that the minister started a meeting. one of which is to tell italians just to not eat pasta. bring down the demand, and you may bring down the price >> price spikes. now pasta. >> the italian eats 50 pounds of pasta. >> "closing bell" starts right now. kelly, thanks so much. welcome to "closing bell." i'm scott wapner live right here at the new york stock exchange this begins with the tech run. whether it has more room to run, and if so, for how long? we'll ask a top fund manager that very question in a moment here's your scorecard with 60 minutes to go in regulation. stocks mostly in the red for much of the day. investors obviously watching that debt duel and another move higher in interest rates today key yields now at their highest level since march. big tech also pulling back slightly even as microsoft briefly hits another new high

it leads us to our tech tear why it's not done, that is the take from our first guest. dom rizzo. it's good to see you welcome. >> fragreat to see you, scott. thanks for having me. >> great time to have you. why do you think this room -- this run has room to run >> yeah, well, you know, scott if we look out into the back half of the year, we have a couple of things going for us. we have improving fundamentals, so revenue acceleration, operating expansion, and free cash flow conversion improvement for most of the stocks in the technology universe. moreover, when i look aeptt the world, i see valuations. the tech is trading at 22 times earnings today historically that's peaked at 27 to 28 times earnings and of course, we have ai which is going to drive a lot of demand for all technology >> yeah, i mean, arguably that's the controversial part of your argument is valuation because it's the place where people get hung up the most, and they say,

how can you possibly justify the valuations of some of these stocks just given the runs that they have had and the kind of environment that we're in where earnings seem to be projected to, and in a world of higher interest rates as well how do you defend that >> it depends on what we're looking at, scott. there are some expensive stocks like nvidia. we know nvidia is expensive at over 50 times earnings, but when i look at a stock that's trading 14 or 13 sam you think and apple and microsoft, mid 20s multiples i feel good about the valuations broadly speaking. >> nvidia, if you have to quivel with its valuation which is obviously high, you still think that that stock has more room to run. do you think it's overvalued at the present time or no >> well, look. we try to invest over 18 to 24 months' time, and we feel really good about nvidia over the medium to long-term. you know, we have incredible gpu

technology and its parallel processing is mission-critical for all artificial intelligence improvements we're seeing this company with absolute lynch pin status in the data center, and there's a shortage of gpus right now so fundamentals should be very strong. >> it has had a couple of years' worth of gains that's one of the headwinds weighing against it. what kind of test do you think it'll be to tomorrow when it reports earnings after the bell? >> definitely. it's always tough when a stock rates. it was only 20 times not longing to, and now it's over 50 we will see if they outweigh the multiple in the short-term, but it's hard to bet against jensen and his team. >> investigators h investors ha hard way i've got apple and microsoft and i don't see alphabet and meta, why? >> we're trying to find the companies we think are best position for ai, and right now that's apple and microsoft in our opinion. we also like amd and the entire

digital semiconductor ecosystem. those are the names that will benefit. all these changes happening in ai is calling into question historic business models a real competitor to search with google and chatgpt we're going to see what happens at the application layer, but an area we're most excited about is the digital semiconductors because these guys provide the lynch pin technologies that enable the artificial intelligence to happen i don't know who's going to win at the application layer quite yet, and ai is so new, but i feel very confident these llms, large language models will be trained on gpus from nvidia and amd. those gpus will be manufactured at tsmc on top of machines from asml the machine is the most incredible it costs over 200 million euros and takes three different 747s to take the tools from the

netherlands to taiwan or arizona. there are other places where you can invest in ai without having to worry about what's happening at the application layer. >> for all the reasons to like apple, i haven't heard many suggest it's the leadership role that company may have when it comes to ai. rather it's meta, and it's alphabet now we can argue over whether alphabet's ceded anything to microsoft in the whole chatgpt ordeal, but how would you justify suggesting that apple has more ai upside than a meta or an alphabet where some suggest both of those companies are absolutely all in? >> this is the part that everyone gets wrong about apple in my opinion. everyone says that apple is really a secret consumer products company disguising itself as a martsmartphone comp right? that company has probably the second best chip engineering team outside of nvidia, and if we think about ai at the edge, that's all going to be done on

