tv Closing Bell CNBC May 31, 2022 3:00pm-4:00pm EDT
steady move higher, we have seen a lot of down appreciate if this goes to the upside i want to know how well things will hold up. >> we were above three, well above three earlier and now back at 2.84. and we got it all in for you, everybody that's why we do it here on "power lunch." thanks for watching today. >> "closing bell" starts right now. ♪ hank you, kelly and tyler. another volatile day for stocks. dow at lows but the broad market is heading south the most important hour of trading starts now welcome to "closing bell." i'm sara eisen the dow is down 200 points at the lows of the session we were down 460, then went positive and we're giving up again. consumer discretionary and services there's buying in the beaten down names that are helping the consumer stock
the nasdaq is down about 2% for the month of may while the s&p is flat. definitely an underperforming overall for the month. here is a look at the actively traded names right here, right now at the new york stock exchange you have amc entertainment off the better "top gun" sales it was higher earlier. snap is on there which is one of the biggest, down about 50% for the month, worst month for snap after warning on earnings, down another 9 percent today. nio gets a boost off the china news a lot of the china-related stocks are higher today on the word of the end of the lockdowns in shanghai and beijing. coming up this hour, we will discuss the volatility and the stock bond and commodity markets in an exclusive interview with cme chairman and ceo terry duffie straight to the top story though european leaders agreeing to ban russian crude oil. the move will impact 90% of russian imports by the end of the year which excludes pipeline imports. the ban could exacerbate an already volatile energy market oil prices have soared since the start of the year.
jumped again on the back of today's news then have given up the gains moments ago the "wall street journal" reporting some opec members are floating the idea of suspending russia's oil prouks deal let's bring in helima mccraw the opec news or report seems to have turned the stocks around. what is the significance of this >> i think it is an expectation if russia were to be involuntarily suspended from opec it would pave the way for saudi arabia and uae to put more barrels on the market. the question we continually raise even if saudi arabia and the uae were to say this production deal which ends at the end of september, we're going to end it now, there's not a lot of additional opec barrels that can be put on this market i mean saudi arabia is almost at the production level seen in april of 2020 when they were in the all-out price war with russia there may be around 2 million barrels they could potential add
to the market, but if we are talking about significant russian losses because of sanctions, that is not going to fill that type of export gap if russia does, indeed, go out in the market in a big way because of sanctions >> i guess, helima, anything helps. why haven't saudi and other opec members pumped up more so far and what has changed that they're willing to cut russia out? >> first of all we have to wait and see if this story is actually accurate. >> true. >> the issue is that the saudis said first of all we're looking for a new security partnership with the united states you have officials like the full brother of the crown prince, deputy defense minister who visited washington you have had senior officials from the biden administration visit riyadh trying to come up with a bargain that energy will be part of the saudi oil minister said, look, we don't have that much spare capacity out there
if we were to put all of the barrels on the market now and we still have the war going on and a we could lose more russian barrels, the market might focus on the lack of compare capacity. in 2008 opec was putting barrels on the market but prices were running up they question what would happen if they deplete spare capacity at this stage. >> i want to bring in ian bremmer, he has a book called "the power of crisis." it is good to have you here on this day we are talking about oil prices and sort of the lines of the oil maps being redrawn as we speak how do you see -- let's move on to europe and what we got today, the consensus to basically sanction russian energy imports except for what goes through the pipeline how do you see that playing out for europe and for russia? >> yeah, i think that this is historic it is really the first time
we've seen the forcible decoupling and what will end up being the complete decoupling of a g20 economy from the advanced industrial world the americans were never doing much business with the russians, but the europeans, of course, were, and they recognize, particularly the largest economy, that it was a massive strategic mistake. now, the hungarians, of course, dug in and said that they really were not prepared to be a part of this. they used a veto unless they were granted an exemption. and as those negotiations went on over a few weeks, a number of other eastern european economies were more than happy to ride their tails. but the germans and the pols are saying that they're going to completely end their piped oil from russia by the end of the year if you add that to all of the shipped oil, you are talking about 90% of what europe gets from russia. this is a really big deal in terms of cost to the europeans it is a really big deal in terms of how much the russians are
being punished >> well, how about the europeans? for one, ian, we just got the european inflation number, 8.1%. in germany it is 8.7 numbers they haven't seen since the creation of the euro this could only make it worse. so how is that likely to go down in europe? surely there are implications more than just the ecb for the european political landscape what do investors need to know there. >> i mean if it were the americans, i mean if this crisis were exactly the same but the united states were the ones that were doing all of the energy trade with russia, were being asked to make the sacrifice i'm not sure we would come out in the same place but i do think this is seen as an existential crisis in europe. you have had 6.5 million ukrainian refugees that have fled a lot of them are in homes of europeans, especially in poland, but in germany, too, across the continent. they've really been shaken by this, shaken by 30 years of a
