>> should i see it? i will say we always get our taylor swift news in here. i love the fact this is yo-yo ma coming in hot. >> i wonder who he'll be dating. >> they're both on the market. thanks for watching "power lunch." >> "closing bell" starts right now. welcome to "closing bell." i'm michael santoli in for scott wapner. this make or break hour begins with more evidence of a hot economy, scorching bond investors sending triesry yields to new highs and boosting cyclical stocks at the expense of stocks. a four-week high before again backing off around midday. the small cap russell 2000 is popping for a second day in a row. to our "talk of the tape." can good news of the economy remain good news for stocks even

if it means yields go higher and stay there? adam parker and cheryl young, welcome to you both. good to have you both here. so there's the setup, adam. the soft landing scenario, you haven't seen much of anything to really disturb that. the market has been trying to make its peace with yields at these levels. i guess putting on a brave face enough rotation away from big tech. how does it feel to you? >> my bias is we can go higher. the market has been remarkably resilient to pretty extreme politics and global risk. i think most people came in under allocated at u.s. equities, bond yields look more attractive and they haven't fully participated in the rally. i think there could be a pretty

big chase. i don't believe that good news is bad for the market for a sustained period. it can happen briefly. good news is good news. to answer the question in your teaser, there's lots of evidence historically that the stock market can work when bond yields rise. often they're both emblematic of growth. i think the risk/reward is skewed to the positive through earnings here. >> cheryl, i mentioned the good news we got evidence of this morning was largely retail sales coming in very strained, even industrial production was okay. at the same time fed officials have been out there saying, okay, we're not going to necessarily look to do a whole lot more from here. is that a green light for stocks, or do we still have to say how long can this growth last? how long can the economy withstand higher yields? >> look, i think this is a market you have to be very picky in terms of what you own. there are green lights on some sectors and some stocks. i wouldn't be excited about the overall market at this point.

i look back at this covid hangover effect we've had. people i know are traveling, eating out despite the higher costs. the fed is saying, hey, we have to get inflation under control. people say i don't care how much i'm spending, i'm going on these trips. i say how can people keep spending? that concerns me a little bit. >> they're spending like 3.8% annualized growth rate. that's a nominal number, but i guess it's this tricky point where you say is it sustainable? will we fall off quickly in terms of activity? >> i think if i gave anyone a project, tell me what the condition is, adjust any data, wages and jobs, multiplied by

each other are the revenue in this analog, and they're still pretty good. you can talk about stimulus, you're going to say the consumer is in good shape but it's getting worse. people think they're done hiking or there's one more, and earnings don't collapse. that's what i think is going on. >> there was interesting commentary. the richmond fed president barkan, to your point, cheryl, about this willingness to spend more. he's saying one thing we didn't bargain for a cohortof relatively wealthy investors. they own stocks. they saved a lot. they didn't spend a lot down. they have a lot of home equity and they're aggressive. older americans, 65 and older, they're traveling and doing whatever the. i wonder if that changes the fed equation or puts them on more of an alert of we may have to do

more or is it about inflation? >> i think we might have one rate hike. maybe a 50% chance it could happen. the fed could keep rates higher than we thought. but to adam's point there are still a lot of healthy things in the economy i'm excited about and you have to look at where the opportunities are and be willing to be patient. which works for options, which is what i do. i saw calls on a day like today these massive swings it's been really fun. >> that's right. fun would have big swings and no net moves. >> i was thinking about your 65-year-old cohort. if you look back at data 30 years ago, you were getting rich

and working and as you got older, you can get 5% on bonds and you spend it, i just bought -- i'm sure your books are the same way. every adviser i know had a huge increase in people buying short duration treasuries. the two-year at 5%. business is down short term. i'm not saying hers. if you're a rich guy sitting on $20 million and you rip from equities, now you can make a million a year doing nothing. locking in decent money. >> what you're saying is for 70 years straight things are breaking in the direction of baby boomers. >> 30 years from now people will look back, equity market will be bad. what happened? >> we need to jump top a news alert. leslie picker here with that. hi, leslie. hey, mike. those shares are higher today up as much as 11%, though they've come down a little bit since the news first broke.

