Dow rallies, Trump calls on big oil: Market Domination Overtime

The Dow Jones Industrial (^DJI) closed its seventh straight day of gains while the Nasdaq Composite (^IXIC) and S&P 500 (^GSPC) started their day in the red. The Federal Reserve released an assessment over how big banks would fare during climate crisis events in the northeast. Former President Donald Trump was reportedly talking to big oil CEOs to raise $1 billion while his campaign in dire straits, making certain promises if he is re-elected.

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Video transcript

There is the closing bell on Wall Street and now it's market domination over time.

We are joined by Jared B to get you up to speed on the action from today's session sponsored by tasty trade.

So let's start with where the major averages ended up.

The dow ending at the highs of the session here and still leading the games that we saw up almost 9, 10 of 1% or about 331 points here.

The S and P 500 up about a half of 1%.

And the NASDAQ up about a quarter of one here to sort of drift up.

I want to check on the S and P equal weight index because we have had a lot of investors in recent days including Eric Friedman from us Bank at the top of the show.

Talk about the equal weight and the broadening out of the rally.

That theme has been surfacing once again and indeed the equal weight index of three quarters of a percent outperforming the S and P 500 which is market way.

So just a little tidbit for you to take with you today.

I'm sure Jared's got many more tidbits for you, Jared.

What are you seeing today?

Well, thank you, Julie.

I'll tell you what, I think that's a really interesting observation.

And yes, the, the rally appears to be broadening once again here is what happened in sector action today.

Real estate.

Number one, utilities, number two.

And that's been something that's been a common occurrence recently though two interest rate sensitive sectors that are usually sleepy are leading.

In fact, let me show you what's happened this month of May.

This is all seven days utility up 7%.

That's the number one sector, then you have communication services.

So just wanted to break off and just kind of highlight that utilities.

It's typically not a leading sector, but now it's an A I play because you got to build those data centers.

Anyway, here's the NASDAQ 100 you're going to see tech not having the best day NVIDIA down 1.84%.

In fact, let me just skip to the semiconductor heat map.

You're going to see more red than green there.

Pretty similar story for software though.

You so see little bit more green because of Microsoft.

And then if you go to unprofitable tech, you actually see the most screens.

So uh kind of a little bit backwards here.

But nevertheless, in this particular group, we're seeing Robin hood down 3% Roblox down 22% both of those earning stories.

And let's take a look at the leaders here.

We got cannabis in the forefront MJ harvest ETF up 3.5%.

Then you have home builders, Chinese stocks, retail solar, pretty broad group here that we're looking at uh in terms of gainers.

And let me just show you what's happening with gold miners here.

We have seen gold kind of tick up today and we're seeing a lot of movement in this sector, not seeing I get a lot of attention.

But uh when gold miners pick up, that's usually a sign that gold is something is doing something interesting as well.

And in fact, it is, here's gold of 1.24% today.

And here's that year to day look up 13.89% guys.

Thank you, Jared Stocks closing higher as the Dow extends its winning streak here here with some of the day's trading takeaways is Yahoo Finance's very own, Josh Shafer Joshua.

Yeah, we've been talking a little bit about the broadening of the stock market rally here at work again, right.

And one of the things that we got today was some softer economic data, which has been a trend over the last month when we think about this broadening.

So today we have job claims hit its highest level weekly, jobless claims, I should say since 2023 August 2023 of course, volatile data set.

Well, and wasn't there like, wasn't it apparently that a lot of people in New York and Indiana and it might have been spring breaks.

I was notified today that certain contractors for the schools can file for unemployment if there's a break so it could have contributed to the up.

It was a big uptick too.

I think that's why we all sort of were caught off guard by a 20,000 uptick in a week is pretty significant and jobless claims really hadn't been doing much, but it caught a little bit of attention because we had weaker than expected employment data last week.

Right.

With the April jobs report.

So people sort of looking for some signs of cooling, but even zooming outside of just this one jobless claims number that I think we'll get a clearer picture next week because they're weekly.

Um, so we, we can talk about it again next Thursday, right?

But zooming out of that, we have just had a little bit of a string of weaker data, not weak data but weaker than we had, right.

