>> stocks moving a little bit higher. we're glad you could be with us. >> hope we'll see the back half. can it rival the first half of the year? slow start. could be a strong finish, though. >> thanks for watching "power lunch," everybody. >> "closing bell" starts right now. and welcome to "closing bell." i'm mike santoli in for scott wapner today. this make or break hour begins with a new month, a new quarter and a half, but a familiar push-pull between tech and treasurys. a few giants at the nasdaq pushing higher to support the main indexes you see there. the s&p 500, up about 0.7%. nasdaq is the leader, up almost 0.66%, yet a majority of stocks continue to struggle. they've been held in check in part by the ten-year treasury yield rising to about a three-week high, pushing the 4.5% threshold just a little while ago, now at 4.48%. apple, the biggest upside contributor to the s&p 500 and the nasdaq on the day, both

those indexes, as we said, posting modest gains after big first halves. small caps remain a drag. russell 2000 is stuck, down more than 0.75% on the day. that all takes us to our talk of the tape. should investors' strategy shift as the market takes the turn into the second half with the s&p up more than 14% year to date, or are the prevailing trends the ones to keep playing? chief strategist at solis, dan, good to see you. the probabilities say you got a strong first half, you have this nice upward trend in the market, seasonally, things look okay. you usually have upside follow-through, but the kpl complications come in the details. how are you thinking about whether the first half pulled forward gains or really just reflect a continuing dynamic? >> i think continuing is probably the right way to put it. obviously, this is an extending of the rally that began late last year, and to the point of

the question that we posed at the outset, i just -- i don't know why anything's going to be different. now, mind you, i came into the year arguing for a broadening out of the rally. >> sure. >> which has not happened. as we know, the market concentration, at least from a contribution standpoint, has been quite narrow, although there are other themes that have played out. you've seen this in the a.i. story, which has caught fire, so to speak, not the chips, but the datacenter buildout and the power side of things has really caught fire. but it's still a largely concentrated market. but in terms of what turns it, i think the one thing that i have been talking about, and i think remains true is, if you start to see rates come down over the next six or nine months, is that sort of the contributing factor to a broadening out of the story, or is the a.i., i don't know the right way to put it, or is the a.i. story, just be simple, too powerful for everything else? >> sure, and i guess, you know, there's no kind of law of nature that says it has to be one or the other, but recently, it

really has been almost one or the other on a day-to-day basis. i think we're working on the ninth straight trading session today where the s&p won't move half a percent. >> it's been quite a fun time. >> and yet, you know, the majority of stocks are lower today. you have this really static index and then you have, you know, whatever the market has to do below the surface to keep it that way. i guess the other thing i've been wondering about is, in march of this year, we really did see a broteadening out. historically, strong first quarters mean strong rest of the year. and yet, april, you got a lot of downside chop. you actually had to go through what qualified as a pullback this year, 5 or 6%, and it was with yields going up. what's your sort of diagnosis of the case in terms of why, after a pretty good pce inflation number friday, and, you know, a lot of downside on the economic surprise index, we're sitting here with yields higher? >> listen, i'm in the digestion camp in the sense that we had a

real strong rally. 15% for the headline index, 4, 5% for the equal weight to start the year. i wouldn't be surprised if we tread water for much of this month into the fed meeting where you get some clarity on how they're thinking about things. to your point about the pce, i mean, you have had a softening of the economic data, which everyone's quite well aware, some of the jobs numbers have at least returned to normal if not started to worsen, like jobless claims. the ism today, construction spending today, were not booming. and so, the economic data has come in at the same time that the inflation rate has moderated, and again, as we saw on friday, the fed's preferred measure of inflation is about 2.5% year over year, give or take. that's pretty good for government work. and so, at the end of this month, they're going to provide some clarity on how they're thinking about things in that environment, and from an investor standpoint, that's going to be pretty important, obviously, in determining when they cut rates and if that point i alluded to earlier about a broadening out comes to pass. i will say about rates backing up here, the proximate cause to

