at pgim, finding opportunity in fixed income today, helps secure tomorrow. our time-tested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. pgim investments. shaping tomorrow today. welcome to "closing bell." i'm scott wapner live from cnbc global headquarters today. this make or break hour begins with the direction of this market. most say up, but maybe a bumpier road than some had gamed out. we'll ask our experts over the final stretch what is in store. let's show you the scorecard with 60 minutes to go in regulation. not a pretty picture. the selling has picked up over the last 20 minutes or so. we have been lower all day long.

now we have 1% declines across the board. yields are up yet again today. ten-year, two-year, 4% or above. oil rising as well. another major hurricane heading towards florida. middle east, of course, is still a flash point. we're on edge about both. not to mention earnings about to begin and the road ahead for the fed. if not for a strong nvidia day, the s&p would be down a bunch more than it is. there's nvidia up near 3%. it takes us to our talk of the tape. are stocks still on solid footing? let's ask dan greenhouse here with me on the set today. do you feel like they are? we felt a little unstable over the last week or so? >> yeah, we had a real good run. i think the oil story that you alluded to at the outset is something about which we should be aware. wti, we just had the chart up on the screen. was just $70, now it's $77.

obviously a lot of that is the geopolitical risk premium associated with what's going on in the middle east. and that's obviously something to be aware of because retail gasoline prices have been tending down for some time now. obviously providing a boost to the consumer that is already doing quite well. if these higher oil prices stick around, that may throw a wrench in the works. >> we're debating the road ahead for the fed. i have yields up. maybe more so than people thought they would be since they cut by 50 basis points. i have the middle east is a problem. obviously. i have another hurricane that i'm really concerned about. because it's on the heels of the other one which has already wreaked havoc and it's done in and of itself some damage in the markets too. what am i supposed to do with all that? i thought the trend was still up. i thought i was supposed to keep my eye on the ball and focus on the fact we're cutting and the economy is good. do i need to figure out some

different things now? >> i don't think so. i think both of those stories still remain in place. obviously, the human tragedy of the hurricane that already hit and the one that's on the way is separate from markets and obviously our hearts go out to everybody affected and soon to be affected. but from a broader economic standpoint, not much changes in the wake of either one. the story in the middle east is a different story because that's what's really driving up oil prices, now, the positive side of things -- what i mean by that is the ever present threat for now is israel chooses to use this momen to strike either a refining facility, a production facility, something in iran that takes some iranian barrels off the market. some of that can be filled by saudi and broader opec capacity, it's something that's a more immediate issue for markets. >> what do i do with the fact that yields are up? i'm not sure people had gamed out that okay, the fed is going to cut by 50 and they're going to continue to cut and yields

today are going to be higher than they were before the fed cut. >> listen, in both cases at least certainly in the short end, the issue right now is that some of those additional cuts that the market overpriced are coming out. you had brian belski on the halftime show and any number of people have made this observation as well. the market was way ahead of itself, way ahead of itself in terms of pricing the number of cuts that was likely to come. not because the fed wasn't signaling that. in some cases they were. just the broader strength in the economy. everybody has been waiting for that to wane and consistently, we have not seen it wane, and in fact, obviously, the most recent jobs report bore out the idea that the economy is doing fine. yields are going back up as a result of that, but i would stress that's for the right reasons. it's good. >> but i mean, yes, it's good because they're going up for the right reason. in the same moment, does it threaten the bullish case? >> well, what it does do is --

how do i want to phrase it? it leads to the diversification we have seen. if you look over the last three months and that's broader than the most recent fed meeting. the only secers that have underperformed in the s&p 500 is tech, communication services, and discretionary. and the only reason discretionary is underperforming because tesla and amazon are the two largest holdings. >> you said it leads to the diversification. does it hurt the cyclical trade because yields are going up now? >> i don't think so. the more in terms of like a discount cash flow model, the more of your dollars that i'm discounting further out, the value of those are higher in a present value sense. but for google, for meta, for apple, et cetera, they make so much money right now, the mag seven is not a rate play from that story. it's the more esoteric,