Not crashing, cooling, not crashing data.

And what we've seen come with that is yields have fallen and we've had a little bit more of a broadening out over the last couple of days.

I mean, you look at utilities over the last month now, really?

Even just in May.

Well, you had, you had a good from that Shafer, which was that I like that piece where you kind of looked at.

Ok.

So what has actually been leading since mid April.

And it was interesting, I mean, it's, it's utilities and staples, it's utilities and staples.

And the interesting thing about that, Josh was, I, I talked to some strategists about that yesterday and I said, ok, at a high level, you read that and you think defensive, right?

Are people getting defensive here?

Is that sort of the positioning play?

And then Keith Werner over at Cruz points out to me and goes, well, maybe it's just they're really cheap.

And when you look at the first, they got so beat up because they got so beat up over the last really two years.

Staples and utilities, both two of the worst performing sectors in the S and P 500 over the last two years.

Also real estate, which we were just highlighting today had a great day real estate.

It's been awful for two years.

So there's a little bit of a movement into just some of the stuff that hasn't done well at all.

With the catch up.

There's a couple of other things to mention with utilities that I think are really interesting.

Now, first and they share this with real estate.

Both are very interest rate sensitive also, which is part of the reason they've done so terribly.

But with utilities, there has been an increasing buzz lately.

We've been talking about it a lot around the office that there is this increasing demand for energy because of data centers.

And so even if these companies are not necessarily and their earnings yet, there are plans to build out more data centers, there's a kind of talk around it.

So I wonder if that sentiment wise at least is, is lending to some of the games.

It's something that macro strategists have been talking about for.

It feels like a couple months now slowly pointing it out.

Like look at how much the hyper scalar of the cloud companies, right?

Like a Microsoft or Amazon are spending, who are they spending to?

And a lot of people think it's going to be these energy companies because it takes a lot of energy to operate these GP US.

And so that perhaps benefits utilities, I think for now, right now, a lot of people just aren't sure.

How can you really bake that in?

How can you price that in?

Where is the actual benefit there?

From a fundamental standpoint?

I think it's been a little bit hard to see, but definitely part of the constellation energy record high today on its earnings, utilities and nuclear power and particularly, and Josh, when you talk to, you mentioned the other sector that's been leading since medieval staples, what were all saying were the drivers there?

Staples seem like a similar trade in the sense that it's just been a laggard.

Um because I think when you look across staples earnings, there hasn't really been a clear read there into OK, things are, things are going really well for consumer staples or the consumer right now.

That hasn't really been the prevailing take from this earnings season.

Of course, we're going to get a lot better look at that perhaps next week.

Um, but overall, it seems like when you look at staples, it's just really hasn't done well again from a valuation standpoint compared to the S and P, it was entering March at its lowest level in the last couple of years.

So perhaps just opportunity for a little bit of all right, we got one more thing we got to talk to you about and this is a cool one and an interesting one.

The Dow has now for what, seven straight days and you did a little number crunching on what has done the best and maybe a little bit of a surprise over that period.

Igen Amgen m look at it up 14%.

I take a look at the wifi Interactive right now quickly and you can see the components in the down.

Amgen's up 14%.

Apple's your next stock up 8% Amazon.

So, so some companies that are perhaps more common, but a gem really stuck out to me because something we've talked a lot about with this rally over the last year is momentum trades, right?

And you have A I and you have the weight loss drug trade and sort of the rise of E I Willy even within the S and P 500 sort of helping push that along with that A I trade.

Well, the dow and the way it's composed, it just isn't always exposed to them like that.

But Agen comes out last week and they say they think that the, uh, that their weight loss drug is gonna do.

Well, the testing went well for it.

Stock goes up big and that's the leader over this seven day run for the dow perhaps entering the weight loss trade.

It definitely gets a taste.

Yes, love it.

Good, good flag, Josh Shafer.

Thank you very much.

Well, the Federal Reserve putting the nation's six largest banks to the test.

But for a new category climate risk here with the latest Yahoo finance is Jennifer Schonberger.

Hi Jen.

Tell us what we learned.

Hey there, Julie this just in the Federal Reserve finding that the nation's six largest banks could see 20 to 50% of their real estate loan portfolios impacted by various climate events.

