Power Lunch - Semiconductors Surge in Q2, Recapping Healthcare’s Historic Run, and Checking on the Call to Flee Financials 6/30/26

Episode Date: June 30, 2026

The major averages are trading higher across the board on the final trading day of the second quarter as the Dow paces for its best first half in 5 years.  Kelly Evans is joined by Interactive Brokers’ Steve Sosnick who helps break down the market action as they discuss the massive rally investors have seen in chip stocks and interview a healthcare analyst to ask whether the recent biotech momentum can continue.  Oppenheimer’s Chris Kotowski also joins the show to explain the rationale behind his latest research note in which he downgrades Morgan Stanley and Goldman Sachs, saying alternative financial stocks are a better investment right now.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The NASDAQ is up. Health care and industrials, both at all-time highs. Gas prices still at those elevated levels, too, despite the drop in crude oil. Welcome to Power Lunch. I'm Kelly Evans. Brian is out today. Interactive broker, Steve Sosnik is here with us for the whole hour. Welcome to you, Steve. We've got a lot coming at you on this final trading day for the first half of the year. So many stats to run through as well. Semicers, once again, a big driver of today's green tape. Best industry in the S&P this year easily. The SOTS ETF, I should say. It's up 94% this quarter. We'll ask a portfolio manager whether she's taking some winnings or letting it ride. And health care is in the midst of a historic run, says Mizujo's Jared holds. He'll be with us and he's bringing some names that are hot on his radar. Plus the call of the day on the street. Oppenheimer's Chris Katowski downgrading four of the big banks into earnings. He'll join us to talk about that later this hour.

But let's start with the markets once again being boosted by the usual suspects. Memory, the chip names. They're up today, just a little bit, though. Is it time to get worried about the sustainability of the overall rally into the back half? Our next guest says, not just yet. Wells Fargo, Chief Equity Strategist, O'Sung, is here with us. And if anything, Osang, you think we have a – can I use term, like, face rip it? Like, what do you see going on throughout the summer months?

Yeah, I think we're going to see a very strong rally starting in July. We actually just raised our S&P target about two weeks ago to 7,950 by year end. So remember, you know, when I was on the first. your show last time, we were pretty neutral for a few weeks, and then we turned bullish two weeks ago. Why? And the reason why we were neutral was because A, sentiment was euphoric, and after the volatility that we saw over a few weeks, sentiment is now firmly neutral, positioning has reset, and number two, the other reason why we were neutral was because of oil prices.

Oil is back down to 70, so inflation concern is going to subside going forward, and that's why we turn bullish for the market. Steve, what are you seeing? Well, I mean, I would say in terms of what we're seeing in terms of our flows, I would say the euphoria hasn't exactly disappeared. Really? Yeah, our customers have been uniformly buying the winners. They're continuing to pile in.

Most active stock on our platform by far was Micron. Most bought stock on our platforms were Nvidia, DRAM, and Micron. So they continue to pile in. Triple-levered socks L was the fourth most active stock on our platform. The euphoria in that sector remains quite high. Do you think that's the case, though, something that's still with that leadership area? Maybe not in the retail sector, but institutional, especially hedge fund world. We have seen some de-grossing over the past two weeks or so, and our sentiment indicator

has now fallen to basically neutral level. Remember, back in May, the indicator had triggered a sales signal for the first time since November 2021, which was right before the bear market of 22. And since then, the market has been flat. And I think going forward, and there are two big tailwinds that nobody's really talking about. Before we get into, I remember when we came on and talked about that, you said, look, first time since 2021, this cell indicator was triggered. That last time preceded a horrible bear market right up until the launch of ChatGPT. This time around, it was one month of kind of churning.

Yeah, it was basically two months. And historically, after cell signals, we have historically seen flatish market. it's not necessarily a down market that the indicator usually predicts. The hit rate of the positive return over the next three months has been 50-50. And this time it was basically flattish for the past two months. And I think going forward, we're going to see this big rally. Seasonality turns positive in July. The first half of July is seasonally the strongest period of the year.

So we're entering that basically tomorrow. Wow. There is, of course, the indicator. Yeah, I agree with that to some extent. there's an indicator that sort of the last two or three days of June into the first part of July. This is, that's a trader's almanac, approved fact. So I do agree with that. But could the baseline be higher? I know that like sentiment, you're doing it over time, so the sentiment is relatively neutral. Could it just be that we're off of a higher base now? And so what looks like down sentiment is just

amidst a much more strong sentiment back job. Yeah, for sure. And I think the reason why sentiment, the base is higher is because fundamentals are really strong. I mean, we're not really seeing that much risk around fundamentals. If anything, I think it's actually going to accelerate. So the two tailwinds that we talked about that nobody's talking about, one of which is tariff refunds. Interesting. It's not under anyone's radar.

