good thing it's a big call by you and a hard one too >> after ten years of recommending t-mobile almost continuously, it's hard sometimes to know when to sell the winners. >> i know. >> i still believe in the t-mobile story, but it's harder to see it outperforming from here >> craig, thank you for joining us craig moffett. >> thanks for joining us on "power lunch." >> "closing bell" starts right now. >> the disinflationary process, the from process of getting inflation down as begun and in the good sector, about a quarter of our economy, but its has a long way to go these are the very early stages of disinflation. >> comments from fed chair powell helped boost the market midsession, lifting the dow from a triple-digit loss but stocks pulled back again after he said this >> the reality is we're going to react to the data. if we continue to get, for example, strong labor market reports or higher inflation

reports, it may well be the case that we have to do more and raise rates again. >> off the lows, the major averages in positive territory as we head toward the close. we'll help you make sense of the roller coaster session this is the make-or-break hour for your money welcome to "closing bell." i'm sara eisen there's the dow, up 200 points low of the day almost down 260 s&p 500 with a nice 1% gain, technologies in the lead that's the sector that's most whipsawed by fed comments. you have some weakness in the defensive groups like consumer staples and utilities and real estate, all lower, so is consumer discretionary the banks are rallying more than 1%, nasdaq up 1.4%, and you are seeing a lot of the big tech names leading the way for this nasdaq rally check out shares of microsoft, getting a lift as the company outlines a way it will integrate chatgpt into its products. we'll talk more about big tech's a irace in just a bit.

also ahead, we'll break down chair powell's message with richard clarida. and later the big post earnings plunge for chegg with the ceo dan rosensweig first mike santoli, what are you watching >> not that much give in this market about two days of pullback or at least some hesitation in the market friday and yesterday, bond market got twip twitchy afr the jobs report friday but you track powell's comments, the market up 1% from its high of the year last thursday. one of the big questions coming into this week is can some of the speculative stuff that got overexcited coming into the week calm down, deflate a little bit while the overall stays the same hints that's possible. if there were a pullback to

4,000, you're still in the normal pullback zone, looks like this a little mini breakout is intact one area that we've obviously been looking at is inflation and commodities need to go further up the chain here's a true year of the commodity index etf. well down from the mid-2022 highs but sticky around this level, which was really right around the russia's invasion of ukraine last february. so clearly some of the pressure has come off but oil is up off the lows, copper has pulled back after a good run ag commodities are lower but not breaking down. we'll see how this plays to the inflation numbers. so far, a tailwind month to month but keep can eye on it >> oil prices are surging up 4%, wti at $77 the dollar hit a short-term high earlier and is now weaker, which bodes well for stocks. and treasury yields are a little

firmer is it all about the fed? >> it's largely about the fed. i think the yields in the dollar have been friendly enough and they've come far enough in kind of the stock market's direction that we're not going to get too worried about these little countertrend moves but, yeah, that's the delicate balance here, have we used up a lot of the tailwind from the dollar and the fed -- and, you know, the fed destination is somewhere in sight a 25 basis point move, seven weeks between another quarter. >> make santoli. richard clarida, former federal reserve kis voois chair, currently managing director at pimco. good to see you again. >> as always, sara >> what was your big takeaway today? >> the chair did what he needed to do, which was not too much after payroll friday that realigned rate expectations pretty close to where they wanted them to be, so i think the markets are more or less pricing in a couple more hikes

as the baseline. i think that's where the fed thinks they're going >> the suspense into today was whether he would walk back his dovish -- what was interpreted to be dovish comments during the news conference. but he's done that before. i think that surprised us he didn't do that >> i think he didn't need to do as much as he would have without the blockbuster payroll number with the press conference today, there was a little something for everyone progress on inflation, that's good, but we may need to do more i think he was sitting both sides of the ledger. but he wasn't trying to move rate pricing today >> do you think this is a change it did feel for a good period during this hiking psych that will the fed cared about the market reaction. >> yeah. >> and it doesn't feel like we're there anymore. he had so many opportunities to talk about looser conditions, and he didn't. he talked about tighter conditions >> yeah. you know, when i did your show in the fall, we talked about that, and that's really where the fed was. they were pushing back against

