Closing Bell - Closing Bell: The Lay of the (Soft) Landing, Tech Run or Retreat? 12/10/24

Episode Date: December 10, 2024

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.

All right, guys, thanks so much. 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 the race to $4 trillion. Apple nearing that market cap milestone after making another major move higher. The stock making its eighth straight intraday high today. We'll keep our eyes there. Look at that. $3.75 trillion. Not to be outdone, Alphabet's been on the move, too. It's in the midst of a big move. It's up 5% today. That's a significant move. We'll have a deeper look at both mega cap names coming up. In the meantime, take a look at the scorecard with 60 minutes to go in regulation, in part because of those two stocks. The Nasdaq is the outperformer today. ComService is getting a big boost as well from Meta. It was, not. Discretionary also one of the better sectors

today. You see it there a third of one percent takes us to our talk of the tape. Mega Cap Mojo and how it's returned lately. We have Deirdre Bosa on Alphabet, Steve Kovac on Apple. Steve, we'll start with you on why this stock has been running of late. Yeah, just so many new all time highs for Apple. And I wish I could tell you there was a single catalyst that's driving the action here, but there's just a lot going on. So let me give you a little bit of rundown of what we got. First, there's the election of President-elect Trump and the idea that CEO Tim Cook's relationship with him can help Apple dodge those Chinese tariffs as it did during Trump's first term. Shares are up significantly since Election Day, about 11 percent, as you can see there. And Trump said before the election he actually spoke with Tim Cook

and that Cook brought up EU regulators going after Apple's business as one of the topics in that discussion. Next, you have the artificial intelligence device upgrade cycle, something we've been talking about since June. That's expected to be elongated with the slow rollout of Apple intelligence. Still waiting for that final chat GBT update to hit any day now. Citi analysts today named Apple one of its top picks for 2025 and talked about Apple intelligence launching in Europe and possibly China as growth drivers for the iPhone next year. By the way, here's Morgan Stanley's analyst Eric Woodring on that AI upgrade cycle for the iPhone on your show yesterday. Take a listen.

The other factor, I think, is still related to this AI upgrade cycle and investors gaining conviction or wanting to gain conviction in the upgrade cycle next year. I don't perceive that to be a fiscal year 25 catalyst from a numbers perspective. But historically, when you look back, Apple typically starts to outperform six to nine months ahead of a product cycle. And finally, Scott, another point that Eric made yesterday, that the whole market is basically melting up and Apple is just going along for the ride with so many other mega caps. Reminder how Apple started the year, though, Scott, it was the underperformer of all its peers down for the year for months until it finally revealed that Apple intelligence back in June at WWDC, Scott. The chart tells the story from when we were sitting there together, Steve. That was the moment, the catalyst, if you will. Now it has to live up to the hype, though, right? I mean, the upgrade cycle has to take hold

at some point to justify that market move. Yeah. And that's why I think the ChatGPT launch, which we've been talking about for so long, that's going to happen maybe as soon as tomorrow or at the end of this week. That is going to be a big one because, again, it's the most popular and most recognizable AI tool out there. It's 300 million users potentially being exposed to a billion more users once it gets into that Apple ecosystem.

But again, so many analysts are saying now because of this overall, not just feature by feature here in the United States, Scott, you've got to go country by country, language by language. It's a very measured rollout. And China is going to be the real one. That's going to be such a big test. I was chatting with Eunice Yoon, who is in the United States visiting for a few weeks. And she was telling me how people out there, the Apple customers out there are waiting for Apple intelligence to launch as well. They're so feature driven. And so they really care about the specs and feeds more so than a United States customer. And so that could be a huge catalyst if Apple can get the regulatory approval it needs to launch Apple intelligence out there in China. All right, Steve, thanks. Appreciate you. Eighth

straight intraday high again, approaching four trillion in market cap. We'll watch that not to be outdone, as we said. D is Alphabet. You don't often see a five percent move in names like these. It's significant. It's a big move for such a gigantic market cap. And what it tells us is that investors are really seeing Google's quantum breakthrough as confirmation or reinforcement of the company's technology leadership. Now, it also raised the prospect that quantum computing can one day be as transformational as AI and answer even bigger questions like the origin of the universe, the nature of consciousness, or how to create entirely

new materials and medicines that reshape industries and human life itself. Now, that's not hyperbole. This is the promise of quantum computing. That kind of transformation, though, is still decades away, independent on major breakthroughs in hardware, error correction, scalability. But the key to takeaway here is that the foundational steps we're seeing now are what make that future possible. Google's VP of engineering, Hartmut Naveen, likens the breakthrough announced yesterday to an entry ticket. He told me that winning on an abstract problem clears the way to win on useful problems. Now, he wouldn't say exactly what those useful problems were,

