Will Rising Rates Wreck Stocks? 5/22/25

Summary

Halftime Report: Will Rising Rates Wreck Stocks? (May 22, 2025)

Hosted by Scott Wapner, CNBC

---

1. Introduction

In this episode of CNBC's Halftime Report, host Scott Wapner engages with top investors—including Josh Brown, Joe Terranova, Shannon Saccocia, and Jim Leventhal—to dissect the current economic landscape centered around rising interest rates and their potential impact on the stock market. The conversation delves into recent legislative developments, bond market movements, sector-specific performances, and notable corporate strategies shaping investor sentiment.

---

2. Economic Overview: Rising Rates and Stock Market Impact

Scott Wapner opens the discussion by addressing the recent surge in bond yields and its implications for the broader stock market. The House has passed a significant tax bill, igniting concerns about the deficit and fiscal sustainability.

• Josh Brown notes, “The bond market continues to scream perhaps about the deficit, not that we expected the House to listen” [00:59].

3. The Big Tax Bill and Deficit Concerns

The passage of the tax bill by the House is a central theme, with discussions focusing on how it affects investor confidence and market dynamics. The conversation highlights the bond market's reaction to deficit fears, especially concerning long-term yields.

• Shannon Saccocia explains, “The confluence of a slowing economy and the impact on the labor market... are disinflationary forces” [03:45].

4. Market Reactions: Bond Yields and Stock Movements

The group examines the interplay between rising bond yields and stock performance. While higher yields traditionally pose challenges for equities, recent market behavior suggests a nuanced relationship.

• Jim Leventhal states, “Once we start to get closer and closer to that 5% 10-year yield... that starts to look really attractive” [04:12].
• Joe Terranova observes, “The 10-year yield moves down as we approach showtime and the stock market moves higher” [04:48].

5. Corporate Earnings and Sector Performance

Attention shifts to corporate earnings and sector-specific trends. Despite rising rates, major indices like the S&P 500, Dow, and NASDAQ remain positive, though Treasury yields continue to climb.

• Josh Brown remains optimistic about the S&P 500's trajectory, anticipating it could return to around 5,720 points [01:50].

6. Technology Sector Spotlight: Apple and AI Innovations

A significant portion of the discussion focuses on Apple Inc. and its strategic maneuvers in the AI space. The potential acquisition of former Apple designer Jony Ive by OpenAI signals Apple's challenges in maintaining its innovative edge.

• Scott Wapner remarks, “Jony Ive forging ahead with OpenAI could either be a breakthrough akin to the iPhone or a costly misstep” [17:29].
• Shannon Saccocia critiques the practicality of new AI devices: “I would not be a seller of Apple because you think that people want to carry around an OpenAI keychain” [20:34].

7. Solar Stocks Under Pressure: Sunrun and First Solar

The episode delves into the struggles of solar companies amid policy changes, specifically the House's tax bill impacting green energy subsidies.

• Steve Kovac expresses skepticism about Sunrun’s viability without tax credits: “The economics of rooftop solar just don't work even with the tax credits” [42:39].
• Shannon Saccocia highlights the broader industry peril due to reliance on consumer leases and abruptly changing regulations [43:21].

8. Highlighting Best Stocks: EQT in the Energy Sector

Shannon Saccocia introduces EQT as a standout performer in the underperforming energy sector. Despite broader market challenges, EQT has shown remarkable earnings and revenue growth.

• Shannon Saccocia praises EQT’s performance: “21 year-to-date return really stands out here. It's the second-best energy stock on the year” [35:40].
• Steve Kovac adds, “The stock didn’t work well in the 90 days, but long-term fundamentals are strong” [37:15].

9. News Highlights and External Events

The podcast briefly touches on current events, including a private plane crash in San Diego, legislative actions on gas-powered cars, and updates from AI startups like Anthropic unveiling Claude 4.

• Jim Leventhal reports on the Anthropic AI model: “Claude 4 is a significant upgrade... expected to rival the iPhone” [40:14].

10. Conclusion and Market Outlook

Concluding the episode, the panel reflects on the resilience of the stock market amidst rising rates and fiscal uncertainties. Optimism persists, particularly around specific sectors and companies demonstrating strong fundamentals and strategic positioning.

• Josh Brown emphasizes confidence in market adaptability: “This was a market looking for a reason to consolidate and it got one” [10:05].
• Jim Leventhal advises caution but recognizes potential growth catalysts: “Rates can't be everything that matters for the day to day” [39:58].

---

Key Takeaways:

• Rising Bond Yields: An indicator of fiscal concerns rather than imminent economic shifts, with mixed implications for stock performance.
• Tax Legislation: The House-passed tax bill raises deficit worries, influencing bond markets and investor sentiment.
• Consumer Sentiment vs. Corporate Performance: Despite negative surveys, corporate earnings remain robust, undermining pessimistic economic forecasts.
• Technology and Innovation: Apple's challenges in AI innovation highlight broader industry trends and the importance of strategic leadership.
• Energy Sector Dynamics: EQT stands out amidst a struggling energy sector, while solar companies face significant headwinds due to policy changes.
• Market Resilience: Overall market optimism persists, driven by strong corporate fundamentals and selective sector performances.

This episode of Halftime Report provides a comprehensive analysis of the current economic and market landscape, offering valuable insights for investors navigating the complexities of rising interest rates and evolving fiscal policies.