speculative names where you see terminal value, this is a little accounting-y for your audience. >>it's not great for let's say the small caps, for example. >> no, it is not. >> which we have been looking for something to give them a boost. they say well, you have to wait for the fed to cut rates. they cut rates, small caps are the biggest underperformer today. not just today, by the way. they have not done well. >> for quite some time. mind you, i will say it again. i think viewers at home should be paying much more attention to midcaps than small caps. i know we pay a lot of attention to small caps on the network. we talk about the russell, the s&p 600, but again, i love this -- i don't think anyone out there watching this can name more than three stocks in the russell 2,000. >> people use it as, i don't know if it's a litmus test or what, but they use it as a central part of their broadening story. >> sure. >> like the ultimate part of the market broadening, like you go

down the cap spectrum and when you finally get the russell and the small caps participating in the rally, that's a sign of true market health. when we have been sitting here wondering where this trade is going to be? >> i reject the notion you need small caps for true market health. this is a point i have been making with you for some time. why do i need small caps to rally for the market to be better? why can't it just be the rest of large caps? because for the vast majority of investors watching, yeah, some are in midcaps. there's a bunch of names we know in midcaps. abercrombie and finch, william williams-sonoma, but the vast majority is done in the s&p 500. when you look at the disparity in market cap between the largest names measured in trillions and the smaller names measured in tens of billions, i don't know that i need companies at $500 million market cap to rally for me to feel good if i'm getting that rally, which you are, in the $10 billion to $50

billion companies. >> sure, but last quarter, you had the equal weight outperform the cap weight as the mega cap tech stocks took a back seat. >> as i mentioned, over the last three months, 8 of the 11 sectors outperformed. >> my point now is though if the market is going to be a little more on edge and yields are going to goup and maybe the broadening trade is going to be in trouble, if you still have some weakness when the mega cap stocks and their performance, that's how you build a tough market case. >> yeah, listen -- >> i'm not suggesting there's going to be one, but that's how you build one. >> listen, right now with what's going on with oil prices, a lot of what's happened with yields is the drop in oil prices. a really good relationship between fluctuations in oil prices and in yields. and the fact oil is up $6 is not a good thing from a yield standpoint. if we step back for a second here, obviously right now, as i

mentioned, part of the worry is israel is going to bomb a large facility. if that doesn't happen, some of this is going to get corrected. some of the oil move is going to get corrected which is going to help dampen some of the move. in the short term, could you see fluctuations in the equity market into some of the other names as a result or concurrent with the drop in yields? do they rotate back? yeah, maybe. >> let's bring in jordan jackson, jpmorgan asset management, and yung yu ma. jordan, are we focusing too much on what some would consider to be noise and not enough on the big picture of rate cuts and stronger economy? how do you see the market here? >> i think we are being a little myopic here. i think the trajectory is still for the federal reserve to continue on its easing cycle over the course of this year and over the course of next year. the move higher that we have seen in yields as of late and as we have talked about has really been the markets taking off

about 50 basis points worth of rate reductions through 2025. and this is on the back of the data. i'm a little more concerned that the data is going to be very volatile, very choppy. some of the hurricanes may impact some of the employment numbers over the next couple labor market prints. i think we will need to try to look through some of the noise and get back to the fact that again, the fed is biased toward cuttingerates. they're ceting rates in an environment where corporate rates are growing. we'll get a good sense after we get some of the big tech companies reporting over the next couple weeks. we continue to see a robust back backdrop for earnings. about 2.5% growth penciled in for the third quarter and gradual trending growth to the end of this year toward a normal 2%. all this suggests taking a step back that the bulls have it, and we'll continue to see a market that grinds higher. >> is that how you see it? is this just noisy, something

that needs to be tuned out a little bit and focus on the big picture or do we have more issues we have to deal with that we didn't necessarily think we would? >> we think it's mostly noise. it is warranting that that longer term yields are rising. we think the risk is to the upside, and on days or weeks where those longer term yields or the ten-year treasury yield rises, we think the market is going to have a bit of a pause or somewhat of a pullback. because it wants to see where the ultimate landing point is for that because we think growth is going to come in strongly. right now, a lot of the rally we had over the past couple month has been driven by the expectation of lower interest rates and the cutting of rates. with some of that getting priced out, the question is where do the longer term yields end up. once we get past the election, i think we'll see a greater focus on the debt and deficit. and even potential for -- i think we have upside risks on

