Closing Bell - Closing Bell: Tension-Release Rally 7/3/25

Episode Date: July 3, 2025

This holiday-shortened trading week ends with a tension-release rally pushing the key infexes further into record territory. So what could be next for your money? We discuss with Fundstrat’s Tom Lee, Truist’s Keith Lerner and Wealth Enhancement Group’s Aya Yoshioka. Plus, former Fed Governor Frederic Mishkin breaks down his first reaction to the jobs report and what it might mean for the Fed’s next move. And, Lisa Shalett – CIO of Morgan Stanley Wealth Management – tells us where she is finding opportunity in the second half of the year. 

All right, thank you, Sarah and Will. Welcome to a special closing bell on this holiday short and trading day. I am Mike Santoli in for Scott Lopner. This make or break hour before the long weekend begins with a tension release rally

pushing the key indexes further into record territory. A better than fear jobs report and the imminent end to the suspense over the big budget bill have freed markets to extend their recent gains. Take a look the S&P 500 up now almost nine tenths of one percent so above 62.75 the Dow also up a similar percentage and Nasdaq has retaken the lead from what

had been a two-day rotation toward small caps such as the Russell 2000 which remains up nine tenths of one%. Treasury yields, they are higher as chances of a July rate cut have more than, almost all been evaporated, let's say. You get the two-year yield is up the most, but you do see the tens, 433 right now. It had been down by 4.2. We will discuss whether these suddenly ebullient markets have it right or are getting a bit too comfortable all this hour.

But first, let's get to the key stories out of Washington. Amon Javars is standing by at the White House following that big interview with Treasury Secretary Scott Besson. But let's start on Capitol Hill with Emily Wilkins as we still await a House vote on President Trump's Magabelle Emily. Where do we stand? Well, Mike, right now, House Minority Leader Hakeem Jeffries is taking his moment.

Really, the minority hasn't had much to do here. Democrats haven't had their fingers in this bill. But what Jeffries can do is that he can use what is called the magic minute to talk on the House floor for as long as he can. And it looks like as he enters our number seven seven what he's going to try to do is break the record previously held by Kevin McCarthy that he made when Democrats were passing Biden's big legislative priorities and so that should probably take us to about 1 30 maybe 2 o'clock after that we expect Mike Johnson to speak and you can see there Kevin McCarthy went for 8 hours 32 minutes

and he broke the record set by Nancy Pelosi for eight hours and seven minutes Meaning that maybe Jeffries might go a little bit longer than than 8 30 maybe a little closer to nine Look, he can talk for nine. He can talk for 10 He can talk for 11 at the end of the day. This bill is going to pass There was a vote taken early this morning where all but one Republican voted to continue to advance it Speaker Mike Johnson has told us that he has the votes. We have heard from some of the deficit hawks who had concerns saying that after they spoke with President Trump, they feel more confident going forward, more confident that the White

House will take further moves to address the current debt. Let's remind what's in this bill because it has changed so much. Now, the House is going to pass exactly what the Senate passed and the Senate did make a couple key changes. Into the bill they put a 50 billion dollars for rural hospitals. They also included for solar and wind tax credits. They allow them to get those credits if the project start construction by 2027 and they also put in that $40,000 cap for salt deduction until 2030. The Senate also took a number of things out of the bill.

That includes that moratorium on states implementing their AI laws. That is now out, no restrictions on states here. They removed that excise tax on wind and solar, and they took out that so-called retaliatory or the revenge tax on investors and multinational companies from certain countries that had levied a tax on the US. So of course after this the White House is already planning for a bill signing on July 4th. We're hearing there might be some some B2s involved. Of course we'll be getting more details as this continues. Mike? All right Emily thank you so much for for staying on top of it. Let's send it over

to Eamon Javers with more from that interview that was just completed here with Treasury Secretary Scott Besson. So, Amon, obviously reiterating a lot of the points he's been making about this economic strategy of this White House for a time. Yeah, Mike, that's right. You heard the Treasury Secretary there dismissing concerns about the deficit with this big, beautiful bill, as the President calls it on Capitol Hill, saying that he simply doesn't believe the CBO numbers, he believes this bill's gonna drive more growth, that'll be good for revenue, and oh, by the way, he points out the U.S. is also gonna get that tariff revenue that the president has been touting over the past week or so, much higher tariff revenue