top of apple's processors and that will be done on our phones. we feel really comfortable that apple has a very strong position for ai moreover, if we think about where apple is in the importance of digital semis, that's the one thing, but on top of that, google pays apple a tremendous amount a year in order to remain the default search engine in search so we see that they have a very strong positioning in the billion-plus affluent customers in the world. >> forgive me for stepping on your toes. i thought you were wrapping up your thought i apologize for that apple is number one, and it's near 15% of your portfolio that's a large number. at what point does that become too large? >> well, we feel really good about apple today. like i said, we have accelerating fundamentals into the back half. it's trading at a mid-20s earnings multiple. we feel really comfortable with 15%, but of course, if things change, we could change our mind, but we like apple for the medium to long term. >> amd is another one on your list that you think is

underappreciated as it relates to ai, right >> absolutely. so everyone loves nvidia, and we love nvidia too, but the thing with ai that's underappreciated is that you really need a full portfolio of silicon in order to make it work let's look at amd's portfolio. they have best in-class cpu technology taking from intel they acquired links and they have technology there. this is what we're most excited about with amd they have the new chip coming out, the new combo chip between their cpu and gpu technology and that's really going to be a great solution for the data center customers who are looking for a second source to nvidia. you know, when i look at the valuation of that stocks trading roughly 26 times earnings, we have improving fundamentals and we feel good about that one. >> dom, i appreciate your time very much. that's dom rizzo, global technology fund. portfolio manar do we agree that mega-cap has

more room to run you can head to our twitter and vote, and we'll share those results coming up a little later on in the hour we have a developing story we are following as well reports of a new covid wave hitting china. several stocks being impacted by that today kristina is here with a look at all of that. k >> let's look at the casino names because those are firmly in negative territory right now, especially those with exposure to macau which is a key gaming market that comes amid concerns that china's ongoing covid surge might not peak until late june, and i should say keep gambling market, and that could have an impact on tourism in the region. so you could see wynn down 6% in las vegas. mgm down almost 6%, and in the same vai vein, we're seeing big gains in the vaccine players moderna on track for its center, and moderna and pfizer expect to keep pace with no covid strains thanks to the mrna technology

used in their vaccines independent advisers to the fdr set to meet next month to decide which to target in the near term thought i didn't have to bring up covid, but we have to >> yeah, and we do because the stocks are reacting on those headlines. kristina, thanks we'll see new just a bit let us know if you have more th let's bring in laura goodwin. it's good to see you again welcome back >> thanks for having me. >> you get a headline or two about a possible new outbreak in china, and you think what as it relates to the markets >> well, as we saw in the names that kristina was outlining, this is a playbook that investigators know pretty well at this point, and so while it's important, and i think where we could see it impact the global macro story is in the pace of global economic reacceleration perhaps more moderate. again, something we know how to manage, and in terms of the wall of worry with investors, i wouldn't think it makes as big of a dent on the horizon. >> you came here prepared to

suggest without even, you know, discussing these headlines that you think a hard landing is inevitable. >> i do, and that's related to the global economic environment, but specifically what's happening in the u.s., and the way that the fed has hiked rates. i mean, it's a story we've discussed in the past. the economic cycle tends to evolve in very similar ways and while there are still areas of resilience in the economy, we see the economy gradually slowing. now what's important about the pace of the economic cycle here is that there has been resi resilience it has been slow, and it's too early to be fully defensive in a portfolio, but an oacknowledgmet is important. >> it's part of the economy that seems to be having a more than, you know, small issue, and that would be manufacturing as we got, you know, again today, that the services side of the economy because the employment part of the economy remains pretty strong. >> still hot still hot. >> former fed chair is saying

