however, someone forgot to bring the putter. no names. however, i was going to do a little putting practice, because -- what did somebody say, go? >> four. it's what you yell when you think your ball might hit somebody. >> anyway, i know nothing about golf, but i do know about some of the big interviews we'll be bringing you from the event from the beautiful lake tahoe on thursday. >> i'm jealous. >> thursday we'll broadcast live. see you then. >> there you go. and welcome to the "closing bell," everybody. i'm kelly evans here at the new york stock exchange where janet yellen is all the talk. >> yes, she has been all day. i'm bill griffeth. usually, the fed chair will boost the market with her dovish comments, but today she took the wind out of what was a pretty good rally on the open this morning. the dow was up about 65 points. she did it by calling out social media and biotech stocks for being overpriced or valuations

stretched, as she put it in her semi-annual report to congress. it was probably more specific than any fed chair has ever been about targeted groups of stocks, and it certainly caught wall street and investors by surprise. we'll have much more on ms. yellen with analysis and views you will not find anywhere else, coming up here. >> now, despite yellen's warning, overall, the market's still on the cusp of new highs today. the dow only needs to gain 13 points to close to be a new record. we're above the 17,068 level at the moment, with a rally of about 14 points here. the dow just at about the 17,070 mark. so, we have turned things around, bill. we opened strong and sold off after that testimony and that report this morning. now, though, it looks in the final hour here like we could yet close positive. >> it is certainly a possibility. and earnings season is hitting in full force. after the bell tonight, it's intel, yahoo! and csx all rep t reporting. in about an hour, we'll have the

ceo of csx here exclusively along with intel's chief financial officer and we'll be looking closely at intel's numbers and marissa mayer's view at the ipo and we're looking forward to the big kahuna. >> yes, this summer. every time we talk, it seems like the market's moving around, which is different, frankly, than what we've seen in this hour in quite some time. right now the dow is up 8 points. the nasdaq down, too. and stocks will be fighting it out to see if we can close positive. seema mody is in the middle of all the action at the nasdaq. seema, when the fed comments hit, biotech, social media took it on the chin. where do things stand now? >> these stocks continue to underperform, bill and kelly. markets getting a bit of a surprise today from the fed's monetary policy report, in which it noted that valuation metrics do seem stretched, especially

for smaller firms in the social media and biotechnology industries. among the social media losers, yelp, pandora, facebook, twitter all moving to the down side, all of which, by the way, are trading at forward price-to-earnings multiples. some analysts consider them excessively high. several biotech stocks also getting hit on the back of the fed comments. the biotech etf falling nearly 2% with social media and biotech stocks under pressure. the nasdaq underperforming the major indices. the russell 2000, home to small cap and many speculative names which just witnessed its biggest weekly drop since may of 2012 is also selling off, down nearly 1%. so, bill and kelly, those comments from the fed definitely being felt by the markets. back to you. >> yeah, it was rather unpress den dented. let's talk about that in our "closing bell exchange." kelly connelly is with jhs capital advisers. rob morgan. david wright from sierra funds. cnbc contributor john rutledge

with us today as well as michael block and our own rick santelli as well. >> yeah. guys, let's start off here, actually, we want to talk about the fed, we want to talk about social media stocks. michael block, what did you think about the way that janet yellen, while not herself specifically in the testimony, the report issued with her remarks this morning named these two sectors? >> yeah. you know, kelly, i think this was very distribueliberate and this was coming. i've been talking about this for a while now. back in march, bill dudley from the new york fed, usually known as being uber dovish, came out and talked about biotech stocks and about credit and he talked about social media and farmland prices. this is a very deliberate attempt by the fed to let a little bit of air out of the tires, rather than go into full hawkish mode, which they know might derail the train. they're very worried about doing that. so in the short to intermediate term, while they figure that out, they're going to make comments like this. it was buried on page 20 of the

biannual report that the fed put out. a lot of people didn't see it at first. it came out. and there it is. i'd say it's a deliberate part of the fed's communication policy under yellen and it seems to be a very interesting way for them to talk things down without knocking the whole thing over, so to speak. >> but is it appropriate? that's what people have been debating today. earlier today, the guys on "fast money halftime report" were talk being it. our own josh brown had this to say. he thinks it's appropriate. he kind of likes it. here's what he said. >> i like having a fed that's aware of the market. i don't think that she needs to be so specific as to say small cap biotech or large cap, but i think to nitpick on that front is missing the point. the point is, the federal reserve was roundly mocked and criticized for not understanding the intersection between the real economy and the way wall street blows bubbles. all she's doing is demonstrating the fact that the fed has their eye on things. >> david wright, should the fed be commenting on specific

sectors in the stock market, do you think? >> let me agree with josh. i think all this is is a marker, as if the fed is, in fact, keeping its eye on the market. they've been criticized for creating bubbles, and i think they're going to be very cautious to avoid that criticism in the future. they want to be shown to be attentive, and i think it's appropriate. >> john rutledge, do you agree? and by the way, is she right? >> i think these open-mouth operations are a terrible mistake. the point is to be nice about it. what the hell does janet yellen know about stock prices, small cap, large cap or otherwise? the irony is, the federal reserve board's full of professors who made their careers writing about rational expectatio expectations. in the beginning, that said hands off the announcements. now they've taken to trying to use information to manipulate prices to their own liking. i don't like it. i think it's a big mistake. >> kelly, what do you think?

>> i agree. i like the fact that she is talking about this. i think that the market has a tendency to be overexuberant, and we could potentially have asset bubbles. i think with the second half of the year, we're going to see some more volatility, and i think she's being very optimistically cautious and trying to warn us not to jump in too fast. i think we should be taking some profits off the table and repositioning into cash or some short-term fixed income. we've got the midterm elections coming up, we've got -- >> yeah. john rutledge, back to your point, with all due respect, couldn't the fed turn around and say, well, what the hell does wall street know? it's not as if the rational movements or behavior of investors prevented us from experiencing the last boom-bust cycle. >> first of all, the guys on the federal reserve board today made their careers saying that

rational expectations dominates economics, which means the market is an equilibrium at all times and financial crises can't happen. second of all, stock prices are wall street's day job. yellen's day job is controlling bank reserves. there are almost $3 trillion of excess reserves on the fed's balance sheet today. those reserves are gradually being turned into loans. the real story is that big banks are lending and small banks are not because of the regulations. small banks lend to small businesses that make jobs. that's why we have such slow growth. the fed's trying to keep rates down because of that, but the fact is, small businesses are being credit-rationed out of working capital. you can place money today at 20% to 30% in small operating companies. >> let's get a couple more comments on what janet yellen said today. i'll get to you in a second, rick. i know you're itching to talk about this.

robert morgan, appropriate or not, and would you buy these sectors now that they've been sold off after her comments? >> i've got to tell you, bill, i agree with her comments, but i think it's completely inappropriate. the fed has two mandates here -- keep unemployment as attractive as they can and keep inflation within their band. and this is completely outside of that. and i think if this is a new precedent, at any given point in time, there are going to be sectors that are stretched valuationwise, and there's going to be sectors that are very cheap. so, i think it's completely inappropriate. i would agree with john and -- >> but rob, as investors, shouldn't you appreciate the fact that the fed's going to go out there and try to jaw bone these stocks down? and by the way, if they're successful with parts of the market, that should create trading opportunities for you? >> absolutely. >> well, kelly, i would just -- here would be my response to that. even though i agree that these are stretched sectors, what if

you have most of your financial net worth tied up? you're an entrepreneur, you're tied up in one of these companies. i think it's unfair to them as well. >> and rick santelli, what if she had said, i think long rates are too low right now? >> well, wouldn't that be amazing? listen, bill, i think you actually ought to get the prize. but what i see here is a correction in kind of covert terms as to the issue you raised last time, that saying that the stock market isn't overly valued and then to have this presented the way it was i think was basically a way to create a retraction. as to what the fed should and shouldn't say, i will just say that back in the day when we had real free markets, that price discovery is what makes a free market, not price pegging. what they should and shouldn't say? i will just say this, that when you indiscriminately spray the fire hose everywhere, i think it's kind of silly to say that the pot of german yums, fourth down in the eighth row, second

from the back shouldn't be getting as much water as the rest. >> especially, michael block, when you consider -- >> well said. >> -- valuations are really subjective, aren't they? they're in the eyes of the beholder. >> yeah. >> it's overvalued compared to what, right? >> and that's really what this is. let's agree on this, philosophically, this is all pretty important, but guess what? it has been for the past six years. the fed's mandate went out of the window some time ago. i compare this to a barbecue and you want some beer. you have a keg sitting there. you tap the keg and get foam out of it. what do you do? do you pick up the keg and toss it away? no, that's going to make everyone unhappy. you play around with the tap and the air and get that beer running smooth. i know, i'm bringing everything back to beer. imagine that. but i'm with what everyone else is saying with josh and everyone else. >> yeah, what's up with that? >> but that's really how i look at this. philosophically, i think i'm with rick in saying i don't like this either, but this is the world we're in right now. i'm not going to toss the keg

