Closing Bell - Closing Bell: Time to Take the Next Leg Higher? 5/14/24

Episode Date: May 14, 2024

Closing Bell: Time to Take the Next Leg Higher?Descript: Is this still a stay-the-course bull market about to take its next leg higher? Sofi’s Liz Young, JP Morgan’s AJ Oden and Fundstrat’s Tom Lee debate where they stand. Plus, Google held its IO Conference today – we break down the biggest highlights and hear from Alphabet shareholder Ankur Crawford from Alger. And, meme mania is back! We drill down on some new research on who is doing the buying. 

And 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 this resilient stock market. Another sticky read on inflation, failing to do much damage, if any, today. Fed Chair Powell speaking over in Europe. Well, he called today's PPI report mixed instead of hot, which means all eyes now turn to tomorrow morning's CPI for even more clues on what the Fed might do and when. With all of that as the backdrop today, stocks aren't that far from new highs. In fact, we've got a little bit of a surge here as

we come on the air in this final stretch. S&P 500 right now is only about 10 points away from a new closing high. We're going to ask our experts over this final stretch, including that man right there, Fundstrat's Tom Lee, where this market is likely to go in the months ahead. He's going to join us in just a few. Let's look at the score this market is likely to go in the months ahead. He's going to join us in just a few. Let's look at the scorecard with 60 minutes to go in regulation because it's been a pretty broad day. Way more up volume than down. I should point the Nasdaq to.

Look at that, 16,508. That would be a new closing high. There's the S&P. I told you, we're about nine points away, and we're going to watch it closely over this final stretch. How about those meme stocks? Well, they're off to the races again. GameStop, AMC, BlackBerry, and others catching quite a bit today.

And tech, it is outperforming on a day when yields are mostly lower. The Russell up now 1% as yields continue to fall and stocks continue to rise. It takes us to our talk of the tape. Is this still a stay the course bull market about to take its take its next leg higher? Let's ask our panel. Liz Young is SoFi's head of market strategy. A.J. Oden, an investment strategist with J.P. Morgan's private bank. You see both are here at Post 9. Welcome back, everybody. All right, Liz. I mean, here we are like nine, 10 points away from a new high. But I read here that you say if we take out all-time highs,

a new pullback begins. I thought it would confirm the fact that we've been able to rally back so sharply and set us up for what's ahead. So let me clarify. When we hit 5,200 and crossed over, I felt like momentum would continue in that direction. Momentum is still very much intact. We're above the 50-day, the 100-day, the 200-day. We've taken out all the technical retracement levels. We're at about 86% retracement. So we are right on the cusp of hitting that all-time high. The intraday high, I think, is a little bit higher, about 52, 63.

So to take that out, then I think we just, we struggle there for a while. I don't see another leg beyond that that's meaningful unless we get some kind of really cool CPI tomorrow and cuts get pulled forward. Is that what this is about right now? You know, again, today's initial read, people said, oh, my gosh, it's hotter than expected. But then you saw the revisions lower. And even the Fed chair who is speaking live today over in Europe wouldn't call it hot. He called it mixed. Yeah, well, I mean, as a surprise to absolutely no one, Powell said rates are going to stay higher

for longer. The other thing that he did say today was that basically they don't see GDP staying below trend anymore. So maybe seeing growth getting a little bit stronger. If CPI stays exactly where it is for the second quarter and GDP actually heats up. So we were at 1.6 for the first quarter. If it gets hotter again, there's no reason for them to cut. And the market has been okay with that so far. So right now, I don't think there's also any reason for the market to pull back in a meaningful fashion. But if we surpass those all-time highs without really any good news to take us into the next leg upward and without an earnings season that's going to start anew yet. There's not that much support fundamentally to take it,

let's say, another five or 10 percent beyond that in this moment. Let's debate that. AJ, what do you think? Well, I think I'd have to agree with Liz to a certain extent just because of the fact I think we're getting away from the double dutch of how many cuts we're going to have. And the market just believes the next move is a cut. And so we're in a better place than we were last year. The market's correct, isn't it? The market believes that the next move is a cut. Yes, yes.

And I believe that's where we're headed from here. And so as much as maybe, you know, whether or not we need to have a cut, that we could debate on. But I think as long as we still believe the next move is a cut is what's important right now. But, I mean, to Liz's point, the economy, let's say, OK, forget 1.6 percent. Let's say the economy is stronger than that. Aren't we talking about the definition of a soft landing, that the CPI is, you know, let's say the CPI tomorrow comes in how we'd like it to come in and growth, you know, picks up a little bit. Isn't that what a soft landing looks like?

