Closing Bell 9/24/26

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1:00Scott Wapner: Thanks very much. Welcome to Closing Bell. I'm Scott Wobner, live from Post 9 here at the New York Stock Exchange. This make or break out begins, of course, with the markets. All eyes on yields and oil and those developments out of Washington. We'll get to all of that in just a moment. The scorecard looks like this with 60 to go in regulation. Did get a turn during halftime up in the market, at least for the Nasdaq and the S &P, on headlines that Iran and the U.S. are talking about a deal to reopen the Strait of Hormuz. Oil and yield dropped. Stocks did jump. Otherwise, Meta's Muse momentum continuing today.

1:33Scott Wapner: What a week it's been up 17 % and counting, and the week's not even over yet. Another near 5 % jump today. Not so much for Oracle. Stock going in the opposite direction on some delayed data center headlines from New Mexico. Let's get right to Eamon Javers in D.C. for the very latest on this state visit. Eamon? Hey there, Scott. Chinese President Xi Jinping has left the White House after a day of welcoming ceremonies here, Although we can't show you pictures of the events, the day featured a Rose Garden military review that was capped off with a military flyover featuring a B-2 bomber and four F-22 Raptors.

2:08President Trump also brought President Xi out to his new helipad on the South Lawn, and the two leaders climbed into Marine One to take a look at the president's new helicopter out there. We're expecting an all-star list of executives at the White House tonight for the state dinner in the East Room, including Tim Cook, Elon Musk, Sam Altman, among a long list of others that you can see on your screen there. The most significant news of the day came on social media, though, as President Trump announced that contrary to a lot of the speculation before this meeting, neither he nor Xi Jinping want to make significant changes to AI policy.

2:44He wrote, a big day with President Xi of China, superintelligence, that's the president's new term for AI, will be a big topic of discussion, but I want to leave it exactly where it is. That is China's position. Also, our guardrail is the Department of Justice. And Xi Jinping also weighed in on AI in his remarks, saying we have both the capability and responsibility to develop and manage AI for good and ensure that the development of AI is always under human control and serves the well-being of the people. Now, we expect Xi Jinping to come back onto campus here in just a couple of hours time for that big state dinner later on today.

3:23Scott, back over to you.

3:24Scott Wapner: Wondering what, Eamon, you make of what I think can be described as the warmness, if not the pomp and circumstance that we've already seen for somebody who has been considered more of an adversary than an ally, certainly by this president. Yeah, I think, you know, this is a president who is a big believer in personal diplomacy. He believes that if he can have a warm personal relationship with that foreign leader, then all of the policy conflicts will resolve from there. We haven't really seen significant progress so far in terms of a lot of those policy conflicts. I was in Beijing with the president back in May when he met with Xi Jinping there.

4:01There weren't a lot of deliverables or major announcements after that, a couple of Chinese purchases to be sure, but nothing big that moved the needle out of that one. The expectation here is similarly low, but the president clearly is putting on a charm offensive for Xi Jinping. He literally rolled out the red carpet at Andrews Air Force Base for Xi last night at his arrival.

4:22Scott Wapner: Yeah, I mean, as we saw with that meeting with Vladimir Putin as well, of course. Eamon, thanks so much. Eamon's on the north lawn of the White House for us. The other big story we're following, obviously, the recent move in bond yields. More Fed speak today for investors to focus on as well. Our senior economics reporter Steve Leisman is here with more on that. Yesterday was in many ways historic. We just haven't seen a one-day move like that in an awfully long time. And a little bit of follow-through today, and you've got Fed speak too. Yeah, I think the story, Scott, is that today's trading confirmed yesterday's move.

4:52It didn't walk it back at all. In fact, we are really close. I've just been watching it before you gave to me. We are really close to closing at the high yields of the day around 517 on the 10-year. That's where we are right now. And it continues to climb. We're at 517 and 8 earlier today. Now we're right in there. And it did not walk it back. It added to it by about five basis points. Some of that coming with a little bit higher oil prices. But also, Scott, we had more Fed speak. John Williams today affirming that he thinks the Fed ought to be thinking about additional rate hikes. There was other speak.

5:28In fact, we were able to put together a panel or a wall here, if you will, of all of the folks who have come out recently and said they think the next move by the Fed should be higher. There was Barr yesterday adding to that move by the 10-year Paulson again today. And of course, you want to know, Scott, where the center of the committee is. You're looking at it right now with a major question as to where Kevin Worsh stands here.

5:52Scott Wapner: I mean, the market's trying to get its arms around what this all means. And what do you make of those who say this is not that big of a deal? And it's simply due to the fact that growth is much better than people expected it to be, underscored by the Fed chair himself last week, underscored by the economic data that we've had this week. I don't like the word simply in what you said, Scott, but I think all of that is true. I don't think it's just a growth story. I think it isn't part of growth story. Yesterday, as we watched the 10-year climb, we saw it initially climb with higher oil prices. That was then added to by the PMI, then added to by more hawkish Fed speak.

