Halftime Report: "Trading the Rebound" (1/22/26)

Podcast: CNBC Halftime Report
Host: Scott Wapner
Panel: Josh Brown, Carrie Firestone, Jenny Harrington, Jim Leventhal
Date: January 22, 2026

Episode Overview

Main Theme:
This episode dives into the ongoing rebound in the U.S. stock markets after a volatile Tuesday ("Trump Tariff Tantrum, the sequel"), with a particular focus on small caps, market breadth, sector rotation, and how artificial intelligence (AI) earnings growth narratives are evolving. The panel weighs in on whether current bullish sentiment is sustainable, dissect notable moves in mega-cap tech stocks, and discuss behavioral shifts among retail investors and fund managers.

Key Discussion Points & Insights

1. Markets Rally: Ignoring the Noise, Embracing Fundamentals

(Segment Start: 00:53)

• Major indices are rebounding, with the Dow at 49,500, S&P 500 above 6,900.
• The panel discusses how the sharp drop on Tuesday now seems to have been a blip, with markets quickly recovering.
• Market optimism is widespread: transports are leading, small caps and energy are rallying, and previously neglected sectors are outperforming.

Quote — Josh Brown (02:21):
"Mostly algos are trading that stuff. Why would you join? The algos are playing a different game than you... The S&P 600 Small Cap Index is the belle of the ball. I absolutely love this tape... small cap trade working, transports leading…energy has decided to wake up. These were areas left behind last year."

• Panelists agree: market action now is less about AI/data centers and more about broader economic strength.

2. Sector Rotation & Small Cap Outperformance

(Segments: 03:47, 07:24)

• Russell 2000 is up 10% year-to-date; transports are near record highs.
• Discussion of Dow Theory: the strength of transports signals economic resilience.
• Goldman Sachs’ and Wells Fargo’s CEOs are cited for their bullish growth outlooks.
• Materials, energy, and industrials are the top-performing sectors YTD.

Quote — Scott Wapner (04:56):
"Materials up 9.25% to start the year. Energy up 9, Industrials up 7. It coincides with what the Russell is doing..."

• The S&P 500’s concentration in “MAG7” tech names leaves room for indices like the Russell 2000 to surge.
• Diversification pays off in this market, with panelists highlighting that S&P 500 returns could lag smaller indices.

Quote — Jennifer (07:24):
"Nvidia alone is as large in terms of market cap as the 300 smallest names in the S&P 500...If you get a few points that come out of Meta or Microsoft, that can really push hundreds of names outside the trillion-dollar club..."

3. AI Earnings, Small Cap Growth, and Market Sentiment

(Segments: 08:35, 09:07, 11:18)

• Small caps’ outperformance is seen as the market anticipating stronger earnings growth among these stocks and the “other 493” S&P 500 names outside the MAG7.
• Anticipation of AI growth is expected to decelerate, while traditional sectors (financials, industrials, energy) pick up.
• Record bullishness is noted both among fund managers (per Bank of America’s survey) and retail investors (JPMorgan data).

Quote — Carrie Firestone (09:07):
"The market likes to anticipate…much better growth in small caps…and frankly, we're going to see a deceleration of the AI stocks' earnings growth rates. That's the signal..."

• Panelists caution that sentiment indicators are often “concurrent,” reflecting current conditions and susceptible to rapid reversal.

4. Bubble or Productivity Revolution? The Real Impact of AI

(Segment: 13:17 – 16:33)

• Is the AI/data center build-out a bubble or productivity game-changer?
• The health of small cap earnings (as users of AI, not just infrastructure providers) will answer whether AI investment is justified.
• The real economic impact of AI may take years to play out, with productivity gains possibly tempered by slow job creation or even job losses.

Quote — Jim Leventhal (13:17):
"If [small caps] have a concomitant increase in their earnings outlooks, then we know it's not a bubble because that earnings growth can only come from productivity..."

• Debate: Is productivity-driven job loss around the corner, or is this story “just beginning”?
• Small business AI adoption still trails large companies—suggesting runway for future gains.

Quote — Carrie Firestone (15:25):
"Companies with 250 or more employees, 33% are using AI right now…drop that to 20–50 employees, it's 18%. That tells me…there is so much more penetration to come—and there is money to be made."

5. Are AI and Tech Bargains? Valuations and Trimming Positions

(Segments: 16:33 – 20:25)

• Discussion on whether AI’s benefits are “priced in” or whether the best is yet to come.
• Debate on market valuations: higher than any time since 1929 by some metrics, but earnings could justify multiples.
• Alphabet/Google (GOOG): Trimmed due to valuation, despite continued optimism about its AI positioning.
• Apple (AAPL): Underperforming; debate on what will get it moving again, with Josh Brown calling it “boring” but Jim Leventhal defending its steady, reliable earnings.
• Oracle (ORCL): Carrie Firestone is buying personally—sees it as “cheap enough” after recent declines, but too risky for clients due to questions around AI, debt, and OpenAI’s financial stability.