out the window. nobody would like that. are we all agreed some. >> i guess, yeah. it's a whole new world the way we view the federal reserve and how transparent they've become, that's for sure. thank you all for your thoughts. appreciate it, on today's market action. we have some breaking news right now. the madoff situation in this particular case, it has to do with andrew madoff. scott cohn has the story. you're getting more details, aren't we? >> yeah, bill bp. we told you about the allegations against andrew madoff from irving picard, the bankruptcy trustee. but among other things, andrew participated in destruction of e-mails ahead of an s.e.c. audit of the firm in 2005, suggesting that he knew what was going on. well, we now have word from andrew madoff's attorney, martin flumanbalm, who says the new allegations are unfounded. "as we've stated from outset, neither andrew nor mark," the deceased brother," knew or knowingly participated in their father's criminal conduct." they say it was neither of them

who ended the fraud. mark madoff committed suicide in 2012. he had no comment on reports that a federal criminal investigation of andrew is picking up some steam. and we should add that andrew madoff's health is said to be precarious. he suffers from mantel cell lymphoma and underwent a stem cell transplant last year. surely the new allegations can't be much help. >> thanks for the update. 40 minutes to the close and the dow is right around flat line, isn't it? >> sharply unchanged right now. >> 17,055 is the level there. again, we need to be at or above 17,068 for it to be a high. the s&p is off nearly four points and the nasdaq 26. a lot still ahead. intel ceo stacy smith breaks down the chip giant's earnings coming out after the bell tonight. intel, of course, a major tech bellwether, so what he says will pack a major punch for other technology stocks in the market. so, you cannot afford to miss that interview, coming up.

also, csx out with earnings after the close. the railroad giant's ceo speaks with us exclusively. he'll talk earnings and share his view of the economy. but up next, as investors pour billions into exchange-traded funds, did you know that only 3% of etfs are out-performing the market? we'll get the facts and then reaction from wisdomtree's chief investment strategist, coming up on "closing bell." stay tuned. in a world that's changing faster than ever, we believe outshining the competition tomorrow quires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

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candidly, it's been a weird day on wall street today with the comments by fed chair yellen this morning about valuations in the stock market as it pertains to small caps and to biotechs and to social media stocks. markets really kind of trying to figure out and make sense of it all today. and the dow was up 65 points at one time, fell. nasdaq with those technology stocks down. the russell 2000, we're not showing, was down also as a result of that those comments. we're just watching the market as it looks to ferret out and looking forward to earnings reports after the bell tonight. as more investors are pouring money into exchange traded funds, are they implying

the inflows by the performances? jeff cox runs through this sector for us. >> exchange traded funds are the hottest things for investors these days, and recent indications are that investors want more. etf providers have created about 107 new funds this year and assets under management has swelled about 11%. they're up to $1.9 trillion now. in june alone, the funds took in more than $25 billion, according to state street. now, here's the other thing about this trend. etfs by their nature are going to underperform in the market because they track indexes. so, the only real way to create alpha with them is by trading, rather than owning them long-term. etf.com recently reported that just 15 out of 425 etfs they have studied have actually provided risk-adjusted returns above their benchmarks, which we call alpha. investors want more. recent respondents to a survey say they think the party's far

from over for etfs. the attraction is that they're easy to trade, they provide diversity, and of course, all-important tax advantages. while mutual funds remain the.com intent investment vehicle with more than $11 trillion, domestically, etfs continue to make major inroads. back to you, kelly. >> all right, jeff, thank you for now. let's get more reaction on this and the etf industry. >> joined right now by luciano siracusano. he's the chief investment strategist at wisdomtree, one of the leading etf industry providers. welcome back. good to see you. >> good to be here. >> what'd you hear from jeff's report there? what do you think? >> well, i think people need to understand that most etfs are designed to track the cap-weighted index. so, the goal is not to out-perform the index, it's -- >> to get the return, right. >> just because you get the index's return, doesn't mean you're average. a lot of these indexes will be 70%, 75%, 90% of all of the active managers over a long time period because they're all competing against each other to try to beat the index. so, just getting the market

return is nothing to be humbled by. in many cases, that will end up being an outstanding return. >> and isn't the whole point of etfs in the first place that these would be a lower cost, easier way, i guess, for a lot of people to trade in and out of the market? does that still hold today? >> for a certain part of the market that trades frequently, but you can use this for buy and hold. you can buy an etf and hold it for 20 years. etfs serve investors many different ways, but i would say the most important thing they give you is a way to diversify globally and across asset classes. and if you can get that right, the asset allocation comes first. getting the fees low and getting the taxes low or zero, that's what's going to drive your returns over long periods of time. and that's why so many advisers and intermediaries have adopted etfs within their portfolios. >> are you going to typically, you being etfs, are you typically going to out-perform to the up side or to the down side? in other words, do you provide more protection when the market's going lower or do you

provide better performance when the market's going higher? >> it's a great question and it depends on the strategy. so in a small cap and mid cap space in the u.s., we're one of the few companies that have been able to create etfs that have beaten the cap-weighted indexes by 400, 500, 600 basis points over time. they've principally beaten on the upside. we have a dividend indix, which measures all of the dividend payers in the u.s. the dividend-weighted strategies tend to protect you a little better on the down side. but this is an important point because that dividend index covers all of the dividend payers in the u.s. there's 1,400 of them. if you own a dividend etf or mutual fund, ask yourself, what did it do over the last 25 years versus all of the dividend players. >> that's why i asked because the industry isn't new enough, you haven't been tested to the down side that much. we had a tremendous market here since march of 2009. we've had five years of big gains. and you know, everybody's looking good right now, but when

there is a concerted move to the down side, that's when we'll find out who's really being successful here, right? >> i think that will be one way to celebrate the wheat from the chaff. one of the things you can do is look for the etfs that were around in 2007 and 2008 so you can see what they did in 2008. we had an emerging market strategy in 2008 that was down 37% when cap-weighted was down 53%. so, there are periods you could point to. but going back to this notion of why use the etf in the first place, most active managers, remember, have to make three decisions. they've got to figure out which stocks to buy, when to buy them and when to sell them. and then when you work in all the transaction costs, buying, selling, fees, taxes, it's very hard for the vast majority of them to beat the index. >> well, and there's still a lot of interests. the growth is still ahead for this sector, but i wonder where you're seeing the inflows today. because i was joking the other day that your commercials are my favorite gauge of market sentiment, because last year it was about japan, this year about

the india etf and tha you offer, and lately, i've seen advertisements for small cap earnings. >> smart beta. >> smart beta. >> the industry can't stop talking about it. it's a polarizing phrase, but it's basically saying there's a third option between basic beta passive indexing and actively managed mutual funds. the so-called beta indexes are weighting the market other than by market value. >> are you seeing retail interest now? >> we're seeing interest at the financial adviser ra level and even in institutions. >> okay. >> i don't think the retail investors is there yet. >> what about the retail investor in equities generally here? >> if you look at the whole industry, where the inflows were, they were into india, they were into europe. you've seen a little bit of a concern in some of the high-yield bond space. i think people are getting concerned about duration, they're concerned about when do interest rates start to rise, but it's been a relatively tepid first seven months of the year. >> wait until janet yellen and the fed get an idea on that, right? >> i think it's a bullish

signal, because the last time a fed chair made a market close it 1996, rational exuberance. the market will have another four years of life. >> by the way, it didn't end that well. >> it didn't, but it didn't end in 1996. >> that seems to echo the theme of this mark. thank you, luciano, for now. >> thank you, always. heading toward the close, 35 minutes left in the trading session here. neutral. i don't know, maybe they're waiting for her testimony tomorrow. >> true. it's not over yet. >> two days of testimony. we'll see if there's anything else. maybe there are other sectors she'll comment on. the market pretty unchanged. >> and we had earnings at goldman sachs and jpmorgan lifting financials across the board. look at the numbers. jpmorgan's up almost 4%, citigroup up another 2%, just about. kayla tausche will round up that action next. >> later, more earnings. it's intel, yahoo! and csx out after the close. we'll bring you those numbers. we've got the market response and the all-important guidance coming up. plus, intel's cfo and csx's

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...with our best-ever pricing for business. welcome back. markets have been digesting earnings reports this morning from some key financial institutions, comments from janet yellen in her first day of semi-annual monetary policy testimony on capitol hill. at the moment, the dow is now positive, but only by about four points. remember, at the session high, the index was standing at

