of here. >> if that's the case the fed will have to hike by 50 wednesday. >> busy week ahead starting busy with the news on first republic that's for watching "power lunch," everybody. "closing bell" starts now. welcome. i'm scott wapner we begin with stocks trying to rally to kick off the big week we'll see if they can keep that up the fed decision 48 hours away more earnings too, including the biggest stock in the market, apple. here is your score card with 60 minutes to go. the dow is beginning may with a late-day turn around up triple digits earlier gave it all back now it's flat. similar story today for the s&p 500 and the nasdaq the s&p 500 got closer to 4,200. gave it back

technology not getting much going today as well. it leads us to our talk of the tape do the bulls have the upper hand in this market or is that old cliche sell in may and go away your best strategy let's ask josh brown welcome. good to see you. new month. new hairdo. >> oh! >> new and fresh what about this idea some were saying the bulls have the upper hand. >> i agree with the premise. if you thought about how we went into the year, what was the big risk the bond market. how much further is the fed going to go? that was it every day. the bond market right now is a basket case. right now the highest yield on the curve is the four-month. it's 5.2%. the one-month is at 4.3. this is a huge spread between maturities it's crazy

the yield is 67 basis points more it's all upside down that's the freak show going on behind the gym where they smoke s cigarettes the captain of the football team is fang. these stocks don't look anything like the bond market when they have strong reports, the stocks go up when they have negative guidance, the stocks go down it makes a lot more sense what's going on with large cap growth, specifically tech, than anything you're seeing that has to do with central banking or interest rates. investors look at that and say, oh, that's why the nasdaq is up 21% year to date and that's why we're looking at all-time highs in some of the largest companies. >> brad girsner was on we asked him about technology.

just had the best quarter he's ever had after a rough prior year because of the exposure to tech the idea can this continue listen to what he said about this >> i thought we had a regime change at the start of last year it's no longer about inflation higher and rates higher. it's now about inflation lower and rates will peak in may or june of this year and then they'll likely follow as well. we think that setup coupled with the rationalized multiples of tech stocks made it a great time to invest in companies like meta, like invidia, like microsoft that we expected to beat earnings and they delivered. >> they did deliver obviously. the implication from brad was this is the place to be. they have the cash flow, the balance sheets and it can continue the multiples are not overstretched in many cases. what do you think? >> you have the russell 2000

flat on the year it has to be frustrating if you have a broadly diversified portfolio and you decided to tilt away from large cap growth. >> a lot of people did. >> the torture chamber started up again now you have good earnings support for the s&p 500 for large caps for q1 53% of companies have reported an 80% beat rate. what else do you want to justify the start of the year? now look at apple and microsoft, combined 39% of the gains for the nasdaq -- the s&p 500 rather it's wild we're right back in the place where the rich get richer, the big get bigger you have to accept there will be periods of time like this. now -- are we doing apple here >> yeah. is apple the last one to underscore the reason why these

stocks have not only gone up but will continue to be the place to be >> here's the way i would frame it i think they'll have good earnings and the stock will react positively i could be wrong that's what i think will happen. the bears will tell you apple is at 30% year to date. you've got the benefit of the earnings. >> that's what they've been saying the whole way you have a year's worth of gains in the mega caps there's no way it's going to continue. >> let me holler at you because if you want to frame it year to date, be my guest. understand apple is flat year of year there are very few annual periods of time where apple is flat yes, you could say year to date it's up a lot. i wouldn't disagree. of course it is. however, in a year it hasn't made any progress. i'm not sure how much of this years, quote, unquote, good news priced in. the second thing, there is a way

to make the valuation, maybe not make perfect sense -- let me rattle off 28 times enterprise value. that's extremely expensive the way you can understand apple better and the thing that's worked historically is not to try to apply a consumer electronics multiple or tech services multiple. you have to think about this company like a luxury goods company. that's what it is. the user of apple products does not trade away or trade down or have anymore options at that level. they're apple users. they're locked in. that's what they want. look at lvmh apple's pe ratio and louis vuitton, if they're growing with each other, this is the way these luxury brands are being valued stop putting apple up against

