Closing Bell Overtime: Big Tech Is Back on the Buy List 10/1/26

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0:56Daniel Skelly: The Bells bringing an end to the trading day at the NYSE. Valvoline, ticker Triple V, ringing the bell. And the Breast Cancer Research Foundation doing the honors here at the NASDAQ. 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 bouncing off the lows of the session to close slightly higher. The Dow just barely in the green. S &P 500 up two-tenths of a percent. NASDAQ 100 gaining a half a percent.

1:18Bess Freedman: That turnaround coinciding with a drop in bond yields. The 10-year peak this morning above 5.3 percent. a 24-year high. But as it retreated, stocks moved higher. Much more on these moves in bonds, along with stocks coming up.

1:31Daniel Skelly: And of course, we are awaiting results from Nike. The stock has been a laggard for years, down 75 percent in five years. Is the bad news finally out of the way and the turnaround can begin? We'll find out in a few minutes. But for now, let's get the first take on the close. And Mike, it feels a little bit like we're just waiting for the jobs report tomorrow.

1:49Bess Freedman: There's no doubt we're waiting for the jobs report. I think we're doing maybe some unfinished business from the end of the third quarter, and it felt like there was an unwind going on. But, you know, there was some climactic action in yields globally, especially short-term yields. You had this surge and then a pretty sharp retreat, the relatively dovish Fed speak, which is interesting because a lot of it was just reiterating what the dot plot said and what the folks said. But it shows you how far ahead that the Treasury market had gotten beyond what the Fed has handicapped. The way the stock market digested it is to kind of reverse the dynamics that we've been talking about ad nauseum for six weeks, which is mega caps holding up the S &P 500, the majority of stocks really feeling the pressure below the surface.

2:30Bess Freedman: That's what we have here in this look at the number of net new 52-week highs in the S &P 500 crashing to the deeply negative area, even as the S &P remains within a couple percent of its high. So today, equal weight S &P, up half a percent. The headline S &P is about flat. We'll see if this is actually the start of something or just like getting into neutral before the jobs are put.

2:51Daniel Skelly: Right. And I think a big question is, OK, fine, we got up to 5.3 percent of the 10 year yield, 5.3 plus. If we back off of that, what is the contour of that backing off? Is it a retreat? Is it just sort of a leveling off? Because that's going to really be key in terms of how stocks react. And if we can go back into, rotate back into those sectors that had been hit hardest by that rise in rates.

3:12Bess Freedman: That'll tell it. I mean, look, we should keep in mind, people thought 4.8 percent might be a moment of truth. And then it was 5 percent. And then 5.3 seemed like this magnetic target on the upside. So, you know, we'll see how it trades from here. Nothing seems to have broken along the way, even though it was a very dramatic move in yields that we don't really know. We don't know if there's a bunch of leverage players out there that were, you know, forced selling and now are buying it back. But I do think that is that is the setup going into earnings season.

3:41Daniel Skelly: Let's get more on the stocks making big moves today. Seema Modi's here at the NASA. Hey, Seema.

3:45Sharon Epperson: Melissa, that intraday reversal was notable. Take a look at Micron reversing those early losses and then closing up by around 3 percent as investors shifted their attention to the durability of Micron's growth story. Of course, yields likely helping to one of Micron's main customers. NVIDIA did trade up on the day and now on pace for its third straight weekly gain. Taking a step back, NVIDIA is now the best performing mega cap so far in 2026, up about 24 percent year to date. The company's next conference, GTC Berlin, at the end of this month. Sticking with AI, analysts Ed Bernstein flagging Coherent, Lumentum, Sienna, and Arista as structural AI infrastructure winners, which sent all four of these optical component suppliers higher on the day, and perhaps a sign as investors sort of broadened their lens when looking at AI.

4:30Sharon Epperson: Software also outperformed. We saw Salesforce close up by around 6 % at last year in the cybersecurity space. Oracle ended up closing higher by about a half a percent, a new deal with Tencent in which it will supply and lease 100 ,000 chips to the Chinese company. But by far the leading sector on the day, energy with oil rallying once again as those supply concerns continue to dominate the narrative. Mike and Melissa.