17,112, so we've come off it quite a bit. nasdaq and s&p are lower today. >> let's talk about the earnings out today with financial giants goldman sachs and jpmorgan chase, shall we? >> yes. kayla tausche is here to round up the day in financials and talk about tomorrow. >> this quarter is one of those occurrences that is rare as of recently where you see main street best wall street on the banks' bottom lines. goldman sachs saw a jump in revenue and profit over last year, the biggest gain from its investing and lending unit. its cfo said it would consider wealth management as the bread and butter business slid. ceo jamie dimon called the hang-wringing a waste of time, since lending to consumers, commercial real estate projects and small businesses all rose sharply and he considers those real barometers of economic growth. jpmorgan's cfo, marianne lake, noting that consumer spending is healthy across the board. the biggest growth there coming in travel and retail spend,

interestingly. now, while investors spent upwards of an hour with jpmorgan executives trying to read economic tea leaves, there was one topic fully disclosed from the get-go, and that is jamie dimon's health. he began the call with an update to his cancer diagnose justice. >> i feel great. i think i have some of the best doctors in the world, receiving the best treatment. i am very fortunate that this is curable. i do plan to work. i do plan to read. i will be accessible. >> he said his senior executives can also find access and senior board members as well in his stead. the banking business is only expected to get busier in the coming months. tomorrow we have a business week that continues rolling. earnings from bank of america, usp and u.s. bancorp and morgan stanley reporting on thursday. we'll be following those closely. but across the board, earnings are so good this quarter, undeniably good, trading aside. >> and it's amazing to see the response in a sector many had said was uninvestable.

certainly, the opposite is the case this week. >> and i didn't know you were going to run that sound bite from jamie, but i was going to ask you on the conference call how he sounded. he was engaged in the whole process, wasn't he? >> he was engaged. there were several questions about him, both on the call with reporters that took place before the call with the analysts. he was extremely forthcoming. i have to give credit to him and jpmorgan for being so transparent about exactly how the company will be run, what will transpire over the course. he said he'll take it easy, but by no means will he be sitting anything out. and of course, we certainly wish him well. >> absolutely we do. good job. thank you, kayla. see you later. 30 minutes to go into the close, the dow still hanging on to positive territory, but just ever so slightly here, bill. all right, when we come back, jonathan tisch, co-chair of lowe's and also chairman of his lowe's hotels unit speaks with us about a bill that would make it easier for international travelers from friendly countries to enter the u.s. without a visa. why does he want this? well, it's about the economy, as the old saying goes.

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markets mixed today. the dow's up four points. it was up 65. it has pulled back. we were in record territory. we're about eight points from that now. nasdaq's getting clobbered today. technology stocks moving lower. but right now -- and there's the s&p 500. we're down three points. as we get ready for earnings -- maybe that's what they're waiting for. >> maybe that. >> the big earnings coming out at the top of the hour. >> after the bell, exactly. we'll hear from major u.s. companies for a gauge of what's happening in the economy. speaking of which, according to the u.s. travel association, international travelers to the u.s. added nearly $181 billion not the economy last year. spending about $4,500 a visit. >> but they say it should be billions more, the industry does, because many trips are canceled due to the difficult process of obtaining a visa. and our next guests want to change that. with us now to talk about this issue and the bill in congress, jonathan tisch, of course, the co-chair of lowe's corporation and roger dowd.

jonathan, as it happens, my daughter used to work for a senator, and that was one of her jobs was trying to get these visas. and she talked about how difficult it was. is this a result of 9/11, because of security issues? is that why we make it so difficult to get these visas now? >> it's very complicated. these are negotiations that go on with other countries. we currently have 39 countries that are part of the visa waiver program, meaning residents of those countries do not need to apply for a visa in person. they come into this country, they spend money. and let's keep in mind, the reason that we want the jolt act passed in congress is to make it easier for countries to join visa waiver, because every time somebody comes into this country and spends money, we are creating good american jobs that cannot be exported. >> roger, this list that extends to countries that are friendly to the u.s., 38 of them it looks like, and the geopolitical backdrop being as uncertain as

it is today, is it that that's holding up this process as to letting it, making it easier for visitors from these countries to go back and forth? >> well, no, it's not so much the geopolitical process. the challenge is, is to get both governments speaking with each other, to get them to enter the visa waiver process and the program. once a country enters a visa waiver program, we've seen their visitation to the united states go upwards of 46% in one year. >> so, but, and back to my point, roger, is this an unintended consequence of the security issues that we have been dealing with over the last decade in this country and longer? >> well, bill, one of the things that happened after september 11th is in the efforts to do the right thing, we did clamp down very hard on people getting visas, and the visa wait time soared to almost three months from china and brazil. we've now worked them down to under two days, which has had a phenomenal impact on travel to the united states. >> yeah, and so, jonathan,

understandable you guys have a vested business interest in this. if people are coming to this country more, they're flying more, staying at our hotels more, using our resources more. is that why this issue has become so important to you? and are you advancing it now because it seems as though there isn't going to be any separate immigration overhaul, or would the immigration overhaul not touch this issue, even if it goes forward? >> well, this bill has passed the senate. it currently is attached to the comprehensive immigration bill in the house. clearly, that looks like it's not going anywhere fast, so we're finding other ways that maybe this bill could get through the house. but once again, this is to create jobs. this is to take and inject capital into our markets. and the travel and tourism industry is creating jobs faster than almost any segment in the economy. here in new york city, 350,000 people make a very good living in some sector of travel and tourism. so, we think that if we can get a few more countries into visa waiver, brazil, poland, israel,

we'll have the ability to create jobs and help economies in all 435 congressional districts. >> are you able to quantify that? i mean, either of you can answer that. how many jobs are we talk being? how many dollars are we talking about coming into the country as a result of the jolt act? >> if we could pass the jolt act, we think it will bring another million visitors, another $10 billion to the u.s. economy and add 60,000 new jobs. >> how much of this is simply economics? listen, we're in -- many countries are in a financial difficulty right now. they're dealing with issues. and people probably can't afford to come to, you know, travel internationally right now. i mean, isn't that an issue as well? >> well, bill, it is an issue, but the flip side of that is that there are millions and millions of new travelers, because their economies are doing okay. and for the first time in history, their governments are letting them travel. so, even though we have gained a lot of international travelers, we have lost market share, which means that the pie is even

bigger. so, we need to get back to the market share that we used to enjoy so that we can create these jobs. >> jonathan, is part of the issue, or roger, the fact that these have to be negotiated on a bilateral basis with each country, and are those negotiating partners holding out for something in return? >> not really. the negotiation really forms a lot around security. when a country goes into the visa waiver program, they allow the u.s. a lot of security protocol, which actually makes it more secure for visitors to come from their country. so, that's very positive. so, it's more about security than other issues. >> yeah. jonathan, can i ask you real quick about markets while we have you as well? janet yellen today was out there making some comments about valuation in the stock market. this has been an issue, as you know. and you have all the exposure, obviously, to a lot of real estate, a lot of other assets. is there a sense of overvaluation across the board of so-called everything bubble, as "the new york times" put it the other day? i mean, what's your position here from your vantage point at lowe's?

>> well, certainly we see things as companies as being fully priced. and in the hotel business, we have been able to expand, we have been able to acquire some new properties. so, we've been fortunate to be able to add to our portfolio. but also, because we have access at lowe's hotels to lowe's corporation cash, we are building new hotels from scratch, and we feel that's a bit of a competitive advantage for us. but to answer your question in general, certainly, a lot of things we're looking at are fully priced. >> and does that strike you in this environment as unusual by historical standards? is there something, you know, untoward about it? do you blame the fed for all of this? >> no, not necessarily, because what we're seeing globally is that there is cash out there. there are a lot of companies that have been hoarding cash, and they're trying to find places to spend it. and there aren't that many options. so, that's why you also get a lot of companies buying back their stock. >> all right. gentlemen, good to see you both.

