on the large money center banks. that's really put a fuel and sparked a rally into that group. that is leading the rest of the market higher. the major averages of the dow jones industrial average, off 1 1/3%. energy stocks strong. oil, by the way, back above $70 a barrel. increasing the oil producing stocks. nasdaq also higher. better than 1%. technology in the leadership group on the upside. s&p 500 looks like this. again, we are at the highs of the afternoon here in this final stretch of the game. 15 points higher op the standard and poor's. bob pisani on the floor today. a lot of activity today. >> 5-1 advantage of the declining stocks. last week there was concerns maybe this is the time to take some profits. we were down 5% from the highs of a couple weeks before. you can't get a sustained sell-off going on. a couple days down. look here today, you mentioned the financials, that's a big

factor. the dollar weakness as well is pumping all those commodities. >> don't you think here we are in the sort of judgment day week, you know what i mean, with the earnings coming out, al co-a kicking off the fourth quarter earnings. we need to get evidence that things are actually getting some action. >> and we need to see top line growth in particular. it's been very, very little in evidence so far. i think that's going to be the key factor. believe it or not, folks, it's the dollar really helping things here. two factors helping. maria mentioned earlier in the day that goldman sachs upgrade helped financial stocks. after that, folks, the dollar really is what mattered. that spiked commodities. look at the dollar index. remember the g-7 did not say much about the strong dollar, even though many were commenting last week, wanting the dollar higher. didn't get much of a communication. dollar moving throughout the day. as we hit our lows of the dollar, just a short while ago, the overall market hit its highs for the day. look at the big names here. the big commodity players here.

alcoa the biggest ganer in the dow jones industrial average today. up nearly 5%. you don't usually see alcoa as a market leader. but as you can see, it's hitting the high here. the energy group, oil's been spiking up. gold's been spiking up. copper's been spiking up. as the dollar moves down here. it doesn't matter, the big oil name charts looking the same today, hitting their highs at the # clock time today. newmont, the can see the relationship is pretty clear. goldman sachs upgrading big cap stocks in regional banks here. their argument is better earnings are coming for the big names over the regional names. but the stocks' performance has not yet reflected that fact. they're upgrading the overall group. in particular, wells fargo. wells fargo outperforming most of the day. let's go around the horn and talk to all my friends.

mike? >> yeah, bob. we're picking up a little bit of steam here at the nasdaq right now. up 22 points. obviously it's not the financials leading the way higher here. it is tech overall. specifically, brocade communications, powering 18% higher at the moment, of course, on the back of the "wall street journal" report, that it's for sale. it's going to get bought. we're seeing shares of net app, suggesting that it, too, could be for sale. that's talk of a couple of deals. we actually have a real deal in the water. i'm talking about pool corporation. the company buying a privately-held pool supply company. it says that deal will start adding to earnings as early as next year, the stock is up 2.3%. weird in this economy to be talking about the pool building business. nonetheless, jenny montgomery scott upgrading shares of petsmart today with a wi of a $27 target. up more than 4%. in biopharma, there's a whole bunch of drug data out here

today. we've got am a cuss therapeutics down 22%. and then on the positive data side, we've got zeno port up 8%. and continuing the huge rally this year, again up 6% today. since we started with the deal talk, i'll finish with deal talk, shares of comcast up 1.1%, reversing their slide from late last week when the report surfaced about it possibly buying a majority stake in nbc universal, even though barons is suggesting this deal is not such a good idea for comcast. let's go to sharon epperson down at the imex. >> i'll talk with dollar talk, that is a main factor affecting commodities today, including energy prices. the fact that the dollar has weakened throughout the session, that has lifted oil prices as well as gold and the metals. keep in mind as well we're looking at stocks at their