4:54Bess Freedman: Seema, thank you. Let's pick it up right there. Oil prices rising once again today. Brent back above$100 a barrel. Pippa Stevens joining us here with all the headlines moving the oil market today. Pippa.

5:04Sharon Epperson: Yeah, she saw a bounce in early afternoon trading on this report from the Wall Street Journal that the U.S. is preparing to send a third aircraft carrier strike group to the region, up to 10 ,000 additional troops, and that also Washington is considering whether or not to renew strikes on Iran after the midterms. Now, that taken together with the 40 million barrel SPR release announced earlier this week does make you think about, you know, how Washington now sees the timeline for this war. But in the meantime, it's clear that the market doesn't need a deal for oil to start flowing. We've seen recoveries in this market.

5:32Sharon Epperson: Goldman says we're essentially back to 2025 levels. JP Morgan puts oil flows at 98 percent. But the relevant question becomes at what cost, because it's costing a whole lot more to get the same amount of oil out as this chart from Argus shows. It's now about$18 per barrel. That is a composite tracker of 15 of the most influential routes around the world. That's up from less than$4 at the start of the year. So what we'll see is that sometimes the most expensive routes, you know, think about the Middle East going to Asia, that can cost$1.2 million per day. We'll then see crude discounted in order to make up for that difference.

6:05Sharon Epperson: But it's not entirely. So the refiner is still having to pay more. And that's not reflected in what we see on our screen, but it is reflected in their cost, which is then what pushes fuel prices up. And then finally, dated Brent, which is oil for the most immediate delivery, traded at$120 yesterday. So perhaps some fears about whether or not this conflict could then resume. And so traders are buying it now ahead of that.

6:25Daniel Skelly: In terms of those fuel prices, is there any hope that the Europeans, for instance, will release some of their reserves on diesel to avoid the export ban and the impact it could have on global prices?

6:35Sharon Epperson: Well, it certainly seems like Washington is pushing them pretty hard, especially France and Germany, since they have more than 30 percent of the available diesel stockpiles. So, I mean, there's a whole camp that's saying this is exactly the time when you should release and tap into those. And of course, there was that coordinated release earlier in March that they did not completely fulfill on. So there is hope there. But whether or not they want to tap into that. We'll see.

6:55Bess Freedman: And then in terms of how much is now known to be flowing in terms of crude across the world, even if it is at a price, does that mean that if there is even a formal reopening, if things are back to whatever version of normal we had before, that we maybe can't expect that price to come in very much because it's already more or less on the move? Well,

7:14Sharon Epperson: I think that, you know, we could expect it to come in if we do get some sort of deal and then we get a resumption of what it was before. And get rid of the risk premium.

7:22Bess Freedman: Yeah, exactly.

7:23Sharon Epperson: But But the idea right now is that the current situation is not sustainable in the long term because things like ship-to-ship transfers, that requires double the number of ships for exactly the same flows. So while it works right now and oil is flowing, it's not a long-term solution.

7:35Daniel Skelly: HIPAA. Thank you, HIPAA Stevens. Stocks trying to shake off another surge in global yields with the U.S. 10-year yield touching 5.34 percent, its highest since 2002, before pulling back with borrowing costs rising from the U.S. to Europe and Japan. How much longer can equities look through the bond sell-off? With us now is Dan Skelly, Morgan Stanley Wealth Management Managing Director. Dan, great to have you with us. Good to see you. We were just chatting. Every single scary level on the 10-year going up has been met, which is sort of like, okay, it's fine. We can deal with this, even 5.3%. So how do you view rising yields, what we've seen so far, and if there's a higher level to contend with?

8:11Sharon Epperson: Rising yields are largely reflecting better growth. When we look at the real yield component of the rates move, it's been driving the boat mostly. Inflation break evens have kept pretty steady for the last month, the last year or so. So, look, in that type of environment, you're trying to find the companies with earnings and pricing power that are leveraged to better growth. And I think that's going to be the story going forward still is earnings.

