social media gives us a very quick access just through a click when someone finds something pretty cool, look for less. >> the fast fashion outlets are so quick to copy whatever is hot. thanks. what brand were you surprised to see? >> there was brand were you surd to see? >> there was reebok, chaps, polo. i thought, normally that's outlet shopping. >> chaps at walmart. who new? "closing bell" starts right now. and welcome to "closing bell." i'm mike santoli. this make or break hour begins with stocks finding traction after a morning skid brought the major indexes within sight of their december lows. the s&p 500 was off more than a percent and a half before the dip buyers showed up. nvidia has been instrumental to the intraday recovery, rising at one point above that 140 level. the stock's been shopping around

for months. it is still up 1 2/3% at the moment. treasury yields eased lower after weeks on the rise. shifted from stocks into bonds, after equity outperformance all year might have been out of work at the open. the 10-year treasury yield remains above the threshold. it recently surpassed the day after this month's so-called caucus rate cut by the fed, which brings us to the talk of the tape. rebalancing at the end of another strong year for stocks or sending a more cautious signal about the economy in 2025? here to take on that question is mohommad -- he is chief economic adviser, and always great to see you. welcome. >> thank you, mike. >> so, here we have obviously very strong year for stocks, sure, skewed toward the very largest in this rise in treasury

yields, which i guess has been perplexing to some. it has really taken flight since the fed started cutting rates. it doesn't seem specifically about inflation expectations. and the big question is can the real economy handle it. that's what stocks care about. what's your read on that element of the market action? >> i think the real economy can handle it because rates are going up for one good reason and a couple of less good reasons. the good reason is growth. u.s. continues to outpace the rest of the world. you see that in the weight differential in ten years between the u.s. and germany. that's now 220 basis points. that's quite high. there are two issues. i think inflation is most sticky and the fed is going to tolerate inflation. and there's also a concern about issuance. but on balance, the economy will be able to handle this if we don't get a policy mistake. >> and what would a policy mistake represent right now? i think a lot of folks were looking for evidence that that might be one of the market's

concerns after the fed really did reduce its anticipated rate cuts for 2025. but you wouldn't necessarily expect to see longer-term yields going up if we were pricing in a potential policy mistake that would bring on recession. >> yeah, i think the rate behavior has a lot also to do with the notion that inflation may be sticking. i cannot stress how important it is for policy not to undermine u.s. economic exceptionalism. that has acted as a shield for u.s. markets, for u.s. economy, for a lot of headwinds coming from the west of the world. europe is essentially in recession. china cannot balance its reforms with its stimulus. geopolitics has gotten more complicated. so, we've had this incredible shield for the economy, for the markets, of this exceptional economic performance.

and we need to maintain that. and that's where the policy issue comes in in a big way, mike. >> what policies are you really discussing there, aside from what the fed does? i mean, are we talking about what happens under the next trump administration, whether it's, you know, taxes and tariffs, or do you mostly mean monetary policy? >> so, at first i mean monetary policy. it's important for the fed not to be overly restrictive. and that means it will need to tolerate a slightly high inflation rate because there are so many structural changes. and then for the incoming administration, there's going to be a race. on the one hand, you have deregulation. you have liberalization, which is going to get turbo charged by a lot of corporate activity and by what i think are significant productivity promises associated with a.i. and with life sciences. and on the other side of that race is the risk of excessive tariffs and the risk of undermining the labor market.

so, a lot will depend on this race and the hope for the markets and the hope for not just the u.s. economy but the global economy, that that race is going to be won by pro-productivity, pro-growth measures. >> you cite u.s. exceptionalism, which is really visible in so many different ways. obviously the outperformance of u.s. equities versus the rest of the world, which has persisted for a very long time, which seems largely but not entirely about our large tech stocks, which are doing that investment and, sort of, creating the, sort of, a.i. infrastructure that you talk about. does it -- does it feed into any potential imbalances, though? is it only a good thing for u.s. assets if, in fact, the u.s. continues to separate itself from the rest of the world. >> and that is the big question, the issue of dispersion. look, the u.s. has outperformed not in terms of market but in terms of the economy. we have consistently come at the top or near the top of the g7

