raising prices microsoft shares are down over 20%. apple shares are down 20% this year so that's a good retention thing to keep employees at apple, at microsoft so they don't go elsewhere or start a new startup and disrupt the companies they used to work for. >> steve, thank you very much. we appreciate it. >> we like sitting over here. >> it's nice a new location love it. >> thanks for watching "power lunch. >> "closing bell" right now. stocks building on gains throughout the session near the best levels of the day as we head toward the close. the most important hour of the trading day starts right now welcome to the "closing bell." i'm melissa lee in for sara eisen. we are firmly in the green but off the session highs. s&p 500 just about 11 points off the intraday session highs we're up 2%, 4065 is the level the dow is up 1.9% the nasdaq composite is staging a 2.9% gain. nearly ever sector is higher, but consumer discretionary

notably the lead here. we had good guidance from the likes of williams sonoma and macy's and that's helping sentiment in that group. that is seeing a 5% gain in today's session. coming up, housing-related stocks getting a big lift even as cracks emerge in the housing market we'll talk to the ceo of redfin about what he is forecasting for the real estate market in the face of higher rates. let's get to the top story, can you trust this rally that's the question being asked across wall street strong retail earnings results pushing stocks higher but how long can this last joining us are ally mccartney, jim bianco good to have you both here ally, i'll start with you. i've got to be honest. i read the notes through if we played the game guess the strategist's target based on the market outlook, i wouldn't have guessed 4700 on the s&p 500 from you. >> yes look, we have come in over the

course of the year and i think that is still a bit bullish, but we do have some signs that there is reason for hope in answering your first question, should we trust this rally, i don't think you should trust any day more than another, right? do i hope that we end the week going into not a ninth week of consecutive downs and that we can actually get enough support to hold risk on into the weekend? we certainly hope so but look, i mean yesterday we had the fed come out with their minutes. it is clear that they are having two conversations and trying to manage both. on one hand, talking about the need to manage hyperbolic 40-year high inflation with restrictive financial policy, right? on the other hand, they're already starting to talk about what and when that rate pause will be. we don't think we will see that

rate pause within necessarily this year, but i think there are a lot of signs that inflation is moving the direction that we need it to move in we have data starting to hint at not being all in the employees' favor but open positions going down and avoiding that spiral. we have preliminary housing data that we got earlier this week that showing financial restrictive policy and tightening is already starting to affect the market and we are already seeing, as we see services starting to take over for goods spending, goods inflation coming down. so this week although i can't say that a day or even a week at this point makes a trend, i have loved to see the interaction between bond yields and stock prices going up and seeing something like consumer discretionaries leading the day with a true risk on. it definitely feels emboldening for right now. >> so, jim, i guess as we stand

here at the precipice of the fed's path towards neutral in terms of their rate hike plans, we're seeing the grit already in the wheels of the economy, as alli had mentioned we're seeing some slowdown in housing, some uptick in claims the flip side to this is that we're seeing this and we haven't gotten to the end of it and we're already seeing it. so the fed really has a needle to thread, so to speak, in raising interest rates but making sure that you're not destroying too much demand, that you're not slowing the labor market too much. >> that's right. i mean the fed is -- the old adage is that the fed hikes until something breaks but the 2022 version of that is the fed hikes until enough things break we've already broken things. we've got the worst stock market in 52 years so far through may 25th we've got arguably the worst bond market in 200 years that's because we've got high

inflation and the fed is trying to deal with it. i think as we move forward, we're going to have to basically see if we get signs that inflation is coming down not peaking. everybody knows it probably already has peaked at 8.5%, but that's not the story and has never been the story the story is how fast does it come down. if it ends the year at 5%, the fed will go full on the whole year their goal is going to be, as former new york fed president bill dudley said, if the stock market doesn't go down, the fed will lower it was the title of his op-ed last month and i think that that's exactly the way the fed is looking at this right now if we don't see serious signs of inflation slowing, they're out for the stock market they have been all year. and i don't think that's going to change, because i don't think we're going to see enough signs of inflation slowing. >> i mean i don't know if they're out for the stock market per se but it certainly is a side effect that they're willing to risk in their fight against inflation. jim, i'm wondering, it sounds like you don't think that we