8:34Bess Freedman: Higher real yields is kind of another way of saying, you know, the core cost of capital is going up, you know, at the benchmark level, which should also include the cost of equity, which kind of has something to say about equity valuations. Are we we've already kind of seen that? Obviously, there's been some compression in the multiple. And as you were just talking about, you know, outside of tech, there has been a lot of discounting of this market. That's an excellent point, Michael.

8:59Sharon Epperson: Under the hood, you've seen a lot of rotation. It's really been two months or so where equal weighted has gone to new lows. And the MAG7 and a lot of the tech AI CapEx winners have held up much better. We, in fact, made this prediction two or three months ago in a world of rising macro uncertainty vis-a-vis not only rates but oil and the midterms. And so I would actually argue today the markets are holding up very efficiently. We think that the AI CapEx winners had everything negative possible thrown at them in the last four months. Open weight risk and China risk back in the summer in June. More recently, safety concerns.

9:33Sharon Epperson: Every outcome, however, has shown higher levels of spending and compute are likely because of those risks.

9:38Daniel Skelly: At the same time, will it be a case of be careful what you wish for? Because right now we're seeing that defensive move into the MAG-7, which is held up better. But once we see sort of a leveling off or believe leveling off in yields, could we see that rotation back into the harder hit sectors, a broadening of the market and then markets sort of stall overall?

9:57Sharon Epperson: You could. I think two things can be true at the same time. On the one hand, folks have favored the higher quality balance sheet names, i.e. the MAG-7. I think, however, fundamentally, we've seen some incremental clarity in terms of the return on investment spending in AI. One of our colleagues, Brian Nowak, has written a lot about this in the last two months, showing favorable outcomes, whether it's closed only, open only or blended model outcomes. Number one. Number two, to your good question, I actually think the one sector that can benefit the most going into year end is financials. We've seen financials compress a lot on the flattening curve on some IPO delay issues.

10:31Sharon Epperson: But when you zoom out and think about the regulatory environment, some of the capital rules that are becoming more known to the market, When you think about still a healthy capital market cycle going into next year, we think the financiers are the one cyclical area that looks good heading into year end.

10:45Bess Freedman: You mentioned that everything's been thrown at the AI CapEx beneficiaries. It's certainly the case. But there does seem to be a continuing reluctance of the market to really pay up and extrapolate the good times way out into the future. Obviously, Micron's an example today. The stock ended up marginally higher, but it's way down from June. And I wonder what gets us out of that, if the market is kind of in this show-me mode?

11:08Sharon Epperson: There's an element of fool me once, shame on you, fool me twice, shame on me. And I think people, particularly in the faster money hedge fund community, are, to your point, Michael, hesitant to regross in some of these areas. I actually like that from a longer-term perspective. When you go back to the June euphoria in semis, as an example, there was a lot of leverage in the trade, whether it was some well-known ETF retail-driven levered funds, whether it was some well-known institutional levered funds. Now that that leverage has come out, I think with more clarity around Micron's numbers, about the long-term nature of the contracts, I think longer-term money can take a better view going into next year, but it's not going to happen right away.

11:46Daniel Skelly: Dan, thank you. Good to see you. Daniel Skelly. The first day of the first quarter brings updates to Wall Street firms' various recommended lists, and we notice a trend those mega-cap tech stocks once again in favor. Deutsche Bank adds Meta to its fresh money list, saying, We think Meta represents an attractive opportunity for long-term investors. Goldman Sachs adds Amazon to its conviction list, saying Amazon can grow revenue and expand margins, even while spending to support long-term goals. The main driver of that, the AI revolution's need for Amazon's compute power. And Wells Fargo puts Microsoft on a tactical ideas list, saying it likes the setup for Microsoft shares heading into the end of the year for several reasons, but most notably, realization of its AI advantage up and down the stack.

12:28Daniel Skelly: because it seems like there is more clarity in terms of the return on the capital spent so far on this AI boom.

12:35Bess Freedman: Some more comfort there, for sure. There's also a sense that, you know, all these stocks in one way or another have either been discounted or out of favor for a little while. Even though Microsoft's had this great quarter, it's coming back from a pretty deep trough. So it hasn't done much year to date. So to me, it's one of those things. It's a pretty good excuse to pick up the phone and say to a client, hey, have you thought of taking a fresh look at Microsoft or Amazon? So it does make sense. I don't think valuation is the problem in that part of the market at all. It's much more about, you know, their return on all this capital, the return to free cash flow eventually.