Bank of America City group, Goldman, Sachs, Jp Morgan, Morgan Stanley and Wells Fargo were tasked with determining how higher average temperatures wildfires and a hurricane in the northeast as well as an event of their own choosing would impact their residential and real estate loan portfolios that is trying to better understand how banks manage these risks that so that the fed can determine overall how climate risks could impact the wider financial system.

Here are the major take away from the report under the most severe climate shock defined as having no insurance for a climate shock scene.

Once in a 200 year event that varied from hurricanes to flooding or wildfires.

Under that scenario, the six largest banks saw 20 to 50% of their commercial and residential real estate loans in the northeast impacted.

Now key to this report is that banks had a very difficult time trying to model climate risks to assess the impact on their loan portfolios.

They noted that there was a lot of uncertainty in terms of trying to model the timing and magnitude of those climate related risks which made it very difficult for them to incorporate into their own risk management processes.

Also noting in the report that the probability of default estimated on a loan from a climate shock uh very significantly across different sectors, regions and counterparts.

Uh key also to this was that insurance matters greatly.

Again, this exercise very exploratory and no in nature and it has become a sore spot for Republicans in Congress who have said that this falls outside of the Federal Reserve scope that Chair Powell said as recently as April 3rd, that quote policies to address climate change are the business of elected officials and that we are quote not, nor do we seek to be climate policy maker.

How maintains the central bank has a narrow role that relates to supervising banks when it comes to climate change.

Again guys, this is very exploratory in nature, no penalties here when it comes to capital consequences for banks, unlike the stress tests, which test for severe economic recessions and whether banks would be able to withstand those scenarios.

Guys, Jennifer Shaon Burger, thank you, Donald Trump reported looking to tap oil executives to contribute $1 billion to his re election campaign.

That's according to the Washington Post for more on this.

Let's break to Yahoo.

Finance's senior columnist, Rick Newman.

Rick, hey guys.

Uh that's right.

Uh Big oil executives were meeting with Donald Trump down at Mar A LAGO.

Now, they didn't say they were willing to take this deal, uh you know, put in a billion dollars into his election campaign and get favorable treatment from the White House.

And I think that would be a pretty dumb idea.

Um What Trump doesn't seem to get is uh basically everybody including uh big oil eos acknowledges that climate change is a real thing and that we have to deal with it.

So I was just out at the Milken conference in Los Angeles.

There were a lot of panels on energy.

The ceos of Exxon and Chevron were there and they were discussing as they have as they have been doing many times before the plans, they have to do their part with dealing with climate change.

Now, some of this might be greenwashing.

I'm not saying they're at the fore of the movement, but they are getting into things like carbon sequestration, uh trying to develop lower carbon emission ways to actually extract oil.

Um They realize this is just gonna happen.

I mean, we're going to have to do this.

It's happening all around the world and I don't think they want to go back to the smokestack days the way Donald Trump does.

I mean, he, in some ways he's just stuck in the 20th century drill, baby drill.

Uh Even the oil and gas industry has moved on that these days.

So it'll be very interesting to see whether they really get behind Trump.

I just want to give you guys one more stat here.

Uh The oil and gas energy, the energy sector has actually done way better under Biden than it did under Trump.

And I'll just give you the numbers.

I just looked these up today.

Uh under Biden, the average profit margin in the energy sector has been 11% under Trump.

It was basically zero.

And if you exclude that wipe out year for the energy sector of 2020 the best you get under Trump is a 4.5% average profit margin.

So it's more than double that under Biden and guess why they're producing less, the price is higher and they're simply making more money.

So this idea that Trump's going to open up all this drilling and they're somehow going to make more money.

I don't think that is even a baseline assumption at this point.

Well, and it's interesting, Rick because, you know, I had the chance to catch up with Darren Woods, the Ceo of Exxon at Sarah Week and asked him about the Ira specifically and he said he's in favor of it staying in place, you know, while many of these oil execs might want the LNG export pause or ban to be lifted, they want stability, you know, and corporate America in general seems to want stability.

They don't want to have to be whipsawed every four or eight years.