the longer side yields, but taking a step back looking at the bigger picture, we have strong growth, a fed that although it's going to cut rates more gradually than the market is expecting, is going to cut rates. so overall, the backdrop is favorable but it's not going to be a straight line. >> you're not the only one who things that either, what this move means for stocks. i asked jeremy siegel about that on friday. he's obviously bullish but he's taking notice. listen to what he said. >> i can certainly see 6,000 on the s&p by yerend, but it's going to be contending with higher yields. i think the ten-year is eventually going to set down, i don't know if we'll get there in two month, but closer to 4.5% from where we are today. >> okay, so dan, is that a problem? he's obviously still positive the market. but he's taking notice of where yields are. we're not at 4.5%. we get at 4.5%, will we still see 6,000 on the s&p?

>> yeah. there has intermittently been a focus on yields, a myopic focus, to borrow a word earlier, on yields as if equities cannot rally in a higher yield environment. in this case, 50 base points higher, not in the big context of things that much. i think it's important to remember that the relationship between yields and equities is a moving target. it's not always higher yields, lower equities, lower yields, higher equities or even sectorially, it's larger. we're living through it now where higher growth is engendering higher yields in this case because of what the federal reserve is doing, and that can be good for equity prices. >> part of the bullish story was fed cuts, maybe the ten-year, i think people had scored it closer to 3.5% than 4.5% on the ten-year. in the near term, i don't

necessarily care what history suggests about the relationship between yields and stock performance. if you thought that yields were going to be coming down and now in fact they're going to be going up and you had to recalculate that over the last 20 to 30 days, doesn't that change to calculus for stocks? >> history is always important to understand in the context of relationships, et cetera. you can have regime change, but knowing how equities perform in certain environments is always helpful. that said, people who would argue that long term rates have to go down, have to go down, because the fed is cutting rates, are making short term rates, sure, the fed funds rate is closely related to short term rates up to the two or five-year, but the ten-year is a whole different story. >> the two-year is at 4%. >> not a lot of ig companies are borrowing for two years. that said, it's also important to remember that the ten-year is 4%. it's not 8%. it's not 10%. it's not 5% as it was. so rates are lower than they

were. and in that environment, equities can do fine. forget my opinion, it's happening. we're still basically near a record high and the ten-year is 50 basis points up. again, that's in the context of oil prices which i think are driving a big chunk of it. i reject the idea, i don't think yung was suggesting this, that after the election, something will be done about the debt and deficit. >> i'll come back to you. you heard what jeremy siegel had to say. maybe equities can withstand a move higher in rates, but if anything, it's a change of calculus, i think, to where many saw yields going in the wake of what the fed is doing. >> well, we do think equities can withstand those higher yields around the mid-4% range. if you take that to mid-5%, i think the calculus changes meaningfully, but we don't think it's going to get there. the difference is when you have a move up in yields like we're having today, the perception at

least is very immediate. whereas the growth aspect, we actually expect to be quite strong in the 2025 and throughout 2025, we expect the impact of fed cuts to really have a stronger effect on the economy than people are anticipating and growth to really come in. but that has to prove itself. it has to prove itself over time. the impact of the yields is more immediate in that sense and that's what can move around markets on a day-to-day basis. if we step back, we think growth will be forthcoming, that's going to be what drives markets higher along with yield levels that are reasonable and digestible by the market is where we think we'll be. >> jordan, the other question is around earnings which i know there's optimism around, but expectations have been slowly coming down for the current quarter or the past quarter, the current quarter, and then into 2025, when the numbers start to get large. people are looking for almost 15% earnings growth. >> i think maybe 15% is a touch

optimistic, for sure. but i think double-digit earnings growth for next year is completely reasonable. this is a backdrop, again, where the fed is cutting rates so perhaps interest burden is going to be lightening up a little bit. perhaps the fed relative to other central banks may be cutting slightly a little quicker than some of the other central banks and maybe the weaker dollar story continues to play out over the course of next year. this bodes well for multinational earnings which a good portion of s&p 500 companies derive their earns from overseas. royal remains to be the big wild card. we could see upward pressure on oil prices. given the amount of spare capacity opec has, that could keep a lid on how much oil prices move higher, and maybe even bring them lower considering we get past some of the uncertainty in the middle east by next year. that bodes well for airlines, transportation, industrials, et cetera. you put all those together,

