it is 5:00 a.m. at cnbc global headquarters of here are the "five@5." new quarter and half of the year after one batch of stocks hits a first time in 40 years ach achie achievement. apple becomes the first company ever to begin with a $3 trillion market cap it is dealing with new concerns over plans and propjections for the vision headset.

and we have tesla with records in the quarter. and a travel nightmare as one air carrier tries to bounce back from one of the worst weeks ever. and books get a boost after the fed stress test. this is monday, july 3rd you are watching "worldwide exchange" on cnbc. good morning welcome to "worldwide exchange." i'm contessa brewer in for frank holland. let's check on the stock futures with the s&p coming off the best day since june we are looking flat on the s&p up 3 points. dow down 20. nasdaq implied opening up 42 checking the bond market now with the 10-year treasury near the highest point since early

march. you can see the 2-year treasury is up almost 4.94% the 10-year treasury at 3.84 in energy, oil is down 12% this year two straight negative quarters wti is up .8%. brent is up the same nat gas down 2%. let's check on the corporate stories with silvana henao >> contessa, good morning. treasury secretary janet yellen will travel to china the trip is intended to deepen and increase the frequency of communication and stabilize the relationship and avoid miscommunications and expand collaboration where we are tesla delivered a record number of vehicles in the second quarter. topping the most expectations and demonstrating the value of the recent price cuts.

the company says it delivered 466,000 cars between april and june that is up more than 83% from a year ago production numbers were higher at nearly 480,000. shares are set to extend some impressive year to date begins. netflix is looking to develop new targeted and tailor made advertising to boost sales in the ad tier reports of the streaming service had high level talks with global ad firms about its new plans and floating the idea of episode ad campaigns tied to related shows. >> we were showing "the squid game." intern international programming may be more important silvana, thank you. investors are gearing up to kickoff a tholiday shortened

trading week the s&p has blown through the average year-end price target. notching the strongest half of the year nasdaq gained 31%. with expectations of more fed rate hikes, and questions around when and if a much telegraphed recession will happen, are we at max capacity let's bring in alan mcknight the first question is have we seen the best it will get, alan >> we are at a point where the market is rewarding investors for what has happened. you hear the numbers coming out whether it is the tesla numbers

or earnings from q1, people are feeling good the reality is it will be choppy going until the end of the year. earnings will decelerate and the economy is slowing down. it will be harder for companies to hit the top and bottom line nu numbers that investors are used to seeing. >> and i'm looking at the small cap stocks which is keeping pace what do you think happens? where does the split come with the large caps and small caps as we head into the second half >> great question. we have been watching the small caps closely they lagged most of the year they are finally starting to get a tailwind in recent weeks we think if we can see the rally broaden out, so the s&p is up 16% and the russell 2000 and small cap index is up 8% and then we can see the gap narrow through the end of the year. it would be a great sign for the economy because you would start to see the smaller names benefit

from what the large cap names have experienced over the last two quarters >> alan, i see a 25 b-basis poit rate hike is the best case coming this july what after that? what will the fed do >> we will take the fed at its word and data dependent and the pause after what we believe is a rate hike. they have not said explicitly there is a rate hike, but after the latest conference, it is the likely scenario. after that, they want to see the data in the coming months, they will review the data and see if inflation got to the 2% target we have talked about this for some time. inflation took the elevator up and the escalator down it is a slow path to the 2% target we don't believe the fed will

take any material moves other than 25. >> let's talk about the international opportunities. cnbc pro analyzed the global stock market and come to the conclusion that global stocks risen more than 12% this year. out performing the recent performance of recent years. where do you see opportunity and how important is china or strategizing around china? >> we think china is a lynchpin to the overall growth for the economy. unfortunately, the eurozone in japan will continue to be weak the data coming out of the e eurozone and the inflation higher with the banks behind over the federal reserve means they have a lot of work to do. when you look at the gdp numbers out of eurozone, like germany, that say sis a struggle.