peace dividend they now know no longer holds true for them so when you are inflation numbers are daunting and this is going to hurt the average european, yet i don't think that the political leaders in european, especially in germany, are feeling an enormous amount of pressure to change their view if anything, the public has made them harder lined in the way they react to russian invasion and war crimes against an innocent nation of 44 million. >> helima, what is the upshot for the market this as chinese major cities are starting to come back on line, increasing, right, oil demand and europe finally goes through with a deal many thought wasn't possible >> sara, i think that the most important part of the story is not simply the number of barrels that won't be going to europe, but the fact they are sanctioning the provision of
shipping and service that means it will be more difficult for countries like india, china and turkey to take those barrels. essentially you are closing potentially the homeless shelter for russian barrels. i think that's an important secondary measure that was imposed that could have major implications for how many russian barrels are actually off this market. >> so, brent, it goes where? it is just below $123 a barrel >> the real thing to watch, sara, potentially do we get russian weaponization of exports, how do the russians respond? do they start essentially cutting off more gas importers, pulling more barrels back before there's an orderly wind down in europe i mean the combination of sanctions and weaponization by russia, that is a path that at a minimum retesting the highs we saw earlier this year, but also reaching those levels like 185 that they had been talking about in the market. >> wow. >> you need the secondary sanctions and you need russia weaponizing exports but it is a
really dangerous combination that could take us to the 185 level. >> well, what will the russians do about european gas i think is the next big question. we will leave it there thank you both for joining me. good to see you. >> thank you. >> with oil prices higher on the day but giving up some gains, chris verrone skeptical of last week as rally but he reveals the one stock he thinks is a buying upside right now later, terry duffy you are watching "closing bell" on cnbc.
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check out today's self-mover it is sherwin williams, the paint company, one of the biggest liners in the s&p 500 after credit suite issued underperformance, $245 price target the analyst there saying paint demand could be hit by rising mortgage rates and a weaker housing market we've seen shares decline pretty much all year long meantime, we have less than an hour left of trading in the month of may it has been a volatile day already, up and down joining us with a top stock picks in the market, head of macro research, chris verrone, which strategas is a baird company. what is the one stock you were buying on the dips >> i will say this i think this market has given us clues about where leadership is going, and that's the area i want to concentrate on it is defense.
when i look at names like lockheed martin or ray theon, those are your leaders in this tape if we talk about a name like lockheed in particular, stock is up 30%, 40% off the lows it has been consolidating for the last several months, but it is consolidating in an up trend against a sea of down trend. it is a leader on a tough tape there's so much good support in the 420, 430 range where i think viewers have to look aptt it as viable decline in a leadership group. we think it makes new high here. >> it fundamentally makes sense. we know europe is ramping up military spending in response to ukraine. why hasn't this stock been reacting stronger? >> i think in the context of the year, this entire group has acted great. when you look at the leadership from defense contractors, it is telling us that the conflict in
russia and ukraine will last longer than the consensus will last it is giving the same message that energy stocks or oil is the idea of peak conflict or peak yield, i don't think the market is justifying any of those. these defense contractors, as your leaders here, i think support that view. >> so you like lockheed and defense names like raytheon but not the overall market why are you not convinced the bounce could go on for longer? >> when you look at the quality of the rally the internals have been decrept, not exceptional. we are looking for days where 50%, 60%, 70% of the market gives you a 2% on the bounce we don't have the momentum surge, the urgency that often shows up off a low frankly, sara, we vice president turned over the leadership either i would expect if we are putting in a bear market bottom and a good, durable low we have to see leadership turnover and it hasn't happened. your leadership here is still energy, it is still resources,
it is still materials. until you lead big leadership change, the status -- >> financials had a big change, communication services there was a real bounce in some of the hard-hit areas. >> but this is where i want to stick between bouncing in a bear market versus leadership 80% of energy met a 52-week high this week. the bounces you are seeing in banks, the bounces in tech are-free the very, very oversold conditions, those aren't your leadership here. i want to make that distinction in terms of what the signal here to take. when we look at bear market bounces, up 15% over about two months has historically been your typical bear market bounce. that's a reasonable framework. it gets you to 43, 43.50 on the s&p. that's a lot of resistance on top of us there. that's where i think it gets tricky from chris verrone, good to get your technical take from strategas. let's get a check on the market down 122, so recovering a bit from the top of the hour but lower across the board s&p 500 only don a quarter of 1%
which means we are barely positive for the month of may on the final trading day of the month. the nasdaq is climbing toward the flat line. consumer services and discretionary are positive amazon is still down 2% for the month but climbing back today along with some of the beaten-down names. consumer confidence sliding on inflation fears. up next, mike santoli looking at what it could mean for both the job market and the fed as we head out check out the top surge tickers on cnbc.com. we are seeing yields higher today followed by tesla, wti crude which is mostly higher today, apple and amazon, which is leading the qqq we'll be right back. mount everest, the tallest mountain on the face of the earth. keep dreaming.