Is it big enough, though, to matter? Oh, yeah, for sure. So since May 11, so basically the past seven weeks or so, we have seen about $36 billion of refunds being issued. to the economy. And we were skeptical, too. We were actually pretty bullish that there's a chance that the Supreme Court rules against the IPA tariffs, which happened, but we were skeptical on tariff refunds, but the refund checks are actually going out. And we estimate that refunds, based on the $36 billion that got issued over the past seven weeks, that itself is going to be

about 3% boost to S&P earnings in Q2. Wow. And nobody's talking about it. So I think as you're moving to the second quarter earnings season, we're going to be surprised by that plus the fundamental backdrop that's still very strong. Yeah. Might some of the, I love the idea about the tariff-free funds, do companies have a way of sort of saying, you know, bad news, it's temporary, good news should be extrapolated upon. This would certainly be a temporary factor. Do you feel that the market's going to treat it that way, or you feel that the market's

just going to say, all right, 3% better, onward and upward here? I think it's going to have a little bit of lasting impact. So $36 billion is actually pretty tiny compared to how much total. tariffs were collected under Aipa, that total collected was $165 billion. So at this way, and total accepted by the government, the refunds, is close to $90, 100 billion right now. So $36 billion, there's still a long way to go in terms of refund in the second half the year. So I think this could potentially continue.

There were about 40 companies that talked about terror refunds in Q2. And this was before the refunds started being issued. And they were talking about how they're going to use. use that money for capbacks, potentially buybacks. And some companies actually talked about lowering prices for the consumer as well. So I think this is going to be a pretty big tail win as you're moving to the second. Nike reports after the bell today, and I think they're one of the companies. And again, they've got other challenges. It's not like a tariff refund is going to be the be-all end-all, but maybe an example of how investors react. Yeah, I think,

again, I think the question is, you know, a lot of times, you know, bad news is written off as, oh, you know, it's a one-time thing. This, this, I will say, let me stick it. It's good news. But I do wonder, good news typically is sort of like, see, we're killing it here. Let's extrapolate this forward. Exactly. So that's my fear about going forward. Not to dismiss that. It just was more about the lasting.

Well, and to the point about lasting good news, what would you say about the chips and the memory names and that whole trade right now? Yeah, we still like it. I mean, I think CapEx is going higher. I mean, that's basically the message that we have been getting since the last earning season. And you think the next one in a couple of weeks that will continue to be the message that those, the big spenders, their capbacks would go higher? Yeah, I think so. I mean, it's not that hyperscalers are not monetizing.

They actually, their cloud revenue accelerate by six percentage points last quarter. So they're starting to monetize, and I think they're going to be comfortable spending more on capax as well. So I think the AI infrastructure trade, especially after the volatility that we saw over the past couple of weeks, is still going to drive the market higher. You know, again, the question here,

and I think the existential question, Yes, this is going to continue. At what point, though, do the customers of these hyper-scalers, you know, the customers, I'm sorry, of the memory companies, all the other suppliers, do they start to, do the best customers start to rebel against some of the pricing that's going on? You mean the hyperscalistening back on? Hyper-cellers pushing back? Yeah, I don't think we're there yet.

I mean, that's a big concern, for sure. I don't think we're there yet. I do think that memory is going to represent a bigger portion of CAPEX going forward, but hyper-scalers, they're competing against each other. And they are monetizing. So that's the big driver of their CAPEX going forward. We are going to talk about health care a little bit later on. Any thoughts about that one?

We were more positive health care. Our systematic sector strategy actually picked up health care as a new long heading into June. But we very much prefer the AI trade and the cyclical catch-up trade. It's just easier, you think. Yeah. I mean, I think the cycle is actually very healthy, especially with the tariff refunds that we talked about is essentially cash injection to corporates.

So I don't think it makes that much sense to own defenses over cyclicals. So we continue like cyclicals and the AI trade. And the other tailwind that I was alluding to earlier is Trump accounts. So we estimate, so starting this Saturday, basically, there will be Trump accounts and the government is going to put in a $1,000 deposit.

Oh, you think those inflows will be a support? How big can you? I think it's going to be pretty sizable. Really? Yeah. So nobody's talking about that one either. So we estimate about $20 billion of inflows from Trump accounts in the second half the year. But most of that $20 billion is going to happen in July and August, the next two months.

