i guess we don't, but we were going to tell you that weekly mortgage demand has been falling. maybe we'll get to that tomorrow. now you know something you didn't know five seconds ago. >> if you go to chipotle, $4.80, you can get a kids meal. with the chips and the drink, it's like that's what makes mcdonald's under pressure right now. >> i'm leaving right now. thanks for watching "power lunch." >> "closing bell" starts right now. i'm scot wapner live from post 9 here at the new york stock exchange. this make or break hour begins with rising rate fears and whether this record setting rally is about to be derailed again. we're going to ask our experts over this final stretch that very question, including super investor josh friedman who joins us in just a bit. your score card with 60 minutes to go in regulation, yields backing up. that continues to be the story teed today. awfully close to 5%, the

ten-year over 4.60. jamie dimon saying 6% not so farfetched. we'll discuss. if there's one bright spot it continues to be mega cap tech, nvidia's surge unbelievable. it continues today, almost $1,150 a share. then there's apple higher again as well. amazon is too. that's a big part of this market story. it does take us to our talk of the tape. the battle between rates and tech. one keeping the s&p on edge. the other keeping investors buying in, so which will decide the fate of this rally. let's ask new york life's chief market strategist lauren good win, and invesco's global market strategist brian levitt here with me at post 9. nice to see both of you. lauren, that's what this is about, right? rates backing up. i said the two-year is near 5%, and the stock market doesn't like it, the dow's down about 400. >> we're seeing a little bit of movement with respect to rates. i think this is just the calm before the storm. we're about to set up for a lot of economic data that will skew the investor perspective in one

direction or the other. we're getting inflation data on friday. manufacturing data on monday, jobs next week, this is an environment where the balance of risks that the fed is trying to navigate could very well shift over the course of next week. >> you make the argument that the data over next week is likely to prove out the fed's cutting bias and that the pce is going to be good. the market doesn't think that? >> i think what the market's been hearing from fed speakers over the past couple of weeks is that their balance of risks is -- they're really trying to navigate a tight rope where the economic news has been strong. earnings has been strong. that's why we see some of the tech names really still flying, and that they haven't seen enough progress on disinflation yet. the all else equal there is the labor market, and i do expect that much like in last month's labor market data, we're going to see continuing signs of slowdown, which i think will give the markets reason to be relatively optimistic about this cutting bias. >> we've seen this movie before,

right? markets going great, all of a sudden rates back up. hello april lows. and then rates sort of backed off, and we had a rally back. >> there's an irony about it because strong nominal growth is good for corporate earnings, and in a strong nominal growth environment, you don't get rate cuts, but investors should probably prefer strong nominal growth and no rate cuts to weaker nominal growth and many rate cuts. so we've spent a lot of this year with the will they or won't they and when and by how many, how much, how many, right? and the irony of it is the market, at least the broad market has done well because we've been in a good nominal backdrop, and we've been in a good earnings backdrop. >> we've narrowed again. here we are yet again, we're talking about some mega cap names that are driving the bus again. it's nvidia, it's apple. i said amazon. there are a couple of others that were like around the flat line that i didn't necessarily want to mention because i wasn't

sure if i said positive they'd be negative when we showed them, but you get my point. >> i do get your point. if you think back to november and december of last year, the market quickly priced in six rate cuts and small caps and mid caps, so think of broadening out had a very quick bull market. that is what a lot of us had hoped for in 2024, and it all happened in two months. then you had to price out those rate cuts, which, again, is what we're doing. as you price out the rate cuts, the smaller businesses that tend to have a little more leverage tend to get hurt in that environment. in order for this to broaden out, you would likely need to see a still reasonably good backdrop, but a fed that starts to slowly normalize the yield curve. that would be the proverbial no landing or maybe really soft landing that investors have been looking for. >> lauren, it's a funny market, you know. one minute it's a good news is good news market, and the next minute it's a good news is bad news market for the very implications that brian laid out what it means for the fed, what

