Closing Bell - Stocks Soar, Slowing Pace & Turning Bullish 7/27/22

Episode Date: July 27, 2022

Stocks staging a big rally after the Federal Reserve raised interest rates by 75 basis points to fight inflation and hinted it could slow the pace of its rate hikes. Fmr. National Economic Council Director Gary Cohn discusses whether he thinks higher rates are helping to cool inflation and slow economic growth. Plus, he explains why he is more of a buyer than a seller in this market. Jefferies Chief Market Strategist David Zervos says he is also turning bullish and thinks the market could rally into the end of summer. And Ally's Lindsey Bell reveals whether investors should buy shares of Meta ahead of its earnings report.

You're listening to Closing Bell in Progress. Fed Chair Jay Powell wrapping up his news conference after hiking interest rates, three quarters of a percentage point, 75 basis point as expected. The market is in celebration mode after that presser right now. We're at the highs of the day on stocks. Dow's up almost 500 points, S&P 500 surging about two and a half percent. The Nasdaq higher by more than four percent right now. Why? Fed Chair Powell acknowledged the softness in the economy. We got that first in the statement, but he really did drive it home what he's seeing in terms of consumer spending, business fixed investment, housing weakness,

even acknowledging some of the weakness right now in the labor market. And importantly, he did not pre-commit to what the Fed would do on rate hikes for September. I thought one of the key moments was when Fed Chair Powell said another unusually large increase will depend on the data. And the next meeting is in September, and there's going to be a lot of data between now and then. Joining us now, as he always does on Fed Days, former National Economic Council Director Gary Cohn. Welcome. Thanks, Sarah. Glad to be here. It's the Gary Cohn rally. Every time the Fed chair talks, the market rallies. Was it just a lot of the hiking news is baked in and now the path goes the other way? I think the news was baked in. I

think the market had anticipated some pretty poor earnings out of the tech sector this week. We got through some crucial earnings yesterday. We've got some more this evening. So we're going to have to get through those as well. But I think the chairman himself sort of came out with a fairly dovish statements. You know, he talked about us being sort of in the neutral range. He talked about the last dot plot being still relevant, which is the three to three and a half range. So if you take the three to three and a half range and you take the three remaining meetings, it doesn't sound like 75 still on the table, although he emphasized that everything's still on the table. You know, to get the three and a half sounds like a 50 and 225s. So he, in many respects, said that monetary policy is working. And in many respects, it is. They said that out of the box.

They said that we're starting to see some slowdown in the economy. We're starting to see it affect the consumer. We're starting to see it in the housing market. We are seeing it in corporate earnings. So I think the chair was trying to say, look, we're seeing the data. What we're doing in monetary policy is starting to have an effect. We happen to have the luxury of not having a meeting for two months right now. And we'll see what happens over the next two months. So the data dependence is what is bullish right now for the market, because the market assumes that the data is going to turn weaker between now and then, as we've been seeing.

I did think that statement was interesting. The new funds rate, he said, is right in the range of neutral. I don't know if he meant to say that or not, or if it's going to come back to haunt him. But what does that signal? Well, it's exactly what he said. He said it's right in the range of neutral. Then he literally went on to say that the three to three and a half range is still the forward guidance for year end. He went on to say three, three and a half for year end. Which gives us smaller rate hikes, to your point.

Which gives a couple of small rate hikes in there. So I think he was telling us that his forward guidance that they gave us last time officially is still where they see it, although he did say that we'll see where the dots come out next meeting. But I think that was a reassuring statement. That was the statement where the markets really took off when he said we're in the range of neutral. Reassuring if you are rooting for fewer hikes and you are worried about the economy. What if you're worried about inflation? Well, interestingly, you know, there was something in here for everyone, of course. The initial statement in the prepared remarks, right out of the box, the chair talked about inflation, the resolve to fight inflation and that they have the tools to fight inflation. And he reaffirmed their two percent target.