than the U.S. government has seen in decades coming into the treasury. So, some optimism there from the treasury secretary. Lack of clarity, really, though, on the status of this Vietnam trade deal that the president announced on social media yesterday. The president said there was a deal with the Vietnamese government to have 20 percent tariffs on Vietnam. Vietnam in turn would have 0 percent tariffs on the US. That hasn't been papered. We've seen no documentation, nothing legal has been signed as far as

we can tell. The Treasury Secretary in that interview is saying that it was finalized in principle was his understanding, and he hasn't talked to the US trade representative about that today. So he doesn't know the exact status of it. One point of question that we've had, our Megan Casella has been asking this since yesterday

when this was announced, do these tariffs that the president announced, this 20 percent tariff on Vietnam, do those go on top of the previous existing tariffs that were already in place or do they eliminate previous tariffs and go simply as a 20 percent flat tariff on Vietnam? Treasury secretary said that the tariffs at 20 percent don't go on top of the 10 percent tariff that the president had floated. But a little unclear here whether or not this 20% figure that the president's talking about goes on top of the previous existing tariffs on Vietnam.

All of that might sound technical. Very, very important though if you're an apparel manufacturer and trying to figure out what your prices are going to be and what your profit margin is going to be. The Treasury secretary there, Mike, saying that profit margins in the apparel industry had been a little distorted during COVID and they might have to come back to balance. If you're the CEO of an apparel manufacturer, though, you might not want them to come back to balance because you kind of like those hefty profit margins that you've been seeing in the past couple of years, right?

Right. If, in fact, you've been collecting them, I'm sure it goes company by company. Amin, yeah, a lot to be sorted out over the next several days on the trade front as well. Appreciate that. Let's bring in FunStrat head of research and FunStrat Capital CIO, Tom Lee, also a CNBC contributor joins me here, Tom,

good to see you. Great to see you. So we have this rally that's now extending probably beyond what most were positioned for, but it started in a moment of peak uncertainty. And even when we were in peak uncertainty, a lot of us were saying that's kind of usually forward looking bullish,

but are we now getting to a point where we have finally feasted on all of the uncertainty and now we have a lot of these blanks being filled in? Actually, I don't. I think that it is appropriate that we are making new highs because the fundamental and the visibility is better now than it was in February at the old highs. And I think there's three levers that are going to get pulled. One we know is that Fed didn't unleash liquidity at the April lows.

So we have a Fed that's been on hold and tight. But if the information and the data comes in dovish, that's 12 to 24 months of Fed liquidity and dovishness. That hasn't happened yet. The second is that I think that there is a false argument. People are saying the multiples are stretched. The PE should be expanding because we've now had five stress tests that companies survived. They survived COVID, they survived the bullwhip effect, they survived the inflation surge,

they survived the Fed fastest hikes, and now they survived Armageddon. If you don't have five more episodes, multiples will be higher two years from now. And the third is that I agree with anybody who says that, look, we've kind of reshaped some of the economic flows around tariffs, but that's an upside story because if it plays out better, that's an earning surprise. So you have three levers that sell us that 6,200 is the market beginning to recognize we're in a better position

while 7 trillion cash is on the sidelines. And I can tell you, our clients, institutional clients, remain very skeptical. This is the most hated V-shaped rally. I grant that given the strength of the rally, investor sentiment pretty much across the board has lagged. It's not as bullish as you would normally expect. The seven trillion in money market funds though,

I mean, to me, that's a non sequitur. It always goes up. Unless you're at the end of an awful bear market, the money doesn't come out of money market funds. And then right now, as a percentage of total market cap, the S&P is like $60 trillion or the US market is. It's like, what are we talking about? Well, there's a couple of things to keep in mind.

One, in fact, money market balances have declined. They only started to rise really in 2022. They had a stutter step in and they went up. You really get margin debt, NYSE margin debt. The dollar amount absolute is still below where it was in October 2021. So you have like four years, it's four years and you're still not even higher

in margin debt. And third, it really doesn't take, you don't need 60 trillion to come into the stock market to have it rise 10%. You probably need 200 billion. And I think there's a lot of high net worth money. I know there's a lot of our institutional long short macro that is shorting this rally.