In a sense, I think that's what we all want. We want CPI to come in right in expectations, because then it tells us that that first quarter of this year was a blip on the radar. And so as long as we're making it towards that 2% mark, yeah, if we don't get a cut this year and we get it next year, as long as we're still heading in the direction and the next move isn't a hike, I think that's what's most important. And that is a soft landing. I mean, I'm going like even the Fed chair was today is like he says, well, you know, a year

ago and core was, you know, seven point whatever. And now it's two point seven. I mean, they they're sort of dropping all the the the messages that they want to cut. They're just waiting and they just don't feel the need to do it now. And that's great because why should they do it now? Well, I mean, it's good in the sense that this pause period is usually pretty good for the market. So nobody should really be clamoring for cuts because that's typically what gives the market a problem. There is no reason for them to do it now. And absolutely, we've made progress coming down from 7% or coming down from 9%. CPI is definitely progress. But in my book, a soft landing includes getting back to target or at least getting much closer to target.

And their particular metric is not the one that makes the most headlines. We talk about CPI more often, which still even this week is expected to come in at 3.6% for core, which is just too high. And it is taking a bite. We're seeing consumers change their preferences. We're seeing trading down again. And we've seen this before in this cycle and consumers have come back, but we're seeing it again. And now at a time when you also see delinquencies ticking up. So we're starting to teeter on that edge of soft landing not looking quite as soft anymore if we continue at this point. I would also say, though, that, I mean, part of the soft landing,

you're going to have hot and cold data. If everything was showing, if non-farm payrolls, although they have been trending around $240,000 for the last three months, that's still very hot. We did get a $175, 175, which is a bit softer. Obviously, we start to move into the 100s on an average basis. Then we need to start worrying about economic data cooling. But what was interesting that I saw was the New York Fed expectations.

Although consumers are seeing and expecting higher inflation, and inflation prints have been coming in hotter, it was interesting how the labor market data that's cooling was kind of confirmed in their expectations as well. Lower quits rate, lower expectations for voluntary job leaves. So to me, you're getting a mix of cool and hot data, and that is a soft landing in a sense. If everything was one-sided, then we'd be talking about reinflation or recession. But we're talking about soft landing because the data is mixed. And to me, that's a good thing. I don't think that Liz is ready to give up the conversation about reinflation and recession.

I'm not a quitter. Am I wrong? I'm not a quitter. No, I'm not. I mean, am I wrong? I'm not ready to. Well, I'm definitely not ready to give up on the idea that inflation is not solved

and that it could actually reignite, especially if GDP growth reignites. So the 1.6% growth that we saw in the first quarter, I think, was a welcome print. It should have been a welcome print, especially to the Fed. They've been wanting this below-trend growth. So the idea now that they're thinking maybe we go back towards trend is not great for inflation. So I'm not ready to give up on that yet because there is, I think, at this point, a bigger risk in cutting too soon. I don't think they're going to.

I think they're going to wait and do it too late, if anything. But I think there is a bigger risk in cutting too soon. The other thing that's interesting, if you look at financial conditions, no matter what the metric, there's a bunch of different indices that measure this. Financial conditions are loose again. They're as loose as they were in 21, 22. So we're at a place where the Fed continues to say we are sufficiently restrictive. I think they want to be satisfied. They're not quite there yet. They keep saying we're sufficiently restrictive, yet financial conditions are telling them that we're not.

And I would say this meme stock resurgence, the reboot in meme stocks is showing us that maybe we're not sufficiently restrictive because risk appetite is still there. Maybe. I mean, it's hard to draw many conclusions from what's happening there. I think we learned our lesson the last time we went through this whole ordeal. Let's bring in CNBC contributor Tom Lee of Fundstrat Global Advisors. Tom, it's good to see you. Welcome. You've heard the conversation. Why don't you weigh in? Is it time to get a little more bullish or not? I think it's good to see you. Welcome. You've heard the conversation. Why don't you weigh in? Is it time to get a little more bullish or not? I think it's time to get bullish. Stocks really have been consolidating for the last couple of months.

And I think the conversation you had is correct. You know, the data has not convinced hawks or doves which way inflation is breaking. And I think once we get a decisive data point, and potentially it's tomorrow, I think that $6 trillion of cash comes off the sidelines, and I think stocks break out of this range. And, I mean, that's our bet that May ends up being a very strong month for stocks, even better than it's been already. What's this rally about?