So he came out initially and talked about a hawkish statement, dovish, nooser. Right. We're going to we're going to get to 2 percent and we have the tools. And then as the conference went on and he started answering questions, he sort of backed off the aggressiveness of rate hikes being needed to get to 2 percent. He acknowledged that the rate action they've taken right now is having an effect, which they also acknowledge in their prepared statement. So they are seeing some slowdowns. The one place they're not seeing slowdowns is in the job market. We still continue to see fairly significant gains in labor.

We still continue to see significant gains in wages. So the one part of the economy where we're not seeing the rate increases really have an effect is in the labor market. Although he acknowledged it. We're starting to see modest, slower job creation, still robust. But he did say it's why he doesn't think we're in recession. Yeah. And we've seen many companies come out and talk about the fact that they're curtailing hiring or they're laying people off or they're stopping to grow in terms of headcount. So I do think that the market and the corporations and the big hirers are starting to slow down hiring. So I think he sees that the

way a lot of us see that, that the hiring is lagging through the system, but we will see the labor part of the economy start to slow down. Though I don't think he gave a specific pain threshold on that front. He did not. For jobs, for the economy, acknowledged all the softness that is starting to happen. He did. Didn't really say what would change their tune on rate hikes, did he? He did not. He did not. And that's the key question. But the market is assuming here that that it's going to be slower. The debt we're now at 571. Jumped another 100 points since you started talking. Well, you started talking. In an interesting turnabout, when he got pushed on the recessionary question, are we in a recession or not?

The chairman defended that he does not believe we're in a recession. And he did use the strong labor market as one of the foundational blocks of why we're not in a recession. You can't be in a recession. He tried to argue that you can't be in a recession when you have 11.4 million job openings in the United States. And we still see robust jobs and we still see fairly robust wage growth in the United States. That's not a recessionary component. Do you agree with that? That's what the White House is arguing. I do agree with that. Yeah. Well, let's, Gary, stay with us, of course. We want to bring in our senior economics reporter,

Steve Leisman, who, of course, was part of that news conference with Chair Powell, asked a recession question as well. Steve, what were your takeaways? I think I was one of the several reporters that the chairman just shut down in talking about how policy change. I feel like my nose almost got hit by the slamming door when Powell just basically avoided my question and that of others, which was about how policy may or may not change if we do indeed have a slowdown. I asked if it was a bright line. Let's play what he said in response to it. I think it is interesting what he talked about, what he expects to happen with growth down the road.

We actually think we need a period of growth below potential in order to create some slack so that so that the supply side can catch up we also think that there will be in all likelihood some softening and labor market conditions and and those are those are things that we expect that and we think that they're probably necessary if we were to have to get inflation we were to be able to get inflation back down on a path to 2% ultimately ultimately get there. So rather than be angry about not being answered, I think the question is why? Why is the chairman not addressing this issue?

And I think the issue is he may have some concern about the state of financial conditions right now, which if you look at the Fed Red Outlook, guys, you see that the market has these cuts built in down the road. The chairman has this inflation fight on his hand he does not want inflation sorry financial conditions to ease and so he wants to avoid any talk at all about what might happen to policy in the event that there is a recession or a more severe slowdown he is staying on point i think is the way to put it when it comes to this idea that right now inflation is the problem in front of us. Inflation is the problem we're addressing. And if there's other problems to address, we'll deal with those later. I guess. But but, Steve, that's not what the market reaction is telling us right now.

