good thursday morning. i'm carl quintanilla with sara eisen. setting the agenda today -- the manufacturing data does suggest a pause. and the inflation data says hike the jobs picture continues to defy all kinds of gravity. what does it mean for the fed, a pause, a push higher we'll talk to morgan stanley. palo alto network says we'll talk to him about his message to investor. later on, a pulse check on luxury real estate the ceo of douglas elliman is with us with a look at where

sales are rebounding and the new market attracting the world's wealthy. take a look at stocks. we've seen a nice improvement. the s&p has gone positive. tech leads the way nvidia is up you have materials having a good day, industrials i'm watching the ten-year yield because we got a ton of data and trying to parse what the market is thinking about it manufacturing, a little weaker jobs, better claims were better than expected americans filing for unemployment games adp a little better than expected prices paid within manufacturing, a little weaker that's a good sign for inflation. why you're seeing treasuries rally with yields moving higher and june hike expectations coming down. >> not to mention all the pressure on the consumer we've seen in micro, in terms of the

retail blowup. vix, meantime, suggests the worst of the concerns about the debt ceiling are coming to an end. back below 17. not to say things are done we'll see what happens in the senate by all appearances, it looks like schumer is going to keep them in session until there can be something on the floor. >> another reason why yields could be lower as well let's turn to the state of retail dismal picture dollar general misses q1 estimates, sending both stocks to it the guidance and jpmorgan downgrading target to neutral today joining us is jerry storch we had you on in recent weeks. you've been cautious about the state of the consumer and some of these retailers as well i think you've been vindicated by the earnings reports. what kind of threads are you pulling from what you're

hearing? >> i think that's right, sara. as we've been discussing, for eight straight months now, eight straight months, the overall sort of comp store sales on retailing has been negative. it started -- the decline actually started last june and july so what i'm saying su take out restaurants and bars from retail sales, and then you take out inflation. it's been negative for eight straight months and declining each month over the prior month. it kind of doesn't gel with the idea that the consumer is okay or healthy i think where the confusion lies when you look at what they're spending money on, and it's services within services there's a thought out there that they're spending on vacations or airlines or restaurants or hotels that is true but those are dwarfed by what is eating up consumer and services, which is health care and housing. those are necessities. that's where all the money goes, much bigger numbers and inflation in those categories and retail goods is what's

stressing the consumer. >> how do you explain who is winning and losing and will continue to do so in retail right now? it feels category specific for sure, but also strategy and brand specific as well looking at an abercrombie, and gap did better with cost cutting. it wasn't all doom and gloom. >> sara, you have been covering retail, that's a bad thing when your same store sales are negative we saw negative same store sales at nordstrom, negative same store sales out of macy's. target was break even. who's winning? walmart. when walmart has a 7% same store sales and target is flat, you know it's difficult times for the consumer that's the way it's been for decades and will always be in difficult times, everybody migrates to walmart. even people with money, without money, they go down to walmart

target has a tougher time because it's a little more educated, affluent consumer. walmart strong tj maxx is worth $88 billion macy's is worth $3.5 billion you have to keep that in perspective. it's like the parasites devour the host here. tj maxx a value player costco, a fantastic retailer at all times. there's a few winners but but a lot few winners in retail sales unless they're selling necessities at a value price. >> you got this downgrade at target at jpmorgan they point to, you know, consumer pressure. they point to grocery disinflation and they also write quite a bit about the political pressure that, in this case, target is under regarding their pride merchandise. how is that getting addressed among management and directors at this time in retail >> i don't know. i'm not talking to management or directors at target. they're great people they've done a great job