but he said that the willow chips have already let them look at time crystals and their properties and even spawn tiny wormholes. But, Scott, of course, the backdrop here, an early lead doesn't guarantee that a company will win. And we've certainly seen that in generative AI. Google, of course, had the seminal paper on transformations that led the way for ChatGPT and ChatGPT took that moment. So maybe there's more urgency here when it comes to quantum computing. And you still feel like this is a bit of a show me story, right, Dee? If you look at the performance of the stock relative to the other mega cap names this year, yes, it's had a fine

year by any measure. Over the last month, though, as the mega cap trade has woken up, this one is just sort of coming out of a slumber. I mean, forget the stock price. Look at the valuation on a forward PE multiple. We've highlighted this many times. It is, you know, by far the lowest or the least expensive of the mega caps because, of course, it's got the pressure of its regulatory scrutiny and it's got this huge innovators dilemma, which is kind of, you know, speaks to its success and dominance in current technologies. Right. So you have to wonder what could quantum computing change that would change Google or other mega caps business models

in the way that generative AI has changed the search business. But, you know, what Google's strength is, is looking ahead, spending money because it has the capital to do so on new technologies and on these breakthroughs, which for today, at least, investors are appreciating. All right. A good look from both Dee, thank you, and Steve Kobach as well. We'll follow these stocks, these mega cap movers, today as we begin the final stretch. Now let's bring in SoFi's Liz Young-Thomas and Rockefeller Global Family Offices' Angela Mwanza and BMO Capital Markets' Brian Belsky. It's great to

have everybody with us. Angela, I'll start with you. Just to segue off of what we were talking about with tech, I suggested that this space has woken up lately. You still like it into the new year? I still like it into the new year. And I'd say, Scott, the question we're getting from clients the most when they see numbers like this is, are we looking at an overvaluation? Is it time to take money off the table? Is this a risky situation that they're finding themselves in? I think the question there has to be, is it, it's a high valuation, but does that mean it's actually overvalued? And for us, when we look at mega cap tax names, yes, we want to rebalance out of it. We want to take away some concentration in the portfolio. But we still think that that has legs.

If you look at the last six months in the S&P 500, they've actually, this magnificent seven has actually lagged the S&P 500. So you're seeing a broadening going on within the markets, which means for us it takes a little bit of risk out of the market and gives us more and more opportunity. And I think there are great other places to be investing as you trim some of your large cap, your mega cap tech names. Liz, you've really had a tale of two tech groups.

I mean, the meltdown, as we've been calling it, in momentum, which has encapsulated a lot of other high growth tech names, Applovin, for example. These stocks that yesterday really rolled over hard. So you've got to be careful in the way you talk about tech as a sector. MegaCap seems to be performing better. These things now, after a massive run, some of these stocks are up 900% or the like year to date. Had a really tough day yesterday, and some are down again today.

Yeah, I mean, some of them you look at the chart, even a one-year chart, and try to convince yourself to buy after you see the line go from the bottom left to the upper right so strongly, it gets difficult. I'm going to steal a talking point from Mr. Belsky before he even gets to talk today. Some of these mega cap names are what people consider the new consumer staples. And that's something that I think people have looked to in periods like this. The month of December, month to date, we've seen this pretty big reversal in just factors, right? Momentum is performing poorly compared to how it had done earlier in the year. Well, I mean, it was doing great until yesterday.

And then all of a sudden you had a rollover. Like I said, the Palantirs of the world, the App Love. App Love is down another 6% today. It was down huge yesterday. It feels like something's going on with those stocks. And I think that there's a rotation of those factors. So it's not just momentum that's seeing it. Low volatility stocks not doing well in December compared to how they've done earlier in the year.

And then you look at the other end of the spectrum and you've got things like growth and liquidity doing really well and they didn't do so well for the first part of the year. So I think there's a rotation happening partly because we're at the end of the year. People are taking some profits. They're trying to reallocate their portfolios, getting ready for the new year. And because we had this big burst of optimism and this big burst of buying post-election that probably needed to cool off a little bit. So the beneficiaries of that are perhaps taking it on the chin a little. The other thing I would say, especially about tech, is it's not all going to be equal going into the new year. I think we'll have a similar story to what we had in 2024,

where some of them are going to look great, some of them are going to look not so great, and you have to be choosy about it. I'm choosing to break up the universe into semiconductors versus software, and I'm much more bullish on software in 2025. Well, that's a trade that's worked so well relative to where semis have gone, right? Semis go down, software's gone up. Brian, what do you make of this meltdown in momentum? It was such a big story yesterday, and in some respects, it is continuing today. We think it's actually quite healthy, especially considering that you've seen so many and heard about so many investors chasing stocks just because they're going up. You buy stocks because they're working fundamentally.

