Closing Bell - Closing Bell: The Rally, the Fed and Your Money 1/8/26

Episode Date: January 8, 2026

The President says he has settled on a new fed chair in a new interview with the New York Times. We discuss with the Wall Street Journal’s Nick Timiraos. Plus, Walter Isaacson gives his take on some high-profile announcements out of the White House over the past 24 hours aimed at big business. And, Apollo’s Torsten Slok maps out his outlook for the economy and where he sees rates headed in 2026. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

All right, guys, thanks so much. Welcome to Closing Bell. I'm Scott Wobner, live from Post 9, right here at the New York Stock Exchange. This make-a-break hour begins with, of course, the rally. The scorecard with 60 minutes to go in regulation looks like this. Yes, the Dow is higher today. We've been on 50,000 watts. We're a ways away, obviously, but it is a big round number that we have our eye on.

We have our eye on the Russell 2002 of another 1% today. That's stealing the show. Another all-time high. The small caps are continuing their early. early year streak, a nice even 2,600 for the Russell. We'll ask our experts over this final stretch where stocks are likely to head from here. How about this question? Is capitalism as we knew it dead? Author and thought leader, Walter Isaacson, weighing in as the Trump administration leans more into corporate America's business this week. First word from the president himself that

he's settled on a new Fed chair. Those comments coming in an interview with the New York Times today, the who still unknown might not be for that much longer though for more let's bring in nick timoros of the wall street journal he of course on the fed beat nick i appreciate you joining us so the president was asked about this by the new york times says quote i have in my mind a decision i haven't talked about it with anybody he was asked about has it directly and said quote he is certainly one of the people that i like if you were a betting person would you have your money on Mr. Hassett? Well, I'm not a betting person, but I think you have, Scott, the two Kevin's in front. That hasn't changed. I mean, if you go back six months ago, you go back to June and the president

was telling reporters he had made up his mind and he was going to be announcing his pick very soon. That was in June of last year. So I think there's also, sometimes people talk about a first mover advantage. I think there's maybe a last mover advantage here where the last voice gets undue weight here. As an example, my colleague interviewed at President Trump last month two days after his meeting with Kevin Warsh, which had gone very well. And Trump said of that meeting that Kevin Warsh was at the top of his list. He then said that both Kevin's, you know, he thought highly of. So I don't think a whole lot has changed, Scott, in the last few weeks on this. Would you be surprised to learn, according to the Treasury Secretary today,

Scott Bessent, that, quote, we haven't yet interviewed Rick Reeder. Presumably, if he's making that comment when Reader was believed to be in the so-called Final Five and was also expected, according to some reports, to get an interview at Maralago a few weeks ago, something that apparently never happened. Will you be surprised that he wasn't yet interviewed, which would mean if the president's made up his mind that he's out? Well, you know, so Secretary Bessent, I listened to those remarks that he made, and he indicated that Reader was still going to be interviewed. And this whole process that the Treasury Secretary has been running, almost a pageant,

has been very effective at sort of pushing back a premature decision, preventing having a new chair who sort of twists in the wind for too long. because let's remember, Scott, the next chair is going to have his hands full. You're going to have an economy with the cross currents that everybody knows well by now, a committee, a rate setting committee that is divided over how to manage those cross currents and every move lower interest rates you see even greater resistance to continuing to cut. And then a president who is going to demand and expect more interest rate cuts than almost anybody on the committee right now is penciling in for this year. So that's a difficult job,

and maybe the longer you wait, the better honeymoon period you might have there. Theoretically, we're going to know before the next meeting, who the next chair is going to be. I'm wondering how you think that might complicate, if at all, the decision that might be made by this current committee at the end of the month, whether there'll be some reticence from Jay Powell and others to make a move on interest rates with a new name hanging out there who's going to want to put their own mark on policy. Do you feel there's any relationship between those two topics? I think it really depends on what's happening in the economy. And so if you go back to when Powell was reappointed at the end of 2021, I mean, that was a difficult period for the Fed.