which everyone's attributing this is apparently now president trump has a greater probability of winning and he's going to be more fiscally irresponsible. listen, my one pushback on this is, like, the supply story is so onerously bad for the next couple of years, and going to be worse over the next ten years at a baseline, you're going to accumulate somewhere around $22 trillion of additional debt. that's probably going to be closer to 27 or $28 trillion. i don't know that one man or one come into the presidency is going to do much, much worse than that, but i guess we're going to find out. >> maybe not. i think if the market's reacting to anything, it's on the revenue side. if the tax cuts are going to stay in place. but also, it's like straddling the end of a quarter, and you don't nopeknow what the dynamic were in terms of balancing into bonds and out, but if nothing else, it does underscore that it's been pretty easy to exacerbate those supply concerns. the market's been pretty good at talking itself into, oh no, we

might not be -- >> for brief periods of time. i will say, and i'm sure you agree, over the last 40 years, how many times have we heard, this can't be, and yet it always is? i don't know that this time is any different in that respect. the number of conversations i have with counterparties across the street, with investors in our fund, worrying about the debt, and you see this in any number of treasury notes that get written, i just, again, you've got 22, probably $27 trillion in additional debt expected. it's just so large, i'm always reminded of that one famous phrase, owe the bank -- you know what i'm saying. >> yeah, yeah, yeah. it's the bank's problem. >> there's no right way to rationalize $30 trillion in debt. >> no, it's not. we're also not pricing the next 20 years today, and there are going to potentially be fed rate cuts and maybe the economy softens up and there's still going to be a need for duration. >> sure, but what would change that about not price it today is if the issuance starts to change. >> sure. >> if the auction data starts to change, which i assume it will,

not in the short-term, but probably over the next six to nine months, some of those auction sizes, which are already large relative to recent history are going to start to get larger, and i just wonder if, in the short-term, the market's going to have to digest those headlines. i imagine they will. >> sure. let's bring in kevin gordon and wells fargo's samir into the conversation. good to have you both. and kevin, love to get you to weigh in on this whole market concentration story. i know you're focused on it, and i always like to get some clarity as to why various people think we should be concerned. what are the risks of it? is it just sort of, oh, this is not the way a healthy market behaves? or is it something else of a kind of mechanical vulnerability in the market? >> well, you know, i think a lot of times, folks will point to, you know, particularly those who are a little bit more bearish, will point to some metric like the top ten stocks in the s&p and how much of the percentage they make above the index and market cap terms. that, in and of itself, i don't think is the problem, and i don't think that should be

villainized. i think it's what performance looks like under the surface. you're always going to have a large contribution to the index when you have a large stock, whether it's nvidia or apple or microsoft. that's just the index map. but what you really have to pay attention to, more so, i would argue, is whether there is waning participation in the average stock world or, you know, down the cap spectrum. that started to take hold a little bit as you were discussing earlier with dan. over the past few months, there has been a little bit more chop with the equal weighted s&p. the capital weight s&p has continued to grind higher. even over the past year, you have had members of the s&p that have outperformed the index. you can go on and on with members above their 200-day moving average that has sort of taken the stair steppa pattern down. you started to see at the back half of 2021, more of a dramatic move lower, especially in the percentage of stocks that were in an up trend. i think that's probably the key for the second half of the year is, if you can keep that, you

know, above two-thirds of members in the s&p or in the nasdaq, that are above their 200-day moving average, i think that would still be a relatively healthy set-up as we go through the softer patch of economic data, as you get through, you know, a little bit more -- to a little bit more clarity for where the fed is going and what the actual timing of rate cuts looks like. >> right, yeah. it seems as if you could make the argument that it's the majority of the market kind of resting to wait and see. and samir, i know that you have sort of favored quality in various ways of defining that in terms of trying to, you know, find where there might be outperformance in this market. on some level, it feels as if the market is willing to capitalize quality at a pretty high level when you look at the stocks that are leading in terms of earnings momentum, their balance sheet strength. is that something that encourages you or worries you? >> you know, we came into the year thinking that there would be an economic slowdown, and i think it would be fair to say that if you listen to a lot of consumer-oriented companies, it's here. you can call it bifurcated,