it means for possible rate cuts. how many we're going to get and when. do you think the market can accept the fact that good news is, in fact, good news and that rate cuts don't matter because the economy's still good? >> i think that we have been seeing that since april. this -- i mean, as brian mentioned, we've moved from an environment over the course of the year where we were expecting -- or the market was pricing in six rate cuts. we've moved to one and a half, and with the exception of tumult in april it's been a pretty easy going process. >> because rates have come down, right? they allowed the markets to rally back. now here we are, rates are backing up again and the market has a couple of days where it looks like it's falling apart a little bit. >> here's what i feel pretty confident in that's been swirling around the market in the past couple of days. i think it will be very, very difficult for the fed to hike rates, and that's not because, you know, 25 basis points higher makes a real meaningful economic growth difference. it's because the signal that

that sends to the market, it would be very likely to tighten financial conditions, even the breadth of potential rate hikes, i think would contribute to a slowdown in the data that would be relatively rapid. >> scott, good news is bad news so long as inflation is above 3, okay? and so we're going to get a personal consumption expenditure report on friday. wel we'll all be looking at the year-over-year and the core and whatever we want to look at, and gauge whether that being the fed's preferred measure is back closer to the comfort zone, and we can get back to a point in which we're applauding good news. now, the core -- or the pce, if i remember correctly, is a little bit below 3. the fed's preferred measure is getting there. the headlines still a bit elevated. until you see that number firmly in the perceived conmfort zone, then good news. >> i had someone suggest earlier today that the market was,

quote, unquote, unhealthy right now because it's top heavy yet again. you have nvidia dominating -- i mean, the s&p would look ugly, much uglier if nvidia and apple weren't doing what they're doing. is the market unhealthy? >> i mean, it's certainly top heavy and concentrated. is it unhealthy? it could be healthier, and to be healthier, you would need the broadening out, to your point. now, if you look at an equal weight portfolio, valuations are about average. it's not as if, you know, that market has been, you know, significantly hindered. valuations are about average, but for a lot of the companies in the s&p 500, it requires a catalyst, and that catalyst would come from, you know, either the growth remaining st strong with inflation in the comfort zone or the federal reserve normalizing the yield k curve over the subsequent months. >> jamie dimon has been talking

a lot about risks that others aren't necessarily paying enough attention to. that's what he gets paid for. he gets paid to manage that risk, and he does it obviously awfully well, which is why he has the standing and gravitas in this market that he does, and when he talks, people listen. he said today 6% rates possible. that's at the bernstein conference. the chance of stagflation is higher than most people think. now, he says a lot of things, and people sort of say jamie, that's just jamie being jamie, and then they sort of brush it off. there might come a time where we actually need to pay attention a little more closely to what he's saying. is now one of those times? >> when it comes to the risk of rates moving higher, i think that that risk would be likely to cause stress in the market before it was able to materialize. i think that market financial conditions tightening would precipitate a backup in rates, a deterioration in valuations, and a fed that would be much more cautious about having to act on things. that's still a pretty unnerving circumstance for investors,

right? and though i do feel confident that this rallyhas a bit more room to run and that valuations are not a good market timing tool, it is an environment where we have been taking some of our gains in equity, especially in the top names and activating them in fixed income. >> you have? >> yes. >> moving -- still taking equity like risk in fixed income because of where we think the economy is. so looking at high yield in the short duration segment of the yield curve, but i do think it's an environment that is to brian's point, could be healthier, but we have to acknowledge where the benefits are as well, which is in this valuation and in the income potential we see. >> this is the problem, right? i've had people suggest, well, you're finally going to get money coming out of money markets that's been parked there and that's going to stimulate the market further. lauren makes a good point, though, and suggests now you've got bonds attractive again. yields are up, prices are down. now they're an alternative yet again to stocks. >> yeah, t bills and chill, right? but the thing about the money market is if you track the data,

a lot of that came from bank deposits. if you're sitting in the four big money center banks earning nothing, a lot of that went to money market as an alternative to earning zero. it doesn't necessarily come back flooding into the market or the bond market. i do think the bond market is attractive. lock in the yields that are available. a couple of other quick things. we were also warned of economic hurricanes. we have not seen economic hurricanes and i don't think it's stag or flation. maybe i sound like linda richmond from "saturday night live." >> you sound like the fed chair himself. >> he stole my line or i'm stealing his line. >> probably the latter. probably the latter, i hate to break it to you. but no, look, people like to pick at what mr. dimon says and say, well, he's called for hurricanes. he's called for this. he's called for that. he has the ability to see things