6:33So there's a whole bunch of things going on that are adding to it. And plus, the other aspect that's maybe not well appreciated by our home audience here is that this is a global phenomenon. It's going on all around the world. JGBs are higher. The Bund is higher. All of the major developed countries are seeing higher interest rates. And in part, that comes from another aspect to this, Scott, which is that fiscal policy is very loose. Deficits are up. And really, the administration, through its tax laws and different things that it has done, is really stepping on the pedal of the economy here.

7:07Scott Wapner: Do you get the feeling that as long as these yields continue to back up, that the Treasury is going to remain, for lack of a better phrase, on alert and may lean more deeply into the market to try and affect it? I haven't heard the Treasury doing much more, Scott. What's been happening is they obviously, as we've reported, they've increased the buybacks from two to six billion. In fact, they're not taking down the six billion that they are offering to take down, in part because it's kind of a little bit anomalous or contradictory that they have, by providing this liquidity, the need for the people who hold these off-the-run securities has actually decreased.

7:52The need for them to offload them. They don't need to do it as much. So it looks like there's better liquidity. It looks like he's had an effect on liquidity, but he's not having an effect in bringing yields down, unless you were to argue that the U.S. is going up a little bit less than the rest of the world. So there's that. I think all the Treasury Secretary knows he can do now, unless he has a very, very large bazooka here, is to watch this thing play out and for the market itself to figure out where that top is in the yield. I believe the 2007 high that would be the next stop here is 528. So we've still got a ways to go for that.

8:25But 517 is a lot closer than it was two days ago.

8:28Scott Wapner: Well, the Treasury secretary does make the point and he does it repeatedly that, yes, yields are going up globally. Our bond market performing better than many of the others around the country. He said that numerous times, including on this network. Yeah, it's a relative performance, Scott, because all the yields have gone up. All the bond prices have gone down. But since the Treasury Secretary announced that enhanced buyback, the U.S. yields have gone up a little bit less than others. Some people have taken it, as I'm saying, drawing a line in the sand. Well, that line in the sand is several tides ago, if you might.

9:04It was around 470. I'm not saying he said that, but some people certainly thought that because that's when he announced the buybacks. The question is whether or not he comes in with enhanced buybacks in the weeks ahead. He's got a couple more announced enhanced buybacks. He's been sticking to the six. Question is, would he go to eight or 10? Use some of the Treasury general account to do so. We've not seen that yet. I think this is an interesting moment. He is getting, by the way, the opposite of what he wanted, but maybe more of what Kevin Warsh wanted, which is a stronger dollar. And that stronger dollar is going to help Kevin Warsh with it's going to help him with inflation.

9:42But it's not going to help the Treasury Secretary with that trade problem that he thinks he has.

9:46Scott Wapner: All right, Steve, thanks, as always. That's our senior economics correspondent, Steve Leisman. Now to our panel, CNBC contributor, Payne Capital's Courtney Garcia, CIBC's Chris Harvey, both at Post 9. I hear a lot of the commentaries that as long as bond yields continue to back up, it weakens the case for equities. How would you assess that? I mean, in theory, yes, but you're also seeing the MAG-7 has been rising with all this, right? I mean, it was down year-to-date going into July, and now it's up 10 percent for the year. and you're looking at all-time highs right now, which is why I think ultimately consumers are looking at, or investors are looking at, where is the earnings story and where does earnings growth look?

10:21And if the AI build-out continues to happen, I think that is justifying some of the growth that you're seeing in the economy and the growth that's leading Treasuries higher. I think that the bigger issue is what that's going to mean for consumer debt. You're seeing mortgage rates are higher on an already stretched consumer. And if those things don't come down, you're looking at roughly$15 trillion of debt that's linked to short-term rates. And if rates can remain higher, That does put pressure on a consumer. The stock markets, however, I think are a different story.

10:46Scott Wapner: Does the case for equities get weaker the more bond yields continue to back up? I think so. And the other thing that we saw yesterday is how you got bond yield higher. You got bond yield higher because it gapped up. Market doesn't like that. Whenever you have a gap up, credit markets get upset, equity markets get upset, and investors don't know what to do. And credit markets aren't really getting upset, though. Yesterday, they began to wobble. Well, today, what was really interesting is SoftBank issued$10 billion in the high yield market, traded better. And I think that's part of what's going on.

11:16That's what's helping a lot of tech. That's what's helping the market risk appetite at that point in time. Because if you can get SoftBank to issue$10 billion in the high yield market, what can some of the hyperscalers do in the IG market?

11:27Scott Wapner: Well, what about the idea that we're just overplaying this, that growth is better than we thought it would be? bond yields are reacting now more to that than than anything else, or at least it's right in the in the mix for the top reasons. So let's just like take a chill and just figure out that it can be OK. Yeah, that's all fair. That's all good. However, growth has been strong for some time and suddenly we're about above 5 percent on tenure. I think with the bond, you can argue what the bond market is doing is they're bringing the cost of capital to a level that will slow down the economy. Because what Warsh has said is, I want to get back to 2%.

