Closing Bell 10/14/26

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0:44Every lesson learned and every idea refined becomes part of what comes next, and it lives inside every MDX, ADX, and Integra. That's precision-crafted performance. That's Acura. And welcome to Closing the Bell. I am Frank Holland, in for Scott Wapner. stocks under pressure falling sharply as a hotter than expected inflation print sends yields higher. Raising some fresh questions about the Fed's next move. Let's get the scorecard with 60 to go in regulation. A lot of red on this board. The Dow pulling back about 200 points, just under a half a percent. The S &P down one and a third percent. The NASDAQ down more than 2 percent.

1:17The small caps down more than 2 percent as well. We also want to take a look at treasuries trading pretty close to multi-decade highs when we're talking about yields still a bit lower than we saw just earlier this month. Right now, you're looking at the 10-year coming in at 5.19 percent. The 30-year at just over 5.5 percent. The big story today, the sell-off in AI infrastructure name. Some of the biggest winners of the AI boom now taking some of the biggest hits. Corwee plunging double digits. Oracle, Nebius, and other names tied to the AI build-out. They are also getting hammered. You see Corwee pulling back more than 15 percent.

1:50And it's spilling into the chips and the memory stocks. All of them are lower. You're going to see a lot of red on this board as well. Taking a look. AMD pulling back 6%, SK Hynix down about 6 % as well. One notable bright spot in big tech today, that is shares of Apple bucking the broader sell-off in the green, as you can see, up over a half a percent and within striking distance of record highs and nearing the$5 trillion market cap milestone. And that takes us to the talk of the tape. Is this just all a reset of sorts, one of the market's hottest trades, or are borrowing costs rising, exposing some new risk in the AI boom?

2:24That's where we begin with our own Seema Modi. Seema. Well, Frank, the sharp drop in Corweef shares prompting CEO Mike Intrater to send a memo to employees today where he attempts to calm concerns around its financing measures. We reviewed that memo. He writes that there will be a period of time when the market misunderstands and acts irrationally. He adds that he's confident in Corweef's backlog, which he says more than supports all of its debt obligations. He then goes to say that not all companies are following the same playbook, with some raising enormous amounts of capital, he says, without execution.

2:57It's worth noting companies that buy GPUs and lease them out, like CoreWeave as well as Nebius and Oracle, are trading substantially lower right now, as are other companies invested in the AI infrastructure build-out. Think about the servers, specifically Dell, Supermicro, Hewlett-Packard, Enterprise, all down, while the chip stocks remain solidly lower as the sort of entire sector reacts negatively. to the spike in bond yields, which have elevated these new concerns around leverage. Also, just want to flag credit default swaps, Frank, for some of these AI stakeholders rising. A new high for Oracle's five-year, indicating that investors on the credit size are hedging their risk, Frank.

3:35Sia Mamone, thank you very much. We now want to bring in Yorkville Ives' Dan Ives to talk more about some of the pressure that we're seeing in technology today. Dan, always good to see you. Great to see you, Frank. Thanks. All right. You just came out with a note saying there's some jitters about the AI build-out. I mean, we're certainly seeing it in names like CoreWeave and also Oracle, a name that you cover. Break it down. Is this just about higher yields? Because the yields aren't as high as they were just a few weeks ago. Why today are we seeing this kind of pressure? Yeah, I mean, clearly CoreWeave being sort of the poster child of what we're seeing in terms of nervousness.

4:07But, Frank, I think it just comes down to the worries like our yields, is that going to constrict the data center build out? Are you seeing cracks in the armor? And I can tell you, I'm here in Korea from a memory perspective. it's accelerating. I mean, significantly, where I don't even think we have equilibrium demand to supply till late 2028, early 2029. So I just think this is a white knuckle moment market, way overreacting. And I think we're going to get through earnings season. And that's going to be the calming force because we're going to see from the hyperscalers and ultimately the chip players and the demand you just cannot ultimately deny.

4:43All right. So spell this one out for us, Dan. You're saying the hyperscalers are going to kind of answer some of the questions that people have about the AI build-out. What are you expecting from these reports? Is it simply just beats on cloud? Yeah, Frank, I think it's a, we put this as pieces of a puzzle. If memory stocks and what we're seeing from a chip perspective demand 13 to 1, hyperscalers, we think we've seen a 30 to 40 % acceleration sequentially in terms of deals. And as that comes out, especially Microsoft, you look with Amazon, Google, that's just another piece of the puzzle that then will be answered further with the Palantir, the Snowflake, the use cases, because it just goes to our point.

5:22We're less than 5 % through in terms of companies going down the AI strategic path. And I get the nervousness in yields and what we've seen with CoreWeave and what the debt market's telling you. We assume 5%, 10 % of data centers don't get built. You then still have 1 ,000 data centers getting built. And that CapEx wave, I think that's really going to be the driving force and why you continue to be super bullish here on these names. All right, I want to talk about the Max 7, specifically Apple, very close to an all-time high$5 trillion market cap. That's certainly a bright spot in this market.

