Closing Bell - Closing Bell: The Record-Setting Rally 1/6/25

Episode Date: January 6, 2026

Where does this rally go from here? Strategas’ Chris Verrone, BNY’s Alicia Levine and Requisite Capital’s Bryn Talkington discuss. Plus, Rick Heitzmann from Firstmark Capital breaks down his outlook for the IPO market in 2026. And, Mohamed El-Erian weighs in on what he's watching from the upcoming jobs report. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to closing bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This maker breakout begins with another history-making day on Wall Street. The S&P hitting a new all-time high today and the Dow going for its first ever close above $49,000 and barring a major surprise over this final stretch. As you see right there, we're going to get it. There's a scorecard, a lot of green on it. Today, materials and health care are leading the way. Financials green again. As many of the names in that space extend their own record highs. Tech doing okay, thanks to big moves today from Amazon and Micron. Look at that from Micron today, almost 9%. And how about Shake Shack? It's outperforming, as one firm calls it a World Cup play as it upgrades the stock today. All that takes us to our talk of the tape, the record-setting rally and where it goes from here.

Let's ask our panel, Strategist Research Partners, Chris Farone, BNY Wells, Alicia Levine, and CNBC contributor Requisite Capitals, Brent, talking. It's good to have everybody. I mean, okay, S&P record high, Dow's going to get this 49K barring of shockers, as I said. You've liked this setup for a while here. We have. We've talked about how this very cyclical pulse has been beating through market. And you really have seen it basically since mid-October, early November, where you saw the transport start to turn.

All the banks started to break out again, the brokers. I think what you've seen with discretionary, again, taking the upper hand here in terms of a leadership sector, is very much on beat with this cyclical pulse. And, you know, frankly, you're seeing it in the rate market here as well. Tens pushing up against 420, but look globally. You've seen German yields breakout, Aussie yields break out, Aussie dollar has firms. So I think the macro is really confirming what the leadership is telling us as well. You agree with that, Alicia?

We agree with it. We've been positive on the market really since April 9th, feeling that the low was in and that we had a risk on environment here. And what we like here is the cyclicality, is the fact that financials are leading here. When financials are leading, you're not going into a downturn. So despite some of the issues that we talk about on the macro side, on the economics, The market's actually confirming that there's a recovery going on globally. Maybe we had a soft patch in the last quarter or so, but we're actually moving forward,

and we're walking right into stimulus in the first and second quarter of 2026, both on the consumer and the corporate site. So we really like the setup here. Still, you're not looking for returns that match even this prior years. So if the story is so good, why are the returns going to be less? Because we think that the 493 are going to catch up. And in the end, you have such a heavy market weight in large cap tech that if there is some redistribution of capital, which I think we saw literally January 2nd. Look what happened January 2nd and January 5th. You saw large cap tech sell off and then you saw a rush into financials.

And I think that's the trade this year. So it's just not the same kind of market cap to drive the top line index. but we do see a return about 11 to a 12% this year and possibly higher if growth comes in better than expected, which I think is actually the upside risk here. You just, Bryn, have to play it, I guess, a little bit differently than you have the past three years. Yeah, and I think we're seeing that as we opened the show

with Dow 49,000, right? And so if you look at the Dow, those 30 names from a sector perspective, you have financials are 30%, and then health care and industrials are another, 15 percent. And so it's like if you want diversification, we don't only talk about the Dow as an investment. You can buy the ETF, DIA, you know, to get that exposure outside of AI, outside of the invidias of the world, into, you know, the financials like Goldman, industrials like Caterpillar. And so I just think you're seeing broader participation. And I do, and we own RSP.

I think there's lots of ways to play it in addition to RSP, like DIA with the Dow, of that breadth is going to spread out as you guys just talked about, monetary and fiscal policy are in conjunction right now on top of higher than average tax refunds for the consumer. So a little bit for everything this year. And as long as rates, we have a steep yield curve, I think we're in good shape here. All right. So, Chris, I mean RSP, it's going to get an equal weight kind of year. That's where you need to have more of your focus than just pure playing the S&P for the market cap weighted gains that we've seen because of the tech-heavy weighting? Yeah, that's the camp that we're in,

that this equal weight is turning versus the cap weight. I do think it's worth noting that the Russell I growth just made new three-month relative lows versus Russell-1 value. Russell-1 value made new highs before growth. So that's a bit of a change in character than what we've been used to. I do think maybe the tension that may arise at some point or the concern at some point is, when does this cocktail of higher commodity prices,

higher bond yields actually start to disrupt some of this very pro-cyclical momentum that we've seen. I don't think that's a question for the first quarter, but I can see that becoming a bit of a more serious concern down the road. I mean, Tony Pescarello, Alicia, says that the path is going to be more tricky. Sounds like you kind of agree with that, that the bull market stays intact, but gains may be more front-loaded. There's certainly uncertainty over the road ahead for Fed policy, markets banking on some things that just may not come to pass. We're hopeful that the economy is going to hang in there, but who knows? Let's see what happens. So I think, I think that there's going to be probably sometime in the middle of the year.