growth leak. and that's impressive for the signs of our economy. moreover, the u.s. is the only g7 economy right now seriously investing in the growth engines of tomorrow. and the market has understood this. and you see this in relative pricing. you see in what's happened to the currency. the euro is at 104. now, the hope is to get convergence from below. the hope is that china and europe get their act together on the policy side and converge with the u.s. that's the hope. the fear is you get convergence from above, and that is what would happen if, like we discussed earlier, we get the policy mistake. on the whole, i think you should bet on continued dispersion going well into 2025. >> yeah, i guess all that is the tricky part, which is figuring out what we should expect in the way of market returns. do want you to listen to a point made by professor jeremy siegel this morning about whether after

two very strong up years in the s&p 500, we should maybe moderate our expectations. >> as time has gone on, i think the probability of a correction next year, you know, which is defined as a 10% drop in the s&p, is getting higher. i'm not saying it's a sure thing. nothing is a sure thing in the market. but, i -- the major forces to propel things upward i think have already been built in. we still have -- you know, we talk about 22 times earnings on 16, 17% gains of earnings, which is, you know, also far higher than historical. so, i see a little bit more risk on the down side, and i'm -- you know, i'm a bull on the market. i'm long-term. i'm not saying, you know, sell. but, you know, i see more risks. >> yeah. so, mohommad, i mean, obviously, you know, most years have some

kind of a significant correction. but how does that sound to you in the way of whether there could be almost too much of a good thing priced up front in the u.s. market? >> look, after you have a 24% year for the s&p, 30% for the nasdaq as of now, which followed a over 20% last year, you have valuation levels that will make people more cautious. and i think we see thi the flows, interestingly. you see a lot of people take money out of equities, put them into fixed the income, get high-quality carry. and you can get high-quality carry right now on 5 to 7% in the fixed income market and just wait and have some ammunition available for this pullback that quite a few people think are going to happen. i think the big test is going to be whether the fundamentals continue to support corporate profits. i think they will. but i completely understand why some people right now would

rather take money out of equities, put it into fixed income, get high carry, and wait. >> right. because now there, of course, is that alternative. mohommad, stay with me. let's bring in barry banister of stifel and ed -- into the conversation. barry, i know you've had your eyes on the prospect of some kind of a correction next year. what's the cadence of how you expect the next several months to unfold? >> yeah, a agree more with the clip from jeremy siegel a minute ago rather than the triumphalist exceptionalism argument. the risk-free year, the 10-year treasury, has a tendency to cause a correction or pullback in the market. valuation is just very high. we see a number of negative surprises in the next year, such as unit level costs driving core pc closer to 2.7 for the year.

fed's not going to be happy about that. >> what specifically would drive the unit labor cost move? >> after every recession, 13 since world war ii, since 1940 -- early '40s -- you get a really big pop in productivity. now, it's cyclical, not what we call secular or the long-term up/down waves. and that happened from '22 to '23 because 2022 was a recession. if you look at real inflation just in terms, income production, sales, fixed investment, all went down. only labor stayed strong because of both labor supply and job openings exceeding the number of unemployed people to fill them. but as that has rolled over on the year over year basis, the productivity coming down combined with productivity falling faster than wages should cause unit labor costs to be sticky and the core pce inflation closer to 4.7, which the fed won't like.

>> interesting. yeah, the idea that it was a stealth recession, stealth, kind of, earnings soft patch is something that does have some explanatory power in terms of how the overall markets behave. ed, i know you generally want to stay in tune with the broad trend. at the same time, you maybe look for some soft spots in the trend in terms of keeping the market on a shorter leash when we've had most stocks down for a few week. how do things look to you right now? >> well, for the most part, the market looks in pretty good shape. there's a lot of talk about how the megacaps have outperformed, and that's true. but the average stock is also done just fine. equal weight s&p is up around 10%, as is the russell 2000 for the year. what we've seen over the past few weeks are what a technical analyst would call divergences, things like percentages of stocks above their 200-day moving average, longer-term view has gone down over the last few

months. the advanced decline line, running total of stocks, are up one day, down one day. that peaked last month. percentage of stocks at 52-week highs. that usually peaks out well before the market. the last high for the cycle was in july. a lot of these divergences resolve themselves to the upside eventually. so, in calendar terms to 2025, we get past the year-end positioning, we'll see how it shakes out. the longer this stuff stays, michael, the more we have to worry that this is actually the market starting to price in some of those concerns that barry has mentioned. >> is there a way to quantify or characterize, you know, where exactly that tips over into the market sending a signal that there's something more afoot, ed? >> quickly, when you get a few different indicators like a percentage of stocks above their 200-day moving average, index 35, 36% range, we're still well

