this week for a change >> yeah, here and there and everywhere, but you can see the due dow right now just barely in the red, flat for the day. s&p 500 is up 0.75% -- a third of a percent >> everybody, thanks for watching "power lunch. have a good weekend. ♪ welcome to "closing bell," i'm mike santoli in for scott wapner this make or break hour begins with a sigh of relief for stocks here's your scorecard with 16 minutes left to go in the session. see the s&p 500 up about 0.33%, the dow is being dragged down by more economically defensive areas. all the indexes well up off their session lows still, all in jeopardy of posting modest weekly declines after a jobs report that came in a bit softer than the street was expecting, and chicago fed president austan goolsbee

telling cnbc he is still undecided about what the fed should do in july. steve liesman will be along shortly with more from that interview. it all brings us to our talk of the tape and whether today's jobs report was just right to keep the fed from turning much more aggressive even as it shows still strong labor market and what it all might mean for the rally. let's ask charles schwab's liz ann sonders. great to speak with you on all this i guess the question is, do you think the market is correct to take a little bit of comfort out of today's numbers, essentially we're not seeing an overheating economy but also not one that's outright stalling? >> yeah, i suppose in the context of the nearly 500,000 adp print, which really kind of freaked out investors, i think you can take some comfort, but of course, we're starting to see the weakening that although the fed wants to continue to quell inflation, might be starting to send some signs of sort of full official recession versus what we have been calling the rolling

recession. i think it was a slightly hotter than expected wage number in the uptick in hours worked that probably moved the needle a little bit in terms of probabilities for a july hike, which were already high, but now they're up around 95%. beyond that, meaning september, you know, it's the data that's going to define what the fed does beyond july, but i think a hike is basically baked in >> yeah, it does seem that way, certainly at this point, although what are you picking up in these numbers today that suggests to you that we may be now getting closer to that more broad-based form of recession? obviously, there were downward revisions to prior months' job gains and about a 40,000-job miss for june. >> you also saw the spread between households and payroll or establishment survey data, the establishment survey is what generates payrolls and the household survey is what generates the unemployment rate and in the case of household,

was up, that is compared to a pretty big negative the prior month, and of the last 15 months, five months have seen big declines in household employment, and that tends to lead as you're heading into a downturn in the economy. you've also seen the rolling over in temporary jobs that also tends to be leading indicator and although we had a little bit of relief in terms of unemployment claims, the four-week average is up more than 30% from the trough, and the average heading into recessions of claims is up only about 20% from the trough. so, it's certainly not a done deal, but maybe a few more little check marks you can put in the recession column. >> yeah, it's interesting, because, of course, i think there's been, in the last couple of months, this consensus migrating to the idea that we're pushing out the potential day of an onset of recession. it seems like things can appear and feel like a soft landing for a little bit longer. meanwhile, though, yields have backed up to a point where, you know, the two-year yield, almost

back to where it was right before that svb regional bank scare, and of course, the ten-year flirting again with 4%. how does that filter into the, i guess, the way the equity markets might be able to handle this environment >> well, keep in mind, as you know, mike, nominal yields are up but so are real yields because you haven't seen a commensurate increase in inflation data and given the rally off the october low was more than all accounted for by multiple expansion, there was no "e," you know, earnings component to it. i think in conjunction with the move up in yields, i think it just puts some downward pressure on some of the more highly valued segments of the market that were probably right for some profit-taking anyway because you had started to see not only overbought conditions but that concentration problem on a day like today, seeing a pretty significant rally by small caps, via the russell 2000, we have had smatterings of those, and i think it's good to maybe see convergence happen by

both a little bit of profit taking up the cap spectrum into those names that were slowly driving performance but also greater participation by the so-called average stock. we need more of it, but some comfort in that today given that broadening out >> yeah, certainly the market has had, you know, coming into the second half, plenty to prove on that score. i know you feel that investor sentiment has also gotten to a point where it's becoming more challenging, maybe more of a headwind from here what are you looking at, specifically, that says that maybe raises the bar for further gains? >> well, if you look at behavioral measures library fund flows and we focus a little bit more on etfs because there's more activity there relative to traditional mutual funds, you know, about 80% of the flows in the past month or so have been on the equity side of things you look at a variety of the so-called smart money, dumb money confidence measures. you look at some of the

