Closing Bell - Stocks Jump In July, Tech Takes Off & Roku Rocked 7/29/22

Episode Date: July 29, 2022

Stocks surging to close out the week with big gains driven by strong results from tech titans Apple & Amazon. Mariner Wealth Advisors' Time Lesko and Rosenblatt Securities' Barton Crockett discuss where they see the biggest opportunity in tech following those results. One tech stock not doing as well is Roku. That stock plunging after reporting weaker than expected numbers. Evercore ISI's Schweta Khajuria explains why she's slashing her price target on the stock. Bespoke's Paul Hickey on whether the big gains in July will be able to carry over into August. Columbia Sportswear CEO Tim Boyle discusses whether consumers are cutting back on spending amid the ongoing economic uncertainty. And PIMCO's Libby Cantrill says the so-called Inflation Reduction Act in Congress is unlikely to cool inflation in the near term.

Stocks are at session highs on this final trading day of July as the S&P paces for its best month since 2020, up 9% in July. Apple and Amazon adding a combined $230 billion in market cap today. Basically, a PepsiCo helping boost this rally. The most important hour of trading starts now. Welcome, everyone, to Closing Bell. Happy Friday. I'm Sarah Eisen. Take a look at where we stand right now in the markets up 1.4 percent healthy week up four and a quarter percent for the S P right now for the week the Nasdaq also joining the party today actually leading it it's up 1.8 percent thank you

Amazon and Apple we are tracking for the best month of the year best month since 2020 small caps up six tenths of one percent as well. We've got almost every sector higher. Energy is actually leading the market right now, thanks to record profits from Exxon and Chevron. Staples and health care are the two sectors that are actually in the red. Consumer discretionary right there behind energy. Look at why. You've got Amazon, Tesla. Those are fueling that sector. Check out the top performing Dow stocks this month. Apple, Boeing and Chevron leading the charge, while Tesla, Netflix and Amazon help power the outperformance in the Nasdaq 100. Coming up on the show today, consumer sentiment coming in above estimates today, but Walmart and Best Buy painting a different picture with their earnings this week.

We'll ask the CEO of Columbia Sportswear what is actually happening with the consumer right now. Plus, from the chipsack to the mansion deal, we'll talk to PIMCO's head of public policy, Libby Cantrell, about the big Washington events that could impact your investments. We're closing out a strong month, though, for the major averages, particularly for the Nasdaq, up double digits, on track for its best month since 2020. Amazon and Apple are helping drive today's pop after reporting positive results. So does the tech trade have more legs? Time to get back into growth. Let's bring in Barton Crockett from Rosenblatt Securities and Tim Lesko from Mariner Wealth Advisors.

Barton, first to you on some of these results, because you have a hold on Amazon and Apple and aren't quite as enthusiastic as some of the other, because you have a hold on Amazon and Apple and aren't quite as enthusiastic as some of the other sell-side analysts on the street today. What's wrong with the Amazon report, which is being universally embraced up 12 percent and seems like a real standout? Well, certainly I think there's relief in Amazon. I think there was a lot of concern going into the report. But, you know, if you look closely at what was happening, there's some things that, you know,

you could look at as maybe not what you would ideally want to see in a stock that's up 12% today. You know, one of those is that the core kind of value driver, web services, slowed, growth slowed, margins declined. The other is that their legacy, retail, you know, while growing is not really the growth story that it was. I would back into about a 12 percent growth rate in North America for everything combined in retail. And inflation is 9 percent, units up globally 1 percent. So it's really inflation. It's not really an outperformance secular story. And margins, you know, they're spending, they were supposed to get some margin inflection as they grew out of the overspending into the pandemic.

But they're sucking up a lot of that in the next quarter with spending on staffing and computers for AWS and also content like Thursday Night Football, which I think is a real head scratcher. Fox couldn't make money on it. These guys are paying twice as much money without even the affiliate revenue stream underneath it. So I'm not sure how the ROI works on it. These guys are paying twice as much money without even the affiliate revenue stream underneath it. So I'm not sure how the ROI works on that. So, you know, I think there's some concerns on Amazon. Well, we should know your price target 118 and your neutral rating.

I'll just, I'll take the AWS part, Barton, because while it was a slower rate of growth than last quarter, it was better than expected. And it's still what 33%, 33 percent, which is even higher than some of its cloud competitors, which a lot of folks think that suggests that they're still taking share. Yeah, I don't think it's higher than Microsoft, which constant currency was up, I think, 46 percent. Google reports their comparable cloud business is buried within their disclosure. And I think if you back into it, it was faster and maybe 40 percent, so a little bit faster than Amazon. So I don't think they're a share gainer.