12:02Scott Wapner: For him to get back to 2%, you have to slow down the economy. You have a shock with oil. Only way to get there, slow down the economy. Higher rates, slower economy. Court, you alluded to the point that the mega cap trade has woken up because the other part of the market trade becomes more difficult with elevated oil and yields. Yeah, and I think ultimately markets can handle rates higher if it's because of growth. And I agree. I think Steve said this earlier. It's not just simply because there's more growth that that's where rates are. This is a combination of inflation and rates. So this does mean there's a higher bar going into earnings season.

12:39Because if you can get 5 % on a treasury, you now have to get rewarded more for risk assets. So you do have to see the earnings picture that much stronger. But I also, I don't think this AI build-out is going to end just because of where rates are right now. or even if you see another quarter point increase, that I think that likely still continues and earnings continue. And I think that's going to become the stronger story here as we get back into October.

12:59Scott Wapner: And we get 30 % earnings growth. So I just have to wait. The problem is, what do you make that face? No, no, you're right. You never just have to wait. I'm saying you have to wait because we've had this pocket, this air pocket between the two earnings seasons where we've had nothing to look at other than backing up oil and backing up rates. Again, all fair, but let's take a look at what's performing. And as you talk about, it's tech. If you look at small caps, if you look at utilities, if you look at cyclicals, not performing very well in the second half, that is really being affected by the macro.

13:35Scott Wapner: Sure. It's being affected by higher rates. So you can have a two-tier market. You saw that two-tier market in 99, 2000 when the Fed was raising rates. And what happened as the Fed was raising rates, the old economy stocks rolled over, the new economy stocks took it to a next level. And that looks like it's beginning to happen here. You're trying to make an analog between late 99 into 2000 by virtue of what you're seeing here? Yes, I am. So there's a lot of similarities to back then, right? You had a new technology. You had a lot of enthusiasm. Tech was leading the way. Momentum was doing very well.

14:08Scott Wapner: And the Fed was raising rates because inflation, inflationary fears. Yeah, I don't think we were growing earnings 30 % from that group that was going up gangbusters like it is now. So you're making the case for me that if growth is that good, then a lot of these tech names should continue to move higher. And we can see a pretty strong move in tech in the tech space, but maybe the average stock, not so much. Well, I mean, it is a fair point that Chris makes. We have, like on Monday, S &P moving 1%. You had more stocks in the S &P making 52-week lows than highs. Some people say, well, OK, we haven't seen that since late 99.

14:42Scott Wapner: Others say, well, okay, that's just representative of the fact that you have a highly concentrated market. People are going where their earnings durability is. Correct. And I think the big headline has been inflation, right? And so I think people are looking for the companies that can sustain earnings even with that picture. And that is why some of your old economy stocks are not going to follow through with that. But I think you also want to look out here. So one of the reasons that inflation short term has been higher is the AI buildout actually has been adding to the inflationary story. But when we're looking longer term, at what point does that start to increase productivity with your overall companies?

15:14Right. I mean, you've seen names like McDonald's and General Mills noting how AI has been improving those companies, which are not AI companies. Right. And I think eventually you start to see that enter the productivity. So I think down the line, this is actually going to increase the overall stock market, the overall economy, not just those names. But in this short term period, yes, it's those names you're going to play to.

15:33Scott Wapner: Are you getting more cautious of how you view the market as a result? Do you think we're going to have some kind of pullback of size? We've been cautious for the last couple of weeks, and it's really more. It's not a cash-in-can good cautious. It's, hey, just protect the portfolio. You're up double digits. The opportunities here are different, more selective. The opportunities, especially for cyclicals, are going to be a lot tougher in a rising rate environment. So look at select tech, look at select group, and move up the capitalization because breadth is not going to be so good. When you say select tech, move up the cap, you're talking about the mega caps.

16:06Scott Wapner: Some of the mega caps, we like the communication space. You have some hyperscalers in there. Like Meta? Like Meta, like Google. They've been doing very well. And those are some of the names that we want to play and the style that we want to play. What happens if we get off to kind of a whimper in this highly anticipated earnings season? You hear from the banks first. Those stocks haven't traded well. You could say, well, it's the flattening yield curve that's a result of that. Profits are peaking. Capital markets, maybe you're not going to be as robust to finish the year as we thought. Does that factor into anything?

16:36I mean, I think you need a strong earnings season, especially when yields are higher. I do think that's going to be important for the markets. But where we've really been looking with clients is actually taking profits from those things that are doing well this year. And actually, bonds have become a really good opportunity where you're finally getting some income there for the first time, especially if you're in a high-tax state like New York or California. Unis are actually looking pretty attractive and just putting you in the position that if things do disappoint, we want to use it as an opportunity because I think if that happens, it will be short term.

17:02I don't see anything flashing signs of a recession or reasons you want to be out of the market completely.

