they need to get rid of that from the bottom. the wnba may be missing out in a prime showcase moment. tonight's three point contest does not include caitlin clark. clark was left off team usa. >> i'd watch more basketball if those guys are in the court. >> that does it for us. have a great weekend, guys. >> thank you, dom. "closing bell" is next. welcome to "closing bell." i'm mike santoli. this make or break hour begins with an unsettled market, chopping lower to finish out a week of erratic. the s&p 500 on pace for a weekly loss of almost 2%. it would be its worse in about three months, though it remains 3% off its recent record highs. the equal weighted version of the s&p is around flat for the

week. big outperformers from the first half continue to surrender their winnings. semiconductors off nearly 3% today, down 8% or so this week and more than 10% from their record high with the nasdaq 100 also in retreat from its record high. that pullback now 5%+. the small cap russell 2000 does continue to outperform, though even it has given back about a third of that huge five-day surge into wednesday on the soft landing and federate cut posts. all of this churn has the vix as a three-month high, as traders seek protection with all these headlines flying. you see it 16.5 right now. which brings us to the "talk of the tape." is this still a healthy broadening of the bull market or the stirrings of the year's first proper correction? we'll discuss with laura -- in a moment. first we are keeping a close eye on shares of crowdstrike and microsoft, as the world

continues digging out from a global computer outage. the culprit, crowdstrike's ceo george kurtz addressing the outage earlier on squaik on the street. >> this was not a code update. this was actually an update on content. and what that means is there's a single file that drives some additional logic on how we look for bad actors. and this logic was pushed out and caused an issue only in the microsoft environment. we identified this very quickly and rolled back this particular content file. obviously many organizations are impacted, and many of them are beginning to recover. many systems can be rebooted, and we fixed the issue so the systems are coming up and running. >> well, ripples are still being felt across sectors and industries.

with me now is cic malcolm etheridge. he's also a cnbc contributor, owner of microsoft then crowdstrike. and technology correspondent, steve kovach. steve, i guess more than 12 hours in here, what's the state of, i guess, the recovery? and what do we make of that explanation of what exactly what happened, whether it means it's potentially an ongoing vulnerability or a one off? >> it does sound like a one off. i think we can say that pretty confidently here that this was just a bungled rollout and really speaks to crowdstrike, the processes they go through and have to look at. because the folks we've been talking to all day, mike, have been saying there are safeguards against stuff like this to make sure a buggy rollout doesn't hit so many systems at once. so, we're going to really being interested to see what kind of investigations, sort of, shake out there. but as for the status of things right now, mike, there are still plenty of systems off line. as kurtz said in our interview,

that's just because while some systems are going to be able to reboot automatically, you restart your computer, everything is fine, working like normal, blue screen of death goes away. but other folks are having issues where an i.t. professional from their company has to literally go to their computer, remove the bad files, and then restart the computer. and now imagine that, doing it by thousands and thousands of computers affected all across the world. and you, kind of, see what kind of problem this could be. it could be not just hours but many days before this is fully resolved, mike. >> yeah. all right. so, certainly a nuisance but maybe not something that's going to escalate from here. and malcolm, you know, we've been hearing pretty much all day that this was essentially just a misstep in this one update and therefore not something about crowdstrike's franchise. the stock is down 13%. how are you thinking about it? >> i definitely think that this is something that we'll refer to in the future as an isolated

event. but i do think, if nothing else, it's a knock against the platform occasion narrative that had really been firmly in crowdstrike's favor up to now, right? the bull run that they've been on pretty much the last three months has really been because they were the leader toward building in the cloud from a cyber security standpoint. and i think that they were seen as the go-to player when you want a platform that you can have a single source of truth. and i think that has, sort of, hurt that narrative a little bit, as larger enterprises would at least be a little bit skiddish about having all of their eggs in one cyber security basket. >> let's bring in rosenblatt's katherine -- who covers cloud strike. katherine, i'm curious your thoughts on that as to whether this could have any impact on the crowdstrike franchise or just the general growth story. >> well, first of all, i thought that they were very transparent and fast to articulate and put out the fix. that helped a lot. i called several customers today, resellers, all of them