>> thank you. >> thank you for a very important topic to our economy. >> thank you. >> see, that's my point earlier. you asked jonathan, are thee overvalued, the assets? he says they're fully valued. there are so many ways to characterize value right now, so that's why i'm stymied that the fed is entering that fray and trying to quantify some sort of language about whether we're overvalued or undervalued or whatever we are. anyway, we are up right now, not much, though. the dow is up five points, about eight points away from an all-time high that was set back on july 3rd. a couple key market barometers coming up. intel, yahoo! and csx posting numbers after the close. we'll bring you them the minute they hit the tape. don't miss it. plus, intel and csx will be breaking down earnings and offering their view of the state of the economic recovery and i'm sure on valuations as well, coming up. stay tuned. caused by slow internet from the phone company? that's enough time to

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welcome back. so, a mixed session for stocks as we've got 15 minutes to go into the close. we'll see if the dow can hold on to its gains here, but it's probably going to fall shy of setting that new closing high, unless we can add seven more to get to 17,068. s&p and nasdaq are lower again,

despite a strong performance from financials today. a reminder, some of the biggest names in corporate america will be posting results after the close, in about 15 minutes. dominic chu here with some of the names and numbers you need to watch for. dom? >> three big companies to watch after the bell today. we're going to start off with int intel, expected to earn 52 cents a share and post sales of around $13.7 billion in its fiscal second quarter. the pc market, which is intel's bread and butter, has shown just slight growth in the past three months. now, ahead of the news, you can see intel shares up about 0.66%, so a nice big boost in an otherwise flat day. in a programming note here, in a first on cnbc interview, intel's cfo, stacy smith, will be live on the "closing bell" in the next hour to discuss those earnings, an interview you don't want to miss. another tech company, yahoo! reporting second-quarter results as well. wall street's looking for a gain of 32 cents a share in terms of earnings per share, revenues a little more than $1 billion. investors are mainly focused on

what yahoo!'s going to do with the windfall, all the money it will get from ali baba going public later on this year. shares down marginally, about . 0.66% now. and we're going to end with rail operator csx. it's expected to earn 52 cents a share in its second quarter. sales of around $3.25 billion. the company is expected to be a barometer for the overall market and economy. those transportation stocks always important for investors. you can see those shares up about 0.2% ahead of its earnings. and in a cnbc exclusive interview, president and ceo michael ward will be live on the "closing bell" in the next hour to discuss his company's results. so, intel, yahoo! csx, they could really set the tone for tomorrow's trade, kelly and bill. back over to you guys. >> yes. >> good cross section there. >> i know. thank you, dom. i'm looking forward to getting into the heart of this tech sector, now that we've gotten some of the big financial names. we've got about 15 minutes to go here. and as mentioned, it's a mixed session. we'll watch the indexes as we head towards the close. >> a lot more still to come,

though. fed chair janet yellen signaling continued low interest rates during her semi-annual report to congress. the fed also said biotechs and social media stocks were at stretched valuations, and that took a toll on that sector today. >> mm-hmm. we're going to get some reaction from leading economist dave rosenberg, just after the top of the hour. we'll be back in a moment. collection is here. summr ♪ ♪ during the cadillac summer's best event, lease this 2014 ats for around $299 a month and make this the summer of style. ♪

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about ten minutes left in the trading session here. up five points on the dow. what we're watching for is to see if it can go another eight points higher, or thereabouts, to finish at a new all-time closing high for the dow industrial average. we'll see. maybe not. nasdaq, though, getting hit, down 26 points, and the s&p is down 4. joining me, phil blancado, and terry doled from benjamin & gerald brokerage. good to see you both. i don't want to belabor this, but everybody's talking about janet yellen's comments about stocks and how she sees stretched valuations in particular sectors. >> it's a bit unusual. why would a fed chairman go out of her way --

>> exact laevl, right? >> you look at the broad-based equity market, an amazing run, fourth longest in u.s. history. why the chairman had to come out and say that, i'm not sure, but at the end of the day, i think she needs to protect herself from the slow easing, quantitative easing, getting out in october. and some time next year, which she's not holding her feet to the fire, but raising rates. she's just build thaeg process. >> so, protecting themselves to some degree against charges that they might be creating bubbles in certain areas, is that the idea? >> inevitably, you have to look at it that way. is the market overvalued because of artificial rates or profits and success of u.s. corporations? i'm on the profits side. i think u.s. corporations have done amazing things over the last six years. i think they need to protect themselves. >> are the abiotechs and social media overvalued? >> i thought so, but i thought the comments were a little out of line, about the i also felt it was a dichotomy, saying certain sectors may be little

overvalued, but yet, her policies fuels the market in general. so, as the market continues to go higher, you can point out that low interest rates being the cause, but yet, she's picking pockets. it was very much a dichotomy in terms of what she was saying to me. the other part i thought was interesting was she seemed to joke about inflationary expectations. >> well, we want them to go up. >> she was jaw boning them to say, okay, we're at 1.8 in implied inflation. that's just noise. don't worry about it. to damper, if you will, investors' expectations of future inflationary pressure. i thought that was interesting, use of the jaw boning tool. >> yet, gold continued lower today. >> and oil is coming down, corn is at multiyear lows, wheat at multiyear lows, not a lot of pressure on the consumer. if inflation stays low, the consumer gets break in their pocket because of low energy prices, low gasoline prices? sudden suddenly, we've got a strong consumer going into back-to-school spending season, which is a big deal. we're already looking at a much better second quarter.

i think you have a great rest of the year on equities and i think her inflation expectations are just not going to be there. >> what about right now, though? we've had a pretty good week to this point, the rally yesterday. what do you make of the market in the short term here? >> i think it doesn't know where to go. it's an all-time top, but you see that at every price level, dow 10,000, dow 5,000. you go back in history, there's always volatility at the top where you're spiking, you're coming down. it's almost like investor uncertainty as we reach new pricing levels. so, i expect volatility to pick up a little bit here. >> you like the market. what are you buying? >> the consumer. >> really? >> you're going to do very well in the large-cap stocks. when verizon can issue $150 billion in bond -- >> you're in a retail funk, i thought. didn't a retail ceo say we're in a retail funk right now? including walmart, too. >> it will change in the last six, eight weeks. lower gas prices, back to school, beginning of the holiday season. you're going to see it. other than the midterm elections, which could make

things a little bumpy. leave those aside, you have to believe in the consumer the rest of the way through. wages are ticking up slowly, inflation not necessarily there. the job number, we had jobs, i know they're not great jobs, they could pay better, but we're on the right track. to disabate that's a bad idea. >> appreciate your thoughts. we'll take a brac and come back with the closing countdown here. then, get ready. intel and csx out with results at the top of the hour. we'll get numbers and break them down with intel cfo, stacy smith and csx's ceo michael ward. you're watching cnbc, first in business worldwide.

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get real-time market scanning wherever you are with the mobile trader app. from td ameritrade. about three minutes left in the trading session. here's today's trading action for the dow. that rally on the open this morning, much like we saw yesterday, but then around 10:00, right here is when the testimony began by janet yellen before the senate committee, and that's when we started to lose altitude. at the low, we were down about 49, 50 points, came back. bob pisani points out to me we were up 0.1 points there -- >> 0.2, don't exaggerate. >> okay, and we've been sideways since that time. earnings are coming out in a few minutes. numbers to watch for. intel, up today, looking for a profit of 52 cents on revenue of $13.7 billion. yahoo! down a fraction, looking

for a profit of 32 cents on $1.08 billion. and watch for what they say about the ali baba ipo coming up. and then csx, you'll hear from michael ward on their expectations for a profit of 52 cents on $3.25 billion. mr. pisani. >> and for intel, the key here, we want to hear about an upgrade to the corporate pc cycle. that's their core business and that's what a lot of people are anticipating. these pcs are old. ours are old, too, by the way. note to the i.t. department. please help. and we were expecting them to make some positive comments about that. >> yes, we are. >> if they don't, we have troubles. that's their core business. >> right. >> tomorrow, bank of america i think will say similar comments about the economy improving, particularly the business cycle improving. we heard that from jpmorgan today. >> right. >> but also, schwab. now, remember, retail trading the first quarter was really good. the volumes were generally up. but about the beginning, the first week of may, they just fell apart. i think schwab is going to have some disappointing commentary about the kind of stock trading we're seeing, which we're seeing

in the kind of low volumes. >> what were you hearing on the floor about janet yellen's comments about overvaluations? >> the important thing is, she was right in the middle of where everybody anticipated. i don't think she was more hawkish. i know people were concerned about that, but i certainly didn't hear it, and i think her comments on biotech and trying to talk down what she thinks are frothy parts of the market, i don't think that's unheard of. yes, you could say since when did she put a sell signal on biotechs. you could be cynical and i understand that attitude, but if she is actually going to engage in this kind of commentary, like she said, regulatory or otherwise, that's the future fed. this is what we're going to get used to from the fed. you may not like it. >> it's certainly going to make future testimony very interesting. we'll all be watching, wonder whaeg she'll say next. >> what's she thinking about marcellus shale? i think it's getting frothy. we could go on and on about

this. >> we'll fall short about five points unless something happens in the next few seconds. we're just short of a new all-time high, but hey, more earnings coming your way in a moment now. stay tuned. it's the second hoff of the "closing bell" with kelly evans and company. i'll see you tomorrow. >> thank you, bill. welcome to the "closing bell," everybody. i'm kelly evans and here's how we're finishing up. a mixed day across wall street. we started out with the dow looking at record intraday highs. we're closing with it barely positive, up about seven points. 17,063 is the level at the moment. now, the nasdaq and s&p never recovered, turned negative on the session after we heard from janet yellen, saw a report in tandem with her testifying on capitol hill today. we'll talk about that in a second, the hit that the social and biotech names took, leading the nasdaq off about 0.5% today, down 24 points and the s&p off 3 1/2. joining us now, greg buttle from rockefeller consulting, inside capitalist.