have seen any sort of a bottoming. for all the optimists out there, your message is we haven't been even close to capitulation if you take a look at the vix, we've got not very close to even the 52-week high on the vix, which is 38. >> yeah. the fed uses a euphemism and call it tightening financial conditions but that's exactly what they mean by it they mean that they need people to stop buying stuff and they need to make people to think about stop buying stuff and that's lowering stock prices so they have been very clear on that i know it's hard for people to get their head around. but you're right, when you look at measuresof capitulation, ha there been wholesale selling, has there been a spike in volatility in the options market, the broad answer is no now, yes, we had a 100-year string of eight weeks in a row down in the dow. that's probably due for some kind of a rally for the next couple of weeks or at least not going down for the next couple of weeks, but was last friday

the low? i would venture to guess it's no. >> alli, just quickly, what sector has got us to 4700? >> that's a great question so the sectors that perform well both in rising interest rates and in above average inflation, those are largely commodities, consumer discretionary and value-oriented sectors, which also at this point in time coincidentally line up with geopolitical factors so if you look back at history, you see the things that you can touch and feel, dividends that you put in the bank, real estate that you can touch, commodities, things that you plant. but again, this is not a short-lived market cycle in terms of volatility. we've seen a lot of volatility this week, whether it's because of pure exhaustion of people like me or fires or people on the institutional side or whether it's just an obsession and a desire to get to a long three-day weekend, have seen

much more calm we've all been remarking on it on the street than the last number of months and so what happens next week when we're well into summer, when we have tomorrow's print on ppi is anybody's guess but there is no reason to think that we have, quote, unquote, capitulated or reached a bottom or gotten substantial information or lack of uncertainty or clarity to get us to some sustainable level before the next couple fed meetings and cpi and ppi prints >> i can't believe summer is next week. >> i know. >> guys, good to see you, jim and alli, we appreciate it. >> bye. after the break, new data out today shows sellers are rushing to list their homes before the market pulls off. we'll discuss the outlet for the rapidly changing sector with the ceo of redfin. that is next you're watching "closing bell" on cnbc.

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ceo, glenn kahman. good to see you. >> good to see you. >> and you're smiling even though the housing market is slowing. tell me, glenn, in six months is the housing market going to be better or worse? >> probably the same rates are going to 6%, inventory is increasing, sales volume will be somewhat fine but prices are going to soften. >> so prices will soften, so therefore you're going to take -- you're going to make it more affordable basically. so you'll make up on the hike in mortgage rates how about the dynamic of people who have to sell their homes in order to buy another home. if i have 3.5% or 3.25% now, the thought of paying 6% for a bigger house is really tough. >> that's where the market is really going to be pinched so many people are locked into the home they're living in now by a 30-year, 3.5% mortgage. so they're going to stay in that property forever maybe they will rent it out.

if they actually want to move up, they are going to have a hard time affording the next place. if you combine interest rates with what's happened to home prices over the next year, the median price is up 43% buyers are saying i've had enough and sellers are starting to freak out a little bit. >> is now the time to buy -- if sellers are freaking out, if you're opportunistic, maybe now is the time to take advantage of that before rates really go to 6% >> i think so. obviously i'm bound to feel that way because i'm a real estate broker but the honest truth is if you're going to stay in a house five years, you're going to do just fine and get yourself a good deal. if you plan on flip the property and make money as an investor, i think that proposition has gotten more dicey. >>anou give us some nuance in terms of where the biggest slowdown can happen? we've gotten some data points the past couple of days.

