Closing Bell - Powell Sends Markets Ripping After Jackson Hole Speech 8/22/25

Episode Date: August 22, 2025

Navigate the Federal Reserve’s market impact with Vince Reinhart and Carole Schleif from BNY Investments analyzing implications from Powell’s speech. T. Rowe Price’s Tony Wang examines the ongoing tech rotation. UBS’s John Lovallo breaks down the housing trade opportunities, while RBC’s Gerard Cassidy provides insights on the banking sector outlook. Adam Crisafulli from Vital Knowledge sets up next week’s key market catalysts as consumer discretionary faces pressure and chips rally.

That's the end of regulation, young president's organization ringing the closing ballot the New York Stock Exchange, a 12 capital doing the honors at the NASDAQ. Stocks soaring today on the back of Fed Chair Powell's speech. Investors noting the speech was more dovish than expected. Markets ending the day in the green, but off the highs, though still some strong gains here. The Dow hitting an all-time high. The S&P just a few points away from a new record. 6467 is the number to watch there, and it doesn't look like as we settle out here with just, ooh, just shy of it. With today's gain, the Dow and the S&P 500 ending in the green for the week, this is their third weekly gain in a row. The NASDAQ, though, unable to post

a gain for the week, despite today's rebound. 10 of 11 S&P sectors ending higher, consumer discretionary, communication services, energy and materials leading the charge. Consumer Staples was the only S&P sector to end in the red. moving lower today with a 10-year back below 4.3%. The two-year yield, which is the Fed-sensitive note, that was lower by more than 10 basis points. A big move for that. The dollar moving lower by more than 1% following the Powell's speech. And the move lower in the greenback sending commodities higher. Gold, silver, copper, platinum, all finishing higher with silver, the outperformer up more than 2%. The S&P equal weight ETF hit.

an all-time high today as well. It's the first since November of 2024. So really strong market breadth here. And a big day for the transports as well. The Dow Jones Transportation Index of more than 3%. The move was led by airlines. Also freight names like J.B. Hunt and Old Dominion, all very economically sensitive. That's the scorecard on Wall Street. Welcome to closing bell overtime. I'm Morgan Brennan. John Ford is off today. Let's get right to this major market rally. Christina Parts Navalis joins us from the NASDAQ with a look at the individual sectors that lead today's gains. Christina. Yeah, thank you, Morgan. Well, now with this September rate cut, almost certain history shows that once the Fed pivots, they make multiple moves, not just

one. And that's why this is the best Jackson Hole for equities since 2010, you know, 2020 when reality show Jersey Shore was still popular. But let's talk about markets. They did surge led by big tech, all Meg 7 names in the green. Microsoft actually the weakest link, but still All of those names adding $370 billion in market cap today, that's more than Procter & or roughly Procter & Gamble's entire valuation. Notably, consumer staples, though, were the only sector left behind. Brought up Procter & Gamble, it's the only one that was in the red. With likely cheaper debt, though, ahead, housing exploded higher. The Home Builders, ETF, ITB, jumped about 5% last I checked. Yep, 5% posting its best month since July 2023, RH, KB Home, Floor and Decor, all surging

over of six, seven percent today. And to buy a home, you may need to borrow money. And so to do so, you have to go to the banks. And that's why you saw a lot of the smaller players, too, Western Alliance, Valley National, Banks United, Old National, all of those names closing at least 5% higher today. And then we have high beta fintech names like block, PayPal, global payments, really the driver behind the financial sector as a whole. They tend to be more volatile than the actual market. And speaking of a little open door continued its meme-like run today. Closing, look at that, 39% higher. It's already up 100, over 156% month to date so far. Once again, Morgan, the dip buyers have been rewarded.

All right, Christina Parts and Avelas, thank you. Let's turn to the big moves in crypto. Bitcoin searching back above $117,000 on hints of a rate cut. Artenaa McKeel has more. And Tenea looks like Ethereum closing in on a new record high, too. Yeah, Morgan, Bitcoin up a nice 4% today. But Ether really going for that new record rebounding all the way to levels not seen since November 2021, again, after Powell's hint at those rate cuts. So up 13% today. The record is about $4,900 after earlier this week falling as low as $4,000 on Tuesday.