And this is going to be price-insensitive inflows into U.S. equities only. And that's going to be primarily basically tech. Imagine if they put SpaceX in there. It sounds like there might be more to come with the Trump accounts. But it would probably be S&P 500. S&P 500, yeah. I would think spiders and the like would be the beneficiaries. Yeah, another new source of funds, I guess we could say,

coming into the market. Osung, thanks so much. It's been great to have you here. Thank you. Thank you. O'Sung, Quang, Wells Fargo. And we're just getting started. Still ahead.

Is it time to fade the financials? I should have asked Osung about that. Shake your head or not. No, he says no. He's sticking with it. All right, all right. Oppenheimer, downgrading Goldman and Morgan Stanley to underperform a head of earnings. We'll speak with the analyst behind that call.

But after the break, is it time to cash in on the chips. The semi-stocks are on pace for their best quarter ever. We'll ask if the rally can stay powered through year-end and get a portfolio manager's top picks ahead. It has been a quarter to remember for the NASDAQ up 21 percent. It would be best quarter in six years. It's the chip stocks leading the way. The semi-index up 75 percent. Actually, 87.

I mean, every time you look, it's higher. Best quarter ever. Stocks like Micron, Intel, Marvell, and Armholdings are big winners. But will the run continue into the back half? Let's ask Ellen Hazen, the chief market strategist and portfolio manager at FL Putnam Investment. It's good to see it. You've got a lot of the names across Nvidia, the MagS7 and so forth. Do you have a strong point of view about the chip rally continuing?

I think it really is stock by stock with the chips. So, for example, if you look at Micron, even after the move, like so many other stocks, it's actually at a lower multiple right now than it was at the beginning of the year. Not only is it a lower multiple than it was, but estimates are still. going up, and the multiple is under nine times. So it's hard to argue with that. On the other hand, you have some other companies where estimates have gone up, but the stocks have gone up much more. So I do think it makes sense to be selective and to focus on those areas where you see the bottlenecks. So there's clearly bottlenecks in memory. The bottlenecks in GPUs are fading a little bit,

but we do see bottlenecks in CPUs. And so it also makes sense to look at some of the CPU companies. And so it really is very much stock by stock. And again, we always go back to, earnings, fundamentals, valuation. And as long as those are moving in the right direction, we're happy to still own them. But it's not just buy everything anymore. Steve, do you think this is the most important part of the market? I mean, this will be the tell kind of up or down? This is completely the tell.

First of all, just from the weight of the Mag 7 or anything chip related in the S&P 500, certainly NASDAQ 100, depending on how you want to classify it, you're talking somewhere between 35 and 60% depending on, depending on how you want to call it. And, you know, and the momentum behind these stocks has been so tremendous. And the leverage that's been applied to some of these stocks that we see, you know, both in the U.S. and in Korea and Taiwan, it requires these stocks to continue going up. Otherwise, you got a problem. But an interesting sidebar about that. We were talking yesterday, Steve off from Federated Hermes, and he said, one reassuring thing from a 30,000 foot.

point of view. The investors meant out. But he said, the leverage right now is not in the financial system, a la 2006, 2007. The leverage is with a lot of retail traders. He even singled out, look what's going on in Korea specifically, where, yeah, when that turns, it's going to be painful, but it doesn't necessarily mean it has to be a painful bear market. Well, it means you don't have a repeat of the global financial crisis, because, as he says, it's not throughout the banking system, but it does mean you can't have a big stock pullback, particularly in the most vulnerable sectors, those have a way of cascading. I don't want to harp on that too much, but it's a risk factor, and the more we go up without a real beat, a real break in this, then the more the risk magnifies.

Ellen, today, one of the stocks sandists got a big upgrade. We spoke to the analyst last hour. He raised his price target to 3,000, which is another 50% upside from here. And he said they're locking in long-term price agreements. And he thinks for them and for Micron, those long-term price agreements make it not different this time, but to your point about, cheap that you can take that to the bank because you can count on those price contracts. Do you think that's right? I do think that's right. If you listen to the Micron Conference call that when they talked about the long-term

conference, this is unlike anything that we've seen in memory in recent years. And by recent, I mean, the last 25 years, we haven't seen this kind of price guarantees going forward for so long. And I think it really speaks to the scarcity value and the bottlenecks. And this is true. In DRAM, it's due in flash, right? It's true in a number of different areas in memory. And so I think that those will continue to work.

as long as you have constraints. Now, capitalism is a solution to its own problem, right? When you have a shortage, high prices lead to more coming in. So eventually, someday, there will be access supply, but we're very far away from that right now. And I think that that means you can continue to invest in a lot of the bottleneck names, particularly in memory. From a supply demand point of view, I'm going to talk, you know, sort of more 30,000 feet. You know, you own, you own the right names, and that's great. And I think to a certain extent, a lot of people own those names. Is there still money around, like, you know, to be put into them?