toll brovthers had better than expected earnings. williams sonoma guided higher. they tend to cater to a higher income household what are you seeing in terms of the type of home buyers that will stay in this market that is more expensive >> well, it's the secondary markets that have been hit the hardest. if you look at tacoma, washington, or sacramento, california, refugees who leave the bay area or the seattle area looking for value have been going to those markets and just sent prices through the roof and now those prices are taking a step back. we're also seeing affordable second home markets like the area in sarasota, florida, really taking a step back on prices so that's where the price reductions are most common one reason that the federal reserve hasn't been able to limit demand probably as much as it planned to is when charlotte gets too expensive, people look at charleston, south carolina. when san antonio gets too expensive, people look at el paso home buyers are being much more

aum 95 russ about where they live because remote work has untethered them. so that's the one silver lining in all of this when one market gets too pricey, people look at another. >> the flip side to that, glenn, is if the fed is taking a look at the market and saying what we are doing is not having an impact on the housing market, that might argue for a harder and more aggressive rate hike path than we're expecting. >> that's probably true, although i think the fed is taking note that pending home sales are down 9% year over year new home sales are down 17% year over year. if you look at the number of people touring properties, that's down 29% year over year so there's definitely been a step back in demand. the only reason we haven't seen prices fall faster is because inventory was so low coming into 2022. >> glenn, i want to talk a little bit about the company second quarter guidance was disappointing to some analysts out there. i'm wondering, you think the market will be about the same in

six months does that make it easier for you to navigate in terms of offering the mortgage product, for instance, when we've seen that mortgage lending has not been that profitable this year for most players >> well, i think we must be the only lender in the united states that's growing so refinance has fallen off a cliff. it used to be about 40% of our lending was refinance through bay equity and now it's about 5% but we've made that up from all the originations through redfin's brokerage business. that lending business is growing. otherwise it's a blood bath in the lending industry there are layoffs and profit compression in almost every lender so we are glad to have combined these two products because otherwise we would be toast. >> and i started the interview, glenn, with saying where do you think the market will be, the housing market will be in six months where do you see it in 12? >> oh, i don't have such a good crystal ball i just think that any concern about a full-blown bubble, a

2008 meltdown, is overblown. the reason is that people were buying houses with funny money a decade ago now most of the people buying houses are using stock market gains to do that and paying in cash i don't think you'll see people get over their skis and have to sell in foreclosure or something like that. there's not going to be some ra rapid loss and value in price. i think the market will be just fine we have to figure out where rates are going to settle and people will keep moving. there's a millenial generation who's still fairly large and a bunch of people who want to leave the big city so i'm not totally optimistic but i'm not crying in my tea either it's going to be okay! >> i feel like you're the type who would never cry in his tea glenn, it's always good to see you. thank you. >> bye, melissa. thanks for having me. >> bye, glenn, nice to see you. let's get a check on where the dow and s&p stands still holding on to those gains. s&p up by 1.9%, nasdaq up 2.5%. up next, mike santoli will

break down the chart to see if this week's big rally is sustainable. as we head to break, check out some of the top search tickers nvidia in the top spot followed by the 10-year treasury, tesla, macy's and apple

stocks are rallying after strong gains on the week mike santoli is taking a look at the market's move for his dashboard today. mike. >> yeah, trying to put this rebound in context here. this is now the fifth bounce that we've gotten since the january highs of 6%, using intraday highs and lows. you see this one from late january, almost 9% february intraday almost got to 7% this was a good one in march, almost to 11%. is there anything different about this one we were up at the highs of the day, 7% above last friday's lows a couple of things maybe give this one some merit. we poked above this four-week high just at the highs of the day. it's also happening arguably

rallying on not-so-great news when it comes to some of the earnings and things like that. for that matter the fact we've ground valuations down also the breadth numbers are good final point, credit is playing along. that had been a worry point of this market. if you look at the high yield hyg relative to treasuries of a relative maturity, that's what's in the iei they're tracking each other so the rise in yields on junk that was mostly about treasury yields until recently, that's when high yield started to underperform. people worried about spreads gapping out. so we have a comeback. it's still not back to normal, liquid stable conditions but i would argue there's at least a shot that this gets some traction out there. >> some traction, but that doesn't necessarily mean that we've seen the bottom. it doesn't feel like we ever had a capitulation. >> well, i do grant that, that if we needed one, we didn't get it it's not that unusual for a subsequent low not to have the