that the others don't necessarily either see or want to admit, and okay, so they haven't come to fruition this time. now, there was a moment where commercial real estate got ugly, and we had some regional bank issues that jpmorgan ended up taking pretty good advantage of through a purchase that they made, but nonetheless, maybe though it's time to be less complacent than some suggest these markets are. >> when i look at the guide posts on the path to the end of a cycle, is there a lot of leverage in the system? is there a lot of excess? there doesn't appear to be a lot of leverage. you think about excess, we actually came into this without enough inventory, without enough homes. it's not excess. the fed raised rates but most americans have fixed rate mortgages. when that happens, growth usually slows. the bankers tend to tighten lending standards, and that hasn't largely happened, so if i stick to my guide post of when do you start to see things, you know, become disconcerting, the

only one we have right now is the inversion of the yield curve. we've been there now for i think 19 months. you know, we'll see. there are the lag effects of it. if there's not a lot of leverage in the system, then perhaps it doesn't hit the way it has in past cycles. >> which is why stocks have been able to rally to record highs. we've got to leave it there. tech, the standout sector off the april lows as you know gaining more than 16% on the back of nvidia's relentless run. but is that rally running out of steam? let's ask rick hietsman, he's here with me at post 9 as well. i'll pivot this way. welcome back. you look at nvidia, you've been in the tech business a long time investing in these kinds of names. your reaction to this relentless run as we said. >> they see incredible fundamental demand. their numbers are incredible. they continue to put up numbers, even at scale, and what you're seeing is so far there's no end to the appetite for ai infrastructure, and until we see

that infrastructure over built, i don't think that demand is going to diminish. >> so analysts keep taking up their numbers, right? keep taking up their estimates. i was with one tech investor, notable tech investor yesterday who said their numbers are 40% above the street's. that's the amount of optimism that remains in this thing. is it all justified? >> i think some of it's justified. i mean, this is going to be -- we've talked about this before, 2024 is the year where the chickens come home to roost in ai. nvidia is building out the infrastructure. there's going to be some tooling and there's going to be some applications. are those applications going to be able to be delivered, and are they going to be able to deliver value for their customers either enterprise's or consumers, and as long as that continues to happen, people are going to have almost insatiable demand for nvidia. if you see chatgpt fall off, microsoft co-pilot fall off, you see a slowing in funding of the

thousands of ai startups who were in the market buying infrastructure. when that starts to turn, it's going to be similar to what happened to cisco 25 years ago when the demand slowed for infrastructure. >> how much on the like 1 to 10 scale of worry in your mind? >> a 3. i'm a solid 3. >> that's it? >> i think that these applications are able to show real value. a lot of companies that we've invested in and we've seen are able to show real value, a real roi for the enterprise, by automating work flow and doing jobs. and even the beginning on the consumer side of that, of ai being able to do jobs show we're confident at least in the first couple innings that it will be more than incremental and will fuel this growth. >> do you look at the periphery of the key players, like the nvidias and say, you know what? the halo effect that some of these other names have gotten is just too much, and it needs a correction in and of itself. how do we look at these other names that have gotten the nvidia bump and maybe don't

deserve it as much? >> i think nvidia is a one on one company. they don't deserve -- they're kind of like nvidia, therefore they should be trading at a slight diskoucounterto nvidia, that's a false flag. there are other companies that are benefitting from this incredible demand for ai infrastructure, but they shouldn't be in the same conversation, if you think about multiples or if you think about potential market size nvidia is. >> you look at software versus chips. chip names have done quite well. software names have been a little weaker. the thought being, well, all of the capex that's being spent by the hyperscalers, the mega cap companies we talk about every day is going towards the chip names rather than some of the software names. how do you view the difference between the two spaces? one going up, one going down, and the kind of investments that you yourself would be looking to make in the future? >> so i think you need the chip makers to bed out the