They were in a moment where they needed to pivot, and they pivoted right around President Biden's decision to reappoint Powell. So if the economy is doing something unexpected, I think that's where this gets more difficult. Right now, if you listen to everything Fed officials have said this week, last week, so far in the new year, they all seem pretty comfortable holding here as long as you aren't hit with some ugly surprise, say, in the jobs report tomorrow. And so as long as things sort of proceed as expected, it doesn't seem like it's the most difficult thing to have a lame duck chair. This is a committee that still is pretty bought into Powell. I don't think that this is really a big issue so long as the economy sort of performs as expected. I started at the very top trying to make you a gambler. You didn't want to go there.

But I'll finish by asking you about odds, of course. It sounds like you don't think the odds are very high of a cut later this month. Well, yeah, just look at what's priced. I mean, you would need to see an ugly jobs report, and then we could debate this time tomorrow, you know, how bad does it need to be. You need to see the unemployment rate move up. You need to see something that shows, you know, not just a continued softening, but something that's more material than what we've had so far.

All right. Interesting development today. Nick, appreciate your time, of course, as always. for joining us. That's Nick Marcos of the Wall Street Journal. Now let's bring in our panel, CIBBC Capital Markets, Chris Harvey and CNBC contributor Trivariate Researches, Adam Parker. Gentleman, it's good to have you here. Chris, I'll turn to you first off the conversation we just had with Nick. How much are you thinking about this topic itself, who the next Fed share is going to be and what it's going to mean for this market? We're thinking about it a lot. And what we're

also thinking about is a commentary from Besson and a commentary from Merritt. Mira came out and said, we're going to have to do at least 100 yesterday. And then today he comes out and says 150. Those are big numbers. And he's a pretty influential guy. Then you have Besson coming out and saying the Fed should not slow down. And it's really interesting they're saying that because it feels like they're trying to run things hot. It feels like they're trying to price in more cuts than out there at this point in time because they want the housing market to be better.

They want the economy to be better. But yes, we're watching it. As we say, we think it's going to be a K-Fed. It's either Kevin Warsh or Kevin Hassett, but we'll see. It's something we talk about every day. Adam, what about yourself? I definitely don't talk about it every day or think about it that much. I don't really care that much.

I think the distribution of outcomes is skewed to the dubbish. I look at the polymarket. It looks like the Kevin's have been the two odds-on favorites for a long time. But to me, it's never really helped me give great investment advice and, you know, people who try to make interest rate calls, you know, they're usually way more wrong than right. So I don't think about it that much. I get why Chris has to. He works at a real company, and I just have my own small one. I mean, Chris, the idea of a doveish Fed obviously factors into why you think the market's off to a pretty good start this year because investors. have that on the checklist of bullishness, right? You've got the Fed, you've got M&A,

you've got the one big, beautiful bill, among other things. Are they overly so in terms of their bullishness? So, Scott, the sentiment that I'm hearing, the sentiment I'm seeing across the board, pretty bullish, pretty optimistic. If you look at in the crypto market, people playing Bitcoin, they're saying, hey, I told you so. The crypto has popped, and rightfully so.

If you look at equity players, they're hanging on Jensen's word at CEO. That's been pretty positive. As you talk about, there's a litany of things to look forward to. It's the big, beautiful bill, it's eminay activity, it's potentially a Fed being more dovish. If you look in the credit markets, the first two days of the year, you had over $70 billion taken down by the credit markets, and spreads didn't move. So it's a really bullish, really positive sentiment, which gives us a little bit of pause.

Why, Adam, some are even telling me privately what they maybe don't want to go on the record and say. They talk about animal spirits again, like they were at the beginning of 25, which didn't really materialize in the way that some did. But those who are surprised at the level of activity already post holidays, and that makes them perhaps more bullish. Yeah, I'm not as bullish as I was for sure. If I look out, you know, 12 months, I think the probability the price to earnings ratio contracts is a lot higher than the probability it expands. And the reason is, while everyone knows about the one beautiful bill and I think most people think there'll be a dove-askew to the Fed, et cetera, the challenge is the earnings estimates are really high, 15% earnings growth embedded in the consensus, bottom-up numbers for this year, back-half loaded in sensitive businesses and tech and industrials. And the market hasn't really cared about valuation, as you and I have talked about for a year. But it does care about missing.

And we produce some stuff at Triberia that really clearly shows the penalty for missing has been a lot greater than the reward for beating. And so I'm just a little bit worried about the expectations being high. I agree with everything Chris said, the one beautiful bill, the tax stuff for the low-end consumer. Current conditions are pretty good in absolute terms. I know they want to stimulate housing. I get all that. but the estimates and bet all that, and if you have misses, it's going to be worrisome. So I think it's more balanced than, I think, you know, pedal to the metal.