on the chinese side, the recent data shows they are seeing a slowing. they are trying to find a way to get things going again they haven't found a silver bullet, if you will, to get that economy back where it was pre-pandemic in that type of environment, we want to be under weight internationally more broadly we don't think investors will be paid to wait it out. >> alan, great to see you. a alan mcknight. reminder for the investors, the markets close early today in anticipation of the fourth of july holiday tomorrow. let's talk about the stock of the year. apple set to be the first u.s. publicly traded company ever to open with a $3 trillion market cap on a more than 49% gain year to date. the stock is now worth more than the combined market value of mcdonald's, walmart and johnson & johnson and jpmorgan chase and disney and exxon and coke and

more the second half of 2023 starting off on a sour note courtesy of the report from the financial times. a arjun joins me on this a disruption for the plans of the apple vision pro >> that's right, contescontessa apple is cutting production targets for the new headset. citing people familiar with the matter apple and lux share, the manufacturer that assembles the headsets are preparing for 400,000 units in 2024. the year apple plans to release the headset. they are citing a lower figure for other components 130,000 to 150,000 units in the first year apple targeted sales of 1 million units in the first year. that is clearly a significant downgrade from what the company

was expecting. although the device is still not out. why are cuts taking place? this is a complex device the small screens inside the headset are difficult to make and difficult to assemble. apple is finding it hard to scale with production of the device this would be a big deal investors have been waiting for apple to find out what is the next big thing coming from the cupertino giant. they have not had a big product in a few years vision pro was supposed to be the big hype product on the other hand, this is a new product and there are likely to be growing pains vo investors are not seeing this to sell in the first few years in massive scale like iphone and max and apple watch. it is expecting to do small units. there is not a lot of concern.

you see that in the muted pre-market action for apple. if they don't sort this out by the time it comes to market, that will be an issue for investors. contessa. >> if there is a concern over what suppliers can do, it impacts other suppliers as well. if you are asking for fewer components from one supplier, it will hit the other suppliers, too. apple is working with samsung and lg for, perhaps, different -- they have the oled lens they might look at l.e.d.s they are starting to plan phase two of the headset >> that's right. this is a $3,500 headset this is the not something the consumer can afford to buy or upgrade regularly. how do you make the headset mass market

how do you scale to the levels of the iphone? many spoken about the mixed reality which incorporates augmented reality and virtual reality. something people will spend a lot of time with like a laptop or tablet. it is a big market from the technology point of view if it takes off. as apple the -- as apple is looking at this, they need to release several versions of the headset. that is a similar strategy if this is going to find success on a large scale, consequentessa. >> arjun, thank you. coming up, a tale of two housing markets. diana olick breaks it down for us. and more travel troubles for one u.s. air carrier. and more on the tech run and if the sector can climb the wall

street wall of worry a very busy hour when "worldwide exchange" returns.

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welcome back to "worldwide exchange." let's get some perspective on the action in asia and early trade in europe with julianna tatelbaum in the london newsroom hi, julianna >> contescontessa, good morning as for the trade in europe, we are continuing the positive run last week with the gains extending this morning every major region in europe is trading higher it is broad based as you can see. the gains shared across the major reasons. the stoxx 600 put in 1.9% of gains last week. pretty much in line with wall street one stock under performing is ftse 100 which is trading higher astrazeneca is down sharply. 4% to 5% lower after lung cancer trial data came through. showing on the one hand, positive results with the impact of the drug on patients in question, but they observed fatal events in the trial. limited details.

as for the asian trade, green across the board hang seng and hong kong up 2%. knenikkei up 1.76%. we got data out of china pmi growth slowing in june according to the manufacturing pmi. that is driving expectations and hopes of policy support from china. part of the reason for the china rally and support in europe as well con ttes contessa >> julianna, thank you under supplied describes the housing market diana olick has the look to see if it holds true for the second half of t2023 >> the data we got is counter i intuitive over confusion

sales of new liability homes were up 20%. pending sales were down 3% i chose pending because it is based on signed contracts and that's how new sales are counted. why the divide twice as much new supply t existing on the existing home side, new listings down 26% from a year ago. the average home that is for sale is getting three offers that points to still strong demand despite higher mortgage rates. hovering between 6.5% and 7% on the 30-year fixed. twice from the first two years of the decade. that brings us to home prices. for existing homes, they peaked last june and fell sharply when mortgage rates doubled in a matter of months they hit bottom in january and now rising for three straight months due to the psupply and

demand imbalance builders have focused on more affordable homes and buying down mortgage rates for buyers and here we are with the a all-important brspring market over. ahead, the bank reckoning is not standing in the way of stocks why some are set to see pretty big gains in the weeks ahead

