Closing Bell Overtime 10/6/26

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0:39Value, safety, timing. You decide what matters most. Stop overthinking what to buy and sell. Go to VectorVest.com slash closing bell. Get 30 days for just 99 cents. VectorVest provides stock analysis tools, not personalized investment advice. Terms at VectorVest.com. The bell's ringing into the trading day at the NYSE. Jabel ringing the closing bell and at the Nasdaq, Fox News Media doing the honors. Welcome to Closing Bell Overtime. We're live from Studio B at the Nasdaq Market site. I'm Melissa Lee, along with Mike Santoli. Stocks setting new records once again today. The S &P 500 up more than half a percent, closing above 7 ,800 for the first time.

1:15Nasdaq Composite also a record on an intraday and closing basis. Stocks getting an assist from bonds today. Yields moving lower, the 10-year falling back below 5.3 percent. Also, oil holding below$90 a barrel on WTI. The S &P 500 has been range bound between around$7 ,500 and$7 ,800 for two months. So is this breakout for real? We'll discuss that throughout the hour. And we're also watching earnings, of course. Constellation Brands have to report momentarily. We will get those numbers to you once they cross. But first, let's get the first take on today's record-setting close. Record-setting, but it felt a little defensive.

1:53Everything is uneven. You know, even the rally days, they're not particularly emphatic or exciting. I do think it's certainly a net positive. You have those stabilizers in the market in the AI trade, Broadcom, and that did do their job. Some bounce in cyclicals and utilities, things that have been really beaten down. I think you could definitely make the case at this sideways period, you've relieved some valuation pressure. Sentiment has definitely moderated. moderated. So there is, you know, the makings for another rebasing trade. But banks down again, small caps down again. And I don't think that investors are going to believe that the financial condition tightening of higher yields and rising credit spreads are behind us.

2:32It's been weeks since we had two days in a row when the 10-year Treasury yield was lower, right? Two days in a row. So, you know, we've had one day in a row now. So we have to see if we get beyond that. Yep. Well, that's it. More on the AI trade lifting stocks to record highs. Seema Modi's joining us here at the NASDAQ with that. Seema. Melissa, Tech is really having a moment. The Mag7 playing a leading role today, propelling that NASDAQ to a new high. Notable gains for Amazon and Google, even Apple coming back towards the end of the day. And then there's NVIDIA extending its five-day rally as it continues to inch towards that$6 trillion market level not yet reached by any public company.

3:05Speaking of milestones, take a look at AMD. It's now climbed about 16 percent since joining the$1 trillion club on September 21st. CEO Lisa Su said the company plans to ramp up its AI chip supply in 2027. Now, those comments providing a lift to shares today. A lot of discussion around nuclear energy after Constellation Energy signed a landmark 20-year power deal with Google, which would enable$4 billion in nuclear reactor investments. Shares of a Constellation ending shall be higher on the day, as did others. And finally, shares of Marvell jumping after revealed a long-term revenue outlook that wowed investors and surpassed analyst estimates.

3:40The stock has now more than tripled this year, guys. It was a pretty stunning forecast, Ray, Seema. I mean, it was 50 % higher compared to what they had forecast before. $70 to$90 billion for 2031, to your point, much higher than the$46 billion that analysts were estimating. And what the company really said on the investor day is they're trying to solve for one of the big constraints of the AI buildout, which is speed. They had the optical technology to help GPUs communicate faster, which the market sees as a bullish sign and what the hyperscalers need as they build their custom chips. All right, Seema, thank you.

4:13The S &P 500 and Nasdaq pushing to fresh records, as we said, as AI stocks reclaim market leadership, with semis rising and NVIDIA nearing a$6 trillion valuation. So can the AI trade keep driving the next leg higher, or is it time for the rest of the market to play catch up? With us now is Gargi Chaudhry, BlackRock Global Chief Investment Strategist. Good to see you. Hi, good to be here. Good afternoon. We keep talking about how it's a sort of, you know, either or market, imbalanced market, however you want to call it. It's netting out to the positive. But do you take that as an opportunity to say, oh, let's let's kind of rebalance risk away from what's been working or stick with it?

4:50Absolutely. So we just published our advisor outlook that came out yesterday where we try to on a monthly go around, just talk to clients about where is the biggest opportunity right now. And we are still absolutely talking about AI, obviously getting into earnings season. We will see if some of the earnings growth once again on the tech and communication services name beats to the upside. But more so what clients are asking us in return is how they should diversify within that AI theme. So they very much like the AI theme. They own it. It's worked. They still want to benefit from it, but a little bit around it as well.