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>> yeah, inside the confidence board, consumer confidence numbers every month is this question do you feel jobs are plentiful or hard to get this is the difference between those two responses. basically record levels of perceived job market strength recently, basically saying jobs are plentplentiful the fed is targeting vacant jobs and the excess labor demand out there. what we've seen is a little bit of a rollover. it's gone down still to a high level but you have seen it curl lower. now, this chart tracks extremely well with measures of wage growth so it's a prerequisite for any change in the fed's stance or maybe some moderation down the road to have wage growth calm down as you know, the party line has been we're not trying to raise unemployment, the fed says, maybe we can sweep away a couple of million open jobs and somehow that's going to cool off the labor market not clear that's how it works but that's the story. >> but that's what's happening. >> so far it's happening, yes. >> are you calling the rollover
in inflation >> basically the peak in annualized wage growth would suggest it's in but that doesn't mean it will crash down to acceptable levels. >> and this is just a confidence thing. opec is considering suspending russia from a key production deal. up next, terry duffy on the outlook for commodities and interest rates all of this trades on his cme group in a volatile environment. we'll talk to him about it next on "closing bell."
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take a look at oil prices taking a leg lower this afternoon, still higher by a third of a percent after reports that opec may suspend russia from its ole production deal this comes as prices are up 50% or so on the year. joining me on post 9 of the new york stock exchange, terry duffy. they let you in the building >> they did let me in this building it great back here in this building with you, sara. >> nice to see you. >> i've got to be honest with you. i was thinking of my dear friend dick grasso when i took cme public in 2002, so i do enjoy this building. >> it's good to have you. >> thank you. >> amid all this crazy market volatility, we started with oil because that's the mover of the day. you run the nimex which is oil
trading. what are volumes like? >> volumes are year to date better last year not as much. when you get in situations where the markets are propelling straight up and the news appears it's going to continue to go straight up, sometimes people don't hedge as often as you think. now we're looking at markets fluctuating quite dramatically with any news at all, so the markets are starting to trade a lot more on the nimex. >> what does that mean what does it tell us about where it depgoes >> it does tell us that people are concerned about the market movements intraday or over a short period of time based on rumors and based on facts. so the ultimate price will be determined on fundamentals and what's going on geopolitically right now there's a lot of rhetoric between opec, between russia and other parts of the world producing this product and here in the united states. >> so you oversee all of the spots of the market where we've seen the most volatility, agriculture, interest rates. where have the craziest volumes
come from? >> the biggest are from the rate markets because of what's going on with the changes with the fed. so we're continuing to see massive moves and then we saw today the president was meeting with the fed chairman, which is pretty unusual to do, to see that going on. i'm assuming the president is very concerned about the inflation and what does the mean and what can the fed chair do about it can he increase it or can he not? what kind of pace does he need to go at i think there's a whole bunch of speculation where these two are getting together at this moment in time. >> probably worried about the midterms. >> no question there's a lot of political conversations about what's going to happen in the midterms and prices associated with them. >> is the market usually right on fed pricing of expectations for interest rates >> you know what, it was for the longest time and then it wasn't for a while because everybody anticipated that the fed could not stay at that zero interest rate policy. actually the market was right and the fed appeared to be wrong because people have said they're behind the curve on moving the