an 8k filing saying the fed is releasing them from stricter regulation they had been engaging in as a result of an acquisition they had made. according to the 8k the fed provided notification to u.s. bank that it has been released from commitments to basically provide quarterly implementation plans as a category two banking organization, usually for banks with more than $700 billion in assets. basically the second largest tier. as of the end of its second quarter u.s. bank was under that threshold yet still reporting as a category two under the requirements of the acquisition as of december '22 with union bank. as part of that deal, they have been undergoing stricter regulatory plans with the fed

and now, according to this 8k they have been released of the commitment. shares popping, up about 6% right now, higher earlier when it was first filed in u.s. bank court, scheduled to report earnings before the market opens tomorrow for the third quarter. guys? or mike? >> interesting. thanks so much. boy, it's a good encapsulation of the way banks are viewed right now. >> like hurricanes, category 2. >> a little bit of capital freed up. it changes the entire equation. on the other hand, we do have banks up a couple%. bank of america's numbers pretty good. adam, to your point, the consumer is slowing down from strong levels. they are a toll taker and things remain okay, and credit loss rates are normalizing from low levels. they don't look bad on a

prepandemic basis. >> yeah, it's funny. last monday, i guess, eight days ago, i was looking at truist, and it was trading 7% plus dividend at seven times earnings and the stock was getting close to march 2020 lows. i said to my team, let's look at all stocks. they didn't do anything wrong. maybe nothing should be near march 2020 lows. certainly we had more fears about. i think things got really oversold. so, yeah, they're cheap. i think people worry about next year being a regulation nightmare and so it's hard to get super excited about trading premiums to book. >> normalized evaluations maybe.

cheryl, no nasty surprises out of the bank numbers so far and that's one of the things that unnerves investors. we got here in a hurry from a period nobody was prepared for it. >> you have to wonder about the market to market. we saw this with a couple of banks that have now been acquired and are no longer with us. i don't worry about the bigger banks. i do worry about the regional banks. they have a lot of floating debt and have a lot of bonds that may be too long in terms of their duration. financials are flat on the year. massive underperformance among banking stocks as a whole. i would be picky about what banks you want to own in your portfolio.

>> low net/high growth. when financial conditions tighten, it shows we're better at picking winners than losers. the question is, are the good ones trading near march 2020. that might create a short-term trade. >> stick with me, we want to get another one of the big groups, chips taking a major hit. news the u.s. is planning to further restrict chip exports to china. kristina partsinevelos here with all the details. that's because the u.s. wants to cut off china's ai industry. by announcing new export restrictions, that include even more advanced computing trips, to close any shipping loopholes that involve third-party companies. if you sell to china you have to let the u.s. government know.

the stock off earlier lows. down 5% after they said they don't expect a near term meaningful impact on their financial results whereas equipment maker asml says restrictions would impact sales in the medium to long term. intel makes china only chips and amd working with chinese hyper scalers, so both companies could be subject to controls and why you see shares sell off today. to shares of vmware are lower on a report from a chinese outlet that chinese regulators need more time to record broadcom's vmware. that has some spooked. shares down almost 7%. broadcom just got back to me and i'm told they still expect the deal to close october 30th. but what timing given the restrictions today. >> only two weeks to sort if that will be on track. kristina, thank you.

it's interesting, adam. do we have to look at this group, at least nvidia, maybe some of the other directly exposed ones as, look, for google, the entire world except for china is the end market, or friction we have to work our way through? did china front load chips or how do we sort it out? >> the immediate reaction were the same, no near term impact but might be medium or long term. it's all about time frame. nvidia, to me, has the best product in the early phases of a 10 to 15 year trend. of course the stock will be way more in two, three and five years. everyone i know wants the thing to go down 20% so they can buy some. it will never go down 20%. >> down close to 18% actually. >> i think they reported -- since they reported the whole nasdaq sold off, too.

a relative underperformance of its peers. can china produce the same power and chips on their own? no. the question is, is this some sort of political thing and they will have to come back later when they need them? we'll see. i'm skeptical of that. >> cheryl, does this qualify with the semis here? >> i would say yes. they are lagging as of today. and i said this when i was on the show a few months ago, mega caps had gotten overextended and names are expensive. i sold at the money calls on some of the names. now the calls have made up for any of the downward movement and i can add to the names with the proceeds. it works out well, keepsme disciplined. for me any of the mega cap names

in the semi space i would be buying on these dips. the ai game is not revenue producing yet but there's a lot of potential. >> i'm interested in some of the work on nvidia. they have the best product but the implied size of this market, if you really want to compound at this level, is wild. it's way bigger than the cloud infrastructure business. >> whether it's ai, which is a misused phrase. we bought an nvidia gpu. we were able to officially do work. the amount of generative work is probably inflated. we'll see. but, look, in terms of the mega caps, only nvidia is a direct chip maker. others will make subscale chips. amd has some stuff. at the end of the day, do you

