How to Trade the Market Momentum 6/2/26

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**Scott Wapner** (0:51)
I'm Scott Wapner, and you're listening to Cnbc's Halftime Report, the podcast, the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in.

**Frank Holland** (1:06)
Thank you, Carl and Seema. Welcome to the Halftime Report. I am Frank Holland in for Scott Wapner. Front and center at this hour, more parabolic price action, and another big committee name raising some new questions about a brewing bubble in the AI trade. Our investment committee is standing by to debate that and much, much more. Plus, our own Leslie Picker is about to take the stage with Goldman Sachs CEO David Solomon at the Economic Club of New York. We're gonna take you there live once things get started. Joining me for the hour, we have Joe Terranova, Stephanie Link, and Brian Belsky. Before we get this started, a quick check of the market. We were lower earlier right now in the green across the board. The major indices, the Dow, the S&P, and the NASDAQ, on pace for another record close. And really, that's where we have to begin, Joe. Some of this momentum that we're seeing in the market, a lot of momentum in the market, a lot of questions about the AI trade. We're going to talk about Alphabet in a bit. I just want to talk to you about the action that we're seeing right now. Yesterday, if you remember, and I'm sure everybody does, the president said, eh, I'm done with those talks with Iran. The market's closed higher. We seem to have a lot of momentum, no matter what happens geopolitically, that continues to see these indexes go higher.

**Joe Terranova** (2:08)
Everything's related to AI and everything's related to the momentum that is witnessed in the most recent earnings.
The earnings have continued to be remarkably strong. We're carrying double digit earnings now for the better part of the last seven quarters for the S&P 500 I understand it's largely attributable to technology. Yesterday, I was sitting here, I was talking about a modest recovery in software, certainly cyber, but it extended into some other areas of software over the last several days. Today, it's kind of back to the semiconductor story, back to the adjacent AI derivative trade. That's where the momentum is. The momentum factor once again today, I see it up 2.5 percent while quality is actually down. That doesn't mean you're not getting an opportunity to broaden small caps working well, value working relatively well over the last several days, energy coming back into play. But the momentum is firmly entrenched in the market right now. If you're going to tell me what is it that's going to be the number one indicator in which you understand that the market has reached a peak and we're about to correct, I don't think it's going to be oil prices. Maybe it's going to be bond yields, but I think most importantly, it's the momentum factor rolling over.

**Frank Holland** (3:28)
Can we show a chart, guys? I had them do a chart of the MTMUM. I know you look at that. It says the start of the Iran war. Not so much. You're going to see a very stark difference between now the S&P and the momentum trade, also out of the SPMO, another momentum-focused ETF. More than doubling the market over the time since the war started, since we had all this geopolitical tension, Stephanie Link.
What do you make of this momentum trade going into June?

**Stephanie Link** (3:51)
Yeah, we're up 19% from the March 30 lows in the S&P 500 We're up 31% in the NASDAQ in the same time period. But that has a lot to do with what Joe just talked about. Anything tied to AI and the food chain that I've been talking about. Or if you want to listen to the CEO of NVIDIA, he talks about the five-layer cake applications, models, energy, infrastructure and chips, all of $90 trillion industries. So that is big and that is impacting the entire economy in various different sectors. I don't know if it's, is it momentum? I'm telling you, it's strong fundamentals. Here's the thing that would change the narrative. It's the 800 billion that the big four Mag-7 are gonna spend this year, if it doesn't go to 1.6 trillion next year, because that's what the expectations are. If they scale back, then you have many different industries that are going to be impacted. But in the meantime, we are seeing growth. Companies are indicating they want even more to spend, right? So that's what today is all about.