He's likely right, Chris. I mean, the whole thing's going to come down to whether earnings meet the moment or they disappoint. Adam's suggestion is maybe estimates are a little too high. Others have talked about it as well. I think that's fair. I think expectations are high. I think what you need is a beat and raise. This is a period where companies are going to manage down expectations,

or they're going to moderate those expectations. So can we see a pullback here? Yeah, absolutely. Next one to three months, a five to 10% pullback, not out of the question. The other thing is, as we were talking about before, with the Fed, maybe what we see is cuts before the new Fed gets in priced out of the market because if the numbers come in a little bit stronger and it does look like the economy's okay, that could cause a little bit of volatility as well.

So overall, I just think, I think Adam's really. right. Expectations are high. They're going to be tough to beat, and that's probably going to cause some either sell the news or volatility. What about Adam the makeup of the market in the early part of the year? We mentioned the, you know, the Russell is out in front by a fairly wide margin. It's obviously, we talk about Dow 50,000 and things like that, equal weight, outpacing the S&P itself. Is that lasting? Well, look, we've had a big, the first two and a half days the year, there was a huge junk rally, the same kind of stuff that bothers institutional investors

or buy high-quality stocks, right? Profitless companies, the Goldman junkbats, whatever those proxies are, really outperform. And I think that caught a few people off guard. Look, the people I talked to on the institutional side are big clients at Trivariate. I think what hurts them the most, Scott, is actually if the grade eight outperform in an uptap.

Because a lot of just don't own market weight either because of 525 rules or internal risk management. And so they want this. you know, Dow and small-cap stuff. It kind of helps them because they're kind of hurt most by when the grade eight outperform. I think we have to wait until January earnings and guidance to see where we are. I suspect the fundamentals will be pretty good for the grade eight on a relative basis in January. And I think we have to really look at the conferences that happen in February.

There's some big tech conferences and others just to see how the first couple of months of the year are progressing on a fundamental basis. Lastly, same question for you. Is this current makeup, whether it's the beginning of something more lasting or not? I don't think so. I think this is a classic January effect. You have small caps outperforming. You have risk outperforming. And value is not quite outperforming, but it's doing okay.

And so you're right. You need the fundamentals to fill in. I'm not really sure the fundamentals are going to fill in for a lot of these companies just yet. One of the things that also, and one thing not to be missed or one thing to kind of parse out, is some of these risky companies are actually high growth, and I do think there's a select number that can perform well. But overall, I think we're too early in the process. But, I mean, if we're going to be talking about financials and industrials

and maybe even discretionary, more often than we talk about tech, you don't believe that. No, I think a more balanced approach is the right way to go, but I don't think some of these non-earners, people are all bulled up on small caps. They don't realize the non-earners or the high-risk companies are driving that. You need the fundamentals to drive that, and that's what's not driving. That's not what's pushing it higher.

The Russell's up almost 5% already in this young year. Guys, thank you. Adam, we'll talk to you soon. Chris, we'll see you soon. All right, let's send it to Christina Parts of Nevelas now for the biggest names moving into the close. Christina. Let's start with Constellation Brands. It's on the rise today after it beat estimates and reaffirm full-year profit guidance in its Q3 report just yesterday afternoon, which is why you can see just the uptick this morning.

They maintain their profit guidance even as consumers pulled back on. drinking Corona and Modela sales managed to stay steady despite these changing habits, shares up 5%. Meantime, applied digital shares, they're surging right now, up almost 8%, even just given a surprise break-even Q2 and revenues just well above estimates. This is a data center leaser. They also design high-performance data centers, and they expect to exceed their net operating income target of $1 billion in the next five years, why due to strong demand, and the expectation of new leases.

shares. And last but not least, Crowdstrike shares are lower after announced the acquisition of security startup, SG&L for $740 million. Crouchdike CEO George Kurtz told CNBC the deal is, quote, a massive opportunity for us to disrupt the identity market. Shares down,

though, about 3%, Scott. All right, Christina, thank you very much for that. Back to you in a bit. We're just getting started. Up next, is capitalism as we know it dead? Walter Isaacson standing by. We get his take on some high-profile announcements out of the House over the past 24 hours or so aimed at big business. We're live at the New York Stock Exchange. You're watching closing bell on CNBC.