And clearly, this has been a momentum market on a short-term basis. But if you go back and look longer than a year or longer than a decade, the best performing factors in the United States stock market, five of them are all fundamental. So I think that we're actually heading into more of a fundamental stock picking environment where enterprise value to EBITDA and earnings growth and price to free cash flow matter the most.

I think that favors the more equally weighted markets and it certainly favors small cap. On the Magnificent 7, we warned everybody heading into this year, 2024, that we were seeing dispersion even within the Magnificent 7. That's exactly what's happened. You had a lot of volatility in Tesla in the beginning of the year. You've had massive underperformance of Google. You've had hatred of Apple at times.

NVIDIA's been the darling. NVIDIA's not been the darling. So I think you have to be really careful. But we continue to believe, and I know Mrs. Thomas stole my phrase, but we're talking about two of the stocks. We're talking about two of the stocks, Google and Apple, absolutely have to be amongst those consumer staples tech names that we believe that you should own from a longer term perspective in your portfolio. Yeah. What are the risks do you see as we enter 2025, Angela? I mean, we're building a lot of anticipation

of a new agenda from the new administration. Tax cuts, deregulation, an economy that remains strong. We're still betting on tax cuts. Are we too optimistic? Is there too much? Some have warned

there's too much euphoria already in the market. I know, and I tend to be a glass-half-full kind of person, so I tend to err on the side of the euphoria, although I'm very practical. So, yes, there's absolutely risk coming into the new year with the new administration. You mentioned some of the accommodative and things that will provide tailwinds for the markets. But when you look at tariffs, that could be very inflationary. That could bring us back a little bit.

And actually some of the sell-off I think we were seeing yesterday is in anticipation for the CPI data coming out tomorrow, which is going to be very, very important for us all to be watching. And I think some people were selling off a little bit in anticipation that should it be a hotter print than anticipated? Because that might mean something different for the Fed and that might mean something very different for 2025 and for our outlook there. What role does the Fed play in all of this for 2025, given that we're not resetting our expectations really anymore? We already did that. Yeah. Right. The markets come to grips with the fact that we're not getting as many and we're not getting as large.

So what difference does it make now? And we've managed pretty well did that. Yeah. Right. The markets come to grips with the fact that we're not getting as many and we're not getting as large. Right. So what difference does it make now? And we've managed pretty well with that. I think the fear say, I mean, we've been basically at highs. We've been on the, you know, the doorstep of 6100 on the S&P. And I think that's surprised people because coming into 2024, we were expecting six to seven cuts. And we thought that that's what was driving the market. It turns out that that must not have been entirely what was driving the market. So into 2025, I don't think people are expecting the Fed to drive the market either. A couple of the things that I think the market is standing on as pillars of strength, you've got this liquidity boost that could happen in the first half of the year, even if or when we hit the debt ceiling. We've got the draining of the TGA that can occur,

so liquidity should still be available in the market, and that's a good thing. We've got low labor churn, meaning that the hiring rate is low, the quits rate is relatively low. That actually drives higher productivity, and it pushes down wage growth. So some of the concerns that we've had or that the Fed has had about wage growth overheating and driving inflation are coming down as well. So there are a few things out there that are still positives driving the market. I think the Fed's role in this is going to be still to message to the market that inflation is at least where we're comfortable with it being for now, as long as they don't get uncomfortable.

And I think what makes them uncomfortable is inflation expectations starting to get out of control. And that has not been the case. Well, you don't need a disappointing print tomorrow, Brian. We know that in the next couple of days, we're going to get a couple of different reads. You're looking for 10%, more or less, in 2025. You sound more bullish on the market than your target would necessarily suggest why so

well you know during uh election years we typically and historically try to come out with our year ahead piece early especially given all the consternation with respect to the to the election and things like that so some of my compatriots had that had the honor to be able to come out a little bit later and be higher than us. But I always like to say, if you ain't first, you're last. And we were one of amongst the first bulls. And our bull case has always been 7,000 anyway, Scott. So I think there's going to be more volatility than most people think.