easing and the national conditions i think now they understand part of it is they are getting better news on inflation so they don't want to seem to not acknowledge the improvement there. but it's more of a balanced approach to communication than we saw, for example, this summer and in the fall. >> should he have sqwatted down the market a little bit given the run-up in the past couple months >> my expertise is the bond market it's about where the fed wants it to be right now >> in other words, signaling more hikes >> most of the heavy lifting has been done last year. a couple more hikes is what they think they're going to need to do >> how do we read that strong jobs report? that means it could go higher than the peak rates that the market has priced in >> i think the seasonals everyone has discussd are tricky in january we may get a better sense in february of how strong the job market is. but it's a very strong job

market openings are up. unemployment at a 60-year low. you can't deny it. >> does pimco think inflation is on a oneway ticket lower >> we do think we've seen peak inflation. we think we'll have lower inflation this year. it may not be a straight line. we're getting some good luck now, but a lot is going to depend on services inflation goods inflation is down. maybe housing inflation starts to fall. but there's a ways to go, i think, before either we or the fed would say mission accomplished >> so you expect a rate hike and -- >> in march. >> and then -- >> another one in may. >> another one in may. >> yeah. >> because you don't think inflation is going to fall fast enough >> i think that they think, through their communication in the statement where they said rate hikes, not rate hike, and then today the chair echoed that, i think they think they're going to hike twice more

that would be my bet right now >> what about toward the end of the year, pause or cut >> well, i think they've indicated, and i believe them, that they want the pause to be a substantial length of time that being said -- >> in restrictive territory. >> yes that said, sara, if the inflation data continues to improve, i think towards the end of the year they could be open to considering a cut, and the chair more or less said the same thing. they're data dependent as we move out further in the year >> what would cause them to cut? >> well, if inflation progress is better than they expect and they see that it's durable in terms of maybe the labor market's not quite as hot. i think if you add those together, they could be in a situation to consider an ease at the end of this year >> the economy would really have to weaken for that to happen, wouldn't it? >> that might be part of it. i can see a scenario, sort of a softish landing, where all the bad luck in inflation in the last two years is better luck and inflation numbers are in the 2s and the economy is slowing,

and they could b-- remember, the think ult my -- rates are restrictive. they want to get it to 2.5 to 3. so even under their scenario they would be cutting next year. >> the other interesting i thought, when he talked about the labor market and the dynamic, he seemed to imply they're structural, that he thought some of the issues with labor force participation and some of the supply issues around jobs, which has some interesting market and fed policy implications, doesn't it >> it really does. i think part of the reality that we began to grapple with in my last year as vice chair and they're still dealing with is the postpandemic labor market is a lot different than the prepandemic labor market in january 2001, unemployment was 3.5% and inflation was 2%. it's different labor market. >> meaning what? we need immigration, we need more -- >> all of the above. some of the folk who is took

early retirement two years ago have not come back obviously, labor force participation is lagging so i think all of the above. >> do you think this labor market is going to soften here in the coming months >> i do, because i think the tightening in place last year and the tightening in financial conditions is going to slow the economy this year, and i think we will see hopefully a modest pickup in unemployment, but that would be my base take, yeah. >> hopefully it's modest >> yeah. >> so people don't lose their jobs how should we listen to the fedspeak that's going to come in the coming weeks what sort of messages or indications will you be looking for and data as well now it seems like they're more data dependent >> i think they've become so certainly as we go through the year the flip answer would be, listen to the chair we'll get a lot more fedspeak. we heard comments from mary daley on friday that reinforced this message of a couple more hikes. the fedspeak and the data will

be coming in, but it was important for the chair to get out there today, as he did, because, you know, let's face it, he's certainly first among equals on that committee >> no kidding. we've got a cpi report on the 14th >> yeah. >> so, next week >> yeah. and then i think one more after that >> do you think the number will go up? you said bumping and -- but the economy has picked up momentum here >> yes, it could i think we would probably tend to look more at the core than the headline and i think we have seen peak inflation so inflation will be low they are year. it's how fast. >> richard clarida, thank you. good to have you >> thank you >> currently at pimco. shares of education technology take a look. chegg, there is attention after the company gave soft revenue guidance for the first quarter and the year, down 18.3% we'll talk to the ceo about what is weighing on this outlook.