Is there anyone in your mind who doesn't own Micron, who's yet to own it or in video, who doesn't already own it, that kind of thing? Or, you know, are you starting to look with fresh money outside these stocks that have run up and into other places? I think it's really hard to gauge where there is fresh money out there that is lying in weight to be invested in semis. I'm not saying that it doesn't exist. I'm saying that I don't know how to look for that. So I think it's a little bit of a tricky game.

I think if I were a Wall Street trading desk, I might have a much better sense of that. But as I look for things to invest in, I don't want to have all my eggs in the AI basket, right? And that's kind of difficult to avoid because so many of the industrials and so many of the utilities and so many of even the energy companies are tied to the AI basket. But you do want to look in some other areas. So financials has some interesting areas. You talked earlier about health care. that's been doing well recently.

So I think that the market can broaden, but AI is absolutely going to make or break the market. So I know if we look at earnings estimates this year, right, for the whole S&P 500, they've gone from up 14% to up 21% for 26 in the last few months, right? So very, very big increase. But 40% of that increase is due just to semiconductor stocks. Right?

So as we look at that, the risk is becoming concentrated in a narrow area. So that really does need to work for the whole overall market to work. And while I do think there are other areas you can look at and find interesting names, they'll just have a tougher time working if the AI trade rolls over. And you have a couple of these Dell Evercord and X power. I mean, just why those three? So Dell and it's let's call it its little cousin, HP enterprises, are beneficiaries of the AI trend, right?

So as you move from training to inference, you need more servers. and Dell is perfectly placed and perfectly positioned to capitalize on that. HPE is making up for whatever capacity Dell doesn't have available anymore. So I think there are really interesting ideas. And with Evercore, I mean, look at the SpaceX IPO. Look at the M&A market, right? You have a decently steep yield curve, which helps financials in general. But then within the investment banks, you particularly have an M&A market that's really heating up.

And Evercore is a stock. It's one of the few where you're paying a lower multiple than the earnings growth, right? You're paying 15 times for 20% earnings growth and estimates keep going up. All right. And then next power quickly is... Yeah. So if you look at more expensive energy production, then as you look at utility scale solar infrastructure, next power helps those utility scale solar arrays to be more efficient.

And so everybody wants to be more efficient because power, again, is one of the bottlenecks of AI. And so if you can make your power more efficient, then that's going to be more efficient. then that's going to be a place that you invest your capital. Tackling the bottlenecks, or I guess investing in them and doing well as a result. Ellen, thanks very much. Appreciate it. Thanks for being here. Ellen Hazen of Ethel Putnam.

Speaking of Mycrown, tune in for Jim Kramer's exclusive interview with the CEO tonight at 6 p.m. Eastern. You definitely don't want to miss it. We're following two other moves today. The U.S. dollar rising about 101 last check, pushing the Japanese yen to its lowest level in four decades. You can see it there at 162. And gold approaching an. ominous level, sometimes called

Death Cross. Let's bring in Rick Santelli. Rick, what can you tell us? You know, I'll tell you, what's going on with the dollar yen is very fascinating. It's just egging the Bank of Japan to raise rates more. They're certainly not intervening. They've rates rates four times.

This past couple of weeks, they raised it from 75 base points to one full percent. If you look at gold, you know, look at gold. It basically peaked about a month after the war start. and, you know, the debasement trades seem to have disappeared. You know, gold's a tricky one.

When interest rates go up, the cost of carry of gold is negative and many ways it does not correlate with inflation. And finally, if we look at the 210 spread, the yield curve is flattened dramatically taking out the easing. But ultimately, tenure isn't paying as much attention to the drop in oil today. That is significant, Kelly. Drop in oil today, Rick. So you're saying lower rates then, which ultimately would mean some pressure off the dollar, maybe some pressure off the end.