want to look back three to five years from now and say i had exposure to the companies with the best compute in the mega trend? i think the answer is, yes, you do. i think you wanted it already. i'm a fan of sticking with this trend and if you're smart yuf to get it right, god bless america. >> i think there's this nagging question, and i don't have the answer, of course, is this like the buildout of fiber optics, of database? 25 years ago you couldn't buy enough of it until you had too much. >> some can protect their customer and employee behavior and be efficient with it. data services and fire employees, i think that will take a long time and will take many years this is a really long

trend. you need to get new gpus every two to three years. it's a constant growth. whether we're paying for mid-teens is a slightly different debate. you just had the two biggest upward sales revisions. and i think limited chance they miss. >> it can seem like a lot or a little depending on what happens from here. >> apple is close. >> adam, cheryl, thank you. to our "question of the day, we want to know is this an opportunity to buy nvidia stock? head to @cnbcclosingbell on x. we are just getting started here. up next, surprising consumer strength. the xrt rising on the back of better than expected sales numbers. how one analyst thinks this could impact the sector as we

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consumer activity has slowed down. it moves around from which category but $4 trillion, 37 million check-in customers slowed by half. the consumer is slowed down by the interest rate environment. >> that was bank of america ceo brian moynihan saying he see as slowdown in consumer activity despite the retail sales report

this morning. joining me here, greg, it's good to have you here. maybe some mixed signals coming out. unequivocally strong number from the government sales report today. some upward revisions from the prior month. some of the card tracking data is more ambiguous and expectations of fatigue before too long. where do you come down? >> we're in the slow drip deceleration is here. it's not collapsing and as long as we get good jobs growth we don't think they will go nominally negative, what the bears are really ultimately thinking. >> right. so nominally certainly is pretty strong and, of course, feeding into some of the gdped models for the third quarter, close to 5% annualized growth. clearly seems robust.

i guess just not even across the retail space and to mean the big question is, look, if you see weakness in certain segments, has the market figured that out? you punished the dollar stores. electronics has not been a hot spot within retail, so where is the opportunity between what the market is priced in and where the consumer is still strong? >> a great question. from a category standpoint, you can see it continuing. the discretionary categories, home improvement, home f furnishings are down. all the growth is coming from restaurants, drugstores, areas like autoparts where people can't afford new cars so are fixing up old ones. a few categories are driving all the growth and the bigger ticket ones are down. we think this decelerating

environment is perfect for retailers gaining share and we love to look at traffic as part of that. it really shouldn't be by taking price but winning more customers than you had. our top five portfolio is costco, walmart, kroger and then o'reilly automotive. and so, to me, those are companies winning share and doing it in a way they can be more profitable and come out of this stronger. >> it seems it tilts based on your process to net doift things like costco and walmart. sherwin williams, is that because the stock is down enough? is it a call on housing activity or something else? >> sherwin has been our favorite in the home improvement space, sherwin, home depot and tractor supply.

they finally have raw material costs coming down. flying is flowing through. the other thing is the category is more defensive so it's less cyclical. i would say that's why sherwin is the horse we're riding in that area. o'reilly is another one, yes, consumer discretionary but acts like a staple. it's stale the share gainer and the winner in the space. >> is there any way to handicap how the holiday will track from here and how to play that within the market? they don't always link up and sometimes we overplay the holiday themes. how would you approach it? >> it's part of our job, so holiday sales tend to -- all the

mormal fundamentals are in play. the wealth effect is bigger so watching how the stock market does are two things we think will help holiday sales. if we're going to see upside it's usually the wealth effect that gives the extra bump. >> things like more reliance on credit among some consumers, things that seem they're starting to fray around the edges of the spending story, does any of that get your attention? >> it absolutely does. we're starting to see cracks in the consumer credit market. a lot is consumers' unwillingness to pay higher rates and banks' unwillingness to lend given the challenges

earlier in the year. when you put the two things together, we're just set up for a slow, steady retail -- not a collapse as long as we have jobs. the key is finding the retailers that are gaining shares, that have more traffic. i think that will be true this holiday more than ever. and value. with the balance sheets being chips away. retail remembers the ones winning. >> greg, appreciate it. thanks very much for the time. up next, star venture capitalist rick heitzman is back. wall street's latest ipo and where valuations should be. he'll join me right after the break.

