Yesterday, still hovering near that level. There it is, the ten year. 4. 92. Its clearly put significant pressure on regional banks and real estate as both of those sectors are among the hardest hit today. Real estate is making a turn, though, as we begin the final stretch. Regional banks have been under some significant pressure. The nasdaq suffering as well, as you might imagine. Theres microsoft, meta, alphabet and amazon. We throw those four up because they are the four reporting earnings in the coming days, each with a decline about 1 . It takes us to our talk of the tape, whats really riding on the results next week and what is the busiest stretch of earnings season thus far. Lets ask Dan Greenhaus back with me at post 9. Its good to see you. Thank you, sir. Its been a bit of an unsettled week. Volatility has picked up a little bit. Does tech come in next week and save the day or raise more questions . No. Listen, i think the important thing to note, i would argue, about tech is while the market sold off, its been large evaluation and for most of these names, not apple, but most of the names weve seen revisions to the upside. And from a performance standpoint, google and meta have looked strong in the face of weak tape. Thats something to do with digital ad trends, et cetera, but more likely than not you go into next week thinking tech, the big tech names, will be more helpful than hurtful. Let me ask you this. Yields remain elevated, near 5. Lets just say the ten year remains near 5 . Mega cap earnings are good. Is that good enough to outweigh the higher level of the ten year . Listen, clearly theres been a problem this last leg higher in yields is the story obviously. Because of the speed, too, right . What i was going to say exactly that. Its not really the level per se, the level can be worrisome, its the speed you get to that level and since midjuly the market has had a problem with the rate at which rates were going up. If the fed meeting comes and jay powell, we dont raise rates and doesnt really tell us anything we dont know, which should be your expectation going into the meeting, and then the eps or the earnings for those big four, five companies, and visa, mastercard, et cetera, are healthy enough, that sets the stage for what will ultimately be a late year rally. A 99 chance probability theres not going to be a hike in november. So thats done. What about yesterday . What was your takeaway from powell . I feel the market didnt know what to make of it. Maybe that was the point. Listen, i sort of have an issue. I follow this very closely and have been following it closely for 20, 25 years, whatever its been. I dont think he said anything we didnt know. On balance in general the fed isnt telling us anything we dont know. Theyre data dependent. But theyre in a waitandsee mode. If things progress the way theyre supposed to, theyre probably done. I think the baseline, theyre probably done. If things get a little hotter, then theyll probably raise one or two more times. Two data dependents. I think i was reading a suggestion of the same thing. Too data dependent, not focused on what theyve already done not in the data theyre allegedly so dependent on raising the risk of going too far and causing an issue that didnt need to happen in the first place. The risk has always been and this is true cycle after cycle, the fed overtightens. The analogy i used 12 to 18 months ago, ten guys and girls in a room are not going to get it right. I think what i would push back on mohammeds point and a lot of other peoples is just note we dont really know how long and variable the legs are. I think thats part of the point. Nor does the fed which means keep that more in mind than the data to make your decision. Yes. But what i was going to say is the other way, meaning in other words, the strong economy. Thats the data that powells obviously so fixated on because he talked about it yesterday. Theres essentially, and im paraphrasing, just too much demand, and thats why inflation on the Services Side is as sticky as it is and doesnt seem to want to go down anytime in the near future. Yes. And lets forget the Good Services and look at American Express who reported and when asked if there was weakness said nothing. Were seeing nothing in the way of a weak consumer and a lot of the banks have very positive things to say about loan demand and the consumer. Jpmorgans cfo said nothing in terms of weakness outside of what should be expected. So far earnings season has gone really well, and, again, forget the macro data from a stock specific standpoint, nothing thus far is giving me pause. And to the point about there being too much demand, i would push back on there being too much demand. What i meniaan by that i mean too much demand by the fed. Too much demand is keeping the economy too strong for their liking which is why they keep talking about having to raise rates, because they are fixated on the fact that data the data says the economy is too strong which means they think, allegedly, they need to do more. And they would be justified in saying that. What i was going to get to before, i think they have to go in december. The market is at 30 70 they dont. That should be at least 50 50. At the rate were going if you think about the big three Economic Data points, retail sales, inflation, jobs, all three were hotter than expected. While theyre clearly not going to go in november, they would have pushed back to a meaningful degree by now. I think they may have to hike in december. From a market