>> my son hates it when we say, we got to take a picture, but i'll tell you, some of my favorite photos are photos we took while on vacation. one particular last year in norway. seema, thanks. >> i second that. >> check out all those stories on cnbc.com. thanks for watching "power lunch," everybody. >> "closing bell" starts right now. kelly, thanks very much. i'm scott wapner live from post nine at the new york stock exchange. this make or break hour begins with the bull case for stocks. and why wharton profess jeremy siegel says we're not done yet. jobs report was largely in line, though a tick up in the unemployment rate sent yields lower. the major averages are all in the green at this moment. communication services and tech are the two best sectors today, hence the nasdaq extending those record highs.

meta, alphabet, apple, seeing gains today, and so is amazon. how about tesla? going for seven straight up days. elsewhere, it's been mostly mixed as we look ahead to next week. it's going to be a big one too. more inflation reads will be on tap. an appearance on capitol hill by the fed chair happens midweek. that's going to dominate the conversation, of course, as will the start to earnings season. the banks will be reporting in just about a week too. it takes us to our talk of the tape. the road ahead for this rally. let's welcome in wharton professor of finance jeremy siegel. i hope you had a nice fourth of july holiday. good to have you on today. >> thank you, scott. happy to be here. >> what is your take after this jobs report and the market's reaction to it? >> yeah. you know, i think it was a pretty weak report. when you look at the details, i know the headline number beat. the revision was beat. the details were not good. we are in a slowing economy.

you know, the fed at the beginning of the year, last december, said that gdp growth this year was going to exceed 2%. well, we got first quarter. that's under 2%, and although we are all enthusiastic, thinking, oh, this quarter looked like three, then it looked like two, now most of the experts, including atlanta fed and the other banks think it's under 2%. i think it's really time for chairman powell to really tee up in the july meeting a cut in september, and maybe another one in november. i think inflation is definitely under control. and i don't want to see this slowing economy turn into something worse. >> that's the risk, right? as you lay it out. that the job market, half the mandate, right? let's not forget. half the mandate about employment. the job market doesn't get away

from the fed. just when they think they've got it right. >> absolutely. there's an economist, claudia sahm, who many years ago had a rule that she investigated that when the unemployment rate rises a half percentage point, and that was on a three-month moving average basis, the probability of a recession was well over 90%. well, guess what? with today's report, we just moved to 0.5% over the low that we hit earlier this year. so, i'm not saying there's a recession. i don't think it's anywhere near 90%. i'm just saying that the fed has to take some of these indicators, including the inverted yield curve, into account, including the slow growth of the money supply,

which although has stopped shrinking is not growing fast enough to, i think, support a strong gdp economy. so, although i think stocks are still in an up trend and the growth stocks still are certainly walloping the value stocks, i think powell has to take note. >> i feel like you're suggesting that no cut in september means recession on the table. no cut in september means this market might be in trouble. >> potentially, yes. and again, you know, i'm looking at the future. listen, next week, we get the cpi. that's certainly going to be very important. we have jobless claims. you know, i like to see them under 240. they've just been tickling that 240 level. a breakout on that. why not be preemptive?

the commodity market has -- is under control. all the others are under control, as you know, scott. we've talked so long about the fact if they use realistic shelter costs in their cpi, they would be much lower than what they have now. i think he can afford to bring us a more normal fed funds rate and relationship to those long rates, which do see, as we saw today, a potential slowdown. >> why, then, do folks like the former fed vice chair, roger ferguson, who was on this very network today, say, good number, it wasn't a great number, i'm not sure it's the all clear to cut. he sees only 50/50 in september. he's a voice i think we need to take seriously. >> oh, certainly. roger's one of the brightest guys, although he has put a lot of capital into saying that, hey, the economy's strong, we don't need one this year.