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check out shares of chegg getting pummeled today, investors focusing on the 2023 guidance, which at the midpoint showed a 2% decline in revenues.

key bank downgrading the stock to market perform saying the guidance was worse than feared and shares may remain in the penalty box for an extended period of time coming from an analyst who had upgraded the stock three weeks ago. joining us, chegg ceo dan rosensweig welcome to the show. good to have you back. >> thanks, sara. fun opening. >> look, expect to come on in good times and bad to talk us through it what happened here >> so, i think there's a miscommunication on our part to folks. the business is actually doing very well right now. what i mean by that is unfortunately when we had our covid peak and started to come down and students started to go back to school and 1.5 million students didn't show up for school, we had to take our guidance down the first part of last year. that probably cost us close to three-quarters of a million subscribers. we have been digging out from that hole during the course of

the year and have seen improvement account growth, increasing retention it will take us some time to pull out of that hole. that's what this year is about so organically, we've been growing at about 2% or 3% last year we also acquired a company and that took us to 10% last year. we broke those numbers out so we have got to execute this year we feel there are momentum on new accounts, which is where the future of subscription businesses come from, it's really strong, and by the end of the this year if we hit our guidance, we'll expect to go back, assuming we achieve our guidance, to a double-digit grower in 2024 so we have to get through this year to execute, but the core business is seeing a significant improvement over where it was a year ago when covid really hit us hard. >> so, that's what i wanted to clarify, dan, because it feels really a stop/start here this is i think the third time many the last 15 months where

the mack to refell apart, there was a big headwind and things were find the next quarter i think analysts and investors are feeling like it's inconsistent where the recovery is going >> yeah. i think some of that is fair, which is we had 19 straight quarters of beat and raise, then a quarter of dramatic miss, then a quarter of big beat, then a miss, then three consecutive quarters of great performance. rose we never gave guidance for 2023 this is the first time we've given guidance we didn't whipsaw anything analysts unfortunately got ahead of us, and that may be our fault having not communicated that but as a business, we are seeing new subscriber growth growing quite nicely now we are seeing the more expensiv package reaching 40% we've dramatically improved our free cash flow

we're the only tech company that is profitable, gap profitable and free cash flow, which is significant. the core business needs to catch up for the loss that we came out of covid with. we peaked, saw a dramatic decline, and now we're building our way out of it, and if we do build our way out of that, we should be in much better shape and continue to grow our ebitda margins and free cash flow >> so, how far are we from a, say, normal education environment, education economy >> yeah. i don't think anybody knows this, right. this is part of the challenge of all of us. what i would say is, and what we said in the middle of last year, we began to see a return to normalcy around summer school. we saw very strong summer school we began to see normalcy we saw it again in the first semester of this year, which is september. we are seeing it now we're having a good start to this year.

so, right now there is this version of normalcy, which means students are going to school, taking hybrid classes, coming back but we have to make up for those that didn't come back. that takes a combination of continued improvement in renewals, which we've done, continued uptake of the more expensive package, which is happening, and an acceleration of new gap growth, which is happening. so, we have to dig out of this hole and it will take us the better part of this year if we do it, we'll exit the year at a much higher growth rate and be back to a company that's closer to normalcy. >> you know investors are worried about the threat from choo chatgpt. you got a question on the call about it last night and downplayed it. how do you know that's not taking business from you we've heard so many anecdotes of students using it. >> yeah. we didn't down play it what we said was we don't see any impact on our business at the moment we expect it to be really exciting i love sam and what he's doing lit come with a whole host of

questions and regulatory issues and new experiences and creating new things people in tech who are leaders in vertical get excited about new technologies with user experience we have, primary contact data, the ability to leverage ai as a user experience, we think we'll advantage leaders and their categories especially like chegg. we've been using ai for years to lower cost of content, increase our matches of solutions so we're big fans of this technology nobody really know what is the full impact of these are going to be, but we look at it enthusiastically as how we can utilize it in our user experience like you saw microsoft and bing they're not saying chat is going to replace bing, but it will enhance bing we're saying ai could enhance vertical leaders like us we have proprietary data it's the magic of putting the two together inside of chegg, which will be very exciting.