And the long only managers are defensively positioned. They don't believe in a cyclical long, but look, if rates come down and the Fed starts easing, it's going to force people into a cyclical tilt. In terms of the jobs number today and how it bears on all of those factors, whether it's timing of the Fed, whether it's the underlying resilience of the private sector, which maybe is still kind of in watch and see mode how does that bear out well today would have been a day where if it was weak then the Fed has to change its calculus but the job market's good so now the waiting game is

how much will inflation surge over the summer inflation expectations are actually coming down so now all it's all that we're waiting for is let it get through this CPI hump I do think it means that once you get into September, we should really think about cuts coming. And that's what I would focus on more as an investor that, well, that's a cutting cycle. The Fed won't just do one cut. They're going to continue cutting.

ECB and the U.S., 200 basis point different in monetary policy rates, but if you take CPI, year-over-year ex-housing, which is how Europe calculates it, we're both at 1.9% today. Yeah, we'll see if that does persist. Hey, if everyone's gonna celebrate Fed going in September and December, guess what? That's what the dot plot said pretty much. So it's not as if they're two offsides

as many have made it out to be. Let's bring in Truett's Keith Lerner and wealth enhancement groups, Aya Yoshioca. Good to see you both. Keith, how are you kind of postured at this point, and wealth enhancement groups, Aya Yoshioca. Good to see you both. Keith, how are you kind of postured at this point market-wise, because I know you've kind of gotten tactical around the lows, now that we're extending to the upside,

maybe in melt-up mode, how does it look? Yeah, well great to be with you, Mike and company. So listen, I think this market has earned the benefit of the doubt as far as the uptrend. Yes, we have moved a lot off the lows, but the big picture, which we've talked about before, Mike, I think this market has earned the benefit of the doubt as far as the uptrend. Yes we have moved a lot off the lows, but the big picture which we've talked about before Mike is this market's moved sideways for about seven months if you take out that one overshoot which was an extreme.

And then the technology sector has really been moving sideways since last July. As you look from a more technical perspective, you're in gear right now. It's hard to be bearish when you have tech making a new high, industrial's making a new high, financial's making a new high. Now you're seeing this bit of a catch-up trade as well. The earning trends are positive as well. I think, listen, the biggest risk,

which there's some of the discussion, expectations have moved up as well, right? Valuations, we can argue about that a bit, have moved up. And we're seeing sentiment normalize, not extreme as well. So listen,aluations, we can argue about that a bit, have moved up. And we're seeing sentiment normalized, not extreme as well. So listen, Mike, I think we're still in a positive seasonal period as well. So I think the underlying trend is one of positive, and you have some of those catalysts, like getting some clarity on the tax bill, getting some clarity as far as around interest rates deregulation.

So it's almost like some of those things we were looking at late last last year actually coming into vogue now. So that's a positive. Are we not are we going to have some hiccups later this year in August and September? Probably. But for now, again, we would stick with that underlying uptrend. I'm curious as to what your conversations are like with your clients. We're talking here about, you know, whether investors are kind of psychologically bought into this new healthy looking market or if they're resisting it. Sure, thanks for having me. So, you know, in terms of, you know, what conversations we're having with clients, they're definitely a little skittish,

just, you know, not being prepared for this uptrend in the markets, especially after all the news headlines that sort of whipsawed markets. But they're a little bit more comfortable with where the market has been now. I think that's why we're sort of cautioning.

Perhaps the ride could get a little bit tougher during the summer, but I think, you know, in the long term, we want to make sure the clients are just focused into the long-term nature of investing. And within the markets, I mean, aside from just getting folks allocations where they perhaps ought to be in line with their goals, Aya, where within the markets seem like

they're either underappreciated or maybe a little bit crowded or hazardous? Sure, I mean, I think everybody's talked about tech in terms of just the leadership. It's been the workhorse for this market for so long. We continue to think that that's going to be the case, but we have to be cognizant about valuations and where they're at. But the quality of these companies is very,

very high and so they deserve premium multiples. It's just that at some point, they're going to fluctuate up and down just deserve sort of premium multiples. It's just that you know at some point they're going to fluctuate up and down just with some of the noise. And then I think you know financials are a place that we all want to be- exposed to just from a cyclical standpoint. As

rates come down- you know currently. Banks are enjoying high interest rates- but you know as those rates come down I think you know it's going to be a very helpful from a cyclical perspective for loans and things like that. So we really like financials as well.

