inflationary report for march of the week coming off a week where actually the nasdaq is still higher for the week despite an ugly day like today. >> the s&p and nasdaq still holding on to weekly gains the dow has gone negative. we're above 5k at 5017 >> we've pared losses, down 1.5. let's get to post 9 and courtney reagan. welcome to "the halftime report." i am courtney reagan in today for scott wapner navigating the pullbacks, as signs of slowing in the economy plus meta's meltdown slammed stocks our investment committee, shannon saccocia, jason snipe and jim lebenthal. we're going to have so much more on meta's 12% drop coming up first, we have to start with the broader market sell-off, as you can see here the dow down more than 550 points. stocks falling hard as today's gdp report shows a sharp slowdown in growth and a pickup

in inflation let's take a look at where we are right now. communication services down the most, 5%, we're going do get into consumer discretionary. two sectors are hanging on to the green, albeit just barely with utilities what a report. when we got this gdp report, below consensus, well below certainly where we were last quarter. what does it make you think? >> there's a difference between being concerned about the top line missing because we could actually see that be revised up over the course of the next couple of weeks. i think the challenge is the data showed that the inflation on a month over month basis for cpi is showing up in this report when you look at the consumer you saw a decline in good spending we've seen slowing in terms of

good spend ing in particular autos you saw that decline in the quarter. the growth in services spending were from areas we've seen meaningful inflation, so that inflation in areas like insurance, in health care, those are not particularly predictive, of stronger consumer demand. i think the challenge is not just the top line but the bottom line in terms of where we saw the consumer spending. they're spending on things that are rather nondiscretionary and i think a lot of the consumer enthusiasm and the resilience, if you will, of the last 12 to 15 months, has been on the discretionary side that's creating the concern. admittedly there were a few bright spots i want to be balanced in my assessment >> sure. >> we did see a pickup in residential spending, a pickup in fixed asset investing parts of the economy, perhaps in these rolling cycles we've experienced, are seeing more

strength, but i think the underlying data indicates that maybe there is a little bit more weakness in the consumer than what we've been seeing the last 15 months. >> jason, visa's performance was strong after the bell yesterday. we were talking about spending travel was a hot spot. i know that falls into services and not so much goods. what did you make when you heard the gdp report >> to shannon's point, it was concerning, clearly. core pce, up 3.7%, the expectation was 3.4% for us, it's just the trend that obviously we've been seeing the last few months. i think when we looked at cpi and ppi a couple weeks back, the hope was for a benign pce print tomorrow when we see the numbers we see today, that is a readthrough to what we might see tomorrow that's a concern obviously yields have been pushing up, which is obviously concerning as well, and that's

what you're seeing with some of the price action that we've witnessed over the last few days but, earlier this week we saw a nice bump we're getting close to back to where we were on monday. a lot of churn here, but i think it's part of par for the course. i'm interested in what we will see this evening with google and microsoft. >> jim, jason points out pce tomorrow, has been a very important number for the fed does this put even more significance on that number tomorrow >> it's very significant the nuance of the pce, which we all know it comes out at the end of the month, after you have cpi, after you have ppi, and i think jason is exactly right it's likely to come in hotter than expectations. this is for the month of march we're at the end of april, the nuance of the pce. the market, whether it's fixed income or stock market, we've had three months of bad inflation reports. i think the thing we all need to do now is start looking forward.

what's going to happen in april. next week we'll get the labor report that's always the first, the nuance of the labor report is it's the first indication of the prior month's inflation readings, and it's not a direct reading. it's the average earnings growth you look for my point here is it's time to pivot to looking at what march's numbers will be as reported in april. that's what the fed will do. i don't think the fed is looking at the pce and expecting some epiphany moment. the fed has, as of last week, jay powell said we'll stay higher and the markets, particularly the stock market, now is in the adjustment period to that. i think, courtney, it might have been naive for any of us to say after monday's rally, or maybe it was tuesday's rally, we're all in the clear that was a little bit naive. on the other hand, folks, i don't think you'll get the full 10% pullback of a correction the reason i say that, this economy really is strong let alone -- put aside the 1.6% gdp, the initial jobless claims, the continuing jobless claims.