I think they are a share leader. But, you know, this is a sector that has a great secular tailwind. And I think a lot of people really want to ascribe huge multiples to it. But the peer set, you know, the multiples have come down. You know, I think it is getting very big. There's a lot of large numbers kind of issue here. And you know good story. But I think that's pretty well known at this point in time. So Tim as the fund manager a long time I think owner shareholder of both Amazon and Apple John take the other side. Well it's not really taking the other side I mean as

a long term holder of these companies are very important to the overall market right. The two of the largest companies in the world. They're owned by investors in almost every style and index fund that's out there. So seeing movement in these stocks is pretty constructive. And perhaps the street had been too bearish going into earnings across the board, right? We've had 60% of companies are beating earnings, certainly lower than the 77%. That's the three-year average of earnings beats, but it's just constructive for equities as a whole. And we don't spend a whole lot of time getting worried about quarter to quarter revenue and earnings changes. You've got two great companies that have created significant moats for themselves.

But I think that the question now, Tim, is whether you want to add exposure to either these companies or any growth companies, because a few things are working. You have Treasury yields basically moving south. You have the market thinking that the Federal Reserve is closer to the end than the beginning on hiking interest rates. And now you have some pretty sturdy fundamentals here lining up for companies in a tough economic environment. So would you be adding? Well, I think what you're looking at is those investors that have cash buying when the market is down and two large participants in the market is down has generally been a pretty good place to

be. So as long as it fits within people's risk tolerances, adding money to the market when it's down, you still have an S&P down mid double digits. So it's not an awful time to be looking at buying stocks. And if you're going to get long the market. You're gonna own these two stocks generally. Barn what about Apple it which is which is trading higher today more than 3% it's actually had a

great month as well. You're on hold. For this stock as well people were encouraged to see that iPhone growth. Were you expecting a decline like other analysts. No I was I was happy to see that iPhone growth. Were you expecting a decline like other analysts? No, I was happy to see the iPhone growth. I think the question with Apple is really what's going to come. I know they've got a great product cycle that they're very excited about. But the question is comping against what was likely some element of pandemic pull forward

for all computing and smartphone. There was likely a big kind of cycle of people buying 5G phones. And I think John Stanky was on CNBC after their earnings saying he expected the 5G cycle to calm down versus last year. And then you have the macro concerns, which didn't hit the iPhone, which was a relief, but they are hitting services and they are hitting wearables. And that's in this environment where everyone's still employed. If we go deeper into recession for a high multiple stock, you know, I think there's some things to be a little bit cautious about here. So where's your target now on Apple?

And what did you do with it after the numbers? So my target is 160. So, you know, I'm not chasing it. You know, there would be scenarios where I would be interested, but not right here, not with this uncertainty. I think as we go into the big test, you know, can they persist the 5G comp and the comp to the pandemic pull forward? It feels like, Tim, what we learned about these companies at Microsoft, Alphabet, Apple, Amazon, maybe Meta, the exception is that they are in good shape if we are entering or in

a recession. I don't want to use the word recession proof, but there was a lot of hand wringing going in about the macroeconomic environment and how that would impact iPhone demand and retail. Amazon talked about a step up in consumer spending, which is happening at the same time as we got that warning from Walmart. So it's just a pretty confusing environment, Tim. And I guess I wonder if the lesson of the week is that these companies are in good shape to weather it. Well, right. I would share your concern over using the term recession proof on anything. But what you've found out is that the core businesses, the recurring revenue businesses, have remained very strong and they continue to move towards cloud based services, whether it be large corporations moving their systems to the cloud or individuals using Apple's cloud based services. It's nearly become a consumer staple to have your technology in your pocket. So those businesses remain very strong.

Where we saw the weakness was in ad revenue. And these are companies that are, at this point, less leveraged to increases in ad revenue than social media platforms, you know, really rely on. Like a meta. That's the first thing, right. The first thing in an economy that goes is marketing spending. Barton, final word to you.