highest levels of the session. that's why we're looking at oil prices 10 cents above the settlement price here. continuing to gain ground as stocks rally, and as we see, the dollar continue to weaken. it's not only oil prices benefiting from this. it's also gold. looking at gold here, well above that #$,000 mark. in fact, we're inching close to the interday high. we're continuing to watch the gasoline futures. that's helping to lift oil prices today. a number of refinery snags, with exxon mobile in torrence, california, and baton rouge, louisiana, helping that part of the complex as well. in terms of gold, traders on the floor saying it's not only the gold futures that are getting a lift, but gld, which gets a high when we're seeing this rally in the stock market. natural gas futures up over 5% today. we did see natural gas etf issuing shares for the first time since july. that also contributing to the rally in natural gas prices. rick santelli, to you in

chicago. >> thank you, sharon. you know, this morning started out with some pretty interesting news. maybe it doesn't fix everything immediately. but to see it above 50 reads for the first time in a year on the biggest section of the economy in terms of the service sector, it was really good news. now, everything fell into place. the equities did better. but the dollar didn't. interest rates normally associated with moving higher on good data. well, they're virtually unchanged. if you look at a one-month chart of the dollar index, we're only 3/4 of a cent within striking distance of the one-year low, closing around 76 the 23rd of september. the beginning of fiscal 2010 for the u.s., there's going to be less bills, and this is important. now, if you look at interday 10s, not a big wild day. maybe tomorrow's three-year could be more wild, because if you're cutting off the road to t-bills at a time when people

are enjoying the safety of bills, you're going to push them in the longer ma turts like two and three-year notes. let's see if tomorrow's auctions affect it. >> rick santelli, thank you very much. the other headlines we're covering at this hour. the supply management reporting service index which tracks p 80% of the country's economic activities. showing that it increased by 2.5 points to a reading of 50.9. that was better than expected. the first time the services sector has expanded since august of 2008. caterpillar announcing plans to raise prices for many of its machinery items by up to 2% because of "currency industry factors." on caterpillar. the price tag is to take effect in january. pepsico bottling north america, coming two months after the soft drink and snacks maker announced

plans to buy its two biggest bolters for nearly $8 billion. pepsi will fold the new company into the new unit which will account for three-quarters of its volume in north america. a look at investing going forward for the fourth quarter. steve is with us, with russell investments, along with eric. gentlemen, nice to have you on the program. goldman sachs coming out with a report complementing the banks as far as buying stocks now. would you buy into that? would you put new money to work in the financial sector today? >> with a caveat. with financials, it's going to be very name specific. so for example, at russell there are financial names we're overweight, but also underweight. so i think a lot of due diligence. you really have to understand what you're doing within financials. so i think just going broadly into financials, probably not just yet. so it's going to be a balance sheet by balance sheet situation. >> the other big story is the dollar here today. how much more perfect can this

relationship be. every time the dollar dries, buy commodity stocks. some day -- >> the market as a matter of fact. >> some day the dollar is going to go up the same day the stock market goes up, when the sun really starts to shine. but until then, boy, does this trade work. >> it's not quite there. it's about the risk trade. taking money out of less risky assets, putting it in more risky assets. equities are considered that, commodities are considered that. i disagree with the buy the bank. i think two things, putting new money in the market right now, the reaction on friday for a number of, you know, unemployment could reach 10%. something i thought was already in the market. i think today it bounced back. it's more than a reaction to the bank stocks. two, the housing market is probably going to start to roll over a little bit here. i wouldn't want to be holding bank stocks in that environment. you could probably pay it for trade, but i wouldn't want to invest for money. >> as you reported, we're going to see a lot of new stock coming

to market. obviously a new market has brought out the companies that want to issue stock, and dilute existing shareholders by the way. let me read you a note here. peterman has been wrong on this rally for a long time. he's been negative. but he makes a fantastic point here. he says the liquidity data from the march lows has been driven entirely by buying and borrowing by portfolio managers." plus you've got huge net sellers coming from companies expanding the shares $127 billion retail investors have been on the sidelines. as this new stock comes to market, secondaries, ipos, is that a negative for the market or positive? >> i think i would look at it two ways. i think it's going to be a positive that the company can actually place it. i think capital markets are generally beginning to free up. obviously from a supply side, it's going to be diluted in the