Market positioning, of course, in recent sessions has been risk off in tech, which has blood into crypto. Some of those ETH-related stocks that you and I have been talking about were some of the hardest hit just a couple days ago. We'll see if this continues through the weekend as Schwartz gets squeezed exchanges in the past day, seeing more than $260 million in short liquidations. Now, we've seen Morgan Bitcoin hit records the last year and the year before. This ETH record, though, it goes all the way back to November 2021. This coin has not gotten close the way Bitcoin tends to on a yearly basis. It has on many occasions, approach that $4,000 level, but that really over the years has proved to be a challenge

technically and psychologically. It just has never meaningfully held that mark until this month. And, of course, it has regulatory support and much more institutional buy-in on its side these days. So, these accumulators like Bitmine immersion and Sharplink, the biggest gainers in crypto stocks today. Salana Treasury, Defi, DevCorp, the biggest winner, and then a good boost as well for the exchanges like Coinbase, E. Toro. So we may be ending the week with a rally. But yes, back to you, Morgan. All right. Tenaa McKeel, thank you. Some more momentum being regained in those momentum stocks. Well, we're ending the week with a rally, but we didn't start off so bullish with some of the markets. Biggest yearly gainers losing a lot of steam

to start the week. Mike Santoli joins us from the New York Stock Exchange. Mike, the message from the market this week, given the fact that we have seen quite a reversal here. Yeah, Morgan, it's interesting. We closed the S&P today exactly where we closed six. trading days ago. Six trading days ago, we thought there was about an 80 percent-ish chance of a Fed rate cut in September. We're back to 80 percent in September. So what did we actually achieve? Well, we took some of the air out of those leading stocks that were a bit overdone in the short term. You did have some rotation. The market did give some relief to some of the stocks that have been beaten down the most. And one of the things the market does respond best to is a threat

that proves not to be so scary or in fact to have come true. And that's more or less what we got right here. I think the question I would ask is whether there was enough of a proper reset in terms of how people are positioned in terms of investor expectations to really launch us much up from here. The S&P is now up about 10% on a year-to-date basis. That's pretty good, not to say it has to be capped from here. But I don't know that we necessarily really rebuilt momentum, though I will say you don't

want to necessarily outright fade a very broad rally like we got today when you had 90% of New York Stock Exchange volume to the upside. Some people use that as a signal of more to come. Russell 2000, it finished up 4% today. It is the outperformer month to date. And actually, it's the strongest performer over the last three months now. What is that signal? Well, it's absolutely part of the rate cut playbook. Obviously, that's where the leverage is, the lower quality is, the cyclicality is. And that's naturally where the market's going to rush toward when you do have greater clarity on Fed rate cuts. So I think right now the market is priced for rate cuts that are nice to have,

but maybe not needed for a real economy. But those economically sensitive stocks could have a little bit more of a cushion because of that. So that's the market's conclusion today. We'll see if that carries through. We're going to have, you know, some more boxes to check off as we go ahead next week. Yeah, just really quick, Mike. I mean, we started the week with because we're in the dog days of summer here.

We started the week with very low volumes in trading. How did we end the week? It did pick up a bit more, so it felt as if the fact that Jackson Hall was ahead of us did keep things a little bit restrained in terms of overall market activity. In fact, some folks were taking some comfort in the fact that the backing off in the indexes was on relatively low volume, although it was not exactly a huge rocking day in terms of volumes. Gotcha. Mike Santoli, we'll see a little bit later this hour. We're keeping you busy today. We're going to stick with Mark.

It's today's exuberant action came after Fed Chair Powell's dovish tone in his speech this morning at Jackson Hole. Here's a quote that really got things moving. Our policy rate is now 100 basis points closer to neutral than it was a year ago. And the stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance. nonetheless, with policy in restrictive territory, the baseline outlook, and the shifting balance of risks may warrant adjusting our policy stance. Well, joining us now, Vincent Reinhart, Chief Economist at BNY Investments and Carol Schleif, Chief Market Strategist at BMO Private Wealth. It's great to have you both here. Vincent, I'm going to start this conversation with you because I'm speaking to Loretta Mester earlier today on the exchange. And she said that she was a little surprised how straightforward Powell was in terms of,

signaling his willingness to cut rates next month, but she did also say she thought this would be a hawkish cut if we get one. What do you think? I think she's right. I think that he was somewhat constrained in signaling easing at the September meeting because there is some data between now and then. And he also wanted to bring along his more hawkish colleagues by essentially saying, yes, it'll be data dependent. Don't worry about it. As for the hawkish aspect to cut, in September, they also put out their quarterly summary of economic projection, the dot plot. And so probably they'll couple that quarter point cut of the funds rate with a projection

that suggests it's only pretty much shallow declines thereafter into 2026. Carol, I want to your thoughts on some of the commentary we got from Fed share, Powell, regarding the labor market, as he did stress the dual mandate and sort of balancing both of those moving forward. You know, he talked about this curious kind of balance for the labor market, and he also said that the employment rate had increased by almost a full percentage point, a development that historically has not occurred outside of recessions. He did say that it appears to be in balance, but really sort of signaling that, especially

