unionize, but starbucks started it all. >> they're kind of playing hard ball. >> for sure. >> kate, great to see you. nice to have you back. >> did your wife like the taylor swift concert? >> she had a good time it was three and a half hours. thanks for watching "power lunch." >> "closing bell" starts now welcome to "closing bell." i'm scott wapner this make or break hour begins with a rally to start the new month. we're at the highs of the day. we have a big interview in moments. wharton professor jeremy siegel is here. let's look at your score card dow getting a nice boost today from united health and chevron and caterpillar and american express. tech an interesting story. some of those ai names reviving

a bit. pretty good day for apple as well energy, the worst sector is leading today. it leads to our talk of the tape can you trust and depend on this rally? let's ask the professor siegel he's with us today from philadelphia professor, welcome back. >> happy to be here, scott. >> new month are we going to have the same story? do you believe in this market right now? >> i think the market loves the -- i was surprised there's talk about a pause or a skip you can name it what you want, but i think that's a major source of the rally. i've been warning about the fed going too far, the delayed effects of monetary policy copolicy if they can pause, this lowers

the probability we'll have a recession. >> you think they're done? when you saw pause, presumably you're suggesting they don't go in june, but that doesn't mean they're fully done i think fed members who have been speaking have been going out of their way to make sure the markets are understanding of that >> absolutely. they're totally data dependent if inflation flares up again or the labor market gets tighter than it is, i thought it was pretty surprising that it was talked about before tomorrow's employment report. i thought they would want to see what tomorrow's employment report would be before saying, well, looks like we can pause. i think that was encouraging i think that means that powell sort of made up his mind with the staff, hey, this is a time for a pause. there may be some dissents

we may get our first dissent in the year and a half at the next meeting. what the chairman wants, the chairman gets. >> swoon or surge this summer? what's your gut telling you? >> you know, i still worry about -- i still think rates are too high to sustain good employment i think we're going to see a downturn not tomorrow, but sometime we're going to see a downturn in payroll growth to a negative number. that could give everyone a little bit of a scare. the year is still going to be up, but, you know, i don't think a surge is in the works. of course ai can go much higher. you know, we've seen this. last year, two years ago you had crypto and you soared.

20 years ago you had a .com to your name you soared now you had ai market goes through these phases i'm not going to say nvidia is a real company, it's not a .com company. those sectors can catch fire and that can continue through the summer. >> you mentioned the .com bubble crypto, that was a bubble, we know that now. bitcoin where it is today. are you suggesting the ai stocks are a bubble >> no. they're not there yet. they have real earnings behind them i'm not saying they're not going to eventually go too high. we threw out bubble way to easily to me a bubble is a stock that's

four or five times above its fundamental values i don't think we're anywhere near that. we were in the .com era, we were in some of the crypto areas, but not there in ai. >> we didn't know at the time when we were in it in 1989 if you looked at qualcomm or cisco, you couldn't say we know this is going to be a bubble you never know it until it's too late that's the sad part. >> if we could, scott, we would all be billionaires. >> yeah. >> i mean, that's the game you can say stock x is too high. i know good investors that are shorting it and then it goes so much higher before it collapses

that they go bankrupt before the company. that's the market. that's been the markets for 200 years. let's hope it lasts another 200 years. you have to select that short run volatility if you love the ride, you can play it. if you're a fundamental investor, you have to watch out. >> when i read you a stat like bespoke put out today, only 8 other months has it outperformed the dow by a wider margin. does that make you pause and say what's going on here >> it does first of all, the excitement of ai and the fear of recession which hurts the dow, the dow is more cyclical than the nasdaq. those two things come together and once you have that story, it

can go really far. you know, listen, once you get out of the nasdaq, take out those ten stocks, you got a 15 pe and take small stocks, you got a 12 pe, that's value. that's long-term value not saying it's a short-term winner it's long-term value. >> do you think it's problematic? if this keeps going where the divergence between what's happening with a select group of stocks relative to everything else >> it's problematic certainly. let's face it, downturns -- i'm not going to say bear markets. maybe we can call it corrections. there's usually weakness in the broader indexes first. there's a few that continue on to the top and then finally they capitulate at the end. yes, this is a setup that looks

like we're aiming towards a correction nothing is guaranteed in the market, but we've seen this pattern in the past. >> okay. setup gearing towards a recession. interesting. let's expand our conversation, professor. let's add liz young and joe t taranova liz, are we setting ourselves up for a correction because the gap keeps growing between nasdaq and everything else? >> the important thing is when you have these dramatic die divergences and we're having big spreads between small caps and large caps, the ratio are reall