Are there safer places within technology to be if we're in a recession? Well, I think there's certainly less expensive equities with also great kind of moats and great stories. The one that I'm recommending in the large cap internet is Alphabet. And yes, there is ad exposure. But the other side of that is that they'll have a nice recovery when we come through this and people anticipate it. You know, so that's where I'm putting my money in the big cap Internet plays right now. Got it. It also had a good week up almost 8 percent. Tim, let's go. Barton Crockett, appreciate it. Good discussion to you both.

Up 321 on the Dow. And tonight, don't miss a CNBC special, The Tech Trade, hosted by our dear Drabosa, featuring ARK Innovation CEO Kathy Wood, Dan Niles, and more. Remember, he said that he was pretty negative on these names on Monday when he talked to us, that he was shorting a bunch of them. Didn't work out too well for him. Look forward to hearing from him later tonight at 6 p.m. Eastern on CNBC. Well, it's been a strong week for tech, but a rougher one for retail. After warnings from Walmart and Best Buy. Up next, we'll discuss the consumer landscape with the CEO of Columbia Sportswear.

We'll ask how inflation and inventory issues are impacting his business. We've got nearly every sector positive. Energy, consumer discretionary, and industrials lead. Staples and health care are the two ones that are lower. We'll be right back on Closing Vow here on CNBC. Check out today's stealth mover, WW Granger. We don't talk about that enough. One of the top performers in the S&P 500, the industrial product supplier,

which sells everything from safety helmets to power tools to janitorial equipment, beating earnings estimates, raising its full year guidance because higher prices and sales volumes were able to offset the significant impact from a depreciating Japanese yen. Big deal for this company. Stock up almost 8 percent. Turning to retail, Amazon jumping after reporting earnings, beating on revenue, predicting sales could soar 17 percent this quarter. And then today, consumer sentiment ticked higher from its initial reading. But a different story this week from brick and mortar names. Remember Walmart, Best Buy, both cutting their profit forecasts in part because of an

inventory glut that follows Target's big warning back in June. So for more on what's happening with the consumer and retail, let's bring in Columbia Sportswear CEO Tim Boyle. Welcome back, Tim. Nice to see you. Thanks, Sarah. It's great to be here. Just going through your results, you did see sales growth, but it was a little bit worse than expected. And you did lower the profit outlook. So what is happening from your consumer? Well, it's always good to remember that second quarter for Columbia is the smallest quarter of our year. So, you know, certain numbers can skew the thing differently occasionally. But what's happening is for us, you know, China is an important market for us. We obviously have concerns about whether or not we'll be able to have our business open there all year. We also

have a solid business in Russia, which is now outside of our revenue estimates. And the U.S. dollar is strong. And, you know, most of our current most of our businesses outside the U.S. are all dollar denominated. So there'll be some pressure there. And then, you know, we were all talking about what the consumer is likely to do in the future. And so we just wanted to make sure that we were we were reflecting that conservatism. You did see nine percent sales growth in the future and so we just wanted to make sure that we were we were reflecting that conservatism you did see nine percent sales growth in in the u.s which was which was healthier than the than a lot of parts of the world are you seeing a slowdown a trade down any big changes well we have solid growth plan for the balance of the year and our expectations are to continue to grow through 23 but you But our numbers had been so significant

over the last several years that we just wanted to make sure that investors knew how we were thinking about the business and that we had a focus on making sure that we were profitable in addition to growing. What about the promotional environment? Are you anticipating that that picks up at all? I ask because it's been all inflation all the time.

Yeah, we had almost no promotional activity either between our DTC business or our retailers business as well over the last really 18 months. And so our expectation is that there will be more of that. So, you know, we're making sure that investors know what our thoughts are in terms of how we approach that. But you are anticipating more promotions? Yes. What about the Sorel brand? Sorel, I should say. They're very fashionable.

I have a few pairs of those boots. Growing double digits. Why do you see a distinction in that group? And what does it tell you about what consumers want right now? Well, you know, it's interesting if we'd follow the Sorel brand from our purchase of it, and it was a number one winter boot brand for men in Canada.

