Will Rising Rates Wreck Stocks? 5/22/25
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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.

Thanks very much. Welcome to the Halftime Report. I'm Scott Wapner. 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 Sikosha and Jim Laventhal. We will check the markets here. We're positive on the S&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 23, 10 years on the move today as well.

Jonathan Krinsky says that 30 years likely going up and the S&P is going to work its way back to about 5720 is the number that he has in his mind. How much of an issue is all this?

I think it's an issue. It certainly got everyone's attention from the chief strategist types to the chief economists. 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 unched today, is up 44 basis points for the month of May. It's a very dramatic move.

It was at 4 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, 5 spot, 09. For me, that's the bigger one than the 30. The 30 is the tail that gets wagged by that 20-year trend.

And again, it's the highest 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 AI impact on the labor market in the second half of this year, which we're already starting 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 inflationary. 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,

that the labor market is cooling, the economy is decelerating, and inflation's not the real risk. My personal opinion, it's the latter. I think 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, a 30-year north of 5%. For me, that seems like the head fake. Shan, how big of an issue is this if rates continue to back up?

for stocks? Yeah, I mean, I think once we start to get closer and closer to that 5% 10-year yield, then you start to see the impediment to earnings, continued earnings appreciation. I think Josh makes a really good point, and I think it's one that we need to 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. We're going to continue to see the curve be pretty steep here. They're obviously tracking one another, rates and stocks. 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.

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. People are trying to make the argument, though. There's some 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.

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. But the Fed is a policy taker right now. They're not a policymaker. And so we're looking at the fiscal situation.

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 confidence. In fairness, Joe, you know,

The economy is holding up better than many people thought. The consumer has 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 deal,

tax bill that given where the deficit already is and the cost of funding it is already a concern you're gonna you're gonna have a backup now on the issue of the economy city 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's 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 Capuano with me on stage. 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 shock to consumer confidence in March. 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.

The perception, awful, pessimistic, but the reality is simple. The S&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 U.S. bond market, but global bond markets,

have basically said to the equity market, hold on, we're taking away your permission slip 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 56.50 in the S&P, we could do that. But this is not just isolated to the U.S. 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, OK, 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&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. 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&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&P is only 4 plus percent and we're 5 percent away.

from a record high in the S&P 500. 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? The people who buy those are insurance companies, pension funds that have long durations. Not me. I got it. I got it. You know what?

What matters far more is the 10-year, because that's what businesses key off of in terms of their capital expenditures. And the 10-year, I'm not going to look right this second. What is it, 4.58%? I'm not freaking out about that. Now, yes, you go up towards 5%, there's going to be a hiccup in the markets, unquestionably. Rate of change, too. We can't always speak about absolute levels. They're almost meaningless. 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...

is actually the 10-year has been kind of stable for a while. Popped up to 4.8 whenever that was April, got back down to four and a quarter. If you really look at it, and I'll give Ed Yardeni credit, he's been calling this, we're just kind of stuck in this four and a 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, yes, 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. 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 10-year. It's four spot 11.

We're slightly elevated. We're not at the top of the range. We're right smack in the middle of a 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 old highs. But I mean, until then. The buyers come in, right?

if you're going to get 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 ten-year treasury coming close to five percent that looks pretty attractive especially with rates moving lower in the back half of the year. I put something on LinkedIn toward the end of '23 as it looked like we were going to quote unquote break the ten percent ceiling on the ten year. I said I will buy as many ten-year treasuries at five percent plus as you could possibly sell me. I'm very, very happy to do that.

If I think inflation is like two-ish to three-ish 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. And that curve's steepening, right? I mean, the front end of the curve's coming down.

I think you have to be careful, though, drawing the correlation between rising yields and the fact that the S&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&P 500, they don't have the need to borrow. That's 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 lays out. - 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 is going to be great. We're going to get this extended tax cut. That's good enough for everyone else. But it's going to wreck inflation.

the most speculative areas of the market. It could act as a governor on multiples, even for the S&P. That's possible. Or the most levered, to Joe's point. I mean, leverage, you've got to look at company-level leverage much more closely in this environment than ever. Small caps won't like it. And they don't. And they don't. And Scott, if I can just go back to Mr. Capuano. And, you know, they shouldn't be surprised. The CEOs should not be surprised that the economy is strong. It's strong because they haven't laid people off.