standpoint, im not sure i care about that. The point about lags, everyone talks about, well, just wait, just wait, just wait, the lags will show up, the lags will show up. There might be an argument the lags have already happened and we are not this is a much longer conversation but maybe were not tight enough. Leave it for another day. I dont know. Maybe powell suggested that, too. Lets ask Cameron Dawson of new edge wealth. Good to see you. Welcome back. I think everybody wants a real clear and simple answer to the idea of whether we can have a late year rally or not, seasonality is on our side, but we have all these other issues, elevated rates, elevated tension in the middle east, and whats going to win out. And then mega caps next week, too. Whats your sense . I think the mega caps are the key point here which is thats whats so very different than 2022 when Fourth Quarter was really weak, we saw weakness into the end of the year despite seasonality because of tax loss selling. The mega caps have been weak all last year and so people were using that as a way to recognize tax losses. Thats not happening this year. And maybe it will be delayed in wanting to recognize tax gains which just means the area people will be selling into will be smaller places like the russell 2000 or utilities, staples, health care, those likely cant pull the Overall Index down. Now we would watch the 200 Day Moving Average closely. We bounced off it earlier today. We bounced off it a couple weeks ago. If that doesnt hold, it likely lowers the probability of a big santa claus rally. But if it does, we could see the chase in the window dressing into year end. What happens, dan, if the earnings next week, and basically all of the mega caps except for apple and nvidia, once we turn the calendar into november, is that enough at this point to propel the market like it was enough to take it from the beginning of the year until the very beginning part of the fall when the calendar got dicey, history wasnt on our side . I dont know why it would not be. Im thinking through the underlying demand trends at work in each one of the names. And ill go back to visa and mastercard which i mentioned earlier, full disclosure, i own visa but have owned it for 15 years. Ive heard nothing from American Express, nothing out of that type of Company Either interreporting period or up until today that tells me the consumer will be particularly weak. The consumer is obviously an important driver of Economic Activity for the tech stocks, again, eps estimates have been drifting up for the last few weeks if not the last few months and so the digital ad market i think is probably going to be pretty strong. Obviously that matters for google, facebook has some other things to mention, meta, i should say, but i dont know why and, again, i dont follow them. Im not the analyst. It seems to me like the setup for them is pretty good. Is it enough to drive the market higher . I think so in conjunction with the fed meeting on november 1st in which we wont get a hike and no sort of promise to hike the next meeting. Cameron, you dont think its enough . Do you disagree with dan . I think it could very much through the Fourth Quarter drag the market higher because it does help boost sentiment and i think if you look at the tech sector, one of the interesting things is on a relative basis, despite the higher rates, its held up fairly well over the past few months. Now 2024 will be a much different question because a lot of the magnificent seven names are seeing significant decelerations in their growth. A name like amazon goes from 322 Earnings Growth this year, no wonder the stock has been so strong, to just 30 growth next year. That is still much better than the market, but that deceleration in growth often leads to p e multiple compression. So it likely is a problem for 24, not necessarily the next couple of months. How do we look at multiples, the valuation of the market, the valuation of mega cap tech, because you cant look at it all the same. You cant necessarily suggest, well, the market is too expensive. Valuations are too rich, because if you look under the surface beyond the mega cap seven, valuations are probably not too rich. You know what im saying . The s p 493. Listen, if i had told you however many months ago i guess lets call it midjuly, the tenyear bottom, call it early may, was going to go from approximately 3. 75 over the next five months, whats the s p going to do . Your answer would not have been higher and yet here we are, and if you go back even further when the ten year or two year was lower, you wouldnt have expected the market to do what its done and yet here we are and mega cap tech held up although admittedly the rate sensitivity of the names is much less than it might be for a cyber arc or service now where the earnings are in out years where the models matter more. If youre google, meta, amazon, youre generating enormous cash flow today. The multiple effect that comes with lower or higher Interest Rates is muted. Cameron, what would you say is the biggest risk . Is it i mean, earnings are probably going to come in just fine. Theyre not going to be horrible. Theyre not going to be great. They may get over what is a very low bar. Is it that the fed has to do more than maybe one more rate hike . Is that what were so afraid of and thats going to just take rates up to a Tipping Point . What is it . I dont think its one more rate hike. It would potentially be the pricing out of cuts into next year. Theres about 75 basis points