infrastructure. there's another layer of data enab enablement, data bricks, data haikus of the past, that enable the application layer to do its job. whether that's work flow around enterprise software or computer software. nvidia needs the application layer to thrive in order for there to continue to be demand because that end user demand is what's going to drive demand through that whole activity chain and through that supply chain and infrastructure, so we think there's a timing factor, and as private market investors who are focused on the medium and long-term, we're investing heavily in the application layer, with the expectation that the infrastructure and foundation of this next generation of artificial intelligence will be built out. >> unless you're an idiosyncratic story with a great story to tell, not every company that you've invested in, by the way, is an ai-related company. >> no. >> but do you need to be to capture the imagination, to be in the zeitgeist of where everything is being talked

about? if you don't have ai as part of your play, are there enough dollars to duoago aurnd to you? >> if you're a glp 1 company. >> which you are an early investor in. >> you talk in your book -- >> you don't need the joke. it's one of the other areas, the one part of health care that a glp 1. >> which has great fundamental demand and a fundamentally new way to think about the world. i think every company we look at has some facet of ai. if you're not writing software "today," you're using ai to help you write that software, load balance it and deliver that software, you're going to use. a lot of the bets we're making on the earliest stage technology companies are companies that are saying, hey, i'm going to look at this facet of software, supply chain, crm, logistics, but we're going to super power that using ai. we're going to need less people, and we're going to make better, faster, stronger software, and that's going to be the next generation leaving behind folks who have not invested in ai.

>> state of the capital markets and, you know, i like to always get the temperature from you. we see you, you know, maybe once every couple of months. it's a good chance to check in. where are we on that? and let me ask you this, the longer that the ipo cycle delays, does it increase the likelihood that some of the companies that you've invested in that are a little further along the growth train get bought rather than go public? >> so to answer the two questions, i think we're still in kind of a cool phase of the ipo market. i think a lot of people thought the second quarter might be stronger than what we've seen, and some of the volatility we've talked about. uncertain rate environments, uncertain capital markets have paused that. you'll still see hopefully a couple of people go out in q2 and maybe one or two squeeze out in september prior to the elections. the elections are a huge overhang, and i think you're right. the longer that people stay private, the more need there is for liquidity, for early investors like me, for

employees, for founders, and that's going to put pressure on the system. at the same time, a lot of the large companies are kind of in the m&a penalty box. the mega cap public companies also have to deal with this issue called the ftc, which is holding them back. so both the classic levers of liquidity, large cap tech buying and ipo have kind of been stalled so we're still in this purgatory, and i think we'll remain there through the election. >> good check-in on all things tech. rick heitzmann joining us once again at post 9. up next, raising the red flag, new data revealing potential concerns over real estate. josh friedman back with us to break town what he is seeing in that space and how he is navigating the uncertainty. he'll join me at post 9 right after thrks is, we're live at t new york stock exchange. you're watching "closing bell" on cnbc.

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we are back, worries over commercial real estate bubbling up again last week with word of losses in even the highest rated mortgage bonds. it's the first time that's happened since the financial crisis. how much more pain could be on the way. josh friedman is co-ceo and co-founder of canyon artners. he joins me here at post 9. it's nice to see you again. >> nice to see you too, scott. thank you. >> this is quite topical given some of the headlines we had last week, s reit and limiting redemptions and such. you've been warning about more carnage coming in this space. how concerned are we now that we see these kinds of headlines? >> i think there are concerns that are shared both across the real estate spectrum and across the corporate spectrum. you've got rates that are stubbornly high and are unlikely to be reduced anytime soon, and maybe they're not likely to be hiked either, but in my opinion, they're not likely to be eased anytime soon, and you have a lot

of balance sheet maturities coming up where people need to refinance in a world where rates are twice what they used to be. in real estate, it's compounded by the fact that there have been significant changes in where people live and work and how they live and work. so it's met obsolescence of certain property types on top of that interest rate issue. >> these bonds in question of last week related to one specific building in new york city, so we're not trying to make a mountain of a mole hill by any stretch, but are those rumblings of things that will be duplicated or are they just idiosyncratic one-offs based on one building here and there? >> i'm sure there are other buildings here and there. that one was a unique combination of almost every bad factor you could have, a somewhat obsolete building with a very, very large single tenant vacating and a lot of debt coming due at the same time, and no one to replace that tenant. and the carnage was significant,