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happy monday p thank you for geg getting up ea. so many people are off because this is the fourth of july holiday. summer travel season getting into full swing. aaa estimates 51 million people are flying or driving over the holiday weekend. topping the record set in 2019 51 people would be remarkable. getting from point a to point b is not without headaches a lot of severe storms effecting the kocountry this weekend new york and arkansas and everything in between. flight delays and cancellations. united ceo scott kirby told

employees the airline has to make changes flying less at the newark hub in new jersey to avoid the disruption united an offering rewards of 30,000 frequent flyer miles for those who did not reach the destination. it is the latest snag for the travel industry as it recovers from the covid pandemic. let's talk about the names in the space with steve grambling at morgan stanley. when we talk about the covid overhang, there are sectors that have not recovered and on top of that, are you seeing impact from recession concerns >> the way i would define the recovery is the plane taking off

rapidly and we crest out and now we are hitting turbulence below the business demand is still recovering and that is still strong year over year. we see high single digit growth. leisure spending and resort spending and luxury spending is down year over year. we are seeing a little bit of plateau. >> in the cases, the luxury sector was somewhat protected. we were hearing the comments saying the high-end hotels and spaces was strong. you are seeing softening h >> i think it is going in a different place. last year, high-end were describing the sunbelt market like miami and sedona and monterey now flying to europe and asia. those markets are strong europe is still running up double digits year over year

>> let's talk names. in hotels, an about face for some of the hotels >> i think it depends which hotels you want to look at here. asset stocks like hyatt and marriott and hilton have unit growth and exposure in the market which is recovering internationally particularly we can see compounding free cash flow growth there. if you are a hotel owner in certain markets with higher exposure, you will have a tougher time >> your top pick is hyatt. you raised the price target from 136 to 142 what about gaming? what is your top pick in the gaming space and why >> we want to focus on secular growth sports betting is the most exciting part of the market. sports betting will have 25% growth over the next five years. draftkings is at the ckconso consolidating shares the number one or two player in

every single state a profit inflection. >> it is up 133% year to date. you think there is still more room to grow in spite of duking it out with pointsbet? they were trying to get pointsbeta way from fanatics >> they will hit a profit growth in the second quarter. we look out a couple of years. this is a stock trading less than ten times ebitda. there is also a huge operating loss or tax loss carry forward that they can use to shield taxes that people are not giving them credit for. >> great to you have thank you. >> thank you let's check on the headlines with jessica layton in new york. >> baltimore is searching for answers after a block party ended in violence. shots fired after midnight on sunday and two people were

killed more than two dozen others injured. most of them teenagers police say more than one shooter was involved and they believe shots were fired from at least four guns. no arrests have been made yet. officials are asking the public to come forward with any information. as you talked about, severe weather is causing trouble for jour fourth of july travel. nascar has problems in chicago and 3 inches of rain caused flood in the city. that severe weather is impacting the northeast now. heat alerts continue from coast to coast across the south. parts of arizona are under excessive heat warning thousands of southern california hotel workers are on strike today union representing 32,000 workers is demanding stronger workplace protections and $5 an hour pay increase and more