At least bonds are rallying big time. The dollar's weakening. Financial conditions are easing. The stock market is rallying because they're because they're reading his words about data dependency, about the fact that we're at the neutral rate, the fact that he said that there's still a lot of tightening in the system that is yet to hit the economy. All of that taken together, the signal to the markets is, well, maybe we've seen the biggest rate hikes that we're going to see this cycle. Yes, I think that's right, Sarah, about the biggest rate hikes. But I don't think it's the end of actual rate hikes. And there's still a substantial thing, substantial question. He talked about getting to that, what did he say, three and

a quarter, three and a half percent range. I think that's where the Fed is headed. And I think if the market thinks the Fed is not heading there, I think the market may be making a mistake. The question becomes what? No, but Gary's point is, even if it heads there, we head there by year end. Those are smaller rate hikes. Did we get three more meetings this year? Oh, there's no doubt about that. No doubt about that. But the question and the debate right now, Sarah, as you know, is about what happens

afterwards. What happens? Is it three and a half to four? Or is it three and a half as the market is priced back down to three? As you know, Sarah, because I know you talk to the same people I do in this regard, there are some people out there that think the Fed has to go much further than that. And Chair Powell is not talking about that situation right now. No, he's not. Steve, thank you very much. Steve Leisman. So do you think we go higher than that? Do you think it's going to take more than that to tame inflation?

Look, I don't know. I mean, I think we are in this situation where we know that the rate hikes do take time to filter through the system. The places where they hit immediately, which is consumer credit and long dated mortgages, we are seeing the impact very quickly. So other parts of the economy, we know that for the rates to affect the economy, they do take time to get through the system. We've had some fairly large, we've had consecutive 75 basis point increases in the system. We have to see them filter through. So as I said, the chair has the luxury right now of literally eight weeks till they meet again. Two TPI reports, two jobs reports. Two of everything. He's got the luxury right now of waiting to see another eight weeks to see how this increase, as well as the prior increases, filter through the system. We'll get through this quarterly earnings cycle. We'll see what the markets do.

We'll see what financial conditions do. And we'll come back. He left himself an enormous amount of wiggle room. He did say three and a quarter, three and a half. But then on the question of, you know, how did you decide on 75 basis points? He clearly left himself open for any rate increase he wanted. He said, you know, I could go to 100. He said, I can go to any number I want.

He didn't take anything off the table. He left 100 basis points on the table and he left 25 basis points on the table. The problem is the economy has now started to soften in various parts of the economy. And I do wonder if he's going to get more blowback from the public, from politicians. Earlier today, I interviewed Senator Elizabeth Warren. She had the op-ed this weekend. Her point is the Federal Reserve should not purposely take us into recession and increase joblessness, especially if they don't have the full tools to address inflation.

Just listen to what she said. Increases in the interest rate won't fix any of those. And Jerome Powell has actually admitted that in testimony before Congress. And yet he continues to drive forward with what so far have been historically fast, aggressive, high interest rate increases. So if it's not going to help bring down a lot of the prices in our economy, what it can do is actually pitch this economy into a recession. A lot of people do agree with her that he should not be going so hard at a time where the economy is weakening. You know, I took the other side, obviously,

because the Fed can affect demand and it's clearly working. You're seeing commodity prices fall across the board and inflation is a problem. But there is a school of thought that why would we want to wreck this really great jobs market? Well, there's a lot to unpack there. So I'll go a little bit on it. So first of all, this is a question that we've talked about. Is this a demand issue or a supply issue? And if we're just raising rates to kill off demand, but we really have a supply issue, it's not going to have an effect. A little both, right?

So there's a little bit of both. But we know there's a supply issue. We know that on the commodity side, there's a supply issue. We look at what's going on with natural. We're talking about the great thing that's happening in the oil market and the gas market. But what's happening in the natural gas market? As supply tightens up there, we're seeing record high natural gas prices. So there is this debate on supply versus demand.