Tom, what's the message you're pulling from the, we're talking about new highs and industrials. Consumer cyclicals have kind of hung in there, right? So the stock market is not as if, hasn't really been leaning in the direction of we're headed for weakness in the economy. Yes. So what growth do you feel as if is now

kind of baked in to the market? That's a great question, cause you're right. I'd rather see industrials flat on their backs cause the ISM has been below 50 for now 29 months. It's the longest stretch of being below 50 in its history of the survey. So I think there is pent up spending, but the stocks have moved. Consumer confidence is flat on its back. Now in 09 it was flat on its back and we did a study back at JP Morgan that showed the best time to own consumer cyclicals is when consumer

confidence is negative. So I'd say there's less upside for both industrials and consumer cyclicals, probably more for financials and small caps. But there is this relief from businesses as we move back above 50. And I think getting this bill passed and getting the tariff behind us will push the ISM back up and it it should lead to earnings growth. Now I mean the case for small caps, I mean I feel like we kind of keep going through this anticipation cycle of when things might line up for it. You know, they've moved again. Russell 2000 hasn't been above this level except for a brief period in the fourth quarter. And then you go back to like late 2021. So what pushes it over the line? Well, I won't blame any investors as fool me once,

fool me twice, fool me three times, like I'm not PT Barnum or whatever. But I do think it really depends on the Fed being committed to continuing its easing cycle. That's the setup we had before and you know I don't blame investors for being really reluctant but the good news is since the April lows small caps have been outperforming and have the banks. That's kind of the participation you want to see. Sure and Keith you know I feel like it's it's interesting that we're all kind of in agreement here that there's still this reserve you know of a little bit of skepticism among most kind of tried-and-true investors and professionals out there and yet I see some of these little these post IPO moves and you see

what's happening and you know in Robinhood and parts of crypto and you see the daily options trading volume. And it seems like there's a group in this market that's really pretty aggressive and highly active. So how do you reconcile those things? Yeah, Michael, I think that probably suggests at some point we will have some gut checks because sentiment, which was extremely supportive at the lows, I would say is neutral to maybe a slight negative as a whole. But also going back to like this move off the lows 20 percent, we know looking at the lows I would say is neutral to maybe a slight negative as a whole. But

you know also going back to like this move off the lows 20 percent we know looking at the data we've seen two month moves of 20 percent about 10 times since the 1950s and a year later you've been up every time that's a small sample things could be different this time of course but you know again I mean the big picture is there's a kind of this mix of skepticism and then this kind of really greed factor. You see the high beta stuff outperforming as well. So again, maybe that leads to somewhat of a gut check, but sentiment more broadly to us isn't a big hindrance, you know, overall for this market and the flow data is mixed. So again, I wouldn't, I would, I would put a little bit more weight on the underlying trend. But again, I

also don't want to be complacent saying we're not going to see any hiccups. It's going to be just a smooth ride forward when everyone is feeling you know, pretty good ahead of the Fourth of July here. Yeah, absolutely. And finally, I mean, the bond market is is, you know, it seemed pretty agitated for a little while people got a little maybe oversensitive to, let's say the 30 year old year going up about 5% we're talking about still wide deficits for a few

years most likely. How does the bond market's action speak to you and what do you again tell clients about the role for fixed income here. Sure Mike you know I think in the bond market it's tough right I think bonds have always been this ballast and and hedge against equities and they're not as much of a hedge especially in a stagflationary environment but with that said you know the Bloomberg AG index was up 4% year-to-date in the

first half and it's been the best first half since 2020 so I think bonds are still doing a good job and they're providing income, especially to the retirees that are many of our clients. All right. Yeah, I guess playing the role that maybe they were assigned for a while here. Tom Keith and I thank you very much. Appreciate it. And of course, happy fourth. We are tracking some big moves in the chip space. Christina Partsenevelis, all of that for us. Hey, Christina. Hi, Mike.

Well, the Trump administration just reversed a six-week-old export restriction on chip design software to China, sending cadence and synopsis shares up at least 4% right now. This is really just a classic President Trump negotiation tactics. He imposed the restrictions back in May as leverage when China cut off rare earth exports in early April. Now that China's potentially agreed to resume rare earth permits, President Trump is lifting that software ban. So the playbook is relatively clear. Use tech restrictions as bargaining chips, but not

necessarily permanent policy. Mizzouho says in a note today, this restores at least 10 to 12% of revenues for both cadence as well as synopsis that was at risk. The big question is what's next? NVIDIA, AMD's AI chip restrictions still remain in place for now with NVIDIA CEO very vocal in his stance against them. He's called them a failure before. But the hope is that these AI controls could, could get similar treatment. Mike? All right, Christina.