when i listen to his interview this morning, i thought i saw a little crack, like, well, you know, i'm not going to change my opinion, but we have to look at the data. and let's face it, scott. the fed must be 100% data dependent. they don't have any magic ball, seeing what is going on in the economy. i think they have to look at what historical slowdowns are and say, you know, maybe i could afford -- i think he's going to tee it up on july 31st and we're going to have a lot of data before then, but i think the mindset has to be there now. >> so, you expect a telegraph, if you will, in july. some suggest, like, mohamed el arian, that the economy is even weaker than people think and that they should cut in july, that -- don't tee it up in july. actually do it in july.

what's your reaction when you hear things like that? >> i agree with him. i'm saying, tee it up, because i know how jay powell works. unfortunately, he's so deliberate, and let's hope he's not, you know, overly deliberate on the way down like we already know how overly deliberate he was on the way up. you know, july seems to be premature unless things really, you know, fall apart in the next three weeks. but i also, by the way, we think about two cuts and one cut. listen, when they had to raise rates, they did it by 75 basis points. we should not dismiss a 50-basis-point cut if we see data actually telling us about the slowdown. we have to be as flexible on that way down as before, and yes, if i were fed chair, i would lower it. what i see right now, on july

31st. but again, we have three weeks of data that we're going to view. >> i feel like we're putting the cart before the horse in some respects. we're talking about september. here we are, we just, you know, had july 4th. it's the beginning of july. we just made the turn into the second half. so, taking all of what you said in context, of course, of how you might answer this question, because of what you foresee, what about the market in the here and now? how does it look to you as we've narrowed again, obviously? we're talking about the same mega cap stocks hitting new highs. some have targets like 6,000 on the s&p between now and the end of the year. what's your thought in the here and now? not in the fall. >> well, the here and now is that the momentum is still with stocks on the way up. i think we have to listen very carefully to all the earnings reports that will be coming out in the next two to three weeks about whether there's warnings. so far, we have not gotten many

prewarnings, which is a very good sign, but yeah, that narrowness and -- does concern me. and honestly, and i have said so before, scott, i don't think the small or the value stocks can rally until the fed does lower it. i think they'll stay in the doldrums and all the money is going to -- all that momentum trade is going to continue to focus on those tech stocks. now, again, as i keep on saying, they bring home the bacon. let's hope they continue to do that, but you know, i think if you want to give a chance to the rest of the market, jay powell has to think about the entire economy and not just the digital, you know, the semiconductors and the a.i. trade. there's a lot of other companies that are not enjoying the expansion. look at how narrow the employment gains are in the health care, in the government sector. outside of a few of those, we

have had very, very little. and by the way, with gdp under 2% for the first half, and that's what it looks like, we have very poor productivity figures. first quarter, very poor. looking not good for the second quarter. this doesn't look like an a.i. revolution, certainly, when you have productivity way below trend. another reason why i think we have to lower the cost of capital, short-term, which hurts small firms much more than it hurts those big tech companies. >> you tee up a good debate that is being had right now in the market, and we have been having it on our programs almost every day, this idea of whether it's too soon to buy into the value trade or buy into the small cap trade. on that note, let's broaden the conversation, and i want to bring in brian belski of bmo capital markets and cnbc contributor brin talkington. the professor tees it up for you, brian, because he says it's too soon, that you can't buy

these stocks until powell and company act. you make the case, in part, that you need to do it now, and you're going to kick yourself down the road if you don't. >> well, thanks for putting me against dr. siegel. why would i ever do that? >> you didn't. i did. >> i think this. you have to be an investor and look a little bit longer term, and you know, we have been -- if you take a look at just fundamentals, scott, with respect to free cash flow and operating performance and earnings and earnings acertainbility and really the scarcity of less and less publicly traded small and mid cap companies, we think we're going to be kicking ourselves five, ten years from now. that doesn't help the momentum traders that absolutely, positively have to perform with the market, and with our big cap money, meaning our benchmark being the s&p 500, we absolutely are still buying tech. we're absolutely still buying