We don't market time at all because we build wealth over the long term, but that it's likely to be some kind of non-linear event this year. It's a midterm election year. We've essentially had three great years, double-digit gains, three years in a row coming out of the bare market. So it's likely to be some digestion. I think the growth here is, the risk here is actually to the upside on growth. And what does that mean for inflation and for the Fed, right?

What's holding this all together is that the Fed's accommodative, right? And even if they're holding, they're still accommodative. So that would be your big risk here. But ultimately, with fundamental strong, a sell-off is a sell-off and tends to be a buying opportunity. So we still see earnings up about 14% this year, and that's going to hold the market together, even with the multiple of 22 times. You know, Brin, so you're getting a job support, the first clean one since the shutdown this week. The Fed's kind of been on the back burner, but I guess we'll be.

be talking about it much more come Friday's report. How do you see that playing out and where does the risk lie, if anywhere, for the market? I think that the Fed, regardless of who is appointed, we probably get another 50 basis points of rate cuts this year. I think that's baked in and I think that will transpire. I think the job won jobs before. I don't think we'll make a difference, but it will be a fresh, to your point, data point for the Fed to look through their tea leaves to figure out what's going on in the unemployment numbers. And once again, though, those numbers are still low. People aren't firing.

And I don't know if it's immigration. There's lots of different theories. But I think it'll just be one data point. I think, though, what it comes down to is, like, this nonlinear event. I really think if the Supreme Court court comes out later on this month and what The poly markets are saying is that they're going to go against Trump. I think that you'll see stocks like On, Levi, Gap, Restoration Hardware, actually move up. I don't know if the market will move down so much, but I think you're going to see a pop in those names.

So to me, that'll be opportunistic for those names. But I wouldn't read much into just one jobs report. Well, I mean, you raise a good point. The tariff decision by the Supreme Court, I'm wondering how much risk you think is there on either side. We could get a decision on that as early as Friday. They come back in session. Well, if you look through the two avenues with which we use to measure risk credit and bank stocks, there's not a lot suggestive there that something ominous is on the way.

I do think on a repeal what bond yields do will be interesting here because they look like they want to break out. We've seen every global yield around the world break out. Do 10 start to push above 420? I think it'll be an important aftermath question over coming days. Is that the principal place that you would look? I mean, it's not like... That's ground zero for me. It's not like all the tariff revenue that we've gotten has done anything meaningful to the deficit in any way.

I don't think you make an argument that the tariff revenue that we've gotten has forced bond yields to the level they are now. So if you have to give these refunds, is it really going to push rates higher? So I think for whatever reason you ascribe to it, the U.S. bond market was the envy of the world in 2025. I mean, bond yields were much more benign here than they were in other places of the world. how long can that persist if the right tail of growth is re-accelerating, if German rates are breaking out, U.K. rates are back up, French yields, Aussie dollars. So how long can that kind of benign U.S. bond market persist against that backdrop?

Best area in the market outside of the AI trade, which we didn't really even get to for a change. And maybe that's a good thing because the market's representative of, okay, right now it's not the top story. Right. So I think downcap is really interesting here. You've got an M&A environment. You have a deregulatory agenda that we, works for small and mid-cap. You have earnings moving higher in those areas. You haven't had

earnings in small and mid-cap for the last three years. You've got lower rates. That all puts together if you're working on the index level. We like that. When it comes to large-cap, look, we like industrials and financials. We still think that's a great area as well. And think healthcare had a torrid run end of 2025. We think that could continue into it. Do you think the earnings story is going to be strong enough to carry the market higher with no multiple expansion? Yes, I do. And I think the estimates continue to go up. But look in unusual places. As Alicia notes, I mean, health care, I believe, is really a strategic turn here. I mean, this is a sector that's been repairing itself for 12 months. This long predates kind of this

move out of tech. This is a very, very kind of long-term move into health care that I think has legs. Yeah, it's good to have you both here. You too. Thank you, Bryn. You're going to stick around. Chris, thank you. Alicia, thanks to you as well. Now we're going to talk about AI. Because if one thing is clear about this year's CES, what used to be a showcase for the latest and greatest gadgets is now an event dominated by chips, especially in the age of AI. John Ford joining us live now from Las Vegas after headline interviews this week with both NVIDIA's Jensen Wong and AMD's Lisa Sue. John. Yeah, Scott, arguably, this is what CES was always supposed to be.