price action. but i think by and large we're beginning to see deals get done. about three weeks ago we actually saw franklin get some toxic assets off their balance sheets a couple of weeks ago. you're actually seeing deals get done, people putting their business models to work. in some ways, in a push, i would probably say more positive. >> let's talk about earnings here. remember the end of last quarter, everybody was worried, are we going to get any earnings growth, anybody beating it. turns out a lot of people beat and we had the market move up. there was no top line growth. people said that's a second half of the year story. you worry too much. >> and expense cuts. >> now it's a little harder to argue we're not going to have any top line growth. >> if you look at the rally since march, it has been driven by fundamental earnings growth. i think we're going into the earning season for the updates look like we'll be upsizing earnings. we certainly look like we are growing revenues more than i think we're expecting.

i don't think it will have as much impact on the stocks as we have the last two earning seasons. >> would you put money to work in brazil right now? >> i think it's contingent on asian growth. i think brazil is one of the names we would like internationally. when i look at brazil, i see more of an asian growth story than latin story. maybe part of the earnings story, revenue story we're seeing in the u.s. markets is a lot of the earnings will come to the u.s. and be repatriated into the u.s. dollars. >> ash a before brazil? >> they're a similar story in many ways. >> the big thing that happened with non-farm payroll, it looks like the u.s. might lag global growth now. maybe compared to europe, that may be why g-7 didn't make a statement on the dollar this weekend? are we going to be lagging the rest of the world here? >> i think we're going to be growing faster than europe. it looks like the same unemployment rates. we'll probably be able to bounce

back a little harder than europe once the banks come back. >> asia grows the fastest. the u.s. is probably going to grow less than a core year. so the euro might be a better currency. >> i'm hearing very, very slight whispers, how about you, bob, of europe beginning to turn. it's the first time i've been hearing that, actually. a lot of people were saying companies, executives managing business on the ground saying, we're stuck in the mud. i'm hearing a little different tone now. >> and i would agree. but you've got france and germany, which seem to be doing well the middle of this summer. you've also got the satellite companies which will have a lot of issues. >> thank you. we appreciate it. >> thank you very much. about 45 minutes to go before the closing bell. dow jones industrial average just off its highs right now. and weak dollar, financial stocks moving. nasdaq not far from its highs as well here. we'll discuss whether the recent signs of a rebound are for real. or if there's more trouble on

the horizon. and then investors keeping plenty of cash on the sidelines. should you be putting your money to work? we're going to take a look for the best place for your cash. home depot founder gives us his take on the state of the economy and what shape the recovery will take. the action on the street today, the most heavily traded stocks. you're watching cnbc, first in business worldwide.

matt nester with the flash. if you take a look at services in terms of stocks, there's both the industrial kind, like you see here, and then there's the consumer discretionary kind. both are very strong today. robert half and monster, rr donlley, and the iron mountain, the commercial and professional services group. flip the page, get into more deluxe service names. these are the consumer service

stocks, within the discretionary sector. young brands out with earnings tomorrow afternoon. look out for that one. starwood hotels in las vegas up about 7% today. the service effect, if you will. bob, back to you. >> we're going to kick off a new series today. too far, too fast. residential reit a run in the last three months. advancing 34%. has the rally gone too far, too fast? joining our discussion today, sam lieber, portfolio of the real estate equity fund. let me start with you, sam. the important thing here is housing is at some kind of bottom. but that doesn't mean we're going to have necessarily any kind of serious rally. the slope of the rally is the real question. the slope of the recovery. where are we in this process? >> the housing market is still got some headwinds. still some foreclosure problems next year. we don't know what the job