There's another debate here on the Fed's mandate. The Fed's mandate is not made up by the Fed. It's another debate here on the Fed's mandate. The Fed's mandate is not made up by the Fed. It's hard. Exactly. So if Senator Warren wants to change the Fed's mandate, they can change the Fed's mandate. But right now, Chairman Powell is executing on the instructions he has been given to go after and try and have normalized employment growth and normalized prices at 2%. So he is effectuating what he's been told to do. He's not making up the rules by which he's playing. So final question, and we asked you the same thing last time when you were here,

whether you're a buyer on the Powell presser. Last time you said yes, and stocks are significantly higher thanks to this month's rally since last meeting. What about after today? Well, I think based on what you heard today, it's clearly on the more bullish tone. I think that companies that have missed in any way, shape, or form have been punished by the market. So I think there's still value out in the market. So the answer I have today is the answer I gave you a month ago. I'm more of a buyer today than a seller. Because there are cheap prices and because you like the way the Fed's going? The Fed seems to be forecasting that there's 100 basis points left. As Steve said,

we don't know what's coming next year, but it feels like the impact of higher rates are in the system. They're slowing down. We know they're slowing down certain markets. We know they're slowing down the housing market. We're seeing the consumer move out of goods. We're seeing the consumer move more into services, which is the natural economy. But some of that services is pent up demand. Some of that pent up demand is going to go away. I think we're going to go into a more normalized environment. So I'm more optimistic than negative. You almost sound like you expect a soft landing. I've been in the soft landing camp, although I've said the runway has gotten significantly shorter and it's gotten significantly more narrower. And as the chair

said himself, the path is narrower. The path has gotten considerably narrower the longer we sit with higher and higher inflation. Gary Cohn, thank you as always. My pleasure. Really good to have you on a Fed day. Up next, we'll get much more reaction to the Fed and how it will impact the market when we are joined by Jeffries David Zervos. Highs of the day right now. We're up more than 500 points, more than 4% on the NASDAQ.

That story plus why Chipotle and PayPal are especially big winners when we take you inside the Market Zone. We are now in the closing bell Market Zone. Allied Chief Markets and Money Strategist Lindsay Bell here to break down these crucial moments of the trading day. Plus, Jeffrey's David Zervos on the Fed and this rally. Kate Rogers also joins us on Chipotle. Let's get straight to the Fed fuel jump for stocks. Major averages moving sharply higher. It's broad. It happened during Fed chair Jay Powell's news conference just about a half an hour ago or so. NASDAQ is the biggest winner. It's up more than 4%. But every sector in the S&P right now is higher. It's being led by communication services, technology and consumer discretionary groups. Utilities is doing the

least best. It's up a third of 1%. Lindsay, did the Fed share and earnings and just everything going on this week, has it changed anything for you in that this rally, which we've seen a nice move in July, could be sustainable? You know, I think that as far as the market goes, we're probably going to trade a little bit sideways going forward. Of course, the news we're getting this week is good news. But, you know, yesterday was a different story. So I think with what the Fed is saying, especially in Powell's conference, he sounded

more dovish than the actual release sounded. So that was good. And I think the markets are reacting to that. We could be coming closer to the end of this Fed rate tightening cycle than we are closer to the beginning, too. So investors see that as a positive, although they're saying that because there is an increased likelihood of us going into a recession, even if he doesn't believe we're in a recession now. So I think we're still on watch. We're going to still be very reactive to any data point that we get, especially regards to jobs and inflation. And I think it's just going to be we're in this kind of wait and see mode. We're going to hear what the Fed says in August at Jackson Hole.

Yes, thank you there. And then we'll get to September. So we have a little more time between between Fed meetings here than we have over the last three months. So we have a little breathing room and I think the market appreciates that. So we've got every sector higher right now. Lindsay, you're the earnings queen. You always go through all the estimates and what we've been getting so far. What do you make of it as a signal for the economy and which groups would you stick with? Yeah, I mean, it's been a great earning season so far, a lot better than what most people have expected. I expected the second quarter, though, to be good. And that's exactly what it is. We're only about 35 percent of the way through,

but we're going to get more this week and next week. Top line and bottom line beat rates are still very good, but guidance is coming down, just as everybody has anticipated. But guess what? A lot of that's been priced into the market. You're seeing actually positive reactions to lower guidance from a lot of companies across sectors. Sectors that I would point out, though, is we are seeing tech, right? We got some numbers last night from Microsoft and Alphabet. They were disappointing, but investors found solace in the fact that Microsoft was able to reaffirm their guidance going forward, and they