rates higher and it appears that they were and here's the situation we're in now right now i think the markets are getting it right. >> what is the derivative market telling you about odds of recession at this point? >> evening a recession is not based on the derivatives market. i think it's based on the eye of the beholder if you have two things and you have to give up one of them and you're a single family or multi family, whatever you're supporting and you have to give up one of those items, is that a recession for you and your family the definition of recession is in every single household around the country. so the question is what's a recession in your mind i don't know if the derivatives market is making that decision or do you want to give up putting fuel in your car in lieu of buying food for your family so that would to me be the recession. >> which more people are making those kind of decisions right now. >> there's no question about it. that's exactly what's going on right now, sara. >> what about the agriculture market, grain prices have also shot through the roof this year. what type of unusual activity are you seeing there
and could we be about to see huge relief if president putin does open the port of odesa? >> i guess we'll find out june 5th he has made that determination he'll do but we have two countries that are a third of the bread basket fighting against each other. you have another country in the eu, france, the biggest producer of wheat in the european union they're potentially having a drought. so there's a lot of issues going on we have 7.7 billion people going to 9 billion by 2050 we need to feed them car gary cohn said we can find more fuel, i'm worried about food >> thanks for referencing a show that was on three weeks ago. >> absolutely. i watch it all the time. >> terry, bitcoin. what are you seeing there? because you testified recently in congress. >> i did. >> and you seemed pretty angry at sam bankman-fried what are they proposing that's
got you so worked up >> i think sometimes people confuse anger and passion. i have a passion for the industry i believe that we should have rules associated with it i've been under regulation by entire career at cme, that's what we do i think regulation breeds credibility to the marketplace so i want to continue on with that path. i don't like shortcutting processes. i made it very clear to sam prior to the hearing that i was going to oppose it i'm going to oppose it for all the right reasons. >> so he's trying to do what >> he's trying to have direct margining to the client versus -- >> cut out the broker. >> yes potentially cut out the broker he has said he may allow the broker but there's a whole host of other issues embedded in the proposal associated with how defaults work and everything else we think it's a market structure issue so if in fact we're going down that path, we need to make sure everybody has the ability to do so and not just sam -- >> largely regulated versus
unregulated fight. what's happening with bitcoin futures volumes as we've seen the price collapse >> i think one of the reasons sam wants to get into the futures end of it because our volumes are going up significantly which would add to his franchise as he goes forward. there's no secret to that, all of them wanting to have that so the volumes in bitcoin at cme have done quite well since we launched them. when you've had the volatility we've seen from roughly 8,000 to 62,000 back to 28,000 now today up 12%, so there is a ton of vol trading these products. >> but people exit as the price goes down? >> we don't have the ultimate information who's doing what on an individual basis. you can watch the positions open on the market, which is publicly available, to see how much interest is in that particular contract yes, if they open, it goes down, less people involved it goes up. obviously more involved. >> terry duffy, always good to get your take on the color around these markets. >> sara eisen, always a pleasure
to see you. >> we've got a market flash right now on disney and netflix. julia boorstin with the details. julia. >> sara, disney and netflix shares are both trading about 1.5% higher. this afternoon both reported huge streaming numbers for their series that debuted friday disney plus reported the obi-wan kenobi series is the most walked premiere globally. that hours viewed of other star wars titles tripled in the weekend. meanwhile netflix reports that stranger things season 4 set a record for the best premiere for an english language series, beating bridgerton series 2. so movie goers returning to the box office for "top gun maverick" did not depress the streaming numbers this weekend, sara. >> a little bit of a boost for those names. julia, thank you. here's where we stand right now in the markets we continue to climb back from the losses that we saw at the top of the hour. we were down 200, now down 60
points or so on the dow. the nasdaq has gone positive in the session so we are attempting another bounce, stronger boy a quarter of 1%. wall street is buzzing about nelson peltz joining the board of unilever. look at the reaction, up 10% up next we'll look at his playbook for turning around potentially the struggling consumer products giant. and you can listen to "closing bell" on the go by following the podcast on your favorite podcast app please do that we're down 61 points on the dow. we'll be right back. you're a one-man stitchwork master. but your staffing plan needs to go up a size. you need to hire. i need indeed. indeed you do.