don't write off a soft landing just yet >> i -- i appreciate the perspective, but this is a matter of timing rather than substance. when the fed begins hiking interest rates, the economy tends to evolve in the same way every time, even though cycles have differences housing and liquidity sectors topple first then manufacturing only then do we see services, profit margins compressing and then the labor market. this is a matter of timing rather than substance, and that timing of course, incredibly important for investors and that's why again being fully defensive, the bear camp we don't believe makes sense at this juncture, and we have because the fed's been raising rates, income ability to generate income from a portfolio from a construction perspective. that's a tool that hasn't been available in a long time >> nor has, you know, economies overheat that's the way economic cycles obviously go

when the fed started this whole thing, the economy was flush, and i mean people were flush with cash. the likes of which they hadn't seen before because of covid and the after-effects of that, and the stimulus that was put into the system we had zero interest rates for more than a decade leading into that so the mattress so to speak to fall onto from all of this was, like, the triple decker, you know doesn't that mean something as to maybe this time, in fact, is different? >> of course, it means something in the sense that myself, the street, everyone has been wrong in terms of how quickly the second cycle would return. those sources of resilience have been incredibly important and actually, they're shaping the way that we can invest into what we believe will be a recession this year. what do i mean by that you mention the consumer household balance sheets and business balance sheets as well are incredibly strong.

that is corporate's taking advantage of fed and federal government programs. municipal governments take advantage of these programs to reassure their balance sheets. that's going to provide an enormous amount of resilience in asset classes and even high yield bonds heading into a credit spread expansion and even recession in a way that hasn't been true in the past, but what you have described in terms of the mattress that liquidity that was flush in the economy, that's an area of excess that has been pervasive in the last economic cycle. the pulling down on which may cause a little more pain than investors are expecting. even a mile of economic recession historically has resulted in almost 2% increase in the unemployment rate when you add a bunch of liquidity, it might be harder to bring inflation down. >> what do you make as we started our show, discussing the tech trade exactly what's happened with, that whether you think as our guest does, that it actually has room to run? >> two things i would say in

response to dom's comments first, i'm sympathetic to the argument that a lot of the multiple compression we saw last year that was felt in the tech sector, that may be behind us. the fed is likely to be nearing a pause, and we believe they're at a pause at this point, and the valuation would be because the rest of the economy is slowing and things like ads aren't doing as well so that might bode for a bit of resill resilience as we head into an economic slowdown, and dom mentioned this as well there are changes in the way -- likely to be changes in the way that businesses conduct their business as a result of developments and innovation and ai it's not just the tech sector in which that's played in my perspective. it's also infrastructure it's digital infrastructure. it's energy infrastructure, and so i think there's a broader way to play. >> what happens if we lose the tech trade what does it mean? it's been a tail wind obviously for the market itself. at what point does it become r risk if you lose that tail wind, does the market then face a greater

head wind because there are already enough economic concerns where cyclicals have not performed and they're got going to be able to pick up the slack? >> i think so, and that's particularly the case because market breadth has been so narrow in this sort of range-bound volatile market, and that narrow breadth has been focused in the tech sector it's a major area of weakness for specifically the equity markets ahead. when it comes to the trigger points which we might see a writedown in the market, i'm looking for a couple of things i think unemployment claims rising will push us in that direction, and overall revenues in these tech sector companies, another -- not just earnings, but revenues themselves, another major area of focus. >> what about interest rates we have been talking again almost every day it feels like they have been incrementally going higher the key rates are at the highest level since march. is that going to eventually, you know, turn into a head wind again for the market itself? which has been really resill ye - resil resi resilient. let's be honest.