5:25And the conversation we're having is how can you add themes like power and infrastructure and liquid alternatives on a whole portfolio level to diversify outside of your AI theme? More power and infrastructure? I mean, it seems like those have been AI trades that have worked already. So at this point, you want to add to that area? So, OK, so taking a step back is certainly the AI trade, the AI names, which is much more around tech. And those are some of the names that are driving this all time high today. Certainly, if you look over the last month at the median stock, it's down. But obviously, you're seeing the S &P make new highs that's driven by, call it, four or five of the large AI tech names.

6:05Around AI is where the power infrastructure themes come in. And frankly, that's where we're seeing earnings growth, too. We saw it in Q2, and we're going to hopefully see that continue in Q3. And then it's the beyond AI. Where can you find diversification in your portfolio beyond the AI theme? And that's where we think, obviously, income plays a role in portfolio. Some parts of emerging markets play a role in your portfolio. And then what we call long-short strategies, liquid alternatives, play a role in your portfolio. How does it make sense to access income at this point? Obviously, we've seen benchmark bond yields go up, but there are obviously other ways to do it as well.

6:42Absolutely. And I think this is the most important conversation right now. The level of yields that we are able to get in the markets. You know, we haven't seen these in over two decades. And mostly when you look at what drives the return in fixed income, the starting point really matters. So the fact that you can build a multi-sector fixed income portfolio today without taking too much duration risk. So you can stay sort of what we're telling clients to do is staying in that short to intermediate part of the curve, that two to five year sector maybe. But you can then enhance the sort of yield of your portfolio right now than ever before in the last 20 years.

7:20Six and a half, seven percent go into assets like securitized, go into emerging markets, a little bit of investment grade credit, some treasury, some real rates, all of that. And you're able to do that without taking a huge amount of volatility. Starting rates matter. And then the second point I would say is cushion matters. So, for example, if yields still move higher, which perhaps they can, if they do, you have enough cushion right now that your portfolio can withstand somewhat higher rates, especially if you keep your duration in that front end and in the belly of the curve. Where are you reducing exposure to diversify in those areas?

7:57Yes. So one of the themes that we've talked about in our advisor outlook for some time now is where we should source our allocations from. And one theme that has come up over and over again is certainly around small caps. We've talked to clients, obviously, we saw for the first few months of the massive rally, and we kept trying to tell our clients that you should be focused on the lounge cap part of the market, on the AI part of the market, and why? Exactly what we're seeing now, where higher rates are beginning to have quite a debilitating impact on the small cap part of your portfolio. So certainly that's one area.

8:31The other, I would say, in the fixed income market, steer away from the very long end of your fixed income portfolio. You really don't need that. We don't think there's enough term premium quite yet. So if you have some of the long end duration in your portfolio, maybe move that into the very front end, into the belly of the curve, especially since we don't see a chance of recession quite yet. If that changed, obviously, you do need duration in your portfolio once again. We're approaching the fourth anniversary of the start of this bull market. Obviously, it goes through this maturing phase. Maybe it narrows out.

9:05Maybe earnings growth becomes a little bit less aggressive. What does it mean for your forward return expectations and how should advisors think about getting ready for that environment? Absolutely. And this is why it's important to have this conversation now because there are even some volatility events that are coming up pretty soon with the midterm elections and that having been a volatility driver in the past. So recognizing the need to have diversification that goes beyond directionality. And what I mean by that is not everything in your portfolio can be driven by the same AI theme or the same large cap theme or the same small cap theme.

9:44That's something actually that we find that advisors tend to have a lot of if we look at our advisor portfolios. So really finding that diversification, alternative sources of return without being tied to which way the market's going up or down. And this is where we're telling investors focus on ETFs like IAlt, which is the iShare Systematic Alternative ETF, which gives you exactly that. No, you know, no directionality with the broader public fixed income or equity markets. Gargi, good to see you. Thank you. Good to be here. Thank you. Well, President Trump speaking now in Baltimore at an event marking a government contract with private defense tech firm Andrel.

10:24Eamon Javers joining us from Washington with more. Eamon. Yeah, Melissa, take a live look. The president is making the formal announcement right now in Baltimore. He's announcing, as you can see there, that the Navy has awarded a$2.9 billion contract to Andrel Industries to develop a facility they're calling Arsenal 2, which will help accelerate a tax submarine construction. The White House said the contract will be matched by a$3.7 billion private capital investment by Endrel, and the new facility will build complex components and large-scale assemblies of the Virginia-class submarine and deliver them to Electric Boat and Newport News Shipbuilding for their final assembly.