on the heels of that jobs report we got earlier this month, that it's softening more than they had previously anticipated. Do you see cracks here? Is this concerning? Yeah, we've seen some cracks all year long in terms of at the margin. And I think his choice of or his use of the word curious as opposed to delicate or balanced was was curious in itself. It really is indicative of the fact, as he pointed out on a couple of different occasions and ways in this conversation, the fact that you've had a a lot of policy change in very short amount of time in terms of trade policy, immigration, regulation, and tax policy, all changing at the same time in understanding how those filter

through the system and when they filter through the system and how they impact. He noted they impact both supply and demand, and it will be critical for the Fed to watch whether or not those impacts are short-term and cyclical, which the Fed and monetary policy have some influence on, or whether they become secular, if you will, or structural, which the Fed really can't control much. So there's a lot of moving parts. It's coming through in the labor market and analyzing those and watching those numbers, understanding that growth in the labor market has been changed pretty dramatically by the

immigration policy and by boomer retirements. And so you've got a lot of moving parts in there impacting that. And I think the Fed was trying to tee up that there's an intermediate and longer-term story. Markets today, though, were just relieved that he wasn't telling a neutral story. He was coming down, at least for today, pretty dovish. Yeah. Vince, I want to get your thoughts on. I realize the markets were very focused on whether September is in play here,

whether that's going to be a live meeting and certainly the dovish tone of Powell, or as it was interpreted by investors, the doveish tone of Powell. But he also spent a lot of time talking about this pandemic policy framework and to use the word that you use in your note, the switchback. How meaningful is that? So basically five years ago at Jackson Hole, the chair rolled out a new framework for monetary policy that was asymmetric. It talked about responding to labor market slack and it tolerated overshooting. That didn't work very well. And in the pandemic, they waited too long seeing the overshoot because of that framework.

And basically, like anyone hiking in the mountains in the Grand Teton's, sometimes to go forward, you have to go back. And they went back to a more traditional view, treating both goals as symmetric. That is, they care both about the unemployment rate high and low and inflation up or down relative to two. percent. That's important because that's what sets up the assessment right now that they have these offsetting conflicting risks to the outlook. They are not happy that inflation has stalled, disinflation has stalled out, and they're worried about the unemployment rate. On balance, they've decided most likely that the unemployment risk is somewhat more resonant to them right now. That's why they cut rates in September.

But it's more of an insurance play. It's risk management to make sure that employment still grows as opposed to a panicky response to evident weakness in the economy. Okay. We have to leave the conversation there. Vincent Reinhart and Carol Schley. Thank you both for joining me. Thank you. With the major averages, all finishing the week, or at least this Friday, of trading, notably higher, the S&P up 1.5%

just shy of a new record close. Coming up, an AI alliance. Well, Apple and Alphabet could be about to team up on a major project that could reshape how consumers see the iPhone. We've got more on that next. Plus, building gains, lots of gains. Home builders jumping today on hope of a rate cut,

but history shows that cutting rates doesn't always mean lower mortgage rates. So should you buy or was this overdone? That's ahead on overtime. Welcome back. Welcome back. We have breaking news out of the White House. Let's get to Amon Jabbers for more. Hi, Ayn. Morgan, that's right. We've got a social media post now from the Commerce Secretary Howard Lutnik on Intel. The Commerce Secretary, Howard Lutnik, on Intel. The Commerce Secretary, Secretary posting just a short time ago. Big news, the United States of America now owns 10% of Intel, one of our great American technology companies. This historic agreement strengthens U.S. leadership in semiconductors, which will both grow our economy and help secure America's

technological edge. Thanks to Intel CEO Lip Bhutan for striking a deal that's fair to Intel and fair to the American people. That confirms something that we heard from the President of the United States in the Oval Office earlier this afternoon that the Intel CEO had agreed to convey 10% of the equity of that company to the United States government. We'll have to wait for details here, Morgan, on exactly how this deal was structured. The suggestion had been going in that the way this would be structured would be that they would convert the grants made by the U.S. government under the Chips Act to an equity purchased by the U.S. government.