with even the triple a's being significantly repaired. that may recur here and there. i think what will recur a lot is the situation with respect to the office. we've seen that already. these problems tend not to bubble to the surface until they actually default. there's no reason for them to bubble to the surface to that point. that's product obsolescence on top of balance sheets that were create insd in a world with verw interest rate where is people were desperate to put their money into something with a yield. >> you don't see rates coming down anytime soon, is that saying you don't think the fed is going to cut rates at all this year? >> i'd be surprised if they cut rates certainly before the election. you've got a lot of factors that mitigate against them cutting rates. you've got a very strong stock market that has produced maybe 9 trillion of value to consumers in the s&p alone since the end of 2023, you've got home values,

which are higher, so the consumer balance sheet is strong. unemployment is stubbornly low, we continue to have good jobs numbers. we continue to have stubborn and surprising inflation numbers. it's not clear to me why the fed would rush to lower rates when they want to keep that tool in their pocket, and yet, on the other hand, you have not just these real estate balance sheets that are then forced to refinance in a high interest rate world, you also have the federal government balance sheet, which is loaded with debt and has to finance in a higher interest rate world, and you have something on the order of $80 billion worth of corporate high yield bonds trading at something like a 15% yield or higher or $0.70 price or lower. so people need to refinance. people took on a ton of leverage when the cost of leverage was low, so now we're going through the adjustment process both in real estate and in the corporate world. >> and i mean, the corporate world is where you see the biggest opportunities now?

you sat down and said seems like we see, seems like there's a new name every day. >> you have a nice combination of some very good companies with very good private equity backing, that just have too much debt. they leveraged up seven, eight times ebitda with debt that was very low cost. the time period for getting the earnings up and outgrowing that debt balance has been shortened by the interruption of covid. in some case interrupting revenues as well as earnings, and now those things have to be fixed, and there seems to be a new name every week where the sponsor says, okay, it's time for me to fix this balance sheet. that's a complicated game, scott, and it can be a pretty nasty game both with the sponsors and with fellow creditors, but it's one that i think is repeated in the context of generally a pretty good economy and generally pretty good companies, and that's a good background for playing the game of restructuring balance sheets. >> you think there's going to be more, you know, corporate

distress going forward the longer that rates remain as elevated as they are, if not, you know, potentially back up even further? >> i don't think that rates will go up, partly because the government itself has to finance its own balance sheet. partly because it's so targeted on real estate c, which is alrey so distressed, which is an epicenter of the commercial bank investment. i also think that rates aren't necessarily the problem because you can lower rates 250 basis points, and you'll still have a significant number of companies that are over leveraged and can't have positive interest coverage. these companies need more equity. they may not be bankrupt in the sense of having value that's less than their debt balances, but they can't sustain these debt balances in today's interest rate world, even 100 or 200 basis points lower ask still amort amortize debt. >> you point to an issue that hasn't been realized so to speak, just yet, but will

continue to get potentially worse before there's a larger problem. >> most sponsors try to look out in the future and take care of things in advance, and we're starting to see with each passing week another company that hires a restructuring adviser that hires a set of attorneys, they start to make threatening noises about how they can move assets around the balance sheets, which by the way, they can do because a lot of the debt that was done in this era of excessive kpuk re exuberance and very low rates, you have to be very careful when you're involved in these situations. not only about who the sponsor is, but also who your bedfellows are. >> i want to ask you about private credit, jamie dimon and others have been speaking about it lately. even today he said he expects problems to emerge there and warned that, quote, there could be hell to pay, and he alludes to the fact that a lot of retail clients who had no exposure whatsoever to alternatives and