11:03Altogether, the White House said this will add up to a$6.6 billion investment in shipbuilding capacity. The production will take place at TradePoint Atlantic in Baltimore County, Maryland. where the White House says the project is going to create 3 ,100 direct jobs and support more than 11 ,000 jobs on top of that indirectly. Guys, back over to you. Eamon, is this a project that multiple companies contended for? And did, therefore, some of the established contractors lose out on this? Or is it kind of fully incremental and the proposal of Andrew? Yeah, I actually don't know the bidding history on this one, Mike.

11:43I mean, you know, there are going to be some questions about the relationship between Palmer Luckey and the White House. Obviously, the Andrel co-founder, who is very close with this administration and was just named to a recent Pentagon project where they're going to be exploring the future of warfare. Andrel, well known for its autonomous vehicles and autonomous high tech weaponry. The question is, if somebody's tasked with writing a report on the future of warfare, will he say the future of warfare should include a lot of contracts from my company? So that's one thing I think that the skeptics will look at this on.

12:19But what the administration says is, look, fundamentally, we need this new high technology. We need this new manufacturing component. We know the president has been extraordinarily frustrated over the past year during the Iran war with the slow pace of technology and manufacturing capacity. in the defense industry more broadly. Eamon, thank you. You bet. Well, speaking of defense, it's been a rough six months or so for the major players in that space. Shares of Lockheed Martin, Northrop, and AeroVironment all down more than 20 percent in the past six months. Lockheed the only one holding on to gains for the year, but up just five percent.

12:55The Aerospace and Defense ETF, ticker ITA, hit a record high in August. Since then, it's seen seven straight losing weeks, its longest streak on record. Obviously, there's been a lot of sort of an overhang of the sense that the government is looking for alternatives away from these traditional contractors. You know, can they buy back stock if they're still working on various contracts, things like that? And the sentiment has just kind of really gotten a little bit gloomy in that area. And the attitude from the administration has been do for less. Yeah. So, I mean, there's this whole other set of pressures in terms of pricing and whether or not the contracts will be to the full price that they were negotiated for.

13:34Yeah, exactly. Constellation Brands earnings, those are out right now. Brandon Goldman's got the numbers. Brandon. Hey, Melissa. Yeah, the stock's been flip-flopping a little bit, down almost 2 % right now. But it is a beat on the top and bottom line, EPS and revenues coming in ahead of expectations. We did go into the print saying we were going to focus more on that beer revenue. That was also a beat,$2.47 billion ahead of the$2.39, with volumes also increasing 5.5 % for beer. Perhaps the guidance might be what's weighing on the stock right now. Now, fiscal year EPS guidance at the mid-range coming in below expectations.

14:05One thing I will point out, too, there's a bit of supplementary news in here about an acquisition. They're looking to acquire or will be acquiring an RTD company called Spiked Aid. It's a$75 million all-cash deal for 100 % ownership. It's an interesting bit of news there and the fact that they've been pushing away from Spirits for so long that acquiring an RTD and expanding into the category, clearly a part of the new CEO Nick Fink strategy. So we'll have to hear how that plays out on the earnings call tomorrow morning, Melissa. So let's just be clear, they beat expectations on EPS as well as revenue for the quarter, but their guidance, even at the midpoint, is below expectations.

14:38That's right. That's right. Yeah, that's a real problem. All right, Brandon, thank you. Thanks. Brandon Gomez. AI optimism helping to push stocks to record highs today coming up. We've got some other AI stories, including an NVIDIA-backed company trying to rival the biggest AI companies, a Chinese AI company set to go public. And what would happen if an AI model tried to buy stocks only by reading and listening to Mike? That is next on Closing Bell Overtime.

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16:13Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished. No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required. All right, minutes ago, America's at Standard Charter ringing the closing bell in Chicago at SIBO, ending the regular trading day for options. All right, shares of NVIDIA hitting all-time highs today. It's fifth straight day of gains.

16:47It's already the biggest company in the world, of course, and through its investments in other companies, it's trying to get even bigger. And now one NVIDIA-backed company is taking aim at the biggest names in AI. Kate Rooney is joining us now with more. Hi, Kate. Hey, Mike. So this is a startup backed by NVIDIA called Reflection. And right now it's being seen as the American answer to the more popular low-cost Chinese options that have surged in popularity. So unlike options from OpenAI or Anthropic in the U.S., other companies, so if you think of a bank or a startup, for example, can take these AI models, customize them with their own data, and then that route tends to be cheaper while keeping sensitive information in-house.

17:26Alex Karp of Palantir has been one of the loudest voices arguing for that route. And there is also a geopolitical factor here, guys. So Chinese companies have dominated the open source space in AI, while banks and government agencies right now do have limited Western alternatives if they do want to go that route and run AI themselves. There is a similar trend coming out of Europe as well. AI startup Mistral this morning out with an even larger open weight model. It does claim that it beats Reflections version. It's called LeChunc, and these are all internal benchmarks. Some of these haven't officially rolled out yet either.