seagate. start thinking about it like louis vuitton. >> people talk about like it's a staple >> it's a staple for the top 1%, maybe the top 10%. now they've got new growth markets too that are not 1% stuff. india is never going to buy $1,500 phones. >> if you think apple is going to deliver and in your words the stock is going to react positively, does that mean this rally has legs >> statistically, the s&p will be up if apple reacts like microsoft did. now we know this year's it trade was the it trade of three, four, five years ago can the rest of the market now come up from behind? can the rustle russell 2000 get going? that's the part left out of

this >> is the dispersion between those two groups and the lack of breadth in the market, is that concerning to you? >> it will be the longer this goes on for and the fewer large caps that are making new highs, but not yet. that's not where we are. actually we don't have a lot of overbought charts. i was looking at the s&p 500 names that were selling at 70 rpsi or greater. it's not a big list. most of these stocks peaking 21. >> what about the argument that all the bad news is still to come what the fed has done is taking a toll under the surface and it's going to bubble up, it's just a matter of when, not if. that's the mike wilson view who said i don't think this rally is going to last much longer. >> i have been sympathetic to that argument for the last 18

months i have felt that way let me ask you a question. how under the surface do you consider first republic bank that's not under the surface that's a calamity driven by the fed's actions and some of their own hubris and bad management. this is not a case where there's been no damage or where it's under the surface. it's right there in plain view. >> is it going to get worse? >> it's just not happening to citi group. >> jamie dimon said they were buying the assets of first republic and this is ostensibly it. >> could be. listen, that would constitute -- listen, this did not have to go the way it went. the fact that we decided fdi

insurance is unlimited, that's a new innovation this is a new thing we invented. had we not done that we would be in the midst of a 2008 because it would be 100 banks in trouble and not three. we'll throw in credit swiss just for fun. there was intervention you can consider what happened with these three banks crisis like they're pretty big banks hundreds of billions in assets we're not talking about a local with ten branches. it's not under the surface it's on the surface. we're seeing it. it's not like there isn't damage it's just that systemically we haven't had a credit event we might we could always say that you could have said that one year ago, two years ago, six months ago we have blow-ups we don't have a systemic

problem. >> let's bring in marcie mcgregor marcie, do you feel like we're still on shaky ground or, as we enter a new month, do we have a little bit better footing? >> you know what, i push back a little bit i see a market treading water with year to date highs. we have inflation which is going to come down quickly over the next ten months, but it's more than twice the fed's target. i think you have market breadth that's pretty narrow 70% of s&p returns have come from five names. earnings are declining in the near term, sentiment can keep the market treading water the big question i ask is what will cause the market to break out of this really wide, stubborn trading range we've

been in for months i don't have a great answer. i think the economy is slowing with market breadth as narrow as it is, much more narrow than back in february at the market highs, i'm still a little bit cautious on this market. >> if earnings better than fear aren't a catalyst to take things higher, if a fed pause this week isn't enough to take things higher, what is? >> exactly you know, exactly what the bulls are saying earnings aren't so bad companies are pretty resilient the fed is going to pause. financial conditions are going to continue to tighten i think we get one more hike out of the fed and they pause. they may leave the door open for june i think financial conditions continue to tighten. we haven't heard much about the balance sheet. i think the rolloff is going to keep things tight. i'm struggling to see,

especially with momentum slowing a bit in earnings, what this looks like as we get to a debt ceiling argument in washington, as we get to a fall where i think the economy really will be slowing and a consumer that's been so resilient, but the purse strings are starting to tighten. i'm more positive if i think 12 months out than 3 or 6 months. >> josh brown has a question >> hey, marcie what changes to asset allocations are you making in light of that outlook? is this more a behavioral thing where you're telling people don't have too much enthusiasm in the short term, make it to the long term? what's the right response if someone agrees with you? >> great question. our position all year has been neutral. we see that positioning can have a near-term impact