17:07Scott Wapner: Believe it there, Court. Thanks, Chris. Thank you. We'll see both of you soon. Let's bring in now CNBC contributor Fundstrats Tom Lee. See what he thinks about what he just heard. You have. It's nice to see you, of course. What do you make of what you just heard from our two guests here on the set? I mean, I actually think both perspectives make sense. You know, yields have risen to a level that they're competing with stocks. we're trying to still I think the market's still trying to decipher why yields are higher I mean I think there's multiple reasons but I think what's kind of lost in the conversation is two things number one is where will rates be in six months because where will inflation be and second I think rising yields make competition better for stronger companies meaning there are going to be some companies that actually become more attractive as yields rise and I think As you're pointing out, Scott, that's probably why the MAG-7 are rising.

18:02As yields rise, their ability to fund still becomes easy, but for competitors, it's tougher. And on the inflation side, I still think the next six months will be the most important because if inflation starts to decline, this is not because of the Fed hikes that happened last week. It's because of the policy that's already in place. And I think that means the Fed could actually walk back some of that hawkishness.

18:26Scott Wapner: Yeah, I mean, what if that doesn't happen, that we have an elevation in both yields and inflation for longer than you suspect? I mean, the Fed's own forecasts aren't exactly talking about inflation getting back to target next month or the month after that or after that. Yeah, Scott, I think the probabilities are really high it's going to drop. One is because the PCE methodology on September 30th, they're going to unveil the new methodology. It's probably 20 to 40 basis points off the year over year. So the 3-4 could be 3%. And then we know that the tariff effects start to fade and the flash memory effects start to fade.

19:07The stock market portfolio fees start to fade. And the energy, if oil again stays here at 100, it doesn't add to inflation in six months. So for inflation to really accelerate from here, housing has to become higher price, but higher rates is going to contain that. And oil would have to make a move towards 150. And then flash memory would have to actually jump again. But again, it's being adjusted out of the methodology. So I think the odds favor a much lower inflation year over year in six months.

19:37Scott Wapner: I know, but there's just no indication that you get to any kind of equilibrium on the memory question. question, you may look at methodology to get your inflation number differently, but that doesn't mean that the inflation itself has necessarily changed. You've just decided to put some different inputs into the mix and bake the cake differently. Correct. But, you know, for the CPI basket or inflation, you know, the average person's life isn't affected by flash memory prices. It, of course, makes AI more expensive. But the average person, the only real expense they have for memory is the phone they're carrying in their pocket.

20:16So I do think that flash memory can still rise in price. It shouldn't be the reason the Fed would be hiking. But in a more total sense, you're right, Scott. We don't have any visibility that inflation is lower, but I'm going to say the probability is high, that it's lower in six months. And if that's the case, the market can really breathe a sigh of relief.

20:33Scott Wapner: But there's a difference between consumers being impacted and companies being impacted, right? I mean, if I have these memory prices that remain elevated for a longer period of time, Ultimately, margins get compressed unless you have pricing power and only a select number of companies maybe think that they do. I'm thinking of Apple, obviously, with their recent announcements of raising the price of the iPhone. But lower margins could equal lower lower stocks. No. Yeah, that's a good point. And I think that you guys had a conversation on that. I think there's already a battle in the stock market because we're at this hasn't been great.

21:05You know, there's a lot of stocks making new lows. The VIX is sort of low, which surprises everyone, because when we talk to clients, I think many are bearish in their shorting names. And that's why there are a lot of stocks down. But the MAG7, which arguably are getting stronger because of higher rates, probably are the reasons the market can actually hold up.

21:25Scott Wapner: Does that mean you would focus more heavily on the mega caps at this point than try and figure out a broadening trade returning anytime soon if the picture remains largely the same? I mean, there's a couple of interesting alignments taking place, Scott, because we're at a maximum pain moment of people worried about high interest rates and a hawkish Fed. And we know sentiment is negative and the market is oversold. I think that a broad rally, like a face ripper, is still our view into the next few weeks. That would be a broader rally. But I agree with you. Higher rates means companies that are levered to earnings growth that don't have a levered balance sheet are going to outperform.

22:15That's a lot of software and downstream aims like MAG7 as well.

22:18Scott Wapner: All right, Tom, we'll talk to you soon. Appreciate the time as always, Tom Lee. to Christina Parts of Nevolos now for a look at the biggest names moving into this close today. Hi there. Hi. Well, we have lots of analyst calls that are moving names today. Shares of Dropbox sinking lower after Citi downgraded the stock to sell from neutral. The bank just really seeing concerns that the company has yet to prove its growth in artificial intelligence specifically and that its current share price is just overly optimistic relative to a, quote, more sober view of likely outcomes. Stock is down almost 5 percent.

22:48Dollar General up 2 % on an HSBC upgrade to buy. The firm lifted its target to$160. Shares at$123 right now, saying strong second quarter sales and margins really show that the turnaround is working. And last but not least, Ralph Lauren. Shares are up roughly 4 % after UBS stuck with its buy call, pointing to growth specifically in women's apparel. And then AI-driven design that's just sharpening how the brand targets shoppers. Scott.

23:15Scott Wapner: Back to you in a little bit. Christina, thanks. Christina, parts of Nebulos. We're just getting started. Coming up next, Oracle shares under pressure today on concerns over one of its data center projects. The fallout spilling into private credit as well. The latest on both of those fronts straight ahead.