there's a nice trifecta there where earnings could be well supported into next year. you look at profit margins across the magnificent seven at around 24%. they continue to grow. their scope for profit margins to expand further as well for the rest of the market, and so i know we could be a little bit more focused on the bad things and we should be as investors to hedge against some of those risks but every single year there's always something that sort of clouds the market and the market has been pretty resilient and continues to march higher. we don't want investors to miss out. >> we're not that far from highs, obviously. dan, one of tother issues with the broadening trade, the best sector over the last quarter was utilities. there's obviously a lot of money flowing there because of the ai trade. jonathan krynski just before we came on the air put out a note saying time to fade the utes. you could get 7% to 10%

correction. you could not only point to that group but you could look at some of the other outperformers over q3 and say they went a long way in a short period of time, now they're looking expensive. what do you think? >> i'll leave the technicals to john, he's great at that, even though i trained him. but listen, i think joe was on and brought up aflac. look at some of the insurance names. they have gone straight up. some of the consumer focused names have gone straight up. you talk with brian on halftime about mcdonald's and home depot, back to all-time highs. there's been a big move in the third quarter in a broad array of names. could you get a bit of a contradiction around the election or more importantly, a disputed election? you could get additional volatility, but at the end of the day, what matters for investors is growth. it's earnings, it's the economy, it's the consumer. and all of those things still look pretty good.

obviously, you have near term headwinds as jordan alluded to and i mentioned in the oil market. obviously there's near term worries about whether portions of the market are overvalued or overbought. unless something changes in the other really important core issues, the bias has to remain for now to the upside. >> you weren't taking credit for his success? >> i take credit for his entire success and his entire career. >> that's what it sounded like to me. you can wrap it up. we haven't even talked election risk if you think there is any at the moment. >> well, there's certainly a broad range of potential outcomes here, and we probably won't know the results immediately after the election as well. so i think there's some uncertainty that could be priced in the market. ultimately, what's going to come out on a policy basis is going to be nor narrow and the impact on the economy probably less than people are anticipating,

less than some of the broader or more extreme considerations that participants might be scared about. so overall, we think the economy is going to weather the election outcome, the policy changes that take place. we think the underlying fundamentals are pretty resilient in the economy, but we think, again, there's potential for upside pressure on longer term yields in the wake of the election. we don't think as your speaker there said, we don't think either party is going to really want to deal with the deficit, but we think the market is going to have a renewed focus on the debt and deficits which could lead to upside pressure on yields when we do have to fund all of these big programs that we have and all the spending that's taking place in the economy. so we see that as a theme in 2025, one that could perhaps cause some bumps amid this strong growth trajectory we ex expect. >> thank you. jordan as well, and dan, thanks for being here.

let's send it to pippa for a look at the biggest names moving into the close. >> you mentioned nvidia which has overtaken microsoft to once again be the second largest company by market cap. it is higher after super microcomputers says it's shipping more than 100,000 gpus each quarter. also announcing a cooler center aimed at lowering power costs. those shares are up 15%er making it the top stock in the s&p. lithium is surging after the company confirmed it was approached about a potential acquisition. no specifics were given. royaltiers did previously report that it could be valued between $4 and $6 billion. those shares up 34%. >> we're just getting started. up next, speaking of technicians, chris furoan breaks down what the recent jump in yields could mean for this market. you're watching "closing bell." dow off about 400.

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stocks are under pressure as interest rates climb near two-month highs. the recent run-up in yields may be overbought. tell me more. that seems to be the issue at hand that we need to focus on. >> i think the question is what is the dominant trend in yields? i would say it's largely still down. yields peaked a year ago at roughly 5%. we failed at a lower high this january and february. we did it again this spring and summer. nothing prevents them from not only back to 4.15, 4.20, but how aggressive do you want to get on the short side of the bond market. listen, i think ing particular you had a lot of bond proxies very overbought into this. you saw utilities run basically all year. let them correct, let them come

in. where do we want to step in and buy weakness? >> let's focus on yields before we get to some of the other spaces and then i want to ask about utilities. what if higher for longer is going to become a thing? and maybe we weren't so convinced it was because the fed cut 50 basis points and we know they're just beginning. however, what if it's a problem, higher for longer? >> i watch a couple things in this regard. number one, it really is higher for longer and we're talking about a major new up leg in yields, they have to punch through 4.25 decisively. >> what if it's a stay here leg. this leg was unforeseen by many. let's just assume that yields now, let's say they stay here. >> this leg being unforeseen by many, i might push back on that. when you look at what yields do around fed cuts, they tend to go up. think about the '95 cut. your nonrecessionary rate cuts. yields were falling into it. they cut on july 5th of '95.

