so i think these things will work real well, but the one thing you do have to worry about with the stock is that, you know, it will be a risk name. >> thank you. >> matt, i hate to jump in like that, but we have ten seconds in the show. i always love having you on. i can't talk any faster. >> but i can s thanks for watching "power lunch." >> we have three seconds. "closing bell "kwot starts right now. guy, thanks so much. welcome to "closing bell "qwest. i'm scott wapner at the new york stock exchange. whether it is still intact or in serious trouble thanks to the dramatic move in interest rates. we'll ask our experts over the final stretch including blackrock's rick rieder. we'll zero in on the nasdaq and that's where the recent selling has been most pronounced and it's down .75% off the worst levels of the day, below 20,000 as you'll see and we'll watch it

closely. nvidia and apple under pressure again, too, and speaking of, we have morgan stanley's apple analyst, erik woodring is coming up later for the apple and iphone demand, as well. it takes us to the talk of the tape. has the path of the bull market taken a turn for the worse? let's ask blackrock's rick rieder. thank you for joining us. >> the employment number on friday was pretty powerful and when you look at the confluence of data, you have an economy that's operating on a strong level. we talkeded about about it a b times on your show. if you look at how the service sector did again and look at the services economy, they're doing well. so you get asked all of the time, where do you start buying

rates here? i find long end interest rates still not that interesting. there is a point that you start adding as you get to around 5% on the ten-year and you maybe add a little bit and you have an economy that's around well and you have uncertainty. the fed, and we'll get cpi and ppi this week. you're still operating year on year, core cpi at 3+ percent. the fed is still, you know, in a tough spot unless employment starts to soften. you have rates that will not come down of any significant attitude. >> you make the case that rates are going up for the quote, unquote, right reason. right? >> you tweeted earlier today about the economy in your own words is in healthy shape. why is the stock market having a problem with rates if it's for the right reason? >> so i think there's a near-term dynamic and an intermediate dynamic. so every time people say with the ten-year, it's over 4%. it takes a little bit of

digestion. i know we've said it before, this economy is much less interest rate sensitive than before and you look at the big tech stocks. they don't borrow. in fact, they're net low on cash, and you need to digest this rate dynamic. my sense is we'll get through this period and rates will stabilize around these levels. i still think the trend, particularly with long rate sts to move higher. >> higher than here. the 30-year is basically 5%, right? we're at 480 on the ten. are you saying that the 480 will go over five? >> the momentum is to move higher than that. second of all, there isn't a lot of rationale for buying ten-year treasurys. if you think about how 2004 finished, if you're sitting in the front end you have a significantly positive return and the back end was negative 4%. what's changed? you still have a relatively flat yield curve. you have turn premium that's not

enough and i still think you can move higher in interest rate. listen, i think once you get to five, it is whether it's optically a ceiling or not, there is some buying that will come in, so i don't think it will go much higher and a fed that can't really go until grew get a couple of months of soft happens in the labor market. you don't think the yield is strong enough to be attractive enough for stocks. >> correct. >> well, what was thought to be an equity-rich environment now you have competition from bonds and cash. >> it's a question of what bonds. people don't realize, you can create and we run portfolios with a two-year duration and very short interest rate exposure where you're clipping 6.5% yield. those bonds i love and by the way, you don't have to stretch in terms of credit quality.

those are great. so you think about what longer bonds are, and if you said i've got two assets i can hold that have long duration. i can own equities or i can own bonds. what is my upside, down side, you think about mega-cap. they have a 30% return on equity. if i'll hold those for two years, five years and they buy back a huge amount of their stock and they're book equity and i can own that and compound 30%+ even with multiples that are not cheap or i can own long treasurys. i think what bonds are today you own shorter term bonds and clip a bunch of income and marry that to equity and i still think tech stocks, growth equity makes a ton of sense. so, you know, the ten-year note is alternative to buying mega-cap? i don't think so. >> you've already had an issue, problem if you want to go that far with valuation to some degree, right? you said it on this program numerous times and it made you