And if we follow the acquisition of that brand since we've had it in 2000, it's really been converted into a women's fashion footwear brand, where it's about 70% of our product is women's fashion footwear. And it's all functional, but it's all great looking. And what we found is that, frankly, women buy more footwear than men and they buy it more year round. I could have told you that. Yeah, well, it's worth we're slow learners here in Oregon. So but it's it's been a great business for us. Very high growth. And the opportunities in that business in a year round basis are enormous. And then what about the supply chain, Tim? You have been dealing with issues and bottlenecks before. How has it

been looking lately and what do you expect? Well, the supply chain issues consistently extend into this year, to 22, and likely have some impact in 23, although we expect it to moderate. Prices on containers are still high. You know, there's the issue of collusion in that area where all the steamship companies are making sure that they're all together in terms of pricing, which has been challenging. But we expect that the supply chain issues

are still gonna persist throughout the rest of this year. Have you raised that? Is anyone looking into that? I think the, yes. I think the administration is spending time on it. We believe that it's frankly not been high enough priority, but we understand that the Federal Maritime Commission is in fact looking into these issues. Well, Tim, thanks for joining us with all the color and commentary. It's always good to hear from you.

Great to talk to you. Thank you. Columbia Sportswear, I'll show you where we are in the markets just about at the highs of the day right now with 40 minutes left of trading. 1% gains at least all around for the Dow. The S&P up one and a half. The Nasdaq up 1.9%. We are capping off a very strong week and a very strong month of July, which is the best month for a lot of these major averages since going back to 2020. We're looking at gains for the week of more than four and a half percent for the S&P. Up next, the disaster of the day, though, is Roku losing a quarter of their value. Those shares after earnings and guidance came in light. We'll talk to an analyst who just slashed her target by nearly 50%.

And as we head to break, check out some of today's top search tickers on CNBC.com. Amazon gets the top spot today, unseating the 10-year. That's what an 11.4% move will do on Amazon off earnings. The 10-year, though, is number two. Buying today, more pressure on yields. $2.66 is the 10-year. That's helped the technology trade and stocks overall rebound this month. Apple's up three, almost and a half percent off earnings. And then the two earnings losers, which are Intel and Roku. We'll be right back. Take a look at shares of Roku. The stock is plunging now down more than 23 percent. It was a miss on the top and bottom line for the second quarter. Roku blaming macroeconomic conditions like

inflation and supply chain. The company also took a hit from slowing ad spend. Joining us now is Evercore ISI analyst Shweta Kajoria, who just downgraded Roku, cut her price target to $75 down from $140. Shweta, welcome. It's good to have you. A lot of the analysts actually stuck with their bullish views on the company and on the stock, especially after the conference call where Anthony Wood went to great lengths to say that this is temporary. It's what you would expect to see in a difficult macroeconomic environment, which is businesses cutting back on ad spending. Why did you see it as a game changer? Well, because thanks for having me because of a few reasons. One is that Roku is facing almost like a double whammy of not only slowing top line growth, but at the same time, they are continuing to invest, although now at a slower pace, which is giving them a huge headwind to their profitability.

In this type of an environment where demand trends are slowing and profitability is nowhere even near the levels that we thought they would be, it is hard to be behind a business like that, at least in the near term. Just at a high level, we think that Roku probably will continue to face challenges at least for the next three to four quarters. Our price target is a one-year outlook. And so if we are not going to see any meaningful catalyst in the near term that could be tailwinds for this business, then we see opportunities elsewhere, like a Google, that is arguably more resilient, higher quality advertising platform at a good valuation than Roku. Doesn't mean that we

may not change our outlook when the market and the macro environment is a little bit more friendly to the business. So it's just that they're more vulnerable. Because I was going to ask, if it is just all about the macro environment and the ad spending, then how do you take this Roku report next to the Meta report and Snap, which was also a disaster? It feels almost company specific in terms of who's getting hit on the ad spend pullback. It is. And the one thing I want to highlight is it doesn't seem like it is a structural issue within the business that Roku is facing. It is a macro issue. But Roku is having the bigger brunt of it, is taking the bigger brunt of it and having an outsized impact because, one, they also face supply chain issue. Two, they have a greater skew to scatter market, which is large majority of the ad dollars are derived from scatter market, which is very soft.

Three, they don't have a very strong exposure to perhaps travel, for example. And auto and CPG are still weak, not just for Google. They have travel exposure. And four, there is inflationary pressure, which impacts their costs as well. And so it's a whole host of issues that are impacting their top and bottom line that Roku is seeing an outsized impact from these headwinds right now. So they're going to reduce operating expenses, namely headcount, right, and growth, content spending. How does a company like this that's going through that do that without hurting future growth prospects? Well, that's a great question.