Yeah, you know, maybe some pressure off the dollar and indeed off the end. And I do think rates may have peaked in the 10 year with that 467 high yield close on the 19th of May. But I also think that even though crude oil and tenure seem to have delinked here a bit, I think it was because Jolts was powerful today. and definitely 10 years paying a little bit more attention to this inflamed inflation dynamic than oil, at least for the moment. Hi, Rick. Steve Sosnik here. Just a quick question about the yen. We're at levels that have been benefiting carry traders, people who borrow yen to use that for other assets, whether it's treasuries or stocks. If the bank of Japan does come in, how much risk do you see coming out of the carry trade? You know, I think that the carry trade is a tough one, because off and on, we've really had quite a long runway for liquidation of that trade. I think as important as it is to pay attention to that.

I think the big money coming out of that trade is already out. I think the most significant aspect of what's going on here is the fact that the Bank of Japan is not challenging the market with intervention. I think that is hugely significant. That's a good point. Rick will continue the story as we follow it. Thanks very much, Rick Santell. Coming up, a big call on the banks. Oppenheimer downgrading Goldman, Morgan Stanley, B of A, and City Group.

Their senior analyst Chris Katowski joins us next to explain. Welcome back and take a look at some of the large bank stocks like Goldman, Morgan Stanley, Bank of America, City Group, all selling off a little bit today on some downgrades from Oppenheimer. Let's bring in the author of the note, Chris Katowski. He's a senior research analyst there. Chris, it's great to see you. And basically you're saying they're doing too well. Investors are finally rewarding them. Their valuations are finally looking kind of rich to you.

Yeah, well, I have been generally positive on the big traditional intermediaries for most of the years since the great financial crisis. Because in general, I think people were always too bearish on these stocks. And, you know, they always thought the next crisis was right around the corner, the 2011 Pigs crisis, the 2016 energy problems, the COVID interest rates going up in 22 and Silicon Valley Bank. People always kind of assume these stocks were cruising at the edge of ruin, and I thought they were systematically undervalued. Now I think the opposite is the case, quite honestly. Like, you know, the banks historically would trade around 70 to 75 percent relative PE.

And, you know, today the big commercial bank, banks are 78%, and the investment banks are 107%, so like a 50% premium to their historic valuations. And at the same time, for me, it's a relative value call because I also cover this group called the Alternative Asset Managers, so companies like Blackstone and KKR and Erez, and all those, even though those are much better secular growth companies and much better secular growth stories, those stocks are down 25 or 30% on the year. So it was an easy call for me.

On the one hand, you know, I think in the banks, you can, for the most part, take your money and run with impunity and the alts are on sale. Hi, Chris, Steve Sosnik here. One question about the yield curve in all this. Did this play into your decision or was it strictly relative value? Because we have seen the yield curve flattened dramatically, and that would impact the borrow short, lend long. Yeah, in my view, the yield curve matters less.

than what people think. And, you know, in particular, I mean, what the banks do is they always have a big bond portfolio that's out there. And on the other side of the balance sheet, they have deposits that tend not to move so much. You know, the average family in this country has, like, or the median family in this country has $5,000 in their checking account. They're not rate sensitive on that money. So what the banks tend to do is they invest that in securities that may go out a couple of years.

And so, you know, companies like B of A, they still get a benefit from the fact that they have bonds with a 2% coupon rolling off, you know, that they put on their books five years ago, six years ago. But at the margin, the curve doesn't really matter that much. Chris, I like what you're saying, which is for a lot of these companies that the alts, I guess we could call it. them, those who had exposure to private credit in particular, they've really gotten sold off this year. And a lot of those concerns remain. You think these are companies that have even better earnings trajectories, it sounds like, than some of the big banks. And you think that you can buy them here without worrying about other shoes to fall. Yeah, I mean, over a couple of your period of time, I have like high, high, high conviction in that call. You know, whether it works between

now and the end of the next quarter, I have less conviction in. But, you know, but, you know, But the alts are fabulous, physically positioned. And let's just think about that private credit concern, which I think is way overblown. So the first thing is to remember, the banks and investment banks, they take the credit risk directly onto their balance sheet and their levered 10 to 1. Right. Whereas the alts, they manage credit for other people, and they take a fee from that for the most part. So, you know, they're not directly exposed. And the risk for the alts really is that their performance is so poor that people don't sign up for their next fund.

And then it becomes an issue in 2028 or 2029. Now, I personally find there's absolutely no evidence to think that private credit is due for a big fall. But even if it turns out that a lot of the investments that they made back in 2021 were terrible. Let's just say that that's true. Well, private credit had a pretty poor performance in its 2006 vintage funds. Why was that a poor year? Because they got their funds all invested right before the great financial crisis hit. And maybe the same will happen in 2020 or 2021.