financials. thoseare our two overweight sectors, but the rest of the sectors have such strong dispersion, scott, that you absolutely, positively have to be a stock picker. i think for large cap, the momentum continues, but we would be buying russell 2000 small, mid cap and value right now. >> hang on. you say -- you just said the words, we're still buying tech. okay? the implication of that is that right now, you look at these levels and these stocks, and you're still buying them at these levels. but -- and the same breath, you suggest that these stocks are priced to perfection and need to crush their earnings. so, are you literally still buying these stocks? or is that just a figure of speech you used? >> it's a figure of speech, because we haven't made any new positions. we're maintaining our positions. we've long said that the super seven or whatever you want to call them are your core consumer staples type tech. we've said you got to trade down. if trading down into a 500 or

$600 billion company like qualcomm, if that's a tradedown, we think qualcomm, amd, broadcom, oracle, are going to be the real winners the second half of the year. i continue to be quite worried that this is going to be a july 1996 type of event. if you remember then, and i was a strategist back then as well, these companies did not hit their earnings after a huge run the first half of the year, and we had a pretty sharp correction. we still think we're going to have a 10% correction between now and year-end, and we think july and august could be when it comes, especially if we do not get powell, as dr. siegel has been talking about, which we actually degree with, if powell does not tee up a rate cut in sed september with the volatility with respect to the election, especially the conventions in august, we think we could see some downside. >> so, brin, are we set up for a big earnings disappointment and a pullback for big tech? >> you know, i don't think that's going to be this quarter. i think earnings for big tech are going to be strong, but what investors need to know, because the market will sniff this out,

is starting really in q4 of 2024 and then next year, their earnings of the mega cap are going to start to decelerate. i mean, that's what's baked in right now, so you do have to be mindful of that. i think what's also unique, though, and brian touched on it, is the lack or the really dearth of ipos. if you look at '98 and 1999, you had over 700 ipos. most of those -- over half were internet-driven. in 2022 and 2023, we had 62 ipos. and so there's really been no way for investors to play the new way of -- the new wave of a.i. or really new companies in general, because there just haven't been ipos. because most of these companies are sitting on vc and vc-adjacent balance sheets. until that unlocks, you're going to see investors buy into these same names that are durable from an earnings perspective. they may not be growing a year from now like they are today, but i think because of the lack of ipos that we're seeing, that

has really changed the construct of the market. i also think, on the small cap, we've been out of small cap for a couple years. if you're going to get a rate cut, i still think because the regional banks are such a large part of small cap value, if we were going to go back into small cap, we'd actually look at small cap growth where you get those growthier names that actually could benefit from rate cuts and have growth and staying away from the regional banks, which i just think have limited upside, because of all of the commercial real estate and just the real estate on their balance sheet on top of regulation. >> professor, i feel like this conversation we're having is very reflective of the overall tenor and tone of what's in the market. you've got somebody like brian belski who says, you know what, we're probably ready for a correction. these stocks are priced for perfection. they better crush their earnings. bryn is really suggesting the same thing. gosh, these things have really gone a long way.

and even though i think they may eventually have a problem with their earnings living up to the hype and these stock moves, it's not going to be this quarter, so we might as well continue to buy these stocks. do you get my drift here? >> absolutely. we're talking about -- >> even if conditions warrant a pullback, they're not coming now, so just keep buying these stocks. >> i think we're talking about the difference between the short run and the long run. i think i really agree with brian. i think, in the long run, you're going to be rewarded. that's what history says with the low pe stocks, despite the fact that this ten-year period has been the worst for low pe stocks relative to high pe stocks in our history. but if you go back all, you know, a hundred years, you know, valuation is better as a goal for a long-term investor. momentum is more important for a