23:44Scott Wapner: This message comes from Wise Business. the only account your business needs to scale globally. You're building a business with global ambitions, but hidden fees are eating into your margins. With Wise Business, you can pay overseas suppliers without exchange rate markups. Have customers worldwide get payment details in 22 currencies so you get more of each hard-earned payment without hidden conversion fees. Be smart. Get Wise Business. Download the app. T's and C's apply. With the Discover Cashback card, it's payback time when you earn cash back on everyday purchases. Activate and earn 5 % cash back at different categories each quarter on up to$1 ,500 in purchases.

24:27That's 5 % cash back at different places each quarter, like grocery stores, on gas, and at restaurants. It pays to Discover. Terms apply. See discover.com slash 5 for details. Your financial life rarely fits between nine and five, and the questions shaping your future don't follow a schedule. That's why Citi created Citi Sky, a secure AI member of your Citi Wealth team, built with the Gemini platform on Google Cloud. Whether expanding your portfolio or planning your future, you'll be able to access tailored wealth guidance on your time. Start building with Gemini at cloud.google.com. Citi Wealth investment products and services are provided by Citigroup, Global Markets, Inc., member FINRA, and SIPC.

25:23Scott Wapner: We're back following a developing story today on Oracle and some new concerns surrounding a data center project. Seema Modi, following that story, joins us now with more. What do we know here. Well, Scott, Oracle's decision to invoke a force majeure signals that it is leveraging these legal tools to manage possible financial strain of this data center that is facing significant political and regulatory pushback. This massive New Mexico data center in which OpenAI will be the tenant as awaiting an air quality permit and approval of a key natural gas pipeline both needed to meet this 2028 timeline.

25:56We're told, Scott, by a source familiar that politics are in play here with many leaders in the blue state up for re-election come midterms. Despite the pushback, Oracle telling CNBC the project is on schedule and that the force majeure is commonplace in developments of this scale and are often used to preserve contractual rights among project partners. But analysts today cautioning any delay to this data central would extend the conversion of its backlog to revenue. So ultimately, Scott, delaying the AI payout.

26:25Scott Wapner: Yeah, interesting, given the news of the moment, I suppose. Seema, thanks so much. That's Seema Modi. That news today putting some pressure on one well-known private credit name. Leslie Picker, of course, is following that angle for us and joins us with more. What do you see? Hey, Scott. Yeah, Blue Owl shares down nearly 5 % over concern about its exposure to the project. Now, several of Blue Owl's funds own a company called Stack Infrastructure, which will ultimately receive rent payments from Oracle once the building is fully constructed. So in the meantime, they pay something called carry costs, which is a slight discount to rent.

27:02I've spoken with several people familiar with the matter who say that the force majeure was submitted over concerns about the building being powered on time. But the force majeure does not mean Oracle can stop paying altogether. What it does is it pushes out that rent start date as well as the rent end date. So if the lease is, say, 18 years and the force majeure happens for a maximum amount of time or three years, then Oracle would continue paying discounted rent for three years while they get the power online and then still pay rent for 18 years. So from Blue Owl's perspective, they get a higher cash flow in totality for 21 years instead of 18.

27:45Now, I'm told that Blue Owl had a call with lenders on the project and informed them that they're fully protected based on the terms of the lease. So Blue Owl doesn't really have a reason to fight this, and they don't have any balance sheet or debt exposure here either. I'm told, Scott.

28:00Scott Wapner: It's been a rough month for a lot of the alts names, private credit names, and the kinds of stocks you're talking about here after a pretty nice comeback, right? Software had started to look better. Yeah, I think part of it has to do with what we're seeing. These names had started to look better, and then a rollover. Yeah, I mean, we're still seeing the redemption pressures from some of these semi-liquid vehicles. Those haven't really abated, although they haven't captured the headlines in the same way that they did maybe six months or a year ago in terms of concerns around private credit. But those issues are still there.

28:31And then on the flip side, there's been more attention and concern paid to private equity, which may be a bit more challenged given what we've seen with regard to the lack of exits. Now that interest rates are moving higher, that creates challenges with financing costs, challenges again with how you maybe value the bid-ask spread of doing a deal. So there are just additional concerns about unlocking that exit freeze that we've had for now about several years.

28:58Scott Wapner: Les, thank you. That's Leslie Picker coming up. Yields in focus. As you know, oil on the move as well. And a fresh earnings season just around the corner. What the big market forces could mean for stocks and where investors should be looking right now. Goldman Sachs is Greg Kallnon. He's with us right here, Post 9, after the break.

29:20This message comes from Wise Business, the only account your business needs to scale globally. You're building a business with global ambitions, but hidden fees are eating into your margins. With Wise Business, you can pay overseas suppliers without exchange rate markups. Have customers worldwide get payment details in 22 currencies, so you get more of each hard-earned payment without hidden conversion fees. Be smart. Get Wise Business. Download the app. T's and C's apply. With the Discover Cashback card, it's payback time when you earn cash back on everyday purchases. Activate and earn 5 % cash back at different categories each quarter on up to$1 ,500 in purchases.