Welcome back from threats to ban buybacks to directly influencing corporate merger decisions. The Trump administration continues to go where few other presidencies have, directly into the boardrooms of corporate America. The question is, will these efforts fundamentally change how our economic system might function in the future? To put it more pointedly, is capitalism, as we knew it, dead. Walter Isaacson is a Tulane University professor, Perella Weinberg Advisory Partner, the author of best-selling books, of course, on Elon Musk and Steve Jobs. He's also a CNBC contributor, and he joins us now. It's so good to have you, Walter. Welcome. Thank you, Scott, and thanks for being on this theme all week.

How would you assess this key question that we asked today? Well, first of all, capitalism is going to survive because it's the greatest wealth creation engine that, you know, the world has seen. In 1776, 2050 years ago, we wrote the Declaration of Independence and said, we're enshrining the notion of life, liberty, and the pursuit of happiness. But something almost as important happens that same year, which is Adam Smith, writes the wealth of nations, which takes the notion of individual liberty and ties it to a free market economy. When you start messing with the free market economy, I do think that it means you're not going to have as much wealth.

The weird thing is we're now seeing it from the Trump administration, messing with corporations and trying to have almost a state capitalism. And of course, on the left, you see the challenges of capitalism. It was almost as if that meeting in the Oval Office between the Mayor Mondani in New York and President Trump was like a meeting of people who liked to mess. with just the pure free market. You've touched on it for a moment. The idea of what some suggest we already have morphed into is state-sponsored capitalism where the government tries to decide outcomes.

It picks winners and losers. It overtly threatens privately run businesses. It takes stakes in private companies. It talks about price controls. All things that, especially in a Republican administration, Walter, would never happen throughout our history. I don't think this is a typical Republican administration, as you know. And I think one of the interesting things is that Donald Trump has seized a populist message,

which can include an anti-corporate message, saying you shouldn't have too many stock buybacks of your defense contractor or pay dividends or corporation shouldn't buy up private housing. That populist message resonates, and there's actually some truth to the populist backlash happening. But what you're doing with this administration is not a conventional conservative of Republican defense of capitalism and free markets, but something slightly different which has a populist tinge to it. You raise a good point, obviously. And maybe it speaks to the argument that some would make, that capitalism needs to change or it needs to evolve that it's not working for all people

as it was maybe originally intended, that it's only widened the divide between the haves and the have-nots between the rich and the poor. Income inequality, which has been a key issue over the last decade or so, is now front and center. And capitalism needs to change because it's not working the way it was intended to be. Absolutely. And this is why you have the populist backlash, is that the free markets, capitalism, democracy, all created great wealth. But over the past 40 years, two things have happened. One is the inequalities of wealth, which is really a policy issue. It can be a byproduct of capitalism and a byproduct of great new technologies coming. But it's something that is also a matter of policy. And secondly, and related to that, is the death of the American dream. If 50 years ago you were born, you had an 85% chance of making more than your parents.

At age 30, you could have a house and a kids and a car on one salary. Nowadays, people don't believe that the next generation, that their kids will do better. If you're in your 30s, you're going to do as well as your parents. And that has shown that there are problems with the past, 20, 30, 40 years of the way democracy and capitalism hasn't delivered for the middle class. We mentioned in the intro, obviously, and people know by now that you've studied and spoken with some of the most important and influential business leaders of our time, whether it's Steve Jobs or Elon Musk.

And I'm wondering how you think this issue impacts how the modern founder or modern CEO might need to change the way they think about our whole economic system moving forward. Well, I do think it's a problem if you can't trust the regulatory system to be a fair ground or to be even playing field. If you're trying to create a media company and you realize that the regulations are going to go against you if you fall out of favor, that's to me one of the most worrisome things is that there's political influence in the job. journalism in the media industry, which is particularly bad because we were premises a nation is the fact that there's a press separate from the government, but also that you have

to countow to what I will call a transactional capitalism. It's not just state capitalism, but one of the things that President Trump does is he's a master of the art of the deal, but he sees things as transactions. And so whether you're buying a newspaper or a network, or you're trying to merge a microchip companies or your NVIDIA or your NIPON steel, you have to deal with the transactional nature. And that makes it a little harder to have, I guess, that consistency and assurance