I mean, it really doesn't make sense to launch the latest and greatest consumer tech in January after Christmas. He's supposed to do that like two months before Christmas. So it's always supposed to be about gathering the ecosystem. and really making the case for what people ought to be building within the consumer space. And so we had AMD's Lisa Sue talking about her latest chip for AI. We had, you know, Nvidia's Jensen Wong talking about how Vera Rubin was just completely redesigned for this next part of the era. But even before the show got started, Qualcomm's CEO, Cristiano Amon, talked about how he's doubling down on chips and technology.

for cars. Take a listen. At the show, we're announcing more, besides those 10 new global design wins, more partnerships with some of the largest car makers. We're also announcing a lot of deployment that's been commercialized with our flex platform that has both the digital cockpit as well ADAS in the same chip.

This is our newest MI-455 GPU. It is 320 billion transistors using the latest two nanometer and three nanometer technology. And this is the thing that everyone's talking about in terms of driving the large cloud deployments and where we're talking about, you know, building, you know, data centers everywhere. Every single chip changed. Six brand new chips. Every one of them revolutionary. And it's by it co-designing.

It's called co-designing. It's basically innovating across everything at one time. And I can tell you, Scott, in this area around here, I haven't gotten a chance to see that much, but around this spot where we are broadcasting, there's stuff around health, around fitness, and all of it connecting in to AI and trying to get a deeper sense of connection to the end user. That's a theme that we're going to see strong, not just through consumer electronics, but as you know, we're seeing it in power generation, in industrial across the whole economy. Yeah, you've given us a good idea of what's really taking place there.

John, thank you for that. That's John Ford at CES out in Las Vegas. Brynn, we kept you around because you're the NVIDIA shareholder, of course. And the reviews seem to be pretty good about Jensen Wong's keynote yesterday. The focus on the new chip, faster chips, the focus on robotics. What was your takeaway? I mean, he says these things, you know, very consistently, and he delivers. I always say, you know, Jensen is the ultimate showman.

but he delivers the goods. And so I think that's why this company continues to be in pole position. Listen, there's lots of other players, you know, look at not in chips, but look at Sandisk or Micron, are just, are crushing it. And so I think as this AI buildout continues, there's going to be lots of winners. Envidio will be one of them. But I do think it's interesting because Nvidia is still one of the cheaper names.

The market is still saying, we don't want your stock over $200. And so you remember, Scott, the stock couldn't get over 150, almost a year. It sat there, and then it broke out finally. And I feel like we're in this scenario where this year, and late last year, it cannot get over and stay over 200. So we'll see, but the company continues to get stronger and more durable, as, you know, they're going to crush numbers every single quarter this year. CES feels very representative of where the sentiment is in the markets, too, that forget software. It's all about chips. Those are the stocks that continue to move. stock for the most part, can't stop going down. I thought it was interesting when we interviewed

Brad Gersner today of Altimeter. He made the point that 90% of the software stocks, that's the number he used. 90% of the software stocks that are down deserve to be. You have to be really tactical and choosy when you look at that area of the market. Yeah, I owned Salesforce for a minute, and then I just didn't have the confidence because their numbers continued to be strong, just like Adobe's. Both of their numbers are strong, but the market is penalizing. I use those two,

because I think they're the poster child for high-quality software names, that the market continues to think that AI is going to replace these companies. And so we'll see what happens, but they continue to deliver the numbers. So I don't agree with Brad that they deserve to be there. I think it's a bit peculiar,

but it's hard to fight the market when those two companies in general continue to have very strong free cash flow, very good numbers, take market share. But it's one of those things. It is what it is. I'm not going to fight the tape. And so that's why I ultimately sold Salesforce. But I don't think they deserve to be where they're trading. Well, I mean, the narrative is what it is. There have been notes about that this week, too, on the sell side, that it's hard to overcome the idea of AI killing software. You have to have a prove, prove it to me story that it's not. Right, but you hit on the keyword the idea. This is all just an idea. I run an investment

firm. There's not even any way, shape, or form we're going to have some type of new sales force or CRM system that isn't just like top notch. And so I think that may change over time. I think as the year goes on, I think that if we don't start seeing products, which I don't think we will. I think names like Adobe and Salesforce app actually are right to go higher. And after this last earning, actually, Salesforce has gone from about 240 to about 260, and Adobe's not done bad of the last, you know, a few weeks or so. So we'll see. I don't own any of the one of them, but I'll probably regret that because I do think they're cheap and they're, and the market is, I think, is mispricing these two names. All right, Bryn, appreciate you. Thanks for sticking around.