we're staying cautious, but staying invested we've been tilted towards defensives a lot this year that's perking up in the last two weeks. i think it's going to be a wise way to be positioned for the path forward, especially if earnings continue to slow. it's up in quality, being defensive and what i keep saying to clients is, have your shopping list ready. when this cycle starts to pivot, it's going to look different in terms of recovery. small caps will finally get their moment international stocks will look more attractive. it's a little early for those right now. i keep saying have the shopping list ready and know where you want to position when the cycle pivots. >> speaking of pivots, game out wednesday for me is a pause maybe not so explicit, but implicit by the fed, is that a sell the news event or is that going to be viewed as a positive

>> listen, the view that the fed pauses on wednesday is widely consensus right now. the market is very much expecting the fed to pause i think it's not really going to be a newsworthy event. now, like i said, i think the fed leaves the door open for june they're going to have a couple more unemployment reports between meetings and other big inflation reports. where i think the market is really offsides is when we get our first cuts the market is expecting cuts sooner than reality. our view, if you don't get the first cut until early next year, and with that, you know, we have to remember markets react negatively to the first fed cut because why is the fed cutting because the economy is slowing that's where the market expectations need to be reset, if not on the pause coming after this meeting, not on the 25 basis points, but the timeline for a fed cut.

i cstill think it's aways away. >> if i think, marcie, like many do, that inflation's peaked, rates have probably peaked and that, okay, i'll give you the fact that the economy is slowing, but it's not going into the tank, that's why i want to be in technology, can you make the argument against that? >> like i said, even if you look under the hood of the tech sector, market breadth isn't great there. where i would push back on tech leading the recovery -- we're neutral tech certainly not a sector i'm negative on. where i would push back is two areas. one, in industries like financial services, which are kind of in cost cutting mode, that's about 20% of i.t. spending i think that can pressure tech

going forward. you also saw a tre mendous amout of tech demand pulled forward with covid that can pressure sales. it's a story for many quarters to come. it's going to be mild, but could pressure earnings. >> that's the thing. it's not really happening. by being neutral, so to speak, on that area, i mean, i can nitpick 10,000 things in this market if i want to, yet the ship keeps sailing forward in terms of mega cap tech there's always a yeah but, but at some point that story sounds tired. >> what we've been saying to clients tilt towards higher quality tech, mega cap tech. tha my gut tells me we've seen market volatility. this market has been so subdued

with the vix under 20. if we see the tough economic data, that's where i think the defenses are going to be proficient >> i appreciate it marcie. josh, we'll see you a couple times before the hour is up. those reasons alone, inflation peaking, rates peaking, economic dicey, you're going with quality and what's viewed as the highest quality. i don't care if it's 6 stocks or 600 stocks. >> that's what got rewarded by and large this year. investors are looking -- by quality, it's not a subjective, like i think this is a nice company. >> no. i'm speaking facts. >> even look at large banks, jpmorgan leading the large banks. it's not an accident

investors are prioritizing quality in every one of the 11 s&p sectors. that's important i think companies that have secular growth stories are doing better so that combination, ask yourself where do i find quality companies that can manufacture their own growth it's large cap this is not rocket science >> let's squeeze a break josh is hanging around let's get to our twitter question we're asking should you sell in may and go away? head to cnbc on twitter. we'll have the results later in the hour we're just getting started here. later, mark newton is watching the key s&p level ahead

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didn't result in travel cancellation it saw revenue rise 30% from 2019 that stock on track for its best days since october 12th. royal caribbean and carnival higher now booking holdings on track to close at a record high it follows four consecutive months of gain as we count down to marriott's report tomorrow seeing if it can match hilton's bullish outlook. scott? >> thank you brad gerstener taking sides in the ai arms race. >> if i'm the ceo of google, i have one job don't let chatgpt secure a leadership position in ai. that's what's happening.