above that, in the mid 50s at the moment. subindustries are in the 60s. that gets in the low 50s, that's a little bit more problematic. so, there are some levers you can look at to say, okay, we've cost a rubicon line and the market's primarily in a down trend what we can still say at this point is an uptrend. >> mohommad, you mentioned earlier in terms of the treasury yield move, inflation perhaps being seen as a little bit less cooperative. maybe it's going to be sticky around these levels. but it seems as if the yield increase recently is not really explained by the inflation piece. so, is it your interpretation that again having the situation where buyers of treasury debt are demanding more compensation because of, you know, the whole government financial situation? or is this just what we should expect in a high nominal growth economy? >> i think it's the latter. i mean, it is striking, mike, that we've had $600 billion go

into fixed income this year, a record level. it's been a huge sucking sound. the u.s. is attracting a ton of capital from the rest of the world, in both the equity market and into the bond mark. why? because we look so much better than the rest of the world. and yet bond yields, since the beginning of the year, have moved up 65 basis points in the 10-year. the ag, if you had invested blindly, passively, into the ag, you would have made 1%. so, what you're getting is that the fixed income market is attracting people who are looking for yields. however, those yields are moving up because of what's happening on the economy. why? i think one is policy. i think the market has finally understood that we will be lucky if we get two cuts next year. we're more likely to get one and we may get none at all. two is the market has understood the inflation issue. and barry is right. the pce is not going to please

the fed. and the hope is that the fed will tolerate high inflation for a while. and three, the growth dynamics, as ed said, are still robust. so, that, i think, has come together to resolve in those yields. and it wouldn't surprise me, mike, if we trade in the 475 to 5 for quite a part of next year. >> on the 10s, i think you mean there. barry, in this type of environment, where you feel as if maybe rates will apply some valuation pressure, how would you navigate it? what would you look toward in terms of places that can be relatively resilient there? >> one of the concerns we have right now is that as wages slowed, inflation stays sticky, then real or after-inflation wages in the back half are going to fall. and that would bring down the consumption side of the economy at the same time housing is in the doldrums and government is not likely to respond. so, you have a weaker gdp numbers in the back half. these mid cycle, late cycle

slowdowns are very common, but they typically do cause the s&p to slow or correct. and that's our view. we are at a 5,500 target for the s&p. we're in the defensive, food, waste stocks, beverage, tobacco, health care equipment, things like that. >> got you. yeah. so, mid-cycle, 2015, 16 years like that, sideways, choppy, if not a washout if that type of history holds. appreciate the conversation today. thank you. happy new year. >> thank you. we are tracking some big moves in the energy space. let's send it to pippa stevens for all the details. hi, pippa. >> hey. gas is surging as much as 20% today, breaking above $4 and hitting the highest level in two years, before easing back now at $3.90. part of this is because this is now the front month contract after the january delivery one rolled on friday. it is a bit of a catchup trade, but that does also coincide with

upcoming forecasts saying the coming weeks could see extremely cold weather across the u.s. and more heating demand means more gas demand. on the back of that move, energy is the only sector in the green today, led by eqt, which is up 5%, coterra up 4%. diamondback up 1%. >> getting an early start on that january buy the laggards trade as well. pippa, thank you. let's send it to christina parts ve liz truss. >> any, mike. i know there's been a lot of talk of a.i. -- smaller models are getting better, possibly decreasing the need for a.i. gpus. if you were to lump all the a.i. winners like broad come, arm, their average return on the year is 107%, far outpacing the broad chip etfs, which was up about

41% and the stock up about 14%. nvidia, though, has been moving sideways for the last two months, but it is the top nasdaq performer today after the information reported that the parent of tiktok, bytedance, plans to spend up to $7 billion outside of china. this is next year in 2025. and speaking of nvidia, chip maker broadcom lowered today, but dubbed the, quote, next nvidia, with management promising sales of a.i. products will gain 65% in the fiscal first quarter of 2025. broadcom still in the trillion dollar market cap club. and lastly, another mover today on semi. can't seem to catch a break. one of the worst performing chip names. no news catalyst per se today, but the slowdown in ev sales disproportionately impacting on semi, given its high chip contact in electric vehicles. >> christina, thank you. back to you again in a bit.