cnbc's own kate pelg and sharon epperson are here and here to break down the market reaction is david rosenburg and "fast money" trader guy adami. thank you to everybody. dave rosenberg, let me start with you, because we had a pretty heated debate last hour about whether or not this was the right thing for the foed ed do, call out specific sectors as being overvalued. is this smart move? >> if the idea is to curve excess enthusiasm in parts of the market, i think that's completely fair game, but at the same time, you know, as everybody's talking about, you know, the previous high-flying biotech and social media names, what gets lost is the fact that they actually gave a thumbs up to the financials and she talked about how solid shape bank capital ratios are in, so on and so forth. so, talking about what biotech today and small cap, but nobody talks about the fact that financials are actually up 0.7%. on top of that, i thought one

thing she said that was very important was her outlook for capital spending. it was actually not in her testimony, but if you take a look at the report to congress, there is a very important blurb on the outlook for capital spending, telling me, if anything, there was a big thumbs up in today's report for industrials and large-cap tech names. >> we'll talk to csx and a couple other companies in a moment as you wait on those earnings. i don't know if anybody else saw the fund manager's survey from bank of america today, but interestingly enough, the folks surveyed said, and to some extent, the highest portion ever, they wanted companies exactly to do capital expenditures, not to focus so much on returning cash to shareholders. i guess we shouldn't overlook that change in sentiment among the investing public. >> of course, that's a long simmering debate in corporate america and among institutional investors, right? and maybe the face of it right now are sort of a larry fink versus maybe like a dan loeb type or, you know, was theel lipton on the side of larry. basically, the notion is that activism often involves a share

buyback program and other measures to return cash to shareholders, but at the same time, it may not be the right long-term solution for a company or the right way to sort of think about organic growth. at least that's the counter argument. so, interesting point there. and i think it's something we're going to see more of this year with all the heat on activism. >> what's your preference in today's landscape? are you looking for companies that are aggressively returning cash, returning capital to shareholders or are you looking for the ones who are bumping up their capex plans and see brighter prospects ahead in terms of business? >> well, i think always, always everybody wants a return on their money, and i would prefer that. i would prefer it going to the investors. let them get their money, let them all of a sudden take it and put if back into the economy. if you hold it back and you're going to try capital expenditures, how long is that going to happen? and then what's going to happen with tax rates later on when you want to give them the money? to me, i'm all for giving it to the investors now. >> dave rosenberg, you want to react to that? >> well, i think that what's happened this year is very interesting from an economic

standpoint. we've had practically no gdp growth, and yet, we've created over a million net new jobs and hours worked are up at a 3% annual rate. so, the follow from that is that productivity is no longer slowing. productivity is actually contracting. if there's anything out there, any recession, it's productivity. and if you're a ceo and you're taking a look at the future and you connect the dots between productivity and profit margins in the future, then you're going to have to start investing organically in your businesses to protect those returns in the future. so, my sense is that capital spending growth in the next several quarters i think very much has upside. >> let's actually break from this right now to go out to john ford, who's got results now from intel. jon fortt, what can you tell us? >> kelly, some upside, even from intel's positive preannouncement that came in with revenue of $13.83 billion, versus consensus of $13.69 billion, and eps of 55

cents versus 52 cents expected. gross margin came in strong as well. they're guiding to a gross margin of 66% in q-3. that is historically quite high. it's a key number that the street tends to look for. the guidance also for q-3 is for revenue of $14.4 billion at the midpoint, plus or minus $500 million. the street was looking for closer to $4 billion even. now, what groups out-performed in particular? well, the pc client group came in at $8.7 billion versus just under $8.5 billion consensus. the data center group also came in strong. software and services to internet of things did quite well. but another key issue here is they're guiding now to a 5% revenue growth for the year. they had been guiding to flat before the positive preannouncement. so, the full year 2014 revenue

growth of approximately 5% now is an upgrade, even, from what they had said at the preannouncement. they just said it would be higher, but they didn't give this particular number. it will be interesting to see what more stacy smith tells us in just a few minutes, kelly. >> absolutely. jon fortt, thanks very much. guy adami, what's your reaction? is the fed going to call out intel here? >> well, we'll have that conversation about you want, but in terms of the quarter, it's a great quarter. i mean, great numbers, fantastic numbers. i will say this, you will see a note tomorrow from an analyst, i'm not sure who, but something to the effect of keep marpeak margins in intel typically lead to peak stock price. so, 5% revenue growth obviously is not fantastic. you can start making an argument, you can start making the argument that intel's getting a little bit expensive on valuation. look for that note from an analyst tomorrow talking about peak margins leading to peak stock prices. >> but don't we see that every quarter? >> it's a great point. i haven't seen one over the last

couple quarters. i think this 66% that they're guiding to might bring out some of these analysts tomorrow. we'll see. >> yeah, that's a good point. that's a good point. sharon, what say you about some of these results here, the market generally? >> well, right now it looks like investors are liking what they see. i mean, i think when it comes to retail investors trying to decide on yahoo! or an intel in this case, they're really looking at what the long-term goals would be for them and looking at it as a consumer and an investor. so, i think what they'll be looking for with intel is what they have to say about pc sales long term, what they have to say about some of the new initiatives over there. that will be the determining factor for the retail investor. >> and another barometer coming in behind them, yahoo!'s quarterly results out now. julia boorstin breaking down those numbers for us. hi, julia. >> kelly, yahoo!'s results light on both the top and bottom line, coming in 36 cents ex-items, a penny light of estimates. that's compared to last year that's up from 35 cents the year-ago period. revenue also missed estimates,

coming in at $1.04 billion compared to expectations of $1.08 billion. mr mrsa meyer kicking off her comments at the top of the report saying we are not satisfied with our q-2 results. i'm going to continue to dig through here and see what the guidance is, especially looking forward, and we'll be back to you with more. kelly. >> good stuff, julia. guy, thoughts on yahoo! here? i mean, do we talk about yahoo! or do witness talk about ali baba? >> we have to talk about both, but it's not a disaster. i think that's what people were just hoping it came in anywhere close, and it effectively does come in close. and again, this ali baba becomes a bit of an algebra problem for a lot of folks. what is the value of yahoo!'s business? what is yahoo! worth? i mean, right now, given the ali baba potential valuation, it's basically valuing yahoo! at zero, which i've got to believe, just given an aol valuation, if you want to go there, it's worth a lot more. so, i'm still in the camp that $125 billion ali baba ipo gets you a $42 yahoo! stock.

>> okay, we've got to go, but quickly from greg and david before we do, on second-quarter gdp. barclays raising theirs to 4%, their estimate today. greg, first to you. is that going to happen? is the economy picking up momentum here? >> i don't buy it. i just think it's all numbers, and i'm not looking for this all of a sudden, this economy that's going to start taking off. i don't like the numbers. i like them, but i don't think that they're sustainable. >> what about you, mr. rosenberg? >> well, i think we'll probably get at least 3% second quarter. it's a giveback from the first quarter. but look, the ecri, you can argue that you don't like the numbers, but the ecri indicator that's a four handle right now, telling you that we're going to sustain the momentum well into the third quarter. >> all right. that makes it interesting for the fed. thanks for now, everybody. stick around and catch guy adami coming up on "fast money" at 5:00. they're going to have live coverage of the yahoo! and intel conference calls, so much more on these two companies is straight ahead. don't miss it. coming up, much more on intel's earnings here.

chief financial officer stacy smith says what it means about the pc market and business spending in general. also, full steam ahead for csx's bottom line? will a jump in oil shipments offset big drops in coal deliveries? ceo michael ward joins us exclusively next. you are watching cnbc, first in business worldwide. at every ford dealership, you'll find the works! it's a complete checkup of the services your vehicle needs. so prepare your car for any road trip