17:59These models are still expected to lag the very best versions and closed systems in the U.S. from Anthropic and OpenAI. And the bet here is that a company can take a good enough model as another route and option in this AI race. It could also, guys, pressure Anthropic and OpenAI's margins as they look to go public at this point. Isn't this going to be a competitor to a lot of NVIDIA's customers? I mean, how is this being perceived? It's interesting. NVIDIA now has actually really leaned into open source in general. I mean, they have their own Nemotron version that's starting to roll out. They obviously bought Hugging Face, which is a huge open source platform.

18:37And the play from NVIDIA and Jensen Wong has been they sort of benefit when any of these open source models use their chips. So if this is the case, open source becomes the next big thing and more companies are using that. They care more about these companies, whether it's Reflection or OpenAI, using their infrastructure, using their GPUs to run on the back end versus having it be just one concentrated customer. should also mention that OpenAI and Anthropic are sort of also moving into NVIDIA's turf. So from what I've heard and we've reported last week, this is sort of the lead up to the hugging face deal is that Jensen Wong and NVIDIA have been a little bit miffed that OpenAI and Anthropic are getting into their turf and they're diversifying their customer base as a result that this may be a reaction to some of the moves into their space, which is GPUs and their own custom semiconductors.

19:27I was going to say, I mean, Amazon, of course, Alphabet, everybody is trying to reduce their reliance on NVIDIA. And NVIDIA seems almost exclusively intent on just enlarging the market, however it might be done. I was thinking, you know, General Electric, when electricity first came out, they're making the generators for the utilities buy, but then they made light bulbs and appliances too eventually, right? The usage of electricity. So, I mean, I guess we'll see how it goes from here. Now, is it something where these open models can be, I guess, marketable, even if they're not anywhere close to the frontier edge?

20:05Yeah, Mike, the analogy has been, you know, you don't necessarily need a PhD to be your office manager or your assistant. So there are things, there are tasks that are good enough that don't need to be the frontier best, best version out there. And there are companies, including Reflection, that are betting that the decent model that's cheaper is actually a lot more useful than the very best version of this. And we talk to the AI labs all the time who have argued the very best version is still going to be useful because there's a guarantee almost that you get the task done. Versus if you're building your own in-house, you're spending on these cheaper models, you might need to run more examples, do a bit more testing, and almost spend more to try to get the same outcome.

20:46Anthropic would say, OK, you know that if you're going to spend on our models, you're getting the best output. But it is really adding margin pressure. And we are awaiting the Anthropic S1. Margins are going to be one of the biggest topics as we talk about all of this. And this is really what we look at. Although I said this earlier, we haven't seen it cut into revenue at all. They have really been immune from some of these pressures. And it just hasn't seemed to dent revenue at a time when we know people are spending on open source. So it seems like right now at least the pie is growing and they haven't seen much of an impact.

21:16Yep. Kate, thank you. Kate Rooney. Thanks, Mel. Sticking with AI, Moonshot AI is planning to go public next year, listing in Hong Kong, according to reports. It's a company which makes the Kimmy chatbot recently disclose a funding round which gave it a valuation of$50 billion. It's a big increase over the previous funding round over the summer. And, of course, when it raises money, when it goes public, it's a whole arsenal of funds that it can be used to enhance the models that are already supposedly as good as some of the frontier models here in the United States. So it really gives them sort of that edge.

21:46And at$50 billion, I mean, it would seem just in terms of absolute dollar terms, it's a relatively smaller scale, inexpensive way to bet on. Although I think it said that the annual run rate of revenue is in the$2 billion range. So 25 times, you know, current run rate of sales. If it keeps going up fast, I guess that's OK. But it's not as if it's a modest multiple. Right. The other, though, there is one overhang, though, and it's sort of parallel to what's going on in the United States in terms of regulatory oversight. There is an investigation into data security in both DeepSeq as well as Moonshot.

22:16So we'll see how that plays out in the IPO. But it's sort of similar to what we're seeing here in terms of what those footnotes and the S1s will say about what is going on here and the concerns about security and breaches. Yeah, it's definitely not the cleanest story, but exciting nonetheless. All right. More and more people are using AI for more and more tasks, and increasingly that includes stock picking. According to an eToro survey, more than half of retail investors are open to using AI to pick their investments, or they're already doing it. And Robinhood saw strong early demand for its agentic trading accounts.