the labor market is healthy and will generate profit growth for stocks to hang on to >> can i just add -- >> please. >> i want to amplify what jim said the economy remains strong, so, albeit we got a bit of a weaker print here the underlying data is point to go growth in the economy and i think that the challenge with chair powell's statements last week, every data point is important to them, the market is digesting every minute point as ill illustrative this is all backwards looking. i think the important thing is as we go through the rest of the show, we're thinking about what the companies are saying, corroborating the macro with the micro -- >> sure. >> that's the important piece right now. >> we want to talk to steve liesman and see really, steve, what do you think today's data

means for the fed? they have to put it together in a data soup, right some pieces are hot, some pieces are hold, so what is jay powell thinking >> and how hot are the matzah balls. this is an important question within my family i separate this into the soup and the matzah balls are two different parts. the growth part of the report does not concern me. the weakness that shannon spoke of is real, it is down it is the weakness we wanted the weakness was all part of that fabulous softlanding scenario that no one this coveted. if you look at the gdp report, take out the trade and the inventory which were 1.1%.

look at domestic purchases there were some issues inside the consumer spending that sharon is right to point out crank it along on the growth side i have to fight one more time what everyone wants to know tomorrow where the surprise are coming from. what you want to listen for, does rick come on and say that the pce for march came in at 0.3 but the higher inflation numbers we got came from an upward revision to january and february that's the best case scenario. the worst case, which i cannot rule out, is rick comes on and says this is 0.4

that tells you that the inflation problem we had continues into march one more question, how does the fed respond to this? our top case, our worst case for rates is higher for longer it is not a hike, not at this time i think what happens tomorrow if the inflation number comes in hot, okay, i am going to stick with the higher restrictive rates for a longer period of time watch how the number comes in tomorrow if it's an upward revision that's a better scenario than if march were hot >> steve, it's jimmy how are you? i love watching you and rick in the morning, and this morning i watched you. he used the word stagflation and it caught me by surprise i remember the '70s and this doesn't feel like the '70s on the other hand, i wanter if

he has a point i'm not trying to cause a spat, but what did you think >> a couple notes. we don't need you to start a spat between us. we're more than capable of doing that on our own. two, you look great for a guy who personally remembers the '70s that's two three, we are a very long way from stagflation 2.8% real final domestic purchases, when you do bad trade numbers, what happened we imported a lot of stuff ask court anney if they were wrg there's a danger they get caught with stuff and a lot of price fudging going on that we don't know it's hard to predict

those impacts could be a sign of confidence on the part of those doing the importing in future consumer sales we don't have the stagg part yet and i think rick was a little bit jumping the gun on that. i don't think he was able at that moment to look at the final domestic purchases a couple of economists thought we would get a build where did that swing factor come if you want to be down in the weeds, in the price adjustment that was why you had the negative off the top that was something you could discount i see the economy cooling gradually. i'm not seeing the inflation

this modest cooling in the economy that gives us down the road the cooling and inflation we hoped for >> it's great to hear your analysis tomorrow pce is really important. jason, what do you make? not so concerned about that number >> steve made a lot of great points business spending has been good and strong a little bit of softness, it's still holding up fairly well i agree with steve the inflationary numbers are the larger concern the gdp is not as much i agree with what he said.

>> it's fascinating, consumer spending has really held up even in areas that might be discretionary. >> i think there is -- and we continue to grapple with this. i think the ceo of cava was on right before our program and was talking about consumers buying what they want to buy. i think you're just seeing some discipline on the part of consumers and, also, an impediment rates are still really high for auto loans that contingent of the economy is not able or does not feel comfortable. you're seeing that in the large durables you see reports from the likes of royal caribbean, right, very strong in terms of bookings. i think there's still a demand

level that is consistent with growth this year in the u.s. economy and i think that's what people need to focus on rather than some of this quarter by quarter, month by month dislocation in certain numbers or certain parts of the industry we have some breaking news out of washington on net neutrality what's going on? >> reporter: the fcc voted to reinstore rules on net neutrality making it official providers have to treat all internet traffic the same. this was passed under president obama to level the playing field on the internet. it's really been a priority for president biden to restore this. this was a 3-2 vote. google's parent alphabet, comcast supported this, too. it's a blow to the critics who argue had could stifle innovation it includes verizon and at&t