amid the lows or we're going lower or this is not sustainable, markets hung in there pretty well. >> markets have, and they have been pretty resilient. i think that's part and parcel despite all of the risks in the economy. u.s. treasury market being the place where investors go when things are starting to look a little shaky debt ceiling debacle n notwithstanding, i think the market ranges. >> i want to bring a comment to you all. since i did ask you about this apass apparent new variant that is causing an outbreak, we are just going off headlines that moved overnight. we asked scott gottlieb who is at our ceo summit out in santa barbara for a comment on all of this, and he says, of the variant cl which is known as xbb that china hasn't seen the

excessive waves we have had here, so they'll be more vulnerable for a longer period of time, including variants that have come and gone that's from scott gottlieb he's on the board of pfizer and i illumina, and we wanted to get a comment on what his level of concern may be as they're trying to digest all of this in the face of what has been, lauren, i think a fairly disappointing rebound in china you know, from everything that they went through with covid you haven't seen the boom numbers from a retail travel standpoint in estee lauder for example. it hasn't been the bounceback to this point that many had thought it would be. >> that's right, and there hasn't been quite a bounceback in part because restrictions, although they have been moved, there's some hesitance as to whether that is a durable change, and i think some of the variant news that we're seeing today is part and parcel of that dynamic. just hesitancy that china is open for business, and that's

true not just in covid terms, but also with respect to the u.s. and china battle over the future of the global economy these ai developments, regulatory oversight in china, and i think these are going to be ongoing questions now from a u.s.-based investor, that has to do with the investability of the emerging market indices, but that's the separation that's evolving from not just the countries, but the financial markets. it'll be really interesting to see. i think it's a trend that plays out not just in tech, but also in the digital infrastructure, the cybersecurity that's going to fuel the reaction to those trends. >> and oh yeah, the debt ceiling issue too which leave me with a thought on that before i let you go how are you thinking about that? a resolution which we know is going to come at some point, could get messy in the interim, but what does it mean for the market >> first of all, part of the reason why investors have been looking past this issue is because it's incredibly

difficult to position arnound a disruption in the risk-free rate for the global economy is just unthinkable even when we move on, which i'm expecting to happen, there is tangible risk that investors should be aware of the treasury will have to start reissuing bonds and t-bills and that's going to result in a refilling of the treasury general account, drain on liquidity in the economy, and i think investors should also be mindful that the closer we get to these debt ceiling yiissues, the more reputational. that's one of the major risks especially in a world where other sovereigns, europe, japan have sovereign yields greater than zero. there are alternatives to u.s. debt at this time, it's something that makes it very different from 2011, and investors have to be careful. >> we'll leave it there. a lot for you to deal with, and i appreciate you dealing with it that's lauren goodwin joining us here once again.

we're just getting started on "closing bell." up next, hedge funds shaking up their own portfolios thanks to the current market we'll tell you who they're favoring and we're talking about paulo alto and urban outfitters of those in ot we're live from the new york stock exchange you're watching "closing bell" on cnbc. (bridget) with thyroid eye disease i hid from the camera. and i wanted to hide from the world. for years, i thought my t.e.d. was beyond help... but then i asked my doctor about tepezza. (vo) tepezza is the only medicine that treats t.e.d. at the source not just the symptoms. in a clinical study more than 8 out of 10 patients taking tepezza had less eye bulging. tepezza is an infusion. patients taking tepezza may have infusion reactions. tell your doctor right away if you experience high blood pressure,

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we're back hedge funds have been shake up their own portfolios leslie picker here with the companies they have been favoring maybe we got an idea during the release of the 13 fs which you

covered so closely. >> we did. this is kind of a drill down from goldman sachs, and they see that hedge fund managers are being a lot pickier about where they put capital to work in the current environment. that new note by goldman says, quote, rising dispersion and falling correlations have signaled a market environment growing supportive of alpha-generation in other words, it should be a good time to be a stock picker goldman found broad selling within financials and big tech with specific exceptions hedge funds broadly reduced ownership in financials amid the selloff this year, but they did pile into jpmorgan, blackrock, and charles schwab fund managers had been increasing ownership of banks in 2020 and the first quarter of 2022, but in recent quarters, they had been reducing exposier even before that march turmoil in the regional banking industry hedge funds also sold out of some technology names cashing out after strong gains this year goldman says hedge funds did add to positions in companies

exposed to artificial intelligence those like nvidia, but other names like meta and apple were among the stocks with the largest net declines in popularity so far the group has yet to turn those picks into alpha however, with equity hedge funds generating 3% returns year to date, just one-ninth that of the nasdaq 100, scott. >> need to get into more nasdaq 100 names. that's the moral of the story. >> that's the moral of the story. >> thank you, leslie picker. up next, jpmorgan's global investment strategist ajene oden is joining us. and we share stories of aapi business leaders here's apothecary founder and ceo.