same panicky readings as the first one. that's been some work morgan stanley was doing that the vix trails off a couple of months into a downturn as opposed to making fresh highs but i agree there's no way to say except in retrospect that this was the one. alibaba and baidu are booming. up next a top analyst tells us whether he thinks this bullish sentiment will continue. student. stujd. stay tuned ay tuned your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates

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check out shares of alibaba and baidu. the companies enjoying a relief rally after reporting earnings our next guest says this is not the result of a positive outlook, it's a reaction to the businesses holding up in the face of lockdowns. joining us now is gill lorea gill, good to see you. >> good to see you. >> mow specifically, baba didn't give an outlook. these are stocks that have been just bombed out over the past year plus. first it was the beijing technology crackdown and then you had the worries about delisting. and now you have the covid lockdown economic growth slowdown what are you most concerned about at this point? >> well, all of the above. mostly that china is in a

slowdown and the lockdowns are unpredictable and probably not ending any time soon both of these companies have declining revenue right now. their fourth quarter may have been flat, but as they talk about april and may, they actually have declining revenue. what we liked about these results and the market likes about these results is the conversation about deep cost cuts in alibaba's case, they make money in their china commerce business, they lose a lot of money in their other businesses. so their willingness to cut down on costs, especially inthose other ancillary businesses is what we like from the results today. >> how do investors view the technology sector, gil when you're taking a look at the tech sector and seeing pressure on big cap tech names here in the united states, investors are clearly questioning what their holdings are here. how does that translate when you take -- when they say, oh, i've got tech allocation to make, maybe i'll put it in these names which are already down 55% on baba over the past 12 months

maybe that's for a trade, a better thing to do >> well, i would say the preference needs to be to u.s. big tech u.s. big tech may have concerns about some slowdowns, some regulation, but in china, you're also adding these other concerns about lockdown impact, political concerns, and then in addition the ability to possibly be delisted from the u.s. and so unless you have a really inexpensive stock, which alibaba, by the way, is, u.s. big tech looks better. apple at 22 times earnings, microsoft at 26 times earnings looks better to me than anything in china alibaba starts being interesting because they're trading at 9 times ebitda in spite of the fact that they lost 50 billion rmb on their ancillary businesses if you take those up, they're cheaper than ebay. that's when it starts being interesting. >> do you think on the u.s. side we have discounted -- investors

have discounted the worst case scenario for technology? as you take a look, your concern about the chinese economy is the economic slowdown. here in the united states we're entering a rising interest rate period there is a move away from long duration and so, therefore, technology i'm wondering if you think maybe we have factored in a tightening that needs to still be done among u.s. tech companies. layoffs, budget cuts, et cetera? >> yeah, i think we've factored for a bad scenario in the u.s., not a really bad, not a real downside scenario, not an economics collapse we're not expecting an economic collapse, though the consumer is still mixed as opposed to all over weak and so the companies in the u.s. have a little bit more visibility by the way, we know how to get through a business cycle in china, they have never gotten through a business cycle the economy there is centrally managed, it was very investment based. the consumer was supposed to pick up the slack there. right now the consumer in china is really suffering.

retail results are already declining in china, almost across the board and so i would argue that we have better visibility that's why these companies and american big tech are still guiding. the chinese companies have very poor visibility. that's why alibaba for the first time did not guide for its next fiscal year. >> right i think that's an interesting point about a business cycle and not having lived through one on the chinese side gil, great to see you, thank you. >> thank you >> gil luria. let's take a check on where we stand in the markets as we head to the close. the dow is up 548 points at the highs it was up 650 we are up by 1.7%. s&p 500 holding on to an almost 2% gain. wall street is buzzing about a venture capital firm warning its portfolio companies about a potential death spiral we've got the details straight ahead. do not miss tonight's special, "inflation usa" hosted by brian sullivan.

