Welcome to closing bell. I'm Sarah Eisen and today for Scott Wapner. This make or break hour starts with a retreat from records as stocks pulled back from all-time highs. Here's your scorecard with 60 minutes to go in the trading session. We are seeing stocks give back some gains, as mentioned, down 3 tenths of a percent on the S&P 500, so nothing extreme. The NASDAQ pulling back four-tenths. We're pretty much flat now into the Santa Claus rally.

This is the third day in. Five more to go. I think four more from here, actually, which is a historically very strong period for the market.

Materials are the hardest hit sector right now as gold and silver fall from those record highs, discretionary and tech also in the red, while energy and utilities are posting gains today.

And that leads to our talk of the tape. Should you lean into the broadening of the market that has

been showing new signs of life as we close out the year? Month to date, we're seeing groups like

financials and industrials outperform tech. Let's ask Palumbo wealth management's Phil Palumbo. Welcome.

It's good to have you.

Thank you. So how are you positioning? You manage high net worth clients, investors, entrepreneurs.

How are you positioning them into 2026? Yeah, so first we, you know, the win is at our back as it relates to the overall economy, which translates into the earnings, which I think will be another up year for the market. And so with all that that wind at our back I do think that translates into the other 493 companies and

the question everybody has to ask themselves well why is that and for me it's about the

Fed cutting rates or rates going lower that will help the other 493 companies and

then I think a lot of these companies are going to integrate AI into their

companies ultimately increase in productivity which will see their earnings start to increase so I think those lot of these companies are going to integrate AI into their companies, ultimately increase in productivity, which will see their earnings start to increase. So I think those are the main reasons why you can see a broadening out. So do you expect more Fed cuts? Because we got three this year. Yes. That was more than what was expected initially. Yeah, I do. I do expect that. And I do think the new Fed chair will be dovesh. So I think overall we'll see a situation where rates do go lower than we are today from a Fed cut situation. I think it makes sense looking at the labor market cooling a little bit. And I think to think that inflation is not problematic. And with that, I think it's a recipe for to continue to cut rates. And then you expect next year to be the year that we start to see the AI impact on earnings? I do.

Higher margins?

What does that look like? Well, first of all, I think you're seeing it already, right? And a lot of companies that are implementing, like Salesforce is one that they implement implemented with their agent force and you're starting to see it in their earnings now. So you start to see it already. Salesforce is one, but it got punished this year. It did get, well, so there's an overhang right now with software companies, right?

So it's a concern about right now with software companies, right?

It's a concern about AI taking over their business, less seats within their business.

But if you look at Salesforce and their business, they're thriving, right?

So in terms of the agent force and their implementation of that, I mean, that alone is up 330% year over year.

The data cloud and that business combines up 114% year over

year. It's now a $1.4 billion piece of their business. Why do you think the market's not giving them credit? It's because, it's down 20%? Yeah, because just like anything else, everybody's concerned that AI is going to take away part of their business and other people are going to use AI, develop software like the CRM, but the end of the day, Salesforce dominates in CRM.

That's not going away. In fact, they're using AI to make their business even better.

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