short-term investor. the momentum is still going towards these tech stocks. they have not yet disappointed. so, at this particular point, you know, what are you? are you going to be a trader or someone that's just going to put away a portfolio, you know, in a 401(k) or i.r.a. and say, i'm going to look at it ten years from now or i'm going to look at my retirement. then, i'm going go wa different way than what i would do right now, because right now, until you lower -- the comment is, small stock growth. i think any small company that finances short, and small companies finance short, are going to be helped immediately by a rate cut. the tech companies are all financed long. either long-term bonds or equity, and it's really cheap for them in both cases. it's really the pain of this tightening and being felt by

those smaller companies that have to roll over inventory and other loans at the bank level, and they need the relief, and until they get that relief, it's hard to see them joining in the tech parade. >> we're talking about momentum, of course, bryn, and it leads me to tesla, which is up -- hard to believe -- 27% this week. in one week. you own that stock. >> yep. i mean, it's a -- it's a sad time for the shorts, right, because it's like these people -- people continue to want to hate on the name. i do think it's kind of fascinating. i think there's some options trading. i think there's short covering. i don't think that beating your vehicle sales by 4,000 even has anything to do with why the stock is up. i think with nvidia, money coming out of nvidia, money coming out of bitcoin, you are seeing a switch over here to tesla. i mean, we'll see what happens on august 8th when we talk about the robo taxis, but i think this is one of those names that people are fine not to own it,

but to short the name has been a real widow maker time and time again. >> professor, at what point -- let's talk politics for a minute, because we're four months away from the election, okay? if we think that the goal posts may have moved, following the debate, at what point does the market start to price policies in if we think that a certain outcome may be more likely, and given what is likely to be a continued level conversation within the democratic party as to the future of, you know, whether president biden stays in this race. the conversation, at minimum, is not going to go away any time soon. when do we start to really think about what policy could mean for where the markets go from here? >> well, first of all, whether it's biden or kamala harris, which, if it isn't biden, i

think my opinion is that she is going to be the prohibitive favorite. there's no policy difference, really, between those two. i mean, certainly, trump did get a bump up in the election. his probabilities and all. the betting markets went up, and there was a little bit of reaction. by the way, i don't think that little bump in bonds -- bond yields yields was due to, oh my goodness, there's going to be a worse deficit under trump than biden. i think there were a lot of other things that were basically happening at that particular time. but you know, we had trump for four years. there's much less uncertainty with a trump presidency now than there was in 2016. if we remember, when he surprisingly won, we had a plunge in the s&p futures on that election evening, and then five hours later, they soared when they saw the republicans wanted -- won everything and were going to give a massive tax cut.

so, i mean, it's -- it's going to be, you know, very, very different now even the tariffs that he proposes, if he can even get those through or goes through with them are milder than they were back then, and nothing else is really as extreme. so, in some way, i'm not sure we're going to have that election volatility that we saw eight years ago or even four years ago. >> well, i mean, the deficit is higher now than it was, obviously. >> yes. >> the prospect of tariffs plus much harder line immigration policy is what some would suggest much more inflationary, correct? so, there is the prospect of bond yields remaining at least somewhat elevated until there's more certainty around those types of policies should the former president be elected

again. >> yeah, i would say that. it's interesting if we make the argument, i mean, and some have, that the immigration, legal or illegal, i mean, you know, basically trump has said, i like the legal immigration and i want to give green cards to everyone that has a college education. i mean, the problem is, with a lot of the immigration we have there, at this point, they're among the lower skilled. i mean, and that's why we have had maybe no productivity growth during the last six months. i'm not trying to say one thing or the other in terms of who we're going to let in and not let in and whether these tariffs are actually going to come through or not. listen, it's going to depend on congress. are the democrats going to take the house? are they going to keep the senate? there's a lot more than just a