of cuts. Its either a lot less, meaning that we dont get cuts because the economy holds in better than expected, or a lot more meaning we get a much more Rapid Cutting cycle because the economy weakens more than expected. And that would bring you back to the earnings question, which is that one of the things that has underpinned the market all year is they have stayed flat, recession fears and banking issues. If we start going into an earnings revision down cycle, because people are actually afraid of growth and starting to price in a recession, thats where that 245 a share plus 12 growth for 2024 looks too aggressive. Now were not seeing evidence of the need to do that yet because the Economic Data is holding in. Were watching that closely because the earnings revision down cycle is what could really challenge the market in 24 if it happens. Lets remind people, too, if we have, the bar chart that shows you where earnings, dan, estimates are expected to be. Cameron makes a good point. Were still pretty optimistic about Fourth Quarter and then making the turn into 2024. There you go. And then you see the big Earnings Growth estimates really take a jump into the end of 23, q4 and q1 of 24, q2 of 24. Is that too optimistic . Everything is riding on that. We talked about this the last time i was here. Coming out of a decline in earnings. Whether youre up 10 or 12 or 8 is largely irrelevant. To Camerons Point if the economy is going to improve or at least continue doing what its doing granted, Third Quarter gdp will be Even Stronger than i originally thought, i was targeting 3, it might be 4 , we are expected to have a slowdown here. On the earnings side of things, 8 to 12 are relevant. As long as the economy continues to do what we are doing, if we skirt a recession and earnings are up, even if you hold the multiple and by definition the market has to go up. No, i dont think a miss here or a downgrade there is that big of a deal. What matters are profits. If profits are going up on balance, the market will go up. The point is, though, earnings projections have gotten pretty optimistic by virtue of the chart we showed you. Relative to last year. Obviously the base was low. But, nonetheless, you have to start living up to that if you think that we can have a meaningful move in the market especially relative to where rates are. Thats the key. Normally if rates werent so elevated, youd say, well, you may not have to meet the moment to those expectations in earnings, but now dont you have to meet them even more so because rates are elevated. You have to justify the multiple based on something. What i will tell you is were at 5 , were been at elevated rates for, call it, nine months. Whatever you want to define as elevated, and the s p 500 is fine. Now obviously were in a bit of a selloff now, and thats something with which we have to wrestle, but on balance, the market multiple is still even for the s p 500 is called 17, 17 1 2 times forward 12 months not next year. Thats pretty good for a 5 . Now, again, do you have to meet that . Sure. But im not saying you have to meet it exactly. 12 can be 10 or 10 can be 8. 12 cant be zero, sure. You can still have growth even if it doesnt match up to the estimates in the market can still be fine. How would you address that, how good earnings have to be because next week is the moment of truth. Lets be honest, the busiest week thus far. You have mega cap stocks, the nasdaq is down 1. 25 today. Its down near 3 on the week. So youve had a slide in a lot of the stocks going into the earnings. Ive got names in a week like tesla, which is down 15 . You have names today, apple, microsoft, alphabet, amazon, everything is weak. Mmhmm. A lot is riding on those names in order to deliver, is not give any signs of deterioration, and if up get signs that theyre starting to caution a deceleration in growth, then, of course the market would run with that and start marking down estimates which for that 12 growth next year, but if we look broadly on the equal weight s p 500, probably the most encouraging thing youve been talking about the average stock is that as of todays trading, its only one multiple turn above where it traded at the lows in october of 2022, because it sat out on the entirety of the rally this year and has come under renewed pressure. So that could set up for a lower bar to jump over into 2024, a not onerous valuation for the average stock which is a close watch if we see more dumping of those weaker names into that tax loss selling into year end. Do you want to sum up, too, i noticed today i was even debating whether the market started to look better. Is it going to make a run at green before the week is over . And then you have the headlines out of d. C. Of no speaker yet again going home for the week. We have an unsettled situation there. Were trying to appropriate more money for israel, ukraine, we cant get anything done because of the chaos, if you want to call it that. The market took a leg lower once that news broke. How much does that matter towards sentiment in the mix of Everything Else . Its impossible to quantify, obviously. Certainly the lack of a speaker at this moment in time is something to which everybody is paying attention. Geo politics more generally, the fact that iran is on the periphery of whats going on and always a risk to oil there. I will just make one final point separate from that before we get out, just about the slower growth. The next three quarters of gdp estimates are around zero. 0. 2, 0. 