The first six months of the year, we've reserved the opportunity to change and revise our forecast. For the first time ever in my career, In 2024, I upped my target twice. So I think we're going to be in one of those types of environments again next year. Lastly, why are we going to be more bullish? I think earnings are too low. I think earnings expectations between 275 and 280 are too low. And especially with respect to financials, I think financials are really going to rip in terms of earnings. And I think the majority of the larger financial companies are way undervalued in terms of their earnings prognostications for 2025. Angela, you agree, don't you? When you talked earlier about other areas beyond tech, financials is a space you like.

Indeed. Financials are definitely a space that we like. We like utilities a lot. We think that although they've been the second best performer in the S&P 500 at about 15% returns, but if you think about what next year brings, whether it's the transition to clean energy, whether it's just all of the proliferation of data centers because of AI, because of cloud computing, and just in general, an aged infrastructure within this country that needs to be renewed, there's several areas within the utility space that we like. But one data point I think is really interesting and relevant to this conversation about what we anticipate for next year

is the fact that 70% of the global index, and this comes from Rashir Sharma in the Financial Times, 70% of the international index are U.S. companies. And so if you look at global investors, because the question is, where is all the money coming from? And global investors are all looking to say, well, 70% of the index is comprised of U.S. companies. We have to be in on the game. And so that's also something that I think people aren't necessarily taking into consideration. Yeah. Financials, do you like or no? I do.

They've already done quite a bit since the election on all of the things that I said. Yeah. You know, we got dealmaking and deregulation. That's like one in one A benefiting these companies. It's a friendly environment for financials. Yeah, certainly friendlier. If I were a technician, which I absolutely am not, I would say they probably need a little bit of a breather here. There's been such momentum in those names and they have taken a little bit of a breather over the last couple of weeks. But into 2025, if you're looking at this long term, it should be a friendlier environment. We should see a pickup in activity in some of the sectors of financials that we haven't seen as much activity in the M&A cycle, likely to have more activity. I think private

equity probably does pretty well and just private investments in general. So it's an okay place to be. Is it the best entry point from a valuation perspective? Probably not. But as we know, valuations are a terrible timing mechanism. Brian, why don't you like health care? I mean, I understand that the underperformance,

it's the worst of this year relative to everything else. It's still positive, but only by, you know, 5.5% or so as a sector. Why don't you like it? Well, we own Lilly all this year, and we love the stock from a long-term perspective. We think that stock has run way too far and been too dominant with respect to the weight loss drugs.

We really worry about drug companies in particular that are so focused on singular things, i.e. like Pfizer was and Moderna were during COVID. So that's number one. We do think that regulation is going to be a major theme from the vaccination side of things. Also, from a valuation perspective, some of these drug companies have run a lot. That's why we like more the defensive side, believe it or not, of health care, which would actually be biotechs because they've got huge balance sheets, some device companies like Medtronic, and certainly Unite Healthcare,

which we believe still remains one of the strongest companies. So we do believe there's going to continue to be money coming out of that sector and into kind of higher growth areas and more consistent growing areas. Yeah. Let me just ask you, since you brought it up, and I'm just going to do this on the fly. I mean, the the the conversation and if not debate discourse and whatever you want to characterize it as that's happening today about UnitedHealthcare and the industry in general in the wake of what happened here in New York City. Is there a longer term stock risk to that? Do you see any of that at all?

Not to the stock itself, because unfortunately, this is just a terrible event. But he was a CEO of a division within UnitedHealthcare. I understand, but you understand what I'm alluding to. I mean, the... 1,000%, I completely understand. A renewed discussion, if not debate, about the healthcare industry. Whatever motivation, whatever the motivation was from this person, it seems to have sparked a new and louder conversation about the practices of this industry. You have this stock, you like it. Are you thinking about that in terms of the performance of it from here in any way, shape or form? I just feel like it's a relevant question

if you're going to talk about that company and its stock. It is a relevant question. And thank you for asking. We're not going to change our view on it. We still think from a fundamental perspective, it's still one of the best companies in health care. I do think that they're still from – emotions are clearly high across the spectrum in health care, just like they were in COVID. So I think, too, we have to be really – we have to be very thoughtful in terms of how we're looking at things. We're underweight in the sector. UnitedHealthcare is one of our favorite names. And all positions are always under review.

If there's something fundamentally or operationally wrong with that company, we'll do something different with it. But we see no fundamentally or operationally wrong things with that company at this point. I appreciate you entertaining that question, Brian. Thank you. We'll leave it there, everybody. Angela, thanks for being here as well. Liz Young, Thomas.