5:54How critical are the Max 7 to maintaining this bull market that we just celebrated a four-year anniversary for? There are hearts and lungs. I mean, I think big tech ultimately is flexing the muscles again, not just on Hyperscale, but we see from NVIDIA and others. But when it comes to Apple, it's a good example. I think we've seen with Meta as well, the golden install base. and they could be lead to the AI party, but they are going to be a toll collector in the consumer AI revolution. And I think that's really what Ternus is going after. And I think investors are recognizing, I think when you look at Meta and Apple in particular, you can't count them out because the install base is at the epicenter, just like what Meta is doing with Muse.

6:35I think these are both names that are going to significantly outperform over the next 6, 12 months. So you're talking a lot about the sentiment right now. Now, you believe at least the fundamentals are very different than the sentiment, at least today. You know, sometimes you see a knee-jerk reaction in the markets after a hotter-than-expected print that leads people to believe that the Fed might hike once, maybe twice. But I also want to go back to some of the action in the market. If you look at ASML, they put out guidance. They have orders all the way through 2030, and you didn't see a positive response there.

7:03Also, we're going to have a guest coming up later. He believes some of the action in memory stocks is tied to short selling. So there are people in the market that don't have confidence in chips. And I think chips are kind of a leading indicator. So, I mean, if you disagree, please tell me. But why do you think so many people are betting against chips and this critical part of this AI buildout right now? Yeah, great point, Frank. And I think so many have been skeptical in this AI revolution buildout the last three years. Now, that's maybe accelerating here, but it comes down to we're here in Korea.

7:33I see it front and center what the memory players are seeing. demand is accelerating a point that you never even could put your arms around relative to demand. But it needs to be ultimately earnings and demand. As that comes through, you can't deny that. And I think a lot of these stocks are disconnected in a way where the fundamentals are accelerating and the multiples are ultimately retracting. And I think they're trading like cyclicality. Investors are sneakbitten. But that creates the opportunities from memory, from SK and others, to chip, NVIDIA, what we're seeing on the hyperscale is these are buying opportunities, not the time to wave the white flag.

8:11You know, Dan, it's so funny you mentioned that. So you're in Korea, huge retail investor culture there. Here in the U.S., it feels like the retail investors cooled off a bit. Is this a dip that you think retail can buy and maybe potentially change from the momentum in the market that we've been seeing? I think this is going to, these are the moments. These white knuckle moments is where you buy the winners and you buy the stocks. I could go back to the fictional SaaS apocalypse, the circular financing concerns, and then you look what's happening with software and such. That's the opportunity right now for memory, chips, and what we're seeing, even when you look at CoreWeb and Ebius and others, we will sit here two months from now, three months from now, going to the year and looking.

8:48This was an opportunity, not the time to panic. Dan Ives, best-dressed man in Korea. Great to see you as always. Thank you very much. Want to bring in the panel, Payne Capitals, Courtney Garcia, Truist, Keith Lerner, and Requisite Capital's Bryn Talkington, Courtney, Bryn, and Bryn, excuse me, our CNBC contributors. It's really good to see all of you. Courtney, you're right here with me at Post 9. I'm going to start with you. So much to talk about rates, technology, everything else. So markets are moving kind of lower today because of that hotter-than-expected CPI, odds of a Fed hike raising pretty significantly, according to the CNBC FedWatch tool.

9:19See, Lisa's going to be on in a minute to break all that down. I want to get to your thesis. You're saying this is the moment to diversify in the small caps and mid caps. Aren't they more rate sensitive? Why now? I think anything that's more rate sensitive is clearly the opportunity to be had here. So we're looking at bonds where you can finally lock into better yields here. Small caps are going to be hit much harder because they have a much more debt on their balance sheets and they're affected by the short term rates that are changing. So I actually agree with everything Dan is saying here. I don't think the AI trade is over.

9:46But when you look at today, AI is getting it harder. But if you look over the last month, it's those interest rate sensitive areas that are clearly the opportunity. So I actually think as we look forward, yes, we could see rates going up from here. Today is a good example of that. But I would actually argue a majority of this rate hike that's happened, we've had quite a move in the last month. I think more of that is priced in than not at this point, which is why you want to start to look at those opportunities. Well, you're saying the hike's already been priced in by the moving yields. I would say the increase we've had in rates, I would say a majority of the hike has happened.

10:18So it could still go higher, but I think it's not going to exponentially go higher from where it's already gone. I'm saying that correctly. Yeah, I think everybody understands. Keith, I want to come over to you. Despite today's action, you remain overweight tech, but I do have to ask you about the action in the SOXX ETF, the iShare Semiconductor ETF, on pace for seven days of losses. I think, and I think a lot of other people agree, that chips can kind of be a leading indicator of where the AI trade is going. Is that concerning to you at all? Yeah, well, of course, great to be with you. I mean, it is somewhat concerning, the weakness in semiconductors, But we also have to remember they went parabolic earlier this year in the second quarter alone.