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what is wall street buzzing about today? unilever the consumer products giant behind everyday basics like dove soap, heldman's mayo, vaseline, has a new board member, nelson peltz. the stock is up 10% after popping 8% on a day that word leaked that he became a shareholder back in january. why the excitement he just stepped off of rival p & g's board. since he was named back in 2017, p & g rallied 63%. unilever is down over that same period what does nelson peltz have planned here no comment from him, but the playbook could be similar to p & g. there he helped push a restructure of the business where it was less focused on
corporate and more on the individual business units, essentially installing seven ceos running the various businesses like health or grooming where there's more responsibility in each unit for everything, from sales to profits. so ultimately shrinking corporate and placing those people inside the businesses it has seemingly really helped to supercharge performance in recent quarters for p & g. unclear what's possible for unilever but they have faced growth problems after a failed bid for glaxosmithkline's business at the very least it lights a fire under management and the board. the market certainly likes that. when we come back. sofi, one of the several fintech stocks rallying this month find out whether that trend can continue into june straight ahead. that story plus the chinese stocks bouncing and a countdown to salesforce's earnings when we take you inside the market zone, next
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welcome back. we are now in the "closing bell" market zone. cnbc senior markets commentator mike santoli here, plus kate rooney on the fintech rebound, edward jones' angela first stocks volatile. the dow and s&p 500 trading lower. the nasdaq just turning positive on the session again they're all positive on the month, while the nasdaq is down more than 1% in the month of may. financials just popped into the green. consumer discretionary is the standout and it's amazon today up 5.7%. why the big move today >> it's unclear why amazon is up that much today although there is some outperformance by the mega cap growth stocks
it feels as if investors might be feeling slightly underinvested after a 9% rally at the end of a month. amazon is probably the one that's the most oversold relative to its trend. it's still not even up to the price where it gapped down to on its last earnings report on april 28th so i think that's why it's a bit of a catch-up move a >> so where are you on the overall rebound? it does feel like today there was a lot of indecision after such a strong week last week. >> yeah. >> the best in years and people wondering whether that can last longer and go deeper as far as a rebound. >> i think there's good reason to wonder about that because we've had multiple failed rallies of at least 5% this year i think last year's action did buy some credibility for this market not so much that it's going to just soar from here, but that the lows that we reached on may 20th, maybe would take new
helping of very bad news to break that you saw a very good breadth numbers coming out of those lows is that sometimes buys a little time and gives it a cushion. most stocks are down but not much keep in mind we were up 250 s&p points last week we're only giving back 14 of them right now. >> good context there. communication services doing nicely as well alphabet, paramount, dish networks all higher. several fintech stocks are also staging a comeback after a rough start to the year. kate rooney joins us is that part of the turn-around story? >> not necessarily on the surface when you just look at the share price but some analysts are seeing those companies with more cash as potentially more resilient in a downturn as for the month of may we had sofi and robinhood outperforming but robinhood is the one with more cash and seen as the better
opportunity. the thought is they can spend more and do some m & a they looked at more than 100 fintech companies and looked at cash relative to market cap. root was number one, that's an insurance fintech company. robinhood was number two so despite the sell-off we've seen, there could be some opportunity there. there's a lot of different variables that go into this. the sector as a whole has really been beaten down but j & p calling it a good starting point for value. the more cash companies have, the better they can weather a downturn and potentially spend more to grow we'lofi is the big outperformer that company has about 15% short interest so it could have to do with some of the outperformance here so if there is a sentiment change, you could see a short squeeze. that's another thing they're looking for in terms of opportunity. >> mike, is it an opportunity? i don't usually think of fintech
players as the most quality in terms of cash flows and profitability. but is wall street stripping out some winners here? >> most of them are. and at least in terms of sustainable heavy cash flows, if they are well capitalized, they have cash on the books that will keep them going and they're survivors. that's the first step, especially once the stocks have been down this much. i really don't think a lot has changed about the overall thesis behind fintech which is massive addressable market and things like payments. new ways of paying for things and borrowing money. all of that stuff is the same. it's just that it got caught up in the whole boom/bust excitement over secular growth type companies i don't see much happening except a bit of a bounce you have your credit-based ones where it's more about credit quality and potential recession than it is really about the big picture changing of behavior of how people deal with their
money. >> financials overall up on the session. obviously still down 9% or so on the year kate rooney, thank you stocks with exposure to china are a bright spot in the market amid reports that cities in china like beijing and shang i are beginning to relax those covid restrictions internet stocks aren't the only names getting a boost from easing restrictions in china morgan stanley naming nio, a tactical trade idea, saying it is well positioned to capitalize on local stimulus programs in china and resume sales momentum. and the beauty world could see a boost too. according to open hierm, which readded estee lauder kristina partsinevelos joins us. how do chips and software stand to gain or fare given the covid restrictions easing.
