mr. president, thank you. your team, i would also like to thank the united states congress for their support, both parties, both chambers. thank you and thanks to every american heart that does not betray freedom and supports us. slavo ukraineya. >> thank you. >> now, we'll take two questions from american reporters, and -- a question from two american reporters, and a question each from two ukrainian reporters. first person i'm going to call on is colleen long of the associated press. >> thank you. thanks, mr. president. about two weeks ago, you changed course to allow ukraine to fire u.s. weapons into russia. given the reported successes, would you consider further expanding the parameters on u.s.

weapons into russia, even despite your concerns about escalation? and on the news from home, you're going through something that so many american families go through, the intersection of addiction and the criminal justice system, but you're not like most families. was your son able to get a fair trial? do you believe the justice department operated independently of politics? and forp -- >> let me answer your question and then you can ask his question. with regard to the first question, it is clear that a near broad meeting just across the line of the border with russia and ukraine and it makes a lot of sense for ukraine to be able to take out or combat what is coming across that border. in terms of longer range weapons into the interior of russia, we have not changed our position on that. with regard to the family

regarding the family, i'm extremely proud of my son, hunter. he has overcome an addiction, he's one of the brightest, most decent men i know. and i am satisfied that i'm not going to do anything -- i abide by the jury's decision and i will not pardon him. >> president zelenskyy, a number of leaders here in italy, including president biden, are facing upcoming election challenges. how will the security agreement signed tonight and the other promises of support continue if they are not in office? and what's your contingency plan, if they don't? >> translator: thank you for this question. may i ask, first and foremost, i

would like to thank the people of the nation, first and foremost, for the united states, to the countries in europe and on other continents who have supported us from the very beginning, the beginning of this absolutely unjust war, russia against the people of ukraine. that is a day of people the homes and territories, all of that is very important, it's part of life. but first and foremost, we're talking about people and lives of people, you understand. and this war was unjust since the very beginning. the war of this evil, whose name is putin, the war against the people of ukraine. and he has killed so many people. to say that it is not him, that there was a military man who did it, the last one is just an instrument of his. and he is playing this instrument. and therefore, it is important for us since the very beginning we were supported by people, by a nation.

because they understood that we share common values. we simply want to live. and the people understood, they imagined what would happen if such evil attacks them, and therefore we were supported by people in the united states. president biden and other leaders who since the very beginning of the invasion, putin's invasion, started to support us. they, on their values, they were, on the voice of their people. and it is impossible -- and i am sure that this nation chooses leaders and presidents and it seems to me that no matter whom the nation chooses, first and foremost, it seems to me that everything depends on the unity within this or that state. and if the people are with us, any leader will be with us, in this struggle for freedom.

>> do you want to call on a ukrainian reporter? >> yeah, yeah, thanks so much. >> translator: yes, please. >> i have a question for both leaders. today during the g-7 meeting, their discussion focused on developing russia's air defense system based on the most advanced western complexes and also on enhancing long-range capabilities. my question is, can you provide any details on the initiative and about the readiness of our allies to take part in it. thank you? >> i would be happy to respond to that. we have acquired a commitment from five countries so far, for patriot batteries and other air defense systems, as well as we let it be known to those countries that are expecting from us air defense systems in the future. that they're going to have to wait. everything we have is going to

go to ukraine, until their needs are met. and then we will make good on commitments we made to other countries. >> i think president biden answered your question already. he knows and all of our other partners know that urgently, we need seven patriot systems. he asked to save our citizens, not all of them, but urgently seven. and we discussed the possibility of having five of them, but the partners work on it. it doesn't mean that tomorrow we will have these five systems, but see in the closest future, good result for ukraine. >> you'll have some relatively quickly. american reporter? josh winegrobe, bloomberg. >> thank you, mr. president. i have a question for president zelenskyy shortly on the annou

announcements, but if you mind, i would like to ask you about your discussions on the situation on gaza here at the summit. you were asked about it a short time ago after the skydiving demonstration. can you give us your assessment of hamas' response? and do you believe that they are trying to work towards a deal, or is this response working against a deal? and what is your message to allies including those here at the g-7 about what more, if anything, the u.s. can do to drive towards a peace agreement? thank you. >> i wish you guys would play by the rules a little bit. i'm here to talk about a critical situation in ukraine. you asked me another subject. i'll be happy to answer in detail later. but the bottom line is that we made an agreement -- i've laid out an approach that has been endorsed by the u.n. security council, by the g-7, by the israelis, and the biggest hang