agreed that they were happy to get the fix as fast as they did. so, it was positive on that. i think there's probably two weeks left in the border. and on the margin there might be some deals that might be held up because of that. but for the most part, every customer i have interviewed, at least six of them in the last three weeks before this morning, everyone was positive. all of them liked their customer service. that's one of the things that gets the most positive response on is how positive and fast they are to articulate and get in and help them resolve a problem. so, i think this is more a short-term issue for the stock, and i still believe in the long-term value. >> i mean, i guess, you know, it sounds silly to just defer to the market reaction, but you do seem to see some evident concern in terms of the -- the stocks behaving today. folks like you out there saying this is probably not a long-term

issue. i just wonder if it means that customers are going to diversify away a little bit, catherine, or if it's just a reflex on a bad headline. >> i think it's a reflex on a bad headline. it's going to be very difficult to take your core fabric, which crowdstrike has become in many of these large organizations, and remove it. so, you know, there might be some possibility they might bring in a one-off, but managing three different end point vendors is going to be more chaos than is having one platform play. so, i think this is a one-off. >> malcolm, you know, you also own microsoft. obviously the market impact for microsoft is not significant. they're clearly just, sort of, the customer here in a sense. but i do wonder, you know, in this pullback, microsoft hasn't been immune to a little bit of down side. how are you thinking about the overall ecosystem and maybe where the focus of the company is right now. >> yeah. as much as i love to step in and

buy when i think companies suffer from an overblown market reaction, i don't necessarily think this is the moment where i would be stepping in to buy these shares, if that's the question you're asking. i think the adage about a falling knife might actually be applicable here simply because we don't actually know just how much financial exposure crowdstrike has just yet. so, i think george kurtz will have a lot more opportunities to come out and let us know exactly what the quarter is shaping up to look like -- the quarter that just happened looks like but also what he sees this quarter we're now in shaping up like. and unfortunately, they don't actually report earnings until, you know, more than a month from now. so, we don't have an opportunity to hear a formal statement from george kurtz. so, i think he'll do the company some justice, coming out and let us know if he does see some serious financial exposure for the company. and if that is the case, i think they could actually see another leg down from here. so, i don't know that this is necessarily the moment to jump in, rush, and buy that 12 to 13%

dip that we're looking at toward the close today. >> catherine, i guess the other thing is even though it's down significantly today, it's only back to where it traded several months ago, and it remains a premium valuation on the stock because of the growth rate, because of how essential it is to all of this. so, is this your optimum entry here? where do you think the stock ultimately can get to? >> i disagree with the former person, and i would be buying down here. i just don't -- this is a very well-renowned company. they are the best at cyber security. there are very few companies that are growing over 25% year over year. they beat on the earnings -- the last eight quarters averaged over 14%. on revenue, it's 2%. so, i would be buyer here. i'm a long-term value holder. if i were on the buy side. >> got you. steve, there is a line of thinking that says, you know,

the fact that it causes this much disruption really just underscores how pervasive crowdstrike is and maybe how entrenched it is out there as an industry standard. >> it's not just crowdstrike. this could be any of the cyber security companies. just look back to what we saw with the at&t hack earlier this week. that was all snow flake. so, when you have one vendor, you know, providing this and something happens with that vendor, then you're at risk. in this case, it wasn't a hack, thank goodness. that is what we should all be saying. and so far crowdstrike seems to be doing their job there. but when it comes to pushing out an update, they clearly failed here. if it just shows if we do get to a point where their systems are compromised -- this is relatively smooth. it's going to be quite chaotic when they can't push out a fix, if they're held at a bitcoin ransomware or something like that. that's where things get really scary. this is just a lesson learned about how we need to be taking these things incredibly