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welcome back. we begin here with some broiking news on google. dominic chu has details. dom? >> all right, so, kelly, if you were wondering what former ford ceo alan mulally was going to do with his spare time, this is going to be one of them. alan mulally, former ceo of ford, is going to join google's board of directors. again, mulally to google's board of directors. in a statement, larry page, ceo of google, said that alan brings a wealth of proven business and technology leadership experience. "i am so pleased that alan is now joining google's board." mulally saying in a statement as well, "i am honored to serve on the board of a global, iconic company that is dedicated to enhancing our lives. i look forward to working together with the google board and management team to continue to deliver their compelling

vision. so, again, alan mulally, former ceo of ford. a lot of questions about what he was going to do after ford. well, now we know at least one of those is going to be serving on the board of directors over at google, kelly. back tovar to you guys. >> now we can think about their driverless car venture in a whole new light. dom, thank you. csx is out with earnings and morgan brennan has the numbers for us. >> csx, no major surprises here, coming in earnings per share 53 cents. that's one cent higher than the street had expected. and revenues coming in ever so slightly light, $3.24 billion, versus the $3.25 billion that analysts had been expecting. a few things to call out here. record operating income, nearly $1 billion. that's a big bump for the company. the other two things i would mention, the company's seeing strong positive economic environment, plus strong growth in intermodal. that's the containers that move

between rail, ship and truck, as well as the oil and gas industry propelling revenues for this quarter. kelly, back to you. >> morgan, good stuff. thank you. let's talk more about what's ahead for csx. michael ward is president, chairman and ceo of csx corporation. good to see you again, michael. >> good afternoon, kelly. thanks for having me. >> the revenue figure i wanted to talk about, shy of what the market was expecting, anyway. i'm curious where you guys see revenue growth coming from in the quarters ahead. >> actually, it was record revenue for us, $3.25 billion. it was the $1 billion of operating income and record eps as well, so we were pleased with the results our terrific employees produced this quarter. we see good strength in the economy, kelly. about 80% of our markets have very favorable outlooks. and we grew volumes overall 8% here in the second quarter. okay, what amount, getting industry-specific here for a second so people have a sense of what volumes you're talking about, what products you guys

are moving. obviously, there is the oil and gas piece of this, there's grains, chemicals, construction supplies, autos. how would you rank these different product categories by strongest to weakest? >> well, actually, our strongest was in the chemicals, driven by the oil and gas industry and movements of crude oil, lpg, frac, sand and pipe. that was up in the quarter. interestingly, our domestic coal was up 15% because inventories being rebuilt by the utilities after that harsh winter we had. our ag business was up 11%, and that's driven by both the strong crop last year and increased ethanol production. as noted, our intermodal continues to grow, a strong 7% this quarter. so, we're seeing good vibrancy in a lot of market sectors, kelly. >> and what are the ones sitting out for now of that vibrancy and why? >> well, export coal is challenged this year. the world demand is down. last year we shipped about 44 million tons of export coal. we expect to be in the mid-30s

for this year. and we're seeing a little slowdown in industrial waste shipments. >> industrial waste sometimes is a good gauge for economic activity. how would you characterize business demand in this economy? >> we're seeing good demand out there. as i said, 8% in this quarter. if we look at the percenting managers index, it's for the third month in a row showing expansion. inventories at 45.6, meaning they expect to grow inventories. the housing market looks like it will go 14% to 20% this year. automatic production is going to go from 16.2, estimated to be 17.0%, which will be the best year for auto production since the year 2000. >> right, right. >> so, across the board, lots of strong markets. >> what about any price pressures you're seeing -- i'm sorry, i was just going to say, price pressures or wage pressures you might be seeing, especially in light of janet yellen's comments today.

>> not really, kelly. i think we're providing good service and value to our customers. we have a long-term contract with our unions. we're 99% unionized. it's worthy of note we're increasing our capital spend $100 million this year from $2.3 to $2.4 because we have strength over this economy and we're expecting to growth faster than the rate of the economy again this year. >> what about safety and how much more do you expect to spend to make sure there aren't more accidents as you're transporting especially volatile components like oil, and potentially in the future, natural gas? >> well, we're always very focused on safety. it's one of our top core values. i'm pleased to report both our previous injuries and trained accidents improved in the second quarter. as for oil, we've taken a number of actions agreed to with the u.s. department of traction transportation. we're slowing them down in high-urban areas, we're increasing track inspections, we're increasing our already

pretty intense emergency responder training. and in addition, we're working with the various receivers and producers to come up with a better tank car design. >> is that going to make your business more expensive to run going forward, though, all of the things you just mentioned? >> well, obviously, there will be some expense, because we'll probably have to retrofit some of the tank cars owned by our customers and leasing companies, so they'll have an expense there. and the new stand will probably be somewhat more expensive than the old, but we think the economics of that crude coming out of the balkan still moves, despite the slightly higher expenses. >> and lastly, real quick, natural gas. you guys will be moving that around on trains in the future? >> no. we're in -- it's a very exploratory stage. we're working with g oee with a prototype to test if natural fuel can be good for our locomotives. something worth investigating. >> michael ward, i feel like

we've toured the u.s. economy. thank you very much for your insights on the quarter. michael ward, ceo of csx. on the earnings front, we've got more out of those yahoo! earnings now with julia boorstin. julia, what have you found? >> thanks so much, kelly. in the company's earnings, yahoo! revealing its q-3 outlook, outlook for the current quarter is coming in a little bit lite. they're coming in lower than the $1.1 billion expected, but it's moving higher after hours, perhaps largely because of this news about ali baba. the company announcing it's entered into an amendment to the share repurchase agreement, reducing the number of shares that yahoo!'s required to sell of the ipo from 208 million shares to 140 million shares. this is the second time, at least, that it has reduced the number of shares it has to sell. now, the company also saying that it'd like to take this opportunity to say that it is going to return at least half of the after-tax ipo proceeds to shareholders.

back to you. >> ali baba comes to the rescue again. thank you, julia. up next, much more on interel's earnings. cfo stacy smith breaking down the numbers in a first on cnbc interview. and do we give a passing grade to marissa mayer two years into her tenure? that's coming up on the "closing bell." but i've managed. ♪ i got to be pretty good at managing my symptoms, except that managing my symptoms was all i was doing. ♪ when i finally told my doctor, he said my crohn's was not under control. ♪ he said humira is for adults like me who have tried other medications but still experience the symptoms of moderate to severe crohn's disease. and that in clinical studies, the majority of patients on humira saw significant symptom relief. and many achieved remission. [ female announcer ] humira can lower your ability to fight infections, including tuberculosis. serious, sometimes fatal infections and cancers, including lymphoma, have happened;

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are doing and also, let's get more on what the company had to say in a first on cnbc interview with intel chief financial officer stacy smith, who joins me now along with our own jon fortt. stacy, it's great to see you this hour. and look, you guys raised eyebrows around the world when you came out with those numbers a couple of weeks ago, saying it was going to be a better-than-expected quarter. what can you tell us about the strength of pc demand and business demand generally for intel right now? >> yeah, i think what you're seeing is our strategy playing out nicely in the first half. we're generating financial growth, which has been part of what we're trying to do, 8% top line, more than 40% profit growth. you can see some strength in the pc market. i think we're being successful in reinventing the pc, and we're having success in other kinds of clients, like tablets and the internet of things. then the other side of our business was really strong. the data center was up 19% year on year, and i think that's benefiting from all of these clients connecting to the internet and computing and also

the build-out of the cloud. so, we saw pretty broad-based strength across the enterprise segment of the market. >> and stacy, how important is that going to be to the future of intel, especially as you mentioned the data centerpiece of this and the cloud efforts that you've invested in? >> very important. you know, our strategy really is to bring our manufacturing prowess to bear, to have the best clients out there that range from pcs down to these very small devices and the internet of things. then we benefit at the other end with the data center. and i think we're well positioned on the data center side. again, it's our strategy playing out. it was a good start to the year. i do want to get not too far out over our skis, but we're seeing strength in the enterprise. we're still seeing a relatively soft consumer side of the market, though. >> two questions on sustainability, in terms of the demand you're seeing. one, how much of this is related to the refresh cycle globally with the windows xp, and two, can you keep increasing margins from here, given now what you've

achieved? >> well to the xp question, i think it's one of the factors. it's clearly one of the factors that is causing people to want to upgrade their pcs. our data would suggest there is something on the order of 600 million personal computers out there that are more than four years old. i think what you're seeing is the combination of the performance that we're bringing to the marketplace, the battery life, the thin and light form factors, things like touch-enabled screens and a transition to more modern operating systems. all of that is playing into at least the start of a pc refresh. in terms of margins -- >> yes, exactly, about the margin question as well. a lot of people interested in this one. >> we've articulated a long-term margin range of 55% to 65%. we're obviously at the high end of that. i think you're seeing some very good costs as we're in a couple product transitions right now. you know, our goal is to keep margins in that range and grow the business. and i think you really see that playing out in the second quarter. you know, we demonstrated

revenue growth, top-line growth for the company, and earnings growth that was considerably more than the revenue growth. so, i think you really see our strategy playing out. >> on that note, i want to bring in jon fortt, who, of course, has been going through those earnings now. jon, questions for stacy. >> yeah, stacy, continuing on the margins question. guiding to 66%, which as you mentioned, is above the range that you've given. how much of that is because of the relative strength in the corporate pcs versus consumer? where i'm going with that is, toward the end of the year, we tend to see more consumer strength, perhaps the windows xp upgrade cycle will slow down. should we expect if those things happen, as usual, that the margins would come down? >> well, we do expect margins to come down a little bit in the fourth quarter, but not for those reasons. i think what you're seeing right now in terms of our overall gross margin is just very good costs. what you'll see in the fourth quarter is we're ramping three