we have a news alert on fanny and freddy. >> it is coming from x investor bill akerman, who is a major shareholder of fannie mae, as been tweeting about the emergence of fanny and fred difrom their conservatorship. i want to read you a couple of quotes from his post on x. he says what makes them particularly interesting today versus any other time in history, there's a credible path from their removal from conservativeship in the relative short term, the next two years. successful emergence from fannie and freddie should generate $300 billion of additional profits to the government. i'll tell you, i did an interview recently with mark -- head of the fhfa, which is the conservator of fannie and freddie. and he is the one who with secretary mnuchin tried to get

out of conservatorship. they wanted to get a backdrop for the two, the biggest backers of mortgages in the u.s., and they could not get that. then of course the pandemic happened and it all got sidelined. he says this will not be a first year priority for the trump administration but maybe a second or third year priority. he says that there are ways to get them out of conservatorship. as akerman is saying in his posts on x, they have gained considerable capital. i want to read you a quote from that interview. he said, i think the concern is that there are underlying problems that are being missed, that is them being in conservatorship. we have a mortgage finance system that works really well on the upside, but is it prepared for a downturn. while i'm optimistic about the overall state of the economy, are we putting the taxpayer at risk. that's his argument for take them out of conservatorship. i spoke to mark zandi. he's very opposed to them coming out of conservatorship because he says, why fix something that isn't broken. in fact, he says, i think it's

unlikely fannie and freddie will be released from conservatorship. it doesn't make economic sense. there are a lot of arguments on both sides of this. it's going to depend what the new treasury secretary thinks, whether they can get explicit government backstop from congress, and whether the two are well capitalized enough to take them back into the private market. a lot going on here, not going to happen in the first year for sure. >> no, for sure. and small volatile stocks moving a lot. i know there had been hopes under a new trump administration there might be a path out, which would seem to require a government backstop or more capital. >> exactly, more capital for sure. they are unlikely to get that explicit government backstop. but then you have lots of arguments claiming they are already backstopped just like the banks are. >> implicitly if nothing else. we are just getting started here. up next, parker's playbook is back and breaking down how he thinks investors should be navigating today's volatility

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the major averages rebounding off session lows but still under pressure today. a stock looking to benefit from positive year end seasonality. joining us to break it down, adam parker. adam, great to see you. thanks a lot for coming on. as we get to the end of the year, really interested in your thoughts thematically on whether any of these trends that have been so entrenched will continue or ripe for reversion next year. you have passive over active. it's been really hard to beat the market. you have large stocks over small stocks, growth over value, u.s. over the rest of the world. all of those things seemingly at

extremes, yet it seems tough to bet against them at this point. how would you come down? >> yeah, i mean i take each one one at a time, mike. and thanks for having me. happy new year, by the way. look, i think the u.s. vs. the rest of the world, i think the u.s. has a superior set of assets. so, unless it's a huge, you know, change to the corporate constitution of the other countries, i like the u.s. the most. growth versus value is tricky, right, because there really aren't that many megalarge cap values in the whole universe. if you're trying to beat the s&p, you probably have to own 2/3 growth to beat the s&p. i think that trait is probably entrenched too. i thought last year had -- q3 -- if you look at q3 of 2024 -- had huge breadth. the number of comings that beat the market by 20% or more over that time frame was the highest since 2020, and before that it

was the tech crisis. i think we had good breadth. we still had plenty of stocks up a lot. i think you'll have a little bit of rotation. most investors i talk to think there will be whether it's into laggards in health care where there's more owners assumptions, maybe industrials where industrial activity has really been in recession. industrial earnings have really been down and maybe they're troughing and can grow in 2025. i think you'll see some rotation, but i don't think it's going to be a wholesale change, the dynamics of the u.s. or growth. >> and do the earnings forecasts that are now set up for next year feel like they're firm enough? through your work, does it feel as if we can reliably expect 10%-ish growth for most of the s&p? >> so, if you look at -- as far as i'm aware, bottom of -- estimates have existed since 1978. on average on january 1st of any

good year, the analyst bottom-up expectations are for 14% growth and the actual growth has been closer to 8. so, the market can absorb downward revisions as long as it believes earnings are going to grow in absolute terms. i don't think people really believe -- i think the q4 2025 numbers are 17% versus q4 right now. i don't think anybody believes those are achievable, mike. it's just more whether results can be steady, that you can have earnings in the second half of next year. that should be enough. i think there's, kind of, a shorter term 2025 view and a longer-term view that you have to think through. i think 8% is a reasonable long-term earnings approach for the s&p. >> i know that you set out a bunch of, you know, ms or vexin about the market okay or when i going to be time to fight the fed? i find it interesting right now because what would it even mean