I mean, they are slowing down their operating expenses. But if we keep it in context, it's still very elevated. I mean, for context, we are estimating them to spend almost $2 billion in operating expense. That is very high for a company this size when the revenue is around $3 billion. And so, yes, it's a slower than expected growth in operating expenses, but by no measure or by no means I would think that these are reasonable operating expenses. These are investment-level operating expenses. They were expecting EBITDA of about 150 million athletes for this year, and now our estimates are, they withdrew their guidance, but based on their commentary, our estimates are for 90 million in EBITDA losses. So the pace of operating expense reduction is going to be key in a market where investors are increasingly looking for free cash flow and EBITDA and profitability.

Well, you describe why the stock is down 23 plus percent today. Shweta, thank you for joining me. Thanks for having me. On your action. Up next, PIMCO's head of public policy, Libby Cantrell, discusses how Wall Street and your investments could be impacted

if the new reconciliation bill this week creates a corporate minimum tax, closes the carried interest loophole. If that does become law, what it means for your portfolio next. Take a look at the tech heavy Nasdaq. It is now surging two percent here into the close highs of the day, just adding to what has been strong gains all week long, up almost five percent for the Nasdaq. And the month, it's up almost 12.5% for the month of July. Now, keep in mind the context here.

It's still down 20% or so year to date and about 24% off the highs, but making up a lot of lost ground today, the week, the month overall. And today, you can really thank the strong earnings from Apple and Amazon sitting right at the top of the Nasdaq. But it's lifting a lot of the cloud names. Datadog, for instance, which has been hammered in this bear market, it's up 6 percent. Tesla is up 5 percent. So a lot of winners today. What's lagging in the Nasdaq? It's Intel off earnings. It's Comcast with some follow through off of yesterday's earnings report.

Zoom Video also not playing a role. But otherwise, it's a big rally for big tech today. Washington has been a key focus for Wall Street this week. The latest GDP print showing a second straight quarter of contraction. At the same time, Senator Manchin and Senator Schumer reaching a deal on the newly named Inflation Reduction Act. And we saw a win for the semi-industry after the CHIPS Act passed Congress. Joining us now for what all this means for investors is PIMCO Head of Public Policy Libby Cantrell. Libby, it's a great week to talk to you. First of all, the name, the Inflation Reduction Act, this is the old Build Back Better plan. Do you guys at PIMCO actually think

that it is going to reduce inflation? It's almost like a gimmick after Senator Manchin was so worried about inflation, them calling it this. Yeah, that's right, and good afternoon, Sarah. I mean, gimmick after Senator Manchin was so worried about inflation, them calling it this. Yeah, that's right. And good afternoon, Sarah. I mean, I mean, not only is Senator Manchin worried about inflation, but basically every Democrat, every member of Congress, every senator running for reelection in November is worried about inflation. So you will hear them point to the Democrats point to this a lot in terms of hoping that this will reduce inflation. I think that the bottom line is that this is not likely to be all that impactful in terms of the reduction of inflation, particularly in 2022, particularly in terms of the run up to the

midterm. So I think the bottom line is, well, you're right that this could be just sort of a gimmick and it could actually be have sort of more of an impact on inflation sort of down the road. It is not likely to move the needle in terms of reducing inflation in the near term. Is it likely to pass? Does the CHIPS Act passing make it more likely that this could could get a shot? Yeah, it's I mean, it's interesting. I think, you know, the sort of the consensus in Washington was that even though, you know, chips had kind of gone through its own trials and tribulations on Capitol Hill, that it was very likely to pass. And obviously it did yesterday and will be signed into law shortly.

I do believe that this will pass. We've actually been sort of out of consensus here, thinking that there would likely be something done on the reconciliation bill. I think there's just way too much momentum right now. Of course, everyone's looking at Senator Sinema from Arizona. She's been quiet on whether she'll support it. But I think the bottom line from kind of a from a market's perspective, Sarah, is that this is very likely to pass. It may be changed, sort of tweaked at the very margins, maybe around carried interest, maybe not. But I think the bottom line in terms of the climate, the renewable tax incentives, the pharmaceutical drug provisions, all of that is very likely to pass with relatively high odds. So then we get into winners and losers.