22:47Now, in my market memo newsletter this week, I wrote about an experiment done by a friend of mine. He asked AI to examine what I said on TV and written online and come up with a long, short portfolio. So here's what it came up with. Only six stocks. That was by design. It was long, sort of quality, boring stuff. Microsoft, Chevron and Coca-Cola. Maybe Microsoft's not so boring. Short, Supermicro, Robinhood and Micron technology. So I have never made a recommendation on any stock either way is really contextual. It's kind of about how, you know, you sort of describe what's going on in the markets.

23:24I sort of see the root of this, you know, being a little bit skeptical of either overhyped stuff or stocks that have maybe overshot for a while. And then, you know, looking at quality and stability. And the thing is, I, you know, I rarely think that big energy is something that's all that interesting. On the other hand, it's a good counterweight if you own tech. So maybe some of it's picking up some of those. And I should say this was like a conversation starter kind of a thing for a group, you know, that so it wasn't as if it was really trying to say what it would be. But, you know, I'm kind of glad I'm, you know, liberated from owning or picking individuals.

24:03I mean, I think it would be more telling, though, to hear about what you don't talk about and what we choose not to talk about on the air, because that's true. A better indication of what you might. There is a ton. There is a ton of that. Maybe even one one big Dow stock people like to talk about that I'm too focused on. Exactly. Exactly. Don't don't don't know. No hate mail on that one. All right. Well, the S &P 500 finally breaking out two new highs and doing it on the back of the same old tech giants like Nvidia. So is that a good sign or old fears of over reliance on tech coming back as well?

24:35Closing bell over time. We'll be right back. Want more commentary from the best strategists, commentators, and traders on the street? Check out Mike Santoli's weekly Market Memo newsletter featuring exclusive analysis and breakdown of the biggest market themes, including his personal take on the markets and more. Subscribe at CNBC.com slash Market Memo.

25:02With 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. That'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. Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done.

25:42You give it a project, close your laptop, and when you come back, the job's finished. No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required. computers are getting smarter Silicon Valley is getting weirder and AI is taking over at least that's what everyone keeps telling us welcome to Machine Gods a new NPR podcast that will be your field guide to the AI powered future we're veteran tech journalists with front row seats to the industry and twice a week we'll make sure you get smarter about AI so you know what's real, what's hype and what might come next listen to Machine Gods from NPR on the NPR app or wherever you get your podcasts

26:28Check out shares of Moderna, the stock popping early in the session to a high of$212 a share. That's its highest level since the end of 2022. But it faded late in the day to close 6 % lower, around$190 a share. The stock has soared over the past two months up 250 % thanks to that huge jump in August and positive results for its cancer vaccine. That breakout coming as a broader market has been stuck in a range until today. The S &P 500 jump above 7 ,800 has come after two months of this kind of sideways churning period, which matches up almost perfectly to the one that happened before. Sometimes, you know, I squint at these patterns and I say, am I just seeing like animals in the clouds or something real going on here?

27:08But this high above 7 ,600 for the first time was June 2nd. It went sideways. You didn't really make any headway. And then we popped here. That was August 4th, two months and two days. So August 4th, we get above 7 ,700 for the first time. We mostly just go sideways until today. We did get above 7 ,800 two months and two days after it. I have no idea if that matters, if that's perfectly significant or not. But it is interesting that this market tends to gather itself and then the index is able to then make headway. However, the way we've done it since that August 4th previous high, take a look at here.

27:42So there's the S &P 500. We're up a few percent. This is the Nasdaq 100. This is the equal weighted S &P 500. That's the narrowing out that we've talked about. If this starts to stabilize and curl higher, it's fine if it underperforms, if the median stock doesn't keep pace. But it is interesting that we have, again, kind of renewed our reliance on the biggest stock. Yeah. Going back to that last chart, I mean, if we can, it does look like higher highs. I mean, like if you're a technician, I mean, this this looks like a pretty good chart. Oh, exactly. I didn't want to suggest it's bearish. It's just very interesting how we get excited about the breakout and then it really just needs to take a breather for a while.

28:17Yeah, this really crystallizes that. Time for a CNBC News update with Julia Borson. Julia. Melissa, Russian officials say the 23-member crew of a Liberian-flagged crude oil tanker that caught fire in the Black Sea has been rescued. Authorities say no one was killed after the Afro-Max Rio was attacked off Russia's coast by an unmanned vessel. Russian officials say firefighting crews will tackle the blaze once it becomes less intense. The Russian oligarch who footed the bill for two nights of celebrations for Donald Trump Jr.'s wedding says the president's son has paid him back for the costs. Umar Kremlev, an ally of Russian President Putin, said he felt that the repayment was unnecessary.