Bryn Talkington of Requisite Capital. We'll see you soon. Let's send it now to Christina. parts of Nevelos for a look at the biggest names. Moving into the close today, what do you see? Well, let's start with one stream, because that company is on pace for its best day ever after it announced. It will be acquired by private equity firm HG for roughly $6.4 billion. That's $24.4 a share in an all-cash transaction. The financial software company expects the deal to close in the first half of the year. Shares are up 28%. Meanwhile, American International Group is on pace for its worst day since April after announcing that CEO Peter Zafino will retire by Bimid M.

year. Zafino will stay as the executive chair of the insurance giant. And then you have Eric Anderson of Aon, who will become the CEO elect and is expected to assume the role of CEO by June 1st. This according to a release from AIG shares down about 7%. And then we've got SOFI. SoFi lower just after the FinTech company was resumed at underperform at Bank of America. Analyst over there see SOFI's recent common stock offering as a modest positive, but not enough to outweigh the stock's current valuation, they're also concerned about M&A activity and just a raising of money over there. And that's why you're seeing shares down about 8% right now, Scott. All right. Christina, thanks. Speaking of raising money, we have news on a new raise of money.

Kate Rooney has that for us. Good to see you. Great to see you, Scott. Yeah, some funding news out of the Bay Area here, Elon Musk's AI startup. XAI has officially raised $20 billion. This is a Series E funding round. According to a press release from the company, they say here that it's, well above the original target, which was roughly $15 billion, David Faber, we should say, has been reporting on some of this. There's no valuation in this press release. Fabers reported about $200 billion in terms of the new valuation.

Again, they have not said that officially in the release. The backers, investors in this funding round includes some of the usual suspects you hear about in Elon Musk's orbit, Valor Equity Partners, Antonio Gracios, somebody who's quite close to Musk on the board of Tesla. But you have some strategic backers here, NVIDIA, Cisco as well, underscoring sort of the race here to scale some of the AI infrastructure. You also have some names like Fidelity and Qatar's sovereign wealth fund, MGX as well. It does talk about some of the AI supercomputers, GPUs here, and also mentions finally 600 million monthly users across X and some of the GROC products. But that is the latest in AI funding, Scott.

Back over to you. The numbers keep getting bigger and bigger. Kate, thank you. That's Kay Rooney. We're just getting started here coming up next. First Mark Capitals, Rick Heitzman. He is back. We'll get his forecast for the IPO market this year. We'll talk to him about these big numbers in the private markets. We're live at the New York Stock Exchange. You're watching Closing Bell on CNBC. 18 months, both Anthropic and Open AI will come public, would be my guess. That's certainly what I would encourage them both to do. I think retail investors should have a shot and investing

in the two most important AI companies in the world. We're happy to be investors in all of them. Well, that was Altimeter Capitals Brad Gersner earlier with me on halftime. Rick Heitzman is the founder and partner with First Smart Capital. He joins us now. Nice to see you again. Happy New Year. All right. So over the course of the next 12 to 18 months, you could get Anthropic and Open AI. You believe that? I do. I do. And I think Open AI could be the first, you know, first a trillion-dollar market cap company.

And I think that you might even see them and SpaceX around the same point in the second half of the year. Well, I mean, SpaceX is already, like, what, at $800 billion? $8.50. So the next little turn, they're going to be there. But imagine just even if they're raised 5% of that market cap, you know, that could be $100 billion of IPO demand dropping in the middle of the fourth world. What do you make of those numbers? We just had the report from Kate Rooney, X-AI with the raise of $20 billion, exceeding the prior of $15 billion that they had hoped to raise.