attitudinal measures like aai, although a little bit off the boil, in general, you're in what might be deemed excessive optimism or at least ample complacency that, and this is important, all else equal, is a contrarian indicator you know, sentiment can get frothy and stay there for years, like was the case in the late '90s, so don't ever consider a frothy sentiment environment as some immediate sell signal for the market but all else equal, i think it represents at least some near-term risk to the extent that there's a negative catalyst >> right and certainly, what it does is get us into a different place than we were entering the year when it seemed like there was a lot of pessimism that the market was able to feed off of to go higher let's bring in cnbc senior economics reporter steve liesman, as well as cameron dawson of new edge wealth to talk more about this steve, you spoke to chicago fed president austan goolsbee earlier today. >> he was kind of sunny. i think it's a great way to leave on a friday and a summer afternoon.

he is not that discontent compared to, for example, some of his colleagues on the fed with the trajectory of the economy. they seem all bothered by how resilient the economy has been obviously, he thinks flaiinflat is too high, and i think on this sunny though humid friday afternoon, we ought to listen to the fairly upbeat austan goolsbee here. >> the fed's overriding goal right now is to get inflation down we are going to succeed at it. and to do that without a recession would be a triumph and that's the golden path, and i feel like we're on that golden path >> so, on the golden path. i don't know how much liz ann or cameron think we're on the golden path, but we are bringing inflation down employment is relatively robust still. we have not yet had anything that would resemble official recession, in part because we don't have the weakness in the jobs market. the consumer seems to not be giving it up, although perhaps there's some softening there, so

i don't know there's sort of a feeling among some that maybe they can pull this off against odds and their past history of being able to do so, mike >> he said golden path, not yellow brick road. might have had different implications if that were the case cameron, it is the case, and i think it's a good reminder of what goodbylsbee had to say whih is it's inflation that's in the mandate and it's the target of their policy right now it's not, we need to get employment to a certain level, we need the economy to slow to a certain point, financial conditions have to be a certain level of tightness do you think there's a shot the economy could have this more benign outcome >> certainly, but i think it really does depend on the path of services inflation because goolsbee called out goods inflation but that's been in disinflation for 18 months from durable goods. so, we've already seen progress on that. it's the services inflation that remains so sticky, and why the fed keeps bringing up the labor

market is something that they need to watch, because we still see wages being very elevated. yes, they're a little bit off their highs, but we saw the average hourly earnings today. that was the source of upside supplies so, how much does the tighter labor market and higher wages feed into that services inflation and keep them from truly achieving the entirety of their 2% goal. >> cameron, i'll give you the goolsbee response to that, because i asked him, and he was talking about the workweek as a whole, which is kind of down from where it was, and as you know, the amount that people take home is the hours work times the wage, and if one goes down a little bit and the other goes up, you kind of end up sort of in the flat area. that's his response to the inflationary impulse from the wage numbers >> although i do think, steve, that what cameron said and all that we've been talking about does get to this idea of, we take some heart in the resilience in the economy and liz ann, i would love your thoughts on this, but the resilience of the economy is also the thing that keeps some

factors sticky, whether it is wage growth or some of these measures of inflation and therefore keeps the fed in the game, looking to do perhaps more versus less. is is this just elongating the process, liz ann, or do you think that we can get to some kind of really favorable equilibrium at some point soon >> i think it's elongating the process, and nobody wants a recession or any kind of contraction in economic growth, but frankly, one that gets pushed further out, possibly into 2024, i don't think that that's a more bullish environment for the stock market i think weakness, sooner rather than later, allows the fed not to pivot to rate cuts but to move into pause mode so, i actually think not that we're cheering for weaker economic numbers but that's the better scenario from a market perspective than a push out into 2024 >> yeah, cameron, it seems as if this market has required -- and it's not that atypical, but it's very stark this year -- it's required the scares along the way, people to get worried about

something, and have a little bit of a concentration of fear and selling and threen get a little bit of relief when it doesn't get so bad i wonder if you think that brings us to a place where, you know, where we're not able to necessarily find the next thing to climb as a wall of worry. >> yeah, the market has certainly shrugged off a lot, and one of the things that it has shrugged off is the impact on better data to the pricing of fed rate cuts in 2023. because just a couple of months ago, there was a pretty aggressive pivot priced into the back half of the year, which has been now effectively completely priced out as data has been supported the fed moving to an easy stance. but as that has been priced out, you've seen the upward pressure on yields, and yet, equity markets have completely ignored them at the message from yields and really continued to see really sharp valuation expansion in the face of higher nominal and as liz ann pointed out