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let's get back to kristina now for more more stocks she's watching for you

kri kristina >> palantir climbing again another 30,000 shares just yet they have been on a tear over the past month 60% it's up 6% today, and early results in may got the bolall rolling and the excitement over ai kept it going it hit its highest level since april, 2022. but auto zone is moving in the opposite direction today the company is weaker than expected sales in march and a big buildup in inventory which it blamed on inflation, but executives say they expect the do it yourself business pushes more customers to maintain their vehicles, nonetheless shares are down almost 7% today >> kristina, thank you up next, goldman sachs' ceo david solomon speaking at our ceo council summit we'll bring you the highlights

of that. and ajene oden will be with us "closing bell" right back.

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the nasdaq is off its lows, but still down 1%. let's bring in ajene oden, a global investment strategist at jpmorgan great to see you again. >> thanks for having me.

>> let's start with the nasdaq because that's where our lead was, and that's where the lead of the market has been do you look it here? do you think it has more legs? is it running out of gas what do you think? >> i mean, we like tech right now. i mean, it's reasonably priced tech and we have investors who are moving into a bit of safety right now. there's the concern of uncertainty of what's going on with the debt ceiling and trying to figure out what's going to pause. we've seen the yields, and it's making it more attractive for tech. >> how do you make the argument that it's in your words, reasonably priced? others suggest it's not reasonably priced anymore, and these stocks have had a years' worth of gains, maybe more in a handful of months, and now the valuations are too rich. >> if you go back to, you know, october lows, semiconductors -- the semis are up about 46%, and so i think for us it's about, you know, more bang for your buck it's not just tech as well we're looking at pe ratios and even international stocks as well so i mean when we think about

european equities, it's about, you know, i think the majority of those sectors are actually relatively discount to the u.s. sectors. so for us, it's really about that ratios >> do you like outside the u.s. better than in >> that creates a tail wind for the international equities and see the s&p being range from here to the end of the year. we do like european equities i think going forward for the rest of the year. they've performed quite strongly, but we think there's room to go on that trade. >> you must think the fed's done then. >> we think we've hit the or are getting to the end of the tightening cycle we're at 5%, 5.25% it's possible they could raise rates again, we we feel like they'll hold here and we won't see cuts until the end of this year or next year. >> you're the jpmorgan stra strategies jamie dimon said at the meeting

that they had with investors to be prepared for higher rate. >> he said be prepared, and i think that makes sense, you know housing has bounced back a little bit inflation is still persistently high, and year over year bay ss basis, and inflation can still move higher and that the fed may have to raise rate, but that's being prepared we expect the fed will hold from here and we'll see cuts at some point either at the end of this year or beginning of next year. >> you like u.s. mid caps which is interesting why? >> i think they're better priced or more appropriately priced for the recession that we believe will happen in the second half of this year, and so we're looking at the s&p 500, you know, roughly 18, 19 multiple which is much higher than the 20, 25-year average of 15, and so we think that mid caps can perform better in the next cycle, the next part of the cycle and they have an allocation in industrials and we think a lot of the infrastructure that's necessary in order for a lot of these tech

companies to move to that next phase infrastructure will be ne needed especially around ev. >> are you suggesting we need mid caps and we're going to have a recession and credit is going to contract, then maybe mid caps fwh would not be a place you would suggest to be. >> i get what you are saying there. i think what it is, is what's about priced appropriately and what's pricing in the recession. we like this entry point there's always a reason not to invest in markets, and we think that clients should have a long-term view, and it's about building a robust portfolio, and that's about this. the highest conviction we view is bonds, right? they've traded this entry point. that's creating an amazing point for investors that hop in, and that's tenure for investment-grade bonds. >> your highest conviction trade is in fixed income >> yes, absolutely investment grade bonds i think clients should get in now instead of waiting for some of the uncertainty for the debt