---

Notable Quotes:

• Josh Brown: “The bond market continues to scream perhaps about the deficit...” [00:59]
• Shannon Saccocia: “The confluence of a slowing economy and the impact on the labor market... are disinflationary forces.” [03:45]
• Jim Leventhal: “Once we start to get closer and closer to that 5% 10-year yield... that starts to look really attractive.” [04:12]
• Scott Wapner: “Jony Ive forging ahead with OpenAI could either be a breakthrough akin to the iPhone or a costly misstep.” [17:29]
• Shannon Saccocia: “I would not be a seller of Apple because you think that people want to carry around an OpenAI keychain.” [20:34]
• Steve Kovac: “The economics of rooftop solar just don't work even with the tax credits.” [42:39]
• Josh Brown: “This was a market looking for a reason to consolidate and it got one.” [10:05]

---

Disclaimer: All opinions expressed by the participants are solely their own and do not reflect the opinions of CNBC, NBCUniversal, or their affiliates. This summary is intended for informational purposes only and should not be considered as financial advice.

Transcript

[Edward Jones]

A rich life isn't a straight line.

[Scott Wapner]

To a destination on the horizon.

[Edward Jones]

Sometimes it takes an unexpected turn with.

[Scott Wapner]

Detours, new possibilities and even another passenger or three. And with 100 years of navigating ups.

[Edward Jones]

And downs, you can count on Edward.

[Scott Wapner]

Jones to help guide you through it all.

[Edward Jones]

Because life is a winding path made.

[Scott Wapner]

Rich by the people you walk it with. Let's find your rich together. Edward Jones, Member, SIPC Are you still.

[Josh Brown]

Quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn [e-mail] CreditCard Based on the February 2024 Nelson Report.

[Joe Terranova]

I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. Carl, thanks very much. Welcome to the Halftime Report. I'm Scott Wagner. Front and center this hour, rising rates and stocks. We'll ask the committee what is in store for the markets as the House passes the big tax bill. Joining me for the hour today, Josh Brown, Joe Terranova, Shannon and Socosha and Jim Leventhal. We will check the markets here. We're positive on the S and P, the dow and the NASDAQ, but we do have the 30 year. Josh on the move again. We passed this big bill at least in the House. The bond market continues to scream perhaps about the deficit, not that we expected the House to listen. We'll see what the Senate does and how big of an issue this becomes. 515 was the high touched on the 30 year highest since October 23rd. 10 years on the move to today as well. Jonathan Krinsky says that 30 years likely going up and the S and P is going to work its way Back to about 5,720 is the number that he has in his mind. How much of an issue is all this?

[Shannon Saccocia]

I think it's an issue. It certainly got everyone's attention from the chief strategist types to the chief economist. But we front ran like we ran up into this actual deal and now yields are flat to lower today. So the big news is has already taken place. The 10 year which is basically on today is up 4034 basis points for the month of May. It's a very Dramatic move. It was at four spot 13% on April 30th. So this has been quite a run. Two year yields up above 5%. Excuse me, there were two yields left above 5%. Still, everyone's really watching the 20 year five spot 09. For me, that's the bigger one than the 30. The 30 is the tail that gets wagged by that 20 year tail. And again it's the highest level level that we've seen since October of 2023 when the growth outlook frankly was much better than it is today. So it's a very strange situation we find ourselves in. My personal opinion is that the confluence of a slowing economy and the impact on the labor market in the second half of this year, which we already started to see evidence of, those are disinflationary forces. I understand that the tariffs are inflationary or at least on the surface could produce supply chain problems that become inflation. I think the market has to decide which story is more believable. That we're going to have supply chain shocks as far as the eye can see or that the labor market is cooling, the economy is decelerating and inflation is not the real risk. My personal opinion, it's the latter. The Fed will be doing more rate cuts than people think today. And I think the economic data is trending in that direction. And I can personally look through a 20 year or 30 year north to 5%. For me that seems like the head.

[Joe Terranova]

Fake Shan is How big of an issue is this if rates continue to, to back up for stocks?

[Jim Leventhal]

Yeah, I mean, I think, you know, once we start to get closer and closer to that 5% 10 year yield, then you start to see the impediment to, you know, earnings, continued earnings appreciation. I think Josh makes a really good point and I think it's one that we need to take a, take a step back. There's a tipping point in the treasury market between fear and greed. And so if you're an investor and you start to see 10 year yields kind of crust up towards closer to that 5% yield, that starts to look really attractive, especially against the backdrop of admittedly shorter term interest rate cuts. Those are, you know, we're going to continue to see the curve be pretty steep.

[Joe Terranova]

They're obviously tracking one another, rates and stocks.

[Jim Leventhal]

Right.

[Joe Terranova]

If you look at the movement today, for example, it's, it's a pretty good indicator about the relationship between the two. You're looking at the 10 year, the 10 year yield moves down as we approach showtime and the stock market moves higher. If Rates were to reverse again, you start to get more nervousness. The Nasdaq obviously had some pressure on it earlier because rates were moving up. Now they're moving down. Nasdaq's green.

[Jim Leventhal]

But the difference today between what we have seen over the past couple of years when we've seen rates on the rise is the fact that these rates are rising based on deficit expectations, fiscal sustainability concerns. They're not rising because we anticipate that we're going to see this kind of meaningful, you know, economic shift.

[Joe Terranova]

People try to, people try to make the argument, though, there's some in the, in the newspapers today that are trying to suggest that all of you and a lot of you are making too much of the fact that rates are backing up because of concerns about the deficit, that it's more to do with expectations of higher growth. Now, you can say that's complete nonsense. Yesterday seemed to be a pretty good indicator of what the real deal appeared to be.

[Jim Leventhal]

If, if that's the case, though, Scott, I think the difference here is too, if we were banking on the Fed to get really accommodative to continue to engineer economic growth in the second half of the year into 2026, I think that's more of a concern because. But the Fed is a policy taker right now. They're not a policymaker. And so we're looking at the fiscal situation. Our view is that rates are moving higher based on those concerns and that there is continuing to be some catalyst in the second half of the year and into 2026 for economic activity to grow once again based on improved business.