The valuation reported by our David Faber to be around $200 billion. I mean, these numbers just continue to grow and grow and grow. And they grow and they grow, and there's no stop to the demand. And certain things are really working. Open AI is one of the fastest growing consumer software companies ever. So you're seeing fundamental demand, from them. Anthropics revenue growth is something that we haven't seen before. But at the same time, part of the reason they're going public, not only, as Brad said, to give the public

access, but they're almost running out of capital sources. Amazingly, for one of the first times, these companies have been private for a long time, and they've consumed so much capital. They've gone from the venture capitalist to the growth funds, to the crossover funds, to the sovereigns, and they need the retail as the next pool of capital. Do they? I mean, it doesn't seem like the spigot's running dry at all. I was going to ask you, why did they even need to go public if they can continually go to the markets, the private markets, the VCs and whomever else, and raise the kind of money they're raising. From what I've heard that they're starting to run dry. So even large, large sovereigns have put in tens of billions of dollars, hundreds of

billions of dollars. You know, the VC industry is starting to get tapped out on these names. We've gone to our LPs. I'm not an investor in either of these companies. People have gone to their LPs. They've done a million things. And they're almost out of capital. And you think about the amount of additional capital open AI needs, they're going to have to touch every single capital source on the planet. So, you know, we know about the obvious prizes that are out there that we think are going to come public. Databricks is on your list.

Yes. Right? I find it interesting that that plays into the conversation that I had with Gersner, too, about AI killing software or not, the names that are going to stay relevant and the ones who are severely challenged, how do you see that playing out? So I think, you know, it's like anything else with AI or anything else. else with a new technology, you either adopt it and it becomes your friend and it drives the next level of innovation or it kills you.

So I think if you're a great company, you're figuring out what AI means for you in terms of both building software. We see some of the things that Microsoft's done, especially with co-pilot, or distributing software. And some of those companies are getting very, very good at it. Service Now is quietly getting very good at it. Microsoft's getting good at it. Companies that are believed to be behind the curve are being punished.

What do you make of the AI trade in general as we come into a new year? It didn't exactly finish last year with a bang. So I think we're not, you know, people are calling the AI cliff or is this the end of an era? Some have said there's fatigue. Do you sense that? Well, I think we're a couple of years in. I mean, we talked about this three years ago in the beginning of genera of AI three years ago and what the next thing was.

So I think people are getting a little tired of it. They want to see what those numbers are. A reason why I think anthropic will be a very interesting. with the IPO is because not only is this the AI pixie dust, but also incredible fundamental revenue growth. So you're seeing, hey, this is one of the most efficient software companies ever, driving real revenue and on the tip of the spear. There's been more, I guess, dispersion in how a lot of these stocks have traded, right? No longer the monolith. Now they're sort of distancing themselves from one another. Are these the early signs of what's going to become more

of winners versus losers, halves versus have nots, leaders versus laggards. How do you see that? Yeah, I think you get into a market maturation cycle where originally everything goes to the moon and then, you know, people as they get tired of everything going to the moon, start to become more discriminating buyers. And they say, who are the real winners and who are the real losers? And that's, the sorting hat is very fuzzy in the beginning. And you're starting to see that. And now folks are going to dive in this year and say, okay, although you mentioned AI 74 times in your press release, what is really, what do you, how you're really using AI? Are you really driving fundamental value, driving an ROI for your customers, driving efficiencies in your cost

structure? And you're starting to see that where companies reporting, you know, revenue per employee, flat expenses, but increasing revenue growth. Even on the financial services side, you're seeing, you know, Citibank saying we're not hiring any more engineers, but we're getting three times the efficiency. People are bragging about what AI is doing for them. Are we now firmly in the stage of scalers becoming now we're going to focus on the adopters? Yes. That's the next big leg of that trade. Exactly.

And I think part of it's going to be now the infrastructure is being built out, both on the hardware and software side. What's the application level software, which is going to ride on top of it? No differently than as the infrastructure, the Internet was built out with, I guess, high-band-with Internet. who are the application levels? Who are the Googles and Amazon's who are going to capture all the value in the next wave? And that's what we're thinking about in the private markets today.

All right. Well, you always help us understand the private markets better. Thanks for being here. Thank you. Rick Heitzman of First Mart. Back with us. Up next, the market's private parts. Investors have more access to alts than ever before. We'll talk about the big money and the big opportunities as we kick off this new year. The bell's back afterwards. We're back on the bell, whether it's private equity or private companies in general.