big. they can lost a long time, but they can't last forever. the market right now, if you're looking at it on a headline basis looks pretty good. looks like there's enthusiasm. there are clearly buyers in it tech trade continues to be durable in the face of rising rates and this back and forth about hike, no hike, which is impressive it's also something that usually happens late in a cycle. here we are still sort of with all these signals that say late cycle. >> we'll get back to the conversation i want to go to dell they were reporting earnings, maybe somebody hit the button too early. what's the case here >> reporter: dell 1.31 adjusted versus $.86 was the estimate sales $229.2 billion versus the

estimate of 22 billion no outlook here but the stock is halted given the numbers are out. i would point out, scott, it's had a very strong start to 2023. back to you. >> thank you for the update. we'll keep our eyes on the stock. we'll show you when it does to see the move you see on the back of what appears to be a good earnings report. joe, do you want to act to what the processor said technically speaking we could close above 3,200 on the s&p the significance of that and whether we're setting us up for something untoward in the market. >> that clears a path to 43 a quarter and you haven't seen then since august of '16 you had this period from august

19th to may 19th that you didn't see over 4,200 the nasdaq 7% return in the month of may the best start for the nasdaq since 1991 equity -- mutual funds for equities have been in outflows every week for the last year there's a significant amount of cash sitting on the sidelines. i think the macro has been very favorable to investors this week you have the resolution of the debt ceiling it's clear there was a message from phillip jefferson that the fed fed federal reserve needs to pause. >> they need to pause, but nobody is saying or suggesting that, if they pause in june, prof professor, that that's it. in fact, you have made the call on this show that stocks could

go up another 10 to 15% this year if, in your words, the fed does the right thing the implication being if they cut rates, if they start raising and then cut. >> yeah. i think they will be i still believe they'll be cutting by year end. when you take a look at the sensitive commodity indexes, we're still in a downtrend we had a little bounce in oil today. all the sensitive indexes are in a down trend look at the manufacturing, way below expectations the stubborn, core -- well super core, whatever powell wants to call it, those things are -- take months if not years to finally wind down. you know, some of that core is actually higher interest rates which the fed itself is causing boosting the cpi i mean, those -- that resolution is going to take a long time

i see no real ignition of inflationary fears or commodity prices going up. it's the pig and the python. waiting for that big chunk of stimulus to get through the last part of the core if they have to wait, you know, all the way until they see unemployment rising rapidly and negative numbers, i think they waited too long. that's why i would like to see them pivot before we get that slowdown >> liz, for those who may agree with the professor that the fed is going to cut, what do you think? >> i think they're going to cut before the end of the year. >> you do also >> i do. >> i was surprised i was expecting you to say you disagree. >> i was not on board with three

cuts because of the way the data is moving, i think there's going to be a pullback that becomes more obvious in economic activity and if we do see negative payroll numbers, if we start to see a spike in unemployment, initial claims, that's going to give them pause if we're at the point where we're debating whatever we're calling this, a pause, skip, hop skip and a jump, i don't know what's going to happen in summer we're already debating whether or not they're done. if they went too far already, it will bake through. i think i said this on this show before we're right in that window where long and variable legs show and rear their ugly head we will see more effects of that as the year goes on. there's still a long time before december 31st. i will not be surprised if we see one cut before the end of the year. >> joe, you're in the camp of

fed's done a lot, they've done too much they're likely going to cause a recession if they don't do anything else anyway if they continue to do more, they're definitely going to cause a recession. the professor thinks they're going to cut >> i would be surprised if they have tocut i think the positive revenue and earnings impact from generative ai is going to keep the earnings environment particularly strong. there would have to be an event that would present itself for their to be a cut. i can't see the reasoning behind it i think it's very clear that they're using the communication tool in the last 48 hours because they're concerned about the spike in yields. the spike in yields is detri

detrimental. >> dell has re-opened. i just want to mentioned it. good earnings, good stock move i'm sorry. continue. >> i think there's clear concern for further regional bank instability. that's why they're using the communication tool they saw the spike in yields they understand as a result of the debt ceiling resolution and extension that there's going to be pressure on bond prices themselves and yields are going to spike i think it's a clear signal that the federal reserve sees some concerns out there i don't know if there's going to be enough to warrant such a dramatic reversal in what would be a short period of time. think about it there's only six and a half months left in the year. >> professor, one of the other issues people have to grapple