starting at the lower rungs, but clearly is consumer is slowing. with it being 70% of the which i, it's going to be very difficult for a preponderance of stocks to do well. it doesn't surprise me that large caps have outperformed, doesn't surprise me at all that people have flocked to growth, which seems to have decoupled from the economic cycle, and i think for the most part, it probably continues into the second half until you see something give. either -- i think you have to see a more pronounced economic slowdown and then early cycle dynamics kick in, or we continue to muddle through, in which case people keep holding on to those life rafts. >> although i guess, sameer, if you were really grabbing on to life rafts, you would think there would be more of a bid for outright defensive-type stocks. it's not quite clear that that's that's what's happening right now. >> again, i go back a little bit to a.i., kind of having carved

its own secular cycle, which i think a lot of people are vie viewing as a little bit immune. if multiples get cut in half, even though people keep spending on a.i., absolutely. i could argue that growth stocks are more vulnerable than the defensive areas. it's one of the reasonwe like health care. it's one of the reasons we've tried to find some of these one-offs like industrials, energy, materials, where you've got some durable demand. you've got really cheap valuations, and they may be built already for that coming slowdown. i would argue those high mega cap growth stocks probably aren't to that point. >> dan, one of the more provocative things people would say is that we're mid-cycle or the market's behaving as if we're mid-cycle. that doesn't mean you have many, many years to go, but in other words, we've been thinking late cycle because of the yield curve or whatever else for a while, and yet the market maybe isn't quite there. >> yeah, listen, i think you could make a case that we're mid-cycle, and although i will say, you were a mid-cycle and did have a mid-cycle slowdown in

the '90s. people said we were mid-cycle and were not in the 2000s and that ended up being very late cycle. i think it's hard to tell and ascertain. there's ways that we do this, but it's very hard to ascertain with any seriousness that you are "mid or late cycle." a lot depends on how you define it. i'll just piggyback on what sameer had to say about the a.i. thing. i don't agree that a.i. hh has "decoupled" from the economic cycle. it has in a number of respects, but it hasn't in -- i think a better way to put it is that it's largely independent of the economic cycle. there's just this gold rush, so to speak, to build out the datacenters, to cool the datacenter, the transportation of the datacenter, the chips, et cetera, et cetera, and i think you're seeing -- you're seeing the a.i. sausage get made here. and i don't know that it's appropriate to overlay that on to the economy. obviously, if there's a broader and more sustained and steeper economic slowdown, some of those capex budgets will be reduced, sure, but i don't know that i would link them in the sense that, well, the within rowe're

spending so much is because of the economy. i'm not sure sameer said that, but still. >> it's catalyzed a lot of real-world spending that in theory has some kind of faculty pl multiplier effects. what are the implications of this environment for you looking into the rest of the year, whether the market is giving us some rebalancing opportunities or some neglected wrareas that look like they seem like better bets? >> well, you know, similar to what dan was saying at the beginning in terms of the broadening out and how much of it has been reversed, year to date, and especially over the last few months, yeah, some of that has been dialed back a bit, but i think if you look over, zoom out a bit, look at the longer term trend, whether you want to take it since the october low of last year or even since the october low of '22, clearly, since the '22 low, it took a while for the rest of the market to catch up. but even since the october low of last year, things are still pretty healthy in terms of broad-based sector gain. energy is the only one that's

been lagging a lot. we think that with the disjointed nature of the cycle, we are talking about mid-cycle, late cycle, where are we, you have to pick which data point you want to focus on, and that will tell you where we're at in its own cycle, because things like housing, yeah, there are certain parts of housing that look late cycle if you look at home sales. but if you look at home prices, you're not necessarily late cycle. look at something like services, it's still relatively resilient. i think the fact that you're still going through a rolling recovery in certain sectors, albeit choppy, especially with what we saw in ism this morning for manufacturing, the fact that it's still in place, i think, still argues for the rest of the market to sort of catch its breath and keep up, and from a factor perspective, i think it's a little bit better, easier to invest that way, especially as we turn the page to the second half, because where rates still are and the fact that you want to be looking for companies, in our opinion, companies and industries that have relatively high cash balances where they're earning more, they have a

relatively high interest coverage ratio, in addition to strong profit margins and revenue that's expanding. that's probably a better way to approach this because of the disjointed nature of the cycle. >> sameer, is there a level of, let's say, ten-year treasury yields or corporate bond yields that would more concern you at this point? it feels as if we keep getting tested every few months about how high yields can go and the economy and the market can hang in there, but is that a key swing factor for you looking out the next six months? >> you've got to keep in mind, right, it seems like any time we push up into the upper fours on the ten-year, and 30-year is even higher, it gives the market some pause. now, again, i think we've entered this phase where people are playing kind of the greater fool theory, where they're paying ever higher multiples for some of these larger cap growth names, so i don't know if it will have an impact at the index level, but i think the most interesting thing about today is, as you mentioned, small caps are underperforming so badly, so rates are having an impact. look at housing. look at small caps. look at house-related stocks.