Why don't you tell me in your own words what you think this is about? Why did we rebound so quickly, and why are we now on the doorstep of a new closing high for the S&P? Well, I think that markets kind of had a very sort of simple framework in their head, which is as soon as inflation accelerates, the Fed switches from dove to hawk and tries to crush the economy. And I think Powell's been very clear in all of his recent statements that, look, inflation is not just this core headline number, and it's not just a services number. It's these three moving pieces, housing, auto insurance,

and everything else. And they've been playing a waiting game. We're seeing that even in some of the recent articles. And Powell talked about it. And a lot of folks are talking about auto insurance. I think once that turns, and it possibly, because if you look at PPI, insurance actually rolled over pretty hard. I think it's going, and it possibly, because if you look at PPI, insurance actually rolled over pretty hard. I think it's going to make it clear to markets that it's not just a, hey, inflation is stubborn. It's really this inflation is now normalizing. The economy is in good shape and rates are so restrictive. The Fed actually needs to cut rates.

And that's actually quite good for stocks. And look, if it's a pause, actually, it's good for stocks. If it's a cut, I think it's even better. I mean, I was looking at the sector activity today, Tom. I mentioned at the top of the program, you know, up volume was way outpacing down even earlier today when it was hard to get much, if anything, going. There was only maybe one or two sectors that were green. Now, almost everything is green. You know, tech is having a great session here. That is now, you know, leading the way. A lot of the names there are green. What are we to make of this new closing high for NASDAQ, especially after some of the rollover that we saw, you know, in the month of April in those names?

I think it's really good news. I think a lot of folks thought this was a ninth inning market expansion or, you know, an extended rally. But I think the revival of meme stocks and the fact that there's still a huge amount of cash that's been accumulating on the sidelines in the last couple of weeks shows you, look, I think there's still a lot of legs to this rally. That's why I think May could not only be strong, but of course, as you know, stocks can do very well into year end. Liz, what do you think? I still think that we'll struggle at all-time highs. And a couple of weeks ago after the Fed meeting, I got near-term bullish

because there was nothing that he came out with and scared us with. And actually, he seemed pretty confident that they were on the right path, and the market interpreted that in a positive way. Now that we're knocking up against new highs with really no positive data behind it, maybe no big negative data, but it's really just been the removal of risks. Isn't that all that matters? Get those risks out of the way? To have more multiple expansion at rates with rates that are the same level. But they're not the same level. They've come down like 25 basis points since the Fed chair spoke at the meeting. But the Fed funds rate hasn't come down.

So the intention to restrict capital activity hasn't come down. And in fact, it stayed where it was longer than we expected it to. So I think we would need incrementally better fundamental news to take us meaningfully higher and have it be durable. I don't doubt that Tom might be right, we would blow through all-time highs and have some more room. I could be wrong about that. I don't know that it'll last very long unless we get better news and things actually look fundamentally better. Yeah, I think it's going to be about this inflation print tomorrow, whether or not the market tends to rally on from here. I think

earnings have been driving the shift for the most part. You've had 80% of companies outpace expectations, up 8%, which has been good when you look at the 10-year average. But to Liz's point, we're going to need to see some support from economic data, whether or not this rally is sustainable. I think the cooling labor market data helped out a bit and earnings coming through to support that. But ultimately, it's going to be sort of like, show me what you got with the CPI print tomorrow. Like, is this consistently sticky inflation or is it just an anomaly of those last three months? Tom, why don't you justify the multiple that the market's trading at? If, you know, look, you could say, well, earnings were good, earnings were better, but a lot of the earnings came from the very top, right? The bulk of the

earnings growth came from mega cap. So that's a little misleading. Why do you justify the multiple here? Liz has trouble with it. Why does it make sense to you? Well, I mean, there's a couple of points to clarify. Number one, the median market multiple is 16 times. So is that demanding when 10-year yields at 4.5% since 1928? Actually, the median multiple should be closer to 20 times for the S&P. In terms of earnings dispersion or the number of companies producing double-digit earnings growth, it actually hit 47%. It's the highest in over three years, which means earnings growth is actually accelerating. And that's with three sectors with negative 20% growth, energy, materials, and health care. And in terms of price action, I think investors need to be mindful

when an index or a stock is bumping up against new highs, and then you layer in a dovish Fed, that's not a bearish setup. That would be extremely bullish. It's going to pull a lot of money off the sidelines. So to me, I think the earnings backdrop has been very good. I think people have been misled by oil rising, thinking that's going to cause another wave of inflation. And it's not. And of course, I think the VIX is telling us, you know, conditions are more risk on than risk off. What's this meme stock resurgence of this mania part two? Maybe it's part three at this point, I can't even remember. What does that tell us? I actually think it's healthy. I think it highlights a segment of retail investors that are learning about the stock market. Now, do I think GameStop