creation will be. it looks like it's going to be difficult over the next year. we think the market is bouncing along. some markets are at reasonable values. other markets, however, we still think have a way to go. probably not more than 10% down in most markets. we might have, over time, whether four years or ten years, 50%, 60% upside. the question is, affordability. it's very attractive right now in the buy-to-rent equation is very compelling to buy right now. >> but can you get a mortgage? isn't that one of the issues. you might be able to be better served in terms of the pricing, but it's pretty tough there. the credit market. tell us how the residential market differs from the commercial. >> the residential market and the commercial market are completely different things. the commercial market hasn't seen the shoe drop, and it will. i still think it has a little further to go. i think some of the numbers that are coming out, for example, the kay schiler index that shows this wonderful rebound, or hope

of a rebound is really only showing positive numbers, and only about a third of msas. so, you know, this has become a very regional play that's not being mirrored across the country. >> sounds like you don't think it's all positive right now. >> i don't think it's negative as it was a month ago or the month before that. but i don't think we're at bottom. depending on when we're at bottom depends on the msa. i think phoenix is close to getting close to the bottom. i think san diego is probably there. but there's a lot of areas across the country that aren't. in commercial mortgages, that's a whole different story. bamplgs are not facing the music as far as the commercial mortgages on their balance sheets. what happens with commercial mortgages, because principal is not paid every month, the borrower has to pay a big balloon payment after a certain period of time. what's been happening is, borrowers on commercial properties haven't been able to get replacement mortgages. so the banks are playing a game of extend and pretend. and they just extend it. >> this is going to be --

>> and pretend. >> and when you get to 015, and we get $4 billion of commercial mortgage coming due, in 15 through 17, and you're going to be deferring, lend and extend, we're going to have a big problem potentially. >> i want to keep it on residential here. one of the things that surprised me is mortgage rates moving down. of course, treasuries have been moving up. but that's a bit of a surprise. you would thought in this cycle, rates would be going up. this is a big plus. i don't see a huge spike, for example, in sales coming as a result of that. >> we still don't have the confidence back. that's the fundamental issue, i think. until people feel that we're near -- we're at the bottom, they don't want to take a risk and jump in. combined with what you said, maria, not everybody can get the kind of mortgage that they want. a lot of people don't have the equity that they used to have. >> what is it going to take, sam, in order to get this market moving again in a substantial way? what will it take to get that credit moving again? for business, certain individuals, who really can't get a mortgage right now? >> it's very tough.

if you tonight have the next new thing, the next internet to propel the economy, we're just going to have to wait for liquidity, hopefully to stabilize the situation a little bit more. and then the question is, do we get the animal spirits going. people say we have to get in and get speculation. you might have to see lower interest rates before we get there. >> len, do you agree rates will be lower towards the end of the year or higher from here? where is it going to be? >> it's hard to say. i think we're basically in a deflationary environment. house prices, home -- price of housing, and home prices come down quite a bit. not a lot of economic activity to push up interest rates. i see that coming down. i think there are four things that have to happen before we hit the bottom of the housing market. one of them is we need to get rid of the foreclosure overhang. number two is, we've got to get realistic about banks showing liquidity for their portfolios. we need more mortgage availability.

and four is, we need to get the consumer to have a little bit more confidence that they're going to be able to make a payment. >> gentlemen, we'll leave it there. glad to have you on the program. thanks for joining us. look at the headlines passing. the kuflt treasury chief advises a pay freeze in place for senior civil servants as a way to cut the uk deficit. we'll get into that a little further coming up. we're at the highs of the afternoon with the dow jones industrial average up 123. nasdaq holding on to a double-digit move to the up side. >> charlie gasparino will tell us about the bank of america search for successor of outgoing search for successor of outgoing ceo ken lewis.