>> given the easing of the covid restrictions and the increase in foundries being built all across the world and the slowdown in consumer electronics, that's supposed to bode well for the chip shortage and maybe ease this chip shortage much sooner than anticipated amd, micron, for example, actually micron turning positive just towards the end of the day today. and you also have the smh etf having its best month since november another note that came out from wedbush saying that their supply checks show apple is doing quite well in china over the weekend and this bodes well for the iphone 14. we also know tesla shanghai manufacturing building added a second shift so we're seeing production ramp up over there, so these bode well for the entire sector. lastly, on the nasdaq, some of the strongest names today are the chinese e-commerce companies like jd.com, like baidu. you can see jd.com up about 5% big question, though, sara, will
the chinese consumer be like the u.s. consumer? will demand surge once people can headout to the stores and shop and buy all these goods we'll see. >> no, it seems like there would be a lot of pent-up demand after people have been locked in for 60 days or so. kristina partsinevelos, thank you. i also look at yinn which is the triple china bull etf. it's up 10% or so. i guess the question is, is this a great opportunity as we saw when the u.s. emerged from lockdowns, or is there just too big of a risk as long as china sticks with the zero covid policy they just go straight back into it >> i think maybe the latter is the way to think about it. there have been some false starts to see the big maybe influence on our markets is whatever china does to try and help stimulate and loosen financial conditions as opposed to the domestic reopening and the character of that recovery within china at this point just seems like it's just too hard to actually handicap that at this point.
>> impossible to tell. let's hit retail shares of american eagle under a lot of pressure. morgan stanley downgrading the stock to underweight from equal weight, slashing its price target to $8 from 22 because risk to margins and sales will likely make the retailer's lowered financial targets unachievable according to the bank courtney reagan joins us retail had so many mixed messages is the morgan stanley call about the way american eagle is running in this environment or more about teen consumer, the denim cycle which i thought it was still going strong >> yeah, sara, it's a little bit of both but i think it's sort of more overweight really what's going on with the execution at american eagle and really the morgan stanley note says, look, the company just didn't appropriately understand sort of the weight of lapping stimulus and the influx of obviously the inflation the consumer is feeling, lapping this strong number from last year so they underperformed in the quarter.
while american eagle management did take down their estimates for the full year, morgan stanley said there is so much uncertainty ahead. they're looking at the last year, 2021, which was strong for american eagle but they said all of that sales growth came from their ability to increase the costs, the average unit retail, the prices that consumers pay really went up and that accounted for almost all the sales growth in 2021 as consumers are more pressured right now in this year, they're probably going to be a little more reluctant to pay those higher prices, not to mention american eagle inventory is up 46% year over year much, much higher than sales growth and they're not alone we saw higher inventories across the board. morgan stanley says, look, as we look across the retailers, there's too much inventory there's going to have to be discounting. consumers will be discerning the last point i would make, sara, you've got this growing business in aerie but it leans toward the casual consumer life
style. those aren't the categories that are selling so it's not that the consumer isn't strong, it's that their preferences are changing and management isn't executing with the cards they have in their hands. >> no. it depends on what category you're in, what income level you cater to the contrast in some of this retail performance in may, target down 30%, bath and body works down more than 20% meantime tapestry and ulta higher for the month it's amazing courtney, thank you. let's talk salesforce. frank holland as the key numbers to watch for and the stock has been disappointing for a lot of the bulls into this report, frank. >> yeah, you know, absolutely, sara actually it's down 1% but doing better than the cloud computing etf. salesforce eps is forecast to decline by more than 20% year over year with revenue forecast to actually increase by more than 20% macro headwinds is the biggest factor the number analysts are watching
is current remaining performance obligation that estimate is $21.5 billion this is work that salesforce expects to get paid for in the next 12 months that will give a lot of insight about cloud spending and i.t. spending guidance also closely watched. salesforce notorious to be very conservative salesforce performing slightly better than the group year to date but still hit hard by similar interest rate pressure as other cloud stocks. back over to you. >> down 36% year to date frank, i tried to pin them down about whether they were going to continue their pace of hiring because it's such a bellwether for i.t. spending and whether we're going to see a pause he couldn't talk, he was in quiet period. >> he kind of gave you an eye so i don't know which way that went >> i couldn't tell he wanted to talk about the trees. frank holland, thank you very much. let's hit the major averages