uncomfortable where equity valuations have gone. do they make you more uncomfortable where rates are relative to valuation and that was an even more of a problem? >> i would say we've shifted our exposure a fair amount. calling options on equities. upon you think when volatility for much of the year was so low you can buy call options at nine, ten, volatility and run the position with convexity. now with mull ims where they are and i would argue in the beginning of the year there's pressure that you could have volatility around rates and oil prices, et cetera. we still like being moderately long equities and we moved to buying put spreads against positions and buying downside. so when you look at days like friday, your put options kick in. it's a different expression that we're running for much of last

year. >> but you're looking to be more hedged than you were then. >> a different type of hedge and upside whereas before we were long and we were convexed to the long side, a very different expression today. we are still moderately long, and i still think if you look at tech and the return on equity, the tock buyback and the amount of cash that's out there. pretty hard to see the equity market not having a decent -- and you would be a buyer on the dip of the nasdaq 100%. one of the ways to create a nice return or optionality is you can sell the down 8%, 10% to sell put options to have some local protection if we go down 2% to 3%. so, yeah, i would love to buy particularly some of the big-cap names, i would love to buy them, but at cheaper multiples. by the way, i think 20 years from now people will look back and think about particularly in

tech, when we talk about return on equity these companies are throwing off. we talk about the stock they buy back and also something that's pretty incredible and they are near monopolies or oligopolies in businesses that are actually increasing in consumers like, if you go back 20 or 30 years, was there pressure to break them up? these companies are doing exceedingly well and the consumer is benefitting from their success. so i think it's a pretty powerful point in time. >> are you -- are you optimistic over the balance of the year? let's say, from election day there was a lot of optimism, obviously. >> yeah. around deregulation and tax cuts and animal spirits around deal making and ipos and capital markets and the whole thing, and i feel like now we are more predicting volatility over the first part of the year more so than even we've experienced now and the administration hasn't come into office yet. >> i think you have to parse the

discussion somewhat into -- listen, i think there are animal spirits that play around whether it's new policy, new administration, deregulation, some incentives to build in the united states. some of that is through deglobalization and creates inflation, but the animal spirits that i think are playing through around capex are real. i think the dynamic -- i think you will see inventory build that gets front loaded and gosh, i will build inventory, and i think the first couple of months of the year, and you can see growth that's flattered to the positive side. what does that mean for interest rates? with rates moving up, do i take a little bit of risk off the table? i think so, but anyway, if you said to me, confidence in the economy, i feel very good about that. >> do you have confidence in the fed that they'll get it right even as you sit and say that their wrob job is more difficul? >> i think they should -- how do

i describe this? i think they should pause for a while and watch the data. we hear a lot of commentary this week, we have cpi and ppi this week. i should sit back and watch data for at least a quarter and so, listen, i don't think the fed, if you said to me, what is the calculous around markets today and what drives volatility and clearly it's what happens in terms of the growth of the economy and the consumer if you cite where is the volatility around the fed, i think we put the fed -- the fed easing this year is going to be tricky. back over the year you could change. >> at all? >> we're only pricing in one cut now, and if you said with an economy, i was looking at this payroll report, we've had our income benchmark was over 5% and it's been amazingly stable. you have 5% plus income, you can have 5% nominal gdp. if you're the federal reserve

you will cut rates into that and by the way, financial conditions despite some pullback are enthusiastic today. at least for the next quarter you should assume it is on hold for a while. could you see growth moderate? some of the models should see growth moderation in the success half of the year, but we ought to see it. >> it's interesting because in september when the fed started cutting, we all assumed that this was the beginning of several cuts over the course of 2025. interest rates have backed up more than 100 basis points since then, and there was a lot of optimism about the pros pecks prospects for the equity market and the rates were going to come down and the rates would continue to cut. can you be as optimistic as equity returns as the whole calculous changes with interest rates. in other words, how could you