we know this new technology is going to make a major impact on so many industries, including ours we think we can make it a positive one, and we're looking forward to engaging with them and continue to use it and get the user experience up that's what's going to be exciting about it. >> how has the competitive landscape changed, whether it's from competition from places like chatgpt or new upstarts that are getting some fresh funding? >> yeah. there's going to be a lot of people remember, that the history of the internet so far has been these new technologies get created, platforms happen, some companies come out bigger wins and some lose. the companies that continue to invest and leverage this technology to their advantage and their consumers, which is what it's built for, it's built to be technology built into technologies, not necessarily just stand-alone so we're enthusiastic about it and are already working on ways we can leverage it to make chegg actually more comprehensive and better the single most important thing

students care about is accuracy. i think everybody would agree at this moment in time, and it will get better, that it doesn't have the accuracy we put our top 200 questions through it, 96% of the questions they couldn't answer at all, 4% they answered with half of them being wrong. we know that's going to get better but we want to use it inside of chegg. we don't expect them to become a vertical site for education. we expect it to be a generalist technology >> the president gives the state of the union address tonight not sure we expect anything on student loans, but he has had the student loan forgiveness plan i was curious about your perspective on it, what more we could see. is the costkcost of education kn kids from going to school? a big headwind for you >> i know you're interested in this and how much you care about students and debt. the difficulty here is we've never capped the cost of education. we've not improved the relevancy

of the curriculum. we've not used technology, like we were talking about with ai to, to the advantage of the student. if you look at the state budge etc. and national budgets, so much goes into the administration, almost noneint learning and the classroom so we've got this problem. it has to be fixed we encourage people to reduce debt, to reduce the interest rate, and we think the president can help people because we're creating a permanent debtor class. but to be clear, the loan forgiveness that they're trying to offer helps people that have it now but doesn't fundamentally change the problem of education is too high, too irrelevant, we're charging too much interest, and we're giving too much money to people who can never pay it back. 40% of the people even before covid weren't paying back student debt the system doesn't work. loan forgiveness will be helpful to a subset of people, but it isn't going to fix the problem >> dan rosensweig, thank you very much for weighing in on that and of course coming through and clarifying the

guidance appreciate it. >> absolutely. thank you. >> ceo of chegg, dan rosensweig. 1% gain on the s&p 500, led by information technology and communication services those are the best performing sectors. but a nice rally in the banks, some of the cyclical sectors tied to the economy doing well like materials, like i mentioned financials, industrials just popped into the red, pretty much unchanged. then the defensive groups like real estate and stap rls lagging today. nasdaq up 1.5% talk about healthy returns, look at oak street health, surging today on rumors of a buyout deal from a household name. that story is next check out the tickers on cnbc.com 10-year yield gets the most love as always. yields are a little higher today even with a weaker dollar. tesla is there, lagging behind some of these other big-cap tech names today, but up a little bit. bed, bath & beyond down almost 50%. more on that amazon, which is lagging, as

well, and apple, which is up 1.5% the tech rally is being driven afe,via,ndft, appl ndi a l fete -- alphabet

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cbs health is near a deal to buy oak street health according to "the wall street journal. oak street shares surging on the news look at the shares up 30%. it's a primary care center operator focusing on patients enrolled in medicare according to the report, companies are considering a price around $39 a share, about $10.5 billion. it makes a lot of sense for most companies. the move would further the long-term strategy beyond the retail pharmacy and doctors who can manage partners care last year cvs announced a deal to acquire signal health karen lynch, the cvs ceo, will

join us tomorrow we'll have a lot to talk about microsoft, alphabet, and baidu are all in on the a irace. what investors should expect from apple's big ai summit for next week. "closing bell" back in a moment.

the ai race is heating up on wall street. microsoft trading higher after holding its artificial intelligence event ceo satya nadella calling it a new day for search and rolling out a new bing search engine powered by ai. baidu at a high after they announced their own chat bot called ernie and alphabet with its version

called bard. we heard from yesterday a ceo who emphasized how early in the cycle he sees the innovation around art official intelligence take a listen. >> the innovation we'll see in the next five years in general wra tif ai, it's the first half of the first ining of the first person's at-bat and we'll see billions invested by microsoft, google, and others to advance cheese technologies. >> not to miss out on all the fun, apple will hold an employee-only ai summit next week at the steve jobs theater according to a report. those shares higher today as well citi group's tech analyst jim suba joins us. good to see you in person. >> it's been a while >> first time back on set since covid. i know you want to talk about apple and why you like it, but first on the ai story, is it feeling frothy to you as someone who's covered these internet names for a while? remember when everyone had to