Investors have more opportunities than ever for accessing those parts of the alternatives markets. Our Leslie Picker and Robert Franco inside Alts and join us now. Leslie, you first. Hey, Scott, yeah. In today's newsletter, we took a closer look at private equity fees, specifically how they are declining. Buyout funds charged the lowest fees ever recorded last year, an average of 1.61% continuing a downward trend. And that's well below the legacy 2% management. fee that the industry has been known for since its inception. There are a few reasons for this

fee compression trend, and they're not all dire. Of course, the industry has experienced a few difficult years of fundraising requiring many managers to offer fee discounts to secure commitments. At the same time, though, managers have been consolidating, and the capital is increasingly flowing into the biggest funds. Funds seeking more than a billion dollars charged far less than smaller funds. Prequent data showed because larger funds can spread out fixed costs over. for a broader base. So in other words, just because fee rates are lower doesn't mean the fee dollars are, Scott. Oh, interesting, Leslie. Thank you. Now to Robert Frank for more on the next big opportunity for AI investors in private companies, Robert. Scott, great to see. Well,

Robert Smith, the founder and CEO, Vista Equity Partners, he told me that we're about to enter the third wave of the AI revolution. So first, we had hardware like chips and data centers. Second was the hypers, that's training the LLMs. The third and the one that's coming is the application, and that's specifically using AI agents to perform specific company tasks. Now, Vista has created an agentic factory, as it calls it, to build agents for its 90 portfolio companies. Smith told me that the theory that AI will eat software doesn't really apply to agentics in enterprise software. We've been telling our investors that. There will be a few that, not only survive, but will thrive in that marketplace.

In the enterprise, you actually don't need large language models. You can actually execute using small language models and smaller footprints and utilizing different technologies that I think will actually, again, create massive economic rent pickup. Now here's the important part for Alts investors. 97% of enterprise software companies are private. So Smith said the only way for investors to catch this third wave is by investing through private channels. And Scott, for the full interview with Smith, you can go to cnbc.com

slash inside alts at cnbc.com slash inside alts or just the website cnbc.com. Scott? And now we will. Robert, thank you. That's Robert Frank. Our thanks to Leslie Picker as well. Up next, Muhammad Al-Ary. And he tells us what he'll be watching this week from the upcoming jobs report, the first so-called clean one since the government shutdown. Plus, we are watching the markets, especially closely today. S&P 500 already set. setting a new all-time high. We're barely 50 points away, by the way, from S&P 7,000. And how about that Dow? Poised to close above 49,000 for the very first time ever. We're back after this. We're back this Friday, marks the first so-called clean jobs report since the government shutdown.

It could have big implications as well for what the Fed may do at its next meeting later this month. Joining us now, Muhammad El-Ary, and he's Al-Aliang's Chief Economic Advisor. nice to see you. Welcome back. Nice to see you. Thanks for having me. Yeah. So this is going to be data that we can trust. Yeah? This will be more normal data, cleaner data, as you called it. And what's interesting is the consensus forecast isn't looking for anything dramatic. Pretty constant job growth at about 55,000, pretty constant unemployment rate about 4.5% and pretty constant labor force participation. So the meat of this report is going to be the details that will tell us the extent of cooling of the labor market. And most importantly, is it demand driven or is it supply

driven? I mean, if you listen to Neil Kashkari on Squakbox yesterday, which I presume you did, he paints a picture that is not great, that job market is clearly cooling. He said there's no question about that. We see this in the statistics. So I think that there's a clear signal that the labor market is cooling. What does that mean to you? So first, there's a clear signal that the labor market is decoupling from growth. So growth remains really solid, but the labor market is not keeping up with that growth. Drop creation is not keeping up with that growth.

That is the big dilemma we having, which is this decoupling. Beyond that, the Fed is torn, you know as well as I do, Scott, that if you're worried about inflation, there's reasons to be worried. If you're worried about your second part of your mandate, there's reasons to be worried. You have federal officials that have different sensitivities, so they're all over the place, and you have no strategic or leadership unifiers in this mix.

So the Fed is going to be very divided regardless of what comes out on Friday. So, I mean, given those tensions that you paint, what do you think they'll do later this month? So I think they'll do nothing later this month. They're going to remain on hold. they will signal one to two cuts in 2026 as a whole. But what I think is the problem is they're not going to give us clear indication of what is the strategic view.