to be fighting the fed at this point, right? usually that means, look, if the fed's cutting, don't get in the way of that. they usually get what they're looking for. right now they're, kind of, cutting but less than expected and maybe the rates are going to settle above what we thought. how does that filter into the process here? >> yeah, i do think if you look at the things that were part of the bull case a year ago when we did our, kind of, you know, bullish outlook for 2024 a year ago we thought, you know, the fed accommodation is going to be there, it's going to help you on the front end. and, you know, you don't want to fight the fed. but, you know, what we learned in the last cycle -- think back to the last cycle. tech stocks got killed in 2022. everyone's favorite nvidia and meta were really bad stocks in 2022. and if you were a genius, you covered your shorts basically this day two years ago and got max long on gen 1 of 2023. and the reason you did that x-post was because the fed was closer to being done hiking, and

you can, kind of, envision the end of the hiking cycle, right? that was the end of the compression. if we take that logic and flip it on its head and say, okay, well, i don't want to fight the fed while they're cutting at least the first half of the cycle. but as we get closer toward the end of the accommodation, maybe i can fight them, i think the answer is, kind of, now or it's getting close to being now that you're not sure if they're going to do another 75 or 100 bibs or that's it. i think you don't have as powerful of a bull case from the fed side as you did six months ago. >> yeah. i mean, there are ways out of that. as i keep mentioning, you know, 95 into 96, fed only cut 75 basis points, went on hold for a long period of time, productivity revolution, tech bubble, all that stuff was still ahead of it. >> it's one of five or six points. i'm just saying, if you laid out five or six points a year ago and said, well, i have had the fed on my side as one of my five points, sure. i agree with that.

i'm just saying that one point is less powerful. per your point, mike, all we need in the first six months of this year is a big u.s. equity, walmart or mckesson, or some company with lots of revenue, to tell us they did something with predictive analytics. then you'll get that second wave up of all the a.i. trade again because people will say that's what we've been waiting for is productivity proof cases. >> that's maybe the phase two. that's what we're looking for. >> right. right. i think that's -- that's going to happen. yeah. happy new year, mike. great to see you, man. >> you as well. thanks very much. enjoy. newsletter from the u.s. treasury right now. emily has the details. >> hey, mike. we are now learning that a china state sponsored actor was able to is hack into a third party software services provider that the government and the treasury does use for tech support, and they were able to access some unclassified documents. this is according to a letter

received by nbc that was sent to the senate banking committee, letting them know about this hack. we have limited details exactly at this time. but of course with the concern about the hack, the concern of what was saw, the statement does say that the third party service has been taken off line. and there is no evidence indicating that that threat actor, that chinese state threat actor, has continued to access treasury systems or information. but of course another serious example of a chinese state third party actor being able to find their way into a u.s. government users and the u.s. government systems. guys? >> emily, thank you very much. up next, finding opportunity in retail. the xrt gaining more than 10% this year. so, what could be in store for that sector and which names should you have on your buy list? we'll discuss after this break.

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welcome back. retail stocks selling off today, underperforming the broader market, capping off what's been a hit or miss year within the group. here to share how the sector could fare in the new years, bernstein's vp anisha sherman. great to have you. it is often a sector that, kind of, has its, sort of, hot and cold running themes. i wonder how things are set up right now in terms of, you know, income tiers, where consumer fatigue is showing itself, and what concepts seem best-positioned? >> yeah. thanks, mike. so, into '24, we saw the higher

income consumer fatigued. they had just seen the return of student loans. their credit card debt was up. their pandemic savings were completed. and they just had this big run of revenge spending in '22 and '23. and they were done. and we saw a lot of trade down through this past year. luxury underperformed, high end passion underperformed. we're now coming out of that gap year. i'm much more optimistic on the higher end consumer in 2025. we did a 3,000 person survey, and the sentiment year-over-year looked stronger. and they have a low base to jump off there. they have a wealth effect from the strong market. they're expecting some rate cuts to come. and their pandemic savings haven't gotten incrementally worse yearover year compared to the other income groups. i would be playing the high income consumer into 2025. i think they're going to be having a better year than they did this year. >> high income consumers, they always have the capacity, perhaps, to keep their spending up. but it's a matter of desire.