We'll see exactly what the terms and conditions are and all the details shortly, but Lutnik now confirming the United States government owns 10% of Intel, Morgan. Back over to you. All right, Amin Jabbers. Thank you. Chairs of Intel are up fractionally right now, and that's after finishing the day up more than 5%. For more on what this means for Intel and for America's semiconductor industry,

let's bring in Bernstein, Stacey Raskon. Stacey, want to get your thoughts on this. Is this good for Intel? Well, I mean, it's good in the sense that they're getting dollars that they may or may not have gotten otherwise, but at the same time, if they were supposed to get those dollars before, they were going to get them for free, and now they're giving up, presumably, 10% of the company for them.

I think the biggest issues, though, it's not really money. Like, Intel needs three things. They need money to build capacity, but they need customers to fill that capacity. And then to get the customers, and what they really need is capability. Like, if they can prove that they can make parts, they'll have plenty of customers. If they can't prove that and they haven't proven to this point, nobody's going to put any volume in there. It makes the capacity kind of moot. And so I actually don't know, like, long-term if they're,

helps them with that or not. Like, in my opinion, their lack of capability at this point has not really been about dollars. But to the extent that they need money to build up capacity, you know, to get any of this going, I guess this will help, although you could argue they were supposed to get this money anyways. Yeah. I mean, I'm very curious to see what the other details of this deal are. And I say this, having covered the MP Materials deal with the Pentagon earlier this summer

very, very closely where the U.S. government also took a stake in that company, but also help to set a floor for raw materials prices and help to ensure and customers for those rare earth magnets. And so to your point, the customer piece of this, I think, is going to be really crucial, especially since Intel does contract with the Pentagon. And the thing is, there's not a whole lot that the government can do to help them attract customers. Look at this way. If Intel can prove that they can make the parts that they need to make in high volume and can make them that meets back and have a good cost structure and are available on time. Nobody will have to force any customers.

They'll have customers lined up around the block to use them. But this is table stakes to make a foundry. If they can't prove that they can do that, who's going to put any material volume there? Nobody, right? Who will be able to bet their own product roadmap on Intel's ability to execute if they can't prove that they can execute? And that is not something that I think the government can really help with. Intel's going to have to prove that on their own. All right.

Does this basically cinch the idea that the foundry stays within the Intel business? I don't know what this cinch is, right? I mean, not necessarily. People have wondered, you know, could they do a split? Could they not? They were clearly prepping to split it at some point, just given the way they'd set up the structure of the business. But the problem with the split right now is, again,

it goes bankrupt immediately. Like, it lost, I don't know what it lost, $13 billion or something last year. This kinds of funding, I mean, wouldn't help with those losses. They would still be burning cash. Because remember, it's going to, even if they have processes, They're 14-8 processes in here until 2028. You need to be able to support the foundry, if it's running on its own. You need to be able to give it cash that they're going to basically light on fire between now and then

until they can get those processes and those customers ramped up. In the meantime, if it's still combined with the product company, at least the cash flow from the product side, can help to fund and support that the foundry, maybe that together with these extra funds can kind of carry them through across the chasm until they can get to 27 or 28 or whenever it is, when they would have these processes start to ramp if, in fact, they are successful in developing those processes. Okay. Well, more will be revealed. We're looking forward to those details. It's been a big week for Intel. It has, it has. Yeah, yeah. I mean, soft bank with an investment to start the week and the U.S. government with an investment to end the week.

Okay, Stacey Raskon, thank you. Let's turn out to broader tech. Despite today's pop, the NASDAQ, the only index closing lower for the week, as the sector saw big outflows in the past two days, is the rotation out of the sector. or done? Or is this a one-day pop? Well, joining us now is Tony Wong. He is the tech-focused portfolio manager at T-Roe Price. And Tony, it's great to have you back on. And let's start right there. The fact that we did see this rebound today, was this just spring-loaded and a relief rally that was triggered by the Powell comments? Or do you expect that the correction, can we even call it a correction that we saw in tech has happened? Yeah, well, I think it's much. mostly a reaction to a pretty big earnings season. I think you had the AI winners really have strong relative valuation to cyclicals in other

stocks. And so I think there's a little bit of a kind of relative valuation that's kind of coming back into balance to some extent. And so I think you saw the earning season cyclicals largely missed. And, you know, with these comments, it suggests that cyclicals might be rebounding a little sooner. So largely, I think, is adjustment. I don't think it changes anything in terms of the tech landscape where secular trends are going.

But to me, that's kind of a little bit of a reaction to what's happened. What do you think about this news we just got with the U.S. government converting a stake into equity into Intel? I mean, there's an expectation that we're going to see it with more semiconductor names that have received Chips Act money. Yeah, well, it definitely highlights that the U.S. government continues to believe that chips are a strategic asset for the country. And so to me, that's a continuation to that. I'm not sure if it is, you know, money that is incremental to what was supposed to be handed out during the chips. So I think a lot of it is in the details. To me, I think that it's not been a cash issue.