and why you think stocks will go up it's because of the cash on the sidelines is going to move into equities. is there an impetus to do that because rates are so good in money market funds where you can get better returns at least safer in your own mind than you can get in the stock market? >> yeah. well, i want folks to remember that earnings are coming in better we've seen dell and everyone thought my goodness earnings were way to high in 2023 maybe not. i think that's encouraging let me mention one more thing about whether they're going to cut or not we are entering more intensely into the presidential political season and the last thing the

democrats and biden can afford is a recession next year, and the fed does have a dual mandate that looks at unemployment and inflation. they have a rationale for if we see negative numbers in payroll, rising unemployment for them to go down. that's why i'm making that projection. >> the fed's not political professor. >> it's not supposed to be, scott. >> that's why i said that. professor, thanks so much. joe and liz, thank you as well joe, we'll see you later in the day. let's get to our twitter question we're asking how will stocks end in june, high, lower or flat you can head to cnbc on twitter

and vote please do. let's get a check on top stocks to watch as we head towards the close. kristina partsinevelos is joining us as always kristina >> reporter: dollar general hitting its lowest level in three years. the company said the economic back drop is having an impact on customer spending levels down over 18% right now. the day isn't going better for okta which is deeply in negative territory. jpmorgan cutting the stock to neutral saying the economic environment is putting pressure on the company's growth. that's why you're seeing shares down almost 17%. scott? >> kristina, thank you. we're just getting started up next the wild west of the '90s chris harvey weighs in on ai and what has happened to those

stocks you're watching "closing bell" on cnbc.

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welcome back the ai arms race has been one of the biggest market drivers late. many compare it to the .com bubble of the '90s my next guest says it's moving

even faster. let's bring in chris harvey of wells fargo. i had a conversation with professor siegel asked him if it was a bubble and he said not yet. what do you think? >> i agree you're looking at the commercialization. back then it was the wild west nobody knew what the commercialization was going to be here you're seeing people adapt ai here and now. we put out a note this morning you have heinz talking about ai and how it's going to help the supply chain. >> i'm going to stop you for a second when a ketchup company is talking about ai, you don't pause and say, give me a break >> no, absolutely not. this is the greatest technology innovation or innovations we've seen in two decades. when you look at the companies, here's the difference between

now and then now you know the established players. what ai is is it's a scale and size business. there's real opportunity here. this is not a bubble >> aren't we somewhat making leaps of faith here thinking that, you know, we're pulling numbers out of hat it feels like to say the total addressable market is 1 trillion, it's 2 trillion, it's x trillion where are these numbers coming from >> here heinz and others are talking about real earnings and cost savings they're not talking two or three years. they're talking next quarter, the following quarter. it's a massive productivity

enhancement. this is an incredible optimization process >> when you see a stock like nvidia up a ton in a short period of time or some other names, what do you think about the moves themselves and what does it make you think about the market overall >> the moves themselves d-- lets talk about the market. let's talk about the s&p and the nasdaq they're telling you that's your ai premium when you look atsmall caps, mi caps, value, that's telling you that's your economic -- >> you're talking recession. >> yeah. the one thing that's similar between '99 and 2000, in '99 you had a tightening cycle it hurt the new economy stocks you can see that happening now, but not just yet >> i asked the professor about the divergence between the

nasdaq and the dow he suggested it's setting us up for a bubble the longer -- a correction the longer that continues. do you agree or disagree >> we don't look at the nasdaq so much. we look at the top 50, russell top 50, the 50 largest stocks. if you look at the multiple, it's 21 times. that's not bad i'll use my scientific term. that's not bubble-iscious. our price target is 4,200. we're there. we think we'll get a pull back and it will come on some of the macro issues we need to -- it's a pause or pull back that refreshes because this is far from over. we're just scratching the surface. we're worried about the economy and things slowing down. that's what some of these other

indices are telling us. >> have you changed your overall view of the market because of ai six months ago, before we were talking about this literally every day, it was like, okay, fed is tightening and if they've stop they've done 500 basis points and it will take a while to filter through. the consumer can't continue to have this burden of keeping the economy afloat now i feel like the market's been more resilient. look at what the nasdaq has done ai has changed the narrative on the market. >> the way we're wrong is the ai premium is bigger than we ever would have expected. we've seen institutional investors are under weight they're behind and people need to catch up. there could be a push. the way we're wrong is not because we have the economy

wrong because we think we have a good beat on that. it's just people get a little too enthusiastic about ai too soon you can see that happening again, if you look at valuations today versus the late '90s it's not close. if you look at earnings expectations, they're more sensible now >> good to catch up with you chris harvey. up next, jonathan krinski is telling us where he sees stocks in the months ahead. that's next on "closing bell."