To Seema Modi now for the biggest names moving in this market i seem a has gotten is catching our eye first walgreens shares are soaring are david favor reporting that private equity firm sycamore is exploring a deal with the pharmacy retailer sycamore does have a history of doing retail deals but this would be the largest by far that had it has ever contemplated the wall street journal was the first to report on this. Walgreens shares up about 18% at this hour. And then there's Toll Brothers sliding despite reporting a beat on fourth quarter earnings and revenue.

The home construction company's gross margins were below estimates. But analysts at Wedbush Securities say demand, as evidenced by orders, is trending better than expected. The stock's still down over 5% right now. Scott? All right, Seema. Thanks, Seema Modi. We're just getting started here up next. Amazon taking a bit of a breather today after climbing to new highs in its own right. We're going to break down what's behind that big run after the break. We're live with the New York Stock Exchange. You're watching Closing Bell on CNBC. All right, welcome back. Amazon hitting a fresh record high earlier in today's session as the e-commerce giant takes another shot at air delivery. Our Kate Rooney joins us now with more. Kate.

Hi, Scott. So, yeah, after talking about this for about a decade, Amazon is now using drones to deliver packages around the Phoenix metro area. At least these aircrafts, they're meant for smaller items. So something, for example, that fits into a shoebox, it weighs less than five pounds or less than that. They drop from a drone to get delivered. That's about 12 feet in the sky. You do pay roughly ten dollars extra for this drone delivery. It tends to get items there faster and right now that is within an hour. There have been some drastic changes in design over the years. They did cut the noise of these by roughly 40% and then doubled the range. And through some of the testing, they figured out things like how to avoid dogs during delivery. They used LiDAR and radar sensors to do all of that. Amazon executive David Carbon, who spent nearly two decades at Boeing,

tells me managing airspace has really been the biggest challenge. They got FAA approval back in October for the latest MK30 drone. The site here where we are today is integrated directly with a sub-same-day fulfillment center, which is how they plan to scale this quickly and integrate all of this. I'm told they're going to be rolling out in new cities next year. The goal, according to Amazon, 500 million deliveries a year. Within 30 minutes or less so far, they say they've done thousands of deliveries, Scott. So still a long way to go. Yeah, but I mean, Jassy has made it a focus, right, on the speed of delivery and better margins, correct? Yeah, that's a key part of this story, Scott.

So speed is a big part of this. I talked to executives here who say they have heard two things from Andy Jassy on this Prime Air focus. It's speed and it's safety. The fulfillment center really being right next to us here is part of that, where they're able to get packages immediately from there, walk them out to the drone site and get them out there faster. And the big part of this is speed.

There are customers who are gonna look at this and say, do I need it in 30 minutes? Maybe not, but it's part of the sort of prime value proposition where that has been their whole bet. They've improved margins. It's really part of the bull case for the stock where they've gotten things to you faster. They've been able to

do that at a sustainable lower cost and been able to use robotics and things like that to bring some of the costs down. Prime is a big part of that. And this really is a place where they're leaning in. But interestingly, they did say yesterday that not everything is going to need a drone delivery. There are still certain metro areas where trucks are a better option. Not everybody needs a drone, but they say eventually they think this is going to be on par, maybe roughly with some of the truck deliveries out there. Yeah, interesting to get a firsthand look like you are today. Kate, thank you. Kate Rooney out in Arizona for us. Up next, Goldman's Elizabeth Burton is back. So tell us how she thinks investors should diversify their portfolios in the new year right here at Post 9

after the break. We have some breaking news regarding Kroger and Albertsons. Julia Boorstin has that for us. According to reports, a federal judge has blocked Kroger's $24.6 billion deal for Albertsons. We've reached out to both companies for comment on this judge's ruling on this deal that was first announced in October of 2022. On this news, we see Albertsons shares down nearly 6 percent. Scott Becker. Oh, and Kroger shares up four and a half percent. Over to you. OK, Julia, thank you for that update. We'll follow that developing story. It is a big one, too, as these companies have been trying to do a deal for a good minute now. And there wasn't expectations. It was going to face a huge hurdle. So thank you for that.

The S&P 500 is sitting on a 25 percent gain this year. But with investors chasing the record rally in stocks is now the time to broaden your portfolio exposure. Let's ask Elizabeth Burton, client investment strategist at Goldman Sachs Asset Management, back with us at Postline. It's good to see you. Good to see you. Let's just ask you on the broad market. Just because we just had this story about a deal that is not going to happen. One of the expectations about the new year is that a lot of deals are going to happen.