13:07Bess Freedman: And then, you know, a lot of the strategic winners and losers in AI. Well, speaking of all this, one reason for Wall Street's enthusiasm comes from the continued AI capex spending. Of course, B of A expects the AI total addressable market at$2.2 trillion by the end of this decade, up from a previous estimate of$1.8 trillion. The firm also says historically, Q4 has been one of the best seasonal periods to own chip stocks. The semiconductor ETF, the Sox, has led the way higher for this current four-year bull market. So which stocks should investors own going into the last quarter of this year? Joining us now is B &B Security Senior Semiconductor Analyst Vivek Arya.

13:45Bess Freedman: Vivek, great to see you. What's driving this pretty significant increase in your forecast of total addressable market for AI spend? Great.

13:56Randy Konik: Thank you, Mike. I think we are incredibly bullish on the semiconductor sector because it's a key enabler of every new inflection that we are seeing in the AI market. You know, we started from consumer chatbots when ChatGPT was launched. Then we moved to enterprise applications with the launch of tools from OpenAI and Anthropic. Now we are in the third phase, which is the agentic layer, right? these tools and apps like Metamuse and Instinct and others that can do these very complex multi-step processes. And at some point, we will get into physical and robotics. And every one of these inflections is driving more and more usage of the underlying computing layer, right?

14:38Randy Konik: Whether it's logic chips or memory chips or optics, right? Or networking and all the design tools that go behind that and the semi-cap equipment tools that go behind that. So I think that's the reason why we continue to see this upgrade. And then the second quick point I would mention is that the demand is growing over 100 percent a year. But the industry capacity is just unable to grow more than 40 or 50 percent a year. So as a result, we have this very tight supply environment with exploding demand. And I think that's why average selling prices for these semiconductor companies are much higher.

15:12Randy Konik: So I think it's a combination of stronger demand, more of these technology inflections and a very, very strong pricing environment.

15:19Daniel Skelly: And what do you make, Vivek, of the reaction to Micron's report, which was good, solid report? And it should be a beneficiary, a big beneficiary of this agentic era.

15:31Randy Konik: Yeah, Melissa, you're absolutely right. I think memory is key to AI. You know, half of the bill of materials now for these data center products is memory. Without memory, there is no AI because you need memory for the computational part, which is DRAM, and then you need memory for the storage part, which is NAND. The tricky part, though, is that memory companies not just depend on demand, they also depend on incremental supply, and there are concerns about incremental supply coming online. But we think a lot of those concerns are overstated because, as I mentioned, that even if there is incremental supply that comes online, the amount of demand is so much more than that.

16:09Randy Konik: So we think pricing can stay very strong. Yesterday when Micron reported, I think they checked three out of the four boxes extremely well. Very strong revenue outlook for next year, very strong gross margin outlook for next year. They reaffirmed that the pricing environment can stay very strong, demand supply environment. But the one place where I think investors were wanting to hear more was the start of their buyback activity, which I think starts December 9th. you know, they can generate enough free cash flow to buy back 8 to 10 percent of their stock every year. So I think it was just around that one specific point where there was some level of debate.

16:44Randy Konik: But we really like Micron. And I just, you know, it's amazing to see this company that is able to grow at this pace, trading at basically six or seven times, you know, price to earnings multiple.

16:56Bess Freedman: And where else within the group, Vivek, do you think there's a dislocation between the investor perception and the prospects? It's interesting. One of the bullish points you hear some folks mention is actually these GPOs last a lot longer. They retain their value. You look at the rental rates. And yet that doesn't seem to mean that people expect less new ones to be in demand. Sure.

17:19Randy Konik: I think, Mike, what you will see is, first of all, you know, there is a greater fragmentation of workloads. Right. There is training. There is inference. There are these agentic workloads. There is also a spectrum of the kind of chips that can be deployed. You know, the earlier generation of NVIDIA chips, the Ampere generation, the Hopper generation, they can only be installed in data centers that are air-cooled. But if you look at the newer generation of chips that are Blackwell, you know, that are Vera Rubin, they require liquid cooling. They require racks with much higher power specs to them.