welcome back. bank of america feeling pressure to find a replacement, sooner rather than later. for outgoing ken lewis, charlie gasparino, author of the upcoming music "the sellout" broke the story over the weekend. what are you hearing, charlie? >> we're getting burn, baby, burn disco next week. here's the deal. the board recognizes that there is sort of yearning, particularly by analysts and also investors, to get a ceo

sooner rather than later. they set an unofficial deadline to do it the by the end of the month. i believe there's a board meeting the end of october. at that point we'll have the new ceo. who that ceo is, i don't know just yet. i'll be making a lot of calls the rest of the day, if they have some sort of a short list. from what i understand, investors made it known to board members they're not necessarily happy with the internal choices, that they don't believe anybody among those choices, about six people on that list, that list has been that way for a while. you know, they think that they can get someone better. and they should get someone better from the outside probably. there are three names, sally and brian and joe price and greg curl. i would say that of those six, the names they're most high on is moynahan and curl. moynahan, he's done a very good job over there. he's done a lot of different

businesses, ran the investment bank for a while. the thinking is internally, that brian moynihan has the inside track. but i can tell you that investors would like them to go outside. and maybe give brian moynihan a little time to learn the ropes a little better before coming what would be ceo of one of the biggest banks in the world. bank of america is a massive enterprise now, particularly with the merrill lynch acquisition. but we're going to get some clarity about this in the coming weeks. there's a lot of talk about an emergency ceo. i believe the journal ran a headline on that. let me give a common sense here. if they -- the only way you hire an emergency ceo is if cuomo, the s.e.c. charges ken lewis -- ken lewis is going to be here to the end of the year, at least that's what they're saying. if the s.e.c. charges him, certainly he's got to go. if there's a criminal charge, he certainly has to go. the question is, would that charge occur before the end of

the month. it's possible. it's possible cuomo's expediting matters. from what i understand, they're still a way away from the sense that cuomo wants to interview board members. that can't be done in -- very quickly. unless cuomo's ramping up this thing really fast with lewis' resignation, chances are you won't have an emergency ceo. you'll have, you know, whoever they pick by the end of the month. like i said, there's talk about an interim ceo, somebody to come in for the next two years while those other sort of candidates get a little seasoning. talking about going outside for someone more permanent. a little bit of flux right now. >> isn't the real question, regardless of who's coming in, what is the new ceo going to do to help clean up bank of america. there were notes around this morning, this is a conglomeration of many companies over ten years, and a lot of the parts don't work very well together. that's going to be the challenge, regardless of who's going to come in.

>> that's why you need someone of very high caliber. one of the problems that citigroup faced is that none of the ceos that ran it, ran it as an effective core unit. sandy was great at collecting things. he waste great at putting them together. chuck prince came in, and couldn't put them together because he was too busy with regulatory settlements. i don't believe he had the skillset to sort of make it all coordinate. the only person that has been able to put stuff together is jamie dimon. and he's not going anywhere. i tell you, i read a lot about this in the book, that you've got to realize, he came from -- he's been working with wile for years before he got fired back in i believe it was 1999. he put together every single firm that sandy wile bought. when sandy bought him, he was a visionary who bought him, jamie put them together. it's hard to find anybody on wall street that has that type of experience. jamie was never a trader. he's never like a salesman,

never an investment banker. he was a guy who put companies together and squeezed costs out of them. ken lewis was supposed to be like that, here is the irony here, he put together bank of america. now, you know, he's gone. it's hard to find someone else like that. >> jpmorgan and jamie dimon are essentially back to where they were pre-lemen. bank of america half of the price. >> that is pretty amazing. >> thanks very much, charlie. dow jones industrial average just off the highs here, the weak dollar as well as strong financials helping out. nasdaq just off the highs. what are banks doing. apparently we're looking at industrial loans outstanding, down for the 12th week in a row. we'll talk about that. technology, cisco about to go on a spending spree.