up so far is hamas refusing to sign on, even though they have submitted something similar. whether it comes to fruition remains to be seen. we'll continue to push. i don't have a final answer for you. >> and to president biden's point, a question about today's discussions, president zelenskyy, the $50 billion today, you've had the supplemental, of course, from the u.s. congress recently. can you give us an assessment of the situation on the battlefield right now and what has been given now, how long will this get you in terms of either stopping the russian advance or making headway on this? and how long will it last you if, indeed, future leaders or current leaders are unable to reach consensus on further aid packages? and president biden, i would welcome your assessment of the situation currently on the battlefield and what difference the supplemental has made as well, sir.

thank you. >> translator: thank you for your question, indeed. we were expecting the fundamental package of this support was in the congress of the united states of america and through it, it was a long pause for our warriors, first and foremost, but it is important. we are grateful that in the very end, we have this supplement and this will for sure strengthen our warriors. yes, this -- this has given the opportunity to the enemy within this pause to try to occupy kharkiv, but that attempt was stopped by our warriors. they were repelled. the enemy was repelled, and we, despite everything that disrupted all of their plans, and it seems to me that is the most important thing, what this supplement that will arrive gives us, it enables us to fully

equip the reserves. those guys, those brigades that already -- so that they provide for the opportunity to rotate our units on the battlefield, so that they can have some grasp, so that the pregaits can generate. this is what the supplement gives them. the raise of morale, but also the raise of strength for our brigades. and it seems to me that this is the most important. for how long this will be enough, look, we without package have been holding the lines for eight months and the russians have had no successes. and therefore, the question on -- for how long it will be enough, no, i think the question has to be for how long the unity will last. the unity in the united states along with the european leaders. these or those elections will influence that unity.

it seems to me that we should look on this, exactly this way. to preserve unity, to preserve the integrity of the world, integrity of the democratic world, because if ukraine does not withstand the democracy of many countries will not be able to withstand, and i'm sure of that. >> by the way, the idea that we had to wait until we passed the legislation overall even held up by a small majority of our republican colleagues, is just terrible. and there's a lot more money coming beyond what's already come in the other tranches that are available now that we've passed the legislation. so they'll have what they need to get it there as quickly as we possibly can. >> thank you so much, mr. president. >> translator: telegraph, please? >> good evening. thank you for this opportunity. you have a long way from kyiv

and have enough time to prepare such long question. firstly, to joe biden. mr. president, additional ukraine supplemental appropriations act that you signed mandated the submission of strategy war for the war in ukraine, within four to five days after its enactment. this deadline passed on june 8th, and to now yet the international community has not seen this strategy. as it been developed? and the strategy that is classified, what does your administration plan to take to hasten ukraine in the world. that's my first question. the second to president zelenskyy. >> what was the last part of your question? >> has the it been developed, this strategy, and to what steps does your administration plan to take victory to ukraine in the world. >> the steps we're going to make sure that ukraine has victory and that russia does not prevail

is continued support of what we just signed. we significsigned that and a sit number of nations have signed it. we have support of the g-7, and quite frankly, 48 other countries. we sat with the prime minister of japan, south korea, we have 50 nation who is signed up beyond nato and the g-7. so we're going to stay as long as it takes. with regard to the plan, that is the plan in process now. we're discussing with our ukrainian friends exactly what it would be. we have a lot of movement toward that. we know the outlines of it. we have not done the detail of it all. but we know what ukraine is capable of doing when given the material to defend themselves. and that's exactly what they're doing now. >> translator: and my second question is to president zelenskyy. you have been in ukraine and recently you have made a couple

of sharp statements in regard to china. and there are rumors in press regarding the possible supplies of russia's weapons to china. but from that, china is actively promoting its own peace plan among sern countries. what are the motives of beijing now? and would it be possible to change the vision of china regarding our war and which role you can play in this? and the final question, is chun a partner of russia in this crimes that it commits. >> yes, i understand that your trip was long. so -- first of all, i had full conversation with the leader of china by phone. he said that he will not sell any weapon to russia. we'll see with you, we'll see, but he said to me. if he's respectable person, he will not, because he gave me the