five percentage or four percentage point tick-up in probabilities that we saw in those prediction markets, i think, to really change the scenario. ultimately, it's going to be the economy. it's going to be the earnings of the -- of the tech firms and all the other s&p components that are going to be driving this market. i think more than what i see in the presidential side. >> all right. we're going to leave it there. professor, i appreciate your time. brian and bryn, see you soon as well. everybody, have a good weekend. to pippa stevens now for a look at the biggest names moving into this close on friday. >> shares of macy's are popping about 10% after "wall street journal" report that the investor group of arkhouse management and brigade capital management is sweetening its buyout offer. "the journal" says the group is now offering about $24.80 per share for macy's, up from $24 previously. and caesar's entertainment is

slipping after announcing it's buying zero flux. financial terms of the acquisition were not disclosed. those shares, down about 20% so far this year. scott? >> all right, pippa, thank you. we're just getting started. up next, from the professor to the dean of valuation. class is, well, not back in session. it's continuing with nyu's aswath damodaran. he'll join me after the break. we're live from the new york ocexchange. you're watching "closing bell" on cnbc.

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with fidelity income planning, a dedicated advisor can help you grow and protect your wealth. they'll help you create a flexible strategy designed to balance growth and guaranteed income so you can enjoy the life you've created. that's the planning effect. all right, welcome back. nasdaq leading the markets today. it's an all-time high, heading for another record close. megacaps, amazon, alphabet, meta and microsoft, also apple climbing to their highest levels ever. joining us now to share whether this rally has gotten overextended is the dean of

valuation himself, aswath damodaran, the president of finance at nyu's stern school of business. welcome back. nice to see you. >> thank you for having me. >> i feel like, you know, it's becoming a bit of a broken record. we have you on. tech stocks go up. nasdaq extends its record high. and i ask you the same questions because they're the only questions that really seem to matter right now. but your answers might have changed because the stock's continued to go up, and the valuations, theoretically, are getting more extended. how do you answer it now? >> i think it's a bit like groundhog day, you're absolutely right. we talk about the same issues over and over. but collectively, these seven stocks have had -- it's not just the last six months. look at the last year and a half, they've added $8.8 trillion in market cap just these 7 companies. just to give you perspective, china is a market cap of $1.1 trillion. these seven stocks alone have added more in market cap than the entire german markets, the french market, the swiss market.

it's been an astonishing run, but i would also argue that before we dismiss these as risky tech companies, these are the money machines in this market, so when jeremy siegel talked about value stocks, i think, in many ways, these have become the value stocks for investors who care about earnings and cash flows, because these are the companies that are delivering those earnings and cash flows. >> wow, so, you don't necessarily think that we're in any kind of danger zone in terms of valuation here? >> if we're in the danger zone, it's not just the seven stocks in the danger zone, the tech stocks, it's the market overall. i complete a monthly market equity risk premium, it's my personal indicator. start of july, that equity risk premium, the implied equity risk premium for the market is 4.11%. that's the lowest number it's been since september of 2008. in other words, it's almost as if the market has erased the

last 15 years, and we're looking at numbers very much like what they used to be before the big crisis, the 2008 crisis. the question we can ask is, is the market overreach oing on th assumption? but a 4.11% equity risk premium is 2005/2006 numbers. not 2018 or 2019 numbers. >> i mean, does that -- does that tell you that we might be heading into a certain place we need to be aware of? >> i think we need to be careful. i think 4% to me is a red flag, at least from the numbers i've looked at historically. once equity risk premiums drop below 4%, it's almost like a magnet pulling them back towards the 4%. some would track that number and i track it at the start of every month, and at the moment, i think we're getting to a point where even pre-2008 status, you would say this market is reaching a zone where you might

need a correction to clean it up again. >> i think what's interesting is you also make the point that the market is not being driven by rate cut expectations. now, once i'll grant you that, because it feels like we've recently, anyway, stopped obsessing over the fed. however, today, we're thinking about it again because we got the jobs report. the fed chair himself is on the hill for two days next week, and we're going to have more inflation data coming down the pike in the next handful of days or so. and we're going to start thinking about rate cut expectations, and i think, at this point, there's a pretty good expectation, and it shows in the market futures itself, of september, december, cuts coming. so, we must be pricing it in at least a little bit. >> let me suggest an alternative narrative, which is, let's say