i think at least for a moment in time, it's pretty easy in terms of what to do. take your gains that you had thus far this year on large caps, even though we like them, and you rotate them into fixed income, right? try to immunize your portfolio, especially on the longer end when the market gives you those opportunities, and then i think it's okay to just write a few chips back into small areas to make sure you don't get caught offside. >> yeah. >> just to bring this back to the broadening out trade that we started with, i think the larger question that all of us who look at markets from a top-down perspective, even partially, have to consider is whether or not this is telling us something. is there something else going on in the market that the 493 are telling us that 7 are not. that's ultimately what you need to focus on. i think the answer is not. i think it's actually particularly interesting. if i told you the -- coming into this cycle, so to speak, the fed would raise rates 500-plus basis

points and the 493 or the equal weight index would put together an average year, i think most people would say, i'll take that. and yet, here we are, and everyone's, not surprisingly, lamenting an average year gain and wondering why it's not worse or what it's telling us. i don't know that it's telling us anything. in the context of this huge increase in interest rates, i think an average year is a pretty darn good outcome. >> that is true, although we almost never get an average year. >> we also never get an average year. >> usually, it's a -- it's kind of a lumpy thing for sure. dan, kevin, sameer, appreciate it. thanks for the time today, guys. let's send it over to pippa stevens for a look at the biggest names moving into the close. >> boeing is higher after announ announcing it's buying back spirit aerosystems in a $4.7 billion all-stock deal after expressing interest in the company back in march. boeings is the move will improve

safety and quality control. analysts noting while it will dilute boeing's earnings in 2026, the benefits of reintegrating spirit are "priceless." the firm saying novsnowflak new ceo is likely to accelerate product development, which could boost topline growth and free cash flow margins, the symptom up 5%. >> pippa, thanks. talk to you soon. we are just getting started here. up next, former federal reserve vice chair richard clarida is back. he's breaking down his rate cut forecast and where he thinks this rally could be heading in the second half. that's after this quick break. we are live from the new york stock exchange. you're watching "closing bell" on cnbc. so this is pickleball? it's basically tennis for babies, but for adults. it should be called wiffle tennis. pickle!

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stocks are green across the board to start the second half of the year. investors looking ahead to a key economic data over the next few weeks to determine how the fed might or might not move at its july meeting and thereafter. joining me now to discuss is pimco's rich clarida. great to have you today. you know, since we last heard from the fed in a formal collective way at the june meeting, probably got some friendlier inflation numbers. it seems like the market grew more comfortable with the idea that perhaps things were developing according to the fed's hopes and expectations. where do you think that leaves the fed with regard to how it sets the stage for any move it might make this year? >> thank you. yes. we did get some good news, really confirming what we saw in the cpi report. we got some good news on the pce index, which is the fed's preferred index, and importantly, the three-month average on that is now down

below 3. it had gotten up north of 4 a few months ago and it's now annualized, running at about 2.7. that's good news. i don't think the fed will have new information to do anything at the july meeting at the end of the month. and the other thing to keep in mind about the inflation outlook is that when you look at the year over year comparison, which is what the fed looks at in terms of policy, those comps start to get more difficult in the fall. so, our view remains that the powell fed does appear to want to get one cut in this year, but most likely, if we got that, it would be late in the year, say, at the december meeting. it could get interesting if we continue to get better than expected inflation data. it could make september a live meeting, but right now, we're sticking to our view that there will be one cut later this year. >> so, at this point, you would think that perhaps the market's getting a little bit too aggressive in terms of pricing, a likelihood of a cut in