earlier, real yields and to see the real yield for the ten-year go to a new year-to-date high of nearly 1.8% today and have the nasdaq and growth stocks lead the market higher just is a great example of how much those parts of the market have ignored the message from yields. >> are they ignoring the message, or are they feeding off of something else out there besides just the math of, you know, sort of the real cost of money, do you think? >> i think it's a little bit of both so, the message from yields may be that the fed itself and the market still has cuts priced into 2024. so, what's a couple extra months of higher interest rates before you get the eventual pivot but to your point, on the secondhand, is that there are other things driving this market higher it's the optimism around a.i. and what that can mean for earnings we haven't seen that shown up in earnings estimates yet the russell 1000 growth earnings have already been revised up about 3% over the last couple months, and usually those do lag

but we'll need to see those earnings estimates be revised higher to justify these kind of valuations which really do price in a fair amount of good news from out years into today's levels >> steve, with goolsbee saying he personally is undecided about what to do in july, it's two and a half weeks ago we're going to get the cpi numbers, not sure what else. does that give you any hint of the state of the internal debate, given that he's a voter, he's going to be in the room, and he's not taking for granted that we're going to go 25? >> he said you can do one or two more hikes this year he just doesn't think they're going to do more than that he maybe wants to take a more of a wait-and-see approach, which is sort of in line with the chair. he's just a little less down beat, but mike, i want to leave you with one other sunny thought on this friday afternoon, and it responds a bit to cameron, which is, where's the profits going to come from? when i think about today's jobs report, the half-year is done, we brought on 1.5 to 2 million

workers. it's an enormous number of workers to bring on. i think company and corporate productivity has suffered because of the massive hiring spree they've been on and i think one of two things is going to happen. the first is that these workers are going to become more productive, and that's going to show up in productivity numbers for the economy, and it's going to make the wage gains look less problematic to the fed the other thing that would happen is if these workers don't become more productive, there could be some shedding of these workers, and so companies will find a route back to enhance their profitability through some cost-cutting one or the other thing needs to happen, but i think we're not giving enough credit for the amount of hiring that's happened and how that at least initially is a potential drag both on the economy and on corporate profitability. >> fair point. unclear just exactly how rapidly we can see that type of effect on productivity that satisfies the time horizons of the average investor >> fair enough >> worth keeping in mind liz ann, just to bring it back to where you sit from a

practical portfolio allocation stance right here, reacting to this current environment, seemingly late cycle, things not looking cheap, but not everything in the market is participated equally >> no question about it. the concentration has been significant in the mega cap eight, and at least through the beginning of june, you had a record low percentage of the s&p that was outperforming the index itself over the past two to three months or so, so, i think there is some opportunity down the cap spectrum in other areas, but we continue to say, you want to stay up in quality. as you know, mike, we've been very factor focused as opposed to trying to make monolithic sector calls with kind of a quality wrap-around factors, factors like cash flow, especially relative to enterprise value, self-funding companies, i.e., strong balance sheet, low debt, high cash we're in earnings season, so positive earnings revisions, positive earnings surprise, so it's really a blend of lower-case "g" and "v" growth

and value factors, but i would say brodily, it's got that quality wrap around it it's going to be okay to move down the quality spectrum. i'm just not sure we're there yet. >> got you and cameron, in terms of the way you would approach things from right now, fresh money-wise, we obviously have this market that has left some things on the table. some things have fallen by the wayside. you have small caps. you have equal weight that have only haltingly participated, but what areas do you think make sense for this current moment? >> yeah, i think that you have to have a distinct time frame in mind when making the decision, because if you're looking out two to three months, the best momentum, the best trends are in the most expensive parts of the market, and we really haven't seen any deterioration in those trends yet to suggest that the up trend is over but if we're looking from a valuation perspective, which is a better predictor of returns