But the thing is, like, 2009 and 10 were fabulous vintage years, right? Because nobody wanted to invest in the funds. And the thing is, like, unlike a lot of the retail investors, the institutional investors get this joke now. That even that you have to look at kind of the through the cycle returns from private credit. And if there is like a bad vintage from 2021 or 2022, doesn't mean you're not going to want to be in the 2027 or 2028 fund. So, you know, the question is, it sounds like we're almost talking about wine here. But if these funds are able to basically sell off some of their private equity holdings to pay the credit or to refinance them, wouldn't that be helpful to some of the banks that you're not in favor of who would be handling those underwritings? Again, it's relative value.

My belief is that these are still mature, cyclical, highly leveraged companies. an important role in the economy to play. They create value. They're fine and well-run companies. You know, I've been saying that for most of the last 15 years and people laughed at me and say banks were uninvestable. You know, what's happened now and what's different now is that these companies are all earning 15, 16, 17 percent return on equity. So they all look good. And they're all positive, and they all feel like they've got the right now to grow. So they're all going to spend more money, more expenses to grow their business, they're building branches. They're deploying more capital on behalf of investors, whereas a couple of years ago, it was all about

RWA diets and efficiency and so on. And like in a couple of years ago, the returns were low and we're going to go up because of all those things they were doing. You know, now the returns are high and, you know, maybe they'll go a little bit higher, but I just don't think I'm going to miss a lot over the next two, three years in these stocks. I'm glad you're able to come on and talk about. There's a beautiful new Chase Branch just a couple of miles from me. It's really, so you're right. They are spending. Chris, thanks very much. Really appreciate it. Thank you. Thank you. Chris Katowski from Oppenheimer. Coming up, healthcare, flexing its muscles with a fresh new record as money rotates out of tech.

Jared Holtz of Missouho with the outlook for the back half of the year after this. Welcome back. The health care sector quietly hitting a record high today as we close out the first half of the year. It's up about 7% this month and nobody cares. It's on pace for its best month since November. In fact, one of our guest, Bob Sloan of S3 partners, he found that hedge funds are now the most bullish. They have been on health care in five years. That's that little uptick you can see at the end of the the chart there. So what's driving this? And can the gains continue? Let's ask Jared Holtz. He's a health care sector specialist at Mizzou. I'm just teasing you, Jared, you're used to this. It's great that health care is showing some life. I mean, but it's not like

the kind of thing where you're going to say, wow, my sandisk is up 800% since Jan 1. Yeah, Kelly, thanks for having me. Yeah, this is kind of like a very slow, you know, gradual turn. I think a month ago, health care was underperforming. the S&P by 17%. And so that was sort of like, the by-side at that point was apoplectic. And now it's around a 7% loser year to date. So it gained 10% in basically a month. So it feels great at the same time. It's tough to say that, you know, people feel excellent about what's going on here. Right. I think you and I might have bottom-ticked that act. I'm going to have to go back and look when we were talking, kind of shaking our heads about it. What's turned sentiment around?

And what does it take for you? You know, we could break it down piece by piece. Is it kind of regulatory news? Is it innovation? Is it a deal-making, biotech? What's behind all this? Well, I think first and foremost, you know, the way that I look at it, like, you have to be, you know, very cognizant of what's happening in large-cap tech. And any time there's a little bit of skittishness there, there tends to be money that goes into either underperforming sectors or, you know, value.

oriented more defensive. Now, I don't believe that health care is at all defensive, but I think the broader investor base probably believes it does. And so you sort of see a little bit of movement out of momentum into these value-oriented or, you know, potentially defensive areas. And I think that's been maybe the most prevalent factor. Beyond that, it's hard to say. I mean, there's been a little bit of life out of managed care for the first time in years. Biotech has had a great run. But it's been sort of like, it's been esoteric in terms of what the drivers have been because not every subsector within healthcare has benefited here. It's been few and far between.

Jared, one of my questions is I see that biotech has had a tremendous run. You put that in your note. How much of that is just the result of the general speculative enthusiasm that we see for smaller companies and mid-sized companies overall? You know, extending from tech into, you know, from broader tech into biotech. Is that a factor to you? I think that's a part of it. I mean, I think about that a lot as to, you know, what the drivers are that that are moving small and mid-cap biotech. I think certainly, you know, having, you know, money flow into the space because there's a greater appreciation for these risk asset classes. But it comes and goes, right? You've got, you know, tech has been on fire. On the other hand, cryptocurrency has taken a hit. Maybe biotech has been a beneficiary of less enthusiasm over Bitcoin. It's super hard. hard to say. I do think the two things are very prevalent and relevant, I should say. The first is

a lot of changes at the FDA. This has been a major point of contention for investors as far as, you know, whether biotech could work. It actually did very well despite, you know, some appointees that made it a little bit less transparent. And then subsequently, it's done even better than the M&A tailwind has been unprecedented. I mean, I could guarantee you today, This will be a record year for biotech M&A just six months through the year. So I think those are the other two things. Yeah, we've seen those headlines, and perhaps it will even pick up steam in the next few months. Jared, thanks very much.