september. >> well, right now, there's not 100% chance of that. it has moved up, and that makes sense. and certainly, you know, we'll get reports for -- we'll get reports at the end of july and at the end of august, and we'll get a cpi in september, so there's a scenario where you get enough good inflation data and particular if the economic data continued to move in the direction of a slowdown, that it could make september a live meeting. but right now, i think that the pricing is broadly fair. >> you know, just looking at the fed's stated framework, obviously, as you know, in eters of where fed funds rate is relative to pce inflation, they believe that means policy is pretty restrictive right now. they've always said they were going to likely be starting to ease before the actual inflation target was met. the current run rate year over year of pce is kind of where they thought it might be at year-end. a lot of that stuff builds towards at least the room for a cut. now, this other line has become

a little bit more commonly repeated, which is, you know, powell wanting to make sure that when they do ease for the first time, it could potentially be the beginning of multiple cuts. in other words, they don't want to just sneak one in. is that relevant? >> well, i think it is relevant, yes. i mean, certainly, both through the communication and history of the fed, we tend to get rate-cutting cycles, and although sometimes, for example, in the '90s,there were only really several cuts. that's certainly feasible. but both the sep projections, which we now have, the dots, which we didn't have 25 years ago, and their comments indicate that from their point of view, if they're going to be cutting, they want to be cutting in expectation that inflation's down to 2% and certainly if they were concerned that wasn't the case, it would make them hesitant, i think, to even get that one cut in. i agree with you. >> what's your read on the

current market action in treasurys? you obviously have the yield curve steepening here a couple of days, especially today. the ten-year, up 11 basis points, the two-year up only 5 or so. this sort of idea out there that there's more focus on supply or the fiscal position or maybe inflation expectations. >> i think all those are relevant. you know, one of our core investment themes in our recent secular form is we don't think an inverted yield curve is the new normal. we think the curve will resteepen. we think largely as the front end comes down, but yeah, an inverted curve is not normal, and it will, at some point, begin to resteepen. and obviously, the bond market, you know, the further out you go from the front end of the curve, the more other factors, including fiscal policy and global developments, become relevant for rates. the ten-year has really been in a range now for sometime, and we think it will stay in that range, but it will rise and fall

as information comes in. >> we're going to hear from chair powell tomorrow, actually, at the ecb forum, along with christine lagarde and other central bankers. do you think that the fact that the ecb has cut, and other central banks have moved in that direction, has much of an influence on how powell's thinking about things? >> no, no, not in that way. i mean, each of those individuals who i have the pleasure of working with closely is going to run policy based upon what they need to do for europe, the u.s., or the uk, but central bankers do communicate at forums like this, and in basal, switzerland, at the bis, so i think they're aware of their colleagues' reaction functions and outlook. on the specific question of, is u.s. policy going to be influenced by the fact that the ecb has already cut, i don't think that is the -- i don't think that's the case. >> yeah. certainly, there's precedent for them kind of going in different directions at times.

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(♪♪) welcome back. the s&p and nasdaq both trading just below record highs. the s&p losing a little ground in the last little while after posting double-digit gains in

the first half of the year, but can stocks stage another leg higher from here? joining us now is chief technical market strategist at macro risk advisors. good to see you. >> good to see you again, mike. >> with regard to the s&p 500, you say, nothing to complain about, not really doing anything wrong. it doesn't sound like a re resounding bull case. why do you treat the move that way? >> i'm a trend follower, so higher highs and higher lows, i got to view nit that record. so, moving average in the right position. there's no discernable patterns in place. i can complain that it's overbought. overall, that chart is fine. i can say we're going another 30 for from here? no. >> so, nothing to fight at this point outright, even if it doesn't look spring-loaded. you were flagging just exactly how extreme the upside in semis was last time we spoke, and that's come off the boil. how are you thinking about that?

