, let's hit some movers here. Phil a beau for a look at Hertz and this new deal that's getting investors excited. Yeah, Sarah, this is one more move that Hertz is initiating

to increase retail revenue. Here's the agreement between Hertz and Amazon autos. Essentially, Amazon autos will be a listing site where Hertz can sell used vehicles that are coming out of its fleet. Consumers will be able to buy those vehicles online and at least initially pick them up at four Hertz locations in the western half of the United States. But as you take a look at shares of Hertz over the last couple of days, the important thing to keep in mind is that they plan to expand this program, ultimately to 45 Hertz locations where the vehicles will be picked up. One last thing, keep in mind as you take a look shares of Hertz over to last year, there's a high short interest in this stock. 19.3% was the

latest data that we found in this. So it tends to move on news like this, Sarah. It doesn't mean that it will always do that, but that is something for people to keep in mind the short interest being over 19%. Because the fundamental story on this stock, Phil, is still pretty bearish, right, on where the business is going. Correct. Correct. And that's not just the case for Hertz, rental car companies, generally speaking, they're fighting a couple of headwinds here. One of them being that people will say, ultimately people won't want to buy or rent cars when they go on a business trip. They'll use Uber or they'll use some other ride share app.

And that's one of the big headwinds that's been there for a while. Yeah, or robo taxis in the future, self-driving. Sure. Phil, thank you. Phil LeBoe on Hertz. Kate Rogers here with more on McDonald's, which is making a mini move higher here. Kate. Hi, Sarah. That's right. The Wall Street Journal reporting this morning, McDonald's is going to lower prices on eight of its most popular combo meals at 15% less than the total cost of buying those items separately beginning in early September. It will also offer extra value meals priced at $5 and $8 in September and November. And the journal reporting, it will subsidize franchisees who lose money adjusting for sales gains on these offerings. Now, Raymond James writing on this news, quote, we expect this to move the needle and to likely be felt across the restaurant into

given McDonald's, $55 billion U.S. sales comprises low double-digit percentages of U.S. quick-service sales and about 6% of total U.S. industry sales. Meanwhile, T.D. Cowan says it leans more negatively on this news, writing, since McDonald's started intensifying value efforts in June of 2024 with the launch of the $5 meal deal, value initiatives have failed to move the needle, despite the fact that the intensity of value activity picked up in the beginning of 2025. The big question here, Sarah and Mike, is, does this wind up moving the needle on traffic? One more thing that Raymond James analysts put in their note today was the overall guest experience, in their view, has deteriorated. And that's something we know companies like Starbucks are working really hard to fix. It's a very competitive environment. The experience has to be worth it for the money, right? Absolutely.

Thank you, Kate Rogers. It also says to me, Mike, that maybe we're not in such an inflationary environment when you see stories like this. Especially in categories where it's been multiple years of price point migrating higher. I mean, you're obviously seeing sensitivity to sweet green, Chipotle, Kava, have all run into this, right? Those have had big disappointments. They sold off on their results each time because, you know, the gap between what a meal's costing there and even at a sit-down casual restaurant has narrowed too much. And, yeah, obviously, I don't think we're looking at broad across-the-board inflationary pressures.

I haven't really thought that for a while. It's much more about how statistically the headline might move at a time when the Fed is being, you know, pressured and maybe is feeling internally the pressure to resume rate cuts. Which sets us up for another potential catalyst, which is the Fed's speech, Fed Chair Jay Powell's speech in Jackson Hole. Since we've last heard from him and since the minutes were released, I mean, we had this weaker jobs report and a little bit hotter inflation report. Is the market set up for disappointment because it's so betting on a rate cut for September? I think the market is feeling as if the payroll report was so jarring and kind of out of bounds versus expectations that it's overriding a lot of those other things. And, you know, is the market's bluff on that going to be called?

I don't know. I don't know that whatever Powell decides to say, whatever Tony wants to strike, even if he intends to sort of reduce the confidence in a September rate cut, I don't know if the market will take that and run. I do expect him to not really overcommit in one way or another. We are going to have probably a pretty important jobs report on September 5th. So there's no reason really to front run that with any degree of certainty. So look, I think it's the next obvious thing to get out of the way. The market has managed to deal with this little flutter to the downside. Okay, all the crypto stocks have bounced, Palantir's balance. We'll see if that matters tomorrow. All right, there is the closing valve closing, just about flat, F&P down

a quarter of 1%, NASDAQ down, 7 tenths of 1%, strength and groups like energy, staples, health care, financials, real estate, utilities, and materials. That's all that for closing down. Now we'll send it into overtime with Morgan Brennan.