is a huge buy? I don't have a view on it, nor do I have a view on AMC. But I actually think speculation is healthy. And they're not employing a lot of leverage. So to me, it's just a sign that stocks actually have a revival potentially coming. What do you guys make of this? Tom says it's good, AJ. What do you say? No, I think what we're focused on is more quality,

and we do like small caps here, but we like companies with more free cash flow. I can't speak on a specific company in particular. That was a good pivot. I learned it from Liz. Pro Bowl punter, AJ Oden, ladies and gentlemen. But I mean what it signals. Forget about the stock. I don't care about the stocks. I'll care about the signal that here we are in a moment of time again where a photo on social media sends off this frenzy in a pocket of the market that last time this happened made us a little bit uneasy about what the overall message was. So what do you glean from that? I would say... Overspeculate what you tell me.

Well, I mean, what I would say is that you're always going to have pockets of speculation and, you know, money chasing various investments. But we always try to advise our clients to really kind of keep looking at the long-term investment. When I think about it, I think at the end of the day, it is a positive thing that we're getting more participants in markets, and that's a good thing.

You know, when we tell our clients, you know, we like to, you know, they're going to pick names that we're not always going to agree with, but it's important to make sure that your risk appetite is adjusted appropriately. So I think it's a good thing because you're seeing more market participants that are always positive for markets. I knew you had something in there. I just had to work on it. I knew you had something in there. That was good. Look, I think it's... You say it's FOMO. You said it's back to this fear of missing out. But here's why I think it's FOMO, because I think I'm not alone in looking at this recent

run-up in the market and feeling like, are we getting a little exhausted with it? So investors are now looking for where else can I find this much upside? And we're running out of ideas because there has been so much upside in certain places and the broadening out trade has provided us with more ideas. So we're still looking for that upside. So the positive about that is that risk appetite is still alive. Investors still want to put money in equities. They're not taking their ball and running home. That is a good thing because we want to see buying activity in the market.

But the same risks still exist as they did the first time this happened or maybe the second time this happened in the sense that, I mean, up 300% in two trading days. That's a lot of volatility that I think most investors might not be ready for the timing of. And you want to be careful not to expose yourself too much to something. I don't think anybody really believes that there's a huge fundamental reason that meme stocks have started to take off again since last Friday. No, I think that's the reason. I think that's the reason. I statement, Liz. That this is trading risk. But to make sure that when you're taking trading risk, it could all disappear just as quickly as it was given.

All right. So, Tom Lee, this broadening story. Remember, you sat with us at the beginning of the year, said small caps are going to go up 50 percent. The Russell's not even up 3 percent year to date. And rates have held it back. I think we can agree on that. As rates come down, Russell goes up. It's leading on the week.

It's had a nice month. But what about that call and where does it go from here? I think the fundamental backdrop for the Russell 2000 to outperform is actually better today than it was at the start of the year. We have a lot more earnings visibility. You know, the median earnings growth of the Russell 2000 stock is actually about 600 basis points higher than the S&P. So you're getting better earnings growth. And the PE multiple discounts four turns on a median.

Actually, sorry, it's closer to six turns of a discount. So if we're thinking about risk reward, Russell 2000 is going to be a much better place. But as you point out, it really depends on the market being convinced the Fed is dovish. I think once the number of cuts starts to stabilize that's expected or even increases, that's really bullish for small caps. And of course, I think it brings money off the sidelines. So I still think it's a 50% move. What about, or you still think it's a 50% move? Stand and buy that call. What about the broadening story in general?

What we've, you know, one month, utilities up 11%. We're talking about utilities now, Tom, as an AI play. I mean, that's where we've come to. Staples are up 5%. I mean, we're rallying towards new highs with defensive type things taking us there. Is there a message in that I need to be aware of? Yeah, I mean, I think the utilities move checks a couple of boxes. It's rate sensitive. So it could be the market telling us the 10-year could be even lower. It could be defensive, as you're pointing out, which wouldn't be good.