Thanks so much. We are just getting started here. Up next, former Fed Governor Frederick Mishkin breaks down his first reaction to the jobs report, what it might mean to the Fed's next move. That's after this break. We are live from the New York Stock Exchange. You're watching Closing Bell on CNBC. and the the

the the the the the governor he is also a CNBC contributor and it's great to see you I mean a single monthly jobs report it's always a little bit of a you know eye of the beholder type of exercise what

did today's report tell you I guess does it leave you more encouraged about the trend or maybe a little more worried. Well as I've been saying the Fed has a fairly high bar on lowering rates and this just actually made it higher.

And the markets have recognized that they've dropped their view that the Fed might cut rates in the near future. So there's two elements of the jobs report. One is that it was better than expected in terms of the number of jobs. Also important in the jobs report is the fact that the unemployment rate actually went down. And this is a reflection of the fact that labor force participation, the supply of labor has decreased.

And in fact, the crackdown on illegal immigrants in the country may be part of this that they're afraid to show up for work. So all of this actually is something that it tells the Fed that they still have to watch out for inflation. There's no crisis in terms of the economy that would indicate that they should lower rates.

It's true that the Fed policy is a little bit restrictive, but that's sort of appropriate right now and sort of wait and see attitude. And they want to basically have a lot more information to tell them that they need to cut rates, and it's not clear at this particular point in time. Yeah. I mean, I'm sure you've heard, or if not just today, then previous... a lot more information to tell them that they need to cut rates, and it's not clear at this particular point in time. Yeah, I mean, I'm sure you've heard, or if not just today, then previous, the Treasury Secretary, Besson, essentially saying,

you know, that right now, the conditions fit all the Fed's previous criteria and its models for cutting rates at the moment, and why aren't they doing it? I mean, now, of course, PCE has not been to 2%, yet. It's not as if it's been at the target and they're ignoring that. But what do you say in answer to that point?

Well, I actually think that, you know, there's a viewpoint that's coming from the Trump administration, which is the only good industry is the low interest rate. That's very much part of Trump's view of the world. He's a real estate guy. They love low interest rates. They never like high interest rates. I have of the world of the real estate guy they love low interest rates they never like high interest rates I have

a nephew who's- who's in real estate the always berates me when I when I actually think the rates should not be lowered or should be actually rate. So I the the issue here is that the there's a lot of reasons for the fed not to cut rates at this

point. Which is number one is that the inflation the- the they're very concerned about inflation expectations rising for several reasons one is. That the tariffs are are in place they haven't been eliminated all these deals that supposedly with a lower

tariffs. Haven't materialized out yet. And in fact we haven't yet seen the effect of tariffs on inflation yet and that can take some time so the fed's very concerned about that. The second issue is that the fed. very concerned about that. The second issue is that the fed has in recent experience actually blew it a little bit they allowed inflation to

rise and get out of control and that weakened their credibility somewhat to control inflation and they have to keep that credibility in place it's extremely important to them to do that and in fact research shows that having strong credibility to keep inflation to control is something that actually makes monetary policy more successful so they would all want to give that up either. The bottom line is the economy is still at full employment that the labor markets are still reasonably tight. No nothing there that's actually going to cause inflation to go down very much and of course the Fed hasn't met its target of 2%. So all of those things are actually very important

in their decision-making and indicate that there's no rush to lower rates. And in fact, if things could go the other way, very strong inflation rises, they could even actually contemplate raising rates, although I think that that's very, very unlikely at this particular point in time. Yeah, well, you mentioned that over time,

the Fed sort of accrues credibility based on its inflation fighting bona fides, I guess. What about the idea, though, that a lot of this very public criticism from the president about Powell really bringing up all these things that suggest he should resign even? Does it affect anything in your mind longer term about. The role about the institution. Over it is certainly. It's very important to the role

institution. Both from experience and also research we know that independent central bank is something that's extremely important to successful monetary policy. When you don't have it when you you have somebody in terms of the president or whatever influencing the central bank to lower rates as happened in Turkey, for example, you get actually monetary policy that's very unsuccessful, high inflation and not very good for the economy. In fact, this is one of the things that's actually been hurting everyone politically. So although Trump thinks it's great to talk about low interest rates, it's actually not

in his interest. Previous presidents have understood that. And we've had a history really starting very much in the Clinton administration of presidents actually both Republican and Democrat, not trying to get the Fed to lower rates just because it'd be good for the economy in the short run. So I think that actually this is a problem for Trump. We've actually seen that it creates inflation scares, that long bond rates are higher than they otherwise would be.