word. the second our -- you know, very good with details, how we relate, very open for everybody, basing on charter, and you know that it's -- it bases on next principles. territorial integrity, sovereignty, nuclear security, foot security. if china has alternative view on it, it can prepare alternative peace formula. if we share common views on it, like with globally, with all the world, i think so. so if they share the same away to peace, we will find dialogue. >> by the way, china is not sp supplying weapons, but the

ability to produce those weapons and the technology available to do it. it so it is, in fact, helping russia. thank you all so much. >> this concludes our press conference. thank you, everybody. is. >> that has been president biden and president zelenskyy of ukraine at the g-7 summit in italy, announcing a new set of sanctions against russia to back ukraine's war effort there. welcome to "closing bell." i'm mike santoli in for scott wapner. this make or break hour begins with another day of chips and dips. broadcom and nvidia, holding the s&p 500 up and nasdaq as well, near record highs, while a hefty majority of stocks pull back. any positive close for the s&p and nasdaq would be a fresh all-time high, while the dow, as you can see there, continues to lag. it's about 3.5% below its all-time high, above 40,000.

small cap stocks, also struggling. today the russell 2,000, down by almost 1% after a little bit of a pop yesterday. that even with treasury yields, falling sharply today, following an encouraging wholesale inflation reading, an uptick in unemployment readings. the ten-year was at 4.5 just a couple of days ago, about 460 two weeks ago. we start with our talk of the tape. can wall street stay patient as long as the federal reserve can? as we await confirmation of a soft economic landing? and where within this uneven equity market should investors be focusing their attention? let's bring in joe terranova, courtney garcia, and adam parker of trivariate research. joe, we got used to this idea that economic resilience, earnings come back, the fed not doing anything, but poised to perhaps easy was enough for the market to get by. maybe the breadth of the market is not necessarily showing a lot

of cheer today, but has anything changed after the fed meeting, after some of those numbers this morning? >> i don't think any has changed after the fed meeting, but i think in the last month, a lot has changed when you're taking about how to invest. it is, can you go beyond ai and technology to invest. and the right now, the answer is, it's very difficult to do so. if you study performance so far month-to-date in the 11 s&p sectors, there's only five that are higher. there's a very clear dynamic that's unfolding within the market. we thought that we were getting a broadening out of opportunity, and we thought a lot of that, the catalyst was going to be yields pulling back. you have a two-year that's pulled back 30 basis points, and you're not getting the response from the other areas of the market beyond ai and technology. so some things that i've done personally, i added the lg, which is an etf that focuses on

the largest 50 companies. 50% of that is affiliated with the super 6. i've added some health care names, but it's a tough environment right now to look for opportunities beyond ai in technology. >> courtney, i guess the question is, do you essentially assume that the mode the market has been trading in, kind of narrow, these larger companies doing well and the rest, not so much. you assume they have it right and therefore it's going to continue? or is the relative weakness of the rest of the market creating a chance to make a bet that maybe the market has it wrong or this is a growth scare that's going to pass? >> i think you want to start to look at other areas of the market here. what's happening is the three largest companies, microsoft, apple, and nvidia now cost over 20% of the is s&p 500, which hasn't happened since at least 2,000. and these overconcentrations of markets don't tend to last over the long-term. do we own them? absolutely. do i think this is ending in the short-term? no. but i think there are a lot of other areas of opportunity.

especially when you look at artificial intelligence, there's a lot of beneficiaries of that, especially things like energy. you have to be able to provide the things like energy to metals and copper that's used in the electrific electrification. i think there's a lot of opportunities that it's had other than those three major companies. >> adam, i know you've taken a look at kind of what specifically is working and why, perhaps, in the market, whether it's a certain style, is it just the ai theme. look, can i point to chipotle and coasstco. they're not up because of ai. they had similar-looking charts. what is the market privileging right now? >> quality and momentum. a lot of institutional investor i've talked to are having good years. if you strip out quality and momentum, and the 60 high-quality growth stocks in the index, the performance is probably closer to the market, you know, because the alpha on top hasn't been that great. i actually think it's been