5, Something Like that. So a slowdown in estimates is already the consensus. While were talking about healthy earnings expectations, economically were already there for a slowdown. It will be a big one. I appreciate it, dan. Cameron dawson, well talk to you soon. To our question of the day, which of the mega cap Earnings Reports do you think is most important next week . Amazon, microsoft, alphabet, meta. Head to cnbcclosingbell on x. Well have the results later on. Lets get a check on top stocks. Steve kovach is here for us with that. Regions financial is on pace for its worst day after missing on earnings and net interest income. The regional banking giant is expected to fall around 5 compared to the prior quarter. Those shares down 10 right now. And night swift is having its best day in 11 months after handily beating earnings and revenue estimates alongside better than expected guidance. The results have a number of analysts raising their price target with jpmorgan upgrading from neutral to underweight. Scott, back over to you. Steve kovach, well see you in a bit. Were Getting Started on closing bell. Scott black is backbreaking down his top picks. Well find out why he thinks the fed could hike again this year. Hell make his case after the break. Were live from the new york stock exchange. Youre watching closing bell on cnbc. I was born on the south side of chicago. It has been a long road, but now im working for schwab. I love to help people understand the world through their lens and invest accordingly. You can call us Christmas Eve at four oclock in the morning. Were gonna always make sure that you have all of the financial tools and support to secure your financial future. That means a lot for my community and for every community. The power goes out and we still have wifi anto do our homework. Ty. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. The power goes out and we still have wifi to do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. Welcome back to closing bell. The s p 500 and nasdaq on track as yields remain center stage. The ten year briefly trading above 5 . Our next guest says yields should climb even higher, and he sees another rate hike this year. Joining us now Value Investor scott black of delphi management. Good to see you. Welcome back. Thank you, scott. I cant remember, quite frankly, you sounding as cautious, if not downright negative, as your note suggests you are. Earnings estimates unrealistic, nasdaq and russell 2000 are way overpriced. Do you really believe all that . I really do. I mean, right now based on this years earnings, the s p bottom up is 219 and change. Im at 214. Next year a 12 gain. Its ridiculous for nominal gdp. Not that much increase in operating margins. If you look at my numbers, the s p is selling about 18 1 2 times forward earnings. Historically its been about a 16 to 17 p e. I think stocks are hemorrhaging and are overpriced. If you look at the nasdaq thats a 26 multiple next year and the russell 2000 is at 23 times next year. Theyre not cheap at all. And the other thing is you asked me why i think rates will back up. Its not just because of the fed, although i think with core inflation at 4. 1 , were not anywhere close to the 2 level chairman powell wants, but we have huge structural fiscal deficits running 1. 4 trillion and 1. 5 trillion. Over 700 billion followers equal to the Defense Budget of the united states. The other thing to take into account is the fed will net liquidate. Theyve gone from about 8. 8 trillion to 8 trillion. So if you look at it, youre going to need higher rates. The other thing the chinese have been net sellers of treasuries over the last year as well. So the longterm supply and demand for treasuries doesnt look all that good. But i guess my point is for a guy who makes his living looking for cheap stocks, right, you are famed Value Investor, this all suggests to me you cant find anything to buy because you dont think its cheap enough. Were at 89, 90 invested. We dont panic and sell. At the margin you want good margins. Yes, there are cheap stocks at 11, 12 and 13 p e, but we own a lot of them. I cant say we should commitment incremental fund. I do think Interest Rates will back up. There will be a severe competition for equities in the short term. And the other thing is when you have the s p earnings growing at 8 and 9 , its not the true thing. If you look at numbers from the bureau of labor standards or from fact set, the real earnings, if you look apples to apples, grown under 1 this quarter. You know its bad when you know its bad when a Value Investor thinks the best thing you can do is buy a threemonth treasury. That says it all. I did pick one stock for you that i thought is doing extremely well. Snapple. Theyve had 13 consecutive up quarters. They dont have 20 on book, that equity is 0. 05 and generate nothing but cash and the stock is selling at 12. 9 times earnings, and they also have the wind to their back and the average age of the fleet is now 12. 5 years is the longest. Its a wellrun company. 12. 9 times earnings. Its an excellently run company and i still think earnings will be up next year. I have 5 top line growth and i have somewhere between 5 to 7 bottom line growth for next year as well. I dont think we have a lot of possibility the earnings will slip and make a mistake. I have to say your suggestion that the russell is overvalued is interesting because its gotten hammered. Small caps have gotten crushed on these concerns that were going to have a recession down 15 in the last three months alone, and you think its that overpriced . Yes, it is, if you look at the p e ratio. You go through any statistical guide, look at all the small cap companies. The s p is seven spots that carry to 17. 