28:58President Trump did not attend the parties, but previously defended the gift, saying it was not a big deal. And lawyers for former Olympic canoeist David Hearn are calling for federal watchdogs to investigate Justice and Interior Department officials after he was wrongly accused of vandalizing the Lincoln Memorial reflecting pool. His legal team claims they indicted him despite knowing a botched installation caused the damage. Hearn was clear to the charges last week. Back over to you. Julia, thank you. Well, a lot of talk is focused on the U.S. competing with China on AI, but biotech is also a big battlefield.

29:33Up next, we'll talk to an analyst just back from China about that country's pharma aspirations.

29:41Welcome back to Closing Bell Overtime, live from the NASDAQ MarketSite. A record-setting day for stocks, all-time highs for the S &P 500 and the NASDAQ. The Dow rising 250 points. But look at the Russell 2000, losing half a percent, and it's nearly 8 % off its all-time high. Once again, leading to concerns about the breadth of this rally. Utilities, the top sector today, but that was driven by AI as well. Google and Constellation Energy making a deal to power data centers, lifting that stock as well as Vistra and NRG. And the other Constellation, Constellation Brands, reporting results earlier this hour, earning$3.74 a share.

30:17It was 18 cents better than expected. Revenue also a beat. The full year guidance of$1 ,120 to$1 ,190 per share compares to the estimate of$11.71. The company also announcing it is buying SpikedAid for$350 million. The U.S. and China may be racing against each other when it comes to AI, but what about biotech? Last month, the Chinese government released a five-year plan to cement its place in biotech innovation. That includes obtaining 25 percent of global share first-in-class drugs. So how will those plans affect Western biotech companies? Joining us now is Selvyn Richter. She is the U.S. biotech analyst at Goldman Sachs, who just returned from a China biopharma trip, a World War I at that.

30:57Selvyn, great to see you. What did you find in terms of what they're focusing on now. It seems like they planted the seeds for this sort of burst of innovation, burst of activity a long time ago. Yes, I agree. I mean, I think we've seen an acceleration here in innovation coming out of China. But I would say that most of the work that they're doing now are really focused on me to me betters and then reengineering of known targets. But I think it's a matter of time before we see more novel innovation that's playing out. And you're seeing, you know, really a focus on on where the Western countries, whether it's the U.S., Europe or even Japan, are leading in areas of oncology and inflammation and immunology.

31:41And then also modalities like anti drug, you know, antibody based drugs or, you know, cancer vaccines. We're seeing a move into that and then, you know, really focusing on creating a stronghold in areas like obesity. The focus by China's pharma companies on those kind of iterations of existing products here. What does that mean for the durability of those product cycles? What's the takeaway for Western companies? I think the takeaway is that you might have shorter product cycles, right, because you're going to have really kind of these better assets that are coming and flooding the market. And so you have to think about how quickly you're competing, not just, you know, the lifeline to the end of IP.

32:27And so we are we do think that when you look at large biopharma companies right now, globally, they are looking at China as a source of assets for them, particularly given there's about four hundred and forty billion worth of drugs going off patent into 2032. But over time, I think it'll be more a function of competing. And so I think the companies are trying to figure out how to be nimble around this, as well as, you know, looking at them as a source of BD. We've had so many deals so far, cross-border sorts of deals, whether they be licensing deals or buying specific assets. And we had Eli Lilly, we had Pfizer, we had AstraZeneca.

33:03Are you anticipating a lot more? Do you think that it's going to be a real sort of source of competition on the M &A front in terms of acquisitions to some of the biotech companies here? Yes, I think the way the companies will view it is, is there a disease area you want to focus on? And then within the disease area, are there targets that we want to focus on? And then they'll look at the four geographies and decide who's the, you know, where the best asset lies. And so I do think that you will see those premiums for the biotechs that are ex-China, you know, pulling back potentially. But I do think that best in class, first in class innovation around the world will still get rewarded.

33:44And in terms of the application of AI in China, what does it focus that is that is it an accelerant in terms of the competitive threat or is it used in other ways? So they're really focused on on really existing targets right now and how they can improve upon them. And then they're doing work, be it using AI, machine-based learning to kind of determine how they can create next generation drugs or go after targets where we haven't had drugs exist. And so we're working in that direction. You're also seeing robotics being pulled into these wet labs, which is really interesting to see. And, you know, I would say the biggest area is really oncology here, where based on all these almost novel, novel combinations that are being created, that really China has taken a lead here.

34:36We are seeing a bifurcation of indications within cancer, but then also subpopulations within those indications. So we're going to start to see a lot of varied treatment options for patients. In terms of what you saw, the use of robotics, for instance, in wet labs, how does that rival what is being done here with AI and physical AI? I think with AI, China is clearly using it to mine IP, right, and to think about drug development. They're using it a lot for early stage discovery and designing molecules, less so for new target development. I think that will be the next iteration. The U.S. is also doing that.