It's been more of a technology and can Intel manufacturer. And, you know, how do we get back to that manufacturing strength that it's had over the years without a leading product? I think they need to fix the product and then fill the fat and then be able to make things for other people. So I think there's a multi-step process, and it is going to take a lot of accountable. That helps, and this definitely could be a step in the right direction. I want to get your thoughts on what we heard from Workday with their earnings last night. They basically pushed back on this idea of AI disrupting the SaaS model. They said, quote, the interesting thing you hear out there is that we hear that AI is eating the software world.

And unless something has changed from yesterday, I think AI is software. and we're leaning heavily into it. Just given all of the renewed speculation we've seen about AI this week, want to get your thoughts on where and what to invest in right now. Yeah, well, I think that's been the great debate over, you know, software the last year

is that is AI eating software essentially? So I think that you can hold both ideas in two different hands here and just think like, okay, AI probably is changing software and software may not be, you know, complete beneficiary of that. At the same time, software's not going away. Like, you still need to use workday, and perhaps some of the weakness is largely cyclical.

And so I think at this valuation, like small software has gone down a lot over the last year. And so, you know, could it be not as bad as the narrative suggests? Like, absolutely. And I think that's what the market is testing right now. Over the long term, can AI also essentially invent new business models that obviate software in the current form? Yes, as well. So I think there's like two things that the market is trying to balance, and it'll be interesting to see where it goes. Very quickly.

We got Nvidia earnings next week. A lot of folks watching that closely. Is everybody too excited about this? Or given the fact that the name's still down on the week, is there an opportunity to buy-in before a strong print? Well, yeah, I mean, I think you have to just be in awe of the move that we've had since April. And I think it's been well-deserved. Like, you know, the cloud CAP-X numbers are really strong. AI continues to lead the market.

And, you know, you think about Nvidia, the earnings have grown tremendously. And I think that you've got to think over the long term, like now it's really about 26, 27, sustainability, and to think about how big are those years in terms of growth here. So it comes down to, I think, demand of the existing kind of big cap X vendors and the clusters they're building as well as new customers, perhaps sovereign, as well as on the supply side, like how do we think about power constraints, golden screw problems, and just being able to ramp the next kind of impressive product that creates more of a system solution. Okay. Tony Wong, we covered a lot there. Appreciate it. Thanks. When we come back, time to rally. Yeah. Well, Mike Santoli makes a case or makes, makes, hey, with a risk on reversal in the market after Jerome Powell's dovish words.

And the charts you should be watching, overtime's back in two. Welcome back. We've got breaking news on the tariff front. It's just not ending today. All these headlines. Amen Jabbers is back with more. Amen. Yeah, that's right. Morgan, just within the past couple of moments, the president of the United States, States announcing a major tariff investigation in the furniture industry, posting on social media. A couple minutes ago, I am pleased to announce that we are doing a major tariff investigation on furniture coming into the United States. Within the next 50 days, that investigation will be completed, and furniture coming from other countries into the United

States will be tariffed at a rate yet to be determined. This will bring the furniture business back to North Carolina, South Carolina, Michigan, and states all across the union. Thank you for your attention to this matter. So President, they're putting the cart before the horse a little bit in the sense that, you know, the federal government is supposed to conduct these investigations and then decide whether or not a tariff is appropriate. The president here telegraphing that the conclusion of this investigation is a foregone conclusion, and he will be, or he intends to put tariffs in place on furniture in 50 days time. Now, the question is, and we're going to have to get a little bit more clarity on this from the White House, do these sectoral tariffs on

furniture that he envisions go on top of the individual country tariffs that we've seen. That's an open question. And some of these countries have negotiated now separate standalone deals with the U.S. government. And so for the EU or some of these other entities that have negotiated deals, how does this tariff threat play into those already baked cakes, so to speak, not to mix my metaphors too much, Morgan? All right. Amen Jibers, thank you. I'm just taking a look here because we've got moves in both directions here for some of these furniture makers. And And there's a reason for that. So Wayfair, obviously, imports quite a few things.