i don't see a level of urgency around efficiency and product release and getting leaner and faster to compete with chatgpt. >> i thought that was a big deal he was like they fumbled the ball in ai and they're not picking it up because the game is being played without them or way ahead of them. what do you say? >> i agree with most of what he's saying. i have a slightly different perspective, but with the same idea the fumble is probably not that important. you kind of dribbled that. he went on a podcast and said this large language model we put out is not our best stuff. it's more like a honda civic that's his words you don't do that stuff if you're serious about making a splash i think the real fumble is that google, and for good reason, became very pressured internally by the employees and all the

chiefs and all kinds of people that were working at the company whose role is to not make money, to be more retrospect about ai in general and more cautious about rolling out chat products in particular. i think they listened to too many people who told them to go slow then microsoft comes around the corner like we don't care. this thing is out there. we'll improve it as it goes. i think it's impossible to have a conversation about the near term future of ai without alphabet you may not think they are in the lead right now doesn't really matter what the public thinks. what matters is who's going to make the best products and have the highest rates of usage i think it's too early to say that open ai has any superiority of everything going on at alphabet i would be hesitant to say that at this point. >> does it give you pause to say

microsoft, invidia, now meta, they're the ones who have sucked all the oxygen out of the room >> today today. today. >> but it's been more than today. >> google is like the 100th search engine. google didn't come public until 2004 we had huge search engines it's not that important. it never has been. google didn't enter the office products market until 15 years after microsoft had dominated it you can take a huge chunk of a business if you come in with the best product apple is living proof of that. they're never first. they didn't have the first smartphone, the first mp3. it's important for us today as talking heads. if we're investors in a stock, we want to feel like they're first. in the end it's important who makes money and who gets the

dominant market share. it's so early that that's a misguided way to try to handicap what's going on. >> you made the case too that you think, general speaking, there's a bubble in ai some of the stocks you own and love got caught up with -- >> the second half is going to be wild. if we don't have a credit event, something like a crazy economic meltdown and we have an atmosphere where the fed is covering rates, we're going to have a wild second half with all things ai. it's almost unavoidable. >> good stuff. up next, mark newton getting bullish on two keys part of the market where he sees opportunities and risks, next.

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higher today my next guest says the markets could be bracing for a big rally. let's bring in mark newton i have two numbers on my mind. 4,200, s&p, closer today before backing off. i just looked at the vix we might go 15 while we're having this conversation what do you make of both >> the vix should be heading lower. there's nothing that spooked the market since it peaked stocks have grinded higher i actually see an upcoming bottom in the vix likely this week even though i expect the market to be higher, at least in the mid month the vix might bottom and make a secondary low for reasons such as -- >> why does the vix go lower into the fed meeting >> it's on a downward spiral right now. there's no reason to try to time the bottom unless you look at

spot vix compared to last month the vix is under 16. the august vix was at 22 that doesn't mean the market has to sell off violently. i think you will get a reaction near the fed the key is going to be technology i think the risks are rising in may. i call it the three ss the first is seasonality we have exited the golden period which starts in october and ends in april we're out of that period sentiment recognizes this rally and we've seen things like fear and greed have risen we saw levels near 25 in march now they're up near 65 sector rotation the most important. we've seen a huge uptick in defensive trading in the last month. the top five sectors are real

estate, desecrationary, healthcare -- >> do you think we're going to have may choppiness? >> i think tech is stalling out and that should happen in this month. i'm not saying sell tech and go away you've seen equal rated tech break down it's been fang that helped to disguise technology. that's going to be something to pay attention to >> you think we can get to 4,300, 4,325 but that technology is not the thing to take us there? >> near term it's going to be 4,200 and we pull back short term and then we move up above 4,200 and everybody is eyeing that to be an important level. they have to break out shorts.