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welcome back to "closing bell." wall street analysts out with a number of bullish calls on instacart this week. shares are still trading below their price. that trend of lower valuations could be in store for companies looking to go public. rick heitzmann, good to see you. thanks for coming by. we have a little bit of an early flurry of ipos. i think if there was something that unified them, you had a mature privately held story with motivated sellers. what does it mean? >> people are taking their medicine. might no longer be real valuations. so instacart took a significant step down to go public.

claf yklaviyo and even loom, bu overall, those are good exits. >> i guess if you look at any publicly traded proxy, down 60% from the highs in 2021. >> it shouldn't be that unusual and mature investors are saying this may not be where we held it two years ago but this is a good return and might be a time to transition in the public market or sell the business. let's focus on where you're going. >> what types of themes or companies seem well positioned? early 2021 everything application software. what about now? >> it was all growth all the time and now the companies that

are popular now, have done a great job transitioning going from growth to profitability, focusing on the underlying metrics. klaviyo took a lower discount to go public, a company with great growth at scale of a billion dollar company and they're profitable. they are weathering the storm the best. >> we talk about the mag nif send seven. acclaimed winners right now. we give them near trillion dollar valuations presumably because they're impenetrable. what does it mean for someone trying to create opportunities in disruptive companies, new innovation? are they using up all the oxygen? >> they have a low cost to

capital and probably respond more quickly than anyone we've ever seen in history. early in my career, we would compete with ibm or to a certain extent with google and microsoft. now google and microsoft where they are today, amazon, are responding much more quickly to changing environments. it was personified in the ai world. >> we're trying to filter through the early run of earnings so far and one of those themes is companies looking to pad margins. how do things feel in terms of just end market demand? enterprise side of things, what spending levels look like and then even on the consumer? >> it's a little bit soft. we've seen softness on the enterprise and the consumer, despite being pretty strong, we've also seen the early signs of weakness. a little bit of consumer credit decreasing, all the savings from

covid have gone away. what does that mean for 2024? it means companies have to be stronger, know customers better and focus. >> what is the appetite like now for private startup or near startup businesses? you have to imagine it's pretty fresh in people's minds how you had a bust after the boom. >> it was free money for a while. almost everybody is a venture capital iz and now people who have honed their craft for a decade and helped champion through success. you see a pullback even from the entrepreneur side.

the tourist entrepreneurs and people who want to build good companies. >> as you look at your portfolio companies or even across those held by others, is there an urgency to try to create? is there a backlog? >> there's a backlog of companies who need capital. svb said there's 6,800 that need to raise money or exit by the end of 2024 if they don't cut their burn. that's an enormous backlog that can only be handled by existing dollars. so there will be a number of companies that will face a reckoning in the next 12 months. >> fresh new opportunities, is the ai theme dominating everything and, therefore, are the ai victims going to be a new

theme as well? >> we see ai as individual ai companies and a lot ai-enabled companies. classic companies are getting powered by ai or incorporating ai in the model and consumer companies are doing the same thing, the travel assistance or waze telling you how to get home the quickest. if you're not saying how is ai going to affect my business over the next three years, you'll be left behind. >> rick, great to catch up with you. up next, we're tracking the biggest movers as we head into the close. kristina is standing by with that. electric vehicles disappoint. stock action next.

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under 19 minutes until the closing bell. let's get back to kristina for a look at the key stocks to watch. >> vf corp is having its best day since 2020 as activist engaged capital pushes for changes at the company including a board fresh. the firm also says it sees room

for over $300 million. down about 3% this year and they believe the plan could put the price in the mid-40s within three years. shares are up 14% on that news. and lucid is lower for deliveries in the third quarter, posting a 32% drop. that's why shares are down almost 6% today. >> kristina, thank you. last chance to weigh in on our "question of the day." is right now an opportunity to buy nvidia stock? we'll bring you the results after this break.

let's get the results of our "question of the day." is right now an opportunity to buy nvidia stock? the stock is down almost 5% today, down 13% from its high. it is close, but most of you did say, no, not quite yet. neck and neck in terms of yes or no, it is up a cool 200%. up next, united airlines reporting in just a few minutes. we'll bring you a breakdown of what to watch when those numbers hit in "overtime."

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speakers who have, i think, in general been expressing no real hurry to do anything else on rates. we did have them talking about lags and the consumer that's been stronger in some pockets. how does it all net out to you? >> well, first, let's talk retail sales. for the moment it looks like a game changer in terms of fed policy and the last quarter point hike, mike. what's happened is november is not really in play. it's mod west when it comes to e probability. and now january is the new place where they're starting to talk about a rate hike there. we started to price one in over 50%. so what's happened -- and i will layer in barkin saying we can be patient but that means not doing anything immediately. when they do get around to doing something, it seems the markets are starting to think more and more it may be a rate hike. this comes after feeling