35:15And then I would say, you know, they're bringing it in other ways in trial design, in manufacturing. We are seeing inputs of robotics here in the U.S. So I think I think both countries are just bringing in all these new tools as as a way to compete and stay ahead in in terms of innovation. Did you come away with one or a couple of kind of acute investment implications from from what you found there? Yeah, I would say so one of the first one of the big events we have yet to see is really translation of China data to Western data. And there is a company called Summit that will have data going head to head versus Keytruda reading out in frontline lung cancer this year.

36:00And so I would say that would be a big event for the China to Western translation aspect. So we're bullish on that based on, I think, what we've seen out of the China data set. What I would say is the leaders that are in China, you have Hongrei, Tehanso, you have a slew of companies that have really been doing partnerships with the Western companies. Those may end up being your next multinationals. And so those would be the companies I would follow as you start to think about the investment opportunity. You brought up the data, though, and being translatable. I mean, there is an issue of diversity of sort of demographic.

36:34Has China been able to resolve that? I think this is going to answer that question, whether we've been able to design that. Salveen, thanks so much. Thank you. Salveen Richter from Goldman Sachs. The S &P 500 hitting a new high today. Up next, we'll break down the charts to see if the market is about to break out further, or if this rally could be short-lived. And check out some S &P 500 stocks hitting new highs. CrowdStrike, Palo Alto Networks, F5, HPE, and Everpure. Closing bill overtime. We'll be right back.

37:33Potentially hard to square aspects of this market. Record highs on the index level with weakening breadth, a spate of 52-week lows, and rates hovering near multi-year highs. So what do the technicals have to say about what's next for the S &P 500? Joining us now is Jonathan Krinsky, chief market technician at BTIG U.S. Bank. Jonathan, great to see you. I guess, you know, all else being equal, S &P 500 making a new high is not a negative. But what are you seeing below the surface or or around it that that suggests whether this is the start of of something good? Yeah, Mike. So, yeah, generally speaking, breakouts from multi month consolidations to new all time highs.

38:11You know, it's not something you want to fight. But I think, as you just mentioned previously, the last time we had that was in early August. And you had about two days of of the new upside breakout. And then we went sideways until today. Right. And so, and there's other, there's plenty of other examples of that. Almost 30 years ago, in fact, early October, 1997, we had a similar situation, consolidation breakout for two days, and then you rolled over into a 15 % drawdown. But leaving that aside, I think, you know, the number one conversation that we've been having with clients ad nauseum, and you've been talking about on your shows, is this divergence in indices to breath.

38:46And so we know it's reached extremes and it can resolve in one of four ways, right? Or the first way would be at no resolution where you continue to have S &P, NASDAQ move higher and breadth move lower. That's what we saw really in late 1999, where you actually got to such a point where by the time the tech bubble peaked, the eco-weight S &P was down about 17 % from its highs. And then you finally got resolution as the tech bubble peaked. That's when eco-weight snapped back. You could also have a compression where the indices move lower to catch down to breadth. You could have breadth catch up to price, or you could have a little bit of both.

39:25And I think that's the latter is really what we're seeing or what we expect to see, where you're seeing areas like utilities, and we can probably talk about that later, see nice counter-train moves, see upside, and ultimately areas like semis probably need to catch down to the downside. So I think we're probably seeing a little bit of both. Ultimately, that probably means S &P chops around to moves slightly lower from here in our work. Within S &P, though, how are you seeing, how are you viewing the more frothy names, momentum stocks? Yes, it was interesting. Now, momentum, you have to kind of classify because what time frame are you looking at?

40:01But the traditional momentum would be kind of a 12-month momentum winner. And a lot of those are still the semi-names. They still have good 12-month momentum. Those are actually down pretty hard today, down around 2%. They kind of failed at key resistance. So I think it's important to note that within the AI complex, we're seeing massive dispersion. So if you think about the second quarter of this year, the minimum stock in the kind of S &P hardware semi-index was up 14%. This quarter, we have a stock, some stocks are up 70, 80%, and some stocks are down 30 to 40 % on the quarter. And so, you know, this massive dispersion means you're not seeing the overall SOX index reach new highs.

40:42And that's very consistent with what we saw in 2000, where you had the SOX peak in March, you had the initial crack. And then over that summer of 2000, you did have a pretty good number of single names get back to the highs, but the overall index never did. And so I think that's the risk here that as you see this dispersion within AI, you know, it's good for stock picking, but it's not as good for the passive AI indices. And you mentioned utilities. It was a top performing sector today, has been the worst performer on the year. So is this sort of a continued rebound candidate? Yeah, so we flagged this to clients last week, early last week, when you had a sub-22 RSI on the XLU, which is an extreme oversold condition.