Do they, like me, believe that we are on the cusp of significant productivity improvements that bring up the speed for non-inflational growth? Or will they stay very data dependent and therefore, torn between the different parts of their mandate. I fear that we're not going to get that strategic clarity until a new Fed share comes in. I mean, the bigger issue and what I know you're thinking about, and for that matter writing about, because you wrote about it in the New York Times on New Year's Day in a piece called The Global Economy Must Adapt to Avoid Tumult this year, is the impact that AI is going to have on labor in general. You point to productivity

gains, which obviously impact how the Fed needs to think about the labor market in general, but the other side of that coin is theoretically what it just means for labor in the future. You said, quote, we need coherent AI adoption policies, one that attempt to maximize output gains while limiting labor market shocks, designed and carried out in collaboration with leading companies. How do we do that? Well, first, there's a handful of companies that are thinking about this. issue. In particular, thinking about how do we have an adoption policy that not only enhances productivity, but that does so without destroying jobs. Think of what Accenture is doing,

of what Google is doing, of what Walmart is doing. These are companies that are thinking about adoption policies. Others on a very different place. And I think that we need to spend more time talking about working with AI than just talking about working on AI. You know, most of the oxygen is consumed by these incredible advances. Is it going to be chat GPT? Is it going to be Gemini 3? What is going to happen to open AI in terms of the marketplace? But the real issue right now is adoption.

And we're not talking about this, and we certainly don't have a policy for this. Well, you make us talk about it more. Mohamed, thank you. It's Mohamed Al-Aerian joining us once again. We'll see you soon. Coming up next, we track the biggest movers into the close today, and what could be a record-setting one at that for the Dow. We'll be right back.

Lesson 15 from the closing bell. Let's get back now to Christina for the stocks that she's watching. Tell us what you see. I have a theme, and it's chips. But let's start with Tesla. Shares are lagging in the market today after new data showed its Germany sales volume actually falling nearly 50% year-over-year in December. InVidio's Jensen Wong also unveiled a new autonomous vehicle AI yesterday called Alpameo.

Must, though, posted he's not losing sleep over in video news. Jensen Wong's comments at CS also moving cooling equipment manufacturers after he said, quote, no water chillers were necessary for data centers using NVIDIA's Vera Rubin Chipstack, and that's its next generation after Blackwell, Johnson Controls, and Modine Manufacturing, you could see down over 6.5% for both of those names, respectively. And then it's a big day for data storage companies. Sandusk, Western Digital, Sea Gase, are some of the top performers on the S&P 500 today. Western Digital on pace for its best day since March 2020. Sandusk, which is Geert's memory is having its best day since February.

Seagate, best day since October. Seagate up 14%. But Sandus, 27% Scott. Wow. All right. Christina, thanks. Christina parts of nebolas. Coming up next, what the world's most popular sport has to do with the bounce and shake

shack today, we will explain. Plus, we're all over this record-breaking rally. The Dow heading for its first close above 49,000. It's only 500 or so points away from Dow. 50,000. S&P with a new all-time high of its own. We're back after this. We're now in the closing belt market zone.

CNBC, senior markets commentator, Mike Santoli, BTIGs, Jonathan Krynchki. They're both here to break down these crucial moments of the trading day. Plus Pippa Stevens is tracking the action in copper, and Kate Rogers is standing by with more on that pop we told you about. In Shake, Jack, Mike, I'll begin with you. I mean, we're 55 or so points from S&P 7,000, a little more than 500 points away from Dow 50K? So I'll repeat what we said yesterday, which is there's nothing bearish about all-time highs. So that you just sort of take it on its face.

And also the underlying message of the market has remained very consistent. They want to play an economy that looks like it's going to run hotter. So I think that you wouldn't want to fight with that takeaway and say, oh, no, it's actually going to be a growth scare coming or anything like that. I'm just getting sensitive to the idea that it feels like it's the scripted first drive of the game. And everyone has decided, this is our plan. and we're going to execute it.

Sometimes it works really well. I'm wondering about what we're going to have to react to down the road. And if you say, I love financials and industrials, and the cyclical trade is going to work and it's going to broaden out, that may very well be true. That's what the market's telling you, but you have a lot of company. And so I'm watching for when maybe that trade gets overplayed. Yeah, I mean, the small caps are doing what people had hoped that they would do.

If you're talking about in so-called everything rally, this is kind of what it looks like. Right, especially when you add in the memory trip madness. which is obviously ripping today. And so the Micron, Western Digital Sandysk, that's the current fixation of the AI trade. We've had many, many episodes like this where we get like a stampede

into one part of that sector, and it lasts for a while, and it makes people really scared to take the other side. Yeah, so we'll see. The scripted first drive is leading to a touchdown. Now it's how you follow that up.

Pippa, Steven, speaking of things that are going up, I mean, copper's at a new record high. That's right, Scott. Another record high is production issues in Chile and Indonesia fuel supply concerns with the prospect of tariffs looming in the background. Imports into the U.S. have surged as traders look to get ahead of those possible tariffs, meaning Komex inventories are now at all-time highs. That's according to Morgan Stanley, which has pressured supply in other markets. That's fueling interest in the miners, the COPX hitting a record.