and you see consumer confidence levels rise to a fair degree. what retailers are in the way of that potential strong spending? >> yeah. i mean, any retailer that draws from that slightly above mid income consumer, something like a tjx, tjmaxx and home goods, six-figure average household. that's the kind that could benefit from discretionary product, nice to have product. another one in high end sports like on holdings, in affordable luxury, something like tapestry. these are brands that are slightly above the mid-income consumer, and they are looking forward to getting another wave of growth from that higher income consumer getting more constructive into the new year. >> tjx, it feels like it's the stock for all vurmt environments or at least it's presented that way. it's had another great year, up almost 30%. it's obviously got the premium valuation. when people are value conscious, it seems like a beneficiary.

can that always be true, or do they simply have that versatile and broad customer base? >> they have a broad customer base and very strong execution, especially with the high-end consumer. i think the scenario in which tjx does not do well is if we see 800 basis points of rate cuts tomorrow and everyone chases low quality growth. that seems less likely, given the messages we're hearing. that's an environment where a stock like tjx does not do well. i do not see that being imminent. >> just a final quick word on tapestry. this is a go it alone. their brands should be back in favor type of story? >> yeah. i mean, their name brand, coach, which is over 75% of sales and over 90% of profit is on a run this year. they've been improved the brand equity. they're resonating with the younger consumer or the gen z consumer. and with that slightly higher incoming cohort wanting to spend more in the new year, that's

another tail wind. >> another gen z i'm related to got a coach bag. appreciate the time today. >> thank you. up next, microsoft has spent tens of billions this year in a big push to build out its a.i. infrastructure. but when will it actually pay off? the details after this break. "closing bell" will be right back. (wind, rain and rolling thunder) (♪♪) nobody's born with grit. british anncr: rose is really struggling. it's something you build over time. american anncr: that's twenty-one missed cuts in a row. (car trunk slammed shut) for eighty-nine years, morgan stanley has offered clients determination and forward thinking to create the future...

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coming up on 16 minutes until the closing bell, let's get to steve kovach who joins us to break down one of the biggest factors weighing on microsoft. >> it's capital expenditures, of course. and microsoft ending 2024 spending at least $53 billion on cap x. nearly all of that for a.i. infrastructure. and that's before we get to 20 billion expected to be spent this quarter alone. microsoft implied to spend around 20 billion in capital expenditures each quarter going into 2025. the risk, investors losing their patience for return. ceo satya nadella said the a.i. is there and microsoft will keep spending to meet it. in the meantime, don't have a clear view of how microsoft's suite of a.i.'s products are selling. microsoft said it's on track to generate $10 billion worth of a.i. related sales this year, but a lot of that is coming from

the azure cloud business. copilot plus pcs launched this year but without the marquee feature, recall. also no idea how copilot are selling after a year on the market. a few ctos said 2025 will be the year to assess whether copilot is worth that enormous cost. open a.i., bleeding over to microsoft. microsoft says it xpects openai's losses to shave a couple points off the eps in the december quarter. that would be about $1.5 billion. >> and worth noting, of course, microsoft stock's been kind of sideways. may be reflecting a lot of those concerns. steve, thanks very much. still ahead, consumer discretionary stocks sinking in today's session. what's behind that drop and the names being hit the hardest. that's coming up. "closing bell" will be right back. sector sort is sponsored by sector spider etfs.

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e*trade from morgan stanley we are now in the "closing bell" market zone. home builders sinking this month. plus courtney reagan on the sell off in consumer discretionary sector. and bob pisani breaks down the crucial moments of the trading day. diana, obviously been a rough road contending with the rates for home builders. >> for builders it's all about mortgage rates, which moved a tiny bit lower today for no particular reason other than they jumped so much last week. we're still over 7% on the 30-year fixed. that's the top of the range. as a result the home

construction etf, itv is down close to 17% month to date, on pace for its worst month since the start of the pandemic.e was builders have been buying down mortgage rates. all that said on the existing home side, we just got the read on pending home sales in november. up 2.2 month to month. that's the fourth straight month of gains. this count is based on signed contracts. so, people out shopping in november when the average on the 30-year fixed spent much of the month over 7%. chief economist claims consumers are used to the higher rates. if you believe that, maybe 7 is the new 5. i don't know. >> i guess the price of the house, you can get used to the high rates. we'll see how that goes. courtney, home builders and housing related stuff are part of consumer discretionary, but not the full story. >> sure, obviously a lot of