Or it's AI, as you point out, which is actually a fact. We know there's a huge power shortage. I still think this is all that indecisive data, but it's actually broadening. And again, to me, at a time when the S&P is near an all-time high, I think investors should really be half full in looking at the totality of this information. And lastly, before I let you go, we're at session highs, by the way, Tom, as I ask you this last question. And we're looking at the Nasdaq currently at a new record close. So tell me about mega cap. Are you still as big a fan of these stocks as you were? Yes. I think that anyone who owns mega caps should really put on a three year horizon and understand these story arcs behind all these companies. I mean, they're growing prodigiously at a time when GDP growth is 1.6%. These aren't going to lose steam

in the next couple of quarters. And whether it's generative AI or cloud consumption or social media or millennials, these are long-tail stories. And I think that's why they're going to work for a long time. And these are the best companies basically globally, so they're very, very scarce. All right. Tom, we'll leave it there. Everybody, I appreciate that. I enjoyed that as we watched this market at record highs. A.J. Oden, we'll talk to you soon.

Liz Young and Tom Lee, I hope we will as well. By the way, Tom Lee is going to be part of CNBC's Financial Advisors Summit on Wednesday, May 22nd. Oh, by the way, that's the day that NVIDIA reports earnings, remember? You can scan the QR code to register or visit CNBCEvents.com slash FA. To Christina Partsenevelos now, speaking of NVIDIA. For a look at the biggest names moving into the close, not that you're talking about that one, but it is one that you cover, connecting all the dots. But I will cover it on May 22nd.

It was a good segue. But let's talk about shares of consumer goods company. New old brands up 5% on a Barclays upgrade. The bank boosted the Elmer's, Glue and Yankee candle parent company to equal weight and raised its price target to $8 as demand returns to its pre-pandemic levels. But Barclays says investors expecting a real rebound should wait until the Fed actually cuts interest rates if you want to see the stock rebound big time. And shares of On Holding are soaring 18% today after the shoemaker reported a first quarter earnings beat.

The company's net sales grew by 21%. But I would just say take a look at everyone's feet in New York City, and that would tell you the stock is on track for its best day since March 2023. I have two pairs. Scott. All right. Good for you. Christina, thank you.

Christina Partsinevel, back to you in just a bit. We're just getting started. Let's get a check on shares of Alphabet. There they are. Near the highs of the day, two up, better than 1%. Google's I.O. conference underway out on the West Coast. We're going to bring you up to speed on the latest next, plus Alphabet shareholder. Alders Anka Crawford is going to break down how she's playing the news today and the AI story in general.

We're live at the New York Stock Exchange and we are closing in on a new record high, 5,254, and change is the number we need to watch, about eight points away. And we're going to track that over the final stretch. We mentioned, by the way, that the NASDAQ is already trading above its closing high, carried in part today by names like that one on your screen, Alphabet, up better than 1% as the I.O. conference for Google is underway today. Our dear Jabosa is there live from the event with the highlights. So what have we learned so far, Dee? So, Scott, Google is bringing AI to every part of the company, across every product,

every service. But maybe the biggest headline that matters most to our audience is that search, we have known it for the last two decades is changing this week. A new generative AI experience called AI overviews is rolling out to everyone in America this week. And then it's going to other countries. By the end of the year, over a billion Google users will be searching differently. In some cases, they're going to get links to websites, more the traditional sense of search. But in many cases, they're going to get these chatbot answers. So that is a huge shift. There was this question going into I.O. and really for much of the last 18 months, will Google be prepared to disrupt itself? I think the answer we now have is kind of. It's not going

all in on Gemini. Gemini was mentioned many, many times. It was the focus today, but we're getting kind of a lighter, different version of Gemini for the search product that Google is going to be rolling out. The other thing that came up that was really interesting, Scott, was this idea of an AI agent that we talked about yesterday as well with OpenAI's demo.

Less of a chatbot, more of an assistant that can reason, that can push back, that can tutor you through your math problem. Google announced that through Project Astra, its DeepMind unit, showed a demo. Let me just show you part of it because it was really interesting. What neighborhood do you think I'm in? This appears to be the King's Cross area of London. It is known for its railway station and transportation connections.

Do you remember where you saw my glasses? Yes, I do. Your glasses were on the desk near a red apple. There is a bit of a collective gasp and applause when the AI agent remembered where those glasses were. They were shown earlier on in the video, and most people watching the video wouldn't have even noticed them. But that is the point here, is that the AI agent can remember things and can reason. So in that sense, Scott, we're moving into this new era, and it really felt like yesterday's demo from OpenAI was directly trying to front run this. So these are the advancements being made. We're going to see a very different search going forward and the rise of AI agents.