seriously and folks buying these products should be doing their due diligence. i'm going to split the difference between malcolm and catherine. on the one hand, crowdstrike has a sterling reputation for their product. so, today is a big blunder. at the same time, we still don't know the details of what exactly happened and how this was able to happen. i'm still waiting to see the results of a more formal investigation before we make a call there. >> yeah. i guess so are we all. steve, malcolm, catherine, thanks so much. appreciate the help putting it all into perspective here. the major averages are approaching the end of a difficult week. joining me now is rbc capital markets laurie -- laurie, what started maybe a week and a half ago as the broadening out and the healthy rotation and whatever other cliché, it's gotten a little jumpy. what's the message of pulling out from these actions? >> i think there's so many things going on at once. i think that's what's hard about

dissecting this week. on the one hand, we were looking at stretch sentiment levels. on a number of different indicators, markets were starting to feel full in terms of valuations. this big cap growth part of the market in particular. we've had a lot of nervousness under the surface about that. on the other hand you've had this broadening out. i looked at some of the russell moves earlier this week. they were so sharp and so severe. i mean, it feels like we almost did, in a couple of days, what it took us two months to do last time before. and i think just before things move that quickly, even in russellland, right, where we're used to these big moves, it unsettles people. and it's not surprising me, as we're ending the week, to see that re-trench just a little bit. >> you hear a lot of folks looking at the unusual degriee f these moves. and you can, kind of, back task and say what does it usually tell us and where does it go from here. when you've had the general backdrop of it's a bull market, we're up double digits in the first half. usually that continues

throughout the rest of the year. that's your overarching piece. then when you have this much positive bragt or this kind of momentum surge or when the russell has this kind of tremendous move relative to the rest of the market, it tends to be important. in other words, it's not just a blip. do you take those on face value? or is there something about this current set up that's different? >> i think you have to go and look at the whole picture. last week there were all these people running around saying -- i forget all the exact stats. but the russell is up x amount, the s&p is down. that's not happened since x date. what does that mean? and i went back and back tested it. and over the next six months, russell only outperforms s&p 35% of the time. i'm not going to tell you that's not going to happen here. we've been neutral on the space and looking for an inflection. the reality is you've had the big, jumping moves and weird diverges in down cycles in small cap and upcycles in small caps. so, you have to step back. i think what's so hard about this moment is the positioning has been really, really in favor

of the small cap reversion. the valuation, maybe a little less so. cheap, not as cheap as we were last halloween, but certainly supportive -- >> you're talking about small caps. >> small caps, yeah. the russell was around 14.5 times a week and a half ago. that's a little below average of 15.2. you had that valuation room. and then we got this big, enthusiastic vote of cuts from the cpi data. so, you had people just moving in a hurry. one question i have is, have we overdone the fed optimism once again? you know, my rate strategist was telling me he's getting questions about 50 basis points and we've seen one big house -- i'm not going to say who -- make a july call. and that's not really the preponderance of the calls out there. but we have done that so many times. so, i think you want to proceed with caution here. there are a lot of good reasons not to be bearish here. but if you're trying to make that short-term trade, it's hard for me to sit here and tell you we're definitely out of the woods. >> you mentioned at the start

there's so many things going on. so, among those things, you mentioned, you know, huge surge in confidence about a soft landing. the fed is going to nail this. we're going to get a cut in the next couple of months. then you layer on top of it is the perceived uncertainty about the election and what it's going to mean for different parts of the market. >> i think that's been a fascinating conversation this week. i've been a little bit quieter on the issue because this has felt like the regional banking crisis a year ago. what i mean by that, not that i think it's a big, nasty thing. i do think that sometimes you've got to let events unfold and not try to guess every twist and turn. >> oh, yeah. you had people rushing from that silicon valley bank thing saying, fed's going to cut now and it's going to be another crisis. whatever. >> it turned out to be a very well-managed crisis. there were a lot of things that kicked in. if you look at where we are, i think at the beginning of the week, there was a lot of questions on small cap. is this about the fed? is this about the election? i'm pretty sure that was mostly about the fed and cpi based on