rate cuts happen. the fed cuts race in september/december, but let's say u.s. treasury rates don't change very much. in a sense, the market is saying, the rate cuts happened. the short end of the treasurys might be affected. but my point is that the market seems to be going up in spite of rate cuts not happening. it's almost as if the market has decided there's a different narrative driving it, and i think the closer we get to november, i think the less rate cuts are going to be the issue and more the issue is going to be what's going to happen on tariffs and taxes, which are going to be driven by what happens in the election. >> well, that's what i ended my conversation with the professor about. do you think -- i mean, are you already thinking about that as you think about where the markets can go over the next five to six months, and at what point do you think the market starts to price in changing policies around both of those issues? >> i mean, it's always -- it's been one of the things that's troubled me over the last year is how the market doesn't seem to be factoring in the potential

shift in corporate tax rates that might occur next year. i mean, i value companies, and changing the marginal tax rate from 35% to 21%, which is what happened in 2017, has a big effect on value. and if it changes back to 35 or 30 or even 28%, there is going to be a valuation effect. maybe in the momentum, we're ignoring all of that, but i think it's going to become more central to the market discussion the later we get into this year and the closer we get to the election. >> well, i mean, what if it goes down to 20%? right? there are some suggestions that, you know, the -- the former president's re-elected, that he wants to reduce them even further. >> i think the at this point, 21 to 20% is less of an issue than 21 to 28%. i think there's no big boon you're going to get from getting from 21 to 20%. but 21 to 10% would make a big difference, but that would drive

our deficit through the roof, and i don't think anybody's talking about 10%, but there are people talking about 28 or 30% tax rates. >> professor, to be continued. i appreciate you joining me. enjoy the weekend. we'll see you soon. professor aswath damodaran. up next, capital wealth planning's kevin simpson is back to tell us what he thinks today's data could mean for future cuts from the fed, where he thinks investors should be putting their money to work in the second half. he's an always active participate in this market.

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we're higher today. stocks are after the june jobs report sent bond yields lower. my next guest says this record-setting rally could be running out of runway. joining me now is kevin simpson, the founder and ceo of capital wealth planning. good to see you. why are we running out of runway? some say we've got a lot of room left to go here. >> i think over the longer term, intermediate term, absolutely, we've got longer, higher, and better. but over the short-term, i think volatility is going to play a bigger part, obviously, with the election, there's going to be tremendous volatility, at least within the headlines. but just looking at how stocks are priced, scott, since february, we've been very, very range bound. the dow is up 5%. the equally weighted s&p is up 5%, maybe 4 or 5% in that range. most of that return came in january and february. we know the a.i. story. i mean, there's nothing more to talk about, the fact that they're pulling everything higher within the broader

indexes, but i think that markets are priced to perfection right now for most of the market, for most stocks, and if we get a little volatility, a little air pocket, i think it's a buying opportunity, not something you're trying to time or sell the news. i think with the market that hasn't given us a 5 or 10% pullback in seemingly so long, we may see some opportunities here in the shorter term. >> how could we be priced for perfection in so many stocks when so many stocks haven't performed nearly as well as the mega cap tech ones have? >> there's absolutely value in some of the names that we own, because their earnings have gone higher, and their stock prices haven't moved. they've been buying back shares, so their pe ratios have come down a little bit. i think i'm talking more just the broader index. you talked about the market calls of 5,800 or 6,000 on the s&p. here we are in july, we can start looking forward to 2025 earnings, but they need to be