ceiling, waiting to see if the fed pauses and let's go ahead and hop in enough with the t-bill and chill, and it's time to hop in on investment-grade. >> we have got investment-grade, and money markets and i have people saying gold is the place you want to be it brings to life the tremendous amount of competition. equities and that may be as much of a head wind as everything else right now. >> like i seaid, diversified portfolios we're seeing that 5% that looks attract i, but if we believe the fed is going to cut rates and that's going to put that rolling t-bill trade in a tough position if we look at the last seven hiking cycles, that last hiking cycle, 24 months after investment-grade bonds outperformed by 17%, and we think clients should get into investment-grade bonds now and not wait for that perfect entry point. >> you must think rates have peaked if you think the dollar has

peaked and it will come down more if the fed's done do you think you like defensive plays, staples, utilities? as yields have gone up recently, utilities and things that have a good dividend yield will not do well. >> we like health care right now. that's a defensive point. >> underperformed big time. >> it has, but as we head into recession, it has that resiliency, and during those times, but i think it's a balance of a barbell approach. we like the technology because we think it's about reasonably priced tech and to your point, it has run up and the valuations are pretty tough, but we think semis, it's a great entry point for semis and they have done well. >> good to see you don't be a stranger. no excuse. you're based close we'll talk to you again soon a.j. oden joining us here. cllast chance to weigh in on our twitter question do you agree that mega-cap tech has more room to run we have the results right after this break

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lertst's get the results. do you agree that mega-cap has more room to run the majority of you saying yes near two-thirds. all right. up next, we're a few minutes away from palo alto numbers. we'll tell you what to watch for when those hit the tape, and a lot more when we take you inside the market zone. , at pgim we can help you rise to the challenges of today,

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and here's to being single and ready to mingle. who's ready to cha-cha?! ♪ yeah, yeah ♪ the inaugural cnbc council summit kicking off in california with exclusive interviews and discussions with some of the country's most influential executives goldman sachs' ceo david solomon spoke with cnbc, and we're joined now what did solomon have to say, carl >> it's been interesting today, scott. we've handled all kinds of topics here in santa barbara we we've covered china, covered ai and covered the prospect recession, and the house view at goldman for a long time now has been pretty constructive relative to consensus on the possibility of recession

they were at 25% odds in the next 12 months they upped it a little bit to 35%. still below the streets. roughly 65% odds if you believe consensus, but listen to what david solomon told me and sara eisen at this panel a few moments ago. he didn't sound quite as optimistic. >> i'm more in the camp that we're probably going to have a recession because i think that inflation is going to be stubborn i don't necessarily see rates really, you know, easing at the end of the year based on what i see now, and so i think it's stickier and harder, but, you know, also uncertain, and a lot of factors that are going to have to be balanced, and it's just not clear >> pretty interesting. almost a bipolar view of what's going on right now, guys when you think about some of the worrisome prospects of tensions in china, obviously a hard landing if that is what's in the cards versus a lot of the upside of productivity that ai could bring us, which obviously gets a

big piece of the conversation here as these ceos are trying to figure out, scott, how much to invest do you go big now? do you try to start small, but early? that's all part of the calculus as we're in the very early days of what some say is a revolutionary time in productivity. >> it also feels like the implication of what solomon is saying, and i'm not sure if he addressed this or not is the idea that maybe he thinks -- i know he said he doesn't see rates easing into the end of the year, but he may not be done going up either if he thinks that inflation is going to be, carl, as sticky as he suggests in the conversation you were having >> i agree i think he definitely laid out the possibility that maybe the fed does pause here, but i think he really just knocked down the idea that we're in for some sort of relief and relates on the downside in the year ahead he talked a little bit about, you know, banking stress certainly china. even the prospect of what happens if there is a repeat of the pandemic