14 nanometer facilities together. that's our new process technology. the first wafers that come out of these mega factories are pretty expensive, so we'll see a little bit of a mix-up in terms of our cost in the fourth quarter. what's interesting, though, to your question about kind of the mix of our business? we saw a very good quarter in q-2 with our atom-based processor that's going into lower-priced pcs. the nice thing about that is we can bring great performance to those devices but do it at a lower cost. that's because of our manufacturing advantage. so, we can actually do it in a way where we get more margin dollars per unit than we did with our older generation products. so, it's kind of our strategy playing out here. >> stacy, some investors are going to fear a replay of what happened with net books, especially given that microsoft looks poised to compete with google on the low end of the pc market this holiday season. any assurances that you're strategically prepared to keep that from happening? >> i think what you've seen from the leadership team here is a recognition that the market

generally is being driven by a couple of trends. it's being driven by the consumer and it's being driven by devices becoming more personal. for us, that means we have to push costs down, we have to push battery life up. you're seeing it with our product lineup. so, there is no blinking for us. we're moving into tablets, we're moving into more mobile pcs, we're moving into thinner, lighter form factors. that's where the market's going, that's where the company's going. >> stacy, i have kind of a curveball question here. it has to do with what janet yellen or the federal reserve today remarked or described as substantially stretched valuations, particularly for smaller firms in the social media and biotech industries. it sees this in the market, it's worried. should the fed be worried about this? >> you know, i think there's probably better people to answer that question than me. if i could make bets on valuations, i probably wouldn't have to work for a living. our job is to come in every day and grow earnings. i think q-2 is a really nice example of doing that. for our company, if we do that, we'll reward our shareholders.

i'd also point out, we also announced in q-2 a pretty significant buyback. and so, we're not just growing earnings and generating cash. we're returning more of that cash to shareholders. again, that's our job. >> interestingly enough -- well, and that's another point that the federal reserve has been concerned about. dave rosenberg, of course, was just talking about this. is there rotation for big firms like yours moving back from buybacks, towards doing more capex? can you tell us how you guys are thinking through the allocation of capital? >> yeah, our strategy is that first and foremost, we invest in our business. we think that's the best way we can drive shareholder return and you see us doing that with our investment in leading-edge factories and in r&d. second is the dividend, and we have an industry-leading dividend program -- >> stacy, i apologize. we actually have to leave it there for now and let you go. stacy smith, thank you for joining us, cfo of intel. those shares are rallying after hours. we have breaking news now out of apple. cnbc's josh lipton in cupertino,

california, at the company's headquarters with the details. josh? >> reporter: well, we are here at apple hq in cupertino, california. just a few minutes ago, i had the chance to sit down and talk with apple's tim cook and ibm's ginny rometti. apple and ibm announcing a new partnership today, a new class of business apps that brings ibm's data analytics to iphones and ipads. also, ibm will start to sell iphones and ipads to business clients around the world. i asked cook and rometti about the partnership. have a listen. >> ginny and i started talking a couple years ago and getting to know each other. and over that time, we built up a tremendous trust and respect for each other, and we'd begin to talk about how complimentary our companies are. and so, from that, we assigned some teams in both companies to go look at some things we could do together, and this was one of the things that came out. and i think it is absolutely

huge. it's landmark. it takes the best of apple and the best of ibm and puts those together. there's no overlap, there's no competition, but they're totally complimentary. and more than anything, it focuses on the enterprise customer. so, this is all about transforming the enterprise, reinventing the enterprise, taking big data analytics down to the fingertips of people so they can spend their time making complex decisions, not running around getting data. and so, we are just thrilled. i'm thrilled to be working with ginny. i think, and more importantly, i think a lot of customers will be thrilled. >> i know the two of us, actually, agree very much on the top three things we're going to accomplish together. one is growth for both our companies, but the second thing is this idea that we have both, tim and i talked often about remaking business and reenvisioning, reimagining professions. so, this is all about unlocking mobility in the enterprise and value that hasn't been there to date. and then the third thing we're

going to do together is actually addressing the number one inhibitor and one of the biggest inhibitors has been things like security. and so, we're really providing value all the way across those issues. >> and let me ask you, tim. you know, it's obviously a big push year by apple into the business market. when you think about that, tim, how big of an opportunity is that for apple enterprise? >> well, i think it's big or i wouldn't be sitting here today. you know, this is a multiyear journey for us. we started investing in ios back in ios 2, adding enterprise features. through that period of time between where we are today, we're in over 90% of the fortune 500 and over 90% of the global 500. but the reality is, is that the penetration in these businesses and in commercial in general from ability is still low. so, where we have very good market share, the penetration suggests there's a huge opportunity here. and i think if we can bring the

kind of transformation we've arguably brought to consumers to enterprise, i think there's a huge opportunity here. and we knew that we couldn't do that alone. we knew that we needed to have a partner that deeply understood all the different industry verticals, that had scale, that, you know, had a lot of dirt under their fingernails, so to speak, from really understanding each of these verticals. and we found a kindred spirit in ibm. and i am so happy we did, because what i want to see is just like the consumers that write me every day and say what a difference we've made in their lives, we want to play a part in that in business. and we're doing that to some degree today, but arguably, there is a new level to achieve in business. so, i think this is great for apple and ibm, but more importantly, it's great for customers. and that's why we get up in the

morning here. >> do you think, tim, just to draw on that point -- i mean, obviously, knowing it's a great consumer brand, not as much of a business brand yet, but do you think a partnership with ibm changes that. >> let me just say, if you're in 90% of the fortune 500 and over 90% of the global 500, we've got a lot of our products in enterprise. but yes, i think in order to fill out and deliver the promise of mobility in a big way, that takes apple and ibm doing that. i think there's no better two people on earth to do this or two companies on earth to do this, or for that matter, any number of companies. i think we fit together like a puzzle. and so, this is profound. it is landmark. it's historic. we've come from 30 years ago being competitors to today being incredibly complimentary. and i think the people that will

really benefit from this are the enterprise customers who can be more productive running their businesses. >> i mean, if you think about this, what tim and i have talked often about, and we know enterprise well. as apple, the gold standard for what is out there when it needs to be consumable and in the consumer space, and us, the gold standard in what it means to be in enterprise. and knowing that, while there's deployment in the enterprise of mobility, 60% is for things like e-mailing and calendaring and 60% name security as the number one concern. we'll take our strengths, as tim says, the puzzle pieces that go together. we've built a $16 billion business in business and analytics, meblt growing, the cloud business growing, security strong double-digit. all of the shifts you see, this pulls them all together and then we put the two gold standards together and really drive, which we both agree number one is actually bringing, unlocking new value in the enterprise that isn't there today for lots of

professions, lots of industries. >> let me ask you, ginny, you obviously have a range of potential partners to go with. why apple? >> back to our gold standard analogy we both used with each other. so, one is the complimentary nature of what we both bring and understanding, again, those kinds of things that what we've built in something we're going to do together as an example, enterprise great apple care, where for apple care legendary in what it does, but for enterprise clients, on site when it comes to security, private cloud, backup or restored, data. and then about you say why apple? at the end, the two of us together, this is about something that on a global scale we can do together to remake how work is really done inside of an industry. >> and ginny, you know, obviously, ibm going through its own transition that's comes km with its own set of challenges. how do you think of this partnership in terms of ibm's overall strategy? >> it's clear and we both agree, the industry is reordering itself. it's reordering itself around the trends of big data analyt s

analytics, around cloud, around engagement, which is mobility, but underpinned with security. and this goes right at the convergence of all of those trends. and so, it's a bold move that just further accelerates our growth initiatives as i know for tim accelerates his. >> and ginny, could you give us -- is there an example of an industry, and maybe an industry that would benefit in an app that you would think of? >> our teams together, and tim and i have talked about this, have seen some of the prototype work and have done a great job. what bodes well for a long-term partnerships, the teams, the engineers, designers, consultants, they have worked beautifully together. so, one of the apps we looked at, think about the airline industry, fuel, big analytics around fuel. this is taking that, making that a mobile application in the hands of a pilot who makes that final determination before a plane takes off how much fuel is on board. this can save 10%, 15% for an airline deployed widely, and that's taking complex, i say scaling the enterprise down into the hands of the individual

user. complex analytics, enterprise strength, mobility strength, security, yet letting him in a consumable way -- he or she, the pilot -- make those kinds of decisions. >> this is a great example of taking it to the next level, because pilots were one of the first groups to adopt the ipad. and they did this because their flight manuals were like this. so, by putting all this on the ipad, they had access at their fingertips. it saved fuel, actually, because the weight of those flight manuals are so huge. but this, arguably, now takes that decision level making to the next level. and so, there's thousands of these examples across retail, from insurance to banking to literally all of these verticals. and so, this is what gets us excited, you know. it's really redefining and reinventing the enterprise. >> last question, tim, i have to ask. we talked before about the product pipeline. you mentioned how excited you were. i know eddy cue talking about

the best pipeline he's seen in 20 years. any more you can tell us about that pipeline? >> i'd agree with eddy. i'd agree with eddy. i totally agree with him. >> good place to end. >> that's a good place to end. >> reporter: now, this suite of apps is going to be available this fall and rolling out also in 2015. no hard numbers here, but as you can tell from that interview, a lot of excitement and enthusiasm i heard from cook and rometti about this new partnership. guys, back to you. >> and josh, thank you so much. i want you to stay on this, get some reaction from our panel. but could you first just give us a couple of examples of what apple and ibm are doing here? >> reporter: yes. so, as you heard in the interview, so, a new set of business applications. for example, as cook pointed out, in the old days, a pilot would have had to carry just a library full of paperwork around with him that now he can carry around on an ipod. with a new business app, that takes the data analytics a step further. he or she doesn't have to think anymore, how much fuel do i need for this trip.