Period. End of story. That's why consumption is so good. They're human beings. They look at the data, at least the soft data, the surveys, and say, wow, you just did the, what was it, the second worst print and consumer sentiment ever. Yeah. But the sentiment is politics. If you look at a breakdown, Republicans, Democrats, it's nonsense. It's nonsense.

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 the more that surveys i totally agree with this premise on unless and until you get layoffs in these non-farm payroll reports and we're not getting them just not it's nothing to talk about i just tell you to a person out in arizona uh... a room filled with c_e_o_'s of big middle smaller level companies uh... it was pretty consistent with

Pretty good. Good. Because everyone's working. And 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 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 expansion. Let's address the fact that the NASDAQ's doing best today of the majors. It's up eight-tenths 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 doing nothing because I think the market is 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 OpenAI deal to acquire Johnny Ives startup for six and a half, basically a billion dollars. Most of you know Johnny Ives, 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 Johnny Ive made in the context of all of this did not go unnoticed in tech land 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 phones. - It's the legacy products that

comment that kind of got everybody's 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 and then the comment. Yeah, Scott, 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 Johnny Ive was kind of that heart and soul of Apple with the 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 him, 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 open AI artificial intelligence gadget is that Johnny Ives says is going to take on these legacy gadgets, by the way, that he helped invent.

Ming-Ching Kuo, he's that 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 says 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. It'll pair with your phone and not expecting this to go into full production until 2027. Now, OpenAI says we're going to see it next year. They're going to finally show

show us what they're working on. But as we think about what this means for Apple, Johnny Ive 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 2007. Or this is a huge whiff and it looks like a six and a half percent

billion-dollar blunder for OpenAI and really damaging to Johnny Ives' legacy. So they're putting enormous pressure on themselves to deliver something they say Apple can't even deliver. And that's why Johnny Ives is doing this with OpenAI instead. So that's something to really chew on as you talk about what this means for Apple, Scott.

All right. Yeah, great setup. Steve, thank you. Steve Kovac. What do you think? No. What is it? It's shaped like an iPod shuffle. It's like a nano. Remember those little ones? The nano. So, yeah, I used to send my kids up to camp with them, and they would get taken away. Shout out to Tyler Hill.

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 talked a lot about 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. - Totally agree. - Look, I'm not Johnny Ive, 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 open AI key chain so they can do an AI search of how do I make the best chicken franchise. I just, it's not realistic to me. - 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 any queue of 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 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 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 the GOAT. Jim Labenthal 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. I'm not going anywhere. Mr. I didn't go anywhere has seen shares up 15% since the Eddie Q sell-off. That's what we're calling it. He stuck with it and it paid to do so. Yeah, where's Kovac? Let's get him back on. He piled on too. No, I love Steve. Guilty as charged, Your Honor. No, I...

It could have gone badly. I acknowledge that. But the thesis is not over yet either. And it's not over yet. But here's what the 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. I

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 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 challenge and I think they will continue to do so from here. Any other comment on that? Congratulations, Jimmy. Good call. I still perceive it to be a problem for this company. Jimmy came in today. He was hoping that he'd get it. He had a bounce in his step. He should have a bounce in his step. Can I ask a question?

So are you less concerned about the search deterioration or are you more optimistic about YouTube as well? Because I think that those are two sides of the coin. 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 there was a similar competitive issue. Yeah, that now is too much. Can I say one thing before you go? Yeah, please. Just one thing. Because you and I talked about this. Is this a value tech stock? It is. And 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. 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. Citi agrees with you, by the way, which says after the event, stocks go into 200. I hope it does. I would just say, and 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've 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 worry about with the stock, which is why I call it value tech. You know, as you say that, what comes to mind is remember when Apple...

10 years ago, traded at 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 to look 26 times for it. So tech is the best sector this month. It's up 10%. We know about how hard it's rallied back. Discretionary is up eight and a half. Now, Tesla is part of that. Stocks had a big move back.

We have a couple of IPOs, by the way, here today. And that bell tells me that another one has opened for business. Which of the two is this? MNTN. It's MNTN because Hinge Health is 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 Chiu takes a closer look at our sectornomics today. Hey, Dom. All right, so, Judge, sectornomics 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 undervalued.

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 D.R. Horton is 18% below the line. Decker's is 19% below its 200-day. You kind of get the idea here. Now, at the bottom of the list is HomeBuilder Lenar, 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. 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. United Health 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. We're back in two.