[Joe Terranova]

In fairness, Joe, you know, the economy is holding up better than than many people thought. Okay? The consumer's been holding up better than people thought. I'm not suggesting that no part of the move in rates is anticipating a stronger economic backdrop, but there seems to be no denying the fact that if you're going to pass a $4 trillion tax bill, that given where the deficit already is and the cost of funding it is already a concern, you're going to, you're going to have a backup. Now, on the issue of the economy, Citi today talks about, quote, the calm before the storm, that they do expect growth to weaken in the second half. I have to tell you, I just got back from CNBC CEO Summit out in Arizona, and to a person, you didn't really hear much gloom and doom out there at all from the CEOs who were in attendance. In fact, it was quite the opposite, I can tell you. Corporate leaders like the Rest of us are wondering whether the soft data is eventually going to turn up in the real data and bleed into the real numbers. Here's Marriott CEO Tony Capuana with me on stage.

[Shannon Saccocia]

I think the the reality is this our business thrive in times of stability and high consumer confidence. Neither of those have been in ample supply in recent months. However, the fact that you've seen this fundamental shift towards prioritizing travel and experience. We just did Q1 earnings. We beat on almost every metric and we would have beat a lot stronger if not for March, January and February. We came out very strong. Then you saw a little bit of.

[Josh Brown]

Shock to consumer confidence in March.

[Joe Terranova]

All right. I mean the point, Joe, is like everybody's talking about, right? Surveys have been horrific. We all know that the data has not the hard data yet.

[Steve Kovac]

The perception, awful, pessimistic. But the reality is simple. The S and p is up 7% since April 30th. And during that period the 30 year has rallied 50 basis points. I believe that what we have witnessed in the last three days is that bond markets, and not just US bond market, but global bond markets have basically said to the equity market, hold on, we're taking away your permission, slipping to go to the all time highs. I still think we are positioned to go that way. And the technical reasoning for my belief there is as long as we maintain above 5650 in the S and P, we could do that. But this is not just isolated to the US and that's why I don't think this is really. Bonds are rallying on the expectation of growth. This is about long yields in Japan at their highest level since 99. We're seeing the same type of behavior in the bond markets in Germany, Australia and the uk. So this is a global question where bond markets are saying, okay, what do governmental balance sheets really look like? And we're going to continue to have this need to borrow. I think what that means is we're in this moment where the S and P rally is probably on a pause until we resolve this. And I think again you look towards positioning. Central banks and pension funds are not coming to the rescue to be buyers of government bonds. That's not what's in front of us.

[Joe Terranova]

You still, according to Tom Lee Jim, have firepower, his word to drive stocks to an all time high. We're only 5% away on the S and P. You know, before you had the little bit of a tantrum yesterday, right. Last week before I went out west, we were talking, well, the S and P is only 4 plus percent that we're 5% away from a record high in the s and P500.

[Josh Brown]

So big surprise. Scott, I'm pretty optimistic. I think this was a market, a stock market that was looking for a reason to consolidate and it got one. But let's parse through what is happening in the bond market. I mean the 20 year and the 30 year and Josh, I think you were alluding to this but you kind of pulled your punch. Who actually buys those? It's the people who buy those are insurance companies, pension funds that have long duration liabilities. I got it. I got it. You know what matters far more is the 10 year because that's what business is key off of in terms of their capital expenditures. And the 10 year I'm not going to look right the second, what is it, 4.58%. I'm not freaking out about that now. Yes, you go up towards five, there's going to be a hiccup in the markets.

[Joe Terranova]

Unquestionably rate of change too. We can't always speak about absolute levels. They're almost meaningless.

[Josh Brown]

Scott, I agree. We always have this conversation. I'm not denying what you're saying. I'm not but what I'm saying is actually the 10 year has been kind of stable for a while. Popped up the forecast point eight whenever that was April got back down to four and a quarter if you really look at it and I'll give Ed Yard any credit, he's been calling this, we're just kind of stuck in this quarter to 4.75% return. So I'm not looking at that. And I'm also going to say one more thing, reason I'm optimistic. What you were saying Joe, about international bond yields.

[Joe Terranova]

Yes.

[Josh Brown]

It's because there's borrowing and there's going to be growth from it. There's going to be growth. European defense companies are going to grow on this. So are American defense companies.

[Shannon Saccocia]

I don't believe the story that people are selling U.S. treasuries to buy German war bonds. I'm sorry, no, I just, I don't. And to your point Jim, you're absolutely right. We took a look at the three year average yield on the ten year. It's four spot eleven. We're slightly elevated. We're not at the top of the range. We're right smack in the middle of pretty close to the middle of a fairly defined range. And the highs again we're back in 23. So the alarm bells may go off as you re approach those those old Highs. But right.

[Jim Leventhal]

If your point well taken is that we're not necessarily looking to diversify a meaningful portion of treasury exposure for these institutional buyers, they're looking to buy other things. But a 10 year treasury coming close to 5% that looks pretty attractive, especially with rates moving lower in I did.

[Shannon Saccocia]

I put something on LinkedIn toward the end of 23 as it looks like we were going to quote unquote Break the 10% ceiling on the, on the 10 year. I said I will buy as many 10 year treasuries at 5% plus as you could possibly sell me, I'm very, very happy to do that. If I think inflation is like 2ish to 3ish percent going forward, which is actually what ended up. I never got my chance. We didn't get over 5% meaningfully and stay there. I feel the same way today and in the Wealth Management channel, I would imagine millions of Americans with a lot of money, they would love that opportunity, right?

[Jim Leventhal]

I mean the front end of the curve's coming down.

[Steve Kovac]

I think you have to be careful though, drawing the correlation between rising yields and the fact that the S and P can't go higher. I think there's an effect on the consumer. I agree with you from higher private sector borrowing costs. But most of the companies in the s and P500, they don't have the need to buy.

[Joe Terranova]

Why? We asked the question, we didn't make a declarative statement. At the top of the program it's will rising rates wreck stocks? Not rising rates are going to because it's not so cut and dry as you both and everybody here.