10:54They were up 80 percent. That was the strongest quarterly game we've seen in history. And they're still in this kind of wide sideways band. We think there's more relative value in the Max 7, which made a new relative high yesterday. The other thing I would point out, Frank, you know, we've wrote about this quite a bit over the last few years. The market continues to have this love-hate relationship with tech. And as an example, last month, there were only two sectors up in the market. tech and communications services. This month, there are only two sectors that are down. One is tech and one is industrial.

11:25So the love-hate relationship continues. But if you bore it now and look since the start of this bull market, tech has outperformed. And I think in some ways, what you're probably seeing with tech right now is it's catching up to the rest of the market. The rest of the market has been weak. Now it's bringing down the leader. I think ultimately, you know, this rotation likely has a little bit longer to go. But ultimately, money comes back to tech because the key theme of this bull market It still is AI and tech in our view. Brent, I want to come over to you right now. So you're saying defensive.

11:54Defensive trades look pretty positive right now. I think a lot of people agree with you. I'm looking at health care up almost 2.5 % right now. Also looking at staples and utilities for the month up about 7%, 6 % respectively. But you also say it's seasonality. So is this a seasonal trade? What changes the seasonality in that defensive position that you're seeing a lot of positivity in? Well, I mean, when I say seasonality, I'm talking about the seasonality of the midterms and really going back to 1962, between the August highs and the midterms lows, the average peak to trough for the S &P is around negative 8 to 12 percent.

12:29So this midterm type of downturn to me is normal that we've seen it really since 1962. I think today you see Apple, we'll talk about consumer staples, a Walmart, of course, healthcare, Lilly, United Healthcare, are going to be up and be those more defensive, you know, defensive securities and stocks. But I really think within tech, Frank, this goes back to where Dan is right now, is in South Korea, because the KOSPI has been weak since last week. I think the COSPI is down and the memory names are down about 12 percent over the past five or six days. You now have the COSPI under the 200-day moving average, which is very heavily memory constrained.

13:09And we continue to see this spillover when the COSPI and the memory names in South Korea sell off. Our names start to sell off and then couple that with rates, inflation and midterms. And we're just in this this type of market right here. But I do think this is going to be an opportunity to add to those names because as you and Dan were talking about, the hyperscalers, the cloud growth, which is huge parts of Google, Microsoft, and Azure, those are looking to be growing at 55 % to 56 % over the next two quarters. Those are big numbers that we're going to continue to see. And so I do think that's going to be a really stabilizing factor within tech, specifically within the hyperscalers' cloud growth.

13:53All right, so we're spending a lot of time talking about some of the weakness in South Korea. Outside of South Korea, Courtney, you actually like international equities. Are there certain countries where you're seeing opportunities, certain sectors outside the U.S.? Yeah, we diversify broadly into international equities. So we have both developed markets and your emerging markets. I think both of those continue to look attractive here. And those tend to be a lot less focused on your AI trade, which I do think is good from a diversification standpoint. in your emerging markets, those are going to be much more directly correlated to commodities, which as you're seeing this AI build outs happening, you're going to need all those commodities, materials, and that is going to continue to drive your emerging markets higher.

14:29So it is absolutely a piece of the portfolio. And it's another thing you definitely want to take advantage of here. And I think, too, we're just looking at the fact that markets are down today because rates are higher. And so we're seeing that repricing that's happened. But you're still getting a lot of good data that's showing that the economy is still on good footing. So if This is purely just a repricing from interest rates higher, not flashing a recession. And I would argue that's happening, especially when you look at the bank earnings. I would think that's more of a reason to look for opportunities here, globally speaking, to your point.

14:56We'll talk a bit more about the bank earnings coming up in just a second. Leslie Picker is going to be coming up. Everybody stay with me. I want to get to our senior economics reporter, Steve Leisman, for more on today's inflation read and what it could all mean for the Fed. Yeah, and a little breaking news, Frank. We're just getting some information about an interview that Chicago Fair President Austin Goolsbee gave to Yahoo Finance. He called the CPI number this morning discouraging, says the economy has work to do on the inflation side. And he cited specifically service inflation as a concern.

15:23Now, that hot CPI core number this morning caused a rethink on the street for the outlook for the Fed in October. Specifically, that rethink yields to is a higher probability of a rate hike. Take a look. October now at 33. Was at 22 percent. Had been higher today. December now at 92, up from 90 percent. So darn sure, or pretty confident in a hike at least one by December. John Kirshner from Janice Henderson writing in, this reaction to this morning's much higher than expected. A CPI report reminds me of the oft-quoted adage from Mike Tyson. Everybody has a plan until they get punched in the face.