consumers will look at their financial balance sheets and look at their homes as their biggest asset. if we look at consumer discretionary as a sector, it's not the worst among the day, worse than the broader averages for most of the day. losers within consumer discretionary or at least within retail, you're seeing most of retail's subsectors like the discounters, department stores. five below, macy's, kohl's, foot locker. certainly seeing more declining retail names than gains when you look across at least my watch list, much more red than green, though without real significant fundamental reasoning. i guess beyond worrying about possible 2025 head winds, namely those tariffs that we may see coming down the pike. now, we're still in this long tale of the holiday season. investors know in retail stocks probably waiting for early,

albeit voluntary released holiday sales results which usually eke out in the early weeks of january. we did get early spending number for mastercard, and they show that retail sales grew 3.8% through christmas eve with strength in apparel, electronics, and jewelry. mike, overall, as you still ele. the the s&p 500 year to date, up about 26% compared to 24%. though the more narrow xrt retail etf well underperforming the s&p 500, up just about 10% year to date. back over to you. >> for sure. and tesla being down almost 3% outside of retail doesn't help the consumer discretionary move either. >> absolutely. >> thanks very much. bob, i know you were watching as i was couple hours before the open today when you really start to see the equity futures take a dive. bonds got a bid. what's the read after most of

the full session here? >> i think the important thing today is don't read too much into today's session. buying -- there's a lack of buying interest, not selling pressure. people dislike it when i say that. but look at the volume today. 400 million shares as we go into the last minute. on a normal day, we'll get about 700 million shares. so, there is no particular catalyst to create selling pressure here. there's just the lack of buying interest in the market overall. so, we had a little bit of relative outperformance today from the laggards on the year. energy was, kind of, flattish. real estate did a little better. metals and mining did a little bit better. maybe a little bit utilities. mike, let's not kid ourself. growth has killed the value this year. s&p growth up 40%, s&p value up 10%. i've been saying this for the last couple of days. we keep waiting, the eight largest stocks in the s&p 500 are all growth stocks, all tech stocks. you've got to go down -- i think berkshire is 9 or 10. that's the classic value stock there. then you start gaining a little

bit more value. you've got jpmorgan down there. >> lilly is down there. >> you get exxon, procter & gamble, johnson & johnson. most of the growth stocks are in the 30s on the forward multiples. you look at johnson & johnson, ten times. exxon, 13 times forward earnings. jpmorgan, 14 times forward earnings. all of these stocks are much more appealing. and yet there's no -- we keep waiting for the rotation you and i have been reporting all year, and it doesn't happen. we've been waiting a decade. >> it's happened in little bursts but they haven't really last for a couple of months at a time. going into next year, the bull case for the rest of the market is earnings growth is supposed to broaden out beyond the very largest stock. whether that's the magic or not -- >> materials up 18% expected earnings growth in 2025. health care up 17% or so. yeah, and these are relative valuations are there.

the tracked evaluations are there. it looks like the close rally is still fizzling. it's the fourth day. there are seven days, so it's not over. we're negative here. 59.74 is where it started tuesday morning. we're below that right now. so, we're down. this would be -- if this was down, this would be the second year in a row the stand of close was down. >> it is interesting in the sense that in theory it was supposed to be somewhat predictive of whether the next year was going to be a good one. obviously santa claus rally doesn't work last year. here we are, s&p and up 24% with a day left to trade. >> up 25% with 10% earnings growth. we've seen a multiple expansion, roughly 10%. last year you and i were talking about 19 1/2 times forward earnings, s&p 500. now we're at 22. that's a 10% of the expansion of the multiple and there's the differential. >> the top three stocks in the market are more than 20% of

market cap when they traded by 32, 35 times earnings. you're paying r up for the biggest and what's perceived to be the best buy. as we go out here -- still down 1%. this would be the first time we have two down 1% days in the final five that's the end of regulation. as they ring the closing bell at the stock exchange, there are winds of gross. stocks closing lower on the second to the last day of the year, finishing off last levels of the session, volume playing the role of that is the scorecard on wall street. the action is just getting started. welcome to closing bell overtime. i am morgan brennan. >> coming up on today's show, dan niles talks about the santa claus rall