Closing Bell: What’s Next for Stocks? 5/18/26

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**Scott Wapner** (1:00)
Welcome to Closing Bell. I'm Scott Wapner live from Post 9 Here at the New York Stock Exchange, we have a big hour ahead. Of course, we'll have more on Elon Musk losing that verdict against Sam Altman and OpenAI in the courtroom. Kate Rooney has been outside the courthouse for the duration of this trial. She'll join us momentarily. You've now heard from the attorneys from both sides. We do await reaction from both Mr. Musk and Mr. Altman when we do get those. If we do, of course, we'll bring that to you immediately. We want to show you the market because that is a big story this hour as well. We're taking a breather today. We're about at the lows of the day now. The Nasdaq is down 300 points. It's more than 1%.
The Russell's getting hit about the same amount. It's all about interest rates today, which have been moving higher, especially at the long end, the 10-year, the 30-year, about the highest in a little more than a year or so. So the market's fixated a bit on that. Yes, we're looking ahead to NVIDIA's earnings midweek, but we got to get past the next couple of days. So that's how the scorecard shapes up with 60 minutes to go. A pretty directionless market, though, as we do come on the air. I do want to talk about tech. It has been mostly red, but if you look at some of the software names today, they're actually doing quite well. That's a story in and of itself, as money coming out of the chips, continuing to go into software like the cyber players. What about Snowflake, ServiceNow and Salesforce? They're all green today too, so we'll follow all that. It does take us to our Talk of the Tape, a big call today from one of the most followed market watchers, Ed Yardeni says we could get a rate hike in July.
Let's get more now from the man himself. He's the president of Yardeni Research and he's with us live. Welcome, it's good to talk to you.

**Ed Yardeni** (2:55)
Thank you.

**Scott Wapner** (2:56)
So you turned some heads today because you're such a bull in this market and you stay with your target of $82.50 for the end of the year, but you think the Fed could actually hike rates in July?

**Ed Yardeni** (3:10)
Well, I think the bond market is calling for that. I think the reason bond yields have gone up is because the perception is that the Fed is still behind the curve on inflation, and the Fed has clearly showed that they're dropping their easing bias, which is what they had in their April meeting, and moved not to a neutral bias, but moved to a tightening bias at the June meeting coming up in a few weeks.
And then after that, I think they have to follow up and actually show that they're willing to raise rates and do it by 25 basis points. The two year is now indicating that the federal funds rate is too low. The federal funds rate range is three and a half to 3.75%, the two year is at 4.1%, and it's a pretty good leading indicator of what the Fed should do, and very often it gets it right.

**Scott Wapner** (4:03)
Ah, so you're one of those in the Fed follows the market camp, it sounds like.

**Ed Yardeni** (4:08)
Well, I think the Fed doesn't really want to get behind the market, being behind the market is being very much behind the curve, because the market is certainly looking at the CPI and PPI that just came out. And there's a lot of concern that we're back into an inflation mode comparable to what, 21, 22 I don't think it's anything like that. I don't think we're going to have another bear market the way we did in 2022 I think the stock market can handle a rate rise in the bond market. Well, right now, it's at 4.6 percent. It's sort of at a critical level. If it goes higher than that, then I think the next stop is going to be somewhere around 4.75 percent. I don't think we're going to go to 5 percent. And I don't think these are the kind of rates that are going to really create a problem for the economy to grow and for earnings to grow. So I see earnings continue to do well. I think that we are going to see some tightening in credit conditions here because of the inflation issue. And I don't think that's going to create a real big problem for the valuation multiple either.