sounded more positive on the earnings call. I think corporations are being cautious here, and they're taking the pass from the markets that has already prepared for lower guidance. So they're doing what they've been asked to do. They're lowering their numbers. And we might see a benefit in the second half of the year with these lower numbers and the opportunity to beat them at a faster rate. So that's what I'll keep a watch out for. As far as industries go, I'm looking at consumer discretionary. I'm looking at tech. And I'm looking at health care. Those are three sectors that I thought the numbers had come down going into earnings season. and not just for the second quarter, for the second half overall. And we're seeing the outlooks, even in places where

there are downgrades, we're seeing these stocks react very well. And the consumer has remained strong thus far, too. And I think you heard that. You heard that in a lot of the consumer companies recently, Visa, Chipotle, to name a few. Right. Chipotle is at the top of the market. Alphabet's up eight and a quarter percent right now, leading that group to the top of the market. Also, Meta, which comes after the bell, up six and a quarter. For more on the Fed and the market takeaways, let's bring in Jeffrey's chief market strategist, David Zervos. David, what was your takeaway as it relates to for investors from the Fed chair, particularly that news conference, seem to make more headlines around his dovishness?

You know, I wouldn't go so so far down the dovish path, Sarah. I think there cyclical highs. They're just, you know, they're warming the market up to the idea of what they have to do, which is be tough, bring demand down to meet these limited supply periods. Hopefully those go away soon. And we're getting closer to the end. And I think the most important thing for the market to take away from this was really that we're moving kind of baby steps away from forward guidance. They could have been more aggressive. And I sort of hope they would have been like the ECB did last week and just say, look, we don't know.

We're just going to we're going to surprise you, give you a little bit more. And then we're just going to kind of go meeting by meeting. He did say meeting by meeting, but then he kind of waffled and said, hey, we kind of have this SEP from the last time. That's pretty good guidance. So he hasn't really thrown forward guidance away, but he kind of, he moved it off to the side. And I think they're getting very close to moving forward guidance completely away and just going, not just saying meeting by meeting, but really having a kind of, you know, an open path forward as opposed to where we are now, which I think is still trying to tell the market, hey, we got a 25 and a 50 and maybe another 25 and another 50 before the end of the year. That's kind of how we see it, but we're just not sure. That's a good step forward.

And I think the market likes to see that end game. Right. Well, he did say that it's not going to be as clear with the guidance now that they've now that he says that they're at the neutral point. But then to your point, he did mention the dot plot. Maybe we'll just get rid of that altogether. So what does it all mean for stocks and for bonds and for the dollar, which is increasing increasingly pricing and cuts next year. Yeah the cuts are a little perplexing it doesn't I it's not perplexing in the sense that the market is giving the feds so much credibility they're saying look as soon as

inflation starts to come down these guys are gonna be able to go back to their old ways. Of cutting rates. As as things turned down I'm not sure the feds really going to embrace that. So I think those are a little bit premature in there

but. You know we're we're splitting hairs. Twenty five or contracts, you know, in the next few quarters of 2023. At the end of the day, I think the story is really one of the Fed having earned the credibility to be able to do that if they need to, and the market giving them that. Whether they take it or not is a debatable point. I think they probably won't. But again, this is all kind of consistent with where you wanted to go in the beginning of the question, Sarah, which is what does it mean for stocks? What it means for stocks is that the Fed is got this credible attack on inflation really under control. And Jay's doing an incredibly good job of massaging long-term