[Shannon Saccocia]

So what happened in 22? This is the instructive. Three years ago what happened was the threat of rising rates wrecked a very particular part of the market which was no earnings. Spac, recent ipo, technology companies without a business plan and rightfully so, they were bubbles because all of a sudden capital has a cost and people change their behavior when it actually costs them something to invest. The two year period leading up to 22, there was no cost to invest because money was free. So what you could end up having is a scenario. Joe lays it out. You could have the general stock market rise as rates rise and you could say, hey look, the economy's going to be great. We're going to get this extended tax cut and that's good enough for everyone else, but it's going to wreck the most speculative areas of the market. It could act as a governor on multiples even for the S and P.

[Jim Leventhal]

That's levered to Joe's point. I mean leverage that you got to look at company level leverage much more closely.

[Shannon Saccocia]

Small caps won't like, small caps won't like it and they don't.

[Josh Brown]

And Scott, if I can just go back to Mr. Capuano and you know, they shouldn't be surprised. The CEO should not be surprised that the economy is strong. It's strong because they haven't laid people off period. End of story. That.

[Joe Terranova]

But they're, they're, they're human beings. They look at the data, at least the soft day, the survey. Sure. And say, wow, you just did the, what was it, the second worst print and consumer sentiment ever.

[Shannon Saccocia]

Yeah, but the sentiment is politics. If you, if you look, you look at a breakdown. Republicans, Democrats, it's, it's nonsense what they call, they're calling people up who answer a landline phone and they're saying how do you think the economy's going? And if you're a blue person it's horrible and if you're a red person it's the second coming of Christ. And the independents are saying they're worried about inflation more so than they were. So that's what's changed. But the reality is don't worry about surveys. I totally agree with this premise. Unless and until you get layoffs in these non farm payroll reports and we're not getting them, you're just not, there's nothing to talk about.

[Joe Terranova]

I just tell you to a person out in Arizona, a room filled with CEOs of big middle, smaller level companies, it was pretty consistent with pretty good.

[Steve Kovac]

Good because everyone's working, they're earning, those companies are earning. And that's the difference between the environment today and 2022 when rates went from zero to two. That was a much bigger impact effect from rates going to four to four and a half, four and three quarters. In 22 you had an earnings recession where you are today. You still have consistent earnings growth and profit margin expense.

[Joe Terranova]

Let's address the fact that the NASDAQ's doing best today of the majors. It's up 8, 10 of a percent and many of the names within it are doing quite well. Apple really is the outlier today, which is flat. We'll say it's, it's doing nothing because I think the market is still, still trying to figure out as it's been down for six consecutive days, the longest streak in more than a year, what the implications are of this open air deal to acquire Jony. I've startup for six and a half, basically billion dollars Most of you know, Jony, I've the legendary designer, of course, behind most of the iconic products that Apple has, and he left the company some five years ago. A comment that Jony I've made in the context of, context of all of this did not go unnoticed in Techland, to where he said the following, and I quote, the products that we are using to deliver and connect us to unimaginable technology AI, they're decades old. And so it's just common sense to at least think, surely there's something beyond these legacy products. Talk about the legacy products. That comment that kind of got everybody's attention, attention, Steve Kovac included, some saw it as a, well, a slight, I guess we should say, on a family network towards Apple, you may have had a little bit of a harder take on that, but what do we make of this, the deal?

[Scott Wapner]

And then the comment, yeah, I had a little bit more of a colorful reaction to what this means for Apple. But yes, this is a shot across the bow, however you want to put it at Apple. Because Jony, I've was kind of that heart and soul of Apple with the, you know, design chops and that artistry that has since kind of left Apple because when he left nearly six years ago, he brought along the best designers with them and they are now working on this project. And let me just tell you the latest now, Scott, that we're hearing about what this mystery OpenAI artificial intelligence gadget is that Jony, I've says is is going to take on these legacy gadgets. By the way, that he helped invent Ming Ching Kuo, he's the analyst I talk about so often. He's always right. He's deep in the supply chains. He says this is going to look kind of like an ipod shuffle. If you remember from 20 years ago, you wore it around your neck with a lanyard. He said it's going to be kind of that form factor. It's going to have some cameras and microphones for always listening with the artificial intelligence that'll pair with your phone and not expecting this to go into full production. And until 2027, OpenAI says we're going to see it next year. They're going to finally show us what they're working on. But as we think about what this means for Apple, Jony, I've also said as he's knocking down these legacy products, he also says he's created it, they've cracked whatever code they think needs to be cracked to make an artificial intelligence hardware device that is going to basically rival the iPhone and that is not something small. So I see kind of two ways here, Scott. One, they live up to the expectations. What they show us next year is just going to blow our minds the same way the iPhone did back in 20202007 or this is a huge whiff and it looks like a six and a half billion dollar blunder for OpenAI and really damaging to Jony I've legacy. So they're putting enormous pressure on themselves to deliver something they say Apple can't even deliver. And that's why Jony I've is doing this with OpenAI instead. So that's something to really chew on as you talk about what this means for Apple.

[Joe Terranova]

Scott all right. Yeah. Great setup, Steve. Thank you. Steve Kovak, what do you think? No, what is it?

[Shannon Saccocia]

It's shaped like an ipod shuffle.

[Jim Leventhal]

It's like a nano.

[Scott Wapner]

Remember those little nano?

[Shannon Saccocia]

So yeah, I used to send my kids up to camp with them and they would get taken away, shout out to Tyler Hill. So nobody wants that. Here's the reality. The reason why the ipod shuffle went away is because the phone was a better music player and you were definitely not leaving your house without the phone. I think the better bet is that glasses will be the form factor. Meta's got a version. Alphabet just, just talked a lot about that, that form factor. I think AI is coming to the face faster than it's coming to your pocket in the form of another device that you have to carry around.