my conversations. but i think it was a legitimate thing to ask about. you saw financials and energy making big moves. it was based on historical playbook analysis of 2016. as we got deeper into the week, some conversations with people saying, is it really going to repeat this time? and i think there's skepticism out there. >> it's certain, kind of, a different setup, just the economy and where it's at and everything. how does earnings filter into all this? you started to see, which we've become familiar with, a little bit of a reflex, in terms of what earnings have to prove? >> i think earnings have to provide you the basis for further rotation. if you look back to last november and december, we had cheap valuations in small cap. we've had our own positioning, and we've popped. and we've started to see earnings momentum improve relative to small. you have similar rates of upward provision in s&p and russell. contrast that with most of '23. it was all about the big caps pulling their earnings up and things were lousy and small.

what we're starting to see right now, i'm pretty excited about. you are seeing the small cap earnings provisions are catching up to large cap. unfortunately this is happening at a time when there's softness generally on that stat. but we are, sort of, seeing that earnings case starting to be made. but we really have to make sure it's going to come through because if you go back to january, we basically saw valuations stop looking cheap, the positioning stop looking, and the earnings didn't come through, and the by the way, the people were too optimistic on the fed. we're going to get an answer in the next couple of weeks. >> it ended up being a fleeting window of time it outperforms. aside from the small versus mega, which is obviously opposite ends of the seesaw, what about large outside of megacap tech. you mentioned financials starting to participate more. are we just going to have a little bit more of an inclusive earnings story there? is that going to help us? >> i think the financials were perplexing coming into this earnings season. they weren't that cheap.

they were back to average on the valuation model. we've been watching that one stock by stock. i think the reality is that even if you're not necessarily super cheap there, you don't have the same kind of valuation problems. my favorite stat right now on valuation is if you take the top ten market cap names in the s&p, your median unweighted p/e hit around 30 times. that's the post-covid high. it really cannot reach that regularly or sustainably. and the rest of the market is trading around 16 times. it almost feels a little silly to me sometimes to talk about sectors when you've got all that valuation opportunity outside that top ten cohort. >> you do hear that 16 times the median for the overall index isn't particularly cheap. >> no, no. it's actually a little bit above average. >> yeah, right. >> and it looks to me like you've had this massive move off the 2022 lows in that big cap cohort. this kind of looks -- if you look at the charts, it's like a classic catch-up trade.

i think the catalyst for that catch-up trade have to be from earnings. we go back to what's happening in the economy, what's happening in earnings, the rest of the market outside the max seven had negative earnings growth in the last year. it's expected to ramp up, but we haven't seen too much change in the aggregated estimates and percentage terms since the start of the year. i am having a hard time understanding where the upward revisions are going to come from when gdp is slowing down. that's a question i want answered in the next few weeks. >> it's tricky. we'll see if we need a little more downside action to reset things. >> i think that's fair. >> all right. lori, great to talk to you. thank you. we are just getting started. coming up, leading the large lower. american express shares weighing on the dow after second quarter earnings. but we have a top analyst standing by who's just raised his price target. he'll make his case for more u'side next. yore watching "closing bell" on cnbc.

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american express shares under pressure after reporting earnings. our kate rooney joins us now with the details behind that move. >> amex has been an outperformer this year, but the revenue miss during the quarter is weighing on shares today. there was also a mild slowdown in spending growth build business, which is pretty much a measure on spending on cards, up 6% which is 7% in the first quarter. i spoke to the ceo. he told me, bottom line here, high end consumer is looking really good. they're looking strong, and they're spending especially on stronger. it's also boosting marketing by about 15%. the focus is the younger card holder. 75% of new card holders are either gen z or millennials.