broad -- more of a broad rally since last november. there's a lot of semis that are up. it's not just nvidia. you can plot broadcom or others. so there's lots that are up, but i think the reason that the market is up is the same story. financial conditions are easy a and gross margins are going up. the frosting on top of that cake is that ai dream. the dream is so awesome, you're in this innocent until guilty proven mode for a while. i just spent the last three days on the west coast, and i can tell you, i think people really believe in the potential for productivity, and something needs to burst that bubble. and i don't think they'll be held accountable on return on that investment in the next couple of quarters. >> it seems as if there's some -- giving the benefit of the doubt to some people who are investing most heavily in this. but i keep coming back, maybe, courtney, if quality and

momentum are all that matters, and people are willing to capitalize the ai theme so aggressively, does it imply that we're afraid of the companies more closely linked to the real economy? in other words, we're worried that the economy is going to wobble or perhaps earnings aren't going to come back the way right now the consensus would have it. >> i think the bigger thing is where interest rates are going. i think a lot of the other areas of the economy that are more cyclical or center to interest rates, we see when interest rates will come down keeps getting pushed out into the future. and that's the bigger concern with the rest of the economy. in the meantime, you're getting this fear of missing out. people want to be in that trade. you're seeing additional money go in there. there are two sides of the markets, where people are flooding into your larger companies, and on the other hand, they continue to put more money in cash, because people are still nervous about a future recession. the overall date on the economy continues to be strong. and i think for that reason, you want to make sure you are investing properly, but making sure you are better diversified than just those couple of companies. >> a couple of companies nod,

joe, broadcom and nvidia basically are good for half a percent of upside in the s&p 500. we would be down without them. broadcom in particular, one of these fascinating stories, where it was like, this is kind of a no-growth free cash flow, cash cow-type story. all of a sudden, they have leverage to the data center ai trend and it becomes hockey stick stock price and earnings estimate and we'll go a ten for one stock split, because that's what we do. and because people will take any news as good news when you're in that anointed category, where does that lead the stock right now or even the little bit group? from my perspective, it leads the stock position to potentially challenge a $1 trillion market cap. everything you heard from this company -- >> that's like a 25% run from here? >> and it can easily be attained. everything you wanted to hear from the company last night, you heard. vmware, it's finally beginning to contribute to the company. they raised the guidance on ai revenue. they spoke about other non-ai

areas of the business, beginning to improve. and those areas of the business had been struggling. so you heard everything that you wanted to hear, and it's a great, you know, example of a company that is contributing in ai. i've owned the company now for the better part of the last year, and i have to tell you, i can't even begin to think about selling it. i can't even begin to think about selling this company, because i'm laughing. adam is mentioning quality and momentum, and i'm sitting there saying to myself, okay, i checked the box on two of those things, but the problem is, don't go and equally weight them right now. because that's the biggest challenge. >> i spent a lot of time with zuch, because i agree with you, he's in the venn diagram, all the circles, he's sitting right in the middle of the venn. >> so is it that easy and obvious that the ones that have already been identified will continue to win in this environment? and not only that, but that the amazons and the metas that are writing the checks are going to

get the benefit of the doubt, because guess what, that was just going to be cash sitting on the balance sheet, buying back stock, and it's actually being mobilized. >> for now, you're willing to believe that that investment is going to get them even farther ahead in the future so i think the risk/reward is skewed to the positive for the ai trade. it took up half of the conversations i did earlier in the week. people are trying to figure out the profit pools. power is one of them, but there are others. the productivity. i think, you know, joe mentioned something i agree with. health care, health care services, distribution. i think people don't like that sector, it's election year, the stocks missed on utilization and cost. but i'm looking at business with lots of spemployees where i can predict the customer behavior, i'm willing to believe that earlier than i am for maybe banks, where i have to are up

systems on parallel, so i think there'll be a phase ii here, and that's probably the next wave of it. i kind of like that. and i hate romanticizing i'm contrarian and now joe and i agree, so we're forming a consensus by accident. but i don't think people love health care when i talk to them. >> but as yields fall lower, biotech comes back into favor, amgen is name i've put on but i think when you think about ai, you think about tech and the contribution of the market right now. here we are, 24 hours removed from the federal reserve meeting and really, the risk to all of us is that the ai and tech story falls apart. i don't think the risk is the federal reserve. i don't think the -- and we've kind of focused on, is the risk the federal reserve -- the federal reserve, the next move is done. it's a cut. >> it's innocent until proven guilty, i think, for now. because we got this sort of data

back in july, you know, if there's any pre-negatives or whatever. taiwan semi just told you're good until 2026. so it's hard to see what makes me panic in the next two weeks. >> a quarter of the s&p on a day-to-day basis is kind of moving. so at some point, if it goes the other direction, you think you're kind of a diversified passive index investor. and you have those bets on the table. >> on the flip side, though, i would say the software sector, particularly the stocks that are exposed to human beings, which was an amazing business for 15 years, whether it's now or crm or adony or workday, i think people are guilty until proven guilty on them. they need to show revenue acceleration. and what's happening here, people are saying, i don't know when it will happen, but maybe they're just wrapper companies.