overall. they got caught in between i know i've always tried as a ceo to keep out of it. you know, you feel like half the country is one way, half the other, just don't step in it once you do, you'll hear from both sides i've heard from both sides as a ceo. it's not just the far right, it's the far left wing people, too. i remember when we were selling trump dresses. he was doing a great job, a great product, but people were hammering us you can't sell anything with the name trump on it the best thing to do is not get in the middle of it. once you do, it'shard to get out of it and i feel for them, frankly, because there's no way of winning it. i've always said you have to keep your personal life separate from your business life. >> if you were running a company right now, a big retailer, mass market retailer like that, would you have any hesitation with going all in on pride month merchandise for all ages >> i'd sell where my consumer wants. that's what you always have to

do find out where the market is and sell it. don't let people tell you what to do, one side or the other you don't do it to make a statement, again, on one side or the other. you're not trying to make a political statement. you're trying to deliver value for your consumer, deliver the products they want as long as you focus on that, i've always found it's fine. i remember back at my days at toys "r" us, there was a big brouhaha, we had a contest for first baby of the year and the first baby that was born that year was undocumented -- was born to undocumented parents in the country and it was, oh, my gosh, you can't do this. so i ended up giving money to both the first baby that was documented, the first baby that wasn't documented. put out a big press release. we love all babies that's the way you have to be. we love everyone at the end of the day, we're about love >> finally, as if that weren't enough for the sector, shrink continues to get addressed in almost every earnings print. there's a lingering school of thought that's going to feed

e-commerce at the margin because people don't want to go to the trouble of going to cvs. do you think that's material right now? >> i don't i think people complain mostly about shrink i think it's better just to do the best we can there. pay attention to your strategy, try to be on strategy, value price, value for the consumers every day. and solving the shrink issue is a comprehensive problem. we talked about it before. as everything you do, the fact these goods can basically be fenced on the internet, if we don't sell that, but individual retailers complain about shrink or weather, and it's funny how when results are good, they say, yeah, that's a problem but we can handle it. >> all right some real talk there finally, jerry, what does it mean dollar general is down 15% and also lowers guidance and misses numbers in this kind of environment? don't they get the benefit of trading down >> sure, they do you know, it was a little disturbing to see that obviously, again, fine

management, fine track record at dollar general dollar tree is doing a little better right now they had some comeback time because they were performing worse for quite some time before that they're adding a lot of stores and yet same store sales were positive what you saw in the dollar tree results -- dollar general results, i'm sorry, the same thing we've been talking about people are buying consumables. dollar tree said the same thing. they're not buying apparel, more discretionary items. there's no confusion about the consumer they're buying what they need. when that happens, those are lower margin products. that hurt dollar general they've expanded a lot they are taking market share in the economy as a whole it's just getting tougher. >> yeah, now down 20%. jerry storch, appreciate have appreciate you joining us. still to come this morning, what a difference a day makes. 11:00 a.m. yesterday, we had 70% chance of a hike in june today that number is down from 70 to 27 we're going to break down the

fed's conundrum and talk about whether a skip is the new pause with jpmorgan's chief economist mike feroli. palo alto network's talking about enterprise consumers on a day where crowdstrike is getting hit on the back of earngnis. more "squawk on the street" right after a quick break.

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. how do we handle this two-faced economy? on the one hand jobs market is defying all expectations adp coming in well above estimate the four-week average for claims, lowest since march total job openings, as you know, rising on the flip side you have manufacturing data continues to come in weak ism showing another contraction today. prices paid did hit the lowest level of the year and all of that has led to a big question for the fed, and that is what to do in june the vice chair nominee jefferson advocating for a rate skip in june expectations for a 25-basis-point hike did sink overnight. joining us this morning, jpmorgan's chief u.s. economist mike feroli is with us to address some of this the jefferson bit on the tape yesterday was broadly seen as a signal did you read it that way >> yeah, i did usually the vice chair or vice chair nominee, as you point out, tends to speak for the board and