they rallied for 12 weeks and then resumed lower. we have seen this before. i don't think we should have been as surprised. 4.25 is the major down trend line. underneath there, i think you play by the same rules we played by all year. ultimately, rallies in bonds are opportunities to get long. above 4.25, all bets are off. >> what about equities? >> i think the primary trend is up. i think we're consolidating in that up trend, maybe 5400 on a pull back here. i don't think it's the end of the world. what i care about is look at the status quo. what's been driving this market all year? financials, industrials, and a very benign credit environment. if the status quo has to change, i think we need to see deterioration in those groups. i think it's too early to make that your base case. it's an election month. vix is breaking out a little bit. i think you can get a consolidation or a pull back, but 80% of s&p stocks are above

the 200-day average. that's a pretty healthy framework under the circumstances. >> do i need the areas that broadened in q3 to continue to work with mega cap tech is not going to carry the load? >> i think mega cap tech is remarkably split. when you look at -- >> it is. >> microsoft basically on the lows, nvidia breaking out. apple has been stuck in a range, alphabet lower. amazon weaker. you can go name by name by name. i think what's important is you keep the pro scyclical markets n the market. the industrials have been leaders for two years of the bull market. if the call is going to change, i think the most reliable leader of the two-year run would have to weaken. on volatility i would also note, you get worried about vol when credit conditions also weaken. we have seen the vix rally, but we haven't seen underlying credit conditions weaken. when they both go at the same time, you get uncomfortable. that's not been the case. >> lets me ask you about the

utilities call. a competitor came out with a note just before we cayme on th air and said fade utilities. they're historically expensive, historically stretched. it's jonathan krynski, said you had a 7% to 10% correction in the group. do you look at that in the same way? >> that's reasonable. john is a good analyst and a good friend. the longer term trends in these stocks are still up. let's not lose sight of that, but they had an incredible first nine months of the year, especially this time of the calendar, october through december, they don't have good seasonality to begin with. let them come in here. what's interesting when you look at globally all these utilities, i think what's been really underappreciated, the chinese and hong kong utility stocks have been massive underperformers. you have seen this complete migration away from anything defensive in that part of the world, and it's bearing itself out in these as well. >> utilities, and everybody knows that they sddone really well, but when you look at the sector performance, the

outperformance by tech and comp services is barely above the utilities. up 25% as a group year to date. tech is only 28%. >> it's pretty remarkable. in some respects, tech's strength has almost been overstated this year to an extent. i'm not sure many know the emqq is actually outperforming the actual qqqs this year. you can do this, gold is up more than the qqqs this year. at a minimum, there have been very concurrent stories running alongside tech that deserve equal amount of attention. >> we'll sooyou soon. up next, morgan stanley's sherry paul reveals the sectors she's petting on and part of the marting she's adding to. we'll tell you what it is when we come back. >> i'm from a small country in latin america, costa rica. when you grow up in such a small country, you realize very quickly that you need to do a lot with very little. for me, i have made scrappiness

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and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity. e*trade from morgan stanley welcome back. as we're red across the board, stocks are struggling to keep momentum from friday's record setting rally. russell 2000 down a percent.

my next guest says now is the time to strategically add to small caps. >> be more specific, strategically. what does it mean when we talk about small caps? because i think it's a good point of debate right now. >> thank you again for having me. that's why i wanted to lead off talking a little bit about small cap because technically when the cost of capital gets cheaper which with the fed sort of pumping the brakes at 50, we saw that pop in small caps. we're still in a slowing economy, albeit not slowing as quickly as people may have anticipated. so the trend for small caps is still getting teased out because they're so dependent on domestic consumption. although from a selective standpoint, they appear to be pretty ripe for m&a. >> i can't help but think of higher for longer and as we talk about rates ultimately going down because of what the fed is doing, how do we think about the