None of this is really good for him politically, but that's not the way he's thinking right now. So maybe that'll change, but I sort of doubt it. Yeah. Yeah. I guess previous presidents no doubt had their frustrations, but did not try to kind of perpetrate them publicly. Frederick Michigan, appreciate the time. Thank you.

You're very welcome. All right, up next, Morgan Stanley Wealth Management CIO, Lisa Shallot is back. She'll tell us where she is finding opportunity in the second half. Coming up, close to Bellvello, be right back. What we've seen so far is that the tariffs haven't hurt.

The dog that didn't bark was the tariff is going to hurt the economy, we're going to hurt the market. Market had the fastest recovery ever, ever. From below in April, the tariff is going to be up to $1.5 million

and the tariff is going to be up to $1.5 million. The tariff is going to be up to $1.5 million. The tariff is going to be up to $1.5 million. The tariff is going to be up to $1.5 million.

The tariff is going to be up to $1.5 million. The tariff is going to be up to $1.5 million. The tariff is going to be up to $1.5 million. the tariffs gonna hurt the economy, we're gonna hurt the markets. Market had the fastest recovery ever, ever. From below in April, from a 15% decline, and we're at new highs in the market. That was Treasury Secretary Scott Besson last hour talking the market recovery. This as the S&P 500 and NASDAQ again, head for closing highs

today here to share her playbook with stocks at records. Morgan Stanley Wealth Management CIO, Lisa Schaue. Lisa, appreciate you coming on to weigh in here. I mean, it's certainly true as the Treasury Secretary says, we've had this very rapid and complete recovery from that tariff scare. Does it tell you that the economy has sidestepped whatever impact we thought we were going to get from tariffs?

No, I don't think we know that yet. I think, you know, most folks recognize that some of the tariff policy resolution is still yet in front of us. We don't have deals from the vast majority of countries. We know that the July 9th deadline is approaching. And it's very likely that we're going to continue to kick the can down the road for a while to see what we can negotiate.

But I think it remains to be seen, which is one of the reasons that the Fed has been on hold. But the market, I do think, has moved on- and is assuming that that- you know whatever impacts we get from. Tariffs are going to be quote unquote

digestible. I and so I think that the market narrative is now really focused on. You know the next six to twelve months where you know there are great hopes that we are- going to get some stimulus, particularly on the corporate tax side of things from this tax bill that will help earnings over the next 6 to 12 months that will stimulate capital spending and productivity. So I think

that's where the market's brain is at the minute. Sure. And do you take issue with it? I guess the question at any moment is, you know, has a gap opened up between the market story that it's locked into and what you think the, you know, the likely outcomes are. I think in the very short term, this is a market that wants to go up. I mean, you just look at the behavior of the of the tape you look at the- the- momentum in the market you look at the leadership of the market it's

the same old same old- mad seven tack oriented- leadership and positioning remains- you know only average we're not really over bought yet. On technical factors like sentiment sentiment positioning so- we think that this is a market that's going to continue to

grind higher- you know throughout the next you know sixty weeks towards sixty five hundred which is our- full year price target. I think once we get past- you know the debt ceiling and pass the actual tax bill I think it may be a sell the news

event. Our folks start realizing that an awful lot of good news now has been discounted. I you know in a move in this move. And that what we're going to be struggling for as we get into twenty twenty six is where the

upside surprise is going to come from- because that's really what powers markets. Sure. And where would you recommend folks start looking? What do you do with this market that seems like it's destined for your target, which is only three and a half percent up from here, and yet maybe that's all it's going to get? Yeah.

So we've been emphasizing a move away from the pure passive index towards stock picking- and in that regard we continue to find really good stories and opportunities in the financials- where we're thinking about both the positive implications of deregulation. The you know- improvements in animal spirits in the capital markets oriented businesses. And the potential for- artificial intelligence and Gen AI productivity improvements- we really like the

energy sector here also likely to be a beneficiary of deregulate deregulation as well as. You know the energy infrastructure upgrades that we're gonna see around the country around data centers- you know that's been- you know

a clear- story. We like industrials- and- you know part of the CapEx rebound. And reshoring- narratives. I am last but not least we'd be looking in healthcare healthcare has been a sector that is chronically under performed. Lots of worry-

clearly about you know some pockets of healthcare link to some of these Medicaid cuts in the tax bill- but we like the biotech some of the product folks some of the distributors. I in healthcare that we think are pretty fairly valued.