6. Gold: Breakout or Fade?

(Segments: 31:18 – 32:56)

• Goldman Sachs raises gold’s 2026 target to $5,400.
• Jim Leventhal: Gold’s trend can last 10 years—but investors must beware long periods with zero returns.
• Gold is seen as a hedge on erratic policy or inflation.

Quote — Jim Leventhal (32:25):
"High in gold was 2011...didn’t start rallying until 2021...that is why it works."

• Josh Brown notes that some clients are turning to gold as “risk off” even if overvalued, for peace of mind.

7. Best Time Ever for Retail Investors? Evolution of the Brokerage Landscape

(Segments: 41:47 – 44:51)

• Schwab’s earnings: Nearly 60% of new accounts opened in 2025 were <$40 years old, with average age dropping by 10 years over a decade.
• Trading is more democratized (Robinhood, 24/7 trading, etc.), but the plethora of choices demands investor vigilance.
• RIA custodians are consolidating—Schwab becoming the “go to” platform for institutions, praised for reliability.
• Consensus: The retail investor is “smarter than ever” thanks to more information, tools, and market access.
• Fundamental advice: “Learning from mistakes” and focus on earnings matter most.

Quote — Scott Wapner (44:12):
"I feel like…the retail investor is smarter than it’s ever been…because there is more information out there to school yourself on a lot of different things."

8. Stock Spotlights and Final Trades

(Segments: 45:15 onward)

• Josh Brown’s “Best Stocks in the Market” pick: First Solar (FSLR): Fundamental turnaround, utility/industrial focus, big backlog; technical breakout watch.
• Jim Leventhal: Reiterates long stance on Exxon (XOM), sees potential for $150/share.
• Vertex (VRTX), Kimberly Clark (KMB), S&P Global (SPGI) also highlighted as strong current picks.

Notable Quotes & Memorable Moments

• On market noise & algos:
  "Mostly algos are trading that stuff. Why would you join?" — Josh Brown (02:21)
• On current excitement:
  "I absolutely love this tape...You've got transports in the lead. When was the last time we've been able to say that?" — Josh Brown (02:21)
• On valuations:
  "If you use a pile of different valuation metrics, this market is more expensive than it’s ever been since 1929." — Josh Brown (17:05)
• On retail investing:
  "Retail investor is smarter than it’s ever been....more information out there to help school yourself." — Scott Wapner (44:12)
• On gold as a hedge:
  "If things go really bad… it just makes me feel good." — Client anecdote via Josh Brown (34:19)
• On AI adoption:
  "There is so much more penetration to come and there is money to be made." — Carrie Firestone (15:25)
• Panel sentiment:
  "This market's kind of answering the challenge ... the market action so far this year is pleasing too many people. Everybody wanted the broadening ... and they are ... I just get uncomfortable that way..." — Carrie Firestone (48:50)

Timestamps for Key Segments

• Market Rebound & Sector Rotation: 00:53 – 07:10
• AI & Small Cap Growth Outperformance: 08:35 – 13:17
• Is AI a Bubble? Productivity & Jobs Debate: 13:17 – 16:33
• Mega-cap Moves (Alphabet, Apple), Oracle’s Risk: 16:33 – 27:58
• Gold Outlook & Psychology: 31:18 – 34:30
• Retail Investing Evolution, Schwab’s Demographics: 41:47 – 44:51
• Stock Spotlights & Final Trades: 45:15 – end

Overall Tone & Style

• Fast-paced, energetic, and candid; panelists challenge each other while agreeing on core themes.
• Mix of optimism (about broadening market rally and opportunities beyond mega-cap tech), pragmatism (valuation risks, rotation, potential bubbles), and wariness regarding crowd sentiment.
• Strong focus on education: earnings, fundamentals, and learning from mistakes trump market “noise.”

Useful for Listeners Who Missed the Episode

This episode covers the notable January rebound across U.S. equity markets, with panel experts dissecting the underpinnings and sustainability of the rally, especially in less-glamorous areas like small caps and transports. AI remains a focal point—as both a productivity hope and a source of bubble fears—but the discussion consistently pivots to the breadth of the rally, the risks of herd sentiment, and how the investing landscape is evolving for retail and institutional investors alike. Specific actionable ideas and sharp debate over valuations make this a valuable listen for market participants keen to understand the shifting drivers in early 2026.