30:03That's 5 % cash back at different places each quarter, like grocery stores, on gas, and at restaurants. It pays to Discover. Terms apply. See discover.com slash 5 for details. Your financial life rarely fits between nine and five, and the questions shaping your future don't follow a schedule. That's why Citi created Citi Sky, a secure AI member of your Citi wealth team built with the Gemini platform on Google Cloud. Whether expanding your portfolio or planning your future, you'll be able to access tailored wealth guidance on your time. Start building with Gemini at cloud.google.com slash AI. Citi wealth investment products and services are provided by Citigroup, Global Markets, Inc., member FINRA, and SIPC.

30:48Scott Wapner: Markets king on moves in oil and bond yields lately. Another earnings season looming large. For more on where the markets might be heading from here, given everything going on, we're joined now by Greg Kalanon, head of public investing for Goldman Sachs Asset Management. Welcome back. It's good to see you. Thank you. Nice to see you, too, Scott. There's a lot going on. How do you get your arms around it? What pops out most to you, do you think? Well, I think what most investors are focused on right now are all the macro headlines. And we'd say that's all well and good, and you should be focused on those risks, but don't fight the fundamentals.

31:17Earnings have been really good this year. We're expecting another strong quarterly earnings season coming up in the next month. And we would also say that the consumer has been very resilient, and the AI infrastructure theme is well at play.

31:31Scott Wapner: So the backup in rates, how concerned are you about it if it continues? We're concerned if it gaps up. If it continues a slow, steady climb. Well, it hasn't been a slow, steady climb, has it? I mean, it kind of gapped up yesterday for one. I would say it's been moderately steady going up. I think you've also seen the equity market react accordingly. I think there's this broader theme of a competition for capital with AI issuance, what's going on more generally in terms of concerns around inflation. All of these are issues that we should certainly be focused on. But we continue as an investment organization to be focused on the fundamentals.

32:06Scott Wapner: So what about the idea of competition for stocks? because that's what you're starting to hear the more that yields creep up. Yeah, look, I think there's a play for risk estimates more generally. We like fixed income now. We think there's plenty of opportunities with the 10-year over 5%. Average yields across the credit spectrum more generally look pretty good, right? So there's opportunities to invest in fixed income. Being dynamic, I think, is also very important. Not taking duration bets, also very important. But there's a lot of opportunities within fixed income. We like it. So, again, I think there is increasing competition for capital.

32:40We still like stocks, too, right? So it's not necessarily that we're selling stocks, going to bonds. We like both risk assets and we like the hedge funds.

32:47Scott Wapner: But the operative word that you used is now. You said we like fixed income now, which tells me that you didn't before. And now it's gotten to the point where it's becoming too attractive to ignore. Is that fair? You like it more now than you did before because it's become more attractive or not? Yeah. I think that's certainly part of the argument. OK. I mean, that also implies that we didn't like it before. No, I wouldn't say that that's the case. That's why I rephrase it, because I didn't mean to imply that you didn't like it before. It's become more attractive. Yeah. It's certainly become more attractive.

33:18Carrie has become a more attractive play in the market. We like that. We think that that makes sense as an investment organization.

33:24Scott Wapner: So earnings season saves the day again. It gets our collective eyes back on the ball as you talked at the beginning of this. This is a theme that we saw also in the second quarter. as you run out of earnings releases towards the end of the second quarter. Market gets very focused on the macro. We understand that it's kind of happening again. We think as earnings releases start to come out, we think earnings will be up north of 20 % again for the quarter. We think that will calm some of this. I think it's very important, though, to pay close attention to what's coming out in these earnings releases.

33:55The banks will be very informative with respect to how the consumer is doing. So that will give you some read into what's happening in the economy more generally as we get to tech season and the tech part of the cycle. You'll also hear more about the AI investment theme. And so I think that earnings will be good. We are constructive on that. And we think that that good news will come as we get further into the fourth quarter.

34:16Scott Wapner: What about the return to concentration? The makeup of the market is back to what it was before. Top heavy. Matter or not? Throughout the majority of this year, it had been a pretty broad market. The equal weight had outperformed. It had. The market cap, September, that's reversed a bit, right? So we certainly acknowledge that. We think as we get into earnings season again, that'll play out some more. You'll see other parts of the market do well. There's a lot of dispersion, right? So it's not just buy the index and everything is going to be fine. You have to be really thoughtful and discerning about the companies that you're owning.

34:48You have to be discerning about the sectors. Energy's up 40%. Consumer discretionary is down 5%, right? You have to be thoughtful about all these different dynamics at play in the market right now.

34:57Scott Wapner: Well, I mean, to your point, you've had more stocks at certain periods recently making new lows than highs within the S &P. That's right. To your point, if you can't just buy the index, you've got to be super selective. That's right. It's a stock picker's environment. So this is great for active managers. We like it a lot as an active manager. But you have to be very thoughtful about where you're deploying your capital in this part of the world. Not only are we talking about this within the U.S. and in large cap, but we like small cap stocks right now. We like international equities. Oh, even with the move in rates, you like small caps.

