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.