welcome back stocks with a reversal with the nasdaq on pace for its longest win streak since january 2020. joining us now is jonathan

krinski. we may close above 4,200 for the third time in four days where you can make the argument it's a bullish sign not that we're about to have a reversal. >> we've continually said that breakouts in this market are susceptible to vulnerability because of the underlying breadth. we saw that happen in august and then the sellout in the fall the distinction to make here, the issue isn't that a handful of large stocks are outperforming a rising market. it's that they're going up while the majority of stocks are falling. if you look at the median stocks since early february, it's down about 10%. small caps down about 12 micro caps down 15%. even though everyone is aware of the divergence, everyone wants the same thing

we just keep getting the opposite where this bifurcation keeps getting wider. we think the action last friday was that blow-off action if you look at the volatility and the volume in the tech stocks, it's emblematic of that move. >> it doesn't have to resolve itself necessarily in the near future at what point do you look at it and say, okay, it's taken a while to get over the 4,200 hurdle and if we can maintain above that, at what point is that a bullish move for the market no matter how we got there >> that's a good point time is as important as price. spending a week or two above 4,200 would be convincing. the other thing to think about,

you know, we're now over 150 days removed from the october bottom we look at all meaningful pullbacks in the market over the last 30 years and at that 150-day mark, the average percentage of stocks above the moving average was about 70% the minimum we've ever seen was 56%. this time around we're at 36%. it shows you if this is a new bull market, it would be unprecedented as far as the lack of breadth this far into the new bull market. you know, i think people are harking on it for good reason. it's certainly something that is either going to be a new bull market we've never seen before or, as we think, we think that big caps are at the earnings and will move to the downside. >> it's been an unprecedented bear market in many respects

hasn't it in the fact that we never got that real true capitulation moment that some, including yourself, were looking and calling for. now we moved away from that and are looking for other signals. >> yeah. you know, you look through the charts over the last couple weeks. i don't know that i would call it capitulation but there's some pretty ugly breakdowns in consumer names so far it's been this rolling bear market. you can argue there was capitulation in tech last year there's been this rolling beer market the reason we didn't have the vix spike like many thought it would is because you haven't had that correlation in selling. june is typically the worst performing month. i think the setup is there

we have to see it. we haven't seen the downside of tech, but the volatility speaks to us late stages. >> jonathan, thank you we'll talk to you soon >> thank you. up next, the count down is on apple's big event of the year a few days away. we'll look at the key announcements we expect ahead. as we head out, let's get a check on shares of dell. the company supposed to report earnings in "overtime. they reported earnings in "closing bell" time. still up one and three quarters percent. we're back after this.

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welcome back just a few days away from apple's anticipated worldwide developers conference. steve kovach is here with what to expect. >> obviously the headline is going to be expecting this new head set from apple. it's going to be entering a space with google glass, magic leap and facebook's name change to meta. now it's apple's turn to take it on similar to meta's last head set

cameras provide a look into the real world and digital images are placed on top of the real world. more important is how apple makes its pitch. no one figured out what this category is for yet. we have bite dances, sony play station for games and two models from meta the quest 2 and quest pro. none of these are blockbuster products samsung is running new software from google and meta's quest also muted expectations for apple sales. analyst estimating apple is only prepared to ship about 200 to 300,000 head sets at $4,000 a pop. if that's true, the head set will not be a significant sales driver for apple any time soon. >> what do you think about that price? what was your first reaction

>> look at what meta is doing. they're talking less about the features and more about the price. the thing comes down to a price war. i can see it happening >> i've seen your hits today on other shows about this budding war of sorts between apple and meta head to head. i mean, apple needs to sort of make it clear to investors what its ai future is going to be as the narrative develops around so many other companies in that area. >> right and apple is not doing front-facing ai like chatgpt a lot is happening behind the scenes every time you take a picture, that's ai making the photo look good maybe siri can't do what chatgpt, but this is going to be talking about ar

>> a headlines moved that says apple's retails plans will put companies deeper into chinae what's your thoughts >> china is very significant of course they're going to open more stores there. the remodelling of the stores, significant. you have to operate these head sets they opened new stores last year >> monday will be exciting we'll be there with you. >> i think i'm there with you. >> whatever. we're there together don't miss a "closing bell" special live from apple's worldwide developers conference. steve kovach will be there too. it's your last chance to weigh in on your twitter

question we asked how stocks will end in june, higher, lower or flat? the results after the break.

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we asked the twitter question how will stocks end in june 53% said higher. coming up, breaking down broadcom, we'll tell you what to h and take you inside the market zone coming up.