prospects of higher for longer as yields have been going up and it's weighing on this trade? >> the good news is look how great the economy is doing with these high interest rates we have been living with now for the past few years. so the most important thing i think investors need to know is we're going lower on rates. i think it's less important how much and when other than the trend, and the theme for rates is going lower. what i think we need to see, though, to get a real bump in small cap is like a real turn in the economy. from a consumptive standpoint. what's challenging about that and for the small cap trade is while markets and economic data are in parallel universes they're operating in different time zones and markets are forward thinking while the economic data is printing what's happened in the past. so i think it's really crucial for investors to be forwstard thinking which is why i continue to recommend big cap. by strateg clee placing money

across sectors in the s&p on a very selective basis. but overweighting and underweighting right now is going to be the key in a market cap dominated type return we have experienced in the last two years. i think that broadens out. >> it sounds like even when you talk about large cap or going up in the cap spectrum, you're not focusing solely on mega cap tech. it's just broadening but large. >> yeah, broadening but large because remember, the thematic that's been the underpinning of this sort of tech revolution has been ai, and the broadening outs ofthies theme now is we go from innovators to installers, and as we see that broadening out particularly around industrials which is a thematic of ours in our portfolios, we should see that productivity enhancing cost reduction kicker. in addition to the theme of rates going lower, which is why we're recommending finances which busts the m&a activity and

mortgage business for financials, and then obviously staples, which speaks to the theme of a slower economy. maybe a bit of a more cautious consumer, which makes a lot of sense. plus you pick up a great dividend and it adds lower volatility to a portfolio. >> at the same time, how do you currently feel about large cap tech? >> i feel strongly, and i have been a voice of large cap tech for the last three or four years. i think it's a theme which is different than an idea. an idea is wow, i wonder if this singular idea actually has legs, whereas a theme is a consensus building thematic that we have some consolidation and now some momentum behind. and that is squarely within software and hardware. particularly if you look at what corporations will be doing with these enormous cash balances that are getting pay cuts as rates go lower, we should see a pop in investment, research development, and upgrade in corporate systems. that should be a boost. it's longer term game, so the

time horizon for that should be 12 to 24 months for investors. >> is there a thematic case to be made for health care outside of glp-1? >> well, yes, we have an aging population. so there's that thematic. plus, we have these innovative drugs that have come to market, not to mention the fact that with ai and the ability now to build large brain analysis around dna and epigenetics and the advancement of biotech and vaccine and therapeutics all that bodes well for health care, not to mention from a leadership standpoint, this a sector that has a real strong bias for supporting their investors through dividend and dividend increases. it's a core part of our portfolio. >> lastly, just about earnings in general since we'll be talking more about it starting friday with the banks and you made the case you like the financials, do you think

earnings expectations are realistic for the remainder of this year into next? >> i think they're directionally correct, as a portfolio manager, i'm looking for directionally correct, not perfect. and so if you're sitting in a money market account in a declining interest rate and then taking a look at what the opportunity set is in these capital markets given the setup and the grab bag of positive framework we're dealing with, i would be pivoting into stocks over cash in a directionally correct earnings cycle. >> sherry, we'll leave it there. thanks for coming on. up next, we track the biggest movers into the close. pippa stevens is back with that. >> two activist investors have two new targets, sending those stocks higher. we have named to watch coming up next.

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the industrial gas supplier according to a person familiar. the firm wants to discuss strategic plans including ceo succession as well as capital allocation, the person said. both of those stakes were first reported by the "wall street journal." >> thank you. still ahead, we'll talk about disney shares dropping today. coming up on the bell next.

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coming up next, a double dose of big tech downgraded. we'll drill down on the calls inside the market zone next.

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familiar challenges that i think are all right in front of us right now. obviously, the yield move, the repricing of the fed, it's the geopolitical backdrop, the season. as much as the prevailing view is october, you have to expect some choppiness, you have to expect some downside tests. why are you going to put on more risk coming up on the election? as much as you want to fade that because it seems like it's such a consensus view and say the most surprising thing would be if we ripped higher from here, its reerl's really hard to do, oppose that idea that it's too many impediments to going out on a limb and decide to buy this market with both hands. you are seeing still selectativity. it's not a washout entirely. the lows for today were just above the july highs in the s&p. we have been defending this area just below 5700. we haven't made much headway, but so far, kind of keeping in this upper range of the year to date. >> how are you thinking about the rise in yields and the