they like the cachet associated with the platinum and amex and, quote, they use their cards for everything. that's why they're focus on that group. if you look at dining, it's almost 2x. one way they are targeting young people is with partnerships. so, singer olivia rodrigo is one example. they're also spending more on f-1. and they're evolving the brand to resonate more with those cohorts. he told me young people are more comfortable paying the annual subscription. they're used to paying for a fee. paying a fee for a card is much more natural for them, mike. >> it all comes back to, i guess, the younger generations are not as different as they were portrayed for many years, right, than their ancestors. we'll see. >> it's full cycle. >> joining me now to discuss is steven bigger. he raised his target on american

express. so, steven, talk about, first of all, i think where you think the stock may be trading lower. is it about the market spend or just a little profit taking? and what did you like in the results? >> hi, mike. i think it was the real head of steam that the stock had coming in, as kate mentioned, you know, real outperformance year to date, about double the s&p 500. that's part of it. maybe a little bit of coming off the table here. but broadly i'd say this is a relatively simple story of execution and just favorable backdrop of consumer spending. as kate mentioned, business did decel brate sequentially from 7% to 6%. a good balance. the underlying trends have not changed there. and just looking at the customer base, which as you know is far more affluent than the national average, they tend to have higher incomes, better credit scores, and of course have been

more insulated from the economic stresses and economic impact from inflation, higher interest rates, et cetera. i think spending here continues. and, you know, then add to that rising stock market values and home price appreciation, greater interest income from bond portfolios for this cohort. i think the spending tail winds are in place. >> i guess the question on the market extent is whether it's just become so, sort of, rewards inten intensive and you have to, kind of, invest a little bit more in that younger customer base at this point and maybe, i guess, muting margins a little bit in the short term? >> well, they do indeed spend a lot on marketing. but the good news is they're very effective with it. so, this year they're looking at spending 6 billion on marketing. that would be up 15% from last year. and, look, that's rarefied air even for american express. they've never spent 6 billion in marketing. so, there's a real effort here to bring in more millennial and

gen z customers. that's where the spending growth has been. i think that's a demographic with business up 13% and the quarter versus the 6% we mentioned for the customer base at large. so, i think that also -- that sets them up well. and the higher market spend, you know, they say it's not going to impact their growth this year. it's not taking away from earnings. and it would actually add, i think, to next year. all else equal, it's going to give them a boost in spending build business for next year. >> your price target of 270 is 20 times current year earnings. it seems a little bit on the richer end of where american express has traded in recent years. >> so, i'd say two things. i mean, a 20 multiple on a company that's growing consistently in the mid teens, they grow revenues at 10% and earnings in the mid teens. so, i don't think 20 is that out of line, especially when you

consider the consistency of the growth that they've had relative to the rest of the broader market. again, the customer base that's fairly insulated from economic downturns. and, you know, it might be on the high side historically, but, again, you know, margins, when margins are this high and you've got the growth rate where it is, i think it's justifiable. >> and in terms of federate cut, how does that sensitivity work through amex, whether it's on net interest side or maybe what your expectations would be on the spending side? >> yeah. well, interestingly, american express has historically been liability sensitive rather than most banks, which are asset sensitive. so, they benefit from lower rates on the balance sheet, number one. and of course, lower rates should, all else equal, result in some kind of push more broadly into consumer spending. so, i think that's -- you know, most of what we've seen this

year is that higher interest rates have worn out their welcome for the american consumer. and to the extent we'll get a little bit of relief there, i think that also adds to the consumer spending story. >> steven bigger, appreciate it, making the case for amex here. thank you very much. >> thank you. shares of starbucks popping. lessly picker joins us now with more on what's behind that. hey, leslie. >> hi, mike. yeah, those shares are gaining on news from "the wall street journal" that elliott has taken a, quote, sizable stake in starbucks. they cite people familiar with the matter there. they say that elliott has been engaging with the company behind the scenes for several weeks, in recent weeks, and the situation is fluid according to those people. and it's possible that they will reach an agreement privately soon. so, this is interesting, mike, because you look at elliott. it's one of the most active activists out there. they've been engaging more recently in consumer-oriented