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5:30 in the morning in new york and there is still a lot more ahead on "worldwide exchange." gearing up for the second half of the nasdaq notching the best first six months since ronald reagan was in the white house. tesla firing on all cylinders posting a record quarter of deliveries of the phil lebeau is here to break down the numbers and what it means for the ev price war. and workers at the west coast port officially hit the picket line after failing to line up a new labor deal that creates hurdles for the supply chain. this is monday, july 3rd and you are watching "worldwide exchange" here on cnbc welcome back i'm contessa brewer in for frank holland. let's check on the futures as we gear up for a new trading week,

month and quarter and start of the second half of the year. the s&p in positive territory. implied up 2 points. dow jones industrial average futures off 41 nasdaq up 38 stocks notching an impressive first half led by the nasdaq the best first six months since 1983 up 32% not to be left behind, s&p 500 up nearly 16%. that is its best start since 2019 dow up 3.8%. relatively paltry. let's talk about the bonds 2-year treasury up 4.93% the 10-year treasury up 3.83%. oil is down more than 2% this year it has come off of two straight negative quarters. right now, wti is up 1%. so is brent and nat gas down 2%. those watching opec plus output

cuts going into effect yesterday. the 1 million barrel per day cut will continue to august. russia will cut 500,000 barrels per day starting next month. let get to silvana henao with the top stories >> several banks boosting the dividends after clearing the stress test. jpmorgan chase and wells fargo and morgan stanley all plan to hike payouts to investors. goldman with the largest boost from 250 per share to 275. citi, on the other hand, making the smallest raising the quarterly payout from 51 to 53 cents. workers at the west coast

ports picketing. announcing the start of the labor strike this weekend and both sides have issues with ouautomation and cost of living for workers. movie goers not up for adventure. "indiana jones" film pulling in $60 million at the domestic box office that is on the low end of proje projections. tacking on the global box office, the final film in the franchise pulled in $130 million on the budget of nearly $250 million. contessa >> silvana henao, rough start for the movie weekend. >> i'm waiting for it to show up on disney plus turning to the playbook for the second half of the year, the nasdaq wraps up the best first half in 40 years a 32% jump the rise fueled by nvidia up

190% year to date. on the big a.i. boom, meta up 35%. apple, amazon, microsoft and alphabet all up between 35% and 55%. can these high flying stocks keep soaring steve kovach is here with more >> contessa, tech was the first winner in the year driven by a.i. optimism and bounce back from the dismal run. apple up 49% so far this year. hitting that $3 trillion market cap last week. meta up 38%. nvidia up 189% for those runs, it made the stocks more expensive relative to earnings going into the back half of the year take a look at the increase in forward pe ratios for the names from the beginning of the year through friday's close amazon from 51 to 74

microsoft 23 to 32 earnings season starting in a couple of weeks putting more pressure on the names to deliver big beats. sko so other catalysts looking for the year and apple with the falling in demand of the products iphone has to wow people to get sales growing again. microsoft is trying to close the $69 billion deal to buy activision investors are focused on a.i expect more product announcements throughout the year alp alphabet, look out to make money for the search of products like google docs. m meta's year of efficiency is appeasing investors so far, but still lags behind reels with tiktok and p we have seen selling off e

last couple weeks for nvidia we are waiting to hear from the commerce department about restrictions on a.i. chip exports to china finally, let's talk about amazon trying to stay in the a.i. position not much tangible there yet. prime day will be a good test for consumer demand ahead of the holidays >> steve, thank you for bringing us that look ahead let's turn to mega cap tech and a.i. and if it will lead the markets for the second half of the year so sophie lund-yates is here with us sophie, this has accounted for 80% of the gains so far. do you think there is a ceiling on that? >> good morning. great to be back

to be blurnt nt, i do believe te is a run to the rally we are seeing there is inflation and it is moving in the right direction, but it is still very much a problem. i do think some corners of the market potentially are remaining a little bit too optimistic in the hiking it will have an effect that said, i'm not going to be doom and gloom here. the companies driving the rally have strong fundamentalfundamens they have strong fundamentals as i said, but there is a limited rally in my opinion. >> we heard steve outline the headwinds for each company let's start with apple as it kicks off the $3 trillion market cap morning.