yields lower, keeping that yield curve inverted, which I think is a sign of credibility, keeping break-evens on the down trajectory, particularly the forward break-evens, keeping the dollar strong and getting the market comfortable with a modest slowdown and not an aggressive slowdown, hopefully not a recession, but probably a small recession in the end. He won't admit it, but that's probably where their head is. And we're going to come out of this with a couple of scratches and bruises. But at the end of the day, the stocks had priced in a little more than a few scratches and bruises. So they were priced for a little too much pain. And that's why we're seeing the bounce we're seeing. And we talked

about that bounce last time after the June meeting meeting you you know you had gary on you had me on and i think you had um the guy from credit suisse on it morgan stanley morgan stanley he wasn't he wasn't buying it so you're buying it with gary this time yeah you had gary buying me switching from selling to buying and yet you had the usual bear stay embarrassed so i'm I'm sticking with what I said to you last time. I think we made a bit of a turn here. I think we've got a little summer squeeze on our hands. I'm kind of excited about it. I think it all hinges on the Fed credibly

going after inflation and the market feeling comfortable with that move that it's not going to generate an extraordinarily deep cut, but just a few nicks and bruises. David Zervos, always good to hear from you, especially on a Fed day. Thank you very much. NASDAQ's up 4.1 percent. Investors eating up shares of Chipotle after the restaurant chain beat Wall Street's earnings estimates. Higher prices able to offset that increasing cost.

Earlier on Squawk on the Street, our Kate Rogers asked CEO Brian Nickel whether more price hikes are planned. Listen. Our value proposition is tremendously strong. You know, we've talked about this before. We always want to take price as the last lever. But it is something that we've had to do given the environment that we're dealing with. We have shared that we plan on taking one more price increase here in August. And hopefully,

you know, going forward, we won't have to continue to do that. Kate joins us now. Any indication, Kate, that consumers will start to push back against those higher prices? He also talked about what was happening at the low end. Yeah, exactly. And that's something, Sarah, we heard yesterday from McDonald's. So Brian Nichols said they're starting to see some pullback with the lower end consumer, but mentioned that's also not really the core demographic for Chipotle. The higher end consumer is still strong. They do have pricing power to continue to raise in August another 4%, as you heard. That being said, commodity inflation for things like avocados and beef have been very stubborn. So they're being transparent now about the hikes to come.

And as he mentioned, in terms of value proposition for similar brands like a Qdoba, for example, they're still lower priced. And that's one of the reasons that the consumer really has been so loyal. And one other thing I'd mention, they've been able to hang on to their margins, too, even in the face of these rising costs. And investors clearly like to see that today. Lindsay Bell, Chipotle. An example, how do you find companies that have the pricing power and that also have greater exposure to a higher income consumer?

Which if you add that up, potentially that's why the stock is up almost 15 percent right now. Yeah, I mean, that's that's exactly right. That higher and the more affluent consumer, they're able to take on higher prices. And so you're seeing companies like Chipotle be able to pass those higher prices on to offset their higher costs. And so that's exactly what you want to look for in an environment like this. I think we're going to hear more and more of that as we go through earnings season. Even some of the consumer staple companies, which I know you've been covering very closely, they've been able to push prices onto their consumers. It's all about the product that the end consumer and really being in that position where you can take advantage of that and and maintain your margins.

That, by the way, have expanded to historically high levels over the last couple of years. No, it's people need to eat. It's all about what the priorities are right now. The staple is doing well. Kate Rogers, Kate, thank you. Right up there with Chipotle at the top of the market is PayPal. Off this Wall Street Journal report that Elliott Management has taken a stake in the fintech company. The size of that stake, however, could not be learned. Kate Rooney joins us. Kate, the stock has plunged so far this year. We've mentioned before that it could be an activist target. I know that we don't know exactly what Elliott is up to here, but what could be the playbook? Where's the upside? So one upside,