17:52Randy Konik: So I think what you see is kind of a broadening out of this, that there are part of the workload that can run very efficiently with the Ampere and Hopper generation of chips. You know, there are part of the workload, especially the frontier models that require the newer generation of chips to train them and run inference on them. But the key is, and this I can't stress enough, what makes this cycle different than what we saw in the prior cycle was the utilization of infrastructure is 100 percent. There is no chip that is just sitting there doing nothing, as opposed to the prior cycle where we had a lot of dark fiber.

18:26Randy Konik: There is no dark compute right now. And I think that's why you see pricing and rental rates stay very strong, because demand and utilization of this infrastructure is so strong.

18:35Daniel Skelly: Vivek, great to speak with you. Thanks, Vivek, Aria. Thank you. Meantime, we do want to get to Nike. Those shares are down 6 % on the back of earnings. Brandon Gomez has got the numbers. Brandon.

18:44Sharon Epperson: Hey, Melissa. Yeah, you hit the move in the shares there. It's a mix in the top and bottom line. Revenue coming in light at$11.21 billion. The street was expecting$11.31 billion. EPS, though, coming in at$0.48 compared to the expected$0.43 a share. Remember, last quarter there was a tariff refund gain factored into that EPS number. Now, it's worth noting coming into the print, revenues were expected to be down year over year for each of the quarters this fiscal year. North America revenue slightly ahead of expectations at$5.13 billion compared to expectations for$5.11 billion. China, the growing pain spot for Nike, seeing revenues coming in below expectation, $1.18 billion compared to the$1.31 billion that was expected.

19:25Sharon Epperson: Now, look, guidance is really going to be what the street is waiting on. And we won't get that until the earnings call at 5 p.m., but I'll be listening in and be sure to bring you any of those highlights. Shares right now down about 6 percent, guys.

19:35Daniel Skelly: All right, Brandon. Thank you, Brandon Gomez. Interesting to see the immediate reaction is a negative one. And I think China is a big, you know, they put out their head of China in this profile today on The Wall Street Journal saying, oh, there's a lot of work to be done, but it's going to happen. And she started off as a shoe salesperson. So really, like, Nike is in her blood. But at the same time, it sort of highlights a lot of the challenges that they are facing in the number two market for them.

20:00Bess Freedman: For sure. I mean, they did say as part of the announcement taking actions to try and revitalize sportswear, Jordan brand, as well as China. I'm not sure exactly what that entails. But clearly, you know, they're conveying this idea that there is a kind of bottoms up fix that needs to happen here. And any decline in the stock from here, you are making new lows, like new 12, 13 year lows, because it really has had no lift going into this report.

20:24Daniel Skelly: Inventories, we should note, 7.8 billion. We want to get some color on that as to whether or not inventories are growing. That's also been a key issue in terms of too much Nike in the discount channel, et cetera. So we'll get a lot more information right now. The shares, as you see, they're down by about 6 percent. Up next, Warren Nike will ask an analyst if he sees any reason for long-term optimism in this report. Over time, be right back.

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21:21Sharon Epperson: With the Discover Cashback Card, it's payback time when you earn cash back on everyday purchases.

21:27Bess Freedman: 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.

21:47Sharon Epperson: There are three kinds of investors that listen to this show. Those protecting what they've got, those looking for solid returns, and those swinging big. Most tools pick a lane. VectorVest doesn't. Every stock gets three scores. Value, 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.

22:23Daniel Skelly: Let's get another check on shares of Nike down by about 5.9 % under pressure after reporting a revenue missed. Revenue for greater China down 22 % year over year. The stock, if it opens at these levels, are at 13-year lows. Joining us now for his first take is Jeffrey's analyst, Randy Connick. He's got a buy rating and a$75 price target. Randy, great to see you. You said proof of a turnaround is going to be seen in North America. They did beat on that level. What's your take on the report?