that the rule of regulation in law will be applied equally to everybody. I'm wondering how you think the so-called age of AI may impact all of this even further. We're worried about jobs going away. That's going to be a key issue in the months, if not years ahead. And the wealthiest in this country, the tech folks among them, some of them, obviously, only growing even more so as this technology proliferates. How should we think about that? Well, I'm one of those optimists who believes that throughout history,

technology threatens to destroy jobs, but in the end, it creates more jobs than it eliminates, whether it was the Luddites trying to smash the looms in England in the 1840s. Well, actually, that created a better textile industry. But what technology does, and AI will do one order of magnitude greater, is it both disrupts jobs, and it tends to allow the returns, the way we divvy up the proceeds, to go to the owners of the technology and not be more equally distributed. So I think technology and AI could increase the inequalities of wealth and disrupt jobs. But as I said before, with any form of free markets and capitalism, that's a policy issue.

You can decide to have a common ground where people have a basic right to the pursuit of happiness and maybe health care, housing, or some playing fields. But the policies, not the technology, is what will determine whether this will exacerbate the inequalities of wealth. And finally, I mean, do you feel like this is simply a moment in time based on the occupant of 1,600 Pennsylvania Avenue? or might it be a roadmap for future presidencies as well? Oh, it's a broader thing than just President Trump and it's broader than just the United States. You're seeing a populist, somewhat authoritarian, interventionist into the economy-type candidates,

whether it's Orban and others in Europe or now in Chile and even in Japan. And so I think that's a symptom of the fact that both the inequalities of wealth, the disruptions of technology, globalization, hollowing out the middle class is a global phenomenon, not just a Trump-imposed phenomenon. But I do think that history comes in waves, and I do think there will be a sense that we have to make sure that capitalism, free markets, and democracies work for everybody. And perhaps in this 250th anniversary of our nation, we can remember the common ground that we all believe in.

I'll make that the last word. You've helped us be smarter on this topic as I knew you would. Walter, thank you so much, Walter Isaacson. We'll talk to you soon. Thank you, Scott. Still ahead, Apollo's Torsten Slok. He's mapping out his 2026 economic outlook. His forecast for interest rates this year as well. Jobs report, of course, is looming large. Bell's back after this. We are back. Today we are launching CNBC Cures, a new initiative focused on raising awareness of rare diseases and improving outcomes for the people who have them. It's a cause near and dear to our friend and colleague, Becky Quick, whose daughter, Kaylee, is one of the 30 million Americans living with a rare disease. We have a new weekly newsletter that you can sign up for by scanning the QR code on the screen right now.

There's a new podcast series, The Path with Becky. We'll have an hour-long documentary that will air later this year as well. And on March 3rd, we're hosting the CNBC Cure Summit, a live event focused entirely on rare diseases. You can register for that and hear more about Becky's rare disease journey at cnbc.com slash cures. Closing bell is back after this. We're getting some news out of Washington. Our Emily Wilkins live on Capitol Hill with that. Hey, Em.

Hey, Scott. Well, the Trump White House just secured two major wins here with the House of Representatives. Trump vetoed two bills that had gotten very strong bipartisan support, both for infrastructure projects in two parts of the country. But after Trump vetoed them, lawmakers just voted, and they failed to override that veto with a number of Republicans' majority. of Republicans voting now with the president to oppose legislation that they just supported only a little bit ago.

It's a sign of strength as far as how much Trump has control over members of Congress and how much Republicans are willing to continue to stand behind the president. Scott? Just to be clear, you're saying that some of the Republicans who voted for it recently have now voted against it to override the veto. Yes, yes, because of Trump's veto, they have decided to change their vote on these issues and support Trump in voting against the legislation that they were previously voted for. Emily, thank you for that reporting. That's Emily Wilkins. Tomorrow's Jobs report,

the first so-called clean one since the government shutdown. It could go a long way in deciding the Fed's next move and investors who are banking on the economy remaining strong. For more, let's welcome in Torsten Slok. He's partner and chief economist at Apollo. Nice to see you. Welcome back. Thanks, Scott. What do you think is going to be delivered tomorrow? Well, so the expectation from the consensus is that job growth will be 70,000 in the month of December. We think that job growth is going to be higher at 98,000. So we view this exactly, as you're saying, as the first clean reading after some very bumpy months in October and November. Let's not forget that the shutdown ended on the 12th of November.