As, as, as the administration's turn over.

They want stability and guess what else Julie?

They're doing fine.

They, they actually don't need anything from any political administration.

And uh yeah, they absolutely want that uh that LNG export pause gone.

And uh here's a prediction, I think it is going to be gone.

Uh Even if Biden wins, I think he's gonna end it after his re election because I think that's just a pretty bald-faced sop to climate activists and it's not even productive.

I mean, uh we, we need to be shipping it gas around the world.

It's a base.

We don't have to geek out here, but you need gas even if you have, even if you have renewable energy and this is hugely important as an energy security thing because of what Putin is doing in Russia.

So the energy companies have figured they have, they are finding their place in the in the green energy transition.

And guess what?

They also know the world is going to be needing petroleum and natural gas for the next 50 years.

Easily.

They're not going to have any problem with demand.

The emerging markets are coming online.

There's going to be plenty of demand for their product.

So there's not a lot else they really need.

Yeah.

And they've been increasingly outspoken about that message, by the way, Rick, you mentioned you were out at milk in, in L A.

Just give us quickly your big take away from that conference.

Well, of course, there was a lot of talk about what the fed is going to do with interest rates.

I'm going to make a call here, guys higher for longer is now officially the most overused cliche in the history of finance.

I don't think I can stand to listen to another discussion.

I don't know, there's a lot of competition for the most overused cliche in finance.

Well, ok, we'll, we'll, we'll do that on a, on a different segment.

Uh You know, financial bigwigs, very optimistic about the US economy.

I know here here in America, a bunch of people might be thinking, what are they smoking?

Uh Guess what people who look around the world say the, the US is just massively outperforming everybody else.

Uh People who go, who go around collecting investments from all, from all over the world say everybody is over allocated to United States they just want to be here.

There was a lot of talk about energy and there's a lot of money in the green energy transition.

And these guys are trying to figure out where it is.

And uh as with everybody else in America, most of the people at the Milken Conference are dissatisfied with their choices in the 2024 election.

Interesting stuff.

Thanks a lot, Rick.

Appreciate it.

Bye guys on the other side.

We'll hear the latest on drug price negotiations with C MS director of the Center for Medicare.

More market domination overtime.

Coming up.

Welcome back to market domination over time.

I'm senior health reporter Angeli Kim Lani, the Center for Medicare and Medicaid Services just dropped new guidance for their next round of drug price negotiations while already being in the middle of the current batch here to join me now to talk about all of it is the C MS deputy administrator and director for the Centers for Medicare, Doctor Mina Saan Doctor Station.

Thank you so much for joining us today and really a lot going on.

You're already negotiating on one side and you're already pivoting to, to start the other one.

Let's talk about what has changed, what is new in this draft guidance?

Yeah.

Thank you so much for having me.

Um We are implementing this law in the most thoughtful way possible, which means making sure that we are learning from the first round of negotiations and getting feedback from everybody interested in this process.

And so to that theme, there are definitely a few changes in the draft guidance that we just put out for um the next cycle of negotiations.

One big area is something called the Medicare transaction facilitator.

We received quite a bit of feedback that people were interested in us playing a role in supporting that negotiated agreed upon price being made available at the pharmacy to people in the Medicare program.

So in this draft guidance, we have proposed a Medicare transaction facilitator that would enable the exchange of the data needed between all of the relevant pieces of the supply chain um that are involved in providing drugs at the point of sale.

And we're also asking for comment on um support for payments that will have to go between the manufacturer and pharmacy.

We've provided two options in the guidance that we're asking for comment for another big area is around how we are getting feedback during the negotiation process.

You may know that we had 10 patient focused listening sessions for the round of negotiations that we're in right now.

And we're asking for feedback in the guidance around how those went.

Should we be thinking about having a more interactive session about creating groupings for questions or for um you know, types of stakeholders?

So we're asking for quite a bit of information there as well.

That's all a lot of uh leaning towards that transparency side, of course.

So important, talk to me about what are some of the lessons you have personally learned a and just generally, you know, the the administration through this process that you're setting up for?

Round two.

Yeah, I think you hit the nail on the head.