22:52Sharon Epperson: Look, the way we think about this is it's a work-in-progress type of company. You have a CEO who is doing the right things to balance distribution and balance the assortment, right, the product architecture from more overweight lifestyle, which is underperforming, back towards a more performance led business. If you look at North America, North America did beat expectations, as you mentioned, and we anticipated that in our expectations going into the quarter. And that's where the market really needs to kind of focus right now is that the attention that's being paid to North America to improve the product architecture, to improve the profitability, is working.

23:34Sharon Epperson: EBIT was up year over year. And then the other thing that stood out in the quarter to me was Europe. If you look at the European business, it met expectations on a revenue standpoint. And then the profits on the EBIT dollar standpoint were effectively flat. And that's interesting in that the business was against a more promotional market in the last quarter or two. So the bottom line here that I see is a company doing the right things to improve the product, improve the channel, balance that distribution, focusing on North America first. It is working and has been working. and then the rest of the geos will follow suit over time.

24:12Sharon Epperson: China, I think the market clearly knows about, and because they know about that, the business will get better in time. It's just going to take time for China to turn. And I think most people with some patience know that, and we'll get that probably in the next four to six quarters.

24:27Bess Freedman: I guess before things can turn, you have to have investors believe that earnings have hit some level of rock bottom or at least, you know, a plausible trough. You know, six months ago, The current fiscal year earnings are supposed to be 224 based on the consensus. Now it's at 168 or so. So therefore, the valuation doesn't look super cheap. But if this is going to be the trough for earnings, you can live with that. Is there a way to make the case that that's what's happening?

24:53Sharon Epperson: Well, one, you saw the EPS beat expectations. Number two, if you look at inventories, Melissa talked about that. What are they looking like? Inventories were down year over year, which is encouraging. And then when you look at cost restructuring programs, the company is just getting leaner going forward. So if you think about a business becoming more disciplined on SG &A for a business that used to spend rampantly in the past, combined with inventory under control, combined with some green shoots in North America where EBIT dollars are up. And as I said earlier, EMEA, where EBIT is effectively flat, that's showing you we're reaching that bottoming process that you mentioned where investors, I think, can get behind this stock going forward.

25:41Daniel Skelly: That's Caitlin Clark's shoe that dropped today, Randy, that sold out in under two hours. Is that evidence of Nike's sort of new focus on innovation and getting to where the consumers are?

25:51Sharon Epperson: Look, the one shoe won't move the needle. But we just put out a note on this before the close. And what we do say is the innovation, to your point, it matters, right? It tells you the company's not standing still. They're doubling down on innovation. That's going to create more demand going forward. And we've seen this movie before. If you go back in time, Mike mentioned that this stock is at, was it, 14, 15-year lows. This company had the last problem back in and around 2015 when Adidas, a main competitor, launched the Ultra Boost running platform. Nike struggled for a couple of years until they had their Analyst Day in 2017, their last Analyst Day, where they recommitted to doubling down on innovation and really focusing on product once again in the marketplace.

26:38Sharon Epperson: And ironically or interestingly, we're only about a month away, a month and a half away until Nike has its next Analyst Day, the first one in basically a decade, where they're going to go, I think, really redouble down again on innovation. They have a lot of styles coming out in the spring of 2027. And right now, performance is working. Lifestyle is struggling. But we expect that lifestyle to bottom while other geos like China and Europe bottom in time. And that will get this stock off the mat, which has been obviously struggling over the last couple of years.

27:11Bess Freedman: Yeah, all right. That's something to focus on. Potential catalyst coming in November. Randy Koenig, thanks so much for breaking it down for us. Thanks, guys. And don't miss tonight's playoff game between Caitlin Clark's Indiana Fever and Asia Wilson's Las Vegas Aces at 9 p.m. Eastern time live on CNBC. Well, the best stock in the S &P 500 today, Accenture, the worst, Paramount Skydance. The stories behind those big moves are next on Overtime.

28:06Vivek Arya: www.gmail.com less work. Try Google Workspace with Gemini at go.gle slash workspace with Gemini.

28:13Sharon Epperson: With the Discover Cashback card, it's payback time when you earn cash back on everyday purchases.