15:55We're wondering if the Fed, and especially Chair Warsh, is feeling the same this morning. Here's the numbers that they're talking about. The punch in the face, not the headline number, which came in as expected at 0.6, yielding that 3.7 year over year. It was the core number up a tenth higher than expected, 0.3 percent, yielding a somewhat higher year-over-year number at 2.6, going the wrong way now. That's the key. How did we go the wrong way? Well, because of energy, 9.3 percent. That's a monthly gain, ladies and gentlemen. That's the big rise in diesel and gasoline. Airline fares, that's where energy bleeds into the core.

16:32Used cars up as well. Hospital services from 0 to 0.7. And shelter, that had been helping a lot. It's responsible for a big chunk of the core surprise this morning. Two years surging in the wake of that number, but then along with a 10-year, but broadly unchanged on the day. Not exactly sure why that is, but it did come back down to where it was. A note, Frank, that it could have been worse. The actual core increase, 0.335. That means it was this close to rounding up to a 0.4 % increase. Tomorrow's PPI, that's going to be key. A hot report could make it really tough for the doves to justify an October pause.

17:06And, Frank, I'm sorry about that punch-in-the-face metaphor there from Mike Tyson. I don't know why you're sorry about that. By the way, second Mike Tyson reference here at Post 9 today. So it seems to be a bit of a Mike Tyson theme. By the way, I don't want to get punched in the face by Mike Tyson or anybody else. Steve Leisman, thank you for illuminating the CPI report. Always good to see you. All right, coming back to the panel, Brent, I want to come over to you. What are the implications for the market of at least one more Fed hike? As Steve just mentioned, if PPI comes in hot tomorrow, it seems like it's going to happen in the meeting coming up later this month.

17:36Well, I think it's important here to point out that the two-year settled a bit. I don't think we're going to get a hike before the midterms. We have a meeting in December. So if we get one, I think the higher probability would be in December versus right before a very, very, we'll say, contentious midterm election. And so to me, maybe it's December, which actually would give the Fed multiple more readings to see. But I think that Goolsbee's commentary of discouraging his verbiage was very important, right? It is discouraging. I do think we need to, like, watch out for oil and diesel, et cetera, because those can move down as quickly as they move back up.

18:16But that's a big if. So I think this is another reason why markets are just in this, like, washing machine going back and forth. And so with all things else being considered, the markets are going to go down on this type of news. Yeah, certainly a lot of ifs when it comes to the energy market. Keith, I want to come over to you and back to your call of being overweight tech. If we do get a Fed hike and or hawkish tone in the press conference afterwards, does that change your view on tech just due to the cost of the AI build-out increasing with rates going up? No, I think actually it reinforces, especially the mega cap tech, because even if rates go up on the margin, the secular growth will likely continue to overwhelm it.

18:52I think it's, you know, the less quality players is where you have a concern. And, Frank, just maybe a couple of things I think is worth pointing out around the discussion. One, I think it's important that we saw the 10-year Treasury go up to 530 today and come back down to below 520. If you're a bond investor, that's a positive. We just saw, you know, the front of the economists talking about a potential bond blow up, the IMF talking negative about fiscal deficits. To us, that's more of a contrarian indicator. And we see value now in the 10-year Treasury where it is today. And then going back to your question about the Fed, when we test this out historically, the market after the first rate hike tends to be pretty choppy over the next one to three months.

19:32As you extend your time horizon over the next year, markets tend to rebound as long as you don't go into recession. That is our call. So all in all, we still think this bull market, which just turned four, has more to go. The history suggests that, though, it will likely continue to be somewhat of a bumpy path. But the good news is we are also now seeing some alternatives beyond just equities, even though we still do like equities. Yeah, I think a lot of people are looking for some good news today, Keith. Courtney, I want to come over to you. We kind of talked around it. Bryn mentioned it. Energy.

20:00Look at the earnings estimates for Q3 for the energy sector. 123 % earnings growth. Is that a place to go to right now? Yeah. Energy has always been a core part of our portfolio. And this year is a really good example of that. That is outperforming a lot of other sectors right now, which is great. But I think with energy, the question is, do energy prices stay this high? And I think the hope is for consumers that that comes down, because clearly you're seeing that read through is happening through inflation. But even if it does come down, these energy companies don't need oil prices to stay this high for them to be profitable.

20:30So I think this is going to continue, especially to see the AI build out happening. There is not enough energy at this point. There's too much demand compared to the supply. That is going to continue to be a trade no matter what's happening with energy prices right now. So, yes, I think you want to continue to own it and have that as part of your portfolio. And look at the XLE up over a half a percent today. Courtney, Keith and Brent, thank you so much. Great to see all three of you. Thank you. All right, now we're going to get to some of today's big movers, including the banks under some pressure as another round of earnings just fails to impress the street.