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what is wall street buzzing about today? tech venture capital firm sequoia capital's warning to its ports folio companies to cut costs or else. kate rooney has the details. kate. >> hey, melissa. yeah, that is sequoia's advice i've got a copy of their 52-page presentation to founders people really pay attention to these memos. it's one of silicon valley's most successful investment firms in decades

sequoia calling this a crucible moment for founders. it doesn't see the economy bouncing back any time soon. warning startups to tighten their belts in the meantime. some of the big names talking about inflation, geopolitical conflicts, limiting what policy makers can do. they say unlike 2020, this correction won't be followed by a v-shaped recovery. sequoia also warns of what they call a death spiral. companies that grow too fast without slowing spending you can see that in the chart there. they say growth at all costs is now over investors are rewarding discipline instead back to you. >> growth at all costs is over that's what the public markets have already told us, kate you've got to wonder what sequoia capital looks like in terms of where they're putting their money and how they're looking at the new companies they're onboarding >> they point to some of the public stats they talk about the nasdaq down 28% and some of the deep declines that we're seeing in public markets

there is a thought that a lot of founders and people running startups are not as attuned to what's going on in public markets. we talk about this and have seen this play out. they're trying to remind founders that you have to look at the long-term trajectory here, which for most of these guys is an event yal ipo valuations have come down and so hammering that down and saying, guys, you are probably not worth what you might be worth on paper right now. as far as the strategy going forward, they have talked about cutting costs, not necessarily job layoffs in all instances we have seen that play out in a lot of big tech companies and some private companies but one of the points is if you can make it through this, tighten your belts, be more disciplined, it's actually a time for opportunity if there's other startups struggling as well if you can make it through this, you'll be one of the strongest and potentially best in your category so they are kind of framing it as a bit of an opportunity as well. >> all right kate, thanks kate rooney.

retail stocks soaring today after macy's, dollar gen and dollar tree reported stronger than expected earnings up next to talk about whether that can continue, amid headwinds. that plus a countdown to marvel's earnings when we take you inside the market zone

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cal: our confident forever plan is possible with a cfp® professional. a cfp® professional can help you build a complete financial plan. visit letsmakeaplan.org to find your cfp® professional. ♪♪ we are now in the "closing bell" market zone. mike santoli is here to break down these crucial moments of the trading day, plus frank holland on cloud stock earnings confusion and kristina partsinevelos on broadcom's massive deal to vmware all 11 s&p sectors trading in the green. mike, it's interesting because we saw a huge market decline

based on walmart and target and here we have ary revival of stocks. >> one indication that maybe the market had just sort of softened up enough in response to some of those numbers. and then the accumulation of all the retail results seemed to leave investors with this impression that it wasn't so much consumer traffic or the top line spending that was the main issue, it was essentially mix and obviously frictional costs, inventories, things like that, which don't necessarily need a macro slowdown you also had a market that was probably poised for some relief, almost no matter what. refusing to go below 3900 on the s&p. nothing has changed the fact we're still in this downturn we could go down 5% and still be in that defined downturn you have to evaluate it each step of the way. right now based on the breadth of this rally the last two days, there's some merit to the idea

that this rally might be worth, you know, thinking it could last. >> 10-year yields easing off we're seeing financials latch on to hope that the economy is good, that the sconsumer is remaining strong because we have a 2.4% gain on financials so far. >> exactly it's sort of i think in a comfortable range in terms of yields right now as everybody is saying, the fed didn't say anything really new in the minutes except it conveyed a sense of perhaps a glimpse of flexibility after july in what they're going to do there's some offsets with bonds performing based on how, you know, they're offsetting the volatility in stocks, at least for the last three weeks so we're enjoying some month-end tailwinds here this was a very strong week. supposed to be a strong week after options expiration before memorial day so we'll see if it has carry-through tomorrow and into next week. >> you mentioned on monday of this week when i was here, mike, that it's a strong week in general. people are feeling good. they're going go to the barbecue, they're going to start