have a metaverse strategy? is it like that or different >> a great question. we think about apple continuing to disrupt the market, continuing education, continuing innovation, specifically, hey, siri, what's the weather in new york today those type of things are going to get smarter and smarter we don't think it's frothy we think we're at the beginning of a new frontier for ai >> is this part of your thesis on apple >> it's a new part our five reasons to buy the stock doesn't include this that would be more of a bonus. >> what are the core reasons >> we believe apple will gain a lot of share and grow sales in the future, specifically in developing countries india, less than 2% of their sales come from india. less than 2% of the market they have in india. when we made this call over a decade ago about china, china is now 20% of apple sales the development of india is very exciting to us we think that's a big positive

ahead. >> is china still part of the story? it's been a little bumpy lately. >> it has been a little bumpy, but the production has been a little bumpy, the covid shutdown, the zero-covid policy bumpy. but we still see apple gaining share in china and it's very important to them. >> you have to, if you like the stock right now, see continued growth in iphone sales where does that growth come from beyond just the developing world? >> you can see the younger generation are getting phones at an earlier age than when you and i did. second of all, developing countries. >> what's the average age now? >> around 11 years old when did you get your first? >> 16 when i started driving, and it was not an iphone >> there you go. there's the candy bar phone. we think about this year, there's 1.2 iphones sold -- users right now, and when we think about going forward, iphone 14 and 15, we think in 2024 we'll have a new iphone that will be great people can watch you on cnbc on

the top of their screen and be texting their friends on the bottom that's going to be exciting to us, a foldable iphone in 2024. >> where does that come from >> the foldable phone? >> yeah. why do you think that will be a big thing for apple? they haven't officially teased anything like that >> no, not for 2023, but for 2024, a foldable phone would be a new form factor. the slate kind of candy bar phone we've had from apple has been around for a long time. the foldable phone for gamers and people who want to view two different screens at one time will be a big uptick in 2024 we're talking about 2023 today for 2024 that will be more important. as we progress, we'll talk in the months ahead, people will start to hear about the supply chain testing of a foldable phone and we think it will be big. >> what about apple as a services direct-to-consumer platform what is it doing, for instance, on the media strategy? >> they are doing very well with

advertising. they've had some hiccups or some clampdowns on what information they will track and allow their advertisers to give them but when we think about to the consumer, going into your house and taking a picture of your kitchen and doing the remodel through ar and vr is going to be exciting the service person who comes to service your heater in the middle of winter will be able with ar and vr to put on goggles or use their iphone to say it's an inducer, an ignition switch, and i have the part in my truck or down the street i can get it. these are things coming to your home on a daily basis. >> why put this out now? they had a strong month, up 20%. it's outperformed the entire nasdaq pretty much most of last year why double down now? >> we don't think it's over. simply put, we have a $175 target price, a buy rating, a great year to date we don't think it's over as they start to do some of these internal meetings on ai

and in june, the apple world wild developer conference, look for more news coming out we're very bullish >> the man loves apple thank you, jim >> great to see you. >> tech is ramping at the close. apple, microsoft, nvidia, meta up today it's amazon sitting it out look at where we stand overall that's why you're seeing such a big rally in the nasdaq, up 1.6% now 1.1% on the overall s&p 500. energy and tech are leading the way. communication services are having a very good day, up 2.2%, and that's driven by some of the video game makers, alphabet, meta, disney zoom shares are higher after they announce layoffs. listen to "closing bell" by following the "closing bell" podcast on your favorite podcast app.

check out today's "fast mover," carrier global, the stock falling today. organic growth came in lower than expected and wall street is not a fan about slowing hvac orders despite today's losses, the stock has been hot, rallying 30% since late october up next, rbc capital markets head of equity strategy lori calvasina. and microsoft's big ai event and zoom surges. we take you inside the mart