20:59Our Leslie Picker joins us now with much more. Leslie. Hey, Frank, yeah, it was a very busy quarter. Bank of America shares, for example, under pressure after reporting a drop in earnings due in part to a$1.2 billion regulatory penalty over violations of anti-money laundering and sanctions laws. We asked Chair and CEO Brian Moynihan earlier where the breakdown was and how close the firm is to fixing it. We put lots of resources against thousands of extra teammates. We've lowered the thresholds of reporting that you can see reflected in some of the technical areas. It took us a while to get eye to eye with the regulators about what exactly they wanted our role to be because we file a lot of SARS.

21:40And so the good news is the penalty went through last quarter. The good news is we've built up the resources and are deep into remediating activities and we'll resolve it like we've done with many issues in the past in this company. As for B of A's third quarter, the Main Street side did outperform while the Wall Street side think investment banking and sales and trading were the weaker spots there, especially relative to peers. One such peer is Morgan Stanley, which beat on both lines this morning, but not by enough to impress investors. The key for the sector, though, is the deal pipeline, something Morgan Stanley's CEO Ted Pick told us earlier that he continues to be bullish about due to pent-up demand and a reasonable regulatory environment while noting, quote, that clock may be ticking.

22:27Now, if interest rates were to get away from us, and that was on the back of a lack of control over inflationary expectations or real geopolitical noise, then I would expect volumes to go down. The IPO windows are market sensitive, so they would be more closed or more opportunistic. But that's not the way we're thinking about it right now. We're thinking that the windows are open for the right structure. Investors are discerning. Meantime, shares of Morgan Stanley down nearly 3 percent, Bank of America down 5 percent, Frank. And those comments, too, from Pick really echoed what David Solomon told Kate Rooney earlier today.

23:07That's the Goldman Sachs CEO just about the IPO window being open just at the right price, essentially. Leslie, really great interview with Morgan Stanley CEO, Ted Pick earlier. Really interesting comments and his thoughts about AI and the generational opportunity there. That's on CNBC.com for anybody who wants to watch. Leslie Picker, thank you very much. Great to see you. Thank you, Frank. All right, let's send it over to Brandon Gomez for a look at some of the other big names moving into the close. Brandon. Hey, Frank, let's start with a group of stocks. Dell Technologies, Hewlett Packard Enterprise and NetApp, all sinking today after Barclays downgraded the stocks to equal weight from overweight.

23:39Now, the bank warning that enterprise hardware valuations have surged ahead of meaningful AI-driven demand. Dell leading the pack lower down almost about 11 percent now, despite rallying over 300 percent on the year. Meantime, shares of Italian tech company Bending Spoon soaring after Berkshire Hathaway announced an additional$330 million investment, bringing its total stake in the company to 4%. Berkshire previously invested$600 million in the parent company of Eventbrite and Vimeo when it debuted in July. You can see that stock up about 40 % now. And finishing things off on ASML falling after the Dutch semiconductor equipment manufacturer reported a slight miss on its third quarter net sales.

24:18compared to Wall Street estimates. You can see shares there down about 2%, Frank. All right, Brandon Gomez, thank you very much. Good to see you. We're just getting started here on Closing Bell. Coming up next, Kate Rooney is following the money on one of the most anticipated IPOs of the year, of course, that's Anthropic. We are live from the New York Stock Exchange. You're watching Closing Bell on CNBC.

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26:43Kate. Hey there, Frank. So about an hour south of where we are right now in San Francisco, Anthropic, from what we're hearing, is holding an investor day and does plan to disclose its third quarter financials. This meeting is with about 120 institutional investors in the Bay Area. This is according to two sources and people familiar with the matter. It does come as the AI giant plows ahead on what could be the largest IPO in history. Anthropics numbers will be closely watched, especially given just how much of the growth of some of these private AI giants right now matters to the broader markets.

27:20Open AI and Anthropics are some of the largest customers of a lot of the chip names out there. Think of NVIDIA, also the major cloud providers. I did sit down here with Goldman Sachs CEO David Solomon. Here's what he said about those potential mega AI IPOs. We don't have a lot of we've got show me the large language model, large company that's come to market for an IPO. I guess we're going to learn a bunch over some period of time in the future. Assuming that Anthropic and open AI go public will learn a bunch about exactly how public market investors will look at that and value that. And, Frank, any perception of weaker revenue projections can royal markets.

28:00We saw a bit of this last week with some confusion around a report detailing Anthropik's rival OpenAI and its revenue and a change in accounting. That momentarily dragged down some of the biggest semiconductor names and the broader NASDAQ as well. Anthropik has filed confidentially with the SEC. That was earlier this year, but it hasn't made that S1 public. We are awaiting that. And the company will reportedly list in November. Frank, we'll let you know if we get those numbers from today. But that's the latest that we're hearing. Kate Rooney, great reporting there. A lot of anticipation for that IPO, very obviously.