let's get you a check on where we are now, 25 minutes before the closing bell sounds

on wall street. the highs of the afternoon, 112 on the dow. back above 9600 on the blue chip average, largely due to the financials. citigroup up 3%. goldman sachs up 4%. jpmorgan up 4.5%. wells fargo up better than 7%. goldman sachs upgraded the entire group. and there is money following that call. nasdaq up 1%. 20 points higher. the s&p 500 holding on to a move of that, 1.5%. >> the tech sector the hot sector so far this year. nasdaq up 60% since the march lows. some on wall street are wondering what they're going to do with all that cash. joining me, john is the option monitor.com, co-founder and "fast money" contributor. i'm looking at some of these big names, yahoo! qualcomm. they don't pay any dividends essentially. they're sitting on a mountain of cash. is it time to either buy

something, or start paying a dividend? >> yeah, well, you're saying it nicely, because of course, it really is time for them to do something with the cash, or give it back to the shareholders. we know companies are loathe to give it back to the shareholders. they can do that, of course, in the way of a dividend which microsoft did to the tune of $30 billion. many of these firms have that kind of money laying around. look at emc, for instance. emc's just got a mountain of cash, and they've got a majority ownership of vm ware as the market recovers, and tech, as you said, leading the recovery in some regard. that vm ware investment, or their stake in there, is worth a fortune as well. so a lot of shareholders might be sitting around saying, hey, where is my stock performance here? if you're not going to get it through acquisition and growing the business, then how about if you send the money over here. so i think emc has some pressure on them to spend that money, or to, like i say, send it back. >> remember, microsoft, the

viewers may not remember, they did a special dividend. they didn't just create a dividend, they did a big cash payback essentially to their shareholders. yahoo!'s got, what, $8 billion in cash? >> right around there. carol bart's done a fabulous job, i think, turning the company around around getting the employees excited again about working there. but now you've got to deal with the shareholders that are somewhat upset about, of course, the deal that didn't go their way when they turned down microsoft when yang was running the company. and there's a lot of pieces here. i mean, i think two of the companies that have a lot of cash, microsoft and yahoo! could end up spending that money on some sort of content. now, it's been rumored, of course, in the case of microsoft, it would be something like video games, and maybe it could be, because microsoft owns a platform for it with the xbox. not so much with yahoo!. but both of them definitely in the digital content and delivery side could be something digital

delivery on the visual side, of course. and i don't want to discount the possibility that that could include film. because certainly in the case of microsoft, they've got more than enough cash to diversify that direction, and there's a lot of companies right up around that area that they might knock on the door of and have a discussion. the one also that stands out to me is qualcomm. because qualcomm is really a company that's got $15 billion, give or take, on the books. they've got a lot going on for them in terms of litigation back and forth with other parties. but not a lot of growth outside of that. so i think they could be a player. and you've seen with broadcom putting their name up for grabs, i would think red hat and intuit and companies like that could be in there as well. >> got to go. thanks very much. microsoft and the other techs, underperforming the rest of the stocks today. particularly industrials and materials stocks. coming up on fast mope, peter schiff puts on his trading

jacket and tells you the best plays for the fourth quarter. stocks could be rebounding after the worst week in july. earning season kicks into gear very soon. >> we've got about 20 minutes before the closing bell sounds on wall street. the dow jones industrial average getting a lift in the financials. right now up 120 points. nasdaq up in the double digits. >> up next, we'll find out what traders are talking about for the quarter and whether it will be leading to a rally, or to a pullback. >> after the bell, the ceo of doha bank will tell me if he's concerned about too much regulation on the global financial sector. we'll get into banking.

let's take a look at some of today's research calls. the latest upgrades and downgrades. petsmart upgraded because of the pet retailers' strong balance sheet. oil refiner va lero, the firm is

trimming its price target on the stock by $1 to $15. on expectations of more production shutdowns. valero up on the weak dollar today. health management, the hospital operators improve operating performance, and lower debt total. maria? >> bob, thanks very much. here we are in the fourth quarter of the year. we are talking about investing in the new period. we've got concerns persisting over the potential pullback in this market, as the market remains up strongly from the lows back in march. even as the economic data remains somewhat muted. joining us to talk about long-term investing at this moment, tom mcmannus at wells fargo advisers. great to have you on the program. what are you looking for for the fourth quarter? >> i think earnings probably set the tone and the earnings announcements, the conference calls. i think companies have managed to gain a lot of improvement by cost cutting. i think as they go out into