for the chair himself. so, i think that wasn't an accidental or idiosyncratic message that made it into that speech i think it was a deliberate effort to signal they are going to pause or skip at the upcoming meeting. >> does it completely derisk the print tomorrow or is there a number that could be hot or cold enough to change everything? >> yeah, that's something i'm thinking about right now i suppose if we got a hot number enough, even with the message we got from jefferson yesterday, that you could be -- have a hike back on the table. certainly while i do think jefferson was speaking for powell in what he said yesterday, there definitely is a large contingent on the committee who already seems to be favoring a hike at the next meeting irrespective of what we get toek i spoke with a strong enough number, we could still see a hike in two weeks. >> does it matter whether we get a hike in june or july isn't it ultimately, mike,

whether they're done after that? >> whether, i'm sorry? >> whether they're done after that and what the longer term trajectory is. is it dwardz cuts, keeping restrictive? june versus july, i feel, is not that big of a deal when it comes to market signaling. >> well, it matters to some in financial markets whether they hike in june or july certainly, it's reasonable to expect cuts at some time in the future but right now we don't see the weakening in the economy in the horizon that would call for cuts any time this year. so, it matters every 25 basis points may just be incremental but over time the cumulative tightening certainly matters for the economy. >> mike, you guys have done pretty good work trying to keep an eye on claims for the year. basically not just claims but the net effect of what's happened in labor for the year to date. is it your sense that there has been a real degradation of the job market overall that maybe isn't showing up in jolts, for

example? >> i do think the economy broadly -- i'm sorry, the labor market broadly is slowing. you did have an increase in job openings in april, but broadly speaking they have been trending down i do think you are seeing slowing in labor market activity it's just not happening abruptly if it were happening abruptly, we would see a signal in claims. generally, things are playing out, as you would expect, which it is to say labor market activity is slowing. it's just not happening -- certainly it's not happening overnight. so, we'll see what we get tomorrow the slowing has probably been a little more gradual than most people anticipate, ourselves included. >> i want to play out the whole skip scenario for a moment if they do skip and say, you know, but that doesn't mean we're not going to hike in july or give some sort of signal like that, are they going to get enough data between june and july that would make their case one way or another if it was unclear and they want to see how the tightening is impacting in

june, why would it be different in july? >> it gives you six more weebs of data so you get one more jobs report, you get more information. the next cpi report will happen before the fmoc meeting. you'll have two cpi reports to really digest. so, in six weeks you'll get more information. you'll get a little more sense of how the banking sector is adjusting to the higher rate environment. so, yeah, it won't be a decisive amount of data but it's not nothing you're going to get between june and july. >> i'm glad you mentioned the banks. we heard everything on the street the last couple of weeks from so far, so good, the stress isn't manifesting itself, a lot of this tightening was under way anyway do you take that dovish of a view, i guess? >> yeah, i mean, look, we're all looking at the same data certainly what we see in the weekly deposits is comforting, as point out there is

tightening we haven't seen that in actual loan extensions. it was something jefferson highlighted yesterday as something they want to have more time to see how that's playing out. i would take the more optimistic view it seems like we're past the worst of that crisis, even if there are lingering drags in terms of tighter credit conditions >> i went through the beige book yesterday. it was kind of inconsistent. it was like cleveland and dallas feeling more loan pressure than some of the country. what's your best guess now about what happens to inflation? >> so, we think it's coming down but very gradually we are certainly encouraged to see -- you mentioned earlier the ism paid component reinforcing a lot of the data that suggests for goods prices, you know, a lot of those supply chain pressures are just totally resolved now looks like rental inflation is rolling over here, although

slowly if we start to see the -- the overall decline in labor market activity manifest itself in slower wage inflation, i think the case is there. now, it's still going to be, i think, uncomfortably high by the end of the year, we have core inflation just a nudge under 4%, which is still too high but we do dhing it's moving in the right direction. >> getting those kind of signals in europe as well, which is interesting, mike. we'll see what happens tomorrow. going to be an interesting end to the short week. thanks, mike >> thanks, mike. later this hour, a new report on the state of luxury real estate. a bifurcation could be starting to appear around the country scott jerkin will join us. off the session low, concerns about rising costs offsetting that 11% jump in revenue. we're at 4205.