28:32Thank you very much. Now we want to bring in CNBC contributor, Big Technologies, Alex Kantrowicz. Alex, great to have you here. Good to be here. So you and I were talking before we got on air. You said$518 billion. That's the magic number that everybody's focused on. Why is that number so important? And is it good that Anthropic has these obligations or bad? Because I remember when CapEx was a great thing. Right. So, I mean, Anthropic, if you'll remember from the leaked numbers, had something in the neighborhood of$4 billion in revenue in 2025. That was accompanied by 518 billion in obligations on compute and infrastructure, 80 % of which is reportedly uncancellable.

29:07And AI companies, they need to make these big infrastructure bets in order to survive and thrive because the demand for their product has grown so quickly, exponential really, that if they were unable to meet the demand, then there goes the company. People can easily go from an open AI to an anthropic and an anthropic to an open AI. But that being said, I think the number, even though infrastructure has been seen as good, I do think that number is a little scary. It sort of shows the tenuousness of what we're rushing into, what the market is rushing into, because these AI companies are building a new category.

29:41It's unproven technology. It is a belief, really, that it will continue to grow the way that it's been growing, and they'll be able to make good on those obligations. But we'll see. Okay. I want to set you up with that because, obviously, we're waiting for some big news. revenue numbers from Anthropic. Where are we at with them and the sentiment around their company and the IPO coming up? I mean, do they have to really beat expectations? Are there whisper numbers out there that they have to beat? Just kind of walk me in and talk me through it. Well, I think last week we saw some jitteriness around the AI trade and what's going on with the private AI companies.

30:15Because the market, I don't think the market is sure what to think about these companies. You know, there's been this private reporting. And in places like the FT, for instance, The FT had the open AI numbers. You know, there was an initial report that it was 70 billion on the year. Then it went to 50 billion. And you saw this massive reaction, even though it was just like a way of counting that had changed, not the actual numbers. So the market is looking at everything. And it's similar with the big infrastructure build out saying we think this is going to keep going, but we don't really know.

30:45And so any little wobble in the story can have broad repercussions like we saw last week. We're seeing a little bit today with the pullback in the semiconductor names. And so, you know, is there a whisper number? Not really. But like if Anthropic doesn't come out and show 10x growth on the revenue that they showed at the end of 2025, at least that's going to be a problem. Well, then there's kind of a whisper number. It's got to be at least 10. I want to go back to Kate Rooney. It's not whisper. Let's say it out loud. Let's say it out loud. You're clearly doing that. Let's go back to Kate Rooney's interview with Goldman Sachs CEO David Solomon.

31:16They were talking about the idea of this Anthropic IPO being the biggest of all time. I was here at Post 9. We had the last biggest of all time. That was SpaceX. I'm looking at the charts. SpaceX is negative year to date. If Anthropic IPOs, what are your expectations? And does this kind of set the tone for the trade for the rest of the year? If it does IPO more than likely before Thanksgiving, that's kind of the timeline people to put out. Yeah, I think it is going to come out in November and it's going to be a big one. A lot of what you're seeing now, again, is sort of hinged on this belief that Anthropic is strong.

31:45The market is going to have a chance to make a decision on that. We're going to see more numbers, you know, maybe very soon as these numbers that Anthropic presents to investors leak. And investors will just make up their mind in terms of whether they believe that this is a business worth buying. And I just want to stress again, this is not a normal business. It's a business that's grown extremely fast in a short amount of time. It's hard to evaluate it like the way that you would evaluate normal business because so much of it is projected into the future. Again, like$4 billion in revenue,$518 billion in compute commitments.

32:15that is a belief. That is a belief type of trade or a belief type of company. Not necessarily a company that you have the hard figures to judge like you would a typical IPO. So as much as I hate to say this is going to be part numbers, part vibe based, that's what it is. And if the vibes could go one way or the other so we could see very, very divergent outcomes here. We're back to vibes. I didn't see that coming. Alex Kantrowitz, always good to see you. Thank you very much. And tomorrow, you don't want to miss a special look at AI in America live from one market in San Francisco for both halftime and for closing bell.

32:47The judge will be back. Big guests include Altimeter's Brad Gerstner and the CEOs of Snowflake, Palo Alto Networks, and Reflection. Again, AI in America for both halftime and for closing bell. All right, coming up, the market's next big move with the charts are telling us about where stocks go from here. Renaissance Macro's Jeff DeGraff is here with the key levels to watch. Closing bell's back right after this break.

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34:54Here to discuss is Renaissance Macro Research Chairman and Head of Technical Research Jeff DeGraff. Jeff, thank you for being here. Thanks for having me. All right, I want to get to the technical moves in a moment. But first, I want to start with this. We had Bryn talking to earlier this hour saying that she's seeing a lot of positive momentum in defensive sectors. You say this tech money, by the way, tech's lagging, health care is leading. You say tech money is going into health care. Explain why is the money going there? Well, it tends to be a natural ying versus yang. You know, if I were to start a hedge fund, I'd probably make it tech focused and health care focused because when one's in favor, the other's not and vice versa.