[Josh Brown]

Totally agree.

[Shannon Saccocia]

Look, I'm not Jony, I've. Okay, I understand my limitations when it comes to discussing tech hardware but I would not be a seller of Apple because you think that people want to carry around an OpenAI keychain so they can do an AI search of how do I make the best chicken franchise. I just, it's not realistic to me.

[Joe Terranova]

I want to move to one of the better performing techs today. It's a good derivative out of the Apple conversation in many respects because it was a conversation that Eddie Q of Apple Apple was having, I believe in a courtroom a couple of weeks back that sent Alphabet shares sharply lower. The fact that searches on Apple's browser had had gone down for the first time ever. The stock cratered off of that many on this desk, not necessarily on this desk today, but generally speaking, including yours truly, talked about that as a very small significant moment. Those we talked to, like Kovac and other experts suggested the same that it wasn't to be so easily dismissed because of the growth of generative AI and the impact that it would have on market share for search in which Google's a goat. Jim Leventhal that day said, I'm not doing anything. You're overreacting. The stock is overreacting and I am sitting tight. This is. I've seen this movie before. Not going anywhere. Mr. I didn't go anywhere. Has seen shares up 15% since the eddy Q. Sell off. That's what we're calling it. He stuck with it and it paid to do so.

[Josh Brown]

Yeah. Where's Kovac? Let's get him back on he.

[Joe Terranova]

Guilty as charged, your honor.

[Josh Brown]

No, it could have gone badly. I acknowledge that.

[Joe Terranova]

But the thesis, it's not over yet either.

[Josh Brown]

And it's not over yet acknowledge. But here's what the investigation investment thesis is. This is Alphabet, for crying out loud. All right? This is not a fly by night company. This is a company with tremendous resources, tremendous intellectual firepower. Obviously this was and is, Scott, a challenge. They have the resources with which to meet the challenge. They are a great company. That's what great companies do, is they meet challenges. And the other half of this, and the reason I wasn't too quick to, you know, knee jerk my way out of it is that the price of the shares at roughly 17 times forward earnings, in my opinion, purely subjective, have priced in far more downside. That is likely. At the time I said they've gone through some trials before and met the. Met the challenge and I think they will continue to do so from here.

[Joe Terranova]

Any other comment on that?

[Steve Kovac]

Congratulations, Jimmy. Good call. I still perceive it to be a problem.

[Joe Terranova]

He was hoping that he'd.

[Steve Kovac]

He had a bounce in a step. He should have a bounce in a step.

[Jim Leventhal]

Can I ask a question? So are you, are you less concerned about the search deterioration or are you more optimistic about YouTube? I think that those are two sides of the coin.

[Josh Brown]

I'm excited about Alphabet putting its resources to work to meet the challenge. And we've seen things like this happen plenty of times before. I mean, this is an inexact comparison, but when Meta faced that issue with Apple's iOS where people were going to have to opt in to get customized ads going to them, people were saying this is a death knell and they met the challenge. It's not the same analogy, but it's. There's a similar. There was a similar death.

[Shannon Saccocia]

Too much, I think. I think this is.

[Josh Brown]

Can I say before you go.

[Shannon Saccocia]

Yeah, please.

[Josh Brown]

One thing. This is because you and I talked about this.

[Shannon Saccocia]

Yeah.

[Josh Brown]

Is this a value tech stock?

[Shannon Saccocia]

It is.

[Josh Brown]

And I'm going To. I'm going to tell you. No, I'm going to say this is better than value, better than growth at a reasonable price. This is growth at a superior price.

[Shannon Saccocia]

Okay. I don't disagree at all. You got a stock that rallied right up into its 200 day. So we'll see how she handles that challenge. The other thing is they had a fantastic event this week, and some of the things that they came out with were things that the tech press was not even looking for. And I think they surprised some people to the upside in terms of the way they're thinking about AI as an opportunity, not as a threat. So kudos to them and to shareholders.

[Joe Terranova]

Citi agrees with you, by the way, which says after the event, stocks go into 200.

[Shannon Saccocia]

I hope it does. I would just say. I would just say. And here's, here's your. Here's your issue that is yet to be determined. It's way too early for anyone to say one way or the other. You got a $360 billion revenue business. 200 billion of that is Google Search. It's clear that Google Search can remain a hugely profitable cash cow. They've got other great businesses too, like web hosting and YouTube. We all agree with that. The thing is, they've been able to grow earnings over the last five years, but the multiple has shrunk almost every year by at least one point per year. Do we think 17 is where it stops? That's what I, that's what I worry about with the stock, which is why I call it Value Tech.

[Josh Brown]

You know, as you say that what comes to mind is, remember when Apple 10 years ago traded to like 11%, 12, 13 times? I mean, certainly it can go down to that. But I mean, where's Apple today? I'm not going 26 times forward.

[Joe Terranova]

So tech is the best sector this month. It's up 10%. We know about how hard it's rallied back. Discretionary is up 8 and a half now. Tesla is part of that.

[Shannon Saccocia]

Stocks have a big back.

[Josh Brown]

We have a couple of IPOs, by.

[Joe Terranova]

The way, here today. And that bell tells me that another one has opened for business. Which of the two is this?

[Shannon Saccocia]

Mncn?

[Joe Terranova]

It's mntn. Because Hinge Health also here at the New York Stock Exchange today. So there it is, big pop off the open. We'll continue to follow that. Just to let you know why you heard that bell. So discretionary is the third best this month, up 8.5%. Dom Chu takes a closer look at our sector nomics today. Hey, Dom.