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close in a moment. rebounding sharply from the two-month close. media and mining leading the gains today. utilities are lagging. the stoxx 600 fell 3% in the month of may key to the market narrative is softening inflation across europe flash readings in spain, germany, france, all showed slowing down in rising prices. europe's headline down to 6.1% in may, down from 7% core inflation eased by 0.3% last month a big concern around the economy remains manufacturing, here it's global we told you about weak china yesterday, weak u.s. today may's pmi in eurozone was 50 for the 11th month in a row. last month's print released today was the weakest of all of

them it's a similar story playing out in europe. moderating inflation, weakening economy. but the ecb speak, like the fed speak, a little more hawkish just today christine lagarde said in germany no clear evidence that underlying inflation has peaked and we have ground to cover to bring interest rates sufficiently to restrictive levels. >> she's talked about the fact they don't need to keep pace with the fed step for step on the bright side, they have somewhere in the negative as strong unemployment as we have in this country. >> similar dynamics at play. they have a single mandate, which is just around inflation they were a little late also in dealing with it. food inflation is a big problem there. the best guess is at least one more 25-basis-point hike out of europe and the manufacturing story is really interesting because that -- china is externally related. it doesn't just speak to china demand you saw it in south korea where they have a 48 on their manufacturing number 40s across the board

vietnam is at 45 malaysia, 47 manufacturing powerhouses all seeing the slowdown. >> and driving what we're seeing in rates in all the rest market holding pretty steady this morning s&p is up 24 let's get a news update with kate rogers. good morning three people died, including a 9-year-old girl in a missile strike in kyiv overnight witnesses said the girl, her mother and another woman were trying to get into a air raid shelter. they have been suggesting the ukrainian capital to strikes moscow claims it blocked three raids at its border today. the senate is scheduled to vote this afternoon on a republican effort to block president biden's student debt relief program and end a pause on federal student loan payments the white house says if it passes, the president will veto the measure. biden's program would cancel up to $10,000 in loans for low income and pell grant borrowers. the fda approved pfizer for

rsv in older adults. they say the single dose vaccine was 67% to 80% effective at preventinging illness. the company said it should have supply ready before the next rsv season begins. palo alto ceo joins us about the role ai will play in cyber security going forward up 53% so far this year. i've spent centuries evolving with the world. that's the nature of being the economy. observing investors choose assets to balance risk and reward. with one element securing portfolios, time after time. gold. agile and liquid.

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welcome back a quick check on the narcotics thursday morning dow coming off its first negative month since february. s&p and nasdaq making three positive months in a row take a look at the price action. 4205, roughly the highest closing level of the year. watch the ten-year as well now below its 200-day-moving average and at the lowest level in two weeks meta is one to watch as well 52-week high again stock's on pace for six straight days of gains. that's the longest win streak since january of 2021. as they unveil a new vr headset in the last hour, just days before we expect apple to reveal their own. let's turn to the cyber security stocks. lots to get to with our next guest. a still heightened landscape, ai using it to develop new protective measures and all of this as two of the biggest names in the space, crowdstrike, okta move lower

palo aloe network ceo nikesh arora joining us. >> good to see you. >> on the macro environment, the stock of salesforst, crowdstrike, okta, there is concern enterprise spending is slowing. can you concerned about that >> we're in a strange time the fed is saying, if things continue to stay good, we're going to try to make them bad. all the companies we sell to, all the enterprise customers are getting wary in the market having said that, we don't see the demand for cyber security is slowing down the threat landscape is getting worse, there's tensions in russia, ukraine, tensions in china, taiwan and we're all on this wave of digit tieization in ai i don't think the demand environment changes. what we are seeing is companies are doing a little -- stuff you hear about, getting sales cycle