7 year to date. If you look at equal weighted s p down 0. 3 yesterday. If you look at the russell 2000, down 2. 2. The russell 2500 down 0. 3. Its just really been the magnificent seven. Whats your biggest position before i let you go . Its a Little Company in omaha called Berkshire Hathaway weve owned for years. I dont worry. Im sure warren doesnt worry on a shortterm basis. He runs good businesses. Its not way overvalued, about 1. 4 or 1. 5 times value. Well, im sure that lets you sleep well at night. Its good to see you as always. Well see you soon. Thank you for inviting me. Thats delphi managements scott black joining us. A news alert on okta. Shares of okta down 11. 5 after disclosing a hack of its Customer Support system saying the hackers were able to view files uploaded by customers but also noting this is different than the customer facing service of okta that companies tend to use and that has not been hacked but, again, theyve notified all customers affected by this. Very few details about specifics of the files uploaded and what kind of data was able to be viewed by the hackers. You can see now falling even further down better than almost 13 now, scott. Appreciate you giving us that update to us. Up next, stocks still under pressure as we come to the close of this week. Wells Fargos Chris Harvey finding opportunity in a few key sectors. He explained where he sees strength right now. Will do it after the break. You founded your Kayak Company because you love the ocean not spreadsheets. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire welcome back. The major average is under pressure today. S p on pace now to close out its worst week in a month. All this even as the ten year retreats from its highest level since 07. Joining me to discuss is chris harvey of wells fargo. Good to see you. A lot of people are negative, as you just heard. Youre sticking, though, to your guns. Youre sticking to your target, 4200 for the remainder of the year. Thats right. What we think is youre 7 , 8 off the high. The ten year is at 5 and the stocks havent created at this time in time. Fundamentals are fine and november 1st is a key date. November 1st is when fomc happens. More importantly, its when we get the treasury refunded and this backup in rates all started because treasury really missed management you mean the issuance which has created a lot of consternation over the supply coming on the market and thats causing the backup in rates and who is going to buy it. And thats right. Youre going to need more paper but can you manage expectations better. I think the other thing to talk about, the curve was inverted by over 100 basis points. Now its steepening. Now its 15, 16 basis points. Youre not penalized that much so we could see rates begin to firm here. What gets us to 4420 . Thats the year end target. How are we going to get there . Roughly 200 points higher than where we are now. Its really not much. We were there, almost there the other day, and so really what you need is a little bit of stability, earnings to continue to do what theyre doing, and you need the fed to play ball. You get that and youre probably up to you could be up to 4600. What does the fed playing ball mean . Okay, a couple things. You have rates going higher, what you want to see is some sort of feedback mechanism, see people acknowledge rates are higher, its tighter, and maybe that will slow things down. And they have done that. The other thing you want to see, you want to see the treasury realize, hey, maybe we didnt do this thing properly back in the summertime and well hit expectations now. Right now we need to calm the market down, and so if you get that, i think things could be very gappy in the rates market because a lot of people are saying to us, the way to lower rates is through higher rates. Hey, im not going to buy 4. 75 but buy 4. 25. How about next week, mega cap . How much does that hold the key for your outlook here . Its very important. Obviously if the numbers are good, the stocks rally, that pushes the market higher. We saw some good numbers from tesla not good numbers from tesla but we saw good numbers from netflix. And if we get the mega caps performing, that will drive the stock market higher. I think they will. The underlying fundamentals are still strong. I dont think we have a whole lot to worry about. Still, you would suggest if you do get a pop towards your target you would sell it, though, you would sell at the strength rather than continue to buy it. Why . If we look into the First Quarter the first half of next year, its not looking so great. Were having a hard time saying, hey, theres a real great recovery coming. There isnt. The second thing there is a lag effect to Monetary Policy. We havent seen it yet but will see. The other thing is a lot of your risk aversion assets are oversold, staples, utilities, low volatility. The last time we saw that late 18, late 21, that was a big reversal. What are you suggesting that earnings estimates into next year are too optimistic . I think so. I think so. You usually dont see great recoveries without a big recession. We havent had a recession we hadnt had a big downturn so where is this great recovery coming from . I dont know. We had so much into thats why you normally dont see anything like weve seen. You normally dont have a tightening cycle