the big boys here. they need to be the ones to carry that market. so, for the broad indexes, i think they're very close to perfection. >> oh, i got you. i got you. i mean, that's why -- precisely why some always point to the outperformance at the index level versus the individual stock level when looking at year-to-date performance of the markets themselves. let me ask you this. i look at your holdings, okay? unlike many that we have been speaking to lately, anyway, you hold a bunch of stocks in a wide swath of areas. you got caterpillar, conoco, walmart, verizon, tjx, procter, honeywell, home depot. i've only named a smattering of the ones you have. my point is they're outside of mega cap tech, yet you suggest to our producers, outside of a.i., there's not much compelling or that we feel that we need to own or rush to own in any way. man, if that doesn't say what

the current market environment feels like, i don't know what does. >> yeah, you know, it's been like that for two years. maybe i've got ptsd with these value names. but if you look at this week, truth be told, we had a half-day wednesday, lot of people playing hooky today. it was a huge day for economic data. we'll get that digested by the markets on monday, tuesday, and wednesday. you look at the ism manufacturing on monday. not great. ism service on wednesday. very much in contraction territory. if you strip out the covid years, it was like the worst print we've seen since 2009. so, it shows the economic growth is slowing a little bit, and i think that's what the fed expects. today, the jobs number was really good from the perspective of what the fed wants to see. 4.1% unemployment. it's not horrible, but it's looking at that dual mandate. jobs, inflation, and inflation is coming down, even though it stalled for a while. so, the good news is bad news mantra holds for now.

i think after today, december is like a sure thing. september, still maybe 50/50. it's going to be data dependent. i don't think they're going to rush into it. i listened to the great interview with the professor. i understand the theory that sooner the better so that you don't run the risk of tripping over a recession before you start rate cuts. but i don't know that if a september rate cut's the first one or a december, it's going to make that much of a difference. i think the idea that you're going to see at least one rate cut this year is constructive. the market is absolutely pricing in too, scott. >> it certainly is. got to bounce. i'll see you soon. thanks, kev. >> thank you. >> kevin simpson. up next, pippa stevens back with us. >> one stock is hitting a new high for the first time in 24 years. we've got the details coming up next.

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it's friday. let's get back to pippa stevens for a look at the stocks that she is watching. pippa? >> hey, scott. let's start with softbank. those shares hitting a new record high for the first time in 24 years. the japanese giant has been given a boost by the public market success of arm, which softbank owns a majority of. the founder has said the firm has shifted from defense to offense because of investment

opportunities around a.i. private equity firm carlyle group is reportedly in exclusive talks to buy baxter's kidney care spinoff, according to the "wall street journal," which says the deal would be valued at more than $4 billion. scott? >> pippa, i appreciate it. thank you. pippa stevens. still ahead, the big banks falling in today's session. we'll find out what is behind that sector's drop and what to look out for when those names althne wk.nings later xtee l at's coming up. we'll be right back. ♪ i wanna hold you forever ♪

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coming up on monday, an interview you do not want to miss. i'm going to be sitting down with boston celtics majority owner wyc grousbeck. announcing they are planning to put the franchise up for sale, the majority ownership group is. we'll get into all of that and more. it's 3:00 eastern on "closing bell" from post nine on monday. up next, bitcoin is falling, and on pace now for its worst week in more than one year. what's behind that drop and how the rest of the crypto market is holding up.

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♪ we're now in the "closing bell" market zone, mike santoli here to break down these crucial moments of the trading day. plus, today mckeel on the selloff. leslie picker joining on the banks falling ahead of earnings next week. mike, we'll begin with you. we're going to close this sho shortened week with record highs for the s&p and the nasdaq, barring a dramatic turnaround in the next four-plus minutes. >> we can sort of hope for that, but i doubt it. it's one of those objects in motion tend to stay in motion stories, and it's also the manner in which it's doing it. today, everybody can point to the megacaps just kind of upward drift is enough for the indexes to be up, the s&p to be up 0.5%, but not only that, it's not just that they're hogging the upside, it's almost contra to the rest of the market. the low of the day this morning for the nasdaq 100 was the high of the day for the russell 2000. they're trading inversely, not