getting wary demand stays strong, and what you're seeing from many cyber security companies, companies are getting a little short other their spend. i'll buy less but i still need it demand is there. the customer's behavior is changing on the buying side but i don't think demand goes away. >> what about ai, how does it change the game for you? >> it's interesting. i've been in the technology industry for over 20 years we had connectivity, the internet, mobility, and cloud. i think the next wave is ai. we're still going through a digital transforemigs between the internet, digital and cloud. and ai is going to get added to the mix. the capability that ai is demonstrating just in terms of driving efficiency, driving technological innovation is going to be huge of course, on the cyber side, it gives bad actors another opportunity to build better tools faster just the way we're going to use ai for good things. and unfortunately, try to use ai for bad things

it becomes incumbent on us to build production capability that stops bad actors >> where are you and where is the industry on that, on using that capability to better defend >> look, we've always maintained that cyber security is a data problem. it's the old techniques of doing it manually, setting up traps and having people fall in traps and find out what's going on they're legacy, they're ancient now. you have to look at data on the fly. you have to look at things real time, find out what's going on, be able to block it. we've been working on it -- i think the industry has been working for a while. we've been working on it specifically for the last 17 years. we did machine learning ten years ago. of course, everything has gotten ramped up and accelerated. ai is a data problem we have the largest data for cyber security in the world, the larger cyber security company in the world. we have been mining that data to

look for threats and bad patterns we're accelerating that and we'll launch some exciting stuff around ai not too far in the distant future this is a five to ten-year technology wave. it's not -- it's not who goes out first is going to win. it's the one that gets out with good data, better processes is going to win we'll be ready we'll be out there sharing with the world how we're going to make this world a better place using ai as you all know, these models are hallucinating. there's not as much precision being delivered through ai models and security is about precision. >> it's interesting. the street is wrestling with this idea that even if ai drives consumption over the long term, in the shorter term it's cannibalistic. if that's true, how long does it last >> i think it's the opposite i think you'll see a wave of spending every company out there is grappling with the idea of

deploying ai ten years ago, 15 years ago, the internet, people were saying, we'll get to it eventually and then with the cloud, people are still getting in the cloud ai, everybody wants to be there yesterday. large legacy companies, which you would not expect to be trying to get on the leading edge of innovation are out there, trying to create leading edge innovation as quickly as they can from that perspective, i think the ai wave is moving much faster i think a lot ofcompanies, traditional, legacy, new, they all want to deploy more and more ai as fast as they can you'll see a technology boom for tools, a technology boom for hardware we're witnessing that in the market, people wanting more hardware i'm pretty sure most of the people trying to deliver enterprise ai at scale are struggling with meeting demands of customers i know many of the partners, the cloud providers, they can't handle the demand. i don't think this is

cannibalistic. >> doesn't sound like you're a buyer of the notion that cloud spend or, for example, will just stay constant and buyers will have to make tough choices you think it moves the whole pie? >> look, fundamentally, the world does not have enough good data to do ai. i'm going to double or triple my data ingestion just at palo alto just to deliver ai to my customers. if i double or triple the consumption for ai, i have to spend more money i hope it gets me a better outcome for my customers i think the money moves. it moves from having to spend a money on a lot of people, moving to storing data, that's going to happen in the last three waves of technology. it's going to happen again. >> it's exciting to hear you talk about it. on the other hand, you alluded to this, how much more dangerous

does it make our world, do you think? i know we worry about whether ai bots are going to kill us one day, but from your lens there on the capabilities of the hackers and what's out there in the dark web, what does ai do for that? >> we are all worried about things that could kill us, we would be sad we can look at the optimistic things we're going to make sure there are more good people in the world than bad people. we'll figure out a way to protect us against it. nation states are working on it, all industry players are working on it. the good news is, you can see ai is still hallucinating in some instances. as we get it better and better and more precise t depends on how much effort and how much heft can you put in there. the good news is that, as i said, ai is a data problem the bad actors still don't have as much data as the good people do i hope the good people can figure out the way to block these things much faster than