[Scott Wapner]

All right, so judge, sector nomics time. And today the spotlight, as you point out, is on consumer discretionary. And by the way, even with that run, it's still the worst of the 11 sectors so far in 2025 year to date. So we're going to go inside the consumer discretionary sector this hour looking at the stocks that are the most above and the most below their respective 200 day moving averages or longer term trend lines. That 200 day shows stocks up or down kind of overall movement longer term. Now, the stocks Most below their 200 day moving average have names like Nike, which are right now 16% below that yellow line. The 200 day moving average. Mohawk Industries, 17% below its 200 day. Homebuilder Dr. Horton is 18% below the line. Deckers is 19% below its 200 day. You kind of get the idea here. Now, at the bottom of the list is homebuilder Lennar, which is 22% lower than its long term trend line. The consumer discretionary stocks on the highest upswing include Booking holdings, which is currently 17% above its 200 day. Royal Caribbean is 19% above its 200 day and DoorDash is 20% above. The top two names are very big retail ones. Ralph Lauren, which is 27% above its 200 day moving average. And then Tapestry is the top of the list, 35% above its 200 day. That stock is up a whopping 30% in just one month alone. So when it comes to opportunities, are ones overextended to the upside or downside? Scott, that's a big debate. I'll send things back over to you guys.

[Joe Terranova]

Good stuff, Tom. Appreciate you. Thanks. Tom Chu. Up next, Stephanie Link. She stands by. She needs to talk to us about a big mover in this market. It is Snowflake. She has a new purchase as well. UnitedHealth is on the move again and not in the direction she wants. She's going to comment there too. Plus, Josh Brown's best stocks in the market has a new member.

[Shannon Saccocia]

We're back in2020.

[Jim Leventhal]

On WhatsApp, your personal messages stay private.

[Scott Wapner]

Between you and whoever you send them to.

[Joe Terranova]

So things like the passport numbers for.

[Jim Leventhal]

Your honeymoon stay between you and your fiance. And that video call for your gran's 80th stays in the family. Even your streaming password stays between you and your college roommates who still ask.

[Joe Terranova]

For it every week in your group chat.

[Jim Leventhal]

Because on WhatsApp, your personal messages are yours.

[Scott Wapner]

No one else can see or hear.

[Joe Terranova]

Them, not even us. WhatsApp message privately.

[Josh Brown]

Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide and every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn [e-mail] credit card based on the February 2024 Nelson Report Ryan Reynolds here from Mint Mobile.

[Scott Wapner]

I don't know if you knew this, but anyone can get the same Premium Wireless for $15 a month plan that I've been enjoying. It's not just for celebrities.

[Joe Terranova]

So do like I did and have.

[Scott Wapner]

One of your assistant's assistants switch you to Mint Mobile today. I'm told it's super easy to [e-mail].

[Edward Jones]

Switch upfront payment of $45 for 3 month plan equivalent to $15 per month.

[Scott Wapner]

Required intro rate first 3 months only then full price plan options available, taxes and fees extra.

[Edward Jones]

See full [e-mail].

[Joe Terranova]

Big chart today on your screen. Snowflake new 52 week high after their earnings report. The target was raised at seven firms post that earnings report including at Stephanie Link Capital Management. She joins us now. Pretty good looking chart. I know you work for Hightower, but you know is what it is. Steph trying to give you props.

[Edward Jones]

Thank you Scott. You know it was great quarter. The CEO has been there over a year and he's executing flawlessly. The earnings growth grew 71%, revenues grew 21.6%. But the thing that everybody cares about is is product revenue growth. And that was actually better than expected at 28%. And it just speaks to again the strategy of the CEO to launch new capabilities. They had launched 125 new capabilities alone in just this quarter. So it's working. Operating margins were 300 basis points better and the guidance was also better. So for product revenue growth. So we all feel pretty good about that. It's not cheap but they really are at the forefront of data mining and that's really where you want to be. AI, cloud, cyber and data mining.

[Joe Terranova]

Speaking of, you bought more Palo Alto yesterday, didn't you?

[Edward Jones]

Yeah, I did. I mean I really was surprised that at one point it was down 7%. I mean this is a company that beat on total revenue. Total revenue grew 15% accelerated by 1 percentage point. Next Gen Security Air annualized recurring revenue actually that beat better than expected. And their software firewall, their trailing twelve month revenue growth was 13%. So all that was better. I think the reason the stock was down is they did not give fiscal 26 guidance. They don't really usually give that at this quarter. So I just, I mean, I thought the fundamentals were really strong and I thought it was overdone. So it's now actually one of my larger technology positions. Top three.

[Joe Terranova]

Okay, so we gave you props. Now we're going to talk about some drops. Well, United Health, because the drop just doesn't stop. I know you're not trying to play hero ball with this name, but do you have any regrets of adding to it on the way down here?

[Edward Jones]

No, I don't. And I actually did add again this morning and I will continue to add. This is not a quick fix, Scott. It's not a quick fix. It's going to be volatile until, until they give you guidance. So that's what I've been trying to do. That's the homework I've been trying to do over the last couple of weeks. I think you can see $20 in earnings power this year and this year really doesn't matter. It's really going to be next year. And I think you're going to see something like $25 a share for next year's earnings. But the stock is not going to really materially move until we know that. But I do think we are going to get guidance at some point. And if you believe in $25 a share for next year year like I do, that's the stocks trading at 12 times earnings, 8 times EBITDA. I've never seen the stock trade at this level. And it, and my assumptions are really, it's like a 1% Medicare Advantage margin. Like I'm not looking for anything heroic at this point. So it's down 40% on the year for sure, but it's up 10%. In the past week we talked about insider buying. The CEO bought what we didn't talk about as a CEO bought 25 million last week the CFO bought 5 million and you had 5 insider buys. And I still think this is the number one company in the industry with size and scale. So this one I'm going to stick with. I just have to have a longer term time horizon.

[Joe Terranova]

Okay, Steph, thanks for the update. It's Stephanie Link.