for now the ai trade for them is guilty until proven innocent. there are a lot of things underneath that have changed in the last few months, even if the fed isn't the thing that changed. >> now hardware is eating the world. >> adam, courtney, good to talk you. >> we are just getting started. up next, betting big on small caps? bank of america's global research's jill and carey hall have been bullish on the space for a while and will tell us the best way to invest there now.

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the russell 2000 pulling back from yesterday's post-cpi gains. a potential rate cut on the horizon, those are said to be a green light for a further broadening of the market rally, so is now the time to bet on small caps? let's ask jo carey brown. we've been waiting for the conditions to be in place to see whether or not small caps get a reprieve. it's been extreme for a while. what do you think it might take, and i guess how to approach small caps within a portfolio? >> thanks for having me. i think, a lot of the macro

conditions have been favorable going into the year. we were positive on small caps for the fact that gdp has been better than expected. we're seeing a manufacturing recovery. we're seeing an inflection in a lot of the cycle indicators. that's all positive, but after the april inflation data came in hotter than expected, we took a more tactically cautious stance on the russell 2000. i talked to a lot of investors and investors are waiting not just for the fed to be done hiking, but for those cuts to seem like a reality given all the rate sensitivity and refinancing risk in the russell 2000. i think this inflation print was a step in the right direction, but it was really the first soft inflation print that we've seen this year, so i think we want to see further evidence, and i think that's what the fed wants to see as well, that inflation is actually ooeasing. and i think we want to see more confirmation that the back-end loaded profits recovery that analysts are expecting for small caps actually looks like it's going to come to fruition.

first quarter earnings was pretty good, but revisions have still been negative. and when you look at how that's trended, the profits recovery earlier this year was expected to start a lot sooner than it's now been pushed out to. so by the end of the year, we see a very back end loaded profits recovery. so i think those are sort of what can cause the broader russell 2000 to do well. but in the in the meantime, we still see pockets of opportunity in small caps. >> the clarity on a rate cut or the reality of a rate cut, is it something that in an actual, tangible, practical way is going to matter a lot for let's say the typical small cap company. or is it more about signal to investors that there's a little bit of a different risk/reward setting up? >> i think, you know, one, rate cut may not necessarily matter as much as the fact that rates are not going to stay high forever, and that you could be going into an ooeasing cycle, especially since half of debt on small cap balance sheets is either short-term or floating rate. and credit spreads are pretty narrow right now, but obviously,

if we see those widen and if rates stay high, that becomes more and more of a risk. if we can see more confidence that we're going to be in a cutting cycle, that should give investors a bit more confidence in terms of the profiles of small caps right now. >> something you start to hear now, and maybe it's an indication of where sentiment is is the russell 2000, the entire market cap is bigger than three individual market cap stocks. why do you have to care? from a bit of a market perspective. and maybe that's a good sign, people aren't looking as much. but you said, you have idea about where within small caps makes sense right now. where can you add a little value? >> i think this has a good environment to be selective. pick stocks or be active rather than passive. the largest index have been very concentrated. the russell 2000 has a high proportion of nonprofitable stocks right now. we, with rather than owning the index, we could focus on higher

quality small cap stocks that are more cyclical, could benefit from some of the improving economic trends, if that continues, but that don't have a lot of leverage or refinancing risk on their balance sheets or aren't rate sensitive. i think those parts of small caps could still do well near-term. and if we get more confidence on some of the things i mentioned, that could be a better environment for the russell overall. >> gotcha, so outside of tech -- >> some of the cyclicals value, but tilting toward quality. >> great. jill, appreciate the update. >> thank you. all right, up next, the s&p trying for another record close. morgan stanley's michael mbbinso is looking under the surface. he joins me at post nine for a rare interview after this break.