2010, i think they're going to need top buying for revenue growth. >> that's the crux of it, sure, we had better than expected earnings for this second quarter. now here we are waiting for the third quarter numbers. are we actually going to see end market demand and some vibrancy around the world? >> i think we do around the world. i think the economic shape is more of a letter v in asia, and maybe more of a letter l in europe, and maybe more of a letter u in the sufficient. i think we'll see gradual improvement, but i think it could be bumpy and drawnout. i think there's a good chance we will see one quarter perhaps, or possibly two in the next six that might actually be sub-1%. and that will get equity investors scared. >> we talked about a lot of money on the sidelines. do you think that money will come into this market or do you think because investors will be somewhat cautious post the earnings we'll see out of the third quarter, that they're going to hold that cash and not

necessarily put it to work right now? >> there's certainly a lot of money of cash on the sidelines. some of that is against debt people have. they're trying to shrink their balance sheets, so they're using cash to pay down their debt. if you look at people's retirement funds, there's about $3 trillion in mutual funds. investors went from 75% stock at the top in 2007, 25% bonds and cash, they moved that down to about 65% stock, and they've taken the other 10% and split it between bonds and cash. is that an unrealistic asset allocation? we don't think so. so there's a couple of things going on. one is people are getting older, secondly, getting a little bit closer to retirement. it's not unusual for this cohort, this maybe boomer cohort to start shifting to a more conservative asset allocation. it sounds like perhaps you think we could see a near spin-off over the market before going to the higher long term? >> we think that owning good

businesses over the long term makes a lot of sense. we think there are a lot of ak track tifl valued stocks, but companies that haven't participated so much off the lows. but that's because they never went down that much. they're a lot closer to their highs than the stocks that got beat up the most and have risen the most off the lows. if you can understand. the banks and other cyclical stocks were really beat up at the beginning of this year. they've had the biggest percentage gains. they're still a long way to go before they're back to their old highs. >> what do i want to do with the portfolio that i'm looking for at the long term, but i want to get in on the best prices. does the market goe lower before it goes higher? >> i think short term you should be prepared for a 10% to 20% pullback. perhaps there's a little bit more risk of that given the stage we're in in the recovery. but longer termive still think it makes sense to pursue growth over value, pursue a dividend growth strategy. not necessarily for dividend

yield, but dividend growth, buy companies that have the ability to sustain a dividend during difficult periods and the ability to grow it at a steady rate over time. >> bob was just talking to john, and he made the point, there's a ton of technology companies that have the cash on the balance sheet. and they may very well create dividends, increase dividends. you don't see a lot of dividends in the tech sector. do you think that's the case? >> one reason the tech companies have a lot of cash, sometimes they pay their people with optio options. so they need that cash to buy back stock, if and when those options go into money. it's just a different way of distributing earnings to stakeholders in the company. >> best performing sector you want to be in right now? >> best performing sector? >> best tech -- >> energy still looks attractive. consumer staples still attractive. utilities look attractive. i think some of the cyclical sectors may be a little ahead of themselves in terms of this recovery. >> tom, good to have you on the program.

chief investment officer at wells fargo. >> if you're betting on the earnings recovery story, matt nesto says it's time to think small. find out why the momentum may be with the small caps when the "closing bell" returns. mr. evans? this is janice from onstar. i have received an automatic signal you've been in a front-end crash. do you need help? yeah. i'll contact emergency services and stay with you. you okay? yeah. onstar. standard for one year on 14 chevy models.