possibly be as an investor, as bullish as you were back then given the changing dynamic and the goalposts seemed like this, and now like this. >> so i think that's fair, and i think the interest rate tool, first of all, i think people overestimate -- grossly overestimate the interest rate tool and they don't borrow any more and they're net long cash. so i think, again, i think that gets overstated. part of what we talked about, i like being moderately long, and i do think that your window with multiples here are tighter and that's totally fair, but you have to marry the interest rate. and you talk about what earnings are and they're operating leverage machines in the economy and if it's operating in a good level and if we'll run 5% nominal gdp or close to that. not that hard to get 13% or 15% earnings growth or higher particularly with the businesses

that are leveraged to growth so there's a balance. where do you come out? equity markets should do a 15% return? >> do you think that? >> 100%. we think about roe being those numbers and not a big value, not that hard to get 15%. >> wow. i mean, look, my commanders proved last night on the road with the rookie quarterback that you can doink and if you can go through. >> you sweat a little bit along the way. >> you do, but you still have to have the fundamentals of what gets you to that point. you have to have the earnings growth that is anticipated is pretty optimistic, don't you think? >> i don't know. by the way, we talked about this a bunch on the show. if you look at small caps or otherwise where you're not utilizing data effectively or you don't have the growth paradigm in place that anything

around ai, technology, medical technology has, yeah, those businesses are tougher, but i don't think it's that great a challenge for the company and as i mentioned, the consumer electronics show and i was blown away. two days of walking around, every company, no matter what it was. tractors, refrigerator, no matter what it was, ai, the capex that goes into it, the rnd that goes into it and it's pretty hard when those companies that are attached to it, cloud, semis, et cetera, software that don't have the ability to grow their top line. >> but you don't -- that said, you don't like the broadening story. >> no. >> and you never really did. >> no. i like being around. listen, the way i think about the broad portfolios and fixed income, i believe in diversification and i believe you're not really in bonds and you're not playing for the upside and you're just trying to clip the coupon. in equities, i believe if i'm

being conversion to the upside and you want to be concentrated in areas that will grow maybe in a more profound way than anything we've ever seen. look at the service economy and the service sector. by the way, it's not just tech. look at travel, leisure and thes very economy is in good shape. i just don't know why i have to take the risk in other parts that just don't have the catalyst for growth. >> that was a quick 15 minutes, i appreciate your time very much. >> thanks so much. we'll see you seen and mr. roadie to postnine. we are following nvidia. >> we're talking about microsoft, aws, google and meta are reportedly hitting snags with the latest blackwell chips and they're dealing with overheating issues and glitches and the information is reporting some might actually scale back their orders. not great timing when the cloud giants are also racing to build their own ai super computers.

hsbc just weighed in with a warning on supply challenges and they're saying these issues could drag on through early 2026 and they're skeptical of nvidia beating revenue forecasts by $2 billion each quarter which brings up the question of sustainability, and then there's another twist. remember the biden administration rules about exporting chips? bank of america, wedbush, they don't think it might stick and here's why. there's a 190-day comment period which means trump, once his administration goes forward, they could potentially revise these restrictions. right now about 15% of nvidia's total revenue is exposed to china, but that portion has declined just over the last few quarters. yes, it's higher compared to q2, but they do say it's declining, and despite the hiccups and the supply chain constraints, it has

quite a few balls in the air and that's why the stock is down 2%. ? pip on, it is the best over the s&p 500. >> that comes down if it's ashls a approaching, that is the latest sanction imposed by the u.s. on russian oil could start to hit supply in the market. goldman sachs estimates the targeted vesseles transported 1.7 million barrels per day in 2024 which is 25% of russia's exports. the firm said if russian production falls below 1 million barrels per day on a sustained basis and if iranian supplies also decline that could push brent to top $90 per barrel. energy is the top sector on the heels of oil's drum, with the xop which tracks the drillers pacing for its 13th positive sessions in the last 14 days.