35:26Even with the move in rates, we still like small caps because of this broader corporate dynamic, right? There's more potential for M &A in this part of the market. The AI theme is certainly playing out within small caps more generally. So we do like small caps. We do like non-U.S. stocks. This isn't just a U.S. mega cap theme in AI. It's playing out in Japanese equities. It's playing out in emerging equities. I would also say, going back to fixed income, we like emerging markets in fixed income. The fiscal situation there is quite robust. Emerging market debt. Local. But emerging market debt, yes.

35:55And so these are all parts of the market that we think are maybe underappreciated in this broader AI piece.

36:01Scott Wapner: So you like emerging market equities. And emerging market debt. Sure, but the equity aspect of that, even as their yields are going up more substantially than ours. That's right. You still like their equities. Yes, because a lot of this AI infrastructure build-out is centered in many of these countries, like Korea, like Taiwan. Good stuff. Great to see you again. Good to see you too, Scott. Thank you. Goldman Sachs. G. Sam joining us once again here at Post9. Up next, we're tracking today's top movers, including one name ripping higher on news of a potential takeover. The details when we come back.

36:38Scott Wapner: It's about 15 to the bell. Back to Christina now for the stock she's watching. What do you see? Well, there is a report that specifically affected GoDaddy shares. They're catching a bid today after the Financial Times reported that Gen Digital, the cybersecurity company behind Norton made a takeover bid for the domain registry. Talks still early, no guarantee of a deal. Still, it's definitely a welcome lift for a stock that's been down, what, over 15 % this year. GoDaddy, you can see up almost 5%, while Gen Digital is moving the other way down roughly 7%. Arm Holdings, a chip company, sinking lower today after the company disclosed in a regulatory filing that their chief financial officer, Jason Child, sold roughly a little bit over 10 ,000 shares valued at$3.1 million, so an insider selling, and so that's why shares are down almost 7.5%, but they did rally earlier in the week on the whole CPU momentum with MetaMuse.

37:27Last but not least, solar stocks sliding lower, likely from rising mortgage and interest rates, weighing on just project financing. You often see that happen. First Solar, Solar Edge Tech, Enphase Energy, all in the red with First Solar being one of the biggest laggards in the S &P 500 and sticking to a new 52-week low, shares down 10%.

37:47Scott Wapner: Thank you, Christina Portsanoblos, another big mover. We're watching MGM. We'll tell you why those shares are tumbling by almost 11 % today in the market zone, which is coming up next.

38:04Scott Wapner: Down the closing bell market zone, Mike Santoli and Steven DiNicolo of Federated Hermes are here to break down these crucial moments of the trading day. Plus, Oliver Rennick is standing by live from the CBO Global Markets in Chicago. Julia Borson looking at another big move for Meta. Contessa Brewer has more. All of our shares of MGM are sinking today. Mike Santolias was a day. I mean, I guess it still is about yields and oil. But that move in the market around halftime has largely held. Yeah. Which I think tells you, obviously, the markets have been leaning far enough in one direction across all these asset classes that there's going to be a sensitivity to any potential, you know, outbreak of peace, so to speak, or anything that seems like it's going to move things toward a resolution.

38:50Nobody's extrapolating, I don't think, too much of a specific scenario out of this, except to recognize that, yeah, that would be an upside surprise if, in fact, you got a headline-driven drop in crude. Maybe that helps treasuries. But the market is still registering what's going on on the macro front below the surface. It's been doing that every day. It continues to do it today. And it's just enough buying the likes of Meta and other names to really keep the overall headline indexes pretty close to the highs.

39:19Scott Wapner: Yeah. I mean, you're only 1.3 percent from highs. It's really important that you say that to keep it all into perspective. You've had a big, big jump in bond yields. And yet here we are. Yeah, no doubt about it. I mean, it just shows you the index construction right now allows for things like this. When you do have really weak breath and you have the cyclical parts of the market that are just not liking what's been going on, it just hasn't mattered if you're an index investor. And maybe to some people that validates the wisdom of how indexes keep you in the game. All right. We'll see you in a little bit, about seven minutes or so or less in overtime.

39:56Scott Wapner: That's Mike Zantoli. Let's Let's go to Chicago now, to the SIBO, Global Markets, Oliver Rennick playing a little options action. You're focused on treasuries, too? Yes, Scott. Options traders are responding in two big ways. The first is that traders are buying up puts in small caps, namely the 269 strike put in the IWM ETF expiring October 16th that needs a 4 % drop in small caps, which have proven much more sensitive to higher yields, down 8 % the past month, while S &Ps are still making highs. The other thing options traders are doing is creating a bond market of their own using a popular strategy called box spreads to borrow and lend money using a fixed options-based payout that currently yields 4.6%, almost 50 bips above the treasury rate and going off at a clip of about$2 billion worth of trades per day down here for a total open interest that's gotten near$150 billion.