his point was at goldman, they planned for those 1% to 2% pro proeblt p probabilities. that's inherent in what the knockdown is, but i don't think inflation will see a dramatic dropoff the way some have suggested. >> a day after jamie dimon warning the markets to prepare for a possibility of -- >> exactly >> -- a higher rate. thank you, carl. out in santa barbara for us. for more exclusive content from the ceo summit, go to cnbc.com/ceo we are now in the closing bell market zone cnbc senior markets commentator mike santoli here to bring down the crucial moments. plus, courtney reagan on lows, and frank holland looking ahead to palo alto earnings there in "overtime" as well tough session. not horrible, but, you know, rates were higher. you have the headlines that we

were telling you about at the beginning of the show about china. >> yeah. >> and tech taking a breather. it all leads right across the board. >> the setting was overbought. nasdaq coming in we knew he needed to cool off. what would the response be by the rest of the market i think the top of the range which is where we are, 4,200, and haven't been able to close it you can accept less bad news, and you need more good news to keep us there or get us further. i think that the slowdown dynamics coming out of china, not too surprising china's been trading weak, but if you see it in the u.s. market with, you know, starbucks having an outsized decline, china, and clearly some of that anxiety is starting to price in, and part of it is the rest of the world was supposed to be a net help to the economy globally, and you see the equity markets in europe and in japan in particular kind of confirm that idea that something good is going on outside the -- our shores. so i do think that's getting into the market a little bit today. it's very contained, and to me

when you get one of these rallies, the s&p gets to a new nine-month high. what it tells me is, okay. we've built a little bit of a cushion to absorb the inevitable, eventual pullback. we have 100 points in the s&p down to where we broke out in the current quarter in terms of the 40, 50, climbing up to 4,200. that's the zone of where we're holding that upper range >> what do you make of what david solomon told carl and sara i thin inflation's sticky. >> yeah. >> the cuts and almost implying that don't be surprised that rates go up via the fed. kind of what dimon was saying yesterday. >> sure. i filter that stuff through financial company ceos are paid to worry and therefore they do, and you can see what's going wrong. a lot of the dynamics that we're contending with are -- is it recession deferred or is it recession denied everyone seems to be on the camp of it's taking longer.

the economy's being more stubborn in terms of the consumer being in better shape and not really giving way, but ultimately when you have unemployment this low, when you have a fed that seems to believe it has a role in softening up the labor market further before it gets the job done, i think you at least have to be on alert for that, right? the fed's not going to be looking for the first idea that the soft landing might be a possibility and saying we're going to ease off. if they're easing off, it's in response to something bad. i buy into all that. i just think the market as a whole has been contending with that for a very long time right now, and the market's up 10% from the moment that, you know, fed funds were under 1% back a year ago >> go to courtney reagan now who obviously covers retail for us what an intraday chart as well for lows today opened at, you know, 202 bucks it's up 5 bucks from there what are we to make of that, courtney >> that's an interesting point, scott. i think it's about the lows investor shrugging off the forecast, and kind of expecting

it as you pointed out. shares still higher and likely the expectations it was going to be like this after what we saw from home depot's results last week we know that lowes was going to be hit hard. it was bad spring weather, and that hurt outdoor products and those relatedd projects that's leading to disappointing comparable sales for lowe's. it did beat the street's first quarter estimates and revenue, but lowering expectations. it wasn't much of a surprise. >> yeah. you want to weigh in, mike, on what we got here i mean, it's home depot -- >> yes >> lowe's not so dissimilar. >> very similar, and again it gets to the fact that we've overanticipated this downturn for awhile right now, and this is a market where if you are kind of a category leader, mega-cap stock, not a crazy valuation, you know, be people aren't expecting great things out of the quarter, it's do you have get it down and keep it down at least for right now.