So there is some rebound coming as a result of still November being somewhat suppressed because of the shutdown. But you're right that this is a better reading than what would you have for the previous months. And we do expect that the number will be surprising to the upside. So sounds like one that you think is going to only underscore the fact that a cut later this month is unlikely? Yeah, a cut is very unlikely in January because what was a very significant headwind to the U.S. economy last year, namely the trade wall, is now beginning to fade more and more into the background. And instead, we're having a number of tailwinds begin to build up. We have tailwinds very importantly coming from the oil prices.

And what's happening in Venezuela is likely also further going to add more supply to the oil market and therefore more downward pressure on oil prices. That continues to be a positive for the outlook. We also have that over the last 12 months. The dollar is still lower. That's also a tailwind. And very importantly, the AI and data center spending boom continues. And of course, critically, stark on the 1st of January.

We now also have the one big beautiful bill. The Congressional Budget Office is estimating that the one big beautiful bill will add zero point. 9% to GDP growth over the year of 2026. That's a very substantial amount of growth coming purely from fiscal policy. Remember, GDP growth normally is two, and now we almost have a full percentage point coming because of fiscal policy. So it's getting more and more difficult to be bearish on the economic outlook. So as a result of that, we should begin to see here in the data when we get it for January

and February that job growth begins to respond and become therefore higher in a much more meaningful way. I'm confused, though, because at least from the notes that I'm looking at, you think the outlook for the economy this year is one that's more stagflationary. Doesn't sound like that's the picture you're painting, though. Well, but the key issue here is that we're entering this year with inflation already at close to 3%. And now we have had some weakness over the last several months in the labor market, but as that weakness fades more and more into the background, the risks are beginning to rise, that we're moving from that stackflationary outlook that most people had going into this year to now turn into instead an overheating outlook

where we have both inflation at two high levels at around 3%. Remember, the Fed's target is 2% and now some tailwinds beginning to build up that as we go through this year will begin to result in higher growth, especially on the CAPEX side, where companies now can do 100% expensing of their CAPEX decisions this year. Normally when you do CAPEX, you have to write it down. over several years, but now you can immediately deduct 100% from your taxes this year. So you're right, Scott. It is indeed the case that this deflationary scenario is beginning to become more the issue

that we had in the last few months, and we are beginning to turn more optimistic on the outlook as we look into 2006. You're pointing to what very much sounds like a quote-unquote run-it-hot economy. I'm surprised, I guess, too, that you still have a recession probability for 2026 at 30%. I mean, some may think that that's not that high, but sounds high to me, given the environment you're talking about. So that number is actually the consensus view of what markets are expecting that will be the likelihood of recession over the next 12 months.

And I do believe that that number is too high. Our number is closer to 10%. So that means that we still have the view that the likelihood of recession is surprisingly high when you look at it from a consensus perspective. And yes, that has been elevated in some time because people are still worried. about the number one risk to the outlook this year, namely that if AI does not deliver on earnings, if we still have a risk in terms of companies

that are not necessarily seeing the significant productivity gains that are priced into markets at the moment, then ironically, AI could both be the biggest downside risk, but it could also be the biggest upside risk. So that's why the standard deviation of outcomes of where we're going continues to be wider and wider. So with that backdrop, yes, we still see a somewhat elevated likelihood of a recession,

because of that uncertainty coming from AI, but the tailwinds are beginning to build where growth is likely going to be better over the coming quarters. Dorsten, we'll talk to you soon. Thanks for your time, as always, Torsten's lock, Apollo. Up next, we track the biggest movers

as we head into the close today. Christina is back. With that, what's on your list? Defense contractors, because they're rallying on plans to supersize military spending, but not all of them are sharing in those games. We'll tell you why when we come back.