they can develop them for us so far we haven't seen anything down breaking. we have people working at breakneck speed to make sure we stay ahead of these guys cyber security has always been a cat and mouse game and so far the cats are winning. >> when does it become a revenue-generating opportunity for you? >> i think it becomes revenue -- it stays a revenue-generating opportunity. we announced last quarter, we had the largest ai deal ever and we launched our product six months ago we did $30 million deal with one customer who wants to rip out all their data, all their stock and say, take me to the new world. this is the first instance this will happen over and over again with the top 2,000, 5,000 companies in the world we've been working on this for a while. all this generative ai hype or enthusiasm is done, has accelerated conversations with customers. i cannot go to a meeting today where the customer does not want to talk about ai for a third of the meeting. how they're deploying it, how

are we going to deploy it, how are they going to benefit from it it's amazing. >> thank you for joining us. appreciate it. it's interesting to hear the enthusiasm nikesh, palo alto networks crowdstrike down 2%. after the break, new numbers on the state of luxury real estate some of the hottest u.s. markets are seeing a drop in sales we're looking at the latest trends and talk about the impact of rates on buyers. deutsche bank initiating the home builders. bearish on lennar and nvr. they're all headed up as rates come down a bit. what happens if you ever need to miss work for a long time? why would i miss work? you could sprain your ankle. get hit by a school bus. get kicked by a horse. scurvy! plan today, feel comfortable about tomorrow. massmutual.

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consider adding this. call unitedhealthcare today about an aarp medicare supplement plan. welcome back getting new numbers on the state of luxury real estate. robert frank back at post 9 with new numbers. >> we look around the world. global sales of homes priced $10 million or more increasing 11% in the first quarter the top luxury markets over 400 sales over $10 million mark. dubai was the leader with 88 sales. an amazing amount of money going into dubai right now new york, l.a., singapore and london like everything else, a lot of mixed signals in high-end real estate april sales in manhattan falling for the first time in three months contracts also down in palm beach and miami.

l.a. taking a big hit in april thanks to the new mansion tax. only two homes sold for more than $5 million in april that compares to 126 back in march. you look at may, we could see some improvement sales contracts of properties priced at $4 million plus in manhattan. that's the very high end of the market that was up 20% in may compared to april so this is a very week by week, almost day by day market, like everything else. a lot of crosscurrents. >> good numbers to start with, robert let's dive deeper into that report and talk about the health of high-end real estate. joining us, douglas elliman ceo scott durkin is joining us i wonder what it says about centers of wealth around the globe right now. >> i think the biggest -- the centers of wealth around the world are having an inventory shortage so, a lot of the pressure reading is saying the market's really soft. well, we don't have a lot to sell that they want to buy

so, the combination of the interest rates and the ultrahigh network, it's not really -- it doesn't make sense it doesn't belong in the same bowl as robert was saying, our market in new york city, above $10 million, has really taken off. >> largely cash deals, i assume? nothing is financed at this level, is it >> if they're financed, you never really know about it because most of those people are using their relationships with private banks. >> how correlated or uncorrelated is that with the rest of the markets below ultra high end >> well, we see the market book ended. when studio one bedroom first-time home buyer is there and the ultra high net buyer is there, everyone meets in the middle and everything goes better again i mean, this is my probably eighth time i've been through this in my career. we're seeing both ends of this market are pushing towards the middle and as i was saying to robert

earlier, we just did our may numbers. and we are -- we were having the best month in over a year. >> wow >> in our markets. >> that's not what's supposed to be happening the fed is supposed to be raising interest rates and crushing prices for rentals and sales and demand >> we're more worried about the inventory shortage than the interest rates can you actually get a seven-year a.r.m. for 4.75%. date the rate. you can refinance in a couple of years. don't let that home get by. >> so much of douglas elliman's business was driven by massive migration from florida to new york you helped a lot of people make that move. are you still seeing people make that move? what does it florida market feel like right now relative to manhattan and new york city? >> they've made the move they're continuing to move i think it's based more on how much tax they can save on their income what they didn't do, they didn't