being large within a sector has been the formula for outperforming over the course of the last several months. >> court, you got something quick on vf, what we should look for in overtime tonight? >> that comes out after the bell and i think that's going to be an interesting one to watch because of course, they're going to skew to this outdoor apparel, and we know apparel has been week, and a lot of this demand for outdoor products was pulled forward from the pandemic. it's a little bit hard to know what we're going to get out of the court because we they have strong brands with vans and timberlands and people do go there, but i think it will be one for us to watch and i don't anticipate the company is going to offer much beyond that cautious consumer outlook like we've heard from almost everybody else urban outfitters out too after the bell. >> we will see you after the bell in "overtime" with the numbers as they break. frank holland as we will with palo alto which has been a nice stock along with the other

cybernames. >> one of those quiet b benefi beneficiaries. shares are up so far outperforming the nasdaq and the qqq so far this year so a big run up for this stock, and it's moving on par with alphabet another one of those ai beneficiaries. so one of the big things to watch here, even though palo alto networks is considered a legacy cybersecurity player, it's its next generation product, specifically its next generation arr, annualized recurring revenue, and this is a proxy for demand estimates have it increasing double each year that shows strong growth in an otherwise soft macro next gen includes palo alto's new releases and the products, we'll show you the names it may look like alphabet soup, and xsiam is an ai-powered offering rosenblatt out with a quote saying, these are clearly

gaining share and sustain top-line growth. commentary on this, and adoption, that will come on the call something to watch. >> we will with you, frank thank you very much. going to be covering palo alto network. you called these defensive software names with the valuations in which they trade -- i was looking at, you know, palo alto. >> yeah. >> it's around 50 time. >> i wouldn't call them defensive. what i would call them is not cyclical or not particularly closely connected with the macro. at least that's the idea of how people are trading them. you did see a lot of the people who are watching the charts and they're on alert for anything besides the big seven obvious mega-cap growth names starting to work, and people saying, you know what? equal-weighted software starting to perk up and perform better on a relative basis which seems as if it's one of the responses to people saying, maybe i did, you know, miss the nvidia move, microsoft looks rich again, and these things took their medicine over the last couple of years.

the i wouldn't call them defensive i think fit's an attempt to fin names that haven't yet had the big move and might be a beneficiary of the strength broadening out we don't know if the clock is still ticking. we saw the small cap move today, outperforming, but it's lasted awhile all these moves seem tentative we got stretched on a relative basis between mega-cap and small cap and cyclicals and we've seen the retracement in that direction. i don't know if you can have that baton handoff in a way they don't fumble it. >> you heard the two- minute warning there as we count down to the closing bell. looking at yields as we mentioned almost every day interesting split today, the so-called, you know, debt duel yields are up. >> yes >> the one, three, six-month, one and two-year, and everything else on the day is lower >> from about midday is when you saw the treasury yields on the longer end start to come down.

the stock market back off the highs, and it seemed just like a retreat from risk all around there's definitely some impatience with the debt ceiling talks. kind of everybody's exasperated with the fact they seem like they want to go down to the wire always we're not feeling, you know, that we have great news in terms of a resolution, and even though everyone feels as if ultimately it gets done, people don't want to have to deal with the impatience of somebody else panicking out beforehand i think that's weighing to some degree on yields at this point as well. >> so i know that 24 hours from now, we are going to be walking right into the close and nvidia is going to report its earnings. >> yeah. >> the latest sort of test if you will for mega-caps looking at it today, how should we be thinking about it here sputter a couple of days into the number we'll see what tomorrow brings. >> it's coming off the boil, but it has had such a monster move i don't know i assume we're going to be listening to any signs of either companies completely headlong

investing in ai, giving them money hand over fist because they feel like they have to participate or if they say there's a bit of a hiccup, then that could color the overall ai trade. semis in general down about 1% today. >> we'll be counting the number of efficiencies. it'll be all about ai and we'll see what happens that's it for us i'll see you then. into "overtime" right now. the stocks closing near the lows after a midday meltdown that's the scorecard on wall street, but the action is just getting started. i'm morgan brennan with jon fortt. coming up this hour, key reads on retail, housing and more from toll brothers, urban outfitters and palo alto networks, and also intuit >> we've got an exclusive interview as well with