looking out two, three years, you do see much better valuations within equal weight, within value now, we prefer equal weight over value just because value has such a heady overweight to financials and energy, but that equal weight index is actually trading below its ten-year average valuation, so a lot of that lift in valuations that we've seen year-to-date that would cause us to be careful about those expensive parts of the market over the longer term, we don't see that within equal weight and that's where we're finding opportunity in today's market >> all right yeah, i think it's about a 4.5% year to date on the equal weight it's not exactly as impressive as the market cap weighted but it's not nothing either. liz ann, steve, cameron, thank you so much. have a great weekend >> thanks, mike. all right, let's get to our twitter question of the day. what will the fed do at their next meeting hike, cut, or pause? head to @cnbcclosingbell we have about 43 minutes

left in the trading day. let's get a look at some top stocks to watch. kristina partsinevelos with that >> let's talk about shares of riot platforms they're surging to new 52-week high today after releasing its production numbers from last month. the crypto mining platform saw an increase in bitcoin production last month. shares are up almost 13% right now. the stock really has seen just this massive -- look at this -- this massive run-up this year as shares are up, what, 350% just in 2023. there's that a.i now, let's switch gears and talk about the retail space levi strauss is falling after the company slashed its profit outlook for the rest of the year, driven by a steep drop in wholesale revenues kontoor brands, down almost 8% it's falling in sympathy you can see both levi strauss down, kontoor, almost 8% do you have wrangler's >> not in a long time.

maybe when i was -- mom was shopping in the children's section for me >> you're like a levi's guy. >> appreciate it we are just getting started. still ahead, amazon ceo telling cnbc yesterday he has no plans to spin out aws, so what could be the next catalyst for that stock? we'll ask a top analyst. plus the chief u.s. strategist at ned davis research tells us the two market forces that could drive the next leg of this rally you're watching "closing bell" on cnbc. >> announcer: this cnbc program is sponsored by truist well, where meaningful relationships matter most. alex from u.s. bank! can she help? how about a comprehensive point of sale system... where meaningful relationships matter most. and customize orders? that's what u.s. bank business essentials is for. (oven explosion)

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amazon shares climbing today following our own jon fortt's wide-ranging interview yesterday with andy jassy on "closing bell" overtime here's what he had to say about the future of aws and amazon's position in the a.i. race. >> what is the possibility, the likelihood that you're going to spin out aws from amazon >> we don't have any intention or plan to do so we've invested over the last few years in our own customized training chips and inference chips, which will have much better price performance than you find anywhere else we're on the second versions of those chips and we're quite optimistic that a lot of the machine learning training and inference will be done on aws chips. >> let's bring in needham's laura martin interesting, their takeaway from my perspective from that interview was a lot of more of

the same, business as usual, we're going to keep doing what we have been doing, both in a.i., we've been in there, it's going to take hold pretty soon, but also in terms of the structure of the company, no spinning out of aws and kind of blocking and tackling on the retail side and general cost-cutting as opposed to a big push for higher margins. what is your main reaction and what do you think this means for the stock? >> i think that is his preferred, like he wants it all to go away, but i think it is shameful that we just had a generative a.i. launch day last week, which is seven months after chatgpt, so talk about defensive. in the division he came from and if you look these horrible margins at amazon, my words, not theirs, 2% operating margins last year and now for the empire overall, and now he's going to want to spend a ton of money trying to catch up with microsoft and google the market won't tolerate it they're not going to let this company cut its margins, and he's laying off people, which is

really bad in a consumer-facing business because it hurts morale of the rest of your employees and makes consumer not like the brand as much. i don't think he's as sing win sanguine in that seat of his >> what would be one, two, and three on your list of what he ought to prioritize? >> he should spin off 10% of aws, gives the financials to anybody, it would allow tax consolidation, let a totally different set of investors invest in aws and give them capital to drive what is going to require billions, actually, of dollars we know from microsoft, they're putting $10 billion into chatgpt. they only own 49%. so, this is going to be billions of dollars that he is going to require in his cloud business, and the e-commerce business doesn't make any money it's their anchor tenancy, but it doesn't make any money. he needs to spin off part of this so he can get a higher multiple so he can fund what he needs to do in generative a.i. over at cloud. >> do we think any surprises as