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power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities. while an earnings tool helps you plan your trades and stay on top of the market. we are now in the "closing bell" "market zone." mike santoli is here to break down crucial movements and jon fortt and rbc capital markets cal lori calvasina alphabet, microsoft lead the way. but the s&p is up 1.3% right now a-3% gain for energy stocks and

more than 2.5% gain for technology with financial not far behind did powell give another green light because he didn't talk down financial conditions or the mark's response? >> i think that's most of it, that combined with the fact that, look, if you're a chart worshipper, you like this market coming into this week. you thought it proved plenty to you that, in fact, it kind of won a benefit of the doubt to the upside a two-day pullback it's interesting how these fed events are now what the bears pin their hopes on, right, that there's going to be something that will interrupt the good mood, and that hasn't happened, you know, twice in a week. i don't think that means we raise higher from here clearly, the market has come a long way, but i do think there's a sense out there that if you have the fed willing to get fortunate about what happens on inflation, willing to allow the economy to prove it can land softly and doesn't have a particular unemployment rate

they're trying to jack up to, then the market's okay in the short term we've also not been able to go down on bad earnings a bit of a buzz around big tech doesn't hurt to get those things back in recovery mode. >> i thought it was so notable to hear rich clarida as the number two under powell and pimco, one of the biggest bond traders, say he sees a path for the fed cutting rates this year if inflation comes down sharply, even with a soft landing one or two more hikes, two, march and may? >> right >> and then potentially cuts at the end of the year. he spelled it out, even though the fed is not talking about it. >> the historical cadence is there for cuts several months after. if there is confidence building -- clarida said inflation with a two-handle, a lot has to happen. you can't take it for granted. the fed won't get in front of that but i do think the bond market's pricing is not purely random,

not a pure head fake. >> no. he thinks the fed is happy with the bond pricing right now microsoft is a big winner today, doubling down on artificial intelligence, announcing a relaunch of a bing search engine behind openai's chatgpt. satya sat down with john earlier. >> i've never, ever, felt this limited in terms of opportunity in the days ahead. i'm excited about innovating, meeting the needs, knowing the search category is the most profitable and large category. that alone should sort of give us the impetus to completely go after this >> jon fortt joins us now. clear clearly, jon, this is a huge push for them. satya doesn't do a lot of inte interviews what were some of your takeaways? >> this is a full-on assault on

google's core business to the point satya talking about how much profit there is to be had there, the idea he doesn't need to eat it all at once, but if he can people it away through ai, there's a lot of opportunity for microsoft there, it's not just about bing or search they plan to roll out this ai capability across the portfolio. but it's so interesting, too, because this week marks nine years since satya nadella was named ceo of microsoft, and he told me really this is the most significant initiative born during that time now, of course, nadella was running cloud and stood up azure before he became ceo, but think about the significance of that it's potentially pretty big. >> it's huge, jon. how do you think about the ai race now is microsoft in the lead because it made this investment in chatgpt? is google ahead of it? who are the players and who's

winning? >> i think if the market ends up being framed the say satya argues it is, then microsoft is in the lead. microsoft has been able to with openai that developers, others are not only able to build into their products right now an increasing number of tech ceos are saying we're rolling this out now trip actions rolling it out for expenses tom siebel getting ready to roll that out in the coming days. they're saying this adds to the quality of their products and their ability to engage and serve customers. so, that's potentially revenue right there in the near term now, we're going to see with bing, was this actually allowing microsoft to capture more attention, more search share, and how quickly google is able to respond we'll see how quickly others can

get real product into the marketplace versus yeah, google has ai but no other tools to build on top of that >> interesting everyone is excited about it now. i feel like we'll have some ethical conversations ahead as well for now, jon, thank you. >> got to have that too. >> exactly a great interview with satya nadella. zoom shares are rallying after the company announced lit lay off about 1,300 employees, roughly 15% of its workers in a blog post, the founder and ceo citing global economic uncertainty and the need to adjust to postpandemic demand. frank holland joins us clearly investors were encouraged by this news. how big of a mark is that going to make on zoom? >> well, i spoke to a number of analysts about this. the general consensus is, and i'm paraphrasing, this is really a necessary evil for zoom to make these job cuts. this stock is trading more than