35:31So, you know, you have a defensive aspect to it versus a little bit more blue sky aspect to tech and yet there's still you know this growth underlying growth potential so that tends to you know it's worked throughout time and it seems to be working here at least today as well and I think that will continue I mean healthcare has has made a big bottom they were one of the most neglected sectors that we've ever seen, frankly, in the 50-plus years of data that we have in terms of alpha-adjusted returns. And it's just starting to emerge. So I think it's good news. Maybe it's because they're going to be the beneficiaries of using AI versus producing AI.

36:10We'll see what the narratives come out. But certainly, there are good charts there. All right. I want to dig in on the tech weakness a bit. You've been doing some research on this, specifically the memory names. A lot of downside action when it comes to the memory names. I'm looking at the charts. The DRAM ETF down more than 16 % month-to-date. Seagate down 22%. Western Digital down almost 20%. You say this is at least in part due to short selling. Why are people short selling right now? Well, I don't know what their narrative is. But, look, keep in mind that this is the post environment of a bubble situation.

36:42And people can debate bubbles. We have a quantitative way that we measure it. It triggered in our work. And it just says to us that, hey, you get an initial crack, which we had, and that really played itself out through roughly August. You tend to get a rebound that is anemic. That's exactly what we saw. A lot of names didn't even get overbought. And then you roll back over. And our mantra to clients for the last six or seven months now has been shoot them in the back, right? You don't need to sell them on the way up. You want to sell them on the way down, particularly when they start rolling over.

37:10And I think we're in the zone to be doing that with a lot of names. The memory names seem to be just that. Now, there were some rumors or some news out of China that they might have cracked the code to some of the DRAM. I don't know if that's true or not, but obviously the markets are reacting to it. It wouldn't surprise me, frankly, because when you see peak margins, what does that do? Well, it invites competition, right? So there's a lot of incentive to go and see if you can solve those problems. And that's why peak margins don't always impress us. Sometimes they make us pretty nervous because it does invite the competition.

37:42So I think it's going to be a combination of things. But technically speaking, these were vulnerable names. They're looking more and more vulnerable as we go. You're also looking at real rates. We're talking a lot about yields, but you're looking at the real rates. You say they're at 20-year highs and some of that weakness is spilling out into other areas of the market. If you're an investor, you're concerned about this. What area should you be the most concerned about right now? Well, high real rates are a tightening of financial conditions, right? So you should be worried about high-levered gains.

38:08You're seeing that with things like CoreWeave today. You should worry about things that have to go to the markets to finance or refinance because those are going to be most vulnerable. This is Fed credibility. This is the markets are telling us that they have the utmost phase in the worst Fed as it goes forward. Five year, five year forward, those rates are very, very high. And what you see is once you have real rates and those tighter restrictions or those tighter financial conditions, they start to spill over into the public credit markets. We're seeing it in triple B spreads. We're seeing it a little bit in B and double B spreads.

38:43Not as much as we'd expect. But, you know, when you start to get these things rolling, they tend to move up the stack. And so far that's been happening, albeit it's in a manageable condition today. But I do think that we're going to see these tightening conditions, particularly with today's inflation print, as we go forward. And that's going to be more troublesome for these highly levered means. All right, Jeff DeGraph from Renaissance Macro, great to see you. Thank you very much. Thank you. Coming up next, we're tracking the biggest movers as we head into the close. Closing Bell's back right after this.

39:15We're now just about 10 minutes into the closing bell. Let's get back to Brandon Gomez for a look at the key stocks to watch. Hey there, Frank. Perella-Weinberg shares falling 20 percent and Piper-Sandler shares up about 3 percent. The Financial Times reporting that the two investment banks have abandoned merger talks after failing to find agreeable terms on financial and personal matters. The Wall Street Journal reported last month that they were looking at a tie-up. We've reached out to both companies but have not yet heard back. Meantime, GameStop was climbing earlier today after a regulatory filing showing CEO and chairman Ryan Cohen purchased shares worth nearly$23 million.

39:49This marks Cohen's second purchase of the video game retailer this month, increasing his stake to about 10 percent. Stock initially climbed to about 2 percent midday, but is now down about a percent. And then ending things on State Street sinking after the financial services company's financial third quarter revenue missed Wall Street estimates. Heavy cash flow, outflows, offset growth in the company's exchange-traded funds. You can see their stock down about 4.5%. Closing Bell, back right after this break.