tell their new york home they kept it. >> that's why we have so little supply in manhattan? >> supply is just not there. if you read the florida numbers now, it sounds as if it's had a drop as i was saying to you - >> fallen off a cliff. >> 30% of it is new. and 20% of that isn't ready yet. there will be a flood of closings and those numbers will change dramatically. florida is one of our strongest if not the strongest market. >> you're seeing sales that won't show up in the data for another three, four, six months? >> yeah, until they spend their first night there. >> what about foreign buyers, have they come back? >> not yet it's absolutely amazing. i was just in london we took some of our top agents to london. there are more americans buying in london now. that was -- when the dollar was so good a few months ago, it was almost -- and the euro was one to one, so there's a lot of international purchases by americans, but in terms of coming across the pond, it's just a terrible exchange right

for them >> the dark view, of course, is that if employment really falls off a cliff, people will be forced to list and that will bring supply if they have -- if their job search takes them outside of their city do you think that's overdoing it >> our average price is about 1.6. anyone in this region has probably paid half of that in cash so they're not highly leveraged. i think they could survive this. we didn't cover the rental market. >> which is crazy. it doesn't make any sense relative to the number of people coming to the office in new york city, which is still about half and rental is all-time high. is that market starting to loosen up or do you see any give - >> no, as someone who just had to rent an apartment i'll say no. >> no. you can't negotiate -- i -- yesterday i had a rental yesterday that was $5,000 rental that ended going up to $6500 and we had 13 applicants.

>> who are these people? >> the ones -- they are the new hire it's very hard -- as much as you -- we may feel the job market is taking a hit and layoffs are happening, there's a lot of available positions and theyneed housing >> we covered that, job openings higher than expected >> yeah. >> thank you, scott. >> fascinating good data. >> thanks, robert. coming up after the break, we'll talk about this gap between the dow and the nasdaq largest ever through the first five months of the year going back to the nasdaq's inception in 19d 71. traders throwing cold water on some of tech's biggest gainers and calling out what they call tourist ai investors. check out shares of chewy. surprise profit in q1. the stock is surging today it's up 24%. n'gowadot ay. good luck. td ameritrade, this is anna. hi anna, this position is all over the place, help!

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big tech carries the market once again without the five stocks responsible for most of the market's gains, the s&p would just be up 1.5% this year instead of 9%. deirdre bosa has more. the market is down for the year if you brought that -- >> you could call it the magnificent seven, the five, the faang. much is being made of tech's outperformance turns out 2022 was just a breather take your pick u.s. tech's largest relative

outperformance versus the s&p since january 1970 levels. the widest year to date gap between the nasdaq and dow industrials since the nasdaq launched in 1971 carl mentioned that and the concentration. the rally has been led by seven stock, the megacaps driving the generative ai boom account for 29% of the market cap of the s&p 500. 60% of the nasdaq 100. jpmorgan said last month the u.s. stock rally has been driven by the narrowest leadership in a rising stock market since 1990 dig a little deeper and it's also semis as a sector the smh up more than 40% this year if you thought the nasdaq was good, that makes the nasdaq's 25% look tame broadcom, the stock has gone parabolic after gen ai fomo to find the next nvidia broadcom is not the most popular

type of chip for the shift and it will not be guiding up next quarter revenues by 50% like nvidia did but broadcom's technology and ip is key for the megacaps building out their own large language models and ai systems and their own customers so the guide may not be there but if the ceo can play up broadcom's broader role the run could be justified and go further. even so there is cold water being thrown on it with salesforce and crowdstrike reminding of the macro backdrop still being tough and it's more disciplined despite the ai boom. >> you know, listening a few moments ago, dee, talk about the tech intensity of spending sort of what the dow has been preaching, the economy will get more and more concentrated in terms of how much we spend on tech and ai is one more chapter in that long story