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so more pet parents can get everything they need... right when they need it. keeping more pets, and families, happy. ♪♪ for the love of moving our clients forward. for the love of progress. 20 minutes until the closing bell. kristina partsinevelos. >> broadcom's earnings beat a bump in guidance impacting super microto the tune of 13.5%. it's the biggest gainer on the s&p 500. actually, 12.5%. there's no direct connection between the two companies, besides broadcom's ai revenues climbing in the quarter, with more expected in the near-term. that ai theme remains in fact, which bodes well were super micro. for all more details on that spending and a lot more, tune into the ceo of super micro on "closing bell" overtime at 4:00 p.m. eastern today.

and sticking with chips, ar arista networks, from 35%. broadcom's ceo says capex spending is shifting towards networking inside the data center versus just compute. that is a good sign for arista networks and why shares are up 6%. mike? >> kristina, thank you very much. another closing high in sight for the s&p 500. the record-breaking run forcing many investors to look under the surface of the index at market breadth and extreme concentration. let's bring in michael mobison. great to have you on. you've done some pretty deep work on not just the history of concentrated markets within the s&p 500, but kind of what drives it, and i guess whether to be worried about it. because people mostly talk about it as somehow a risk or a distortion or something to be concerned about. >> yeah, exactly. the first thing i'll say, is

going back, we went back to 1950, trying to get 75 years of history. we are now at year end at 27%. last night, we were at 31%. this is the top 10 stocks of total market capitalization. last time we were at this level was 1963. and you have to go back to the 1930s to see a sustained period of that. the fundamental question, as you get to it, why is everybody so worried about this. and i think the thing that's really been disturbing for investors is the sharp rise over the last decade. so the last ten years has been the largest increase in concentration we've ever seen. >> and i guess, you know, there have been some who have said, look, it just reflects dynamics within the economy, whether it's kind of a winner-take-most a economy for the biggest names or is it somehow a mispricing, an over allocation of capital. >> it might be all of the above. there are two things we can point to that is interesting. one is their return on invested capital. their measure of economic

performance. that gap is 80 basis points differential in the 1990s. and that gap has opened up to over 400 basis points. four percentage points. the underlying economics are better. the second thing we look at, this will sound a little fancy, but we use a term called economic product. and it turns out the top ten companies last year, which is 27% of the market, are almost 70% of the economic profit. if you go back over time, even when those numbers were in the teens, it was 40, 50% of economic profit. so there may be some other things, but there's certainly something that underpins what we see. >> there was a fascinating piece, kind of a counterfactual in your work which was, you have to test the idea that maybe when the market was much more balanced, let's say in the early '90s, it wasn't concentrated enough. in other words, the market was missing the point that there were going to be these huge winners. >> two things to say on that. one, when you look around the world, of the top 12 markets in equity cap, we're the fourth

most diversified. actually, this is not unusual if you take it on a global level. we did that counterfactual, which is to say, if prices were right at the end of this year, what should they have been five years ago, ten years ago, and they should have much higher. you're markets that were efficient before and they're inefficient now, or argue both ways. just because we're in new territory, i'm about observing, you know, what could make this -- >> it's interesting, because the other periods you mentioned, the early 60s, where you had this extreme concentration, with and another one that was almost as concentrated around the top of the market in 2000. you had pretty good markets in a wile, after 2000, you had a rough decade. that doesn't tell you a lot. what i did like was the history of you want to own the largest stock in the market more or or the second or the third. if you just own the top stock for every year, that index went from 100 to 4, 1, 2, 3, 4 in

2023. so it was bad the whole thing. what's interesting is, that actually was a huge recovery. it went from 100 to 1, like 1.5 in 2013. if you look at 65 years, it's been a bad stock to own, last decade, it's been fabulous. >> interesting. and so many of the other things that people are pointing to as extremes at this point, whether it's, well, large versus small stocks. growth over value. quality over lower quality, they all seem like maybe they're related to this kind of preference for these kinds of companies that now rise to the top. >> part of it, we have to talk about artificial intelligence to some degree. the underlying fundamentals are good, but the ai in the last 15 months has also played into this. and the first obvious thing is what everybody is talking about, the infrastructure play, that