i don't think we get above last august peaks at 4,325. for me there's a 2 to 3% upside. the risks of the pullback, those are important, but you don't have any traditional self-signal right now. >> some have raised the issue of whether the fed decision, if it's a pause, is a sell the news event. how do you see that? >> i think after 500 basis points in hikes, whether they do 25 or not is irrelevant except for this one major thing in the march fed minutes they said there's going to be heightened risk of recession later this year. why would they continue hiking if even the fed says there's going to be a recession? >> let's say it's a pause. >> i think the market is out of touch with what the fed is saying and those two things have to reconnect i mean, i don't necessarily

think there's going to be a drop in rates i don't think they're going to have to cut later this year. i think we could have a meandering period where the fed is done and we have to wait and see. personally it's a smart move. >> what's the best part of the market >> i love health care. it's coming into a bullish time. we've seen medical devices and biotech. pharmaceuticals are a great area to be. tech is starting to wane and you're seeing good strength in discretionary. casinos, home builders >> mgm coming in over. >> you have to respect the defensive sectors as well. >> what about energy >> energy is still seasonally in a good time. it's disappointed. i'm waiting for crude to stabilize and go higher. i'm a longer term energy bull. it has stalled out a little bit. you have to more selective until

crude gets above probably the low to mid 80s. >> that's been a debate whether you need crude prices to go up for energy stock to work some make the case you don't. >> i wouldn't disagree with that you saw a period where energy held up fine even though crude was declining. now, things like xle are still okay i don't mind energy. i want to be in health care. i like industrials there's lots of parts of industrials in good shape. you have to be diversified you can be a stock picker again. the three-month correlation is down 30% stock picking is working you don't need to own broader technology you can diversify your assets. >> you have to believe, as you do, that you're not going to have a recession you can't tell people to buy cyclical stocks if you think we're going to have a recession. you said we don't. you said the fed doesn't need to

cut. >> the market is not wrong opinions are wrong the market, since last october, has shown good performance until i see that changing, i think in general the market will respect inflation starting to fall off quicker than an earnings recession or the threat of a recession where everybody thinks we're having a recession. i think it's going to be postponed. it doesn't need to happen this year. >> we'll leave it there. appreciate it. up next, we're tracking the biggest movers pippa stevens standing by with that. >> it's all about the chips. we have one key report with one name on deck that's coming up next.

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less than 20 to go before the closing bell let's send it to pippa stevens. >> we are tracking the chips on semiconductor is the top stock today after the company posted earnings results that exceeded expectations. silicone carbide revenue nearly doubled. automotive revenue grew 30% year over year. other chip stocks on the move include invidia.

after the bell, we'll hear from nxp. scott? last chance to weigh in on our twitter question should you sell in may and go away the results after this break

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let's get the results of the quit question. should you sell in may and go away the majority said no, near 58%

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lebeau, contessa brewer with a look at mgm. mike, first, i feel like it's we try to get ahead of ourselves going into the fed and then we're like what are we doing here >> there is some of that this market has lots of rotation the fact that the regional banks continue to decline, couldn't get out of their own way -- i thought there was a chance the frc takeover would have been viewed as a clear to slate moment >> jamie dimon tried to sell this too, it feels like it's the end of this. >> and it kind of is people aren't selling regional bank stocks because -- we just have the continued pressure from all the places we know that's one side of it.

then warmer than expected growth and inflation numbers have yields higher. it's like let's tense up in advance of the fed we'll get most likely what we expect, but we don't know how it's going to react. i will say, also, heavy corporate debt issuance today, which is a good thing, that has treasury yields leaking higher. >> tech not doing much today that's another bit of a breather >> it's just invidia accounting for the upside brad gerstener weighing in warning they might not be able to pass on more price increases to consumers. >> in 2022 they were able to pass on massive price increases because we had supply chain disruption now supply chains are being

normalized it's going to be difficult for companies like autos to pass on price increases in a world that is starting to deflate around key prices. >> let's bring in phil general motors got an upgrade from adam jonas. what about the point that gerstener makes? >> he makes a valid point. by the way, the average transaction price has only come down 1.5% from the end of last year many expect it to come down further. we have to wait and see. that's the idea out there, as you see more supply, prices will come down. i want to show shares of general motors the stock got a pop at the opening, but it's given back some of that especially as news came out that the company is cutting several hundred contract worker jobs, jobs in the product development area of the company. not a huge number of job cuts,