Appreciate it. Jared Holtz. Thank you. Let's get to Pippa Stevens now for the CNBC News Update. Pippa? Hey, Kelly, the race-to-find survivors continued in Venezuela today. Six days after powerful back-to-bath earthquakes hit the northern part of the country. According to authorities there today, the death toll now stands at more than

than 1,700, with thousands still unaccounted for. According to NASA satellite imagery, nearly 60,000 buildings were damaged or destroyed in the quakes. The Trump administration is reportedly drafting a ban on imports of foreign inverters. They connect solar projects and batteries to the grid. Reuters reports the White House is concerned China could use them to disrupt power supplies. The European Commission has already banned Chinese-made inverters from publicly funded energy projects. And the FDA today cleared the way for Philip Morris's Zinn nicotine pouches to be marketed as less harmful than cigarettes, a big regulatory win for the tobacco giant. The pouches contain nicotine but no tobacco.

According to the FDA, the ruling does not mean Zin is safe. As cigarette sales decline, pouches have become the fastest growing product in the nicotine market. Kelly, back to you. Pippa, thank you very much. Coming up, stocks that are truly taking off. Rocket Lab and Arridium, both soaring dust. double digits this week following their tie-up announcement. Our market navigator on why this deal could mean bigger upside for investors. It's time for market navigator. SpaceX isn't the only game

in town when it comes to the future of mankind's galactic ambitious. Our next guest is homing in on a very recent deal announcement. He thinks there's more room for one stock to keep going higher. Todd Gordon is founder of Inside Edge Capital and its CNBC contributor, Todd, you're all over the space trend and trade. You like Rocket Lab, even post-East. I'm not post-IPO, post-IPO, where we've already seen some movement. It's all what we think about, the SpaceX IPO. And that's the first thing that I was concerned about with my holding. And I'm probably going to mess it up and interchange the two, but holding in Rocket Lab.

And then, what, two weeks after the AIPO, they announced this deal with eridium. So, of course, all day, yesterday and into today, understanding what iridium does and how, and if it competes and what kind of, you know, target market between iridium, in Starlink. So, Kelly, where do you want to dive in? Tell me what, this being the market navigator segment, what do you, what would your advice be for investors or for traders? I mean, is it, is it, is it this tie up? Is it something else in the space world? Where do you see the most potential? So I hold about a 2% allocation or growth portfolio in, um, in Rocket Lab. The acquisition

of Eridium is sent the stock up like 20%, which is very unusual. It's at 8, billion dollar deal. It pulled in about two and a half million subscribers, but our customers, I should say, but what Eridium does is it's more non-netflix streaming high bandwidth, like what Starlink targets. Eridium is government entities, it's maritime, it's a different L-band signal that is going to hit a different target market with this embedded subscriber growth. So they're going after a different segment of the market. A lot of tech specifics that I've learned about over the last 24 hours. But Rocket Lab itself, I mean, they're looking at positive EBDA, 2027, positive EPS in 2028. And I think we have the chart up as well, Kelly. It's kind of a fun

chart to trade as well. Over the last like year and a half since 2025, you'll see that it comes down about 45 to 55 percent. It's kind of run in the mill pullback into the 200 day moving averages, bounces back. I added it in November, added a little bit more on that June pullback. And if we can get a push through to new highs, I'll add that next 1% to get up like a 3% allocation. The last thing I'll say, Kelly, is if you overlay a rocket lab and SpaceX, they're starting to trade together. So they're not competitors. They're hitting a different segment of the market.

And with profitability at EPS in a year and a half, two years out, I'm going to try to hold this one. Well, it's fascinating. Like you said, the street cheered the deal. Usually the acquires sells off, not this time. And you think there's more to go. Todd, thanks for joining us. Appreciate it.

Todd Gordon. My pleasure. Take care, Kelly. Coming up, some fuel for debate. Gas prices are down roughly 70 cents from their highs back in May. But the president says pump prices should be closer to 250 a gallon. That's more than a buck below where we are now. Can we get there?