We're going to be talking to Sundar Pichai in about an hour from now. We're going to get lots more from him. Yeah, we'll look forward to that interview. Dee, thanks. Ed Stewart-Jabosa out in Mountain View. For more, let's bring in Alger Zanker-C Crawford. She owns Alphabet right here at Post9. You want to give us a review of some of the things you saw today and what you think it means for you as a shareholder? I mean, that was a pretty cool demonstration that Dee showed us, right? Yeah, absolutely. I think

what Google showed today is that there's a race for the personal assistant. So we've talked about AI in the enterprise. We've talked about AI as a cloud service. But now we're really entering the realm of AI being used for the consumer. So OpenAI yesterday and Google with their personal assistants today, whatever Apple's going to do, collaborating with OpenAI will be very interesting.

I think one of the things that came out of it is that search is going to change collaborating with OpenAI will be very interesting. I think one of the things that came out of it is that search is going to change. Search will change dramatically. And the question is, will Google be able to get the same share in this new paradigm for search as they had in the old paradigm? That is the beginning, middle, and end of where the importance lies for this story, correct? Are you comfortable in their position that they can? And can they afford to lose any bit of search market share? I think any kind of change in the search market share for them may be a negative, and it's going to be perceived as a negative. So the question is, how much share do they lose? Because it's definitively going to change. And so, look,

the good thing about what we saw today is Google is in the game. They've woken up. They're in the game. You can't write them off. But there is still existential questions about the search market. The stock's done really well. Yes, it has done well. It's done really, really well over the last year. It's done better than Microsoft. I keep saying that like a broken record, but I think it's worth repeating because the general narrative and market story would have you believe otherwise. Yeah, I think it also came from a different multiple. So Google has been a lot more volatile than Microsoft as it's become kind of a risk on, risk off of search, existential risk, maybe not, versus Microsoft has been a steadier kind of return or compounder relative to Google. Let's talk about this market.

We have this nice move here over the final stretch. We're not that far away from a new all-time high on the S&P. We're already above a closing high on the NASDAQ. What do you make of this snapback from the April sell-off? Yeah, I think you have to split the year into its two parts. So the beginning of the year was a Goldilocks story where inflation was coming down, the consumer was great, GDP was good, growth was good, into an environment where now that the Fed is saying hire for longer, as they should in that kind of environment, bad news is good news. So as we got the jobs report, you know, that was actually considered good.

And, you know, because maybe the Fed basically backs off on their stance. So it's kind of an interesting kind of win-win scenario in this moment in time where, you know, bad news is good news. But if the news is actually better, then the earnings go up. So that's good. So it's good for the market. So I think we hit highs. Are we? Well, I mean, we're right there.

Or beyond them. The question is, right, what happens next? Are we, where do rate cuts factor into how far this market can go by the end of the year? You've got an election to think about and everything else that may come between now and the end of the calendar year? I think what it sets up to be is even if we get to new highs, it ends up being choppier from there until we have at least a little bit of a view into the next administration, the rate cuts, the landing in the economy. I don't think anyone is predicting a recession at this point, but does that come back on the table if rates stay at these levels for the entire year?

So it just sets up for a choppier economy or a choppier market. Other markets around the world are rallying, some better than ours. Do you look overseas for opportunity? Is now finally that moment? How would I view that? Yeah, so I think the overseas market, in part, they're rallying. Europe and etc. Right. Because they're taking on a more dovish stance. Right. So as they start to loosen their policy, it's attracting money versus we're having a hard

line on our policy. So do we look overseas? We do, we have several different companies in our portfolio. They are relatively all AI related, whether it's ASML or TSMC in the portfolios. So yeah, we think there's opportunities in many different markets. I mean, I'm just looking like around, across Europe at various indices and things that track the stocks over there,

for example, that in the last three months were minimum, almost 7% of the kinds of things I'm looking at. Euro stocks, 50. Stocks, Euro, 50. So those markets have done quite well. I had a gentleman sitting here before you came on set who thinks there's some pretty good opportunities in Europe. Yeah, I don't think it's one or the other.

We are U.S. domestic equities that will look for opportunity overseas. You have to remember a lot of our multinational companies have exposure to Europe. So, you know, Google, Meta, Amazon, you know, 30, 40 percent exposure to revenues in Europe, including Microsoft. So we have the exposure to the European economies via our multinationals. Of the sectors that have done the best here over the last month, utilities, financials, staples, which do you like the best and why? Okay, if you had to pick one of the three. You have to pick, that's the game. You have to pick one of the three, I would say... That's the game. You have to pick one of the three.