So we're looking for some value, we're looking for quality, we're looking for that cyclical exposure, and we think that that's where you can beat, if you will, that three and a half percent gains that we see in the index. Alright, yeah, healthcare certainly would be kind of against the grain. Maybe people looking past that one right now. Lisa, thank you very much. It's good to talk to you. Absolutely. Happy holiday.

You too as well. Up next, we are tracking the biggest movers as we head into the close. Christina standing by with those. Mike, a cloud monitoring firm just landed a spot on the S&P 500, sending shares up double digits. While an AI infrastructure firm scored a major hardware deal, we'll break down those tech moves next. Let's get back to Christina. She has the key stocks to watch until then.

Holidays soon. CoreWeep. Let's talk about that. Just scored a major win becoming the first company to watch until then. Holiday is soon. CoreWeave, let's talk about that. Just scored a major win becoming the first company to get Dell's new server system running in video's latest Blackwell AI chips. It's a big deal because it shows how CoreWeave is becoming a key player in the Cloud space,

essentially renting out super powerful computing to companies like OpenAI that needed to train their AI models. Dell's also riding the AI way with clients like Elon Musk's XAI, and that's why you're seeing CoreWave stock up over about 5% and Dell up almost 2%. Switching gears, Datadog is replacing Juniper Networks on the S&P 500 index starting July 9th, following Juniper's acquisition by Hewlett Packard Enterprise, HPE.

Datadog is a cloud monitoring firm and its stock is soaring almost 15% right now. Investors typically, and the reason for that is because investors typically buy shares ahead of index inclusion to front run ETF managers who have to purchase these stocks because they're tracking the index. Robinhood shares though down about, last I checked, 4% after the announcement as the trading platform had been widely predicted to actually be included in the S&P 500 instead.

As we can see, that wasn't the case today. Mike? Yeah, this is at least the second time, I guess, Robinhood got one of those headfakes from the index rebalancing. They just, the cold shoulder, you know. All right, Christina, thank you. Still ahead, TripAdvisor shares jumping. We'll break down that balance.

Plus, 314's Warren Pies standing by to break down the critical moments of this shortened trading day. The S&P 500 up 9 tenths of 1%. Closing bell, be right back. We are now in the closing bell market zone. Pippa Stevens on why solar stocks are rallying again today. Diana Olek on the moves in the home builders and Contessa Brewer on the activist stake pushing shares of TripAdvisor higher plus 314's Warren Pies

on what he's watching heading into the close and beyond. Pippa, another relief trade in the solar stocks. That's right, Mike. So solar stocks are tracking for their best week since 2023 after punitive measures were struck from the one big beautiful bill, Sunrun is the top performer this week, surging 40% as residential leases will once again qualify for tax credits with solar edge jumpings more than 30%. Shoals for solar array and next tracker all up double digits. But two important things to note here. The first is that there is very high short interest

in these stocks, meaning some of the gains are likely short covering. The second is this bill is better than feared for clean energy, but it's certainly not good. While the timeline to qualify for credits has been extended slightly, and the proposed excise tax on projects with foreign components was removed.

The bottom line is that incentives for renewable energy are being gutted at an accelerated rate. Mike? It's remarkable, Pippa. Looking at the TAN ETF is due to close at its highest level since November 6th, the day after the election. It round tripped down and back, although as you suggested, still half its peak levels from two years ago.

So quite a ride. Thank you very much Pip. Solar coaster. Yeah. All right, Diana, home builders I guess with a lot at stake when it comes to rates in the Fed. Absolutely. Home builder stocks are taking a hit today because mortgage rates moved higher after

that hotter than expected jobs report. Now the average rate on the 30 year fix rose again today to 6.75%, according to Mortgage News Daily, that after moving higher yesterday as well. Rates had been falling little by little since the start of June, which had given the builders a boost. Still, we are in this very narrow high 6% range really since mid-April. Today, the home building ETF is down a little under 2%. Earlier this week, it had been at its highest level since mid-March.

But names like D.R. Horton, Lenore & KB Home are down even more. They had also seen nice bumps higher in the past week, but pulling back today. Overall, the builders are struggling not just because of this higher rate stagnation, but because of the broader uncertainty among consumers about the state of the economy. Lots of people out looking for homes, just not inking the deals, Mike. Yeah, quite a mismatch, I guess, been there for a while, Diana. Thank you very much. Contessa, TripAdvisor, long-term kind of laggard in the travel space.