And that's part of the optimism, along with tax cuts and deregulation and everything else. You want to just give us a sort of broad thought on where you think 25 is going to look like? Sure. So optimism is always great. And we seen quite a bit of it over the last month. I think the last four weeks ending Friday was one of the biggest monthly flows on record, 140 billion into equities that we've seen. So there's clearly a lot of optimism going forward. We think, as you know, our outlook for 2025 at Goldman Sachs is still positive equity returns. But there's a lot of tail risks. There's a lot of places where there can be some stumbles.

And we're so concentrated right now, at least in the equity market, and so few names. You know, it's not going to be shocking to say that we think you should be broadening out, thinking about diversifying your portfolio now. I mean, it's interesting because, you know, that trade had obviously been working quite well. Until recently, it feels like then the money's been finding a home again in a lot of the mega cap names at the expense of broader parts of the market. Is this just a blip preparing for the end of the year, into the new year? What do you read on that? I think there is something about going into the

end of the year. The last two weeks of December, the first two weeks of January, historically tend to be really good for stocks. And a lot of these flows are passive, right? Which means for every dollar you see going into the S&P, 37 cents of that is going into the mega cap names. But we are more constructive actually on the mid cap and small cap names looking into next year. We think there's a lot of room for growth there. There's a lot of quality in the mid cap names. We've said before that we think small cap remains interesting, and we think that story still remains true. And I hear a lot of people saying, you know, it may not be as cheap as you think,

but if you look on a median P.E. ratio, small caps and Russell 2000 is what I'm talking about. Median, you take out the ones that are unprofitable. It's actually trading at a 23 percent discount, which on historical average is about a 2 percent discount. Do you think there's skepticism in part because we've dialed back our expectations of rate cuts and you need a bunch of rate cuts to make small caps work even better? That could be part of the issue. I think it's hard just to miss out on FOMO, right? Because if you don't stay invested there, you might think you're getting it wrong. And look, staying invested in growth is part of our outlook. And we certainly like the MAG-7 in addition to the other names. But the MAG-7 we project are only going to outperform the remaining 493 by seven percentage points until next year. That's a pretty small margin to have so much confidence.

You say that next year is going to be about growth assets and diversifiers. What does that mean? When you think diversifiers, what is our viewers supposed to think? Sure. So I'm saying it's not equities versus bonds. It's growth, which some attribute to equity, but it's a lot of other things too, versus diversifying. So in terms of diversifiers, that could be things like infrastructure, which maybe have a 0.6 correlation to equities, but it could also be tail hedges, risk-off strategies, and in this environment, gold and bonds. I think the bond story, while we're constructive on bonds, it's actually one of the biggest changes to our asset allocation is that we're now overweight bonds. It's really in its relative role as a diversifier to your portfolio,

not necessarily, you know, a total return story because we think it's going to be carry driven next year. So are you thinking a lot about alternatives as part of, you know, and the sort of rebuilding of portfolios in a new political slash economic environment? I don't know if it's so much politically oriented, but rebuilding the alternatives portfolios based on, one, the tail risks you think are coming, and two, what's sort of happened in the private equity and venture markets over the last year. You know, investors aren't getting their money back. Venture has clearly had some issues, you know, getting funding and returning capital to investors. We think growth equity for that reason should be pretty interesting

next year. Those sort of check sizes are going to have to come from growth equities. And when you think about that opportunity, there's about 750 unicorns right now, and that's about a 10-year backlog. So those companies are going to need private capital for longer. They're going to need private capital, which means at least the IPO pipeline, which is fairly rich. Sure. A lot of companies are just staying private longer. And they're using the capital that they can get from private equity to stay private longer. Is that likely to change or no?

Once there's more certainty in the market, we hope that that will change. But, you know, we've been saying that for a couple of years now. So we need to see additional certainty. And I think one of the things about 2025, there's a lot of different ways things can go, but we should see a pickup in the IPO market for sure. I think people are looking internationally, too, and trying to figure out what, you know, what possible tariffs are going to mean on different parts of the country. I've had a lot of people who've loved India over the last two years. And now, you know, maybe they still do, and maybe they like it even more because China is still hard to gauge on what's going to happen.

How do you see India as an investment? We take India back to what we were just talking about, the IPO market. India has actually seen quite a bit of IPOs since 2015. It's had about a thousand. And we really like the small and mid-cap space in general and including in India. And small and mid-cap is where we tend to see those sorts of transactions. So we think there's still a lot of tailwinds for India. We think it's a good investment. It's got low diversification of the U.S., low diversification globally. And we have seen a ton of investor interest there. We actually just took some investors there for, well, we joined some investors there for a trip. So there's definitely renewed interest in investing in XUS. All right. It's good to catch up with you.