to how the rest of amazon would trade if aws were capitalized separately in other words, is it just such a huge, predominant weighting in terms of the overall company valuation that the market is going to pay even less for the rest of it >> so, i think conglomerates always get a big discount from wall street. when we add up the actual value of what we think cloud would trade at separately and we think the media, like, prime and twitch, all these assets get buried in the conglomerate and the margins get pulled down by e-commerce it is my point of view that the more you separate those financial statements from e-commerce, the more they would have to increase their e-commerce profits, which would be better for the business and for capital allocation in my point of view. >> do you think they have a clear path you mentioned it's not a great look to be laying people off, but presumably that would be part of it >> i don't, i don't think there's a sense of urgency, and i think there should be. i think he's going to need a lot of money to compete in cloud,

and cloud has massive 30% margins whereas everyone else in cloud is losing money or has tiny margins so he wouldn't have even had a 2% operating margin last year if it wasn't for his wonderful, huge cloud business at 30% the thing about generative a.i. is once one of your clients creates an app on one of these foundational models, the lock-in into your cloud business is enormous it's really important he race for the finish line here, or he's going to lose his business clients to google or to microsoft who are ahead, and he will not get them back, because you build these apps on a foundation model that's sitting at one of these big cloud providers. >> he did address that a bit is it your sense that the company is truly behind or that they've just been bad about messaging where they're headed in this area and haven't made as big a deal out of it as microsoft and alphabet have? >> i disagree with his statement, although i think it's the only position he could take. i think they're really far behind and i think the evidence i would use is not only this

very late watch seven months after chatgpt came to the consumer but also the fact that what they're doing is they're saying, hey, all you foundation models, you don't want to be at google that's a conflict of interest. come to us at aws. we will host your foundation model, and so our business clients can pick among any foundation model, including ours, bedrock, but that means to me that they're behind they're going to become the aggregator for other people's foundation models. >> all that said, i know you're still carrying a buy on the stock, say $150 price target is that just because of the underlying aws value >> it is and because we really think twitch is undervalued here we think amazon prime is undervalued here the media assets here are really worth the sum of the parts here, sort of, you get e-commerce for free, but we think e-commerce must start to increase its earnings >> interesting laura, thanks a lot for the time appreciate it. >> my pleasure >> laura martin. coming up, our next guest says the bull run isn't over yet. he'll tell you whynd a how to position your portfolio after

this quick break

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welcome back to "closing bell." the s&p 500 staging a modest midday turn around to the upside, still on track, though, for its second negative week in three. yet, the bull run isn't over yet, according to our next guest, chief u.s. strategist at ned davis research these two major market forces that should drive the next leg of the rally ed, good to see you. i know you probably have been contending like everybody who's watching this market with some mixed messages it was a pretty good rally off the october low but didn't necessarily check off all the boxes to say this is a true high-momentum bull market, but what are you seeing in your signals that emboldened you to nudge equity exposure up recently >> thanks, michael we had been overweight equities since january, and we added a little bit more exposure earlier this week, and there are two reasons for that one is that a fair criticism of the rally coming off of the

silicon valley bank debarcle wa it was very narrow that's changed it's broadened out considerably. it's well boabove 75%. look at percentage of sub-industries, about 150 sub-industries, almost 80% of them are in uptrend, so that's a broad rally, and the second thing is that there's been this concern over a looming recession because growth has been weak, the fed's been so aggressive, but the recent economic data, if you look at the jobs data today, the ism services report the other day and some other economic data, it's suggesting an imminent recession risk is pretty low so, that could happen next year, but that enables the rally to continue for a little bit longer, even if the fed does raise rates in a few weeks >> what is some of your other inputs suggesting at this point, things like valuation overall or even some of the sentiment

metrics that you carry are they also feeding into this idea that there could be more room >> yeah, those are a little bit mixed, but if you look at absolute valuation, just the s&p 500, it's not that far above its long-term average. the challenge there is relative to short-term interest rates it's probably the first time in about 20 years that cash has been a very reasonable alternative to stocks, so that may cap the upside in stocks somewhat when you look at investor sentiment, michael, that has been -- had been a really positive part of our indicator suite. people were so concerned about a recession, about the fed for so long that any incremental piece of good news was probably going to nudge the market higher now, some of those bears have come off the sidelines there's a little bit more optimism usually, when you have been pessimistic for this long, months and months on end, the first move into optimism isn't necessarily a bull killer.