but they continue to want to be as cost conscious as possible. that's one reason why adam jonas at morgan stanley upgraded the stock. he said it's a slow melting ice story. in other words the internal combustion engine vehicle is not dying. sites their improved capital discipline we're going to learn what ford has learned in the first quarter. they report tomorrow scott, back to you. >> mike, the best of times in the auto industry, in terms of you have this pricing power, you're charging way above msrp and the stocks can't get out of their own way. >> that's part of the takeaway too. it's not as if everybody was expecting these companies to be able to pass along price increases. if anything, we're bumping up the limits of affordability and

they traded five to seven times forward earnings clearly the market doesn't think you have this great price times volume growth story behind us. i'm looking at allied financial. stock is hanging in there, but way off the lows we've built in this anticipation that it's like a weird part of the cycle to try to get excited about these names. if you do slow the transition, if there's this persistence that their legacy business is not going to be obsolete, you can have an extended life. >> i'm looking at uber up 6%, which reports tomorrow morning phil, thank you. we'll hear from you regarding ford and what they delivered it's a big day for uber. contessa brewer, mgm in overtime, what do we expect? >> we expect a lot from the

earnings april gaming revenue for the entire organization topped expectations we should also get current color about visitation this is a holiday period right now. secondly, u.s. generally and vegas specifically, the strip keeps setting new records. will we see indication of a consumer pullback in leisure spending or companies pulling back on conference spending? in the sports world we learned from bet mgm there were first quarter net gains 94%. what that means for mgm moving forward, they're a partner of course shares up about 38% year to date >> let me ask you this, what happens if you see a pullback in corporate spending for conventions and the like, but you don't see a pullback from the consumer which has been very strong and vegas is on fire?

what's the fallout >> even before the conference calendar had truly resumed we were seeing real midweek strength and what they were able to charge on the weekends, raising room rates and what restaurants were charging and cabanas at the pool, it was almost an after thought when conventions and the midweek business travel started to come back it's come back with a bang it's a packed calendar when we talk about sports, you have f-1 that is all the rage. they've significantly raised their rates and packages for that we'll see what they say on the call with this looming threat of recession and whether they're seeing any impact in las vegas. >> the cabana indicator, that's a new one? forget everything else the cabana indicator >> it fits in line with booking holdings being at an all-time high there's a mixed message which

is, yes, there's no quit to the travel economy people are willing to pay up for it economywide, we want to see services-based inflation calm down we're not seeing it just yet, or at least not quickly enough. housing should roll into the numbers. that's why we're caught in this pinch between the consumer still has resources. there's still enough sturdiness to the consumer and companies are making their way through they've made efficiency measures and they're not feeling like they have to face declining demand on the other side, is the fed going to be friendly or not? that's why i think whether we get a pause or it's hinted at is going to be key. if the fed says we don't see another way out, we have to put 1.5 million people out of work and that's the only way this works, that's not going to be acceptable to the market the s&p is where it was a year

ago, two years ago don't fight the fed. makes a lot of sense don't fight earnings forecast declines makes a lot of sense both have been hostile the market's found its way through. you can say, well, that's because ten stocks are working right now. that's true lately it's not true on a one-year basis. on a one-year basis the average stock is plus or minus 5%. >> contessa will be covering mgm after the bell thank you for that i'll give her full props on the cabana indicator we have less than a minute until close. yields you mentioned them. higher across the board. the real question, is this it for the fed? we'll find out 48 hours from now. >> yeah, and even if it's not it, are they going to lean in the direction of saying we feel like the policies are restrictive enough, the economy is growing below potential

if inflation continues to come down, they'll be able to say short-term rates above 5% are restrictive enough >> we're not going to make it into positive territory for the dow. not a bad day though that disoes it for us. i'll send it to morgan brennan and john fortt monday reversal as the major indexes finish down. the action is just getting started. welcome to "closing bell overtime." i'm morgan brennan with john fortt. we're going to get results from mgm, chegg and many more >> plus, we're going to talk to the ceo of e.