Thanks for being here. Thanks for having me. That's Elizabeth Burton of Goldman Sachs. We are getting more breaking news, this time on U.S. Steel. Megan Casella has those details for us. Megan, what are we learning here? Scott Bloomberg News is reporting that President Biden is prepared to formally kill the $14.1 billion sale of U.S. steel to the Japanese company Nippon. This is not entirely unexpected. President Biden has signaled that he was against this deal and President-elect Donald Trump had signaled that as well. But this news now really hitting hard. Shares down almost 18 percent today on U.S. steel and had been paused for volatility. Looks like they may still be paused right now. Bloomberg was reporting that this is going to be blocked on national security grounds. You'll remember, Scott, that CFIUS, that's the Committee on Foreign Investment in the U.S., has been reviewing this deal for the past few months.

And they were due to release a decision before the end of the month, December 22nd or 23rd, to release their decision on whether this should be blocked, whether they were recommending that it should be blocked. But Bloomberg News now reporting that President Biden does plan to formally block that deal. Scott, and one last point here, the union United Steelworkers had been formally against this deal. And U.S. Steel has said that the deal represented a lifeline for them. It was forged nearly a year ago and has been in review ever since. So there are concerns now that the company may move its headquarters out of Pennsylvania and shutter some operations if the merger collapses, which now, of course, it does look poised to do. Scott, back over to you.

Appreciate that update, Megan. Thank you, Megan Casella. Up next, we track the biggest movers into this close. Steve Kovac is standing by with that. Hi, Steve. Hey there, Scott. Yeah, we got two database cloud names moving lower today. We'll tell you what's going on when Closing Bell comes right back after this. All right, we're 15 from the bell. Back to Steve Kovach now for the stocks that he's watching. Hey, Steve. Hey, Scott.

Yeah, Oracle shares, they're down more than 7% right now. After posting a miss on the top and bottom lines in its earnings report and issuing disappointing guidance, the database software company's Q2 results did have some bright spots. Sales grew 9% year-on-year, boosted by the company's cloud segment. Shares are off about 7% now. And MongoDB sinking more than 16%, now 17%, after announcing that the chief financial officer and chief operating officer will step down at the end of January. The news sending the database platform lower despite reporting better than expected third quarter results

and strong fourth quarter guidance. Scott, back over to you. Steve Kovac, thank you very much. Still to come, city shares are ticking higher today. We're going to break down what is behind that move and how the other banks are faring as well. The bell is back after this break. a quick programming note premiering tonight on cnbc the third installment of cnbc's primetime special series of cities of success this time we're heading to salt lake city do not miss it tonight 10 p.m eastern right here on cnbc up next we'll tell you what's behind

the big drop in Moderna stock today that and much more in the market zone. 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

Leslie Picker breaking down the action in two big bank names. Angelica Peebles with us as well on what has shares of Moderna slumping today. Michael, I'll begin with you. Right across the board, what's on your mind? It's a bit of a fatigued market, broadly speaking, you know, and the momentum reversal we've all been talking about has persisted. There was an opening bid to actually try and pick those names up, and they've actually continued over the course of two days.

There's a momentum ETF relative to the S&P. You see names like Robinhood and Coinbase, which are almost leverage upon leverage to the whole trading fever, are down like 10% this week. Now, that's happening at the same time. I think a lot of the cyclical parts of this market that ramped for weeks after the election have already been coming in. And so you have a general case of the market treading water, churning around a little bit.

The S&P is flat on a one-month basis. I think that would perhaps surprise a few people. And I don't think it's necessarily caused any damage to the trend. But I think we are suffering, continue to suffer from that elevated starting point for that excitement of the post-election rally. We were already there, in other words. Did you have Apple closing in and hitting $4 trillion in market cap on your bingo card? It kind of just picked up out of nowhere.

I know you were talking about it with Kovac earlier. The Wall Street Journal front page article about how Tim Cook has perfectly finessed the Trump relationship was November 24th. OK, this stock is up to 30 at that point and no other news, really. It's up 18 bucks in a couple of weeks. I mean, I'm not saying only on that. No, but I asked Woodring about that yesterday, about that very idea. And he said, yeah, it's at least part of it. Look, we saw it with Meta. It's fascinating because it's like, oh, the market seems to think that the government's going to be picking winners from losers in the new administration, even though they say that's not their style. So that's part of the theme going on. More generally, I think people overplayed the hands with some of the more thematic momentum names.