in as quick a time as this time. You normally dont have a tightening cycle when you had the amount of stimulus you had in the system that we had this time. So lets talk about it. Where would a great recovery come from . The consumer . The consumer is okay. Theyre getting stretched. Is it going to come from corporations . Funding costs are high at this point in time. The only way you get a good recovery things get sloppy in the first half. The fed does have to cut. And Interest Rates come down in the second half. But thats a really back end loaded recovery and things have to get worse. The consumer could slow down. That could take the edge off demand which jay powell needs it to happen. That could cause inflation to come down. It doesnt have to necessarily be you break it and then you have to cut rates to fix it. No. What can of growth rate are you going to get from that level . 20 or high single digit growth rate . Well talk to you soon. Enjoy the weekend. A rainy one, unfortunately. Chris harvey, joining us. Were tracking the biggest movers as we head into the close. Steve kovach back. We have one tech name taking a dip after adjusting its outlook and pharma name seeing a boost after some positive analyst commentary. Well have all of that when closing bell overtime comes back. Im so glad we did this. Im so glad we did this. Im so glad we did this. Life is for living. Lets partner for all of it. Im so glad we did this. Edward jones every day, businessess. 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Lets start with Hp Enterprise deep in the red after lowering expectations for adjusted Profit Growth this year and the Software Giant issued 2024 earning guidance that came up well short of analyst expectations. Those shares off by more than 6 now. Meanwhile, shares of merck outperforming as ubs upgrades to buy from neutral. The price target goes from 122. They arent fully appreciating the strong pipeline nor key treatments. Back over to you. Steve kovach, thank you very much. Last chance to weigh in on our question of the day. Which mega cap Earnings Report next week do you think is most important . Amazon, microsoft, alphabet or meta . You can head to cnbcclosingbell on x. You got this. Lets go. Gobble gobble. Ive seen bigger legs on a turkey rude. Who are you . Im an investor in a fund that helps advance innovative sports tech like this Smart Fitness mirror. Im also mr. 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The number one cardiologistprescribed blood thinner. Ask your doctor about eliquis. The results, well, those are the results of todays trading thus far. Were at session lows, so were sucking some wind here as we close it out or get closer to it. So in the meantime, lets get the results of our question of the day. Mega caps Earnings Report is the most important next week. Amazon. Thats interesting. Almost 38 followed by microsoft and alphabet and meta. A very big week. Up next, solaredge is sinking. Well find out whats behind that move lower and how its impacting the rest of the solar space just ahead. That and mucmo wh rehen we take you inside the market zone. This is american infrastructure. Megawatts of power, rails and open road, and essential services of every kind. All running on countless invisible networks, making it a prime target for cyberattacks. But the same aipowered security that protects all of google also defends the systems running americas infrastructure. 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The low close for october on the 3rd. The concern seems to be that yields, even though theyre backing off today maybe have helped to do more damage. Powell saying maybe the economy is still strong because we havent been restrictive enough for long enough. That sets out in front of us a murky path. All of that together along with i think more of the vague concerns about stocks not trading well off decent earnings. That can change next week or the world doesnt seem like a particularly trustworthy place. All those things fitting together, i think, getting us in the riskoff mode. If theres a Silver Lining in the mega cap favorites, really leading the down side today, the nvidias of the world, it shows you at least a sense theres no easy place to hide. Very defensive tone if you look at what is working today which is traditional pharma and the like. Do you think theres more riding on next week, just given where the fed seems to be and where rates have moved . You really need something to spur us away from that conversation. Or you need something to remind everybody that beneath it all things seem to be okay. If we can say, and we cannot say based on one days action, the s p 500 is at potential support, were back at the june 2nd levels where we blasted off from, and you have earnings coming through in a big rush that maybe is going to say the next couple of quarters looks like theyre plausible in terms of growth rates, yeah, sure, i can see that happening. The market is not super oversold yet, though. Youve really pulled the slingshot back. What do you make of American Express . Pretty good earnings. Yet that stock is one of the biggest weights today down more than 5 . What are we supposed to take away . Financials very suspect. Its trading down with a lot of regional banks. Customer volumes, were a little bit light. Not bad. Everything seems okay in the here and now for amex, it really does capture this moment were at where investors are not willing to give the benefit of the doubt to the economy or to companies theyre going to be able to keep