it's if it stays there for a long time, that would be more on an issue, which is why we think the rally could go on for several weeks or a few months more before it runs into trouble. >> is there a level of yields that would become more of a concern? or if yields fell, would that refresh the bull case? >> i think from here, another 25, 50 basis points in fed rate hikes to push the three-month towards 6%, some point in there, it would probably mean the equities are even less attractive i think it has to do with this speed of long-term interest rates. if you get a a7,500-basis point move in a few months, the market tends to notice. so, that's something that we're keeping an eye on. the level, but also the speed of the moving interest rates. >> sure, yeah, it seems like the market has been, you know, drawing a little bit of strength

from the idea that no matter what, the fed has slowed down quite a bit from last year and then just in terms of general seasonal pattern stuff, does that start to get less friendly are we still in decent shape for the market >> it starts get a little bit less friendly as we move deeper into the second half, you know, usually there is some sort of summer rally that brings into a fall pullback, so again, that gives us a little bit more time. like the most positive part of the cycle, if you want to, say, look over a four-year window, presidential election cycles, i think it's an old wives' tale that the pre-election year is the strongest year on average. that is very true, but a lot of those gains do come in the first half so seasonals will probably get a little bit tougher as we move deeper into the second half of the year. >> and just in terms of what we're calling this thing, you know, there was a lot of debate, we got across 20% in terms of upside from the low, and people said, okay, that's a bull

market you guys have your own ways of determining these things, and you said you have been overweight equities since january, so presumably, you've thought that the trend was higher for a while now before we even got to that 20% >> yeah. so, we do keep our own definition of a bull and a bear market that's different from the 20%, because for example, november 20th of 2008 to january 6, 2009, the s&p rallied about 24%. no one calls that a bull market. so, if you want to do good, robust analysis, you need a better definition or it's just a combination of time and price. we haven't quite gotten there at this point, another push higher will get us there. but you know, those are really good for historical analysis, but if you wait for, you know, the market to rally 20% or more, then you've missed good gains, which is why you need to go ahead and allocate your portfolio before necessarily you get that information that the

bull market has already started. >> yeah, staying in tune with the market and labeling it later makes more sense ed, great to talk to you thank you so much. >> thanks for having me. >> ed clissold from ned davis research up next, kristina partsinevelos is back. >> well, i've got to talk about a new alzheimer's drug that just got full fda approval and yet shares of the producer are falling. i'll explain why after this break. - [soldier] take a look at this! >> announcer: the bond report is brought to you by pimco. we misjudged them. - i love horses. (birds chirping) - [soldier] we should open the gate. - let's see what charlotte thinks.

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18 minutes to closing bell, s&p 500 just about flat right now. let's get back to kristina partsinevelos for a look at the key stocks to watch. >> hi, well, let's talk about shares of pgre, not to be confused with paramount global those shares are up 14% after giving an update on former lease agreements the group, sounds like bad news, expects to take a $20 million loss in profit after a loss of revenue from lease agreements with first republic bank and silicon valley bank. this news literally comes just two weeks after the new york real estate giant said they're going to slash its dividend by 55%, but the market wanted numbers, they got numbers, that's why it's up shares of biogen they're about 2% but now 3% lower after announcing the fda approved its first alzheimer's drug, which means patients could get reimbursed for the cost, but

this is the caveat doctors would have to submit patient data before the treatment as well as every six months to a registry database, so that means more paperwork analysts seem to be a little bit split on how fast biogen can ramp up the drug for production, so maybe that's adding to some of the selloff you're seeing, but still, great news for alzheimer's. >> that is for sure, kristina. thank you so much. last chance to weigh in on our twitter question we asked, what would the fed do at its next meeting? hike, cut rates, or pause? head to @cnbcclosingbell on twitter. we will bring you the results a of this break.

let's get the results of our twitter question we asked, what will the fed do at its next meeting? hike rates, overwhelming winner here 72% of you that about links up with the odds the markets are giving, a 25-basis-point hike in two and a half weeks, although 3% says cut rates. a lot has to happen between now and then for that to happen. iba'stk oaring higher, and alabs ocis popping those stories and more when we take you inside the market zone.