definitive of fed speak saying, you know what, it looks like we'll be on hold and we've reached the place where we don't need to do any more. and one of the reasons, mike, i want to make clear, it's not just backwards looking data. the third quarter strength of retail sales is beginning to rethink the fourth quarter. and the fourth quarter now looks like it will be stronger so that quarter, mike, which you are probably as sick as i am of hearing, is the one we're finally going to get the slowdown, maybe not now. >> i think people were saying, fourth quarter, the big payback and less than 1% gdp growth, but we're in it now and it doesn't seem to be giving way. just to your point about pricing in a little more on the fed side or at least staying there, the two-year note deal did pop above 5.2, the first time this cycle. that gets you to where fed funds are at the moment. if you're saying that's the next two years and where it might average, a long way of saying higher for longer is making its

way into the market. >> you're right, mike. that's important. i was going to mention that because when you think what a two-year note is, if that number goes up, when the two-year goes up, it tells you people are starting to bake that in, and, in fact, i can put some numbers behind that, mick. the belief in rate cuts is being pushed forward. it had been june on average and now you have to get to july. >> steve, thanks very much. appreciate you breaking it down. >> a pleasure. >> leslie, banks -- bank of america feeling a little bit of a benefit. what are the takeaways? >> there's a big difference in

how the companies are leveraged to interest rates. all beating on the top and bottom lines. citi, jpmorgan and bank of america each hiked guidance. higher for longer rates that's a boon as the capital markets re remain muted. less exposure, ala goldman sachs, rising rates continue to have an impact. in private equity and commercial real estate that have depreciated in value thanks in part to those rising interest rates and higher rates led to $131 billion of unrealized losses on bank of america's balance sheet. ceo brian moynihan said on cnbc this morning those losses would never be realized.

tomorrow we'll hear from morgan stanley, several other regional banks in the latter half of the week. each have their own tail winds for those regionals that we will see. >> if bank of america is a proxy, if you are able to look past losses, that will never be realized by treasuries, you can pay up for it. really write-offs of dead ends to the business from the past was a misallocation and what do they do now absent a really busy deal calendar looking like they're risk on again. >> they're in that camp was being super leveraged to the capital markets and them led three of the biggest ipos. klaviyo, a leading role in arm, and they led instacart as well.

advisory is still muted as fewer transactions closed during the quarter. their strategy is to build up asset and wealth management for the more volatile returns and now in the quarter that took a 20% decline in revenue as a result of some of the legacy investments we talked about, but they did see inflows of $7 billion. that is something they've been touting as a more stable, predictable base. the problem is, of course, with the legacy businesses they are looking to unwind. you start to see lumpiness in terms of just that business when you break it out. >> they're chasing morgan stanley along those lines.

we'll hear from morgan tomorrow. where is the state of expectations? i have seen analysts do downgrades on the stocks in the weeks coming up. >> yeah, the question really is some of it is on this cash sorting phenomenon we've seen elsewhere. the question is what are the healthy doing with their money? are they keeping deposits at morgan stanley or seeking higher risk elsewhere? that will be the key question. capital markets, some bright spots but nothing to outearn other pockets of the business. it will look to what's going on with wealth. are they still doing the cash sorting. >> leslie, thanks very much. phil, what are we looking for most importantly with united

today? >> i think what we expect for the fourth quarter, the summer was strong for united and really for all of the airlines, especially united with its international route. three things will be standing out about the q3 numbers. first of all, what are they saying in terms of domestic de demand, we've heard some stories about softness at the lower end of the market. are they seeing that at all international? we know it's red-hot. tell achieve and the q4 guidance as you look at shares of united. we heard a narrowing of its guidance for full-year earnings. do we hear the same thing for united? for the full year was $11 to $12 and, mike, tomorrow morning, "squawk box" exclusive scott kirby, we'll talk to him. what are we expecting for q4 not only for united but the airlines

overall? that will be front and center in our conversation. >> no doubt. it's a more rational industry, the stock trades at four times earnings. the market says this can't last. >> i think the market is looking at the overcapacity there on the lower end of the market and wondering if that will creep into the higher end of the market, the premium players, the deltas, the uniteds, the americans. >> we'll talk to you once those numbers are out for sure. as we head into the close, you see the dow is almost flat. the s&p 500 was down as much as 0.75%. it is down to near even. it did make another run. got back up to about a four-week high. was not able to stay there. the russell 2000 for the second day in a row is the standout. more cyclical stocks and higher yields are performing. the russell is up almost 3% on a week-to-day basis.

it is on the upside as the s&p tries to finish. just about flat. we'll send you to "overtime" with morgan and jon fortt. >> stocks making a late day rebound. red-hot retail sales. the action is just getting started. welcome to "closing bell overtime." i'm morgan brennan with jon fortt. coming up, we are in the thick of earnings season and this afternoon we will get three reads on key parts of the market when united airlines, jb hunt report results. we'll bring you those numbers as soon as we cross. >> we'll be joined by gabell