[Edward Jones]

Thanks.

[Joe Terranova]

See you here tomorrow. Thank you. On the desk with us. Look forward to that, Christina. Parts and Evil has the headlines now. Hi, Christina.

[Edward Jones]

Hi, Scott.

[Josh Brown]

Well, authorities say multiple people on board.

[Jim Leventhal]

A private plane that crashed into the San Diego military housing neighborhood earlier this morning are unfortunately dead while no one was on the ground injured. The assistant fire chief said the plane could hold between eight and 10 people, but it's unclear how many were actually on board. He added authorities will be investigating whether the plane hit a power line. The woman who was shot by security guards after she crashed into a gate outside the CIA headquarters and has been preliminary identified as Monya Spadaro. That's according to to two senior law enforcement officials who tell NBC News that she's being treated right now for the non fatal gunshot wounds.

[Josh Brown]

And law enforcement agencies are investigating whether.

[Jim Leventhal]

Or not she may have been intoxicated when she actually crashed. And the Senate has voted to block California's rule banning the sale of new gas powered cars by 2035. Lawmakers passed the first of three resolutions to roll back the state's vehicle emissions standards. The resolution is now headed to the White House, where President Trump is expected to sign it. Scott, back over to you.

[Joe Terranova]

Christina. Thanks very much. That's Christina Parts and Nobles. Up next, Josh Brown's best stocks in the market. A new name makes it into the groove. We'll tell you next.

[Scott Wapner]

Our state has changed a lot in the last 140 years.

[Josh Brown]

We know because Multicare has been here.

[Scott Wapner]

Guided by a single purpose, making our communities healthier.

[Josh Brown]

That comes from making courageous decisions, partnering.

[Scott Wapner]

With local communities to grow programs and.

[Josh Brown]

Services, and expanding healthcare access to those.

[Scott Wapner]

Who need it most. Together, we're building a healthier future. Learn more@ multicare.org.

[Joe Terranova]

Earn a business degree.

[Jim Leventhal]

On your terms at Capella University.

[Shannon Saccocia]

Our Flexpath format is available in select.

[Joe Terranova]

Programs and lets you learn on your schedule. A different future is closer than you think with Capella University. Learn more at capella.

[Shannon Saccocia]

Edu.

[Joe Terranova]

All right, we're back. Josh Brown is a new stock in his best stocks in the market and it is what please tell us.

[Shannon Saccocia]

Yeah, that's right, Scott. We're going to talk about EQT today, which is in the energy patch. This is a sector that's been left for dead amidst the spring rally. The XLE just cannot get going. Only 35% of the components in the XLE are above their 50 day. Only 30% above the 200 day. It's really been a drought, but there are four names on my best stocks list from the energy sector. I thought it'd be fun to take a look at where the strength there is in case that sector plays catch up. EQT exe, which is Expand Energy, WNB Williams and KMI. Those latter two, they're a little bit more dividend oriented former MLP names. Let's look at EQT. This is the best of the bunch. 21 year to date. Return really stands out here. It's the second best energy stock on the on the year. 35th best S P 500 stock overall. What's going on? This is the second highest expected earnings per share growth of all the energy names. 110 EPS growth expected. Take a look at this chart. You got a relative strength of 60. Not overbought but certainly confirming those levels. We're 3% below the 52 week highs. 7% above the 50 day, 25. 5% above the 200. That 50 to 52 dollar level had been resistance up until it broke through. Now it should be support. I like the risk reward here. Play off that 50 level with your stop and I think she can keep going. You want to be long this name so long as it stays above that rising 200 day. This one looks great to me.

[Joe Terranova]

Joe, you own it? Personally?

[Steve Kovac]

Yes. I bought this stock back in August. The reason behind it was that I had the expectation that coming into what was hurricane season, natural gas prices would spike. Obviously this is a company with significant exposure to Appalachian natural gas. Well, guess what? The hurricane season never came. Josh talks about the year to date performance for equity. It's up 21%. Natural gas is down 10%. What happened with this company is they had phenomenal earnings and revenue growth. The revenue growth over the last four quarters, 31%. You're not going to find that in the energy industry industry. So it's a name that I picked up in the mid 30s. Here we are at 56. I'm very glad that my 516 brother is stamping my trade.

[Jim Leventhal]

I like that.

[Steve Kovac]

And I see the same thing. I think this stock gets into the 60s.

[Joe Terranova]

All right, the 516 and the 561 on your screen right now. Highs of the day for that stock. We'll watch. Be sure. By the way to sign up to CNBC Pro for Josh's best stocks in the market. You'll get insight into each name plus exclusive market commentary. For more go to cnbc.com or the QR code on your screen. You can scan it right there. Coming up, Santoli is next. Senior markets commentator Michael Santoli joins us now. We're going to be just tied to rates for a little bit. I mean it's going to dominate probably the conversation now, at least until we get to Nvidia most likely.

[Josh Brown]

Scott? Yeah, I mean that is right now the feedback loop that seems most relevant in the moment. I do like to broaden it out and say this is the week where we were supposed to be pulling back or pausing or cooling off in the stock market almost, almost no matter what else was happening. There's no denying the fact that you absolutely have had the coincident moves in, in yields and stocks, especially yesterday. But you have a day like today where at least it's getting by again with benign rotation and NASDAQ 100. A handful of those names sort of take control and the index stays supported and volatility can kind of bleed out a little bit. So I think that's. It's fine. I just think it's, you don't want to get too deterministic about what any particular yield level means for, you know, an equity index level or valuation, because we've made our piece along the way in the last three or four years with three and a half percent on the 10 year, 4% of the 10 year. And so, you know, you kind of have to recognize that there is some anxiety being expressed by the bond market in terms of the fiscal situation, the structural setup, but it can't be everything that matters for the day to day.