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you really shouldn't walk out the front door without it. switch today at xfinitymobile.com. i remember being on aau trips, high school games. my mom would always say, "you need to fuel the body and you need salt." i'm like, "why do i need salt? like, who is going to do that?" she literally would make me rip open a pack of salt, pour it in my hand, and i would, like, lick my hand. sure enough, i would always be the kid not cramping, i would always be the kid energized, ready to go.

fast forward 20 years and i go from eating salt out of my palm to a drinking lmnt. power e*trade's easy-to-use tools, like dynamic charting and risk-reward analysis help make trading feel effortless. and its customizable scans with social sentiment help you find and unlock opportunities in the market. e*trade from morgan stanley. with powerful, easy-to-use tools, power e*trade makes complex trading easier. react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity. e*trade from morgan stanley >> announcer: the market zone is sponsored by e-trade from morgan stanley. ♪ we are now in the closing bell market zone wells fargo securities' chris

harvey is here to break down crucial moments of the trading day. plus phil lebeau on a huge week for rivian and what it means for the state of the ev market and deirdre bosa the big caps are deflating a little bit after this intraday rally, although it is seemingly some health care and microsoft weighing on the s&p. the equal weighted s&p is showing some relief. up 0.66% small caps are outperforming as well what's your takeaway from the jobs number, the implications for where we are in whatever landing we're going for, and therefore the fed? >> that's a lot. let me see if i can take it piece by piece yesterday, the adp number, everyone was like, whoa, and so the probability of a fed fund hike just skyrocketed. we always thought that the fed was going to raise 25 basis points but now i think everyone's convinced it is today, we get the payroll numbers. it wasn't -- it was a bit cooler than people expected, so we ease back a little bit. at the end of the day, it looks like the fed has two more hikes in there that's what we're dealing with every time the fed gets a bit

more hawkish, it weighs on the market, weighs on uber cap stocks and the uber cap stocks are now overbought and we're heading into arrangeearnings se, trying to be a little more conservative, looking for things that haven't worked just yet, and we're seeing a broadening of the market because of that >> it's interesting. my take on what happened with markets and the interplay with the fed after the svb meltdown was, quickly won us a little bit more of a patient fed, it seemed, than we would have had o otherwise and the question was, how bad does the economy have to be as a cost of that we're here now, four months later, and the economy's held up very well. on the other hand, rates are almost back to where they were in early march, and we might get towards 6% on the fed funds rate, maybe not. but toward there so, is that an equation that the market can digest? >> it's trying to digest it, and it's confusing i've been in the markets for well over two decades and i'm trying to understand, still understand, why the fed paused

all of a sudden, 30 days is going to give them such clarity and insight. at the end of the day, yes, there's going to be a lag. but 25 basis points is not going to push us over the cliff. and you want more certainty. you want to do things -- you have the economy -- you have inflation, not quite on the ropes, but a little bit on the run. push that advantage. if you're a boxer or you're an athlete, you know you go for it when the other guy, the opponent's on the ropes. they should not have paused. they did, and i think that's to their disadvantage but to your earlier point, yeah, we may be contending with fed funds over 6% at some point in the next couple months >> yeah, i think they would say, well, look, it's 42 days between meetings it's a little more than 30 days, but that's still not a tremendous amount of new information. you mentioned maybe it's time to look for things that haven't participated or things where there's a little more valuation advantage. what does that mean specifically >> what that means is mid cap and specifically mid cap growth. mid cap growth has done okay this year but it's underperformed the market. it's a group that still has good

valuation. it can perform quite well because it does do well in this kind of economic malaise, and in addition to that, you have some stocks that really can power through from an earnings point of view. that's where we want to put a lot of emphasis. otherwise, what we tell people is, maybe barbell the portfolio with some pharmaceutical, something defensive, and then, you know, get your a.i. exposure through media and entertainment. valuation still looks good there. and i think that's a smart way to go about it >> not something like financials, which is a little more of a reclamation project at this point >> i think that's a great word, reclamation project. the one thing about financials is when they do poorly into aerpgz season, you see them outperform earnings season they have underperformed but i think that's a short-term issue. >> let's get over to phil lebeau, who's going to tell us all about rivian as well as the rest of the ev market, phil. >> mike, what a week for rivian