Those shares are down about 7%. R.H. down 7.5% even though they've been diversifying their supply chain, but obviously quite a bit of investment in the last call it five, 10 years into China. Williams Sonoma also down 6%, although they've been moving some of their furniture making back stateside as well. Lazy Boy makes almost everything in the U.S. And you see those shares are up 2%. And then a small cap name that has been manufacturing furniture in the U.S.

pretty much forever is Ethan Allen, and those shares are probably. popping 3% right now, too. So let's bring in Mike Santoli for a look at the risk on tone the markets have embraced today after Powell's speech, Mike. Yes, a really distinct one, Morgan, after a week when we kind of had a little bit of a backing off of risk, take a look at the high beta S&P 500 ETF. This is the stocks that move much more than the index, so they're more volatile, more aggressive, more leverage. They've been lifting off relative to the S&P 500 for a couple of months, but then you see this kind of stutter step here, now back to the high. somewhat similar. I mean, banks are definitely celebrating the idea that we're likely to get this rate cut into a still decent economy. The bank index has been one of the leadership groups, along with some consumer cyclicals and others. It also was making a new high today. There we are. So we did get a marginal new high over where we were just a couple of weeks ago. Now, the bond market reaction, interesting. Of course, two-year yields plunged in response to Powell's message. The longer end didn't.

go down as much, although it did ease back and yield a little bit. So this is the gap, the yield curve between twos and 30s, the very longest end and the shortest end. And you see it's been migrating higher. This is a five-year chart. So we have been steepening, and you want to see it steepen because if it was flattening as the Fed is cutting rates, it kind of means maybe we're late cycle and you have to worry. But if it really gets on anchored at the long end, it would suggest that people are prepared for more durable and higher inflation. So right now, I think we can take where the yield curve has settled out today, Morgan. All right. Consumer Staples in the red, the only sector in the red.

I mean, we saw this rotation out of more of the traditional safe havens and defensive sectors. I guess is that just sort of exactly the knee-jerk reaction you expect in trading today, or is there something more underlying it? So this is absolutely the reflex. This is the way you'd reprise in response to this news. We'll see what it has in the way of legs or if it was just a positioning shock for today. Okay. Mike Santoli. We'll see in a little bit.

Thank you. Coming up, builders and banks. Just got a little bit of a preview. Jerome Powell laying the foundation for a massive boost to the home builders. The name is seeing the biggest moves in a rally in this rally, our next guest says, is long overdue. Plus, RBC's Gerard Cassidy joins us to put a finer point on the financials. What today's big move means for the big banks and the smaller ones too. Overtime.

We'll be right back. Welcome back to Overtime. the housing sector is building momentum today after Fed Chair Powell signaled the central bank could begin cutting rates next month. The home construction ETF, the ITB, is having its best day since July 22nd. Our next guest says the rally is long overdue. Let's bring in UBS Home Builders analyst John LaVallo. John, why is it overdue? Hey, Morgan, thanks so much for having me. Interestingly, this is sort of the next leg of a rally that began at the beginning of earning season. And it's something that we had highlighted in our preview note, and our preview note was titled Bear Trap.

And really what we were suggesting is that investor sentiment had turned far too negative at a point when rates were stabilizing, consumer confidence was improving, and most importantly, we were reaching an end to the negative earnings revision cycle. So the home bill disrupt 20% versus the market that's up 3% over that time frame. Now, very interestingly, we have an internal cash flow focused evaluation team here at UBS. Despite this rally, our team says that the HomeBuilder stocks are as dislocated as they have been at any point over the past decade. And when they hit similar levels in the past, the relative returns have been 50% plus. So we have a long way to go. Interesting. Are there names you like specifically or do you just buy everything broadly?

You know, it's an interesting question because I think you can kind of ride the wave here. However, we do believe that the first time entry level part of the market is still the best place to be. That's where there's the least inventory out there in the market. It's also a buyer that is very need-based, very driven by life events like marriage or children. That would lead us to names like Merridge Holmes or D.R. Horton. But we take a barbell approach. We also like sort of the higher end with Toll Brothers and names like Pulte Holmes, where they're selling a lot of very high dollar upgrades and options that are very creative to margin.

Yeah, and Toll Brothers certainly talked about what they're seeing there with the resilience of their luxury business and the more affluent customer base when we got those earnings earlier this week. What's the housing data telling us? Are we seeing green shoots here, even as more inventory does start to come online? You know, I think we are.