[Joe Terranova]

All right, good stuff. I will see you on closing bell. That's Mike Santoy. I was referring of course to Nvidia earnings, which are going to be in the middle of next week, which the market, as you know, as it always is, is going to be fixated on. We do have breaking news on Anthropic. Let's get out to Kate Rooney and San Fran.

[Edward Jones]

Hey, Scott. Yeah. So AI startup Anthropic is just unveiling right now its latest AI model called Claude 4. They are calling it a significant upgrade to the latest version. This, of course, is the open Air rival. It's backed by Amazon and Google. Roughly $61 billion valuation after its last funding round. It does speak to some of the pressure out there for all of these startups to keep launching the latest and greatest tech. Its last model was unveiled just three months ago. They say it can work this new model for about seven hours straight, almost a full workday. Here's what Mike Krieger, the chief Product officer and founder of Instagram, told Andrew Ross Circuit about it.

[Josh Brown]

Claude can now work for you for much longer.

[Joe Terranova]

It's doing hours of work for you.

[Scott Wapner]

We're even seeing it in our early access partners that have deployed Opus 4 in their own use cases, whether it's.

[Joe Terranova]

For coding or other hard tasks. And Claude is now doing much, much longer horizon tasks. It's able to manage its own memory.

[Scott Wapner]

It's able to work through these hard.

[Joe Terranova]

Things autonomously without going off the rails.

[Edward Jones]

So this new model Claude 4 is going to be available on Amazon and Google Platform cloud platform among others. It is one of the models also powering Amazon's Alexa Plus. So this is a key upgrade for Amazon potentially as well. Krieger's full interview airs tomorrow on Squawk Box at 7:30 Eastern, guys.

[Joe Terranova]

All right. Thank you. Yep. Kate Rooney with the update for us there. Coming up, we will talk about solar stocks. They are getting burned big time today. Talk about that next. All right. Welcome back. Category of stocks we don't often talk about on this program, but they're getting smashed today. Sunrun is our chart of the day. Take a look at that stock. The tax bill passes. You do have the prospect of green energy subsidies going away. By the way, short seller Jim Chanos, if you remember from what a week ago at Sohn, told me he short that name in specific. Specifically, here's why Sunrun is going to.

[Steve Kovac]

Get into financial trouble. We've said this now publicly for a few years and we've been short Sunrun for a while. And the economics of roofing top solar just don't work even with the tax credits.

[Joe Terranova]

Now the point now is, Joe, without the tax credit, does it work even less now?

[Steve Kovac]

The entire industry is, is in significant peril.

[Joe Terranova]

You sold First Solar for contact, for context. Well, first of all, the CEO of that company is going to be on power lunch today. So should we act to the news of the day and then, you know, ideally to the Chinos comments as well? But you sold First Solar at the.

[Steve Kovac]

End of April, which looks like the low right now. It was a position that was taken really for 90 days. It was established at the end of January, end of January rather, and then we got out of it at the end of April in the, in the industry itself, the solar industry.

[Joe Terranova]

Yeah.

[Steve Kovac]

Well, that's what happens with solar in the solar industry. I think this is really the only name that you could own because if you look at their balance sheet, it's a real balance sheet. It's AN S&P 500 company. It has a reasonable valuation. It gives you the revenue growth. So it's kind of the one name that you could actually look at. But I have to tell you, you know, the stock in the 90 days didn't work well for us and we moved on.

[Shannon Saccocia]

First Solar is relatively unscathed today when you look at the other ones because of the point Joe makes, it's a stronger company, but also it's in the manufacturing side and the manufacturing tax credit was left untouched. I think this is about the homeowners, 70% of all of the solar rooftops on a lease. And so they basically took a hatchet and chopped that right out of the inflation reduction act. And this is the results. You don't want to be in these companies that are reliant on the people doing this for their rooftops and utilizing the lease plus the tax credit because the whole world just changed.

[Jim Leventhal]

There are some defenders in the Senate who are talking about trying to maintain these, but I think more importantly, energy transition is really focused on natural gas now. Scott so this renewable trade, if you're trying to think about energy transition and power demand, you need to be looking.

[Shannon Saccocia]

At the wait for Nancy Pelosi to buy one of these stocks and then you'll know. Maybe there'll be some safe saving. Until then, I think you can't really touch them.

[Joe Terranova]

Two finals next.

[Shannon Saccocia]

Are you following the halftime Report podcast?

[Josh Brown]

What are you waiting for?

[Shannon Saccocia]

Look for us in your favorite podcasting app. Follow the Halftime podcast now.

[Joe Terranova]

I'll see you at 3 o' clock. Closing bell. Adam Parker, Ed Yardeni, Courtney Garcia, Doug Clinton, Brian Levitt. We got a lot to talk about today and I hope you'll join me. Then let's do final trades. Jim Farmer. Jim, feeling great today, came in with that bounce in his step, was looking for some love from the judge. He said, I'm tired of taking all that heat. Did I deliver for you?

[Josh Brown]

Yes, your honor. Thank you. I'm quite honored as well. Delta Air Lines judge was going to bring this up when Dom was talking about discretionary look for all of us who are waiting for for the recession, you know, Mr. Capilano and everything, it just isn't appearing. We've got low jobless claims. People are flying. Estimates are going to start going back up.

[Jim Leventhal]

All right, Shan, Energy sector, a lot of negative news priced in here. Pretty undervalued. MP integrated probably are where you should be looking in this space show.

[Steve Kovac]

T best consumer discretionary name that we own right now is Mercado libre.

[Joe Terranova]

Okay. And Josh Brown tost. Thank you. See you on the belt. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.

[Scott Wapner]

All opinions expressed by the halftime report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftime reportdisclaimer For 140 years, MultiCare has been in Washington prioritizing long term solutions, partnering with local communities and expanding access to care. Together, we're building a healthier future. Learn more at multicare. Org.