would be nvidia, but the second interesting question is, that helps the incumbents get stronger, or an disruptive innovation in the sense that new companies would come along. and it seems like the bet for now, and time will tell what the answer is, is that it's just making the stronger stronger. >> i guess the other thing that you would having to investigate to some degree is whether, in fact, there's some type of behavioral aspect. you look a lot at investor behaving, does it seem like we tie any of this to that many request >> it does feel a little bit like this, fear of missing out. and when you see these stocks do so well for so long, but the other tricky thing when you think about companies like nvidia, i don't recall ever seeing a company deliver numbers like this, and the operating leverage. incremental profits is a function, incremental revenues is really extraordinary. so, you know, eventually, this is going end to, but for now, it's hard to know how long -- >> and in the meantime, very

difficult for stock pickers, which i think, is why, a lot of professional investors are uneasy about this. it feels like you could never own enough of the winners. >> we looked at the -- in mutual funds, the benchmark of the s&p 500, their average market cap in their portfolio is quite a bit smaller than the s&p 500. so when large cap does well, it's challenging for those active managers. when small caps do well, it's the opposite. that setting in nine out of the last ten years, large caps have done better. it's a difficult backdrop. >> it would be difficult for an active manager to have 20% of assets in the three stocks. all right, up next, we're setting you up for earnings in overtime, adobe reporting at the top of the hour. we'll break everything down for you that you need to watch many that report, after this break. that and much more when we take you inside the market zone.

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now in the closing zone. phil lebeau and pippa stevens looks ahead to adobe aerks out after the bell. welcome all. market kind of hovering here at the index level. another day where the majority of stocks aren't really participating. everybody has a question about whether it's sustainable. >> i'm bullish but cautious here on the tape. the s&p 500, what's not to like, there's plenty we can argue about, but i'm still bullish, i think the s&p can get up to around 55, 50 or so on this next leg higher, before something more serious can happen. >> if you're bullish on the index, the index itself is the

truth at this point in terms of aggregate market behavior. would you kind of own an s&p 500-like portfolio. in other words, you're not looking to pull laggards? >> that's exactly right. you want to be where the strength is. that's where this narrow breadth is telling us. be in those areas of the market that are the strongest, so lean spite. if you think back to 1998. you were bearish, you got tapped on the shourl. >> that's when the dow transport started to lag and you had two years to sit there as the market got higher. when it comes to the time of year, it's interesting, a lot of focus on july as being this meltup potential for the nasdaq, if you look at the seasonal tendencies and where flows might come from. on the other hand, late june, sometimes a little choppy. and then you have the election year dynamic. how do you synthesize all of that? >> a good way to think about it is a lot of my clients are ask me, i don't get it, why is the

s&p at all-time highs and vix is at all-time lows and we have this crazy election coming up? but historically when you look at the seasonal trends for vix in particular, it trends down lower throughout the election year than bottoms somewhere in mid-august. and then ramps up. and guess where it peaks? election day. so it's kind of par for the course to see vix at lows, s&p at highs, and even going into what should be an insane election season, it's pretty consistent with historical norms. >> and i keep pointing out, too, when it comes to the vix, the fact that you have a lot of divergences within the market, parts of the index going down, others going up, the index volatility has been really calm. >> it has been relatively calm. it's the rest of the market that's not orderly at all, small caps, mid-caps, unprofitable companies, higher beta stocks, completely different altogether. >> when you say, kind of take what the market is giving you, semiconductors remain at the

focal point. it's hard to deny their leadership. on the other hand, is it getting extended? as the risk/reward -- basically, has it been too good for too long? >> on a shorter term behavior, the risk/reward is not favorable. it's one-to-one. longer term, i brought a chart that goes back to 1969 and shows that it broke out of a 20-year base in 2020. and there's still upside to be had. from a very simple chart reading, the count is still another 80% potential on the upside on that particular chart. but on a shorter term basis, it's way too high above its 50-month moving average. and when it's 130% above its 50-month moving average, it tends to pull back about 20%. so buybacks should be -- >> it looks a little vertical there in that chart. >> really quick world. >> it's a tricky one. it's a tricky one. purely on the charts, they are breaking down the credit spreads