Beyond that, not much to talk about except that bond yields are tame. The macro looks fine for now, even though maybe you've seen some downside and economic surprises. And we get the CPI tomorrow. Also, by the way, PPI on Thursday, which is a cleaner read into PCE inflation. All right. Good stuff. Leslie Picker, what's going on with these banks today, Goldman and Citi specifically? Yeah, we've got a conference going on. It's the Goldman Sachs Financial Services Conference. We're getting some guidance, some commentary from executives there. Shares of Citi, though, the standout among those big banks, that's thanks to some guidance shared by CFO Mark Mason at that conference. Mason reaffirmed top line expenses and net interest income guidance,

and he shared that he expects investment banking revenue to be up 25 to 30 percent in Q4 across all businesses, ECM, DCM and M&A, and said markets revenue will be up by, quote, high teens percent year over year. That's sounding somewhat similar to what we heard from J.P. Morgan's Marianne Lake, giving a similarly bullish outlook for dealmaking, saying investment banking revenue there would be 45 percent higher. And then Goldman Sachs CFO Dennis Coleman also spoke today. He didn't share overt guidance except to say that M&A activity into 2025 is accelerating and normalizing back toward 10-year averages. And Coleman even added that there's, quote, no reason we can't go above those averages if we sustain the momentum.

We'll hear from the Wells Fargo and Bank of America CEOs tomorrow at day two of this event, which does tend to be pretty newsy, Scott. Yeah, Leslie, thank you. That's Leslie Picker. These stocks might have moved a lot. And they've moved a lot since the election, especially on for all the reasons that everybody already knows. Fascinating intraday chart of J.P. Morgan, because when those comments came out from the CFO. Stock popped three bucks. It's this vertical needle on the chart, and it came right back down, that $3, because of exactly that idea that, well, exactly, they're up where they're already trading because we expect deal activity and markets, you know, revenues to be strong. It doesn't mean the stories are obsolete. It just means we sort of got there already. Yeah. Angelico, what about Moderna? What's happening today? Yeah, Scott, those shares taking a big hit today. And that's after Bank of America analysts saying

that there are, quote, just too many layers of uncertainty here. That's with the stock down more than 50 percent this year. Now, Moderna's COVID vaccine still driving its P&L, and that's already a tricky business to forecast. And RFK Jr. being in the mix poses a new risk. And the B of A analysts saying that they don't see Moderna becoming a cash EPS positive company until 2029. They have doubts about the rest of the company's pipeline, and they don't see Moderna's RSV vaccine becoming a major player. Remember, Moderna was the third company to roll out an RSV shot for seniors, and today the FDA raising concerns about Moderna's work on RSV shots for infants. The FDA asking its independent advisors to review Moderna's trial data at a meeting later

this week, Scott. Angelica, thank you. That's Angelica Peebles. You know, I'm thinking you're talking about yields being tame and CPI and PPI. I mean, what level of yield risk do you think this market still has, if any? It would take a resumption of the uptrend, I think, to get the market's attention right here. Felt like four and a half was going to be that psychological threshold. We never really got there on this move on the 10-year treasury, of course. And it seems like we're in a comfortable range, more or less, very similar with the U.S. dollar index. It's in the 106 area. A couple of points above that was probably going to force a few more questions about financial condition tightening and what we're expecting out of the Fed. I don't really think there's a lot of risk on the headline CPI

or the core CPI tomorrow that says all of a sudden we have to totally rethink what the Fed's going to do next week. But I do think the path beyond that is wide open in terms of whether the Fed feels like they need to either communicate they're going to be on hold for a little bit or just take it meeting by meeting. Other market risks that I read about are the same ones that you see and have been thinking about, perhaps the rollover in momentum. Yeah, I mean, we've sort of been using Applovin as the poster stock of what's been happening, up 900 plus percent year to date, down huge yesterday, at the lows of the day again today, down more than 6 percent. How are you thinking about what we're watching? It's mostly this kind of positioning shock type of a deal. And by the way, December, some folks had foretold momentum sometimes runs into some trouble around the turn of the year.

That's not necessarily in itself worrisome as long as we can absorb it with other stories within the market. Right. You have to even get to a point where, you know, NVIDIA stops just like being dead money, which it has been for six months at this point. The semis trade pretty poorly. So it's tough to reach for the obvious things that are going to support it. I just think if Goldilocks goes missing for a while, either on the growth or the inflation side, that's the big thing to worry about. But absent that, it's all just noise, and maybe we get a proper pullback instead of just a 2% one. I noticed Broadcom's off big today, too. I think I last saw 3%, 4%, 5%. All right, there's the bell.

Mike, thank you. That's Mike Santoli. So we'll go red across the board as we wrap up this day. I will see you tomorrow. I'll send it in to early tea with Morgan and John.