Freeport is at its highest since 2011 and Rio Tinto at a three-year high. But copper is now up 20 percent in the last three months. That is a huge move for the medal and benchmarks Albert McKenzie, saying it feels like a momentum-driven trade at this point. It's running away with itself and getting away from the fundamentals of the market, Scott. All right, Pipps, thank you. That's Pippa Stevens. All right, Kay Rogers, interesting thesis behind this call on Shake Shack today. That's right, Scott. So Shake Shack is higher today by more than at 7%.

This after Deutsche Bank upgraded the stock to buy from hold on its valuation for growth in a, quote, compelling catalyst path, rather, in the first half of 2026, saying looking ahead, Shaq is lapping easier, compares in Q1, LA wildfires weather extended Truffleburger LTO. It could benefit from fiscal stimulus in second quarter, skews middle, high income, lower frequency occasion, and it should be one of the biggest beneficiaries of tourism for the World Cup in the third quarter, noting that about 30% of its locations are in or near host cities. Analyst also noted it could ramp up its cadence of LTOs and notes. The launch of its first ever loyalty program should drive multi-year compounding benefits.

Shake Shack so far has steered clear of any straight value offerings like you see at McDonald's. Instead, it's given diners premium options to opt into something that you can expect more of in 2026. CEO Rob Lynch told me last year. Scott, he also did note when we spoke in September, just the idea of this tourism bump. People make Shake Shack a destination when they're traveling. So that's what this note is kind of alluding to. We'll see if it comes to fruition. All right, Kate, thank you.

That's Kate Rogers. with that interesting call and a big stock move today. Jonathan Krenski, welcome to you. Technically speaking, how does this record-setting market look? Hey, Scott. So, yeah, there's a lot of moving parts right now. You know, I think obviously trends are in place pretty strong and bullish trends across the board. We have small caps finally kind of broke out of that four or five-year trading range at the end of last year.

And now we have the Dow, as I mentioned here, 50,000. And I think to us, what's actually more timely now is back looking at the Mag 7 as a group was down five straight days heading as of Friday. And since 2023, the last five times we've been down five straight days, they've bounced back 10 days later by an average of about 4.6%. So I think, yeah, there is a lot of optimism around the cyclical trade. And I think to be clear, the medium and long-term trends are looking. like we might be shifting away from Mag 7, but I think, you know, over the next couple weeks, the tactical, the best tactical setup probably is those Meg 7 moves. Well, I mean, we're not shifting away from the chip names, as Michael was mentioning here on the desk.

Some of the moves that we've seen, the microns, et cetera, only continue to show the dramatic outperformance versus some of the software stocks. Do you think it's gotten to extreme or no? Yeah, I mean, if you look at, I think, Friday's move. in semis or software, depending on which index or ETF you look at. It was one of the largest moves in favor of semis in the last 20 years or so. And then we're just adding to that with the move in semis yesterday and today. So I think, yeah, probably it is getting a little overdone.

But again, these parabolic moves are always tough to time the inflection. So I think the message is probably be a little bit careful chasing the strength in the semis at this point. But until you see the kind of, you know, some downside reversals, it's tough to, you know, really call the final top there. All right. Jonathan, we'll talk to you soon. Thanks for joining us as we count down to the bell. We have about a minute or so, Mike, before they start ringing that thing. And it is, as we said, going to ring in some milestones. You're going to get the first ever close above $49,000 on the Dow.

Soon you're going to be closer to $50,000 and $49,000. If this pace keeps up, S&P, 7,000 is in sights, too, and that is not to be ignored either. Not at all. No. And look, it's obviously broadened out over the course of the day as well. Brett started out basically 50-50. It's now well positive. I do think you're probably benefiting a little bit, too, from the fact that the S&P's kind of been churning and built this base here. You know, we first got above 6,900 a couple months ago on an intraday basis, and now finally we might be able to break out that's probably going to have some significance to those people who watch the charts. We'd point out, though, as we talk about the chips, Nvidia can't hold a rally. Five days in a row, intraday. sell off. That's been a wait. But then what does the market do? It goes and grabs for Amazon and Microsoft. Two of the worst Max have a names recently, and they get a little bit of relief. So that rotation has obviously helped us get here and not have a lot of a drawdown, even as we didn't make new highs for a couple of months. We're getting just in large numbers, as all who knows. And we do, in fact, have that new closed record for the S&P, and we did get that close about

49-K as you knew we would on the Dow into overtime.