now things like private credit have been put into the space. he said, quote, you want to give access to retail clients on some of these less liquid products. the answer is probably, don't ask like there's no risk with that. i've seen a couple of these deals that were rated by a rating agency. i have to confess it shocked me what they got rated. it reminded me a little bit of mortgages. he's alluded to the great financial crisis. you share any of those concerns? >> i don't think it's like mortgages where there was just widespread fraud in the securitization of those mortgages and the level of mortgages relative to the value of the properties was completely off any kind of historic trend line because of the appetite to issue that product. but what i do think is that there are different types of private credit. there's the more custom bespoke where you sit down with the issuer and say, hey, you've got too much debt. you put in some money. i'll give you a break on this. i'll defer some coupons. i'll lower the balance a little bit. now you've got to make a balance sheet that works. that tends to be a one on one,

two on one, three on one discussion with a lot of negotiation. that type of private capital solution debt i think is extremely attractive right now. what's become a bit less attractive perhaps is the more broad broad broad-based uni tranche debt where there was so much capital assembled so quickly that it out distanced the number of deals with which to deploy that capital. that's probably a trillion 7, trillion 8 market, and easily a half a trillion of that is sitting unspent on the sidelines, and there are so many firms that have grown their dry powder in that area that if an issuer wants to raise private credit money, the competition is based on low covenants, maximum lending proceeds, and lowest interest rate. that's not a good formula, and that's probably more what jamie's referring to. >> i appreciate your insights on all of this. it's good to see you. thanks for being here. >> thank you. >> that's josh friedman right here at post 9.

up next, prepping for pce, another critical piece of inflation data looming. jan hatzius is here with his expectations, and his prediction for when the fed might actually cut rates. "closing bell" is coming right back . so this is pickleball? it's basically tennis for babies, but for adults. it should be called wiffle tennis. pickle! yeah, aw! whoo! ♪♪ these guys are intense. we got nothing to worry about. with e*trade from morgan stanley, we're ready for whatever gets served up. dude, you gotta work on your trash talk. i'd rather work on saving for retirement. or college, since you like to get schooled. that's a pretty good burn, right? got him. good game. thanks for coming to our clinic, first one's free.

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welcome back. stocks are in the red across the board. the ten-year treasury yield ticking higher for the second day. so is the two-year. that's a problem as investors

look ahead to friday's core p pce report as the next piece of inflation data. joining me at post 9 is jan hatzius of goldman sachs. nice to see you. >> good to see you. >> what is the pce going to tell us on friday? >> our estimate is 26 basis points. we talk about basis points now. we used to talk about tenths of a percentage point, but we have i think a reasonable idea that it's going to be somewhere in the mid-20s just based on what we saw in the cpi and the ppi and the import price numbers. so that would represent, i think, a significant amount of progress. >> okay. >> it's also important to look at the market base core pce number, which we think is going to be just under 20 basis points, and that leaves out prices like, for example, financial services which are extrapolated from stock market movements and may not be really

representative of inflation. >> the point you make, though, is that it potentially brings these cut conversations back into the forefront because it would theoretically give the fed comfort in thinking that it could cut rates. >> well, it's a step in the right direction after three steps in the wrong direction or a first quarter in the wrong direction, so it doesn't undo what we saw in the first quarter, but if we get continued moves, you know, in the 0.2% range over the next several months, then i think, yes, that will give the fed comfort and ultimately can still get you a cut by the september meeting. >> remind our viewers -- because things change, you've changed your view from time to time -- how many cuts do you think we're going goat this year as of today? >> we've got two cuts, one in september and one in december. >> and you're sticking with that for now? >> we're sticking with that. obviously it's always subject to

what we find in terms of inflation data, in terms of labor market data, and in terms of the committee's reaction function. i think one other important data point probably more important frankly than the core pce number is what we see in the next employment report at the end of the following week. we have seen some deceleration in the labor market, nothing too concerning, i would say. this looks like a healthy deceleration, but if we were to see more deceleration, i think, again, that would support the idea that maybe we should take a small step down. >> do you think that the economy as reasonably strong as it is today can withstand a scenario in which rates remain this elevated throughout the remainder of the year and that they don't cut at all? >> well, i'd certainly think that's a possibility. again, it's going to depend on the data. if we find that the economy can withstand a higher level of rates and if the inflation data