they say reinstating rules will be counterproductive and anti-consumer. it's possible we could see further legal challenges here. the fcc believes this can pass legal muster and they hope this is the last time they have to address the topic. >> we've talked about it for so many administrations you mentioned big tech companies. let's get to the chart of the day. shares under pressure on weak revenue guidance and higher capex costs. bill baruch was at least adding to his position ahead of the print. what do you make of the meta results and the investment going forward? mark zuckerberg said this could take a while to see the revenue pay off. >> i think zuckerberg hit it right on

he addressed the issue, the spending that it will take it's an a.i. arms race and them need to spend. if they don't spend, they will fall behind. they guided, what, half a billion below estimates for quarter two. they're going to do or have done $14 billion in revenue it was about a billion above estimates on expenditure they're going to take in less. the market didn't like it. we've seen that from some of the previous reports this is a. iflt, the important thing is to keep spending. we added tesla on monday and that turned out to be one that turned out pretty good 98% of meta's revenue comes from advertising, and we're in an election year, and that will be pretty critical.

that could be a good tail wind with beats, they're laying the bar pretty low >> just to be clear, you added to your position ahead of the result but you're not taking advantage of the sell-off today to continue to do so >> i want to see where we settle out. i think there's really solid support at the previous gap, 395 area i'm watching 435 if we can close above on the week, i think that would be a pretty good hold of the low and could bring tail winds as well this was in the bottom ten it's now in the middle, and so we're still underweight meta i do want to add what else do you own and the a.i. arms race, the spending here is not just meta spending money, this is the hyper scalers, news from alphabet and microsoft later today. look at nvidia, up 2.5%. where does that spending go? it's going to nvidia nvidia is one of our top holdings as well this is looking at the pie and

how you will position in a.i. to take advantage of that that's what we're doing right now. >> it looks like more of an investment than a trade. thank you for joining us on this one. jim, what do you make? i have to dig into this a little bit. >> when you see a stock down 11-odd percent that means something dramatically has gone wrong at the company or there's something going on in the economy much worse than people expected i don't see either here. i think this is a massive overreaction i don't own the stock. i'm not a big fan of social media. i can look at the stock and say it's attractively priced i think the reason it's down today is people are worried this is an echo of 2022 when meta was spending too much. i think, however, mr. zuckerberg and his team got the message and changed tune in 2023 i think they are pivoting to be on the balls of their feet and want to invest in their company. i think this is an overreaction. to me, look, if you're a

long-term investor, you want them to put their money into a.i. and maybe it will stumble, take a while to see the payoffs walmart is so very different than meta. i remember when doug mcmillan came out and said we will invest in digital years later, that was the exact right thing to do. jason, what do you make of meta? and zuckerberg is being honest, laying it all out on the table >> one, the quarter was solid. revenue was up, net income was a double but i think to jimmy's point, the market is looking at when he talked about the spend, i think the market didn't respond well and made all the changes he needed to make, still down 10% the arms race is real.

meta has to make this investment to remain competitive in the space. and i think it will play out i think zuckerberg has earned our right to respect his moves and where he is and what his vision is in terms of implementation i don't also think for engagement for the use case for a.i., i think it plays very well for meta >> shannon, you've been nodding your head. it feels like investment is the right thing despite the reaction in the stock price today >> to use jim's term naive earlier, it would be naive to look at what happened, there wouldn't have to be spend to monetize this excitement over a.i. this is not just for big cap tech companies today but every other company that will want to utilize a.i. over the next several years. this idea of capex around a.i. will not come for free i think people are discounting what's available here.