Less than 15 from the bell. get back to Christina now for the stocks that she's watching. Hi there. Hi. Well, let's start with Merck because shares are actually popping right now. You can see the news just hitting the FT reporting that it's in talks by cancer drug maker revolution medicines. This follows a report just yesterday. Scott and your show that Abvey was intoxed by Revolution, which then Abbey later declined to CNBC. CNBC has also reached out to both Merck and Revolution Medicines. No response just yet. Nonetheless, that is why you're seeing shares up about 3% on that news. Now let's move on because we're seeing other shares on the rise after President Trump said on truth social afternoon

that he'd like to expand, and this is defense contractors, expand the U.S. defense budget to $1.5 trillion from $1 trillion. Lockheed Martin, L3 Harris, Northrop Grunman, all higher, as is RTX. But you can see not as much as the rest, lagging the others after Trump said in a separate post that it has been the least responsive to the Department of Defense. So specifically calling out this name. Meantime, data storage stocks are continuing to slide today after, I just would say, a blistering start to 2026, Western Digital, down about seven, almost 6 percent. Seagate down 8 percent. Sandisk, five and a half. Even Sandisk, which finished yesterday, definitely higher, at least 7 percent higher. You can see that it's down today. So just really a rotation out of a lot of these names, Scott, and I guess the greater tech trade, too. All right, Christina, thanks for that. Christina Parts in Neville. It's up next. The precious metals is about to lose their shot. We tracked that trade after the break. That and much more inside the market zone, which is coming up next.

We're 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 Pippa Stevens is watching the medals for us. Kate Rooney is standing by with an interesting look at how individual investors are trading geopolitical turmoil and intelligent Alphas. Doug Clinton is here as well with his tech playbook. Mike, I'll turn to you with a little bit nice turn here. for the Dow, but market still seems to be taking a breath and wants to see this jobs report tomorrow.

Certainly at the index level. I think it's easily the most interesting day you could have with the S&P 500 dead flat. You have the small caps and equal weight S&P, both up 1%. All the cyclicals are flying, but so are as kind of low volatility and stable stocks and defensive. We're shrugging off a 2% drop in Nvidia, 3% drop in Broadcom. So it shows you there's an urgency for investors, they want to write a new script for this year. They want it to be this broadening trade, cyclically geared and all the rest of it. It's working so far. The equal weights up more than twice as much year to date, it's only five days, as the S&P 500 is. But it does show you, too, that a broader market doesn't mean one that has a lot of outright momentum at the index level.

We're trading, I'll keep saying it as long as it remains true. We're trading at levels of October 28th right now in the S&P. And below the surface, it's kind of a good macro message, but it's not a lot of outright progress. So interesting setup going into the jobs number of course. Come back to you in just a bit. Pippa, tell us more about metals. Well, Scott, metals are losing some of their shine today as the commodity index rebalancing kicks off with silver expected to come under the most pressure after last year's nearly 150% gain. Gold and aluminum also forecast to see selling as index tracking funds adjust their weightings. Now, that weakness is weighing on the miners with the COPX and GDX, both pulling back.

from their record highs hit earlier in the week. Alcoa also slipping after J.P. Morgan cut the stock to underweight as part of a valuation call, noting the equity has significantly outperformed the underlying commodity. Overall, the firm prefers copper to aluminum, thanks to supply concerns on the copper side. And so they reiterated their overweight call on Freepoint and pointed to Ivanhoe Electric as a name to watch ahead of a coming update on the company's Santa Cruz Copper Project in Arizona. Scott? All right, Pippa, thank you very much for that. Stevens. Kate, tell us more about individual investors here.

So, Scott, the momentum from individuals and traders that we saw last year has really kept up into the new year. So J.P. Morgan noting this week the most action we've seen from this group in about eight months, a notable rotation also into energy and commodity-linked stocks of this crowd looking to trade some of the geopolitical turmoil in Venezuela and its effect on oil. Vandotrack noting what they call abnormal flows into Chevron, SLB, names like Halliburton by individuals, plus some oil, linked ETFs as well like the XLE. Halliburton, for example, seen some of the highest flows. In about a year, I did also speak to Varage Patel over at Vandatrack, who told me it's a sign of investors risk appetite to trade geopolitics. Some of the most intense dip-bine that we saw last year did also come around tariffs. There are some questions about retail's commitment

to this particular trade. But Patel, I mentioned earlier, compared it to a dog with a bone. He said, once retail gets his teeth into a theme, they don't let it go, that has paid off when they commit to things like Palantir, NVIDIA and Tesla, as they did last year, Scott. Okay, thank you for that. That's Kate Rooney. All right, Doug, so looking beyond tech, that really feels like it is the headline

of this market right now. How long does it last? Scott, Mike talked about maybe moving to a different script here in the market, but I don't know that the script is going to be wholly different from what we saw last year as it pertains to tech.