Angeli, I think transparency, you know, continually learning through the process, be engaging everyone, making sure that all voices are being heard are very important.

Um We also in this guidance, we also released our information collection request um for feedback, which is what is the data that we are going to be collecting from everyone as part of this process.

And we have made some potential changes there as well to clarify the kinds of questions we're asking so that people know what we're asking for again, grouping the questions in a way that people can more easily understand.

So I think really engaging in that back and forth has been very important as part of this process to make sure that it is thoughtful and it is working as intended to be able to support um access to innovation that for the therapies that people need.

We're certainly sitting in a different space than the last time you and I spoke then uh you were facing also the litigation from these pharmaceutical companies.

Now a few of them have been thrown out and you're also dealing with the negotiations right now.

How is that shifted sort of how these companies are engaging with you and, and how are those negotiations going right now?

That's a great question, Angeli, you know, we our priority has been to implement the law in the most thoughtful way possible.

So from the beginning, we have engaged with everybody involved, we have put out our guidances, gotten feedback, incorporated, that feedback and when we were the guidances and that is the theme that we continue to use.

We are implementing as thoughtfully as we can and we are negotiating on behalf of the millions of people who rely on these medications for their health and well being and on behalf of the Medicare program at any point in time, did you feel like maybe you underestimated the reaction that the pharmaceutical industry would have or underestimated how they would go about this process or the impact that the negotiations would even have on the companies and their stocks.

Well, I think in fact, you have um reported that when we had announced the selective drugs, it did not have an impact on um on the stock market.

I think that was something that you had reported.

You know, in all of the conversations that we have had again across patient groups providers, you know, drug manufacturers, health plans, others, everybody has a common goal here of rewarding the kinds of innovations for the cures and therapies that people need and making sure that people can access those treatments.

You can have the most wonderful uh treatments out there to save someone's life or, you know, increase their, their um their well being.

But if they can't afford that medication and they leave it behind at the pharmacy counter because of sticker shop, it is not serving anybody, not that person and not the people who have worked hard to bring that innovation to the table.

So, you know, we really are approaching this in a way to try to improve the care that is provided to people improve health outcomes for our populations and make sure that the dollar is spent in the smartest way possible.

Certainly something to watch.

Meanwhile, quick pivot Medicare advantage.

That's also another topic of interest right now.

As we've seen the most recent earnings calls from these insurers with the rate cuts that you've uh uh sort of done for uh the IB I know that there's been some concern.

Some of the insurers are warning that they might have premium hikes or maybe uh sort of redesigning these plans and maybe providing fewer benefits for seniors.

I wonder if you have any thoughts on that and if that's going to impact at all the upcoming rates that you have planned?

Yeah, we um we have finalized a 3.7% increase in reimbursements to the Medicare Advantage plans, which is about $16 billion.

That increase is greater than the increase that they got last year.

Last year, it was 3.3% this year.

It's 3.7.

And last year, the premiums were stable, the offerings were stable, choice was stable.

So we are confident in the stability of the market.

And um we continue to believe that Medicare advantage is an important part of the Medicare program.

And that all parts of the Medicare program need to drive towards transparency, towards access to coverage and care and towards helping to be good stewards of the Medicare program.

So that is affordable and sustainable for generations to come.

Definitely, we'll be watching that as well.

I know there's a lot of uh focus on what happens for the upcoming year.

We'll have to leave it there.

Thank you so much.

C MS, deputy administrator and director of the Centers for Medicare.

Doctor Mina Simon.

Thank you for having me Angelique.

Let's recap the action from today's session sponsored by Tasty Trade, all three major averages in the green, but especially the dow a stand out and it actually rose for the seventh straight session of 9/10 of 1%.

The S and P and the NASDAQ also rising and as we've been talking about the S and P equal weight in outperforming the 500 market weight index.

So another signal that the rally is broadening the XL U the Utilities group also rallying for the seventh straight session by the way and that highlighting the strength we've seen in utilities that our Josh Shafer was talking about a little bit earlier today.

That'll do it for today's market domination over time.

Be sure to come back tomorrow at 3 p.m. Eastern for all of your coverage leading up to and after the closing balance, stay tuned for our latest edition of Lead this way on the other side.