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♪ ♪ here we go we're in the "closing bell" market zone. cnbc commentator mike santoli hear to break down the crucial moments of the trading day kristina partsinevelos joe taranova look ahead to broadcom earnings mike, i begin with you i want your to reaction to what professor siegel said. listen >> those tsectors can catch fire and continue through the summer. >> are you suggesting the ai stocks are a bubble? >> no, they're not there yet they have real earnings behind

them i'm not saying they're not eventually going to go too high, but i think we throw out bubble way too easily to me a bubble is a stock four or five times above its fundamental values i don't think we're anywhere near that then >> would professor mike santoli agree? >> generally so. it's too soon. we're six months into this thing. a bubble if it's worthy of that label is going to be barreling on for a while, long enough for a ton of ipos to show up and companies taking advantage of irrational pricing in the market and sell a bunch of stock. a bubble has to have 70 or 80% downside once it crashes there, it does nothing. look at the chart. that's a mini bubble i think it's too soon.

you can have whole parts of the market that are overheated in the short term and too richly valued to give you a return. there's room between these are buys and it's a bubble. >> kristina partsinevelos, set the scene for us speaking of ai for broadcom and these earnings coming in "overtime. >> broadcom is known for custom chips and operatability. investors want to know if the design will be larger than the previous quarter similar to what we saw with marvel you have mega cap customers having drive broadcom's custom chip business. also, co-designing the first ai chip with meta and signing a multi-billion dollar deal with apple. we want to here about that apple deal

scott, it's not just about these custom chips broadcom chips are found in networks, broadband, server storage. broadcom is a great bellwether for the rest of the chip industry. >> we'll look for you in "overtime. we can't wait. joe, you have been looking forward to this earnings report. >> absolutely. this is the next ai test this is a way to reasonably play the ai story without the extreme valuation. the forward earnings on nvidia is 50 times. the forward earnings on the semiconductor index is 75 times. the earnings on broadcom is 19 p times. it's going to be an ai winner. it's going to participate. if you have concern about it getting bubble-iscious trade

down, own broadcom they have a tremendous balance sheet. they have ten consecutive quarters of double digit growth. this is the trade to make to stay in ai for the long term >> all right we'll see what they deliver, whether it lives up to the hype and what the stocks do zima, really interesting day for retail i wonder what that means for lululemon. if you look at capri holdings, macy's, dollar general and target, et cetera. >> reporter: lululemon is down about 13%. analysts say it's due to the softness we're seeing across the retail landscape in the u.s. last quarter lululemon said for 2023 it expects sales to be up 15 to 16%. can the company maintain that

forecast following the cautious commentary we received from capri holdings and macy's. wall street is very bullish on the stock. tessly group has a 425 price target the stock is trading at $327 some context lulu is different it's got a loyal customer base and has made inroads in china. we'll see if those tailwinds continue to exist. >> seema, thank you. joe, you still bullish on lulu. >> we own it there's a spillover effect from nike and foot locker there has to be something that reignites the bullish momentum >> there's an interesting spot right here the last earnings report on

march 28th, big guidance, it gapped huge from 320 if you looked at the disconnect versus where it closed and where it opened, here we are giving most of it back. >> all right good point by the way, don't miss lululemon's ceo on "squawk on the street" tomorrow all right. two-minute warning we just got it as we wind down to the close here. interesting trading day that we've had. first trading day of june. what do you make of it >> to actually hold these highs at a new year to date high going into the jobs report which says the fed officials speaking in the last couple thdays have drained suss spence out of the job reports. they're looking towards skipping which means they're not set to

completely undercut the employment market before they're done raising rates it suggests they can live with a stronger economy you know, it's still this split market what's going on is interesting the retail etf trying to bounce off the october low which is where it's got back to the energy etf trying to bounce off the march low. all these parts of the market have been badly lagging and getting short term watched out a lot of the market looks very sloppy and looks like it's on the verge of breakdowns. if you get help from those areas, where we are able to hold 4,200. >> significant to you to hold it and close above it >> yeah, especially if you get this weekly close. a lot of people will feel forced to have part in it or stop fighting it or feel like you built yourself a cushion

where you close the first quarter is significant and it's 4% pullback from here. it's building up a cushion >> mike, thank you we'll hold 4,200, 4,220 is where we are now dow is good for 150. that's all see you tomorrow sending it to "overtime" with morgan major averages ending higher led by the nasdaq which is on pace for its longest weekly win streak since 2010. the action is just getting started. welcome to "overtime" i'm morgan brennan. john fortt is off today. we have reports from broadcom, lululemon, z scaler and charge point. plus ai gets creative. we'll talk to the ceo of advertising agencies, wpp, about the firm's