>> reporter: absolutely, i want to go back to that chart i showed you at the beginning that tells you what happens after we have seen the relative outperformance tech takes a breather. when you listen to nadella and so many people in the bay area, this could continue because if you believe that this generative ai shift is going to be bigger than the internet, that leadership may just expand it may be continued to be tech, maybe not the names we think it's going to be but it will continue to be tech as it sort of weaves itself into every single part of our lives. >> this is a long-term story it's hard to keep that in mind sometimes when you're following the stock moves on wall street like now want to see profits and revenues coming from ai. >> yeah, and you look historically there's been different sectors that have led the markets that measures have been concentrated in but it has been technology for over a

decade now and it doesn't show any signs of abating but i was listening to bill gates a few weeks ago in san francisco at an ai conference and he was saying there's a 50/50 chance that the biggest companies in the world are going to be the ones that we already know like a microsoft and 50% chance it could be companies the incumbents coming up like an openai skepticism because that size and scale is important in that shift because it's all about the data you own. wall street is buzzing about the economic impact of negative birth rates here in the united states some new dattoha aerhea sreft t break. ♪ ♪ every day, businesses everywhere are asking. is it possible? with comcast business...it is. is it possible to use predictive monitoring to address operations issues? we can help with that. can we provide health care virtually anywhere? we can help with that, too. is it possible to survey foot traffic

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birth rates are the buzz this morning showing that birth rates in the united states ticked dunn slightly in 2022, disappointing after an increase in '21 and they still haven't returned to prepandemic levels big part of the story, people are waiting until later in life to have kids with women 35 and older seeing their highest rates since the 1960s. on the flip side teenage births falling to a record low but when you add up all the data and this

is the depressing part, we are -- our fertility rate is bele the replacement threshold and has been that way since 2007, basically the level our generation needs to replace itself that falling birth rate has implications for the economy, for demographics, more near term for stocks like a p&g and kimberly-clark that makes diapers and formulamakers like nestles, it's one thing elon musk is worried about. >> i was going to bring up musk. he calls it one of the biggest societal dangers we have in this country and we have plenty of examples around the world where the number has not gone japan's way, china's way for other reasons and it's been difficult to get out of. >> i thought the post-pandemic trend would have a bigger pent-up demand but 38 states, it was down, two states that it was up, texas and florida. >> interesting interesting. where obviously mobile was a little more lenient than other northern states. >> and people move there. >> the jobs number, of course,

tomorrow and goldman is coming out sticking with their forecast of 175 despite the massive adp beat today street's currently around 190. we'll see what we get tomorrow atlanta fed reviseed up from 1.9 to 2 we'll see what that looks like cleveland fed also with cpi numbers maybe looking for something. >> a little softer. >> and these base effects will be interesting. >> the debate will be is inflation moderating enough for us to take a pause or do we have to signal that we have more work to do? that's the thing that's why in the jobs numbers tomorrow, sure, we'll be watching to see how healthy the labor market is but really why it matters is wage growth. it would be great if we could continue the growth and so the fed doesn't have to be worried about that spilling over will be key. >> shorter term, 4213 would be the highest close of the year. intraday you have to get higher, maybe 4235 or so to get intraday

highs. tech obviously is doing a lot of work. >> we've had a nice build throughout the session and some other sectors are green like financials, industrials, oil is higher for a change. it's been hammered lately. signs that we might get this debt deal. let's see if it gets through the senate also treasury yields are coming down a little bit alleviating pressure. >> interesting afternoon to the judge >> thanks so much. welcome to "the halftime report." i'm scott wapner, the ai trade, whether it is getting overheated as several stocks in the space take big tumbles today, however, many of them are off the lows so we will discuss and debate with the investment committee what to do from here joining me josh brown, stephani link and jim lebenthal let's check the markets. we're green across the board and call out the highs of the session for the most part. for all of the major averages today, really interesting stuff going on too as we come on the air with you i want to show you