I would pick utilities. You would? Even after that kind of move? Yeah. Why so? I think there's a paradigm shift in the utility market, in part because of the demand draw on electricity that is going to be needed to run these data centers. We have never seen this kind of growth in electricity,

probably in like three decades. You look at where CapEx needs to go in order to actually provide that electricity, it needs to go up. And if you look at the forward power curves for utilities, they're headed up. So it's actually a really interesting, different time for utilities. I don't even think the management's fully understand what's going on because they're not up. So, you know, it's actually a really interesting, different time for utilities. I don't even think the management's fully understand what's going on because they're not used to growing. Well, they probably do now because everybody's talking about it. Yeah, perhaps. That seems to be the most, you know, bullish thought on these stocks is because of AI.

Now, I know falling yields have certainly helped, too. And maybe it's a perfect scenario for these kinds of stocks to work. But it is interesting to me when you see utilities and you see staples doing so well in a pretty strong bull market. Makes you think, like, why is that? Why is that the case? Now, maybe because they had underperformed for a while and they were the cheapest stocks within the market. In part, I think that's one reason. I think you have to separate them. Staples are probably rallying because of that reason. Utilities, I think, are rallying because there is a paradigm shift in utilities.

And financials, maybe because bad news is good news. There you go. All roads lead back to that. Ankur, thanks. That's Ankur Crawford from Alger joining us. Don't miss an. Yeah, there you go. All roads lead back to that. Ankur, thanks. Thanks. That's Ankur Crawford from Alger joining us. Don't miss an exclusive interview, by the way. Dee told you about it.

Alphabet CEO Sundar Pichai. That's on Overtime today, 4.30 p.m. Eastern. Up next, the return of Meme Mania. We told you about it. We're going to tell you again. GameStop, AMC, BlackBerry, others are on the move this week in a very big way. And yet again today, look at those gains. And we have new research on who is doing the buying.

Is it all retail? Maybe not so fast. Closing bells coming right back. Another day, another surge for meme stocks. Kate Rooney here with what's driving that move higher. If we can pinpoint it, Kate. Yeah, it's got hard to say, but this was all sparked by the reemergence of Keith Gill. You might remember that name, a.k.a. Roaring Kitty. We had not heard from him since the GameStop saga three years ago.

He's been back online and traders took his tweets as a signal to buy. Vanda Research addressing today who is doing this buying. Retail investors, they say, were only responsible for about 7% of GameStop turnover and 10% for AMC in the past week. GameStop has seen more than 15.8 million of inflows from retail investors, but nowhere near the peak of inflows back in 2021, which were topping 87 million per day. It does signal some risk-taking, Scott. Many have been approaching this type of trading as pretty much a joke, a way to jump in on this social media bandwagon. Hedge funds, though, do tend to monitor social media sentiment and get in in some cases. But key difference here, pro traders are hedged, hence the name hedge fund. Many of

these meme traders and individuals, at least in prior cycles, were really slow to sell, if you remember the term diamond hands. AMC, I also mentioned, rallying today. BlackBerry, Tupperware, all of those are household names with struggling financials that happen to be highly shorted, Scott. All right, Kate, appreciate that. And speaking of meme stocks, CNBC Pro out with a new piece highlighting the new meme stocks getting the most buzz on message boards.

For those names and the full story, please go to CNBC.com slash ProPic or scan the QR code on your screen. You'll find the answers up next. We're tracking the biggest movers into the close. Back to Christina, who has that for us. Scott, we're seeing a divergence in Chinese Internet powerhouses. And is Sony reconsidering a bid for Paramount? Details next. We're less than 15 from the closing bell. Back to Christina with the stocks that she is watching. What do you see?

Let's start with China's two internet powerhouses, Tencent and Alibaba, posting earnings on the same day and yet are telling very different stories. Tencent Holdings reporting a 62% surge in earnings, while rival Alibaba's net profit plunged 86% year-over-year after an unexplained write-down for losses in its publicly traded holdings. Speaking of a profit drop, Sony reported a 7% year-over-year drop in fiscal 2023 profits, dragged down by a decline in its financial services division. The company also missed its full year forecast for unit sales of its PlayStation 5. And you can see shares are up at 6%. Speaking of Sony, it's a conglomerate that owns Sony Pictures. And separately, CNBC's David Faber reported today that Sony Pictures is, quote, rethinking its bid for

Paramount after Sony's parent stock price dropped recently in the last week, two weeks, and the continued deterioration of what David calls the cable environment. Paramount shares are down 5% on the news. Scott? All right, Christine, appreciate that. Thank you. Still to come, Oracle popping in today's session. We're going to tell you what's driving that and more why that company could end up being the next new AI play. That is just ahead. Closing bell's coming right back. We're in the Closing Bell Market Zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day.