where are the headwinds for apple and where is the opportunity? >> a phenomenal number apple and most analysts beat this i know it has one of the most potent brands on the planet. we have seen although things haven't been as bright as they have been, but a bit of a slowdown in demand the numbers we have seen are inn -- incredibly resilient as we are in the middle of the cost of living squeeze with inflation so tai far. the valuation has reached the $3 trillion level and that means we are increasing the risks there we are seeing production issues with the new headset that has come out today. the complex nature of the

product will lead to a pull back there on what they can deliver the extent of that is unknown. really, i would say the opportunity remains the phenomenal business level. the bar is now potentially a little too high. i do think we could be looking at a bit of volatility in the short-term >> on microsoft and alphabet, yes or no? higher or lower? >> i think we are looking at a great deal of strength of microsoft. it is well placed in the rally there is more momentum is left with microsoft >> sophie lund-yates thank you. no tech rally talk is complete without tesla the stock up more than 110% this year set to gain more today after reporting another record quarter for vehicle deliveries you see in the early trade up 6.25%.

the shares phil lebeau is here with a breakdown. really a remarkable accomplishment for tesla, phil >> contessa, these numbers were above the expectation on the street even the bullish analysts were saying it might get up to 455 or 460. the consensus was 445,000 vehicles delivered what did tesla deliver 466,000. a little bit over that for the second quarter 10.2% increase quarter over quarter and the consensus was 445,000. they were doing well above the street was expecting you combine the 466 along with the 422,000 and change in the first quarter, and you are looking at tesla deliveries, if you look at the annual growth basis, they are halfway or just under halfway toward the guidance of delivering 1.8 million vehicles this year when you listen to the analysts and read notes this morning,

that's what you see time and again. all of them say much better than expected halfway toward meeting the full year delivery guidance the real question is in a couple of weeks when the company reports q2 financials. what was the average selling price? no doubt the price cuts throughout the spring in china and in north america and europe. how much did that cut into the margins? it helped in stoking sales, contessa, but the question is how much did that cut into the margins, which are already on the decline, relative to where they were a couple of years ago, do we see them go down to dramatically from here that is what we will see with the average selling price and how much it declined in the second quarter that is the next big catalyst, for the stock, if you will, what they report after the bell on july 19th. >> the first quarter profitability down to 11.4% from

19.2%. is the strategy for the company to deliver all the vehicles and make the sales and take the hit now so you are ensuring they are in your ecosystem and taking a page from apple? >> that's part of it let's be clear automargins. you are looking at over 19%. that is the metric people are focused on in the second quarter. how much more does that drop down drop to 18% or 17% that will be the real interesting thing here there is no doubt they want people within the tesla ecosystem. they are dealing with a brutally competitive market in china which is driving a lot of the cost cuts over there remember, that's the largest ev market in the world. there is also competition and a market that's facing headwinds here in north america and europe will go through what china is going through now.

they are noticing the competition at the lower end or cost conscious end of the business if you were tesla, you want two things here. the giga factories cranking out model 3 and model y and you need to get as many deliveries out there and get people into the ecosystem. once they're in, they tend to stay in. now the question becomes how much can you bring into the ecosystem. >> phil lebeau, thank you for getting up early i appreciate that. coming up, the morning global briefing and headlines dominating trading desks around the world. this was a messy weekend for demonstrations in france it turned violent. "worldwide exchange" will be back in just a moment.

13 minutes until the top of the hour time for the global briefing french president emmanuel macron

and his ministers came together to map out the response to the ongoing violent protests which swept across country over the shooting of a teenager macron instructed leaders to do everything possible to reestablish order and calm the grandmother of the teenager is calling for an end to the violence. japan launched a stock index today. the prime 150 aims to make it easier for investors to identify corporate value within the markets. that index includes sony, nintendo and toyota and several wa warren buffett based companies. and china is showing a slowing growth for the second largest economy. and stocks looking to keep the strong start to the first half rolling. we key up the trading day ahead

and the catalyst for the stocks for thba hf e ckalof 2023. we'll be right back. ♪ ♪