summer usually we see this drift higher is there anything to you that indicates that maybe this is a little stronger than just the normal drift higher into a three-day weekend? >> yeah, i would say that we're tracking for more than 80% upside volume on the new york stock exchange more 52-week highs than lows on the big board that would be two days in a row with 80% plus that checks off a box for some people saying maybe this is real demand as opposed to a short covering and allowing the market to lift. we scrutinize these things a little too closely i don't think we're talking about any kind of a v from here, but certainly sentiment, positioning, got defensive enough that you can feed off of that for a little while longer as i said, we're in this zone where you could go up a few more percent and still have the bull/bear argument. let's get to cloud stocks. snowflake beating earnings estimates but warning of a challenging operating environment. box missing on the bottom line

but reporting stronger than expected revenue the company noting overseas customers are reducing spend and splunk rallying. let's bring in frank holland frank, is there one sort of takeaway, one common thread that we can take away from these results? >> absolutely. i think everybody realizes right now that cloud growth and cloud stocks, things are slowing down a bit, whether it's because of i.t. issues -- slowing down on i.t. spending, supply chain issues, fears of a recession there's a lot of concern out there about the stocks however, i want to show a stock that looks at the sequential growth of the three companies you named plus another one and across the board we're seeing slowing of revenue growth, nothing eye-popping to the upside here. analysts say investors are rewarding optimism splunk and box are trading much higher today they also both raised their guidance box even missed on eps and

splunk gave tepid guidance they talked about a lot of issues and analysts i talked to said this is a test of management of both customers and supply chain and stocks that have really good management and at least appear to have a plan to get through some of the headwinds in asia where it comes to covid and getting supplies out of there and also just a changing environment in spending, they're really being rewarded today. those raises of guidance being rewarded when it comes to box and also splunk. >> and i guess the bigger question, frank, even though we're expecting a slowdown in growth, have we factored that in when we look at snowflake, have we already re-rated this group where even a slowdown we're learning of now forecast by the companies, that's already in the price? >> you know what, that's really not clear how much further these companies can go one thing we do know is the companies that are the so-called top of the stack when it comes to cloud names, those are the app names like workday, data

dog, they're the most sensitive. i want to show you another graph of cloud spending so far this year this is from keybank and it really shows the slowdown that we're hearing from the companies now. here's the real data we were seeing sequential growt in cloud spending. is it priced in? analysts say it's not really clear but we know the companies on top of the stack, like workday, data dog, krcrowdstrik will be the most sensitive to that those are the companies that have the potential at least to continue to fall. >> mike, some might take a look at the stock reactions to these earnings reports and think that's a real silver lining, that's a positive when it comes to determining or trying to answer the questions as to whether or not this rally is sustainable. >> yeah, at least in the sense that there isn't the continued pile-on effect in these names. i'd be very surprised if we were suddenly going to go back to

game on, buy all the software as service stocks and kind of revive that entire trade but there's a lot of room for relief again, the entire cloud group, if you look below the salesforces of the world are down more than half in value from their high. so it's a salvage operation. you like to see some m & a come in and see if it places some kind of strategic value on some of these stocks. for now it seems like it's a little bit more just reducing the negativity as opposed to a brand new story. moving on to chip stocks, thank you, frank, by the way chip stocks rallying after broadcom announced it is acquiring vmware for $61 billion. kristina partsinevelos joins us with more. what does this tell you about the state of the semiconductor industry given this is a diversification into enterprise suft wear? >> i guess this pretty much tells you we need to diversify away from semi conductors and head into the software space, especially given the ceo saying that the new company, which