shares take a look at this stock, up 50%. 50% compared to last friday. a number of things helping here. you had commentary, positive commentary, about production increasing and sustainably increasing at rivian also, the first half ev sales, we've got a report today, analysis from motor intelligence the r 1 t is the best-selling electric pickup in the united states in the first half of this year that you see the market share for the first half tesla continues to dominate this market i want to talk about gm and ford, which is now number five in terms of ev sales here in the u.s. both of those stocks got price target increases for morgan stanley, but not because of the ev business. not because of optimism there. it's because of the traditional business, mike, and what's happening there in terms of demand and pricing, and the benefits to both gm and ford with their legacy business that's why both shares hitting a decent pop today relative to what they have been doing, and

look, we haven't seen this, where we have had a decent month or two for gm and ford, but that's what we're looking at right now. >> and phil, what are we pacing in terms of an annual rate for overall north american sales i mean, i know gm had some optimistic wortds about that ths week >> yep well, they thought the second quarter would come in at $16 million. actually, it came in at $15.8 million as the pace of sales. for the year, most believe we're on track to come in somewhere in that 15 to $15.2 million, depending on what we see in the second half. right now, mike, we continued to see strong demand, and we continue to see estimates move higher >> yeah. it's been, i think, a real surprise to the consensus that the auto market has remained as robust as it has phil, thank you very much. deirdre, alibaba, another mover today, a little bit of relief running through that stock >> there is a relief because even though it is a billion dollar fine that the chinese authorities are levying on alibaba, it does mean or at

least it signifies, investors believe, that this regulatory pressure is finally behind the company. removing one obstacle to an ipo. you might remember back in 2020, after some comments that jack ma made very publicly to the chinese regulators himself, they pulled that ipo and it's been a downward spiral since then ant group, most recently valued around $64 billion so it has been a tough slog. alibaba, of course, owns 33% of ant and that is why you see with this sort of hurdle removed, that is why alibaba shares are surging today. >> and what do we take from this, dee, about the message from this move in terms of policy, by the chinese authorities toward the private sector clearly, that's been one of those factors we have had to evaluate, along with every other bit of economic fundamentals >> i mean, on one hand, and i think this is generous, there's some relief here, and that the regulators will eventually back off, but i mean, it's

bittersweet because relief comes after hundreds of billions of dollars destroyed in value of both ant group and alibaba you go back two years to the beginning of this or more, a bit more than that, to the beginning of the whole saga with ant group, and alibaba has suffered dearly jack ma cofounded both of those companies so anything he's touched or built in china has been smacked down by the authorities, so maybe some small relief here, but it is really small consolation for how much value's been destroyed since this all began >> yeah, without a doubt clearly, people are gun-shy, investors and business folks alike. dee, thank you very much have a great weekend chris, as we talk about what the fed might do, if they're in this fine-tuning mode, we had austan goolsbee there suggest that that coveted soft landing scenario doesn't -- isn't something you have to abandon yet. do you agree with that >> you don't have to abandon it yet, and i don't think the economy's going to slow down until the fed gets a lot more

aggressive we're not talking one or two hikes. we're talking three or four. that's when you really have to worry about when terminal rate starts looking or staring at 6% and that's when i think that trend, the major trend, will break. >> so that means it's not really a soft landing it's a prolonged process before we have the remembering sent reckoning? >> at the end of the day, i think the fed still has a lot of work to do they didn't break the economy. they didn't break inflation. they didn't break the job market stock market's up double digits. i think they have a lot more to do >> yeah, you would think with all those inputs they have a lot more to do we'll see what cpi says tomorrow about if inflation really starts to do some of their work chris, thank you very much good to see you. as we head toward the close, s&p 500 now down about 0.33% on the day. also down more than 1% on the week however, market breadth has been positive this is one of those days where the big caps are pressuring the overall indexes and the russell

2000 up. 70% of all volume on the new york stock exchange is to the upside and we have the equal weighted s&p up. volatility index down below 15 after running above 16 in the middle of the week that's going to do it for "closing bell. let's send it into "overtime" with morgan brennan and jon fortt. well, that's your scorecard on wall street for the first week of the second half, but winners stay late. welcome to closing bell overtime i'm back at headquarters with morgan brennan and on today's show, the muddled picture for jobs former atlanta fed president dennis lockhart is going to join us to weigh in on the fed's next move, why it will be a huge beat for adp but a cooler jobs report we'll get you ready for bank earnings, which kick off next week as jpmorgan, citi, and wells fargo all gear up for results. let's, let's get to our market panel