Clearly, the solar stocks, we've covered a lot here. We talked to Sanova's CEO yesterday. He also thinks and hopes this will pass. What else is PIMCO saying about who could be beneficiaries and losers of it? Yeah, so, I mean, this is really kind of an all-above-energy bill. So, of course, renewables are very much in focus, as you mentioned, solar, wind, hydrogen, nuclear, geothermal. There are some things that are punitive for the fossil fuel industry related to sort of methane fees and what have you. But there are also some pretty sort pretty nice provisions here, some pretty positive

provisions for the fossil fuel industry, whether it relates to sort of the permitting, whether it relates to allowing for more drilling in federal lands. So I think in some ways there's a lot to like in sort of every sector of energy in terms of this bill. In terms of the losers, the clear losers are the pharmaceutical companies as it relates to allowing for Medicare to negotiate drug prices. This is, I think, pretty much priced in. However, this has been sort of expected that if anything passed, it would be that provision. So, again, probably not very much to do as it relates to that industry, but they are going to be the clear losers going forward

in this if and when this bill passes. And private equity and hedge funds, if carried interest moves, if they get rid of it. Yeah. So and just to be, you know, there is some more nuance here. The carried interest loophole is not completely eliminated. That's just the time period for to to to receive that that more favorable tax treatment is extended from three years to five years for PE firms and hedge funds. So it's not completely closed, despite some of the rhetoric coming out of the various Democratic offices. But it is extended and it is more punitive for that industry, for sure. Libby Cantrell, thank you for joining us. I appreciate it. From PIMCO. Here's where we stand right now in the market, still holding on to gains, actually charging forward here with the Dow up 363 points.

The S&P up 1.6, and there's the Nasdaq now well above 2% on the session, final day of the month of July, ending with a bang here. And it's thanks to energy, which is having also a good earnings day with Exxon and Chevron, thanks to the big tech like Amazon, which is now up 12 percent. Up next, the CEO of Spirits Maker Diageo and whether he sees any signs of a spending slowdown from higher end consumers. We'll be right back. In today's big picture, more signs the luxury consumer is, well, booming. Hermes, home of the $10,000-plus Birkin bag, reporting 19.5% sales growth and a record 42% operating margin in the first half of the year. U.S. and Europe were the bright spots. It's watches, accessories, shoes, and turns out alcohol, too. Diageo, which makes Guinness, Smirnoff and Johnny Walker, saw double digit increases and continues to expect growth. What's behind it? Well, the CEO told me it's spending on premium brands, the good stuff.

The premium end of our portfolio is growing faster. The top one third of our business is the fastest growing part of the portfolio as people are drinking better everywhere in the world. And he also told me he expects the trade up to premium products will continue. Continue to see positive trends on premium brands growing faster. So in the U.S., tequila brands are really strong. Johnny Walker's had a great year, strong double-digit growth. Bullet Bourbon doing well, Crown Royal Whiskey, right across the portfolio, Kettle One Vodka.

He also sees resilience across the board, even if the U.S. does enter a downturn or recession. There is more resilience here, in part because it's an affordable luxury. The average American household spends for at-home consumption about $330 a year, a dollar a day on spirits. You're buying Kettle One vodka

a few times a year, a bottle of it. Only a dollar a day. Bottom line, we are hearing more evidence that the low-income consumer is holding back purchases as inflation bites. But for these luxury companies, it's still boom times. Watch U.S. luxury plays Ralph Lauren, Tapestry, Capri. They're all going to be reporting results in the coming weeks. Up next, bespokes Paul Hickey discusses whether a strong July for stocks will be able to carry over into August. He always has some good stats on the seasonals. That story plus Intel plunging and a pair of oil giants rallying

when we take you inside the market zone with the Dow up 350. With the Nasdaq surging more than 2%, we are now in the closing bell market zone. Bespokes Paul Hickey is here to break down these crucial moments of the trading day. Plus, Wedbush's Matt Brayson on Intel. Pippa Stevens is here on Exxon and Chevron. But first up on the markets, final trading day of the month of July. Major averages in the green. It's been a good month for the bulls. Nasdaq's up more than 12.5%. The S&P 500 up more than 9%. The Dow up more than 7%, which raises the question, Paul, you know, the bears will say it's a classic bear market rally. Those can be some of the most powerful. Bulls will say we've put in a bottom.