50 to 65 billion whatsapp, you have a continued engaged younger cohort in instagram, which could potentially benefit from what's happening with tiktok. there are a lot of things here from a competitive perspective, and i think the reaction would be i'm surprised at the depth of the reaction today because i think the reaction -- this is a reaction i think i would have seen if we hadn't had a good year last year in terms of showing an ability to be austere from zuckerberg and team i agree with jim i think there's a lot under the surface that is an opportunity that this can be ex tratrapolatd across other companies it will increase if you want to benefit from a.i >> it will be interesting with the stock action in the days to come and if some gets pulled back tech's next test comes after the

bell, a.i. will be front and center full team coverage standing by ahead of the critical reports. steve kovach at microsoft. we'll start with deirdre bosa. >> i've been listening to your conversations intently zuckerberg raising these concerns over gen a.i. that applies for google as well revenue contribution is still unclear, but for google it is expected to show up in the cloud. continues to spend bill, warning that capex spend will be larger. how does sundar pichai protect search ads while embracing gen a.i. and chatbots? look to core search advertising numbers. the advertising numbers were lower than expected and some thought, uh-oh, gen a.i. is

pulling away from search google, too, needs a new ceo they still don't have one. potentially an announcement tonight. we'll be listening maybe a small chance of this, some are looking tonight for a dividend especially after meta sur surprised markets by issuing one that could offset some concerns around spending. it has withheld for a long time. >> jim, what are you expecting you're a shareholder >> i am not expecting a reaction in either. the multiple differential is too wide but if that corrects by maybe microsoft coming down and google

going up they all have irons in the fire besides this you have the web services. you have the basic search businesses and web at google not to mention yahoo and the moon shots. i hope that's not to use the word -- shannon? >> naive >> -- that's not naive >> jason, you're also an owner here what do you want to hear from this report? >> clearly i want to hear about a.i. and how gemini is performing i think youtube search will be perfectly fine the other highlights for me is advertising, $60 billion plus last quarter it was up almost 11% i don't think we talk about that enough that will serve as a catalyst for google as well

i expect the print to be solid to jimmy's point, i don't think we'll see a blowup like with meta i do think it will be good >> it sold off a little bit, too. >> it has sold off a little bit, too, with meta >> it's 4% off its high? >> good point. >> i saw the down today, wow, they must be having a terrible year >> let's get over to steve coc kovach >> where does the a.i. money come from? you have to look at the cloud, though, not necessarily co-pilot copilot is sold to businesses for a hefty price of $30 per user per month we don't know if it's living up to that promise to boost

productivity microsoft helped customers cut costs when everyone was worried. growth re-accelerated over the last couple of quarters. you see that ticked up in the chart i'm showing you here, in part, thanks to a.i., open a.i. and other companies run on azure which means more money for microsoft, the more activities going on for december quarter, microsoft said six percentage points of azure growth came from a.i we will be watching that number to grow, court >> thank you very much, steve. appreciate it. jim, you're in this one,ations h >> you can say that in the multiple 32 times forward earnings as i was saying, maybe that's a touch heavy, a touch expensive i don't think there's anything fatal in terms of the valuation. look, it's possible that the

a.i. hype is ahead of it let me stress the words, little ahead of it. don't expect a major course correction after the results today. straight ahead, much more on the sell-off including the big move in caterpillar, the stock sharply lower. we have ownership on the desk. we'll break down the trade coming up next amelia, weather. 70 degrees and sunny today. amelia, unlock the door. i'm afraid i can't do that, jen. why not? did you forget something? my protein shake. the future isn't scary, not investing in it is. you're so dramatic amelia. bye jen. 100 innovative companies, one etf. before investing, carefully read and consider fund investment objectives, risks, charges expenses and more prospectus at invesco.com.

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welcome back to "halftime. some committee stocks on the move caterpillar down big following earnings, a mixed report, beating earnings estimates, but revenues missed. they expect sales to be lower. jason, this is one of yours. >> caterpillar has been a rocketship over the last year and some ching obviously some concern around the miss on the top. there's healthy demand for products data center build is really important for them as i look forward the concern was about inventories. i still want to hold on to this one. i think it's about this whole infrastructure fiscal, all that's going into the economy