would be rebranded under vmware would have half of its annual revenue come from software maybe there's not as much growth in this space as we believed we talk about everything becoming connected and yet there's downgrades that are happening. i was on the call at 8:00 a.m. this morning and the ceo said that you are probably, quote, dreaming if you think this current trajectory will continue for the semiconductor space. more specifically if you look at nvidia, they had their q2 guidance lower than expected and you had the stock fall then several semiconductor equipment makers like applied materials, lam, all of them had guidance lower than estimates. so that's telling you something here, that the space is probably shifting, you know, to echo fr frank's comments, we're starting to see weakness from the supply chain, still weakness from china, and here's one large company that is diversifying and then to just add, we have marvel that's coming out in maybe ten minutes or so and so we're expecting some strength

for them from data center demand and 5g infrastructure. maybe auto wasn't the case for nvidia yesterday. >> mike, just to hone in on nvidia, in the after hours sessions kristina had mentioned that the stock's reaction was to the guidance, which was a little bit light. at one point in the after hours it was down 10% or so and here we are, a good day for nvidia being helped by the overall tape. >> it absolutely is. even by this morning, it was only down a few percent before the market opened so it seemed as if folks were able to sort of absorb the actual message from nvidia and willing to make the bet -- there's a lot of people out here probably who remember wishing they owned it back when it was twice yesterday's value and so maybe there's a bit of a muscle memory at work right there. a lot of sell side analysts have $400 price targets on this thing. i'm not saying they're right but it shows you why there's a

willingness that a stock went from 60 times earnings down to 30 times earnings finds a little buying interest when it's able to say these are extraordinary factors responsible for our revenue guidance to the downside. >> i'll be looking for marvel. kristina, thank you. kristina partsinevelos. retail stocks having a strong day macy's beating on both lines while raising its full-year earnings guidance. burlington stores, ralph lauren and kohl's also up big and the etf is up 5% joining us more, dana telsey dana, investors were absolutely depressed when walmart and target roreported and now it's a party. what is the message in your view >> some of the message in my view is you look at the demographics and bifurcation between the low ending consumer and upper, middle to high-end consumer, what you're seeing is a return of occasion wear with dresses and shoes that's out there that's working plus the fact that when you think about these discretionary items, you look at some of the teen retailers didn't do as

well hollister and urban outfitters didn't perform as well it's these consumers who have the money who are going out to occasions that's working guess what, you now have inventory. keep in mindi, the setup now, watch for the promotions as we move forward because inventory levels are building. >> yeah, in terms of the inventory levels, we heard it from walmart with the staggering 32% increase in inventory. we heard from macy's too in terms of not having the right inventory. they were too heavy on casual wear when the shift was very, very quick to office as well as occasion and that category will be discounted, the casual wear. does a retailer like tj maxx be the ultimate beneficiary >> they're getting better brands, better categories and it's all three that will benefit. so i think the off prices will certainly win because the value they offer, the longer this

inflation goes on, the greater ability for the off pricers to capture share like tjx. >> there's a lot of hoping put into the higher end consumer and i wonder what indicators you look at in order to give you an idea whether or not they are starting to crack? >> when i'm looking at the higher end consumer, take a look at tourism it was interesting that macy's commented today that tourism is coming back from 17 tram south america and from europe, just no asians that you're getting here in the u.s i'm also looking at what's the innovation and price points. it doesn't seem to be a high in terms of high-end accessory price points lvmh and also the chanels of the world. i'm watching tourism and inventory levels and at their ability to pass on price so far the product innovation is driving demand in luxury goods. >> the ability to pass on price has been key, mike it's interesting that we haven't seen much of the wealth effect

happen, translate into the consumer and how they're feeling in terms of what they are spending. >> yeah, not yet obviously the total spend includes price so inflation is in there and maybe people aren't happy about spending it. but you're right, spending is not nearly tracked with consumer sentiment which is completely in a trough state right now it's really depressionary levels so i agree that's the effect the wealth effect to me in terms of the stock market going down translates much more quickly into corporate sentiment and that's why you're hearing a lot of belt tightening we'll cut back on investments, thatce staff and things like maybe it kicks into spending a bit later. >> dana, good to see you, thank you. >> thank you. kraft heinz, take a look at this one, worst performer in the s&p 500 today. they are downgrading it from sell to neutral, trimming the price target from 34 to $24 a share and the threat of consumers trading down to private label brands