maybe continue to surprise on the upside, then i think they could do nothing. and that could be okay. my best guess, though, is as inflation comes down again and the labor market continues to look more in balance that they will say in order to rebalance the risks it's better to cut a couple times. >> and you don't think that september, which is how you moved your first cut back to is hindered at all by the election? you don't think that's too close? >> we do not, no. we think what matters is really the economic data and the committee will make decisions based on the economic data and will leave the politics out of it. i would also note in the last press conference, chair powell was asked that question, of course, as expected, and he gave an answer that was, you know, very detailed why they do not take politics into account. it wasn't just a perfunctory, we

don't take politics into account, and we take them at their ord. >> but if we take the calendar, you know, at face value, you've got -- take your time line into consideration, so september we go. the next meeting is the day after election day. can you imagine a scenario in which they cut in november, or is this september, december is your best guest gs? >> i can imagine a scenario in whichi which they cut in november right after the election. i can imagine a scenario, i think it's less likely that they would do back-to-back cuts in september and in november, unless the economy slowed more sharply. i think the more likely path for rate reductions -- by the way, in the u.s. and also in other g 10 central banks that are starting to cut is that they go every other meeting because it's mainly normalization cuts. it's not cuts designed to, you know, to combat a sharp downturn

in the economy. >> it's because they cut because they can, not because they have to. >> and because inflation is closer to normal, and they are at normal levels of short-term interest rates. >> lastly, you mentioned when you sat down that other central banks are about to begin the cutting. what sort of pressure, if any, does that put on our central bank and our fed, not to let the distance between the central banks get too far. >> i don't think it's pressure per se. i do think that the fed makes its own decisions, obviously the mandate is the u.s. economy. with that said, i think cuts from the fed would be somewhat welcome by other central banks, and if all else is equal, that may be a factor arguing for cuts, but the primary issue is always what's happening with u.s. inflation, what's happening with u.s. employment. >> good to see you, thanks for coming by. up next, we are tracking the biggest moves into the close, kristina partsinevelos is

standing by with that. >> pet adoption rates are up, and that means spending for one retailer, we discuss the stock impact and much more after the break.

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we're a touch less than 15 from the "closing bell." let's get back to kristina

partsinevelos for the stocks she is watching. tell us, please. >> it seems like nothing gets in the way of people spending on their pets, or at least that's what chewy's latest earnings report is showing us with their earnings beat, share repurchase program, and their 27% stock pop right now. management also says pet adoption rates are climbing post-covid again, which bodes well for spending. advanced auto parts or advance auto parts posting a surprise sales decline with the ceo acknowledging the year started off slower than anticipated because of bad weather and a challenged consumer. the auto parts retailer points to cost cutting as a way to hit its full-year revenue guidance. shares are down 10%. thank you. still ahead, american airlines' stock is dropping and dropping hard in today's session on some serious growth concerns. we're going to bring you the details, tell you how the rival airlines are holding up as well. we are back on the bell right after this break.

nvidia shares on a record run this year, and some chart analysts are saying it may be time to take some profits in that name. for more details, you can head to cnbc.com/propick or scan the qr code on your screen. up next, salesforce reporting results in overtime. we're going to tell you what to watch for when those numbers hit the tape at the top of the hr.ou that and more inside the market zone next. of thinkorswim, the award-winning trading platforms. bring your trades into focus on thinkorswim desktop

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and stay on top of the market. e*trade from morgan stanley nchs the market zone is sponsored by e-trade from morgan stanley, no account minimums. we're in the "closing bell" market zone, cnbc senior markets commentator, mike santoli here to break down the crucial moments of this trading day. plus, phil lebeau on american airlines tracks for its worst day in some four years, and steve kovach looking ahead to sale salesforce earnings. they are out thiin ot. we're 1,500 points off 4k, that happened pretty quick. >> it did. less than two weeks. the s&p still up almost 5% this month, but it doesn't feel like it because you've given back a good percentage. it's actually very skewed to the

negative, and it's a playbook that we are familiar with in terms of when bond yields start to make a run, it causes this cycle of questioning of whether it's happening for the right reasons, whether higher for longer response, or lots of treasury supply can be handled by the economy. now, most indications are probably so at this level, but you are seeing a lot of the leading indicators of both cyclical strength and inflationary pricing pressure come back off their highs. that's industrials, it's homeb homebuilders, it's auto insurers. it's all the things you actually want to see soften up if on a macro perspective you want to see inflation become more friendly. that's kind of the good news version of this, even as it causes a little bit of churn and hesitation about the equities themselves. >> we've been unsettled before, and not that long ago by quote, unquote, bad bond auctions, and then we were sued by good inflation reports.