and caterpillar will continue to benefit. >> next up is union pacific. the company beating estimates for the year jim, this is yours >> chugging along, pun intended. they're starting a share repurchase i'm not sure the gains we have from here. trades at 21 times this year's earnings the underlying strength comes from the capital expenditures going on in the economy on things like infrastructure, things like factories built for supply chain onshoring that's a lot of material that needs to be moved by union pacific. at 21 times, this might be fair value here >> okay. shannon, you like industrials generally? >> yeah. i think there's an opportunity here we were in essentially a manufacturing recession in the united states and globally for the last 15 months or so and we're start to go see that

re-accelerate. if you think about the necessity not only here but outside of the united states for not just day-to-day but also for security, for some of this a.i. build, there's an opportunity here there are going to be ebbs and flows in terms of demand i'm not surprised to see the reaction with caterpillar. that is something we need to be looking 12, 18, 24 months out and look how the economy is turning. >> okay. finally, service now narrowly beating estimates, full-year guidance that matched expectations jason this is one of yours >> yes with service now, listen, it was still a triple play. they beat on the top and the bottom and raised the guidance the concern for the market, the guy was aguide was a little ligr than anticipated

automatic work flows and the a.i. application, use cases, i really think this will work well for the team i continue to like this one. >> shannon, do you have thoughts >> i thought it was about the second quarter guide they said this would be a second hatch of the year story for them and if you think about what that means, there is a little bit of near term concern and partnering with these companies they reiterated full-year guidance, which i think is important in this environment where people are looking for companies that are able to drive better margins >> look at that. let's get headlines with bertha coombs how are you? oral arguments continue this afternoon at the supreme court over the question whether former president trump has absolute

immunity from prosecution after the 2020 election. much of the discussion between the justices and lawyers has focused on whether there is absolute immunity for official acts the former president's federal trial on election interference remains on hold until the supreme court issues a ruling. the epa has set a new rule that would force coal fired power plants to shut down. those that plan to stay in operation past 2039 would have to capture 90 first by 2032, the first time the u.s. has restricted emissions from existing plants. and the first cargo ship has passed through a deep water channel in baltimore the port's main channel is set to reopen next month once the containership dali that slammed into the francis scott key bridge is removed. courtney, back over to you >> bertha, thank you

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we're back on "halftime. tracking the pullback on wall street today, we are off our lows right now the dow jones industrial average lower by several hundred points here much better than we were what do you think is happening here the big reason for the sell-off this morning is that gdp number, lower gdp, hotter inflation, obviously meta's results were crummy the dow down 472 what's the reason? >> well, i think people are taking a closer look at the gdp numbers. this was hard to figure out, even liesman, i listened carefully to him >> he seemed less worried. >> consumer spending, i think were you referencing that, stomach is a little off here

is this a one-off or is this the start of a bigger macro trend? i love the pain trade. what would make the greatest number of people uncomfortable no one was positioned for slower growth with sticky inflation we are in a difficult situation. tomorrow it's really important working with month over month, 2. year over year. so here it's very clear what will happen f. it comes in benign -- benign has to be there or below those numbers or below, sigh relief, everyone says, okay, we can have slightly slower growth but the fed will cut. if it comes in 0.5% or something like that year over year, everyone will say, oh, my gosh, now the fed is in an impossible

situation. the economy is a little slower but they can't cut because inflation is too high. now you're in a bad position and the market will be down on that. the multiple is coming down. if you look at the earnings reports, they're pretty good they're not that bad the numbers are stable for the full year. so what's coming down is the multiple they are saying, wait a minute we may have slower growth, we're not going to pay 20 times earnings for that. the multiple goes down, so you can have earnings stay up. heavens, we'll be in the mid-4,000. >> meta down substantially everyone on the desk, at least,

believes it's an overreaction. we'll hear from alphabet and microsoft after the bell that could tug on what's going on with the market >> this will tell you about crowded trades and things like that look, meta has been investing money in a.i. for ages he smartly pulled back on the spend. now he reaffirmed it there's the story. they were betting on the numbers coming down. basically less spend means more money for the bottom line. people who invest made certain assumptions. i don't think we should get too involved in meta i look at some of the companies report tractor supply, the consumer has been resilient. customer bases, healthy and engaged. chipotle, we are not seeing any consumer pullback. visa, the people i really watch. consumer spend from low to high has remained stable.

american express, strong spending trends. >> i found all of that very interesting and the interesting juxtaposition with this report this morning thank you, bob keep us updated here >> any minute now. >> it's getting closer up next, your pullback playbook spotting opportunities in today's sell-off where they're looking is coming up next.