companies. take for example what's going on with southwest airlines and elliott as well as etsy previously that had a little bit more of a tech bend to it. and of course southwest is an airline. but the starbucks situation is really interesting. the fact that they are, kind of, negotiating behind the scenes would suggest to me that they may not be pushing for some kind of a short-term sale or a short-term m&a transaction, which seems pretty unlikely, given the m&a environment and the size of starbucks. you look at what's happened in public purvr between the founde, howard schultz as well as the ceo, in disagreement on how to run the company. it will be interesting -- i got an official no comment from elliott and cnbc got a no comment from starbucks as well. what exactly they're pushing for is going to be really critical, as we think about just the next phase of starbucks and elliott's

role. >> it is interesting considering it's been, kind of, an execution story in terms of the stumbles recently. and who knows? you've even heard talk maybe they should do more franchising and find another way of structuring the business. so, i guess we'll see what they might be pushing for, lesley. thank you. up next, strengthening support for stocks. ed khris sold is back, and he's flagging a bullish backdrop in the months ahead. the catalyst he's watching and that could mean from here when "closing bell" returns. okay, team! oh, thank you so much i couldn't have done it without you. honestly, i don't do a whole lot here.

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. obviously many organizations were impacted. this was not a code update. this was an update of content. to be clear, it was not had a cyber attack. >> you're watching the show right now and you're saying to yourself, i can't get on my computer. what should people do? >> it depends on each individual system. some customers, it's as simple

as a reboot. it's up to the company that has the impact. we are doing everything that we can to get in front of it. welcome back. small caps again lower today but shaking off the woes of the broad market pain. as for whether the rotation can revive its momentum, let's bring in ned davis researchers chief u.s. strategist, ed clissold. ed, wondering what your work is suggesting to you about whether this rotational move, this huge move higher in the broad list of stocks has good meaning on a forward-looking basis. >> so, for the broad market, it does have a good implication because what you want to see are most stocks rallying together. what you don't want to see is a very narrow market where just a few stocks are rallying, everything else isn't. we've kind of gotten into that situation in the second quarter where megacap stocks were the only thing going up. so, what this rotation has done

is created a percentage of stocks above the 50-day moving averages, got about 70% earlier this week. that's a positive sign. we had another thing looking at the five-day advancing stocks, although the stocks went up in a day for five day s in a row versus all the stocks in decline for five days in a row. that got to high ratio above three times. when you get something that strong, it usually means next few months are going to be positive for the market. this kind of rotation for more boats rising with the tide tends to be bullish for the market. >> and then put that into the context of the general cyclical outlook. it's all happening as we are gaining more certainty about, you know, soft landing, federate cuts, perhaps the election. how does that filter through to your view? >> these things don't happen in a vacuum. they're happening for a reason. it's the macro-fundamental backdrop where, you know, a lot

of people are looking for the fed to cut rates. at some point this year. we got clarity in the cpi report and powell's comments that september looks like the likely first cut date. now at least small company stocks, who haven't been profitable lately, so they need to borrow money to keep going, the lower rate environment means a lot more for them. and what you're seeing, too, is that earnings growth of small caps starting to look up. then we have the political uncertainty of who's going to be in the white house. the market has gone up under democrats and republicans. the market likes to know who it's going to be. whether or not you agree with it or not, knowing that trump's lead is widening in the polls tends to reduce some of that political uncertainty as well. >> i guess who knows if that will last for the next couple of months. but that certainly has been behind some of what's happened in the markets. no doubt about it. and then in terms of whether we're in a good spot in terms of how people are positioned coming into this tough seasonal period

of the year and whether you think that there is a higher risk of some kind of giveback in the near term. >> yeah. so, you look at it a couple of different ways. we have some sentiment indicators that we watch closely. and things probably a lot of listeners follow. the vix index, the volatility, put, call, ratios. they're showing a lot of optimism to. think the market couldn't have a bit of a pullback for a variety of reasons, interest rates pop back up, maybe some earnings disappointment could allow for the market to pull back here. but as long as the damage isn't too great in that trajectory of a few rate cuts coming up, decent year earnings growth, and the political uncertainty remaining in the background, it means the market should be okay for the second half of the year. >> in terms of that, the massive advantage of advances versus declines and all these thrust things that happen in the small