just somewhat distinctly. and that just sort of tells you what's going on. when the market plays defense, it buys the seculargrowth stocks. lower highs in treasury yields, lower highs from the prior time in the dollar. clearly, the market is pricing in risk of a deeper slowdown, and maybe the fed is going to have to ease before long. in the meantime, it's still in the market's mind, okay to buy microsoft and meta. >> maybe it's a little bit of riskoff, feeding into bitcoin down 20% in a month. that will get your attention, won't it? >> yeah, it's been quite a day. we have been talking about these distributions all day long. this, of course, was the exchange that was hacked and went bankrupt ten years ago. it was an expected event t. the trustee gave the market a heads-up that those distributions were going to begin this month. it was also likely a short-term move, and it looks like the market is feeling that a little bit too at this point in the

day. bitcoin, down, you know, just 2, 3% now. coinbase getting ready to close flat. and a lot of the mining stocks have actually flipped green. so, yeah, looks like, you know, the selling was maybe a little bit aggressive due to the u.s. holiday yesterday, and buyers are finding a nice entry point here. >> i'm going to track risk sentiment as it generally has. good weekend to you. leslie, three sectors in the red today and the one you cover is one of them. financials. >> it is indeed in the red, scott. regionals, such as fifth third, citizens, kind of leaning to the downside, as well as keycorp. discover financial services is the worst performer among the financials today. the moves come after wells fargo analyst mike mayo downgraded the 2 q earnings estimates for several of the regional banks, including keycorp, comerica, and

truist. that was on weaker net interest income commentary. there's this expectation that the profitability metric for loan making, nii, will trough sometime in the first half of the year, but as rates stay higher for longer, that could get pushed out, so that's some of the concern there. we'll have a better sense, of course, when banks kick off 2q earnings one week from today with jpmorgan, wells fargo, and s citigroup leading the pack. perhaps it's worth noting that mayo actually upgraded some of the larger names. j jpmorgan, morgan stanley, and goldman-sachs, upgrading those earnings on the prospects of a capital markets revival, scott. >> he's long made the case, right, goliath is winning. those are his words, not mine, as he makes the continued case for the bigger banks. big week next week, okay? fed chair on the hill. bpi, cpi, and these bank earnings say, hello, earnings season. >> i think cpi in particular.

it's not necessarily the central swing factor of what happens with the fed, but right now, nothing going on in terms of economic data or even the fed's projected path is telling you that the soft landing is off the table or telling you that we're off course with regard to the great 1995 soft landing scenario that we all perhaps would consider the ideal. but the longer it goes, and the less friendly data you get, the more that does change. the bank's move is interesting. i actually lump it in with a lot of what's going on with wavering confidence in the immediate cyclical story, and it's hitting the banks, hitting consumer discretionary to some degree outside of amazon today, and it's also hitting the industrials. so, i do think we're at this hesitation moment where nobody's abandoning the story, but you're also, you know, at the margin, losing a little bit of faith that we're going to pull it off. >> you got the unemployment rate at 4% or below for 18 straight months. even a tenth of a tick higher sort of just raises your

antenna. >> yes. the trend is definitely pretty entrenched right now for softening labor conditions. there's no real way to look away from it. >> you figure how that factors in as well to how the fed is thinking about it. good weekend, everybody. see you on the other side of that. into o.t. now with jon fortt. ♪ i'm going to sound like a broken record, but stocks have more broken records. new closing highs for the s&p 500 and the nasdaq and a dip lower for yields as we wrap up the first week of the third quarter. that is the scorecard on wall street, but winners stay late. welcome to "closing bell: overtime." i'm jon fortt. morgan brennan is off today. tesla finishing its best week in more than a year, but is the rally sustainable? we will talk to guggenheim's analyst about why he's sticking by his bear thesis on that stock. plus