maybe we're set up for that. we're going to find out because you get pce. >> we probably would be -- >> on friday. >> even the auctions this week, they haven't been great in eters of showing heavy demand at these levels, but they also haven't been very destabilizing. yields are down from their 1:00 p.m. high on the seven year charity which was auctioned today. still, we're near these multimonth highs, you can't get comfortable, but i do think it's all happening in the con ttext an incomplete pullback in april. people had heavy equity exposure. there's not a lot of conviction outside the small number of ai plays. >> phil lebeau, tell us about american airlines. we're looking at the worst day in, what, four years? >> yeah, and it's dragging down really all of the airline stocks with the exception of united airlines. look at the big four right now. united is fractionally higher on the day or was earlier today. mainly because it reaffirmed its q2 guidance. then when you look at the rest

of the sector, what's the problem? you mentioned it, scott, american airlines. the q2 warning due to a number of factors including its execution, poor execution cost itself sales. it has raised questions about whether or not domestic demand is softening. we just had the busiest day ever according to the tsa. the numbers don't back up that demand is softening, but it does also raise the question for investors where's the catalyst, and that's why when you take a look at the airline index, there's no traction here, and there hasn't been in some time in terms of where the airline stocks are at. a number of people are looking around saying if you want specific growth within the airlines, now is the time you've got to pick and choose those that are performing versus those that are not. >> phil, i appreciate it. phil lebeau with the story on american ask the airlines in general. leads me to steve kovach and salesforce. the big disconnect in the tech trade has been software, right? it's the area that has not done all that well. we'll see what salesforce

delivers. what can you tell us? >> you nailed it, scott. the question for salesforce and other enterprise software companies, where is the ai money coming? we've seen ai sales flow to microsoft, google and amazon and nvidia on the chip side. not much happening with ai software sales. that goes for microsoft too. especially true in the enterprise, salesforce has been hyping its ai platform called einstein since last year. we know the story behind salesforce' turn around last year following those job and cost cuts. ai monetization story, that one less clear for investors. commentary from marc benioff about sales and its data cloud, which it says secures customer data for its ai tools. last quarter he said a quarter of its deals under or over 1 million buy into data cloud. it's still tiny, but salesforce meanwhile has been down 12% over the last three months, scott, underperforming a lot of its peers. >> steve, all right, thank you. we'll see you in overtime.

getting ready for the close here, obviously, which is why you have the clapping already starting. we'll see if the bell rings on time. get a little excited. you never know. >> yes, they sometimes jump it. meanwhile, there's a little modest bit of suspense in terms of where the s&p is right now. 52.50ish is last week's low. it was also the march 28th high. that's kind of a little bit of a test of did this little break to a marginal new high mean something? are we going to have to pull things back a little bit farther. that's your initial benchmark of are we just bouncing around this new range, or is it something, you know, a little bit worse than that? >> russell down one and a third percent today. elsewhere you've had weakness in utilities, industrials, materials, and energy. >> the utilities weakness combined with the fact that consumer staples and pharma have not been good are almost reassuring because you don't

want to see traditional defensive areas start to rift when yields are higher. that would mean we're punching up for manager worse on the economic front. >> the bell is near, in fact, the bell is ringing. the dow is going to lose more than 400. i'll see you tomorrow," ot" with morgan and jon. >> stocks pulling back as yields tick higher with the dow and the russell 2000 leading the declines. that is the score card on wall street, but winners stay late. welcome to "closing bell" overtime, i'm jon fortt with morgan brennan. >> we have a very busy hour coming your way including results from dow component salesforce. also nutanix, okta, c3.ai and more. we're going to bring you the numbers and exclusive interviews with the ceo of c 3 and pure storage. >> that is how we do it here at