And what I would point you to is Toll Brothers and their earnings said that traffic in their communities was up 15% year every year, 15%. And their online traffic was up 5% to 10%. Now, this is very consistent with data that comes out from Zonda, which is an industry forecaster. Also, believe it or not, in the NHB housing market index, the only component that was up was the traffic index, and that was up two points. So I think that there is increasing interest. And very, very importantly, Morgan,

the intent to buy is incredibly strong. 37% of respondents to our most recent survey for housing intentions said, hey, look, we want to buy a house over the next 12 months. That compares to 32% in the first quarter and the long-term average of 30%. And so the intent of buy is there. What we need is consumer confidence to improve and a little bit of rate stabilization, all of which seemed like they're in the office. Yeah, do you think rates come down from here? I realize you saw the 30-year fixed rate come down as treasury yields came down, including on that tenure, which it tends to be pegged to here. But we also know that the last time the Fed went and cut rates, and that was last September, did a big 50 basis point cut. Diana Oleg did some great reporting on this earlier to

earlier today, that while rates came down a little bit, they ultimately, actually mortgage rates, they ultimately went higher because the longer end was moving higher. Yeah. That's the risk, right, is that inflation wins over and the long end goes higher. We're not calling for rates to go down. In fact, honestly, I'm not smart enough to know what direction rates are going to go. However, what I do think is going to happen is we're going to see rate stabilization. What that allows folks to do is have a better idea of what they're going to be paying when

they're buying their house. And importantly, allows the home builders to kind of better manage their business. So rate stabilization and consumer confidence improving, those are the two keys. Okay. Some certainty for the housing market and the mortgage market, perhaps. John Lavallo. Thank you. Thank you. Still on deck. The fate of the financials. We're going to look at with a doveish tone from Jackson Holmeans for the banks and for lending with RBC's Gerard Cassidy. Stay with us. Welcome back to overtime. KBW Bank Index closing at a record today as investors count on an interest rate cut next month from the Fed. Is this rally sustainable? What names are the

best place? Well, joining us now is Gerard Cassidy, RBC Capital Markets, co-head of Global Financials research. Gerard, it's great to have you on. Just this move we've seen in financials. Does it make sense to you? Absolutely, Morgan. If the Fed actually does start cutting interest race as early as September or continue cutting rates, that is likely going to lead to a steeply yield curve, and that's very positive for net interest income for the banks. So I think the move today, because of what Chairman Powell was saying out of Jackson Hole, is reflective of better times ahead for net interest income growth for the banks. Yeah, and I realize that maybe if you start to see some types of lending rates come down, maybe that spurs more consumer and business

borrowing as well. Are you expecting that? It's interesting, Morgan, the consumer loan growth over the last two years has actually been pretty robust, particularly in credit cards. But you're right about the business borrowing, corporate lending has been modest. However, we have started to see a pickup in commercial and industrial lending in the last six to eight weeks. And I'd point out that on an annualized basis this quarter, we could see loan growth for the industry exceed 4%. We're forecasting 4 plus percent growth in this current quarter. the third quarter. And this could lead to even further growth, as you point out. So is it the big banks that are also seen traditionally as a little more defensive,

or is it the regionals that you buy into here? It's a good question. You want to own all of the, you know, the whole group, obviously. But if you believe that this net interest margin expansion due to the actions by the Fed, meaning they do cut rates, 25 to 50 basis points between now and year end and maybe further next year, You get the steeper curve that benefits the regionals more because they generate more revenue from net interest income, which is spreads. And so a typical regional generates numerous from 65 to 70 percent of revenues from spreads, whereas the money centers like J.P. Morgan Bank America, that number is closer to 55 percent. So you would want to lean more into the regionals. I mean, today we're very focused on monetary policy where the Fed is concerned.

But you also have this other dynamic that's materializing here, and that is the fact that President Trump is starting to stack more of the Federal Reserve with more of his nominees or is poised to do so. What is that going to mean for bank regulations? Morgan, that's really one of the key catalysts over the next 12 months for the banks. Chairwoman or the vice chair of safety and soundness, Mickey Bowman, is a real critical component of this. And we anticipate that the regulatory environment, as talked about by the Treasury Secretary Besson, you know, they want to loosen up the corset. It was too onerous. And the banks have always commented about that, led by Jamie Diamond and J.P. Morgan. So I think the good news here is there will be less restrictions, nothing like we saw in 05 or 06, and we're not suggesting that.

But the regulatory environment will ease up, which will make it more profitable for the banks. in our opinion, which should lead to higher stock prices. Okay, Gerard Cassidy. Thank you. Thank you. Still ahead. Fed Chair Powell dominated the headlines this week, but next week, earnings are back in focus. InVIDIA is set to hit the tape.

We're going to get you set up for what's going to be another big week of trading. That's ahead. Welcome back. Consumer Discretionary, the best performing sector today, propelled by the travel and leisure names. The cruise lines were the leaders with Norwegian Carnival and Royal Caribbean jumping. Norwegian finishing up 7%. Hotel stocks like Marriott and Hilton getting a nice boost. And gaming was a winner as well as Caesar's Entertainment and MGM among the biggest gainers on the S&P.