We'll discuss that next. Gas prices are slowly starting to fall, but not quickly enough for President Trump, who posted on Truth Social last night ordering retailers to price around 250 a gallon. It's more than 30% below the average price today, according to GasBuddy. Speaking of gas buddy, let's bring in Patrick DeHan. He's the head of their petroleum analysis, and he's at a gas station, Patrick, and you can tell us what's it going to take to get back to 250. Well, you know, a lot. You know, first of all, we are in summer.

We are on the more stringent type of gasoline for the summer months. So that's going to be really difficult. I would point out, though, average gas prices already are down 80 cents a gallon from their peak. But we'd probably need $50 oil for us to see a national average at $250. And then second of all, we'd likely have to be in the fall when demand is lower and when we're on the cheaper winter blend of gasoline, we'd probably also need the straight to be open for a couple of months. And we'd also need to see Russia's refineries start ramping back up after drone attacks. That's part of the disconnect here between the price of oil and the price motors are paying this July 4. Patrick, can you explain sort of the rocket chip feather analogy that's used a lot of times with gasoline prices, why they go up immediately and take a while to come back?

there's economics behind it. Yeah, there really is. And what a lot of consumers don't see is that for several days, while prices go up, stations are often behind by two to four days, and they lag behind for as long as prices are going up. Only then when prices start trending lower, do they make up for that loss in March and that they sustain for much of March and much of April.

So that's why gas stations are a bit sticky. Though I did some data digging after the president mentioned that. We saw a very significant decline after gas prices hit five, in 2022. Prices plummeted a dollar a gallon, but it took almost two months. The pace of decline that we're seeing here in 2026 is actually faster than the pace of decline we saw back in 2022. Now, it's pretty close, but the national average this time around is declining at a pace of almost 1.95 cents a gallon a day back in 2022. The pace of decline was 1.84 cents a gallon a day. That's good to know. And what would the oil price have to be, Patrick, for us to get back to

250. Well, at this point, it's not so much about the price of oil, but it's about the attacks that we've been seeing Ukraine attacking Russian refineries. That has kept the crack spread very high. Essentially, that's an index for measuring the value of gasoline, diesel, and Jeff. A lot of Americans are looking the price of oil and scratching their head saying, hey, why is gas so expensive? But part of the story is simply not enough refining capacity. That heat dome that's hitting us here in Norton Shores, Michigan right now is going to further cause problems reducing refining capacity because of the tremendous amount of heat. In fact, I think after this interview, I may have to go into the beer cave behind me to cool back off. Even that heat that we're seeing is a big impact for what we're

paying at the pump. Patrick, our intrepid, you know, honorary reporter, really, making the rounds for us. We really appreciate it. Thanks for having me. I'm a little jealous, too. Doesn't that sound good nice right now? Patrick, down of gas buddy. Still ahead, Bitcoin's spare market. The coin down 20% this month and on pace for a third straight down quarter, what it means for its largest corporate holder next. Welcome back. As great as the quarter was for the stock market, not the same is for the crypto space. Look at Bitcoin. Price is falling again today. They're about 58 in change, approaching their lowest levels in nearly two years, by the way. They're down 20% this month and over 30% since the start of the year, making it the worst first half start for the Bitcoin since

2021. Bitcoin believers, though, Steve, these stats are not going to phase them. They're used to crypto winter. It won't phase the true believers, but it will phase is the people who got in because of, because of ETFs and now getting, now realized, wait a minute, why shouldn't I be buying semiconductors, whatever? They're momentum traders. They bought the momentum. Now they've moved on in momentum. You also have the problem now of strategy, micro strategy, changing its strategy, whereas they were, hold on for dear life. Now they're saying, well, we don't have to sell a billion or, you know, a certain amount of Bitcoin. If they turn seller, who's the marginal buyer? They've been the marginal buyer. People joke they were like the Fed of Bitcoin. Now we'll see. Meantime, Nike flat ahead

of its earnings report after the bell. They previously announced they expect sales to fall for the fiscal fourth quarter and the rest of the calendar year. The shares seever down 50% under the new CEO who's been there about two years now. Yeah, I mean, you know, as I look at what the options are saying ahead of earnings, I checked this before the show, so it might have changed a little bit. The peak probability was for a move down to the 39 level, which is about 5% move from where it was when I checked. The volatility was very high predicting about an 8.5, 9% move on which, considering the moves of 16% or more that we've had in recent quarters, it's not so bad. All right, we've got to go. But so momentum trade up or down? Thumbs up, thumbs down?

Momentum trade, be careful. Just don't really... What a tease. See, thanks very much for being here. Thanks for watching Power Lunch closing bell stars now.