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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, it is what it is, Steph. Trying to give you props. Thank you, Scott. You know, it was a great quarter. The CEO has been there over a year and he's executing flawlessly. The earnings growth grew 71 percent. Revenues grew 26 percent. 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. Speaking of, you bought more Palo Alto yesterday, didn't you?

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 one percentage point. Next-gen security, ARR, annualized recurring revenue, actually that beat better than expected. And their software firewall, their trailing 12-month revenue growth was 13%. So all of 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. 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? 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 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 twenty five dollars a share for next year like I do that's the stock straightened twelve times earnings eight times even though I've never seen the stock trade at this level on and it

my assumptions are really it's like a one percent 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 five million and you had five 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.

Okay. Steph, thanks for the update. It's Stephanie Link. Thanks, Scott. We'll see you here tomorrow. I think you're on the desk with us. Look forward to that. Christina Partsenevelis has the headlines now. Hi, Christina. Hi, Scott. Well, authorities say multiple people on board a private plane that crashed into 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 ten 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 Monia Spadaro. That's according to two senior law enforcement officials who tell NBC News that she's being treated right now for the non-fatal gunshot wounds and law enforcement agencies are investigating whether 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 emission standards. The resolution is now headed to the White House, where President Trump is expected to sign it. Scott, back over to you. Christina, thanks very much. That's Christina Partsenevelos. Up next, Josh Brown's best stocks in the market. A new name makes it into the group. We'll tell you next.

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in his best stocks in the market. And it is what? Please tell us. 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, WMB 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 year. Third

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% above the 200,

That $50 to $52 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, you own it personally. 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 outflow.

Appalachian natural gas. Well, guess what? The hurricane season never came. Josh talks about the year-to-date performance of EQT. 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. 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. I like that.

And I see the same thing. I think this stock gets into the 60s. 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 slash Josh Brown 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, no? At least until we get to NVIDIA.

Most likely, 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 no matter what else was happening. There's no denying the fact that you absolutely have had the coincident moves 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 an equity index level or valuation, because we've made our piece along the way in the last three or four years with 3.5% on the 10-year, 4% on the 10-year. And so 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. All right. Good stuff.

I will see you on Closing Bell. That's Mike Santoli. 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 Sam Fram.

Hey, Scott. Yeah, so AI startup Anthropic is just unveiling right now its latest AI model called Claude4. They are calling it a significant upgrade to the latest version. This, of course, is the open AI 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 AI 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 Sorkin about it.

Cloud can now work for you for much longer. It's doing hours of work for you. We're even seeing it with our early access partners that have deployed Opus 4 in their own use cases, whether it's for coding or other hard tasks. And Cloud is now doing much, much longer horizon tasks. It's able to manage its own memory. It's able to work through these hard things autonomously without going off the rails.

So this new model, Cloud 4, is going to be available on Amazon and Google's 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. All right. Thank you. 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 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 rooftop solar just don't work, even with the tax credits. Now, the point now is, Joe, without the tax credit, does it work even less? No, the entire industry is in significant peril here. You sold First Solar 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 Chino's comments as well? But you sold first solar at the 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 the January, end of January, rather, and

than we got out of it at the end of April. In the industry itself, the solar industry, yeah. 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, the stock in the 90 days didn't work well for us, and we moved on. First Solar is relatively unscathed today when you look at the other ones because of the point Joe made, 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 are 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.

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 at other places. You have to wait for Nancy Pelosi to buy one of these stocks, and then you'll know maybe there'll be some saving. Until then, I think you can't really touch them. We'll do finals next.

Are you following the Halftime Report podcast? What are you waiting for? Look for us in your favorite podcasting app. Follow the Halftime Podcast now. 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? Yes, Your Honor. Thank you. I'm quite honored as well. Delta Airlines, Judge, I was going to bring this up when Don was talking about discretionary. Look, for all of us who are waiting for the recession, you know, Mr. Capuano and everything, it just isn't appearing. We've got low jobless claims. People are flying. Estimates are going to start going back up. All right, Stan. Energy sector, a lot of negative news priced in here, pretty undervalued. E&P integrated is probably where you should be looking in this space.

Joe T. Best consumer discretionary name that we own right now is Mercado Libre. Okay, and Josh Brown. T-O-S-T. 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.

Thank you.

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