It's attracted some interest here. Yeah, TripAdvisor shares are making massive moves higher today after Starboard Value revealed a stake of more than 9% in the travel services company. Look at that up, 16.5% right now. Shares had just been punished last year and mostly flat year to date because of worries about consumer discretionary spending and whether AI might make search platforms like TripAdvisor just irrelevant.

I was unable to reach Starboard or TripAdvisor to talk about how their stake might influence TripAdvisor's prospects, but I will point out TripAdvisor, Expedia, and the giant in this space, Booking Holdings, are all talking about how they're incorporating AI and expect it to give them a lift rather than to provide simple competition, Mike. Yeah, you would think one of the first potential big use cases that's getting tested out there, Contessa. Thank you very much. Warren, good to have you on.

You know, we hear you've been giving the market the benefit of the doubt for some time. It's been the right way to approach it right here. How does the thing set up right now in terms of what the market has already been feeding off of and where do you think it goes from here? Yeah, I mean, we're still overweight equities. That's been our posture since early May.

We stepped out and we neutralized our overweight back in February and kind of got back in in early May. And that's, I think you want to let that run. I mean, July seasonality, just to keep it really simple is so positive. I mean, I think a lot of people know this, but one of the things that we looked at is somewhere sort of counterintuitively when you have this strong May and June, it feels like maybe July shouldn't be that positive.

But in fact, when you have a greater than 5% gain in May and June, you're leading into July, July's even better. And so that first half of July, when you break the year up in a 24 different, two components for each month, this is probably one of the strongest little two week periods for the market. And so, wanna stay long, at least for right now, overweight equities.

I hear the seasonal tailwind story. I certainly hear the investors are maybe still under positioned positioned or they haven't participated fully and might have to be net buyers or would be slow to sell if we did keep going up. But all of that kind of boils down to somebody else out there is going to buy it for me at this valuation. What is the underlying kind of fundamental, the earnings trajectory and the other things say about where we should be?

Yeah, I think that the rate of the rally is probably gonna slow as we get through this July period. I think that one of the reasons why July is seasonally so strong is because you do have a lot of new money coming in, rebalancing flows and other flows. I still think there's some room to squeeze out of that systematic bid that we talked so much

about over these months that got forced out, forced to de-risk during the vol event in April, and they're getting back in. And then the other big driver of the market is going to be earnings. Like you suggest, I think earnings estimates have come down probably more than is necessary due to the tariff fear. And so I think that's created a lower bar for these companies to jump over as we go through the second half of the year. And the I think that's created a lower bar for these companies to jump over as we go through the second half of the year. And the other big factor, we see with the big, beautiful bill,

is that we're gonna still be running these 6% to 7% deficits probably out for the next few years. And I mean, that's pure money creation into the economy. That's 6% to 7% money creation, unfunded money creation into the economy. And I think that's been really the backbone of the economy and the backbone of the market. And it's why we haven't had a lot of credit creation, unfunded money creation into the economy. And I think that's been really the backbone of the economy and the backbone of the market.

And it's why we haven't had a lot of credit creation, see home builders and housing markets struggling, but still you have this one big factor, fiscal stimulus that's working. Yeah, there's no doubt, there's no fiscal payback on offer in this bill, no matter what else you think about it. You know, all that being said, and you know, we don't have too much time,

but I just wonder if this market has been kind of raring for a real completion of an AI bubble of some kind. Yeah, I mean, we think AI adoption is gonna be a big driver for the next big part of this bull market. Whether, how that materializes, I don't know, but the census runs a bi-weekly survey now, and you can see it in the data, like the firm's planning to use AI and actually using using AI that's a hockey stick. One of the things

we look at is token generation that's basically the amount of words that these LLM models are generating and we think that token generation is going to go from 50 trillion to 200 trillion by next year and if you put that in context that's more than twice the amount of words spoken in the entire plan on any given day. So the AI story is going to take hold this market. Yeah market It's certainly attempting to to sniff out the implications Warren. Thank you very much The S&P up about a 10th of one percent solidly a new record territory Now it's up by 330 points. All caps have outperformed that time. The Nasdaq Fireworks here on Wall Street. That does it for closing bell.

That's it into overtime with Morgan and John.