it up, that will keep working. There was an uptick in chargeoff at American Express, but, again, like every one of these you look at, its a big jump year over year but not up to where we were before the pandemic. You look at 2019 levels, also, this stock, if the earnings are anywhere near where theyr forecast, the stock is cheap relative to history. You dont often get a chance when the economy is not in complete freefall to buy American Express at these levels unless you make the case something sort of secular has changed about the business. I know some have made the case. You make the point its as good as its going to get for a while for American Express or feels like youre going to have to take more pain and go through a little more of the uncertain fundamental times. Speaking of pain, pippa stevens, solar stocks brutal. Whats going on . Solar edge is down 28 today on pace for its worst day on record. And so there have been a lot of head winds for the Solar Industry well known by the street. But what happened was the magnitude of solar edges warning is what took investors by surprise. They said they view the q3 revenues will be 20 lower than prior expectations with q4 taking a hit. They also significantly cut their forecast for margins. They now see that gross margin at 21 , down from a prior forecast of 31 . This all comes down to weakness in europe, essentially distributors are working through an excess of inventory meaning theyre not buying from the product manufacturers like solar edge. The street really did not like what it heard from the company. We got five downgrades including from bank of america and goldman sachs. Goldman taking its target from 254 down to 131 saying there is no way to defend the stock at this point. Now one interesting thing to note is that end phase is also being thrown out alongside solar edge today, but there is a key difference here in that end phase has much less exposure to the European Market than solar edge does. So one thing to watch, scott, end phase does report next week. We will be listening for commentary around what they say given that they dont have that same level of exposure to europe, although the u. S. Is not looking so good either. A lot to watch here. Solar edge down 27 , the worst day on record. Pippa, thank you for that. Pippa stevens. Mike, im looking at sector performance. The worst is discretionary. You have to figure tesla is a big part of that. Elsewhere industrials down just about 3 , tech down 3 . I mean, youve really had broadbased weakness if you want to call it that. Material is down just about three. Financials down just about three. Utilities down two. Pick your spot. For a long period of time, even after the market peaked in july, the s p 500 peaked at that point, it was possible to say, and i was saying it, that cyclicals have still maintained their leadership off the october lows. The credit markets remain relatively firm and not giving you something new to worry about. And i think youve been able to punch some holes in that idea. The average stock is absolutely taking on a lot of water. Equal weighted discretionary is now 16 off its highs. It is down almost 2 for the week, and 5. 5 month to date. Youre losing a lot of that. Part of that, home builder related stuff, anything housing related. One thing we cannot we dont have to debate in terms of the effect of Monetary PolicyMortgage Rates 8 . Home builders just not quite able to buffer that with buying down the rates as easily as they were before. Yeah, youve seen supply come up. Youve clogged up the entire housing market. Its no longer a driver of economic growth. It really hasnt been much all year. So thats one thing you can say about discretionary and then the rest of it is, once again, yeah, sure, government retail sales report looks pretty healthy. Almost 4 annual growth. We dont think it can last. Thats what the stock valuations are telling us. The other thing, d. C. Ridiculousness, that goes on. And then as someone made the point on halftime today, its hard to be long over the weekend with the middle east still unfolding and, you know, iran hanging out there and its brought concern from investors. A hard hump to get over. I think ultimately vague geopolitical worry is viable but not until you really get the market feeling like its at this extreme fear point. We havent gotten there yet. I totally get it. Its why the vix is 21 going into the weekend. On the other hand, we had 15 straight mondays when the s p was up. Its a bizarre streak, maybe nobody wants to bet its going to make it to 16, but it is interesting youre having the market down 1. 2 and you have a little bit of a giveup type action at 42 and change. So not a lot of fresh buying interest even though bonds backing up. Well see if thats a oneday quirk or if thats new lasting dynamic. 4225, were right around the 200 day for the s p. Keep an eye on that as we make the turn into a new week. Enjoy the weekend. Its going to be a red friday. The dow will go out right around a 300point loss. Ill see you on the other side of the weekend. Morgan and jon pick it up in ot. Well, a down week and a huge week of earnings ahead is the scorecard on wall street. Welcome to closing bell overtime. Im jon fortt with morgan. Why mark zandi thinks it may not last. Plus, the latest messaging from the fed including new comments today from atlantas Raphael Bostic on cnbc. United auto workers president shawn fain is giving an update on the union strike against detroits big three automakers this hour. We will bring you headne