>> what i did since then, did a study, took a look at transformative technology companies and i went back to 1900 for that, and the chart that i brought today was of rca corp., and what i found there, it did exceed its -- >> like in the '20s and '30s? radio corporation of america. >> right. and what it did was exceeded this 200-day moving average three different times in the 1920s. the first two times, it got shaken out pretty aggressively, but there was that third time in 1938 when it hit it. the way i'm looking at things is if we view like nvidia as transformative technology, i think i did this exercise with gm as well. maybe it's overbought for a reason. >> so, that's the way -- so, with nvidia having had this double-digit pullback, you feel like it's -- i guess the question is, how deep might those become? >> that's true. i mean, on average, the example i brought up last time in semiconductors on average could

be 20%. we already got 16-ish on nvidia. my guess is we're two-thirds of the way in terms of price but probably only halfway there in terms of time. it's going to have to muddle along a little bit before it goes up, up and away again. be a trend follower, mindful of your levels. these moving averages will trail up with price, and that will give you your exit point, so i can't sit here and guess. an example i'll give you last time, got bearish in 1998 and missed on the bubble, you're out of a job. >> if you look at other intermarket things, people have been saying, credit looks type, the cyclical parts of the market still holding up, is any of that changing? >> that's starting to change. i think we have to start looking at the macro again. we just saw since the debate, nominal yields are ripping higher. oil is up 15% in 18 days. that's pretty impressive. but my cross -- my macro uncertainty indicator is starting to tick up. what really caught my eye is that credit spreads are starting to poke up. the fed has hiked aggressively,

but financial conditions have been relatively loose, but credit default swap spreads are starting to push up, and the work that i have done is when the momentum, when it's a buy signal on cdxs, it's a riskoff environment so that brings me to the conclusion of maintaining the allocation i currently have, which is low-beta, high-quality stocks but if that were to persist, because it doesn't look like a base on the chart, that could derail everything that takes my cautious view off the table. >> when it comes to translating it to, let's say, s&p terms, in terms of the we did get a pullback, what threshold is there for where it's like more than routine? >> we're looking at somewhere around 5,300. then we start looking like we're topping. but really, that april low, that is it. you can't be outright, you know, scared to death about the markets until you break that level. until then, it's just -- could just be a consolidation, could be a prolonged range. but i think it's premature to be outright bearish about the april lows. >> we got a few percent.

>> plenty of room for that. >> john, great to see you. thanks very much. appreciate it. up next, we are tracking the biggest moves as we head into the close. pippa is standing by with those. hi, pippa. >> hey, mike. we're seeing choppy waters for one group of travel stocks. all the details coming up next.

coming up on 20 minutes until the closing bell, the s&p trying to hold above the flat line. let's get back to pippa stevens for a look at the key stocks to watch. >> hurricane beryl is roaring through the windward islands and taking a bite out of cruise stocks. carnival, norwegian, and royal caribbean all lower after the storm made landfall this morning. royal caribbean saying they are making adjustments.

madison square garden on the move following news that the boston celtics majority ownership is putting the team up for sale as sports franchise valuations soar. the controlling shareholder is the dolan family, which owns the knicks and the rangers, and could be why the stocked moved higher on the news. >> hope springs eternal among knicks and rangers fans and investors. still ahead, shares of ev makers tesla, neo all moving higher. "closing bell" will be right back. tony, its gone. no. how am i going to do this? welcome to the mdy mid-cap cup,

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welcome back. shares of amazon continuing to surge higher, the newly minted $2 trillion company is investing heavily in its a.i. future, planning to spend more than $100 billion over the next decade on datacenters. cnbc's jon fortt spoke with amazon web services ceo matt garmin in his first interview since taking the job. here's what he had to say about the future of generative a.i. >> that openai moment did galvanize companies to think about, okay, if the world is

going to change, which it's going to, and i firmly believe that generative a.i. is going to completely transform every single industry out there in every way, shape, and form, and some of them, very materially. so, kind of delivering three more percentage points of margin is not going to help them if their revenue is going down, so i think people pretty quickly shifted to, how do i innovate, and how do i grow? as soon as you get past, you know, i put a chat bot on my website that was useful and able to answer a couple of questions and was pretty cool, you get to, okay, i need to use my own enterprise data to go deliver some actual value. >> you can catch more of that interview coming up in the next hour on "closing bell: overtime." keeping an eye on shares of paramount, off the lows off the day on news the company is looking for a streaming partner, and warner bros. discovery could be in the running. alex sherman, wrote the story, joins us now with more details.