cap rush higher, it seems a little bit out of sync with perhaps arguably where we are in the economic cycle. isn't that the kind of thing that you would typically see coming off of a major economic low or some kind of -- the crescendo of a big-market selloff? >> that's when they happen most often. i would say the last decade or so, we've gotten a few more of these after smaller selloffs. here's a nugget that really brings it home. you know, last week after the cpi report, it was the fourth best day ever for the small cap russell 2000 index versus the large cap russell 1000. the other three were the day of the black monday 1987 crash. october 10, 2008, when lehman brothers went belly-up. and then we also had a couple of days before the pandemic low in 2020. those were major market events. and this happened off of a cpi report. so, it is a little bit different

from when these things normally happen. but the way we do things is we let the data speak for itself. and, you know, broadening the market, unbalanced is a positive thing. >> and i guess in some ways, it's a measure of just how extreme the underperformance was recently in a decent economy leading up to that huge bounce. who knows how we account for it. ed, always good to talk to you. thanks so much. >> thanks for having me. we're tracking the biggest movers. >> we're going to bring you the details around one major utility company up double digits and clean energy names heading in the other direction, collapsing in today's session. more on all of that after the break.

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16 minutes until the closing bell. s&p 500 down 3/4 of a percent, around 5,500. let's get back to kate rooney. >> let's talk about hawaiian electric shares, first surging over 35% today. the utility company among the firms tentatively agreeing to pay over $4 billion to settle hundreds of lawsuits over last year's maui wildfires. this is according to a bloomberg report. and some power shares collapsing today, really going the other direction, as the energy company

announced thursday. it plans to suspend any new solar installations or shipments as of september. the move effectively marks the end of sun power as an operating business. shares are trading under $1 at this point. and plug power shares sinking after the green energy company announced its plans to sell $200 million of stock. shares are down over 13% on pace for its fourth straight losing year. mike, back to you. >> that's been going on about 20-something years with plug power, more money, trying to make more. kate, thank you. still ahead, coverage concerns. insurance stocks sliding today with names like aig, wr berkeley, and -- contessa brewer explains why. "closing bell" is back after this. it's time to simplify. waystar's technology is the way to make healthcare payments more human. the way for providers to prioritize care and improve margins.

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♪ we are now in the "closing bell" market zone. contessa brewer on what's behind the selloff in insurance stocks. plus leslie picker on moves in the regional banking space. and breaking down the crucial final moments of the trading session. contessa, talk to us about what's behind these insurance moves. >> well, you know, travellers had a noteworthy earnings beat this morning, mike. in spite of a record breaking quarter for thunderstorms and catastrophe losses of 1.5 billion, it wasn't so much that the climate risk spooked investors. it's contagion concerns because a much smaller company posted losses in its earnings yesterday in part because of an unfavorable prior year casualty reserve development. turns out it didn't set enough money to play games in casualty. and that stock dropped about 18%

now. let's show selective. other companies with exposure to business lines like travellers, wr berkeley, hartford, they all got lumped into the same boat. and of course there's concerns over the crowdstrike fallout that will likely hit cyber insurers. i mean, aig is down about 4 or 5% today and the impact still to be seen here. we'll keep an eye on our insurance stocks, but it looks like there's more story to tell, mike. >> for sure. and certainly one of the stronger groups within financials or had been up until recently. contessa, thank you very much. leslie, regional banks, seems seems like a little bit of a give and take here. >> roejal baegional bank fundam have been better an expected. western alliance shares are about 7% higher after the phoenix based bank raised guidance and showed significant