because right now we're down about 100 points, looking like they will go two for three in may with the nasdaq finishing lower but the dow and s&p 500 in the green just barely. let's bring in angelo, edward jones investment strategist. how are we set up for june >> no doubt the backdrop remains challenging. economic growth is slowing and monetary policy is tightening. that historically has never been a good combination for equities and this time is no exception. however, we don't necessarily agree with the prevailing view that the economy is on a one-way road to recession. the reason economic and earnings data challenge this view and suggest that the pendulum might have swung too far to the pessimistic side so there is some reaches for optimism. >> so would you be buying the cyclical groups that have started to price in recession, likes banks, consumer stocks, industrials? >> so last week's rally was a
reminder that there is a path for stocks to stabilize and rebound. of course one week of gains does not mean that the coast is clear. but it is encouraging that so farthe market has been able to not have a bear market so we favor cyclicals as the path of least resistance remains higher but we do see opportunities emerge in some of the areas of growth like the profitable tech companies that have posted cash flow and strong balance sheets we are still a little bit cautious on the unprofitable tech names that still trade at high valuations. >> what about small caps, they're also up half a percent for the month but they have been hit harder they're down about 24% or so from the highs so they're definitely in bear market they're leveraged to the u.s. economy pretty cyclical group. would that be a buy if you think that the recession fears are
overblown? >> yeah. as we move later in the business and economic cycle, there is for this asset class, however, the risk/reward in our view is more attractive, particularly if this pullback in the markets proves to be a non-recessionary correction and to gauge whether the rebound endures, we will look for evidence of moderating inflation and signs the fed does not need to tighten more aggressively than the market expects. >> the only -- the pushback i have there is that the fed repeatedly every time they had the chance, and yesterday was in the form of fed governor waller, who's an important member of the fed, tells us that it's inflation, not the economy they're not worried about recession, they're not worried about the slowdown, they're worried about inflation, which means they're just going to keep tightening here. >> yeah, it's all about inflation this year. the argument, though, for big inflation has gained more traction
look at last week, it eased slightly from the previous month. if we look at the market-based inflation expectations, specifically talking about the break-even rates, they picked in late april of course one month doesn't make a trend. but if we see two or three prints lower, that can take some pressure off the fed and allow them to move at a more gradual pace after the summer. so far we have two 50 basis points hiked for june and july and the september meeting can go either way. >> angelo, thank you for joining us with the outlook for june we've got two minutes to go here in the trading day mike, what do you see in the market internals as we give up more ground. down 214 on the dow. >> they have been pretty soft all day, sara. you mentioned earlier we had very strong breadth in the rally last week and we're having a bit of a give back well over 2-1 of declining to advancing volume it is those big mega cap growth stops propping up the indexes. look at the energy, the xle
versus tech. this goes back to the end of 2019 so encompasses the entire pandemic period. energy is up a ton, 57 p% year date but you see here all it's really done is almost catch up to what tech as done so longer term maybe that's bullish. the volatility index has settled back, not much of a new week pop. we have a meandering index as we're stuck in the mid-20s we'll see if anything breaks it out as we get into a little bit of summer trading mode, sara. >> that is an amazing chart, the joining of energy and tech performance at the hip after a few years. as we head into the bells, take a look at the dow, we're down 200. we're up still for the month of may and this is the final session for may. nike is leading us higher in terms of point contribution. united health is the biggest drag today on the dow. s&p 500 mixed sector performance. consumer discretionary and communication services are both higher amazon, google, some of the mega caps are doing really well today after suffering this year.
energy is now underperforming. it was a better performing sector all day long. it's now the worst in the market along with materials and health care that's just for the day, though. s&p 500 looks like it will go out with a gain for the month of may but lower on the day it's flat, hard to call. nasdaq lower for the month and lower for the day as well. that does it for me on "closing bell." have a great evening i'll send it to "overtime" with scott. >> all right, sara, thanks so much welcome to "overtime." you just heard the bells we are just getting started and have another busy hour ahead salesforce earnings are imminent we'll have the numbers and instant stock reaction the moment that report hits. no doubt a good read on where the much maligned growth trade currently stands. we do begin with our talk of the tape how long can it keep going let's ask eric johnston of cantor fitzgerald. it's good to see you again. >> thank