Plus, Steve Kovach on why Oracle might be the next AI beneficiary. And Pippa Stevens on what's behind the pop in alternative energy stocks today. Mike, I'll begin with you. From kind of ho-hum to within five points. Yeah, I'm sort of melting higher. For a couple of days, I've been wondering if the CPI could be this sort of clearing event. And it seems if the market maybe just doesn't want to lean too hard against that possibility. And you have the other piece of it, which is if the Fed share and the bond market are going to be tolerant of imperfect wholesale inflation numbers like we got today, it just seems like maybe we've de-risked it a little bit.

Now, who knows? I don't think the market's sniffing out anything in particular about CPI. You'd have to know what the numbers were, what the composition was, how the bond market was going to absorb it, and all the rest of it. I do just think, though, that it's kind of a bull market. The rally that's kind of gone on for almost three weeks has been broad enough. And there's enough else going on that we don't feel as if necessarily it's hinging all on CPI tomorrow. But obviously, Stan, to be proven wrong. Yeah, all right.

The other way. Yeah, Steve Kovac, Oracle. Now, that could be the next AI play we're told. Yeah, and we're seeing shares pop about, last I looked, about 3.5%. That's because the information reported Elon Musk's artificial intelligence company, XAI, is talking to Oracle about a $10 billion deal to run all that AI activity on Oracle's cloud. The information does note this is a single source story. So who knows, you know, take it with a grain of salt, I guess, in that context. But they also note that this

would be a multi-year contract that they would do. So who knows if that $10 billion is being paid out over one year, 10 years or however many. So take that into account. Also take into account, it's unclear how much cash this company has. There's no revenue being generated at the very least. But we also have several reports they're trying to raise up to $6 billion and give away a significant portion of XAI equity to backers of the company. And they're going to need that cash if they do want to start competing with stuff that we've seen from Google today and OpenAI yesterday. They are way behind of those capabilities, Scott. All right, Steve Kovach, thank you very much. Pippa, quickly on alternative energy stocks as we watch the S&P try and hit a new closing record high. Yes, Scott. Well,

solar stocks were jumping today as the Biden administration doubled tariffs on Chinese solar cells. But some names also getting caught up in the meme stock rally, including SunPower, which is up 60 percent. It's traded more than 28 times its 30 day average volume after seeing a big move yesterday as well. Now, 82 percent of the float is sold short, although only 25 percent of the company's shares are available to the public. And in the hydrogen space, Plug Power surging after announcing a one point six six billion dollar conditional loan from the DOE's loan programs office. Now, this was a long time coming, and the company had been burning through cash. And so, as Evercore ISI put it, with this funding, a, quote, big concern is abated.

Now, the stock is well off the highs of the day, but still up about 20 percent, with the name Scott also heavily shorted. Pippa, appreciate that. Pippa Stevens, two minutes exactly to go. Don't know if we're going to get there today, Mike. We're five points away or so on the S&P. NASDAQ, though, is going to get a new closing record high. Yeah, and then, you know, we have the Russell here, too. I mean, the meme stock story, to me, in part, of course, it's largely random and just sort of a social stampede. But it does tend to be bull markets acting like bull markets, which is some

speculative stuff around the edges. In general, I guess the market, having gone too far too fast into the end of the first quarter, all it needed to do was slow down and back off a little bit, at least right now. I'll continue to say I don't think we really got the super flush where you'd say we're going to launch to mega new highs from here. But market's not as expensive as it was at the last time we were at 52.50 because earnings are higher. So all that stuff works together with credit being fine. And of course, Treasury yields so far managing to hold that retreat we've got. Look, you've been on the case that the internals have looked pretty good. I'm looking at volume today. Up is just trouncing down.

Here's the thing. Six to one. GameStop and AMC trade on the New York Stock Exchange. They're up today. 700 million shares between them. OK, so, but there are twice as many individual stocks higher than lower today. And that's a composite volume number, not necessarily the ones on the floor. My point is, yep, it's been a broad rally.

Yes, financials. Banks are up 7% month to date, right? We're not even halfway through the month. So all these things do suggest that there's a firmer tone to things, even if it's not specifically cyclical leadership, even if it's not specifically the highest risk, highest momentum stocks, enough things are holding together that here we are at least going to take a sniff at the old hot. Let's see if it's confirmed in the morning with CPI or upset. We'll have to wait till then. But there's the bell. Don't forget, in this hour, Sundar Pichai is coming up.

An exclusive interview with Joe DiBosa. I'll send it to Morgan and John in OC.