>> hey, mike. yeah, look, the idea of pushing these two companies together may ring familiar to some people. that's because warner bros. discovery actually looked into preliminary talks to merge the two companies earlier this year. they put pencils down on that deal. investors didn't really like it. step two, chapter two, to this story may be that paramount plus and max could come together in some sort of joint venture. paramount global's leadership actually publicly stated their desire to move forward with a deal with someone, whether that be a tech partner or a legacy media provider that already owns a streaming service in an employee town hall last week. the news today that i'm reporting is that there is interest from warner bros. discovery in paramount plus in that paramount content to match it with the content they already own in their max service that would theoretically give consumers a more robust streaming offering. >> so, we have this potential

combination or, you know, joint venture, as well as the various media companies perhaps teaming up for this sports distribution deal in streaming. it feels as if just everybody feels as if they have to scramble for scale. it's obviously, you know, the main thing for the players that are not, let's say, in the top two. >> yeah, mike, a couple things going on here, i think, that i report. a joint venture like this would take off, theoretically, paramount plus from the balance sheet of paramount global. so, paramount plus has been losing billions of dollars every year. that may be good news for paramount global shareholders if this thing becomes a joint venture and is no longer on the books for paramount global. but really, in a bigger sense, it speaks to what you just said, that there is a rerationalization of streaming assets going on. so, all of these things have been launched, or they're about to be launched, like sports service, and all the legacy media companies are kind of thinking, you know what? we've got to do this better. we've got to have more scale,

more partners, better monetization of our content, new bundles, new packages, because what we've been doing has been losing us a lot of money. maybe we're finally at the break even point. now is the point that we can make this business into a real money-making business for the next five, ten, 20 years. >> yeah. as many of them sort of plateaued on subs and i guess reducing churn and cutting costs and all the rest of it kind of works on paper. we'll see, alex, how it goes. appreciate you bringing that to us. up next, a volatile day for chewy. that stock pulling back from its early roaring kitty-fueled rally. we'll hear from an analyst with how he's navigating that after this break. that and much more wihen we tak you inside the market zone. \s ♪ do what you want ♪ ♪ what could go wrong? ♪ ♪ come on, come on, come on ♪ ♪ come on ♪ ♪ do what you want ♪ get into an audi and go your own way.

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♪ we are now in the "closing bell" market zone. ubs global wealth management's julie fox is here to break down the crucial moments of the trading day. plus oppenheimer's rapesh digs into chewy's latest wild swing, and phil lebeau with the latest on what's moving the electric auto stocks. welcome to you all. julie, we have this year where obviously great gains, almost 15% to the s&p, only a 5% pullback along the way. yet, a lot of complaints that it's just all been big growth over everything else and maybe the economic message of the market isn't that strong. how would you be advising investors to navigate the second half? >> i think right now the market's trying to tie up a few loose ends. how will the fed react? how will earnings fare over the

next few quarters? earnings season begins in mid-july again and how the political uncertainty of the presidential election may affect markets. ultimately, we don't think any of these factors will cause sustained moves lower in the market, but we also don't see the broader market rising too much further from current levels. our year-end s&p 500 target is 5,500. we're very close to that level now, but again, we're up 15% so far this year, so i think the bottom line is, we think upside is muted for stocks this year, although there can always be volatility. the economic data reports, the jobs data, the inflation data, that's going to be key for markets, and it's important to stay invested. >> if it's important to stay invested, look, if you're an index investor in the big cap s&p 500, you should be pretty happy, but you suggest maybe the index doesn't have a ton of upside. so, within the market, where would you be looking to emphasize? >> i think there's three key sectors we're focused on. the first is tech. we remain constructive on technology stocks, even with the

run the sector has had over the past year. valuations for tech are higher than their long-term average, but many of these companies are profitable, on a firm foundation, and will get bigger. i think tech is important part of a portfolio. the a.i. investment tape remains intact. improving manufacturing sentiment, and the tailwinds from the reindustrialization of the u.s. economy. lastly, small caps. i think while there's a lot of schedule reserve uncertainty, we think the fed's next move will be a recut starting in september, and rate cuts tend to benefit small cap stocks because those stocks are more reliant on debt. >> yeah, that has been, you know, kind of a big albatross on that group. we'll see if the pass of fed rate cuts changes that at all. julie, thank you very much for the time today. now, chewy giving up earlier gains today.