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gold bond. champion your skin. you are looking at live shots this morning from around the world. london, hong kong, new york and washington, d.c. welcome back on this monday morning to "worldwide exchange." this is what we call the wex wrap up. six stories you may have missed. apple slashing production targets for the vision pro headsets because the key manufacturing partner is struggling with the device's complex design treasury secretary janet yellen will travel to beijing to meet with chinese officials. senior white house official says the trip is intended to deepen and increase the frequency of communication with the two countries. thousands of hotel employees in southern california walked off the job over the weekend demanding better pay and

benefits and less burdensome workloads. the united union group here says the high cost of living in l.a. forces members to commute several hours to and from work. oil moving higher this morning and breaking now is russia planning to cut exports b by 5,000 barrels per day starting next month. wti up 1.25% goldman sachs looking to end a partnership with apple and in talks with american express to take over the apple credit card operation. one it launched with the tech giant in 2019. elon musk is limiting the number of tweets users can read to 6,000 posts a day for verifiedaccounts and 600 for non verified users musk said the changes are

temporary and in place to address extreme levels of data scraping and system manipulation getting through 6,000 tweets in a day? a lot of time. gearing up for the holiday short trading week ahead we get two pieces of manufacturing data with the pmi and ism manufacturing data tomorrow, markets are closed for fourth of july wednesday, we get the minutes from the fed policy meeting. thursday, janet yellen is traveling to china and friday is the monthly jobs report for june. with all of that, let's see how the short trading day is shaping up futures are not moving too much. s&p hanging on in the green. implied opening up 1.5 dow jones industrial average off 45 the nasdaq futures up 35 investors gearing up for the start of the weekend half after the s&p notched the strongest first half of the year since

2019 the nasdaq did better. it gained more than 31% so far this year. its best first half since 1983 michael farr is joining us now the chief market strategist at hightower advisers and cnbc contributor. good to see you, michael thank you for being here. >> nice to see you, contessa happy fourth of july >> i think retail investors may be looking at their portfolio and thinking i've gained a lot so far this year should i take a bit out or put money on the side? what is your recommendation? >> right my recommendation is stick to your discipline. you know, this has been an incredible year. we had the seven stocks that steve kovach was talking about

earlier, up 85% seven stocks driving the s&p 500 returns. the majority of the s&p 500 up 2% to 3% not many investors are saying my s&p portfolio is up 14.5% and probably not the 30% of the nasdaq what you do is stick to your discipline and don't get swayed by the short-term market fads and market volatility. discipline is not a discipline if it is wafted around by the short-term trends. stick with the discipline. figure out real value and make sure you are still on track to meet the long-term goals i go to the first point and say should i rebalance maybe if you have some of the stocks with nvidia up 189% and should you trim some of those and redeploy money

that may make sense to listen to contessa this morning. >> okay. if you are going to deploy some of your money that may have been sitting the sidelines and you missed the run-up to where we are on the nasdaq or s&p 500, where would you put the money now, michael >> you know, i think you follow that advice of hit them where they ain't remember that fundamental rule of buy low and sell high let's look at those things that might be up 2% or 3% where the earnings have been continuing to grow and market share continues to be solid. some of those stocks are not running up because they have a.i. in their name i take a look at stocks like disney or pnc. some of the big blue chips that haven't moved all that much and i would continue to stay defe defensive. we continue to have these headwinds from the fed we have very high stock prices we have the inverted yield

curve. we have the mother of all recessions that just won't happen economists say there is tough sledding coming up i like to continue to say the good blue chip companies and stay the course. don't feel like you missed too much unless your time horizon is six months if it is longer term, this will work out for you if you stay steady and stay the course don't ever bet against america greatest country in the world. >> on that note, happy independence day, michael farr orwi ehae.for joining us on "wlddexcng "squawk box" is next (christina) with verizon business unlimited, i get 5g, truly unlimited data, and unlimited hotspot data. so, no matter what, i'm running this kitchen. (vo) make the switch. it's your business. it's your verizon. (♪) feel the power of osteo bi-flex®. taken every day, it's clinically shown to improve joint comfort in 7 days,

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good morning stock futures are mixed ahead of the first trading day of the third quarter after a great day

on friday. we have the playbook for the second half of the year. we have no idea, but it is incredible. united airline ceo scott kirby p apologizing for taking a private jet from newark when thousands of airlines customers were stranded by weather and staffing issues. news from two of elon musk's companies. tesla with an 83% jump of deliveries and twitter limiting the number of tweets users can read per day not one thing changed about my life details straight ahead monday, jeuly 3rd, 2023. "squawk box" begins right now. good morning welcome to "squawk box" here on

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