relationship to stocks? >> really interesting. at some point, probably not too far up from here, it starts to press on stocks more aggressively. right now, we're back at early august levels in the ten-year treasury yield. just above 4%. where the s&p was there, 5500 or something, so 200 points lower. in other words, it's totally compatible with the market being okay if it's for the right reasons if we're pricing out more urgent fed easing. >> one of the issues today are these big downgrades. apple and amazon. >> let's start with apple here because it was downgraded from buy to hold and an interesting note was a slightly different take on artificial intelligence than many on the street already have. they say expectations are too high for the iphone 16 demand. and now this doesn't mean they say that apple won't benefit from artificial intelligence, the analysts here are saying it's going to take another two to three years for the iphone hardware to be powerful enough

to run more impressive ai features than what we have seen so far, and then apple may be able to charge a subscription for those. by the way, bloomberg says the first round of apple intelligence launching on october 28th. let's move over to amazon here because wells fargo downgrading that stock from overweight to equal weight. analysts pointing to multiple headwinds facing amazon including more competition from walmart's fulfillment marketplace, expecting advertising profits to moderate, and investments in the project hypersatellite service could hurt operating income. it's been a crummy start to october for amazon. shares are down about 3% so far this month. >> steve, thank you. amazon, mike, has been down i think eight of nine days, something like that. hasn't been able to find a lot of traction, but it is finding negative notes. >> it starts to feel safer to challenge these stocks' valuations or the next catalyst. it's clear that the analysts

were kind of truing up their models and going to the company and saying is it okay if we price in more margin expansion here? do you think you're going to be in harvest mote and they're getting the signal, nope, we're still spending. with this move in amazon to the downside today, only two of the mag seven are up on the s&p 500 on a year to date basis, nvidia and meta. the rest of them, again, it becomes safe to underweight them or not necessarily have that much commitment to them. this has been going on really since june where these stocks have kind of been ceding the spotlight to the rest of the market. it means they kind of need more time to grow into the valuations they got by the middle of the year. >> cautious note today on microsoft. >> 90 plus percent of analysts still recommending amazon. >> julia, talk to me about what's happening with disney. >> well, disney shares are trading down about 3% presumably reacting to concerns about hurricane milton impacting the park. disney telling me that walt

disney world resort is open and we're monitoring the storm. meanwhile, comcast, cnbc's parent company, is also seeing its shares trade down now, about 1.5%. there is another factor that could be impacting the media stocks. barclay's downgraded netflix to underweight. that analyst saying the valuation prices in more than a doubling of the subscription base from the present level, saying that does seem unrealistic, and of course, we're seeing both disney and comcast on streaming. >> you heard the animation there, two minutes. inflation data, mike, this week. i don't know, may not hold the same kind of weight it once did because we feel like we have a little bit moved on, and then earnings on friday. >> interestingly on cpi, the argument has been made today that it's now back to being a bit of a live report. because you have this sensitivity to yields and maybe the economy is not decelerating

the way we thought after the jobs report. i don't think really there's a reason to rethink the idea it's pretty subdued, going to be under 2.5% yeefrar over year. yeah, that's something we have to watch maybe more than we thought we did, and earnings for sure. markets traded pretty poorly in the beginning of the earnings season the last couple quarters. expectations have been brought down, by about 3 percentage points. so it seems like the bar isn't that high, but bank stocks never trade that well as a group off earnings. >> i'm wondering because you say that and we the this conversation earlier with chris verrone that this market needs the financials to continue to perform. so maybe there's a little bit added weight there for a group that as you said doesn't normally tell exactly what's going to happen. >> i would say financials outside of core banks have really been carrying the weight of that sector. at times it's been berkshire

hathaway and visa and mastercard and the fintech type things inside that index, but there's no doubt they will matter and the credit situation, there will be a window on all that. >> we'll see you tomorrow. see all of you as well. we'll go out red. bells are ringing. decidedly so on the bell. i'll see you tomorrow in overtime. >> that bell means the end of regulation, the nyse tech council ringing the closing bell. microsoft doing the honors at the nasdaq. stocks selling off to start the week as bond yields jump, oil surges, and volatility roars back. winners stay late. welcome to "closing bell" overtime, i'm jon fortt with morgan brennan. >> a number of magnificent seven stocks catching downgrades. we'll talk to dan niles and get his take