Which is it? You know, I think you have to look at this week and be really impressed. We had the four mega cap stocks, Amazon, Apple, Alphabet and Microsoft all report. They have never reported in the same week going back to 2015 and all had positive reactions. Normally they trade down when they all report in the same week and the market runs into trouble. But this week we saw the complete opposite. And I think it was just a function of sentiment being so low in the market that you tend to see when things get washed out like that, there's only one direction things can go. And I mean, we've seen that with earnings overall throughout this earnings season. Coming in, the tech and consumer discretionary sectors had the highest pace of

negative revisions coming in through this earnings season. And now we're closing out the month. And those are the two best performing sectors in the market this month. So we've seen pretty encouraging results in the earnings, which makes you think that this could be a, you know, that the lows may be in. You tend to see, you know, we've seen guidance numbers equally split between raised guidance and lowered guidance, which coming into the earnings season again, no one was thinking we'd see companies raising guidance because the outlook was so uncertain and there was, you know, no incentive to step out on a lurch, step out and and stick your neck out. But what we've seen is companies that have had a number, have had confidence to raise guidance in a lot of situations and stock prices are reacting positively. So you see this as more than just sentiment and positioning? Yeah, I mean, I think it's justified. Yeah, I think we've tended to see,

you know, the results are sentiment was so low, the expectations were so low, and companies are actually reporting decent numbers. So I think in the next couple of weeks, who knows what goes on. But longer term, a lot of the things we look at are pointing to, you know, the historicals and the seasonals are pointing to better markets ahead. Well, let's hit Apple and Amazon in particular because both are big winners today, especially Amazon, after posting strong quarterly numbers. Apple beating on the top and bottom lines. The company weathered supply chain constraints. They weathered the shutdowns in China and worries over a softening consumer.

iPhone sales proved resilient, actually grew. Amazon also up sharply, adding over $120 billion in market cap just in today's move alone. Revenue growth there came in faster than estimates, partly thanks to continued strength in the cloud. But also, I thought the retail business, Paul, on Amazon was particularly surprising, especially because Amazon expects a step up, which is just amazing at the same week that Walmart is warning on profits and a changing consumer. How do you square that? Well, so, I mean, we've said it, you know, at the risk of sounding like a broken record, if there's anyone that's going to weather this, all this macro

environment and get through it just as strong, if not stronger, it's Amazon. And they have the Amazon cloud services, which acts as a big cushion. It's growing at over 30 percent, and it's a 20 billion quarter revenue run rate. And I mean, look at Walmart this week. I mean, after that enormous decline, it's gained it all back. So again, that kind of situation where you're seeing investors looking beyond the bad news and buying the weakness and just going back to earnings again, we've seen companies gap down initially in reaction to earnings in aggregate and then rally from the open to close and finish higher on the day. So and Walmart is just a very extreme example of that.

Let's hit Intel as well, because Intel shares are under some serious pressure today. Missing estimates across the board. Revenue missed consensus by roughly 14 percent. That was the largest miss since 1999. Shares touching a five-year low today. Intel CEO Pat Gelsinger was on TechCheck earlier today. Here's what he had to say about what happened in the last quarter. We missed yesterday. We own that. And, you know, a lot of that was the economic, but a lot of that was us and our execution. You know, we're being put firmly accountable for that to our shareholders. Yes, I need to do better. We need to do better and we will do better. Joining us now, Wedbush Securities Analyst Matt Bryson has an underperformed rating on the stock, lowered the price target today to 35 from 44.

Matt, and you called it results and outlook equally terrible. What's the problem here? I think Matt just said it. It's partly they didn't execute it's partly it's a very difficult macro backdrop where you have the consumer stepping away from purchases and you have enterprises where spending hasn't necessarily slowed but suppliers into enterprises are concerned spending will slow and so they're cutting back inventory which in turn is hurting Intel. Investors have wanted to look for a bottom in this stock for a while, especially in periods where value and underpriced stocks do better. You're clearly not willing to go there yet.

Why? What do you see in front of Intel? So on the execution side, you just heard Pat Gelsinger say that we didn't execute. To some extent, that is not on him. That is on his predecessors. It takes a long time to turn manufacturing around. And Intel has laid out a path to resuming competitiveness. They don't get there till 2024, 2025. And so the struggle on my side is

how do you get more optimistic around a name where things will get better potentially, but we are still a long ways out in a difficult macro environment. It's sort of an interesting juxtaposition because Pat was so out front on the CHIPS Act and so bullish on building an American. He has this plan in Ohio. They're going to spend $20 billion. He got what he wanted. And I feel like they've been all over it. And that's been part of the story, Matt. So how does that factor in with the weakness that they're seeing now? Yeah, I think it's two different things in the sense that what he's trying to build or rebuild is Intel's manufacturing prowess. And to do that, Intel has to spend.