40:19We are now in the Closing Bell market zone. Mike Santoli and Kestra Investments' Kara Murphy, they're here to break down these crucial moments of the trading day. Plus, Oliver Rennick is standing by at the CBO Global Markets in Chicago. And Diana Olick is looking at mortgage rates. Mike, we start with you as always. Yeah, Frank, obviously, you know, no room really for some of the stronger areas of this market to hold up the indexes as you get a lot of the credit-sensitive names really flaring up today. I do think it's less about Treasury yields, which actually have come in over the course of the day in a flight-to-safety bid, and much more about credit spreads on top of that.

40:53So anything in the AI hardware food chain that consumes capital that is going to be dependent over time on more capex and debt, that's under fire. But I also think it's happening with, you know, banks showing some weakness and even MAG 7 having maybe gotten a little stretch to the upside. I don't think it's sort of a decisive call at exactly where we go from here, except it's more of a reminder. The S &P 500 right back into this range that we sort of entered into in very early August. So we weren't able to get escape velocity after that all time high yesterday. Maybe some earnings reports can can rescue the story as we go on from here.

41:29All right, Mike, we'll see you coming up on OT. Thank you very much. When to send things over to Oliver Rennick, live at the Seabo. Hey, Frank, overwhelmingly bearish options in core we've today with traders unafraid to take some deeply bearish shots, despite the stock falling to near 52-week lows. The biggest trade of the day was a likely$18 million call sale at the 80 strike expiring in March. The second biggest trade was a$14 million put buy of the June 2028 40 strikes, in which because those trades cost$10 a pop, they need the stock to drop 54 % to pay off. And for most immediate attention, a buyer of 26 ,037.5 strike puts expiring mid-December.

42:12Those are 70-cent contracts that were opened as a speculative purchase, looking for a 40 % drop in two months. These trades look particularly doomy, but worth noting, add on to about a week of tone change regarding bearish NASDAQ options flows in general, Frank. Oliver Rennick, live from the CBO. Oliver, thank you. I'm going to go to our Diana Olin for a look at the move in mortgage rates. Well, Frank, after dropping back a little bit last week, the average rate on the 30-year fix rose 10 basis points today to 7.56 percent, according to Mortgage News Daily. That matches where we were just a week ago.

42:51Rates are now well over one percentage point. In fact, 125 basis points higher than they were a year ago. That has the home building ETF ITB continuing its ride lower. It's now down around 8 % in just the last month. Names like D.R. Horton, Lenar and Pulte all at 52-week lows as these rates are really taking a toll on demand. We saw it in the mortgage applications from last week down again. And a report from Wells Fargo earlier this week said their monthly real estate agent survey went, quote, from bad to really bad. They said they were struck by the sheer pessimism with things likely to get worse via rates and midterm jitters.

43:29Frank. Diane Oli, thank you very much. We're just moments away from the close of spring and Kestra Investments. Kara Murphy, Kara, thanks for joining us. Tech obviously having a weak day. You say it's now time to rotate into small caps and mid caps. Why? Well, this has been a trade that we've been in for a while. Part of it is simply a risk play. When you look at the overall S &P 500 or other broad diversified indexes, they're incredibly concentrated in just a handful of names. So simply from a risk perspective, you want to start looking at some other areas of the market. But it's also important to remember that you have an incredible amount of earnings growth that has happened in these tech names, but that earnings growth is starting to spread out.

44:08When we look at small and mid-cap earnings expectations, those have been climbing quite significantly over the course of the year. And in fact, you see it outside the U.S. as well. This is earnings growth that is not just in a handful of mega cap names. So you want to be able to have exposure elsewhere in the economy. We've been talking about bonds all day. Yields have pulled back from the levels that we saw earlier after the CPI. We do have PPI tomorrow that could move yields in the bond market. You're saying right now there's kind of an interesting inflection point when it comes to bonds, because for the last quarter of a century, the government's been able to put out bonds and it hasn't really been any issues.

44:41But if yields go higher, there could be. I think this is a really intractable issue, right? There are some short term issues that the bond market is dealing with. Think like hyperscaler debt that needs to come. Oil prices high. But the federal debt issue is something that has been around for decades. Debt has grown under pretty much every administration since Truman. So that means it's a very American problem, not Democrat or Republican. But they've been able to do that because interest rates during most of that time period have been declining. So even as interest rate or even as debt climbed, the interest paid on that debt declined.

45:17That changed significantly a couple of years ago and has only gotten worse. So, you know, for example, if interest rates simply stay where they are for the next 12 months, the government will have to pay an incremental$500 billion in interest expense. That's almost as much as what the federal government spends on Medicaid. So, I mean, these are really, really big numbers, and they don't go away easily. Very quickly, we're almost out of time. Do you see any opportunities in bonds on the short end of the curve, the belly, in any area? So with the increase in long-term interest rates, it's tempting to go out in duration.

45:50But given the flatness in the curve, we don't think you're really being paid to take on a lot of duration here. With the increase in short-term rates, the short-to-medium-term part of the curve, we think is still quite attractive. Kara Murphy from Kestero Investment Management. Thank you very much. Good to see you.

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