Sarah, PayPal is sitting on about $8 billion worth of cash. So being more efficient with that cash, potentially cost cutting would be another big area that could come in the form of layoffs. They also spend a lot on R&D and sales and marketing. So, Mizuho, for example, estimates they could go from 25 percent margins to a 40 percent margin business. So, that would be the classic activist play here and the playbook here would be to really pull back on spending, improve margins. And then there's also now more speculation about a Pinterest deal. Remember, we talked about that back in October. Sources told us that PayPal had been looking to buy Pinterest. That deal was scrapped. Elliot also owns a stake in Pinterest. So there's some renewed speculation over those two companies

potentially combining. And then the last thing would be management changes. So CEO Dan Schulman does not really have an heir apparent right now. John Rainey, who was the CFO, left to go to Walmart. There is now an interim CFO. They don't really have anybody waiting in the wings. So chatter now about what happens on the management side and Dan Schulman's job at this point. Either way, it's getting investors excited today. Look at that move. Kate Rooney. Kate, thank you. Alphabet and Microsoft both jumping today after earnings last night, as we mentioned. Just a few minutes, we will get results from Meta. Julia Boorstin joins us with the key number investors will be watching for.

So interesting, though, Julia, to see Alphabet not really pull a snap when it comes to advertising falling hard. That's right. Alphabet trading higher because those results were not as bad as expected. Now, for Meta, the thing to watch is revenue. Now this is expected to be the first quarter ever that Meta has reported declining revenue growth. Analysts are looking for a 0.4% revenue decline in the quarter from the year ago quarter. Now we're also watching revenue guidance and how the company expects a couple key factors to depress growth, including macroeconomic uncertainty, challenges navigating Apple's operating system that limits ad measurement and targeting, and also increased competition with TikTok.

Investors are also looking for color on new businesses, such as Reels and Messenger, and when those could start to generate meaningful revenue for the company. Sarah? Got Julia Boorstin. Julia, thank you. Lindsay, would you buy Meta into this report? messenger and when those could start to generate meaningful revenue for the company. Sarah. Julia Boorstin. Julia, thank you. Lindsay, would you buy Meta into this report? I don't know. It's tough to buy into the report.

Obviously, with the numbers that we got from Alphabet, it are a good sign that ad spending at companies like Alphabet with the YouTube platform and potentially Meta, especially with an Instagram platform, could do well. And they're seeing that they could potentially be the share takers from others in the space when it comes to ad spend. So I think that's an encouraging sign. I think when it comes to Meta, look, the stock is really being down. The valuation has come down quite significantly.

And there may be opportunity from that perspective. But I think they have a long slog ahead as they transform the business from a social media company to one that is really focused on becoming the center of the metaverse. So I think it's one to watch for sure. The other big event happening in the next 24 hours is we're going to get GDP on the second quarter. And if it's negative, that'll be two negative quarters in a row. And so some technically will say that is recession, though not the White House and not the Fed share. Apparently, we're 10 percent off the lows for the S&P 500. Lindsay, so how much pain do you think for this economy is factored in already? We're about 16

and a half percent off the highs. Yeah, you know, I think that the market is pricing in a moderate recession. And so I think that investors are comfortable with that. If we do get a negative GDP print tomorrow, we could potentially get a slightly positive number. Either way, we're showing that growth, economic growth is slowing, but it's a bit of a snapback to more normal levels if you think about it on a two-year basis. Last year, economic growth grew gangbusters, right? Over 5% GDP growth. So we're in a period of a bit of a giveback. You're seeing a slowdown in economic activity.

And so I don't know that a negative report is actually going to be that much of a surprise to the markets tomorrow. Lindsay Bell, thank you very much from Ally Financial. As we head into the close here, we're looking at a nice rally, 2.6 percent higher on the S&P 500, near the highs of the session. Thank you, Jay Powell. 442 points higher on the Dow. And the Nasdaq is surging. Nasdaq 100 up 4.3 percent. Overall, Nasdaq up about 4 percent or so. The Fed chair acknowledging the softness in the economy did not pre-commit on September and perhaps signal that they won't have such a large move at 75 basis points in the next meeting, which is two months away. There goes the bell. That's it for me. I'll see you tomorrow.