And so part of the struggle is their increase in spending is making up for the deficits that were created under the past few administrations. And with the U.S. willing to subsidize chip manufacturers, that is helping them in that task. But at the same time, it just takes time. They've fallen behind. They need to catch up. Again, that's a two to three year process. And I don't think there's much that you just can't fix that regardless of how much money you have overnight. Got it. Matt Bryson, thank you for your quick take on Intel from Wedbush. Want to hit energy. It's the top performing group right now in the S&P. Pair of oil giants helping out here. There they are, Chevron and Exxon. Chevron's a top performer

right now in the Dow, easily beating earnings estimates, increasing the top range of its stock buyback program by $5 billion. Exxon, meanwhile, reporting stronger than expected. Bottom line, actually missing revenue estimates. Earlier on Squawk Box, Exxon CEO Darren Woods discussed the outlook for demand amid these rising recession fears. There is some elasticity in demand. So we did see some impact in moderation and demand, but continue to believe and see growth overall and products as economies continue to recover. Pippa Stevens joins us. Pippa, not sure these what record profits and higher buybacks are going to help buy them political goodwill. The White House has accused them of prioritizing profits above all else. What did we learn here? Well, Sarah, during this record quarter for both

Exxon and Chevron, both companies were quick to note that they are increasing output and they are trying to alleviate some of the burden on consumers of these sky-high energy prices. Mike Wirth at Chevron said that Permian production is up 15 percent compared to last year. Darren Woods at Exxon said that they're bringing an additional 250,000 barrels per day of refining capacity online by the first quarter of 2023, which would be the largest addition in the U.S. in more than a decade. And look, these companies know that they are under fire for these record profits. And typically when companies do report a record quarter, it's the first thing you see.

But this morning at the top of both of their earnings statements, they did not note that these were record earnings. So they are well aware that they are kind of under attack, really, by the administration. And while Exxon's $17.9 billion in earnings this past quarter is a record, you have to remember that in 2020, the company lost more than $20 billion. So while they are increasing output to a certain extent, you know, they remember what it was like two years ago. And so nobody is rushing to open the spigots in a way that you would have previously seen when oil was at 100. Good perspective. Pippa, thank you. Pippa Stevens. Paul, what do you do with the energy names?

Do you buy it because they're having quarters like this on the tight supply? Or are you more wary because of recessionary concerns and what that will do to demand? I mean, the energy sector has had an enormous run. The stocks have pulled in a bit. They've come back to earth a little bit here. But as Pippa was talking about, they've been very disciplined in their spending here. And as long as they remain disciplined, I mean, Chevron is spending 25% less than it was in 2019. So they're being very disciplined. They've pulled back a little bit.

If oil is going to remain at these levels, the energy, you certainly want to have exposure to the sector. Maybe not after today, after Chevron has had its best earnings reaction day in 20 years. But, you know, as these stocks consolidate, you want to stick in there and have exposure. Two minutes to go in the trading day. It looks like we're going to end here on a high note to what has been a high month. And Paul, we've talked a lot about technology this hour, but it's not just technology. It was pretty broad based. And I wanted to highlight the cyclical parts of the market. The transports today having a great day up about six percent for the week, up really nicely for the month. Gal transports up eleven point three percent. So so the question

goes beyond just do you want to get back into growth and tech, but cyclical at a time where there are a lot of worries about the economy. Yeah, I mean, that's a great question. You look at the headlines today and you're thinking to yourself, why is the market rallying after the second straight quarter of negative GDP? But what you have to remember as an investor is what's going on in the headlines today was happening in the market six months ago. So the market has already priced all this in. And then what you have to look forward to now is how is these Fed rate hikes going to impact the economy? If we see better inflation numbers, the Fed may take a wait and

see approach over the next few months. And that would be great for the cyclicals. And when you have historically seen two straight quarters of negative GDP, eight out of nine times since 1950, the S&P was higher six months and 12 months later. 12 months, the median gain was actually 30 percent. So I think having exposure and these sectors rallying isn't unheard of. All right. We'll end with that great stat. Paul Hickey, thank you very much. Dale Serging here into the close-up. 3.23. Chevron is the biggest contributor to the Dow gains.

S&P up 1.4% on the session. Energy is the leader, along with consumer discretionary. That's an Amazon and Tesla story. Technology and the NASDAQ doing quite well, up almost 2% on the day. Apple also a huge earnings winner. And that has been the story of the month, where we are going out with our best month of the year for July. Best month since back in 2020 for the S&P and the NASDAQ. That's it for me on closing.