40:58Scott Wapner: Oliver, thank you. That's Oliver Rennick from Decebo in Chicago. Julia Borson, we have to come to you again. I mean, what's with this move in Meta? Well, Meta shares now up about 4.5 % today on the heels of Meta Connect, which showcased how Meta's Muse AI Assistant will be accessible through a range of new hardware, including more AI-powered glasses. By the holidays, there will be over 100 options, as well as a new keychain-sized device called Muse Charm for connection to Muse AI without a phone or those AI glasses. Now, Meta shares are now up about 26 % since the company launched Muse AI just about two weeks ago.

41:35Zuckerberg saying Meta will monetize Muse by taking a cut of purchases made by AI agents from a range of retailers now including Walmart, Sephora, and Wayfair. Analysts are bullish. JPMorgan reiterating its overweight and upgrading the price target on the stock to$920, saying they think Muse has the potential to be the most widely used consumer AI application since ChatGPT, and that its connectors or partner platforms, now like Walmart, are critical to remove friction and establish connectivity. Scott?

42:09Scott Wapner: Okay, Julia, thank you. We'll turn to Contessa Brewer. You got to know when to hold them. You got to know when to fold them. Yeah, well, you know, you've got MGM International plummeting today because Barry Dillard's People, Inc. dropped its bid to acquire the global casino company. There you're seeing the shares are down 11 percent. Dillard said that deal just wasn't coming together the way he had hoped. Our colleague David Faber said the financing was too complex. People, Inc. still holds about 27 percent, though, of MGM Resort's outstanding shares. Analysts are baffled here, though. McQuarrie's Chad Bainon says the price dropping below 34 bucks a share makes no sense.

42:44If you strip out the Macau business and bet MGM, the current value of MGM trades at multiples less than regional casino players Penn and Boyd, less than Caesars, and far less than Las Vegas Sands and Wynn. Plus, the analyst points out investors are giving MGM no credit for building Japan's first integrated casino resort. For his part, Barry Diller said in his statement he's confident in both MGM's management and the company's prospects. Moving forward, CEO Bill Hornbuckle, the CEO of MGM Resorts, will be on stage with me in Las Vegas. next week for the industry's biggest conference, Scott. So we'll probably hear more then.

43:18Scott Wapner: Oh, good. Good stuff. Contestant thanks. Contestant brilliant. Stephen, what do you think about this market? Hey, how are you? Thanks for having me here. Look, it's currently a game of chicken. It's a Walsh versus the White House market. And we'll see who wins. I'm going to take the other side of the trade and the typical taco trade. But September is always a tough month, right? And at the end of the day, you have a market that has gone up less than its earnings growth, right? We're expecting mid-teams earnings growth, and the S &P is up about 12 % year to date. You yourself said that the market is only one or two percent off its all-time highs, but we have one heck of a wall of worry.

44:00And so as we get through September and the midterm elections and all this hysteria with AI, I mean, look, let's look back. AI, you had the deep-seek moment last year. You had AI was going to kill all SaaS companies. It was going to kill all hyperscaler balance sheets. It was going to kill every job. It was going to kill insurance and brokerage companies. And eventually it's just going to kill everyone. I think the one thing that it might kill is inflation. And then you look into next year and we get past this war. And look, it's very clear. You've had huge demand destruction in oil because of what's going on in Iran.

44:33And it's actually the second worst demand destruction since COVID over the last 45 years. We get through that. It's not demand. It's actually supply getting choked off. So we get through all these things. And I think you've been clear sailing into your end.

44:47Scott Wapner: So we keep climbing that wall of worry of what you're talking about. Absolutely. Look, at the end of the day, companies go up because they're earning more money and they're generating cash. You look, and I'm going to take the other side of the trade who said there are all these options on small caps. Small caps, it is the wrong narrative to say that they are hurt more by higher interest rates. they were not able to turn out all their debt in the COVID lows. They have mostly floating rate debt. So as interest rates have gone up, small cap companies have already had to live with that. The incremental headwind is actually on large caps who have 2 % COVID loans that are going to be coming due at much higher rates.

45:28So I think small caps are extremely attractive here, and they've been absolutely decimated since the summer.

45:34Scott Wapner: You like small caps over large caps? from the last current print. Absolutely. Look, small caps in general are going to give me 20 % earnings growth right now. You're getting much better absolute growth and companies that don't need to worry about low interest rate loans that are coming due right now. Steven, we'll talk to you soon. I appreciate it. Thanks, Scott. All right. Thank you very much. We'll take one last check of the market here. we can show you certainly, you know, what oil's done, what yields have done today. Again, that development midday, at least a Reuters headline that the U.S.

46:13Scott Wapner: and Iran were trying to find some sort of workaround to this closure in the Strait of Hormuz. It did give the market an undeniable boost, but you still have elevated yields. Look at the 10-year. It's almost at 520 now. So that's been a steady creep throughout the day. Something absolutely worth keeping an eye on. We'll leave it there and send it into overtime.

46:47Which NHL teams are scoring big off the ice? CNBC Sports' Michael Ozanian has the numbers. If a dive margin in the NHL right there with the NBA. Official NHL team valuations revealed Friday in Squawk Box on CNBC.