sdot? scott? >> pippa stevens. courtney reagan here. >> holiday quarter preannouncements to two major retail conferences running concurrent, macy's store, saw comparable sales growth, but the full portfolio did fall short of expect eggs and expectations and the retailers battling another activist. barrington capital suggests macy's separate the better performing bloomingdale's businesses and they enter the big show with all three of those ceos, i asked macy's ceo if the activists are right, should they be sold to recognize the value? >> we're not getting the recognition of the value of these two brands and we believe that there are synergies between the wear housing, legal, finance and back end operations and

joint brand negotiation. there's just so much opportunity for us to leverage scale of the portfolio. >> separately, abercrombie shares are getting hit pretty hard. citi calls the reaction overblown. it raised the sales guidance range and didn't increase its earnings forecast. at the rcr con fraens, ference, horowitz was upbeat and you'll hear from her in the ext hour. courtney regan. ike mayo will tell us the names he is betting on most this year after the break. ♪ ♪ good morning. dad, what is this? how many did you post? they're all from last night. it's going to go viral. and then you're not going to be so upset.

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welcome back. bank earnings begin later this week with many stocks in that

space coming off a very strong year. the question now can they keep that momentum going as interest rates rise? let's ask mike mayo, wells fargo securities analyst. good to see you. you say the curtain is rising on a, quote, new era for u.s. banks. in what sense? >> welcome to the new era for u.s. banks. wie talking about more free markets, more revenues, more intermediation, more letting banks be banks. the shackles are being taken off so less regulatory complexity and less focus on just expenses and less marginalization of banks. do you know, scott, that loan growth in the last couple of years has been about the worst in the last century? loan growth in an inflation-adjusted basis has been negative in the last couple of years and a lot of the risk taking had been done by outside the banking industry. banks are going to be moving more front and center and letting them act the way they're supposed to. >> okay.

you're obviously talking about deregulation and expectations of that along with animal spirits and sort of everything else that's being figure side going to happen. >> well, i want to change the word deregulation to re-regulation, but we're not talking about going back before the days -- before the global financial crisis and it's the wild west and you had ridiculous leverage and i went on your show back after all of the catastrophes that happened. we're just talking about not sacrificing one iota of safety and soundness, but having said that, with as much red tape as humanly possible and if you reduce the complexity, you have more predictability about when banks want to price their goods and the hurdle rate can be lower and they can do more business and yes, they'll benefit and frankly, the regulators can save money. >> you don't think there's a prospect of banks attempting to make riskier loans if, as you say, the shackles are being taken off as they watch the shadow banking community make

loans and get returns like they would love to have, but can't make because of the current environment? >> banks grew not all double, and for the last year four years, so when i worked at the fed starting back in the late '80s. the adage was if it grows like a weed, maybe it's a weed. the weeds are not growing in the banking industry. the banking industry has been derisked for the past 18 years. by the way, if you don't believe me, believe the $7 trillion investment grade bond market that says bonds are about the same risk as regular corporates or as the stock market you're giving a 40% discount. to me that says opportunity. >> okay. are they going to return more capital to shareholders more freely? >> think the way to frame this is that banks will have more freedom to allocate the capital the way they seem most e

fethive. so that means -- >> you know what i'm talking about, dividend, buybacks and a lot of the things they haven't been able to do because they really weren't allowed to do it. >> yeah. more dividends and buyback and more capacity to make loans that they otherwise might not have made. look, bangs don't know the costs are sold until after the fed's stress test. that's not the way to run a business. if you ran a restaurant you wouldn't know what to charge for your steak. so it's the same concept. if they know the cost of capital and if the cost of delivering the product could be reduced then the hurdle rate lowers and they can make more loans and they can be more intermediaries the way banking is intended to be done as opposed to being marginalized as much as i've ever seen in my 40 years. >> what about higher rates? on the surface you would think they've good to some degree and maybe they're counterintuitive

and not as good. >> the biggest risk to my bold theis thesis on bank and i'm a buyer of the sector. >> you're always a buyer on the sector. >> no, i was negative from 1999 to 2016. >> on the whole sector? >> on the whole sector. i was on your show during the global financial crisis and people called me permabear. right now my level of bullishness is up and i would say you have inflexion. i'm talking about a multi-year investment thesis for banks that you haven't seen for two decades. at the same time you're likely to see inflexion short term in revenues, operating leverage, earnings and you have this regulatory change taking place. >> all right. i look at the performance of a lot of these stocks as i said in the intro that are already coming off great years. so how much of what you've just talked about has been anticipated and is reflectioned in the in the j.p. morgans that have