there's also a shift in 3g which would effectively make it easier for 3g insiders to sell their shares putting some additional pressure on here. >> absolutely. really kind of thorough and i think sharp-edged downgrade here or sell rating where they detail exactly why kraft heinz is uniquely disadvantaged in terms of their positioning and product mix. things that are challenged by private label. i'm pointing to the comments by walmart in particular last week of how they're going to treat the pricing in different grocery categories so i don't think really kraft heinz had won the benefit of the doubt the way some other food producers and consumer staples stocks had it's been a little bit of a serial disappointor and probably explains part of this move lower, especially on a day like today when it seems like people want to buy the riskier seeming, more cyclical or growthy stuff. >> we even heard about the trade-down effect in macy's earnings, that lower income

consumers were trading down at macy's we've got -- what do we have here, four minutes to go what are you making of the market internals at this point >> it's somewhat governored by the rules here we got up to a 7% gain off of friday's lows. we still on the s&p 500 today not gone above last week's highs from nine days ago so this entire week as jumpy as we've been has been within last week's range so it's sort of unresolved, indecisive, even though it's a plausible short-term low in terms of the actual internal breadth figures, more than 80% of volume today as yesterday on the new york stock exchange is to the upside. and there are all these systems and models and traditions that say two 80% upside days is the equivalent of a 90% up day and that wins the market a little bit of credence in terms of the real demand coming in. so that's one positive i would look to as well.

in general, energy strength even on a day when everything else is going up continues to stand out to me. it's up more than 1% today arguably the margin of outperformance versus the rest of the market has gotten way excessive, but that's not stopping it. it seems like the cash flows are going to be strong enough if commodities remain at these levels so i do think that's one thing that you would pull out of the week's action as well. >> consumer discretionary you mentioned before is the big winner on the session, up by 4.6% but consumer staples still winning on a day like today, mike it seems to tell you that there's not a willingness to say, you know what, we're off to the races here we still wanti to play it safe. >> that is true. there may be another wrinkle in that we have the momentum strategy etf that's rebalancing at the close. there's been a lot of eyes on this because it's going to start buying and buying energy and staples.

there have been these turnovers in years past when they essentially chased the recent winners. so some folks have been looking at this as a sign of short-term culmination of some of the demand for those sectors we'll see if that was a factor or not but definitely worth keeping in mind. >> it's sort of weird to think that the momentum strategies are buying at this point after the big runs that we've seen. >> that's the definition of momentum, right? it happened in '19 too, 2019, all these funds essentially bought the defensive quality type stocks because we had just had that huge drawdown led by growth >> yeah, all right mike, we'll see how this settles out here we are on track to add to our gains for the week the dow could be on pace to snap an eight-week losing streak here we are up right now by just about 1.6% the nasdaq holding on to a 2.7% gain with 36 seconds till the closing bell as we mentioned retail the real winner here, so consumer discretionary the leading sector on the day but financials aren't too far behind here.

we're up 2.25% with rates cooling off here into the close on the session the s&p 500 we are looking at, strength in semi conductors too. highlight that, up 3.8% ahead of marvel technology's earnings let's send it over to scott wapner in the "overtime. all right, mel, thanks so much welcome, everybody, to "overtime. you just heard the bells we're just getting started right here any minute now we will get earnings from costco, what is now a critical read on the state of the consumer and how much inflation is eating into retail profits. we begin with our talk of the tape the nasdaq surges and some say the signs of a near-term bottom might be in place. let's ask stephanie link she's been cutting back her exposure to growth lately. she is hightower's chief investment strategist, a member of the halftime investment committee as well. steph, i'm