there can be a business app for that. crunch the numbers more effectively and efficiently for him. it's using ibm's data analytics for apple's mobile devices. guys? >> good stuff, josh. i mean, sharon, is this a game-changer? what does everybody think? >> i think it's totally a game-changer and definitely good news for ibm, good news for apple, too, but listening to this, it seemed to me that at least a lot of small businesses are already using apple products for their businesses, and now large corporations will just simply be following suit. i spent a week in pittsburgh last week. every small business i went to from coffee shops to boutiques, everything they did was on the ipad. so, this is something i think now corporations are doing with the data analytics that they will need for the example, like, with the pilot. >> right. >> the pressure that might object blackberry after hours, potentially microsoft, a lot of companies hoping to get into the space. we spoke with stacy smith about the course of enterprise to their future. >> doesn't they just seem like a formalization, a cementing of

apple's market prowess, really? it's already sort of won perhaps the minds of some key professionals, a lot of traders, for sdexample. sharon mentioned the people she met in pittsburgh. traders i know have the iphone technology, using them to make trades away from the desk. this adds added heft and sophistication to do what they need to do. >> i love the meeting of small people. i mean, you talk about smart people, at ibm you're talking about very smart. you're talking about people at apple, very smart. what i think is being missed here, some nerd on going to create an app to out-sell everything that ibm and apple's doing anyway. it's is not just that. when they talk about big-data analytics, i think they miss the mark in what it's really about. it's about big data, predictive analytics and how to take the people, which are particularly

the millennials, because they are going to tell everybody what to do in the next five years, and if you don't understand them from top to bottom, you will be out of the business. now, so, apple and ibm, i think, are getting together saying we've got to figure this out. i don't think they figured it out yet. >> jon fortt is with us. your reaction. >> this is really interesting on several levels, kelly. first, i want to give props to josh lipton. i believe that was tim cook's first business broadcast interview as ceo. great job, man. but the companies on the other side of this in the enterprise include hp, microsoft, intel, oracle and blackberry. interesting, oracle used to be one of apple's best friends in the enterprise. they're now chief rivals with ibm. so, apple doing this deal with ibm is interesting. steve jobs and larry ellison were best friends, of course. this is very important for the ipad, which has been criticized as not being very ready for creative work, more for viewing than for doing. ibm has an opportunity to help apple transform that in the

enterpri enterprise. it's potentially similar to what apple did with hp back in the ipod days. the ipod used to not work with windows. apple actually partnered with carly fiorina and hp to bring the ipod to windows, greatly expanded their market share. ipad units have kind of flattened out recently. this could be a catalyst to help accelerate those, particularly in emerging markets where ibm is strong. so, very interesting to watch this play out over the next few quarters. >> yeah. breathless jon fortt almost on this news. josh lipton, our thanks. we should, by the way, say there is so much corporate speak, josh lipton, don't you think, in the descriptions here between ginny rometti and tim cook? i mean, it was almost like a case in point for people talking about business synergies. >> reporter: yeah. i mean, listen, for both these companies, you know, apple, known of course as a great global consumer brand, but they had been pushing hard in that business market. you talk about the free productivity software, ramping

up the security features. and for ginny rometti in this transiti transition, she's seeing it big, blue. the emphasis is on data analytics and cloud computing. she thinks that partnership is clearly part of the overall strategy. >> thanks, ysh. we have to take a break. big announcement out of apple this afternoon. you just heard it from ceo tim cook in a cnbc exclusive. up next, analysis from the panelists at the nyse. time and sales data. split-second stats. ♪ its so close to the options floor, you'll bust your brain-box. all on thinkorswim, from td ameritrade.

welcome back. we just heard from our own josh lipton, apple partnering with ibm to create global business apps. shares responding positively, up 1.4% after hours. let's get more reaction from max wolf, professor of economics, the new school university and ross gerber from gerber kawasaki. welcome to you both. ross, what do you think about this? do you buy apple on this news? do you buy ibm? and who suffers. >> well, i buy apple all the time because i'm always getting new money and it's still one of our core holdings. who really suffers, apple just stabbed the heart of blackberry and said you're done. i mean, blackberry mastered that enterprise market for so many years, and what apple's doing now is partnering with a great partner and taking over the business world, the big business world, where the orders are way bigger and you have so much opportunity for growth there. so, i think it's great news. >> and max, same question, great news. and who isn't it great news for? >> so, i think it's an exciting

piece. maybe a little overdue, but exciting news. i think this is aimed at google and it might be an issue if you're at microsoft. i think this is about apple not seeing their runoff and their dominance the way they saw on the phones to some extent happen to their tablet business. so, i think they're looking at some of the new android tablets. there's a little bit of concern there. i think they're also looking at the surface, they're looking at the microsoft sort of struggle to get into the tablet business and matter there on the enterprise side. certainly, i would agree this is not good new for blackberry, but i don't think that's the focus, because quite frankly, i don't think blackberry keeps anybody long apple or in the apple "c" suite up at night. >> thank you, guys. apple not the only tech giant making headlines today. yahoo! also out with earnings a short while ago. up next, find out how they are playing in the after market and what the analysts are saying about it. tomorrow, cnbc and institutional investor bring you the delivery alpha conference. at just about this time tomorrow, we will be bringing you an interview with carl icahn, live, unedited. you don't want to miss it.

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welcome back. yahoo earnings were out moments ago. m-cam partners joempbs us with more analysis on the panel. rob, good to have you with us.

and correct me if i'm wrong, this was a top line miss, a bottom line miss, a lower guidance, they will sell a few ali baba shares. they're rallying. >> that's close. the ebitda number, people are focusing on that rather than eps. a little profitability. a weak outlook on the profitability line. the good fuse is they're reclaiming or keeping more of the ali baba steak at presumably higher prices. >> so i'm wondering, once this ipo is done. if we had the same quarter and results yahoo showed just now, what would be your view on the company? >> well, the stock would be down clearly on performance in the core business. very early stage, you know, if there is any optimism for turn around, investors would have to be patient. the good news for the company is they do have this very material event in front of us. even after the pricing of the deal, they're going to retain about 75% of their steak stakes.

they will be driven even after the ipo pricing. >> i have a management question, marissa meyer enjoyed a little honeymoon criticism. lately there have been top tallying and part of the story today is that advertising continues to disappoint. is this a shift that nobody can successfully turn around or is there a meyer problem at yahoo? >> it's a tough one. they have been through several management teams as you all know. one thing is there is an enthusiasm. people do get up and want to go to work at yahoo. it's been a long time since they've had that. i think it's a really difficult shift to turn. thankfully for her and her tenure the companies that this ali baba stake. it gives her a longer window before the spoltlight will be shown intrensively on her turn around effort. >> two quick questions, rob, do you like yahoo, i'm sorry, greg, do you like yahoo?

greg. you first. >> i like the move with the ali baba. i love the yahoo gear. i love the model ali baba does. i am all about millenials. i don't think yahoo understands them. this is a way to get an understanding. >> target is $45. agree with that commenttary. it will be a long shift. there is value in the sum of the part with the asian assets. >> that's $10 bucks liar than they're trading today. appreciate it. we will wrap up today'd headlines, janet yellin, yahoo, that's all next. we will take a quick look at what's ahead tomorrow. we'll be right back. saved 760 bucks. love this guy. so sorry. okay, does it bother anybody else that the mime is talking? frrreeeeaky! [ male announcer ] savings worth talking about. state farm.

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looking back, let's quickly show some of the movers here. intel after hours, see how that company is moving. we just discussed yahoo, obviously, we have the news from apple and ibm as well. intel, after hours moving significantly higher. we talked to the cfoc.c. smith on this show. he told us the margins, de