By the way, a similar dynamic in the Dow transports, which had a hefty surge today with airlines leading the charge there. Up next, big retail earnings, big economic data, and a pivotal tariff deadline. That's all on deck next week. We're going to get you set up ahead with Adam Chrisafouli of vital knowledge. And don't forget, you can catch us on the go by following the Closingville Overtime podcast on your favorite podcast app. We'll be right back. Well, let's get you set up with next week's trade today. Another busy week ahead with 14 S&P 500 companies set to report.

The big one, NVIDIA, those earnings are out next Wednesday right here on overtime. Investors will be watching those results closely and we will break it all down for you. on this show. On the economic front, we will be tracking June home prices, the PCE report, which is on Friday. Let's bring in Vital Knowledge Finder, Adam, Chris Afouli. Adam, no summer slow down here. What do you think matters the most to the market next week? I think the last couple weeks of markets have really been debating two main issues, one of which we saw resolution on today with kind of the near-term path to monetary policy, it looks very likely now. We'll see a recut in September. And the next big one concerns tech,

because we have seen the ingredients of a potential rotation trade out of tech into more cyclical and value stocks. And so I think to the extent you do see more anticipation of a Fed easing cycle, that momentum trade out of tech can continue. And so that puts a lot of pressure on invidious reports this coming Wednesday night. You know, for obvious reasons, this is the marquee name in tech right now, biggest market cap, dominates the AI narrative, which is the most important theme in the whole market. And then on Thursday, we also get two more important tech names with Dell and, Marvell. So I think the focus to really be on tech, there's a lot of discussion right now, where you know, you will see a more, a further rotation trade. And these, those names will play a

key role in determining what happens there. Okay. The fact that we get U.S. tariffs on Indian imports, those are going to rise to 50%. We obviously just got the news earlier this hour about investigations into furniture imports too. Can we say that there's still uncertainty lurking in the in the trade dynamics? Yeah, I definitely think. that tariffs are, you know, there's still a lot of complacency when it comes to tariffs. And I think, you know, one of the most important developments this week was a remark on the Walmart earnings call when they talked about how as their pre-tariff inventory gets depleted, their costs are going up week to week.

And they're going to pass that along to customers. They're going to try as hard as they can to keep prices down, but they're not going to just absorb all the tariffs into their margin. And so you're going to see this play out more in Q3 and Q4 as tariffs really come online and as pre-tariff inventory gets depleted. So, you know, Powell today said he's willing to look through this. He thinks the base case assumption is tariffs will only apply transitory effect on inflation. But, you know, transitory in this case could mean a couple of quarters, you know,

which will really test the market's patience. Yeah, we got a lot of retail names next week, too. Abercrombie, Ulta, Gap, Dollar General, Best Buy to name a couple. Read through to the consumer. And is this also, I guess, one of the areas where tariff dynamics continue to show up in financials? Yeah, definitely, I think, you know, retail and tech, nominate these kind of off-quarter earnings season, the July end season. You know, the reports this week in retail were decent as far as sales is concerned.

You know, Walmart sales were very strong, Target was decent, Home Depot, lows, all were okay. So the consumer is still spending despite the environment. This could just be share games, so Walmart definitely talked about how they're taking a lot of share. The specialty names are going to be more exposed to the macro environment. And so you might see more volatility in some of these reports coming up. These names, you know, tend to be more discretionary in the products they sell, and they tend to have, you know, more tariff exposure, less leverage to negotiate on tariffs and prices with their suppliers. And we've talked about it just how strong today was for stocks and the big moves in the markets. But the Dow Industrial is closing at a new record high and the S&P equal weight also hitting a new record.

What is that signal about what we're seeing in the market and what's under the hood? Yeah, I think this kind of speaks to, again, the potential for more of rotation training. We did see that play out this week, and that's why Nvidia is going to be so important. So definitely the momentum is in place for more rotation, which would help smaller caps and would help the equal weight S&P over the NASDAQ end S&P. Okay, we got less than 30 seconds here. Russell 2000, what do you think? I definitely think in this type of environment, to the extent you see more anticipation of that

easing cycle, that's going to benefit smaller caps, cyclical value names over, over tech and momentum. Okay. Adam Chris Affouli. Thank you. Getting a setup for next week. Have a great weekend. We did see stocks move higher today. Treasury yields moved lower. The dollar weakened. Crude was lower. Gold and crypto, both moving higher. That's really going to do it for us here at overtime. Have a wonderful weekend. Fast money begins now.