had tremendous runs. >> my top three recommendations are not reflected and that's citigroup, citigroup and citigroup. it is by far, j.p. morgan was my top pick a few years ago and i think earnings will be good this coming wednesday, j.p. morgan, but citigroup, i think the stock can double in the first three years. it's a new era for the banking industry and a new era for citigroup. >> because of what jane frazier has done, so to speak. >> the currency is riding on citigroup's changes. there is a disconnect between the changes citi has made and they're going from 50 years of this global matrix management structure, ridiculous to five lines of business. payments, banking, marks consumer and consumer and wealth and that's only been in place for three quarters and not even a whole year and there's a ceo in charge of that business and there's transparency nd there are returns and targets and that's

exactly what april it and, in a wi is a prokor and gamble and that's per our analyst at the firm, chris carey. >> what about capital markets benefits for the players that would, you know, obviously stand to make the most money within that new universe if you want to put it that way. >> look, two words, game on. it's game on for capital markets. >> it's not game on for everybody equally. >> no, definitely not and you see the capital mark stocks and it's a fair question. how much is priced in, but i think an inexpensive way to play capital markets would be once again, through citigroup. they're a top five global capital marks player, so you don't have to go for the ones that have taken off. citigroup's stock -- >> citigroup's stock was up almost 40% last year. >> oh, you know, the stock was almost $500 back in 2008.

>> just for those who don't remember, this was like your most hated name ever and now it's your most loved. >> yes. two of the ten chapters in my book "x on wall street" talks about how bad citigroup is. right now it is by far, the stock that i love the most because they're going from worst in class back toward normal. >> what about, before i let you go, the super regionals. you have overweight on statestreet. i think there are questions again about those banks in some respects because of what interest rates have done. can you be optimistic about the bond market environment. >> they're saying be careful because bond yields and ten-year yields go past 5 or 5.5%, you know, this thesis has a wrinkle in it. not citigroup, but the general thesis does, as long as washington, d.c., listens to the bond market and doesn't have

deficits or inflation that's too high then regional banks do well and the banks like pnc and u.s. bancorp and fifth third, and bankamerica, and state street, not quite a regional bank and that would be in my buying list and i have a soft side for banks right now. >> but you say if, you say if washington listens. the bond market can scream loudly for a while and washington may not be paying attention for a while. >> well, washington, d.c., may be forced to pay attention if the bond yields go too far past 5% there will be enough disruption that something will have to give. >> we'll leave it there. >> all right, mike. i appreciate you. mike mayo, wells fargo security sgloos . we're getting news out of stars bucks, pippa stevens. >> it would require cafe to pay customers. it aloud the public to stay in cafes or use the bathroom regardless of whether they bought anything. this, of course, follows brian

nick nickol taking over last year. shares are shy of 1%. >> pippa stevens. apple falling on weak sales data and he'll tell us where he sees the stock heading from here. "closing bell" is coming right back.

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december as questions continue to nt over iphone demand. let's bring erik woodring. >> thank you, scott. >> what do you make about the continued concerns about demand whether it's the influential in china last week about it being down. i have another report today apple falls on ai disappointment and you're the guy on this story. what do you make of it? >> sure. i think both of those reports are directionally accurate in that we have iphone units down roughly year over year in the december quarter, as well, and something that i keep going back to is that right now the iphone 16 is still largely only available in english-speaking countries which means the majority of apple's customers do not necessarily have access to what would be viewed as this key upgrade factor in their native language.