80% below its all-time high and that was hit all the way back in october of 2020. you mentioned the price action today. the stock was even outperforming even before today's rally, but in general, a lot of people think that was basically dumpster diving, people buying this beaten-down stock that has a lot of big questions about demand when you look at the growth of revenue, go back to q3 of 2022 with 35% year-over-year revenue growth, that's fall on the 5% revenue growth a lot of questions about demand and where that future growth might come from. but zoom has a lot going for it. first and foremost, it's expected to generate more than a billion dollars in free cash flow this fiscal year, and a great brand name, talk about video conferences with respect to competitors, you're going to say i'm zooming for the most part third, a low number cost acquisition cost where does the next leg of growth come from last year they announced video conferencing with tesla for

cars i mean, maybe, a big maybe, that could be useful in the future with autonomous driving. the layoffs we've seen in tech will hit thome, the enterprise of the business, fewer people sitting in seats but still a lot of free cash flow >> look at that one-year chart a little pop today, but boy, it's been hit. it's up 10%. another check on the market heading to the close it's a strong session on wall street lori calvasina joins us. you were looking at the market internals when powell was speaking in washington what did you notice about what popped >> so, you know, what i was watching, sara, and whenever we have fedspeak events i like to watch the sectors in the s&p what i was focusing on today was how tech, communication services and consumer discretionary were acting that's because if you look back

to the 1990s, those are the three sectors that have performed the best following federate hikes i wanted to see how those sectors were acting. we saw the sectors take off like a rocket it told me what we were hearing initially from powell was that we were closer to the end of the sector then those sectors took a hit but have done well towards the end of the day i think the market got a little confused and had to digest later comments about the labor market but ultimately came to the conclusion that we're still closer to the end of this hiking cycle. >> and really taking off now, at the highs of the day, the dow up 300 points, the s&p 500 up 1.4%, more sectors turning green, including consumer discretionary. it had been lagging because of amazon lori, is that the right take are you a buyer? we've already had quite a nice rally here, 19% off the lows for the s&p. >> you know, sara, we're a little above my target of 4,100,

but we did say coming into this year if there was a risk, and we were wrong we thought the risk was to the upside, and we put a piece out yesterday saying we could see potential upside to 4,500. my base case is still 4,100. it's interesting, right, that we haven't had the finalization yet, markets are pulling forward, so i feel like the markets have gotten a little bit ahead of themselves in here. it might be time to exhale and take a breather. but in general, sara, i find myself really pushing back against the bears and the strategy world i think it is quite possible that we saw the lows in october. i think we're going through that final leg of earnings downgrades and markets typically bottom three to six months before you get the final earnings downgrades in. i think they're preparing for a little chop, a little digestion, but in general i think the bears have overstayed their welcome. >> that was the bear case. all the strategists were saying this is the year of the economic slowdown and the earnings

downgrades and revisions lower and we haven't felt that impact of recession or a slowdown yet because of all the fed tightening is that still coming or is it being priced in >> i think what you are starting to see are some hints of slowing demand, some softening in certain industries we're starting to see some companies talk about that. and frankly that's good news for markets because we want to get whatever this is, whether this is recession with a capital "r" or a little one. we want to get it ow of the way. if you look at the pricing on the october low, we were down about 25%, and that is pretty close to a median recession. a median recession drawdown is about 27%. the economic pain, if we're in the midst of it now, get it out of the way relative le soon, that low can hold from a timing perspective. >> lori, thank you very much for talking the strategy into the close. less than two minutes to go. a very strong rally on our hands, mike. what do you see in the internals? >> they're strong although not

decidedly so considering the magnitude of the index move. that's because the nasdaq megacap index is up. but more than 60% of the volume is in advancing stocks look at the ride intraday on the 2-year treasury yield as jerome powell spoke you saw it jump higher and that plunged when he seemed to be crediting the disinflationary move, potentially adding more mikes. but the 2-year is near the highs of the year to date. but 4.7 is the high all-time in this cycle and we're below that. the mix has come in again. we're under 19 there was a bit of a premium waiting for what powell had to say, now relaxing off of that. >> we saw the highs moments ago of the day up 256 or so on the dow. microsoft is having the biggest impact on the dow, s&p, and nasdaq in a positive way

a lot of strength today in technology, energy, communication services, the banks having a good day. the financials, materials, health care, consumer discretionary, that's all working. the nasdaq goes out with a gain of almost 2% nasdaq 100 up 2.2% driven by strength in microsoft, apple, nvidia, alphabet that's it for me on "closing bell." see you tomorrow now into "overtime" with scott walker >> thank you very much i'm scott wapner you heard the bells. we're getting started from post 9 at the new york stock exchange we're about to get chipotle earnings, a good read on what's happening in the economy on the ground and also where food prices are heading i'm going to speak with lo toney on whether all this ai talk is just another sign of another great big bubble i