Dow closes at record high
Speakers
Mike Santoli
— Senior Markets Commentator
Summary
CNBC senior markets commentator Michael Santoli discussed the Dow approaching a record close above 49,000. He noted the advance was narrow, driven by Goldman Sachs and Caterpillar, but said the market still favors the cyclical trade, with transports and banks strong. He also flagged a potential rotation back into mega-cap growth and tech, saying the earnings broadening thesis lacks near-term fundamental support. He described AI trade conviction as narrow, centered on Alphabet or Meta, while Microsoft has lacked traction.
- Dow approaches first-ever close above 49,000.
- Market breadth is positive but the Dow move is led by Goldman Sachs and Caterpillar.
- Transports could hit a new high and banks are strong, supporting cyclicals.
- Santoli sees potential rotation back into mega-cap growth and tech.
- Non-tech earnings are not expected to outgrow tech until Q4 2026.
- AI trade conviction remains narrow, with Alphabet and Meta favored and Microsoft lagging.
- CES is a near-term event investors are watching.
Ideas
Cyclical trade remains supported by banks, transports.
The market still wants the cyclical trade: most stocks are up, transports could hit a new high alongside the Dow, and banks are very strong. This suggests cyclicals remain supported even though the Dow's advance is narrow and driven by Goldman Sachs and Caterpillar.
AI conviction narrow; Alphabet/Meta watch, Microsoft lags.
Within the AI/mega-cap tech trade, high conviction is narrow. The market has concentrated on Alphabet or Meta, while Microsoft has not gained traction despite its large OpenAI stake and the market already pricing a lot into the growth trend. This suggests monitoring the narrow high-conviction AI winners and avoiding Microsoft's relative weakness.
AI conviction narrow; Alphabet/Meta watch, Microsoft lags.
Within the AI/mega-cap tech trade, high conviction is narrow. The market has concentrated on Alphabet or Meta, while Microsoft has not gained traction despite its large OpenAI stake and the market already pricing a lot into the growth trend. This suggests monitoring the narrow high-conviction AI winners and avoiding Microsoft's relative weakness.
Potential rotation back into mega-cap growth, tech.
Santoli sees the makings of a potential rotation back into mega-cap growth and tech after the recent rebalancing out of the market. He argues the broadening-of-earnings thesis lacks fundamental support because non-tech earnings are not expected to outgrow tech earnings on a year-over-year basis until Q4 2026, and investors may also avoid being too negative ahead of CES.