welcome back. let's take a look at how some of the most widely stocks are faring today. alcoa, stronger on the weaker dollar. retailers lagging here. but all on the upside here. some of the big tech names that you can see. microsoft, one of the few stocks on the downside today. intel, ibm, apple, google, all to the upside but not as strong as the big industrials and commodities. under the radar stocks, seattle genetics, the biotech company ended a lymphoma study because the treatment was unlikely to meet its main goals. mel a knocks technologies boosting forecasts above wall street estimates.

represents year-over-year revenue growth of 11%. rpm reporting a 5% increase in profits to $73 million. topping wall street's estimates, thanks to lower expenses. maria? >> if you're betting on a big earnings recovery story this season, at least one strategist says you'll be well served to think small. matt nesto with the lowdown on the little guys. >> yeah. i'm a little guy, maria, right? if you take a look at the small caps here today, and really since the trough and since the second quarter earning season came and went, you're going to see a group that has vastly outperformed a group that some say is vastly overheated. that's why brian caught my attention here today. he says there's actually really a transition going on here today in terms of growth momentum. it is shifting and will continue to shift not only through the third quarter, but especially more so in the end of the year, and into 2010. but from the large caps to the

small caps. .7% is the estimate versus a 25% on the day. the decline we're looking for on the large caps, interesting, he says that analysts continue to underestimate the economic recovery. and therefore, underestimate the earnings growth that would go with it. and then lastly, i mentioned 2010 and on. the small cap growth is ratcheted in at about 50%, which is double what analysts are looking for for the s&p 500 right now. for this quarter, he points out the discretionary stocks, the financials, the telecomes and utilities all should show better than market growth. so this is my little wonders here today. you should recognize all of these names. they're all up more than 100% in three months period of time and in different industries. truckers, paper, travel, shoes, and natural gas.

maria, back to you. >> thanks very much. the closing countdown coming up next after this short break. cutting the price of the wii video game by 20%. find out if he thinks that's going to be enough to give nintendo's bottom line a boost this holiday season.

welcome back. bob pisani down on the floor of the new york stock exchange. we're off of the highs. once again, as the dollar has risen a little bit here, the markets have come off of their highs. we're going to be entering earning season in the next week or so. the question is, what kind of top line growth will we see, if anything. the last quarter everybody was wringing their hands about this. bottom line was, it was terrific. we didn't get any top line and nobody cared. this is a little bit harder to argue, particularly if they're going to give no top line growth. it's going to be harder to ignore the lack of top line growth. that's why i want to hear what's going on. the other big event this week is the brazil ipo. that will be prizing on wednesday. we'll be watching that very, very carefully. it's going to be a big one, $7.5

billion. that will be the second biggest ipo in the world globely after one of the chinese ipos earlier in the year. after what happened with non-farm payrolls, better get some indication of some kind of improvement sequentially in retail sales. they were shortened like crazy on thursday and frizz. they all got killed by those shorts. you can't keep the markets down for any lengths of time. the s&p down 5% or 6% in the last week and a half. on friday, everyone said, are we ever going to have a 10% correction? once again you see the resilience of the market. professional traders are terrified of actively shorting the market. a lot of traders net long stocks this year concerned about a double-dip. but see what's going on getting blown out every time they try to short the market. closing bell's going to ring. we're just moving down a little bit going into the close here. still a nice gain for the first

trading day of the week. there's the closing bell. you know who's next, maria bartiromo. it is 4:00 on wall street. do you know where your money is? hi, everybody, welcome back to the "closing bell." i'm maria bartiromo on the floor of the new york stock exchange. we've got a busy program ahead. stocks rallying today. ticked off a new week, following two down weeks. energy and financial services leading the way on the upside today. goldman sachs this morning raised its rating on the central banks to attractive from the neutral on the belief the big banks will outperform new regionals. 7% rallies for the major banks today. investors getting a boost of optimism from the better than expected report on the services sector which grew for the first time in more than a year. the take a look at how we finished. dow jones industrial a