Do you think about the beginning of the year? We've had great strength in the memory players, So we talked about Western Digital a little while ago. We own that one, Sandisk, Seagate, and then also in the semi-caps. They've had a really strong start to the year. So I think what we're seeing right now is just a little bit of digestion in terms of the tech trade. A lot of people own, obviously, the mega-cap names. But I think the AI trade is still alive and healthy, and I suspect that it will continue to work throughout the year beyond this period.

Okay, so you feel like to continue the analogy that this is simply an opening act, not a full script. I would agree with that 100%. If you think about what are some of the names that you should look at going forward as well, what can work in this script, I look to some of the names that didn't perform well last year, but still might have an AI trade exposure. In the large caps for me, that's still Amazon. Amazon, I think, is the name you want to own in the mega caps this year. It was the worst performer of the mega caps last year.

I think this year, if they get an AI story, if they get a little bit of credit for, for AWS, some of the investments they're making in partners like OpenAI, I think that stock could work really well. And then also look at some of the software names that have been beat up last year. That could be a script flip too that still pertains to AI. Names like Adobe, names like GitLab and Service Now, all names that we own. They didn't perform well last year. I think they could get a little bit more of an AI tail win this year. You're going to have to give investors a good reason to want to buy those names. Some say they've lagged for a reason. Let me ask you lastly about NVIDIA, what do you make of the way the stock's traded?

It's been tough start to the year because actually, if you think about the fundamental reality of NVIDIA at CES, we heard from Jensen that the $500 billion backlog that they've talked about for Blackwell and Rubin heading throughout the rest of this year has grown, so we know there's still a lot of demand for the underlying product. I think the tough part has been that just everybody kind of owns the stock. We need to look for another catalyst. I think that catalyst maybe is eventually when they start selling in China again. Doug, we'll talk to you soon.

Appreciate your time. As always, in the market zone, that's Doug Clinton. I'll finish with Mike. We've got about two and a half to go. So we've got the jobs report. You know, we're obviously on watch for that. First clean one since the shutdown. What it means for the Fed, we could get a new Fed chair name now, as we think,

any day. Sure. We could get a ruling on the tariffs from SCOTUS, perhaps as early as tomorrow. Yes. How do you think the market's looking to digest all of that? The estimates have been inching higher on the job support on payrolls. So that's probably a net positive. Maybe it has people's sites a little bit bigger.

I think the ideal situation for the market would be that we need less Fed. So therefore, if we do see the momentum that everyone believes was there in the third quarter, maybe into the fourth quarter in GDP and its reacceleration due to policy tailwinds kicks in, then maybe we kind of de-risk the Fed story a little bit. It's going to be hard to get the market off the idea, though, that new leadership at the Fed is going to mean a downside bias for rates. I think that's probably fair. When it comes to the tariff story, I know there's some betting that Supreme Court's going to

disallow this use of the law for tariffs, and that, oh, but the president's going to have other means to reimpose them. I think it'll end up being seen as an opportunity to loosen up trade restrictions, all right? You sort of say, okay, selectively you can add some back, but on a net basis, I think the market It is very consumed with the idea that a lot of policy levers are going to be pulled to run this economy hot, as we've been saying. And again, the big question to me is whether we're forcing the trade in advance. Because when I say writing a new script, it means trying to sort of insist that that's going to be the outcome and insist that that's going to be the kinds of stocks that work here.

Equally, consumer discretionary is ripping again today. The banks have been amazingly strong. So clearly, if we get anything other than good economic, momentum, the stocks are not going to trade well off that. Been fixated on Dow 50,000, S&P 7,000 for good reason. But what you're suggesting and what the news flow may dictate is that we could be focused on the interest rate complex pretty heavily over the next few days relative to jobs and the terrific.

It's been a dog that has not barked just yet. We have pretty tame treasure yields at this point. It has not kind of gotten in the way of the big fiscal reacceleration trade. We'll see if that change. Charles brings us out today. Dow is going to be up as you see. Nasdaq Red. Russell out performed yet again. We'll see you tomorrow in the overtime as Morgan and John.