the stock had rallied in premarket trading after an s.e.c. filing revealed meme stock trader known as roaring kitty has taken a stake. rupesh of oppenheimer is here to discuss the company and the stock's prospects. the stock has held on to some of the gains that seem to be accumulating when there was speculation about this stake right here, but the company itself has been trying to, you know, kind of prove it has a durable growth story. how are you thinking about the valuation right now and what the company has to do to kind of, i guess, justify it? >> i think valuation right here in the mid 20s, is fairly valued. prior to some of the speculation out there and roaring kitty, the stock was trading in the low 20s. if you look at the pet food industry right now, you're seeing a difficult backdrop, so given that you haven't really had the household adoption impact in recent years following the pandemic, you've seen some

challenges in those categories, so i think restructuring is a headwind for chewy. food inflation is big part of the growth, and right now, you've seen no inflation out there in pet food. we're actually seeing deflation in the latest reading, so i think those are two of the big challenges out there. >> and rupesh, has chewy sort of proven the business model at this point, beyond just the cyclical pricing issues? >> they have. if you look at their profitability, gross margins are in the high 20s. they think they can get to 10% plus over time. i think where chewy is really differentiate is on the health care side. they've done a great job with their pharmaceutical business, and now they've opened up these clinics, and i was able to visit one in april in florida at their grand opening, and i think they've done a great job with their clinic business. this is -- this is a great business model. i think it's really just lasting

the pandemic headwinds with all the household adoptions and really the lack of inflation out there. if i look at chewy over the next few years, eventually i think they will get closer to high-single-digit topline algorithm, but right now, you're more in the low to mid single digits. >> i know the company's done some buybacks, but you know, somewhat offset by new share issuance. i guess in terms of getting to sustainable free cash flow, are they close? >> they're already there. they announced that $500 million share buyback program on top of what they bought. they generated a lot of cash. they're very profitable. it really is getting back to topline algorithms that they laid out for analysts in december. i think that's what the market is waiting for. the other challenge is driving positive net adds in customers. they've been louising customersn recent quarters. >> i know it's hard to predict, but do we know if, you know, pet

adoption trends are going to turn in their favor any time soon? >> on their last call, chewy highlighted they were seeing green shoots in their business, so maybe we're seeing some modest rebound. you know, i think it's not going to get worse from here. the question is how a rebound we see. there are green shoots out there, face basted on what they're saying out there. >> all right, rupesh, really appreciate you running through it with us. thanks for the time today. phil, we got tesla up close to 6% on the day, among some of the other ev makers. what's behind that? >> well, the chinese ev makers spurred everything early this morning. you're talking about lee, nio. look at the sales results they had in the month of june or in the second quarter. nice percentage gains here. now, some of this is admittedly off lower bases, but even when you take a look at byd, look at all these stocks for the last month and also factor in byd. byd's june ev sales, global ev

sales, up 13%. now, admittedly, there are some questions about whether or not there are price cuts that are going to be cutting into margins in china, but those numbers have people saying, hm, what will we get from tesla tomorrow? the street is not expecting much. the estimate is for deliveries of 433 to 436,000 vehicles. that would be a decline of about 6% compared to the second quarter of last year, mike, but what many people are looking at is this momentum that seems to be building in terms of ev demand, at least right now in china. >> that would be a big, i guess, a turn and a tailwind, phil. in terms of the future quarters, what's now on paper for tesla in terms of delivery? >> well, for the full year, the estimates now come down to about 1.82 million. last year, they delivered 1.81 million. essentially, flat. so, we know that they struggled

two successive down quarters. we'll see what we get with these numbers tomorrow. >> all right, phil. thanks a lot. you had the s&p 500 set to go out with a gain of about 0.25%. even as two stocks are down for every one that is up on the new york stock exchange. that's going to do it for "closing bell." let's send things to "overtime" with morgan and jon. ♪ well, stocks struggling for direction as we begin the third quarter, but the nasdaq climbing to a new record close. all the major averages finishing higher, driven by a big pop for tesla. that's the scorecard on wall street, but the action is just getting started. welcome to "closing bell: overtime." i'm morgan brennan with jon fortt. >> we have a big interview coming your way, matt garmin joins us in his first interview since taking the job at the beginning of june. that's a role once held by current amazon ceo andy jassy, and part of the business crucial