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there. i think you'll agree with me we've seen a pullback. looking at meta today, that's not on my list what's on my list is semicap equipment company like nvidia, a stock was up and now it's 820. amazon, i've added to that but would add more to that the other one, apple worldwide developer conference is going to be early june. i think the market will start anticipating that, running into whatever they say about a.i., running the stock up a month beforehand early may i want to have a bigger position in apple before early may. >> jason, what ideas do you have >> for us, i mean, it's not pulling back today, but we talked about it on the show, uber really like uber they have a compound annual growth race 30% to 40% in the next few years gross bookings are up, mobility is up close to 30% it's a stock that we've been watching for a while, has pulled

back some. obviously not today, but i feel like there is a new stage for this company and it's a company we really like and will look to add on pullbacks >> there was a move there after tesla reported, talking about the robotaxi, there, too shannon, what's your pullback playbook >> i think if you look at the shifting leadership, if you will, over the course of the year so far, you've seen a little bit of life out of financials i think there's probably some room to go there and they're down today and then i think health care health care has been something we've been particularly interested in for a while. i think if you are looking at that from both an offense and defense perspective, there's a lot of potential growth in the companies and opportunity there, and some of this may be looking at valuations in that space and selling off on that a bit. i think there are so many opportunities within health care, you can get selective and prescriptive there >> consumer spending in the area is one of those callouts in the gdp report up next, trades on abbvie,

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♪ ♪ rubrik now open for change as it opened at $38.60, trading under the ticker rbrk. you might have heard the cheering as we were going to break, it was just opening right then so above that initial pricing of 21% in the first couple of minutes. we have more key earnings coming outside of big tech. we have a number of them let's start with abvie

jim and jason, go. >> you go first. >> all right so i think for us, as it relates to ip, humera competition as of late, and they already made a fair amount of acquisitions of late, as well. you know, humera represented 23% of sales it was down 41% last quarter i want to see how skyrizy is doing. so we'll see how that plays out. >> he literally said everything. you know, on humera, it's hung in there quarter by quarter much better than expected maybe that puts some downside on there, but it's less and less important over time. >> and exxonmobil, shannon, i understand you picked commodities for your 2024 contrarian idea. >> it doesn't seem so contrarian

now, does it >> it doesn't. >> listen, i think there are two things if you think about hedging, you know, in terms of geopolitical risks, there's clearly been an increase in pressure, and we didn't see that in commodity prices last year and we are seeing it now. two, there is, you know, the outlier of what we have experienced in economic growth in china they reported gdp in excess of estimates. so this is a play on continuing increases in commodity prices, but also just think about the capital discipline for a company like exxon it's changed over the course of the last 15 years. that's why energy companies are quality companies in many cases. that's not something you would have said ten years ago. >> we are getting a lot of folks on the network picking around in the energy patch, as well. coming up next, time for "final trades. we'll be right back.

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time for "final trades" or a very busy day. shannon, what's yours? >> utilities i think that there is a longer term need, especially on the infrastructure side to improve our networks >> jason >> i like verizon here a top take, free cash flow is tremendous, $2.7 billion ad 6.8%

dividend yield >> jim >> general motors. if you're in the stock, it's generating a lot of cash that will come back to us shareholders both in the form of dividends and buybacks >> interesting we heard in tesla and ford the markets are still lower, but at least off the session lows. we'll see what the rest of the afternoon holds. "the exchange" starts now. ♪ ♪ courtney, thank you very much welcome, everybody, to "the exchange." i'm tyler mathisen in for kelly evans. she'll be back in a couple of weeks. here's what's ahead. a tdp surprise and not a good one, the economy slowing but inflation stubborn we're hearing the words, stagflation, stocks are sinking, but two guests say it's not as bad as it seems. they're here to tell us why. meta down big amid weak revenue guidance and big ai spending plans so did tha