why would you upgrade to an iphone if you don't actually have those capabilities? one is to future proof your iphone and that's not taking place in international markets especially in china where there is a lot of competition. i directionally agree with a lot of the comments that are being made about the december quarter and you know, what it is incumbent upon apple to do there for is make sure you're getting these features out, not necessarily quicker although that would be ideal, but make sure that they're complete and make sure that they're enticing to the consumer and make sure the consumer understands where to buy it and how to buy it. that's a tougher sell than selling a device that's a tangible upgrade where you can hear, see and feel differently in stores. it is a tough smartphone market and the competition is still intense, but to me, this is all

about apple intelligence still being layered interest the install base with most of that layering to come into the future. >> but this is a good part of why you remain bullish on the stock, why you have it as your top pick and why you have 273 on it is that you're bullish on the eventual upgrade cycle and at what point, erik, do you sit back and say i've seen enough. it's like election night. you see the data coming in and saying i thought i knew what would happen and then you've seen enough and it's not what you thought it was going to be. >> one is the iphone cycle that we've pointed to, we think is predominantly starting with the irk phone 17. iphone 17 that launches in 2025 and they'll have exposure to apple intelligence and have exposure to key features, right?

we've done survey votes that they want chatgpt integration and siri. you have chatgpt integration that works quite well and the upgraded siri that comes in april. on a very short-term basis, what we're seeing is fundamentals mattering, right? at the end of last year apple was up 2% for six consecutive weeks as even we were cutting our iphone numbers in early december, now the market is paying more attention to fundamentals, frankly, rightfully so. so i think this is a bit of a healthy correction. you're also seeing the ten-year having an impact, i think, on these growth multiples. so the iphone 17 is still to us, the cycle where apple intelligence really starts to shine through. the iphone 16 just doesn't have enough exposure yet to apple intelligence as a key upgrade device. the other aspect here are the

non-iphone-related stories. growth is strong and we think this product grows and it could be underappreciated as we go into a commodities down cycle and then the services business. we wrote in the middle of december about services outperforming in the december quarter. app store remains strong. digital advertising remains strong, so there are factors within the apple story that we believe remain -- that we believe remain very attractive, but to be fair, to get to the $273 price target that you alluded to in the fiscal 2026 estimates, you need the iphone and really it becomes iphone 17. so what we're watching for in the coming months one will be is there any inflexion in markets where apple intelligence is increasingly available meaning the features are being built out or becoming newly available and then the other part of what we're looking for is really as we look into the future, markets

like china, is there clear visibility into apple intelligence being available before the iphone 17 launches? >> i think it's going to be tough, frankly, to get to my forecast in fiscal year 26th if apple intelligence is not available in china. so i am harping a bit on china here. obviously, it's the second largest market that uponael has and it's critical. >> let me ask you, lastly, i guess what would be a more existential issue, a perceived lack of innovation. i ask you about it because it comes on the heels of what mark zuckerberg was talking about with joe rogan on the podcast. i want you to listen to what he's said and i'm sure you've seen it and remind viewers if you could, let's watch this and i'll have you react on the other side on the idea that apple hasn't done anything. >> they have used that platform to put in place a lot of ruling

that i think feel arbitrary and feel like, you know, they haven't really invented anything great in a while and it's, like, steve jobs invented the iphone and now they're just kind of sitting on it 20 years later. >> what do youic ma of what he said? >> sure. i think innovation looks very different today for apple than it did back when steve jobs was at the helm, right? of course, steve jobs created the iphone. it was completely innovative and new to the market, and i agree that tim cook has largely taken the platform that steve jobs created and pushed it forward, but to say that there hasn't been innovation to me is just a little bit misguided in the fact that apple has effectively become a semiconductor company without actually being a true semiconductor company, right? they design and engineer all of their -- all of their application processors. i think that's fairly innovative. they're increasingly doing more on the services side. it's $100 billion annual run

rate business. back when i started my career it was less than a $40 billion annual run rate business. so innovation just looks different today. i can agree when it comes to new products nothing has displaced the iphone. it is 52% of revenue and the iphone matters as much today as it did ten years ago and as it did 15 years ago, but at the end of the day, i believe this company is innovative and it takes a little bit more time ask it's hard to move need will when you're accompanied with, and i don't believe the innovation story is over for this company. >> we'll leave it there. i appreciate it you as always. thank you for being with us. thank you. >> erik woodring. christina partsinevelos is standing by. >> coming up, a major vaccine maker's billion dollar warning

and the battle for an american steel giant heats up. those stories are next.

less than 15 from the closing bell. back to kristina now for the stocks she's watching. >> shares of moderna as it slashed its sales guidance by a billion dollars. jamie mock tells cnbc increasing

competition in the covid market as well as falling vaccination rates did play a role. moderna expected to wrap p later in the year off the back of the covid shots and rsv vaccine for seniors and shares of u.s. steel jumping as sources tell, david faber nucor are for a potential takeover bid of the steelmaker after it banned it from buying the firm. cleveland cliffs declining to buy u.s. steel and shares of united steel up 6%. >> all right. thank you. kristina partsinevelos. we'll talk about shares of honeywell today. sector sort is sponsored by sector spdr etfs.

coming up next, we'll t se you up with kb home results in o.t. the market zone is next.

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we are now in the closing bell market zone. seema modi standing by with the breakup pressure mounting on one major industrial company and die diana olick setting us up in o.t. and jonathan is seeing the crucial levels in the markets and seema, the analyst pressure honeywell. >> yeah, scott. management is said to be pressuring honeywell to speed up separation of its business, aerospace from automation and that's according to the report. it is reporting a massive $5 billion stake of honeywell calling on the industrial to split up its business as honeywell shares have underperformed its peers. it's performed exceptionally well a sign that the market wants simplified stories and plays. honeywell ceo did say the company was reviewing its portfolio and expected an update during its earnings call in a few weeks.

analysts say aerospace alone, scott could be worth $90 billion. >> that's seema modi. to diana olick with what to look out for with kb. >> kb beat out analyst estimates and missed significantly on guidance and jeff metzger noticed in that release that june and july were tough, but as rates moderated in august net rates improved and they were encouraged by strengthening demand in the positive trend they were experiencing so far in the 2024 fourth quarter which we're about to get, but that was september and the cyclical low in mortgage rights was 6.11%. as you can see rates shot up right after that to over 7%. so the rest of the quarter going to be tough rate wise, at least. we saw that in lennar's earnings, as well and kb had to lower prices to keep buyers coming in and that pressured some markets and some argue that buyers are getting used to a, quote, new normal in rates. we'll see if that's true in a few minutes, scott. >> we will. and we will see you shortly. that's diana olick.

to jonathan krinsky. we put out a note saying we could get a short-term bounce. it is worth noting that we're bouncing into the close today certainly off the lowest levels and the dow's up 370. the s&p's gone green. more specifically, what are you looking for? >> hi, scott. yeah. we were looking at a level on the s&p 500 where it gapped up from at the election back in november. that was 57.83. so we had the unfilled gap and we finally filled it today. we are pretty oversold. we know about internal breadth of the market and only about 17% of the s&p 500 is above its 50-day moving average. that's typically a good reading to get oversold countertrend rally. i think the issue we have is when we look beyond that rally we don't think the pullback on the s&p 500 itself is consistent with that deterioration and breadth. tip typically, the last time we saw that was in october of 2023.

you typically see a 10% drop on the s&p 500. we think something around the 2 hun- 00 day moving average. >> that's the number you have in mind, would you be a buyer on that? >> it depends how we get there. when you get these quick flushes like we saw in august, those tend to be better buying opportunities as opposed to if you see a slow, drawn-out drip like we've seen in a lot of the other parts of the market that have already succumbed to the selling, so it depends how we get there. our sense initially you do want to be a buyer typically, but we'll have to wait and see, but we'll see that later this year. >> what are you thinking about when you look at tech as rates have crept higher? >> yeah. it's funny, tech, there are only three sectors that have not seen selling and tech, communication services and consumer

discretionary. part of the reason why those are not impacted by the more sensitive sectors of the market and they're due to come down and ultimately what brings the s&p lower.to come down. so i think it's hard to see the s&p test that. >> all right, jonathan, we'll talk to you soon. thanks so much. . >> that bell marks the end of regulation. risk ringing the closing bell at the stock exchange. deloitte fab 500 winners doing the honors at the nasdaq. rising bond yields and nvidia worries put pressure on big tech. the dow gets a boost from united health. attention turns to kb home earnings. that's the scorecard on wall street. i'm jon fortt at cnbc