have started to widen out a little bit. why won't it break down? so i've been using this term like technical goldilocks, would have to be underneath 430 on the ten-year, but breadth is four-to-one today, with a ton of new lows. i think we need to see more evidence that growth is not deteriorating. and that's what the market is expecting. >> john, great to see you. >> good to see you, mike. >> phil, wlahat are we waiting more in terms of the tesla vote and what do we know? >> we expect to get those results at least a half hour, 35 minutes from now. that's the start of the tesla annual meeting. some time during that meeting, we expect them to announce the results of two votes that the shareholders have been waging here for some time. first on the pay package for elon musk, as well as the reincorporation from delaware to texas. and last night, on "x," elon musk posted a chart, and said, thank you for your support,

because both of the votes appear to be on track to pass by wide margins. that was not a final vote, just saying, they appear to be on track to pass by wide margins. all of this sets up the question, if you're a shareholder, what happens next? we've already seen some of it today with tesla shares moving higher. this is triggering a relief rally. the question is, how long does this rally last? is it a one-day pop? wedbush believes there could be as much as a $25 bounce in here. it's also been trending higher over the last couple of days, but that's the real question. how long does this relief rally last? and after that, it becomes fundamentals. some of that will likely be discussed discat the annual mee during the q&a session tonight. as you take a look at shares of tesla, mike, that meeting starts at 4:30 eastern time. and again, we think that some time in that meeting we'll get the results or shortly after the meeting. you know how this goes. these annual meetings, the poll's open, two minutes later, the polls close.

they know the results. it's a matter of when they announce them. >> unlikely it's so close they won't actually have a way to call it one way or another. >> correct. >> phil, a decent test today in terms of how the market would react to an affirmative vote, right? even though stock is well off its highs from the morning, presumably the market is trading on the assumption it's more likely that his pay package passed. that means the 9% delusion for tesla shareholders, because of musk's state going up, i guess that's a net positive, because you didn't know for sure how the market was going to take it >> and when you look at the retail investors, almost all of them probably said, give him the money. a, tesla is elon musk, and elon musk is tesla, and "b," this should end a lot of the discussion about him ultimately saying, look, if i'm not going to be able to be the head of tesla and get compensated the way i should, i'll take the marbles and go somewhere else. that discussion is largely going

to be muted for now, mike. that's the two reasons why the stock is moving higher. remember this, mike. this doesn't mean that he gets the pay package. the delaware courts still need to make a decision here. ultimately, this is a legal case. not just shareholders saying, we'll give him the money. >> right. it's a shareholder endorsement, but it doesn't set the issue finally, phil. thanks very much. we'll see how those numbers come out in a little while. pippa, adobe after the close. >> there's pretty muted expectations going into adobe's print after the company's revenue guidance back in march underwomened the street. adobe isn't entirely enterprise focused, but after those weak work days and salesforce's quarters, investors will be watching adone yoois experience segment which is about 25% of total revenue. updates around ai also really important with oppenheimer saying that opinions have suggested from adobe as an ai winner to fears about competition with ai.

on the flip side, mnksorgan stay saying ramping comps could be a clearing event for very weak investor acceptsentiment. and those shares are down about 23% this year. >> we were just talking about the way investors are looking, you know, pretty dimly, on software in this ai world, pippa. we'll see how those numbers come through. all right. as we head into the close, one minute left, we are on track for new records for the s&p 500 and the nasdaq. the s&p up about one third of 1%. owing a lot to nvidia and broadcom. together, they are more than accounting for the entire gain in the s&p 500 with broadcom up 12% and nvidia up nearly 4%. you have two-to-one negative-to-positive stocks on the new york stock exchange. another day when breadth is negative. the russell 2000 down by 0.8%. so a very, very split and selective market. bonds have been rallying all day. that, you think, would be supportive. the ten-year treasury yield,

down below 4.25%. it was at 4.5 at the highs, just on monday. and here we are, 5435 for the s&p 500, up one quarter of 1%, continuing to launch a winning week at least for now. that's going hit for "closing bell." we'll send it to "overtime" and morgan brennan and jon fortt. >> a seesaw session, but ultimately, record closes, again, for the s&p 500 and the nasdaq composite. we've got more promising inflation data, a dip in yields, following a strong bond auction. that's the scorecard on wall street, but the action is just getting started. welcome to "closing bell" overtime. i'm morgan brennan along with jon fortt. >> coming up this hour, the much-hyped tesla shareholder meeting officially gets underway with a vote from the on elon musk's multi-million pay package, perhaps imminent.