beat on -- credit quality wasn't much of a certain with net charge offs and non-performing loans. little changed on a quarter over quarter basis. and it's this type of print that's pushing the carry higher. comerica reported somewhat mixed results. that one is down about 11%, largely spurred by the likely ending of a key partnership. comerica said today it received preliminary notification from direct express, which distributes federal benefits. analysts point out that this relationship generated average deposit balances of 3.3 billion in 2q. and mike, we'll get additional regional reports next week. >> absolutely. so, i guess since that's, kind of, a one-off, still a decent economic message coming in general out of the action in the regional bank stocks. another busy week coming up. scott, let's talk about

where you would, i guess, re-allocate any portfolio funds you might have right here, because even though it looks like an orderly 3% pullback in the s&p, so much movement below the surface, i wonder if it's surfaced any opportunities for you. >> well, i think, mike, it's a little early for that. i mean, in our opinion, you know, this rotation that we've seen into small caps, that's not something that's going to last. we think we're still in late cycle, not early cycle, where, you know, small caps and high-yield bonds and that tend to perform early in a cycle. so, we don't think we're there yet. we had been hoping for a pullback because we do have a little bit of cash. we think tech and communication services are a little overvalued here. and i don't think it's really a bold call. if you're looking for a 10% pullback, you know, after the kind of run that we've had since the october lows, i think that's very doable. and so, you know, 3%, that doesn't get us interested yet.

but i think we have some potential over the next couple of months for a little more down side. >> i mean, what do you think would spark that? not that you always need some specific cause. but it seems as if the market is getting pretty comfortable with the idea of, you know, soft economic landing, fed's going to cut rates, maybe we get friendly policy measures out there, but who knows? i guess is there something in particular you're expecting to disturb the markets here? >> well, you know, i think at this point in the cycle, it comes down to what inflation is going to do and what the reserve is going to do about it. and i think right now, whether you look at what the market expects in 2025 or what the fed expects in 2025, i mean, they're expecting a lot of rate cuts between now and the end of 2025. i think, you know, we've got two pencilled in this year. i would still argue that if we're wrong about that w, it wod be fewer rate cuts and not more.

and of course we're running out of meetings. i think the thing that would spark some sort of sellout is inflation is stickier. that's one thing which would cause the fed to leave rates where they are, not cut much at all. and then i think also this earnings season has the possibility of not coming in with nearly as high a beat rate as we've seen in the last, you know, three, four, five quarters, which, you know, that's been, you know, 400 basis points better than consensus pretty consistently. you know, if we come in in line or just less of a beat, i think the market's going to get a little bit concerned about the magnitude of the slowdown and really what that's going to do to earnings. because as we look down the road 12 months or so, it looks to us like the consensus is a little optimistic on earnings. so, i think those are two things, inflation, interest rates, and then earnings, that could take us down a little bit. >> you continue to, kind of, lean toward a quality bias, but

you also said that tech and communication services look expensive. that's often where a lot of the quality names are. where would you focus if you still want to take advantage really of this rotation out of quality into lower quality recently? >> yeah and on this run-up -- and you're right, mike. tech and communication services have plenty of quality. tech is about 32% of the total cap of the s&p 500 now. if you're neutral there, you're carrying a pretty good load. we have interest in industrials. we have interest in health care, which has been a little difficult. we have the most interest in energy. we think there's still a shortage there. and even if the economy slows further like we think, we want to get into that. so, materials, we still like materials. so, i think those are some of the things that we think are undervalued relative to what the outlook is over the course of the next 18 months or so. >> all right. scott, i appreciate the time today.

have a great weekend. thank you. 30 seconds to the close. we are headed for a pullback on this friday, the s&p 500 down about.7%, right about that 5,500 mark on pace for about a 2% drop for the week. as well as a 3% pullback from all-time highs. the russell outperforming. that's going to do it for "closing bell." we'll send you to overtime. that's the end of regulation. shari is ringing the closing bell at the new york stock exchange. the dow leading the declines today, finishing down about 1%, wrapping up a volatile week. the nasdaq shutting more than 3.5% since monday's open, while the russell 2000 does hold on to weekly gains. that's the scorecard on wall street. but the action is just getting started. welcome to "closing bell: