we have. >> markets retracing a little bit. apple still under pressure. it's been fun. "closing bell" starts now. >> welcome to "closing bell." i'm mike santoli in for scott wapner. we're live from post nine at the stock exchange. this make or break hour begins with the indexes struggling to hold on to wednesday's powerful relief rally with a majority of stocks making further progress, offset by some pressure on key mega cap names. here's the scorecard with 60 minutes to go in regulation. the s&p 500 churning all day, just around the flat line. you see it's almost exactly dead flat at the moment.

around that 5950 level. the equal weighted version of that index, though, is up more than half a percent, about two-thirds of one percent. you see broader strength. yet the nasdaq has been the weak spot all day. held down by a further pullback in apple shares. that stock now down 3.4%. it is off some 12% from its recent record high on chatter of further sluggish china sales after the stock's pretty steep ramp in late 2024. now, the broader tape is supported by further slide in treasury yields after yesterday's big drop on some friendly inflation data. see the two-year down below, 4.25. the ten-year around 4.6. it takes us to our talk of the tape with the s&p up 3% off monday's low. will the coming rush of corporate earnings be enough to power a further run toward highs. let's get to the two big earnings themes of the day. kristina partsinevelos here to talk taiwan semi, and leslie

picker is digging in to the latest crop of bank reports. >> taiwan sem a's earnings matter far beyond the numbers. it gives us a crucial read on the entire chips sector. q4 net profit was up 57%. the company's fastest growing area of business was high performance computing. they also confirmed their arizona plant is now in production amid concerns of delays. but investors are laser focused on early full year sales forecast and spending plans. the capital expenditure came in higher than estimates. when it opens its wallet, it creates a ripple effect. to chip equivalent makers, and look at the share prices, sea of green, all over 4% or more. the sales forecast, though, tells us an equally compelling story about a.i. demand since it dominates high end chip production. they forecast their overall revenue will increase at least 20% annually over the next five

years which is a bullish sign thanks to demand from nvidia, which counts tsmc as its primary manufacturing partner. a.i. revenue for tsmc will double in 2025. that's a big jump. you can see nvidia shares were trending higher. came down lower in the afternoon. these positives, though, are offsetting the expected q1 softness in smartphone sales which is part of the seasonality but it's impacting apple and qualcomm today. mike. >> kristina, pretty stark contrast there. i guess to what degree was this bump in capex by taiwan semi a genuine surprise? it's kind of fascinating how the market continues to reward bigger numbers when it comes to expected capital spending. i guess this is essentially saying look, the food chain continues to thrive for as long as we can see. >> it wasn't even that big of a deal, like, there was a range between 38 or 39 billion to about 42 billion dollars. that high end of the range came in higher than anticipated,

capex increased 41% year over year. it's an increase but not a massive one, and yet, the market is reacting possibly because the smh and the whole basket of non-a.i. plays have been hit so hard that this is kind of the little boost that that sector needed. >> yeah, there's no doubt that the setup maybe did prime the sector for a little bit of a bounce. thank you very much. leslie, you know, pretty hard to find much fault in a lot of the banks. how are they doing today? >> reporter: yeah, yesterday, they certainly had a standout day, but today, the banking sector is facing a bit more of a mixed picture. morgan stanley, the standout performer today after reporting better than expected gains in equity underwriting and brokerage. after the election when clients were taking on more risk. bank of america, though, that one in the red today, which analysts really pegged to guidance for net interest income. that's the profitability metric for loan making, and that came in a bit below what the street had been hoping for.

i am currently, though, here at citigroup headquarters, which announced a massive multi-year buyback yesterday. that sent the stock soaring yesterday. and i asked the ceo a short while ago, why now? >> i was very pleased to announce the $20 billion program yesterday. as well as an increase in our share buybacks for this coming quarter. why now? capital return is very important to our shareholders. i know that, we know that. and we're very committed to doing it. >> reporter: i followed up and asked her whether the buybacks were predicated on bezel 3 rules which are likely to be scrapped entirely or add least come in neutral to capital under the new administration. she said they would have to wait and see hot the actual structure looks like. we chatted broadly about her priorities for deregulation as the newly elected chair of the financial services forum which represents the biggest eight

banks in washington. she said she wants an environment that allows for clients to transact as well as insuring the system isn't overcapitalized in a way that impedes growth, mike. >> i guess if you're citi and your stock trades at 80% of book value, that's when it makes a whole lot of sense if you have the wherewithal to buy back the stock, and in theory, that should help out in terms of the entire capital structure. leslie, although i wonder about the themes that you're seeing here, the breakdown of where the was strength and where maybe there was not. you see things like you mentioned bank of america, but u.s. bank corp also struggling. it seems like if there was less investment banking and trading in the mix, maybe slightly less impressive. >> reporter: that's the perfect way to put it. i would say the wall street tilted businesses did really well during the quarter. things like investment banking, sales and trading. i mentioned prime brokerage. even at morgan stanley, we saw ipos and equity underwriting coming in strong, relative to what we have seen the past few

years. but the business of lending, and we're going to start to get a lot more regional banks in the upcoming days that are far more exposed to the lending business, that was a bit more of a broadly struggling, we did see some loan growth with bank of america, but the other key lenders saw that lending decline in the quarter. and so a lot of that is just a byproduct of still high interest rates. and the fact that there's some uncertainty on the trajecty. people were hoping for those to go lower which could spark demand. now that they appear to be settling at these levels it's a big question mark what's to come in 2025. >> for sure. there was a little bit of a change of the thought process on that whole thing with the fed last few days. we'll talk more about that. leslie, thank you very much. let's bring in stephanie link and cathy jones. stephanie, of course, a cnbc contributor. great to see you both. steph, let me start here by the front edge of earnings season.

you can't always dry a direct line reading through what the banks say, but the economic backdrop is at least reassuring. what are your big takeaways? >> yeah, i mean, like so far so good with in terms of earnings. the banks always trade a little funky around earnings so it was very encouraging yesterday, the action. today a little mixed but the numbers are still really good. i would say that the earnings growth for this kwaurptder is likely going to be -- the fourth quarter, should likely be about 10% plus. that largely has to do with the economy doing better. i mean, today's numbers that we got, retail sales, the control group at .7%, the consumer is just fine. absolutely just fine. and we have been saying that, i have been saying that for a long time. that is 75% of the economy. most interesting is while initial claims, we're getting used to it being really low historically and good trends, but i thought that the philly fed manufacturing number, while it's very volatile, and on't

pay a lot of attention to the regional manufacturing series. what it does though, it confirms what we're seeing in the ism manufacturing, which is starting to see an increase, about 200 basis points from the lows. but that's really encouraging. i think you add it all up and you run at something like 3%. economy in good shape. that equals in my mind about 10% earnings growth, maybe more with margin expansion. >> i guess also the atlanta fed gdp tracker for the fourth quarter was bumped up to an even 3%. it had been there a little while ago. i no you thought that perhaps the jobs report we got on friday probably put the fed on hold for a while, but i'm interested to hear your reaction to what chris waller had to say to us today about what he thought might be in the cards. let's listen to some of that. >> we'll have to wait and see whether this continues. i believe it will be. we'll see some base effects come

out. last year, we got a shock with inflation in january and february. that kind of put us back in terms of our progress for cutting rates. i'm hoping it doesn't happen again so if, if we continue getting numbers like this, it's reasonable to think that possibly rate cuts could happen in the first half of the year. >> and cathy, numbers like this, he was referring of course to the slightly softer core cpi reading yesterday. so he was pretty dovish about his take on the inflation trend. how do you think that sets the fed up here? >> my impression is that there's kind of a wide divergence at the fed right now between those that are in the waller camp and expect inflation to come down and open the door to some further rate cuts and those that are more in the let's wait and see camp. and i think it will come down to the labor market as much as the inflation numbers. they need to pay attention to what's happening in the labor market. if unemployment starts to drift

up from here and wage growth continues to drift down, then the fed may say, yeah, as long as inflation is continuing to have some space, but they don't have a lot of space. i think the market may have overreacted to the cpi number because we need more than one months, right? you need three or four months in a row. i would be very surprised if we get a rate cut in the first half of the year. barring some big surprise in the labor market. >> it's interesting, yeah, i mean, arguably, that dramatic reaction in treasuries, the drop in yields, seemed like an overreaction, but that's maybe because they had been up in a straight line for a couple months. you still think there's upside to treasury yields from here, kathy? >> i think it's possible, when we look at where fed funds rate may end up, it looks like it's going to be closer to maybe just under 4%, 3.75 to 4% is a

terminal rate. if that's the case, then it wouldn't be too unusual to see a 5% ten-year treasury yield. we have a long way to go. we have a whole new set of policies coming out of washington. we have a whole new set of people in washington to determine policy. so a lot of the uncertainty that we're dealing with will only get compounded over the next couple months. i think that that may open the door to another test of 5% on the ten-year yield. >> interesting. and steph, i guess at this point, the economy has shown that 4% plus treasury yields, something close to 7% mortgage rates, have not really kind of held it in check. it's obviously been able to grow through it, at least for now. i guess the big question and the risk that the market seems to perceive is that these rates at these levels might undermine the growth story a little bit before we might get any policies that could be a boost to growth. >> yeah, i guess it all depends on why you think rates are going higher. i think rates are going higher

because as i mentioned earlier, we're growing at about 3%. so the trump administration is inheriting a pretty good economy, and on top of that, you have pro-growth initiatives from trump which would help keep it around that 2.5, 3% level. because that's important. because we're not going to get nearly the amount of fiscal policies that we got over the last couple years. so you will need trump and the deregulation, lower taxes, to stimulate growth and to be able to continue to see above trend growth overall. so if rates are up because higher growth -- growth is higher, as a result, maybe inflation is a little higher, we can live with that. especially from the corporate side, from the investment side, because that will be good for earnings and that's the most important thing for equities. >> for sure, and obviously, earnings season is always a little obstacle course. i want to get your thought on united health care. they had earnings. they kind of squeaked through, underlying trends maybe not that great. stock down 5.5%.

how does that sort of set it up? >> yeah, well, i recently added to the name. as a new position, and i added more today. because the stock has been very volatile as of late. it was an underperformer last year. this is best in class in the manage care space, mike. you know this. they're growing double digits in earnings. they're going to get back to double digit in revenues. i think today the reason the stock is down, a, it was up 7% on monday. so it's giving back some of that because of regulation and that sort of thing. more favorable regulation, if you will. today, it was a little more disappointing on the medical loss ratio. margins going in the wrong direction. i think it's fixable. i think you will see an improvement throughout the rest of this year. i think you're getting first on class in sale at about 17 times earnings when the historical average is about 24 times. it's not going to fix itself overnight, but i like it long term. >> and should mention it's draining about 200 points off the dow.

it always has an outsized impact on that index. unh today. thanks so much. appreciate the time today. >> meantime, our next guest says the pressure on tech threatens the market near term setup. joining me is katie stockton. katie, great to see you. we have been, i guess, in this sort of choppy range. leadership has been flagging a little bit. low momentum for maybe six weeks. how do you think it resolves here? >> i mean, december was a really rough month in terms of market breadth and also the momentum, which has fallen off not just for tech but more broadly. so we do think that we're already in the midst of a corrective phase. we think it probably has a few more weeks to it if not longer. based on what we're seeing and our intermediate term metrics. that loss of upside leadership especially from the mega cap growth segment of the market is an issue. tech has such a huge footprint,

33% or so within the s&p 500. really it's only year to date, so meaning this year, january, we have seen the ratio of the technology sector spider etf break down, break a short term up trend line relative to the s&p 500. and that suggests we'll see more of the same in terms of downside leadership there. >> what do you think the ultimate destination is let's say for the s&p 500 through this phase? >> the next support, we have already seen a short term breakdown. the next support is at the 200-day moving average, really simple to reference. just shy currently of 5600. and that is about 6% below. we do think that's possible as a down side objective for the corrective phase. but rather than looking for a key level, we also watch just our indicators. we want to make sure we have more convincing low being established. right now, we're seeing a little bit more of a b wave to the abc

corrective wave with this bounce which in some cases looks like it has more room, especially in the value complex. but we do look for another down leg. the down leg, once it generates more widespread readings on the weekly charts, that would be a welcome development, there's usually a bit of a retest. a retest of oversold territory. and that tends to be when we get the best entries. we have correlations running very high typically when the markets are going lower. so unfortunately what that means is even if you're seeing an outperformance from the likes of value or pharmaceutical stocks or defense stocks, areas that do look poised to outperform, it doesn't mean they're going higher. we don't feel like there's a great buying opportunity yet at hand. >> you mentioned the xlk, the technology sector spider having really kide of buckled a little bit here relative to the s&p. obviously, apple a huge part of that, 14% i think of that fund. that stock has been a big

downside leader so far this year. how does that shake out? it did have a really good run toward the end of last year. >> without question it's been a source of downside leadership this year, but that's within the context of the long term up trend and longer term outperformance from apple. we're still viewing this as a corrective phase, not necessarily the start of a bearish reversal. however, on the monthly chart of apple, we have countering indications from our indicators to suggest that like the broader market in some cases we could see a trading range develop for more than a few weeks. but really more like a few months. as the gains that we saw last year are effectively digested. we're looking for more of a range-bound environment perhaps to unfold for apple and also for the major indices that are so heavy in these tech names. and that makes it a little bit more challenging, i think it begs for active management, meaning that the next low that we feel is unfolding, you might want to be a little less

committed to that low. maybe it's not a long term entry but a short to intermediate one. >> and just as downside reversal in let's say the ten-year treasury yield yesterday, in your work, does that look important or decisive at all? >> we had a breakout in ten-year treasury yields before this pullback, so we feel like it's just a counter trend move. obviously, had rallied pretty steeply, so we feel like it will persist in the near term and it's certainly an influence on market sentiment for equities. so it does matter, but we don't think it's a lasting reversal lower. our work suggests that ten-year treasury yields can continue to climb after this pullback and reach 5%, if not secondary resistance around 5.25%. >> all right, yeah, 5%, i guess, is the high for this cycle. we only touched it briefly. see if that pulls us back up there. great to see you. thank you. >> thank you. >> all right, we are just getting started. up next, top retail analyst simien siegel is here with his

first reaction to today's retail sales data and the name he thinks has serious upside. he joins me at post nine after the break. you're watching "closing bell" on cnbc.

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target shares slipping on the back of some fresh sales data. courtney regan with the details. >> at first blush, their business update looks good, but there's a lot we don't know. shares rising nishy premarket and then selling off. target said sales for november and december grew 2%, with record high sales during black friday and cyber monday. but those are big promotional selling periods. discretionary categories also gained, those have been weaker for a number of quarters. the retailer raised its comp

guidance to 1.5% from flat. however, target only reiterated, not raising its earnings guidance. it's a pretty wide range, too. no mention of margins, what those might be looking like. the question many are asking, did target have to discount aggressively in order to spur those sales at the expense of profitability? why did apparel and toys reaccelerate when they had been weaker before? they weren't able to give me answers. i guess we have to wait until the full results are out in early march to hear more. >> and i guess the extension of that question is, to what degree would we generalize those trends? in other words, everyone said in holiday time, oh it's a value seeking consumer. maybe there's going to be a lot more attention to price. so does target reflect what was happening industry wide or is it a target issue? >> yeah, if you look at a name like abercrombie, they actually

had pretty strong results as well. and so they, too, were looking more positively at least at the sales action for the quarter, but for them, they just went ahead and reaffirmed that as well, so maybe some disappointment because we saw those shares sell off as well. it's a little hard to know exactly. i think we still have a lot of questions. what does it mean for everybody else when it comes to margins, to profitability and how that equation may or may not have worked together. a lot of the commentary from the analysts after they have been hearing from executives were sort of look, holiday was pretty good. maybe not blockbuster. the consumer is value seeking but also resilient. sort of hanging in there, but maybe not awesome. we'll ask simeon about that. >> let's bring in simeon siegel. just take it from there interms of first a comment on just the general operating environment. >> okay. i think everything court said makes a ton of sense. i need to be a dad for a moment.

have you heard of flat stanley? >> sure. >> elementary school kids send something to a star they want, athlete, politician, music, whatever. yesterday, i got addressed envelope to me, and you're supposed to take that photo. my son sent it to me, so i need to bring formika, his flat stanley, as i walked out today. i think that the idea here that courtney is talking about is it makes a ton of sense. businesses are doing well. you and i black friday talked about the difference between taking risk to multiples versus taking risk to numbers. we're not seeing any problem with numbers. we're seeing problems with multiples. the guests before were talking about the same thing. we're seeing markets sell off, not businesses. the conference she's referring to, you're hearing a lot of companies look at their stocks, and they're confused. >> they're confused because the stocks haven't reacted well to numbers. but i would assume, i suppose, the stocks at some point had

outperformed the fundamentals to get expensive. >> 100%. they were confused about that, too. they just didn't want to admit it. what we saw, what we have learned through this week, through the icr conference, tloum target today, people are spending if you give them a reason to. that reason might be promotions. but it's not always. but you have to decide what you want to spend for those numbers. are we going to continue to accelerate? that's what happens to the stocks. that's why it's important when we go back to that conversation of do you want to pay for the multiple or find a turnaround? it is important you know what you own. abercrombie, i don't know if we pulled up the chart, but it did not have a very good day. if you looked add the results, you would have been very surprised by the reaction. >> fair point. and so taking risk on the valuation, as you presented it back when several weeks ago, was things like tjx, where they do nothing wrong in terms of the actual results, but it's an expensive stock. >> the idea of just deciding, do

i need to find you a surprise in the business or do i just rely on the fact that it's a great business, it's expensive but expensive for a reason? tjx is one of those. there are others where i can't give you material earnings surprise but i can give you compound. those are one category. the other category, the ones where you have torque, where you have real positive movement, those are ones where you have to be willing to get more dirty. >> let's get to that. then you have the question of is something cheap or neglected for a good reason. capri holdings is one that i think you're betting is more than meets the eye. >> i love this one. we haven't spoken about it because i just upgraded it last week. this is a fairly new idea that i love, but i think you have a business, capri, i think at this price you're effectively getting versace and jimmy choo for free. but you have very low -- you're going to love this. very low revenues, very low margins, a lot of debt, buy the

stock. it sounds ridiculous. but the point is you have a lot of pressure points. as each of those pressure points goes away or loosens i think you'll see the stock move a lot. in a way that's different from other turnarounds, when brands overextend, they fill the field with promotions. they fill the field with logo. and you have to pull it back, clean it up. nike is going through that right now. i think what michael kors did, they were supposed to get bought by tapestry. i think as soon as that announcement started, everyone left. because they felt, you didn't know what your job was going to look like. if you're management, you just made the deal of your life. except you didn't. >> what's the cadence, though, of i guess that restoration effort? how many quarters are we talking about? >> here's the beautiful part. before we even talk about the company, debt represents more than 60% of this market cap right now. the only other time it was that high was during covid. it's not because they took on more debt. it's because the market cap collapsed in both instances. when that happened during covid,

the market cap versus the enterprise value, the actual value to the business, exploded. why? because it generates a lot of cash. so if you can generate cash and improve that net debt, you actually get the stock go up well before the business has to improve. i think that's going to happen again, either they sell assets, either versace and jimmy choo up for sale, or michael kors generates business. that will be the first opportunity for the stock and i think it's material. then we go back to the point that nike needs to clean up. that takes effort, work. if i'm right that michael kors just needs to turn the light back on. people need to come back in the building. that fix can be much quicker. >> are you getting asked, you know, under the new administration, is some kind of deal like they just walked away from or were forced to walk away from back on the table? >> yes. i would be surprised -- i think that that price was dramatically higher than where we are right now. i think, and i'm speaking beyond out of turn. i think that if both sides came

back to the table, i think tapestry would ask -- if they wanted. >> the ask is wide. >> i don't know this is as simple as new administration, it's back on, because everyone was so happy to have it in motion. but we are talking about, we're talking about assets up for sale. figuring out who wants what, could it be that different businesses want a piece of capri? that could be. michael kors is a very different business than versace and jimmy choo. a lot of optionality. >> for sure. good to talk to you. up next, tesla shares tumbling as the company shifts its cybertruck strategy. details and what it might mean longel wl ngp.comi u "csi bl"ilbe right back.

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welcome back. shares of tesla slipping today. phil lebeau is here with the details of what seems to be behind that move. hey, phil. >> mike, there mail be some people who are wondering are tesly shares falling because of new incentives added to the cybertruck, to increase sales? i'm not sure that they're moving because of that, but certainly, whenever you are talking about a new vehicle having incentives put on, it raises the question. is there a demand issue or is there an inventory issue? either way you look at it, the cybertruck discounts have been added. and this really started yesterday. we started to see these reports of this coming out of the press

that follow closely the website for tesla and the cybertruck. the incentives anywhere up to $2600 for 2024, the cybertruck was the best selling quote/unquote pickup truck in the united states. among electric trucks, its sales were 38,965, well above the f-150 lightning and the rivian r-1t, and you see the hummer at the bottom. as you look at the ev market, tesla remains king of the hill in the united states, but its market share has dropped below 50%. what's the future of the cybertruck in terms of production? whether or not they're a little concerned about inventory, you can bet that's going to come up in a couple weeks as you look at shares of tesla. on the 29th, we'll get tesla's q4 results after the bell. we're assuming elon musk will be on the call, and the cybertruck may come up. there y be a few analysts

asking questions. can guarantee you they're about a.i., robo taxi, a lot of those things will get a lot more attention than the auto business, not that the auto business should be ignored but that's the way it's been in the last couple conference calls. >> the auto business is somewhat in a steady state. it is what it is. the other things are bigger kind of options within the business. although i do wonder, there was another line of chatter aside from the cybertruck discount story, phil, about just how many used evs are going to be kind of coming back on the market or off lease or things like that and whether people tracking the resale value of those things too. i guess it shows you the maturation of the market, but in a sense, tesla's big market share to this point means there's a lot of used ones out there. >> and the used market is an interesting one, mike, because with the federal tax incentives, you can get a federal tax credit for buying a used ev if it is under a certain price point. look, a used cybertruck is not

going to qualify for a federal tax credit. but that is a part of the market that has to a certain extent fueled demand for used electric vehicles. let's see what happens with that, especially with the trump administration saying it's going to get rid of those federal tax credits. >> for sure. could absolutely change the math. phil, thank you very much. up next, we're tracking the biggest movers as we head into the close. kristina standing by with those. >> an upgrade as well as a swiss luxury giant defying the slowdown in china, and a watchdog known for taking down corporate giants suddenly disappeared and it's helping a few stocks. what it means for your money is next.

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18 minutes until the closing bell. the s&p 500 just about at the flat line. let's get back to kristina for key stocks to watch. >> let's start with carvana catching a break. upgrading to buy with a new price target of $280. shares at $232. carvana recently was rocked by hindenburg research as well. allegations of fraudulent accounting and questionable loan practices and that's why it's seeing shares soar today, not only from the rbc note, but also

hindenburg announcing its closure. jpmorgan maintaining a neutral rating but hiking their price target for estee lauder. shares trading just shy of $78. that hike and a 10% jump in third quarter sales at richmond, which the owner of cartier helping retail names across the board. seen as a bellwether for the luxury goods space. that's helping estee lauder as well. up almost 5%. shares of snap falling as the ftc says it's referring it complaint to the justice department concerning the messaging app's use of its a.i. chat bot. the ftc claims it negatively impacted young users. and shares are down 4%. mike. >> all right, kristina, glad i didn't have to correct your fruns pronunciation. >> somebody watching is going to say something. >> that's right. that's all right. thank you. > stl >>ilahead, shares of unitedhealth sinking following

its quarterly report. we'll drill down on those results with an analyst.

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we are now in the closing bell market zone. real estate names making moves today. diana olick is breaking down those gains. plus, john ransom from raymond james on why unitedhealth just posted what he called a winning ugly quarter, and frank holland is looking forward to jb hunt reporting in overtime. diana, obviously chasing the rate moves but talk to us about some of the moves in the real estate sector. >> real estate is having a good day. shocker, it's all about interest rates both on the commercial and residential side. first, the home builders are reacting to falling mortgage rates. the average on the 30-year fixed

down 15 basis points since tuesday. lenar and dr horton both higher, and kb was off a little bit but it may be because it shot up so high earlier this week. now, to commercial and the s&p real estate sector which is the second best performer on the day. again, interest rates, the ten-year is down six basis points today to the lowest since january 6th. two of the best performing rets today are american tower corp and crown castle, each on pace for their best day since july. the stocks are rate sensitive. mike. >> yeah, diana, a great reminder that a lot of the reit etfs and indexes are cell phone towers and data centers and things like that that we don't necessarily think about as commercial real estate. on the residential side, we did also get some home builder sentiment data today, and i know the rates kind of dominate the whole discussion. but what were the nuances within that? >> actually, there was concern

in that report, specifically about tariffs and the effect that would have on material costs for the builders and about the overall economy. they said they were optimistic in general about the economy, but again, rates were playing on it. in fact, the sentiment about future sales came down quite a bit, and that was because of that mortgage rate issue. we're around 7%, over 7% right now. that's creating affordability issues for buyers. >> yeah. have been with us for some time. diana, thank you very much. john, this drop in unh, down 6% right now. i guess investors seizing on the ugly part of this winning ugly quarter. talk about the details. >> sure. i mean, there's been a vacuum of information since the tragedy of the lsa, so the market was probably a little offsides. in the quarter, there was some real volatility in the intersegment, optum health was worse. they had a curious revenue shortfall that had to do with

some year-end contracts and cms program. so none of that was expected. it got a little messy. it's been a popular trade to be long payer short providers over the trump trade. we're seeing a little bit of that, but our view is none of this should affect people's views on 2025 and 2026. we're looking at a stock at $36 of earnings in 2026, about a 15 multiple. it's traded as high as a 24 multiple. it usually trades in the zone of the market multiple. we think that there's opportunity here. but you probably need to get a little closer to $26 for people to see the dream, if you will. >> so obviously, some noisy elements here in the report. i guess you're suggesting that investors shouldn't necessarily be too concerned either about the medical loss rate trends here or just overall kind of membership levels. you think those things will true

themselves up? >> so it remind me of numerator and denominator. the medical loss raceio was not great, but it was a denominator problem with revenue. if you looked at actual trends overmembership, it shows signs of stabilizing. without the one-time revenue, the ratio would have looked better. we're seeing signs that medical costs, some of the stuff that drove it up this year, you're going to laugh next year, and we think there's going to be a quarter in 2025 where the payers actually beat street expectations on medical cost ratio. as we get into the third year. >> you allude to the tragedy, obviously, that's really not that far back at this point. is there any way to think about the company and how it has to kind of present its results and its profitability and whether there's a little bit of a restraint on kind of talking about how profitable it can be, whether it's by managing medical payouts or anything else at this

point? >> well, the world is not rational. at the same time we're mad at all these insurance companies they're paying out a record amount of revenue in medical costs so we should be happy. they were paying a lot less out in 2022. one thing i heard, as you know, there's been a lot of controversy about pbms. i thought the ceo did a good job laying out what pbms do and the fact they pass through 98% of their rebates back to their customers. we're a customer of united. we get 100% of the rebates in our contract, for example. their goal is to get that to 100% by 2028. and that's a pretty simple change in contracting. so i think at the very least on the pbm side, they corrected some of the misperceptions. look, i get why pharma is mad at them, because they're the only guys who can negotiate because our government doesn't set brand prices. so i'll take a little different tack. i think they're getting back on

offense a little bit but they chose to start with some of the misinformation, if you will, on the pbm side. >> you did highlight what you think the earnings path is, down into let's say 2026. $34. if you put what you think the proper multiple is on that, where does that get the stock to? >> it's about 15 times now. so a year from now, you know, we'll be looking at 26, 27. if it goes back to the historical multiple, and let's think 18 months out, people could be paying 17, 18 times, and then take the $34 and grow it at the low end of the range. you're looking at a stock well into the 600s a year from now. if the multiple -- but look, they have to stop winning ugly. part of the multiple issue here is, and winning ugly means you get the number on investment income and tax rate and miss on medical and you miss on health. you have to start beating your operating income targets at a segment level, particularly again, and the market has to see some evidence.

one other quick thing i want to mention. unitedhealthcare really is a medicare advantage company. the outgoing administration has gone after medicare advantage hammer and tongs with sort of back door rate cuts. a coding change is taking away about $15 million from united over three years. they made starters harder to get, as you bow. they have done a number of things to make life hard on the plans. so part of the rhythm of the trade is we think at least you have so many stocks beating you on the head with a hammer. we think it's great. i don't think you have to be amazingly beneficial but maybe just the back door hostility will start, and that actually started with the advanced rate notice that was better than people thought. >> all right, we'll look for that to unfold, as the months go on. john, thank you very much. appreciate it. >> thanks, mike. >> frank, what are you looking for for jb hunt? >> jb hunt, the biggest container trucker in the u.s., it's outperforming the transports and the market since

last earnings. this quarter, revenues expected to fall, so the real question for the quarter, that's going to be pricing power. volumes are expected to be strong from a pull forward in freight because of port strike and tariff concerns as well as the holiday peak. u.s. container volumes on rails jumped double digits higher in november and december with the exception of thanksgiving. that's the down week in the trend. jb hunt gets 50% of revenue and profit from container shipping. the other question this quarter, its guidance in the 4 report. investors will be looking for commentary on tariffs. also on freight shifting from east to west coast ports. that benefits jb hunt, mike. >> all right. frank, we'll get those numbers in just a little bit. thank you very much. the s&p 500 just below the flat line, down about .2%. that's really about apple's weakness. that stock down about 4%.

market breadth is positive. small caps also turned positive. this has been one of the most broadening out days, and that's created treasury yields getting out of the way, adding to yesterday's slide in the ten-year treasury note. so pretty decent day below the surface even if the s&p 500 that is the end of regulation and the closing bell at the new york stock exchange with a superior group of countries that my companies doing the honor and here following the reality. real estate climbs and all of the major averages finishing slightly lower and that's the scorecard on wall street but the action is getting started and welcome to closing bell overtime. >> we have a big show coming away. we will break down the latest thinking on the market and the