41:26The forward hit rate looking out 10 days was 100 percent over the last 20 years or so. And so we've seen that play out to some extent. Yeah, it was a nice move today. And we've said you don't necessarily need rates to move lower for utilities to work in the very short term. I think if you look, talking over the next couple of months, you probably want to see rates move lower. But this is a very tactical trade. Now, 20-day returns are also still pretty positive. So you probably still have a little bit of upside there. The median 20-day return is about 9%. So I think we're probably about halfway there on the oversold bounce for utilities.

42:03And Jonathan, I wanted to ask you about Moderna. We were just talking about the reversal that we saw in today's session. What's your take? Yeah, so Moderna is the second best performing S &P name year to date. It's up almost 600 percent just behind SanDisk. But today had a pretty key reversal day on very heavy volume. And in fact, a lot of the genomics names, a lot of the very high momentum names within the biotech space had significant downside reversals. and you didn't really see the offset on some of the lagging biotech names. And so as a result, the biotech index broke key short-term support.

42:39We think it probably heads lower towards that 200-day moving average, and that will probably prove to be more viable. But I think right now there's still some vulnerability within the healthcare space there. All right. Jonathan, thanks. Good to see you. Jonathan Krinsky. Thank you. Up next, why affordability in the auto industry may be flashing a warning light about American consumers. Plus, Meta getting a new street high price target thanks to momentum from its new Muse AI assistant. Details and closing bill overtime returns.

43:15There's some potentially troubling new data on Americans stretching out auto loans to afford new vehicles. According to Edmunds, a record 25.5 % of all new car purchases during the third quarter had loan terms of at least 84 months. The average amount financed was for a record$44 ,664, leading to, you guessed it, a record average monthly payment of$787. And Edmunds analysts adding in the report that if you need 84 months just to make the payment fit, that is a potential warning light that the vehicle is out of your budget. And, of course, you add on to it rising fuel costs. And that is a very difficult pill to swallow.

43:55Fuel and insurance costs. I mean, it's obviously kind of a burden. But I think that's what American consumers do. They kind of say, here's what I can afford per month. Right. And the industry and financiers are going to try to make that happen. The only good part, as opposed to when people were stretching to buy a house, nobody buys a car thinking it's going to appreciate in value and therefore borrowing according to that. But it does make it a tough one over seven years or something. Meta shares are up roughly 20 percent in the last month. And one Wall Street firm thinks the stock will go even higher from here.

44:26Wells Fargo hiking its price target on the stock to$1 ,000 a share from 796. It matches now the highest target on Wall Street and implying a more than 30 percent upside. The analysts there are citing excitement around Meta's AI assistant, Muse. although he cautions Muse may not contribute significantly to Meta's revenue until 2028 and beyond. We mentioned a couple of times that Meta kind of got back all of its valuation discount in one big burst. And it's also up in a price area where it's peaked multiple times over the last two years, right in and around$800. There you see that. So it's got a little work to do to get over toward four digits, I guess, from here.

45:07It's just interesting how time and time again Wall Street wants to go to the very extreme. Oh, yeah. This is the next thing, and it's definitely going to make revenue eventually for the company, and we're going to put all of that onto the valuation right this week. And it arrives at a perfect round number price target on top of it all. So we'll see if it is exactly that neat. Let's get you set up with tomorrow's trade today. Consumer credit and the Fed's minutes from its last meeting are really the only items on the economic calendar. On the earnings front, we'll break down results from Levi Strauss after the bell.

45:38So a little bit of a consumer clue right there. And then really it's about how the market metabolizes this marginal new high we got on the S &P. It was really only a few points above the intraday high from mid-August and then the bond market. It took a breath today. You kind of backed off and yelled, we'll see if there's more of that. The breath was like four basis points. Very minor. I mean, that's been the rule, honestly. It's like it sort of pauses. It doesn't really pull back very much. So we'll see if that can change. We'll probably have some more Fed speak as well. I don't know if that's really driving the market now that we've kind of written off October.

46:10It feels like we've moved away from that. Yeah. We were talking earlier at the top, first take on the close, the defensive sort of nature and the defensive complexion of today's move higher. We saw that outperformance in utilities. Even within health care, you have the big tech pharma stocks versus the biotech stocks, which really pulled back today. So it's interesting to see that sort of rotation within sectors towards sort of the safer. It was. And, you know, of course, we just talked about utility. So it's the most washed out parts of the market. Got a little bit of relief. And that has been the defensive sector.

46:42So, yeah, tomorrow will be the next chapter of that story. That does it for overtime. Fast Money starts right after this big break.

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