28:19Bess Freedman: 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 five for details.

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29:21Daniel Skelly: The top performer in the S &P 500 today, Accenture, the stock closing about 15 percent higher today. Investors cheering strong bookings growth in the latest quarter, as well as a full year revenue growth guide coming in above expectations. Chair and CEO Julie Sweet addressed the company's AI strategy earlier today.

29:37Sharon Epperson: Think about all the new areas that AI has opened up, like data centers, like the safety business, like capital infrastructure.

29:47Vivek Arya: So we're investing now to not only be the partner for companies who are going to scale across the enterprise,

29:55Sharon Epperson: but also to be relevant to all the parts of things that have to enable the use of AI.

30:02Daniel Skelly: Even with today's best day ever, shares are just back to its February levels around the start of the so-called cesspocalypse. But you can see today's news lifting other names in the sector, including Cognizant Tech, Booz Allen and Gartner. Of course, this is sort of the first round of let's kill all these stocks because we think AI is going to disrupt them and then see what happens. They haven't really recovered since then.

30:24Bess Freedman: No, the stocks have not recovered. The valuation's not recovered. But a couple of quarters worth of reports suggest at least Accenture is making the case they're preserving a role to helping big companies sort out the AI equation. And it's not going to just be, hey, we're going to let agents do it. And this is what Accenture has done historically, helping new technologies get implemented. It might mean that there's going to be a more paced rollout in the business sector to exactly how AI proliferates, where it's going to be a little bit more about security and privacy and process. The valuation on Accenture got down below 10 times earnings.

30:56Bess Freedman: This was always a premium multiple. So now it's back up, you know, mid-teens. So it's still not demanding, but it does show you why. There was a big snapback, but nowhere near those highs.

31:05Daniel Skelly: Yeah, better than feared is sort of the dynamic of that 15 percent rise. Yeah, no doubt.

31:09Bess Freedman: Well, shares of Paramount Skydance falling sharply today as its deal to acquire Warner Brothers Discovery gets closer to reality. A judge approving its settlement with 12 states, removing a major obstacle. The company also issuing$52 billion of debt to finance the$81 billion deal. Some of those bonds now yielding more than 10 percent as they started trading. According to reports, investors are already seeing losses on that paper with the cost of betting against the company's credit surging to a 17-year high today. Double Line's Jeff Gundlach tweeting, Paramount floated the largest high-yield bond offering in history this week, and the bond sold off immediately in trading afterwards.

31:47Bess Freedman: This is not a sign of a strong market. At minimum, it's a sign that there were not as many buyers as expected to absorb it all. And the reason you would sell off immediately upon the deal closing is people got more than they really thought they were going to get. So this is why oversubscribed offerings are to be suspected, because you always ask for more than you think you're going to be allocated. They ended up with more. Because you got more, it means, uh-oh, maybe this deal's in a little bit of trouble, and therefore you had to sell to reduce your exposure.

32:20Daniel Skelly: I was going to take it the other way, and that is a sign of skepticism about Paramount's road ahead. Oh, well, that's for sure. Yeah, in terms of the cost-cutting and what they're able to do with the business. I mean, sign of a weak market, maybe, but I think it's maybe a sign of investors' sort of weak belief in what Paramount and David Ellison can do in terms of$6 billion in cost savings per year to be reached in three years.

32:41Bess Freedman: I think that's definitely true, implicit in how the bonds initially were priced, right? You are having to have a pretty punitive rate. I think the way they traded after, you know, they were in investors' hands shows, oh, no, I think we don't want to have this much exposure to it.

32:55Daniel Skelly: Time now for a CNBC News update with Brandon Gomez. Brandon.

32:58Sharon Epperson: Hey there, Melissa. Attorneys for death row inmate Krista Pike say she is in critical condition after a botched execution attempt last night. They say she is receiving life-saving care after being taken to a hospital in an ambulance. her legal team is calling on Tennessee Governor Bill Lee to commute her death sentence and allow her to serve the remainder of her life in prison. Meantime, a Massachusetts judge denied Lindsay Clancy's request to have her murder case tossed out. He ruled today that jurors have enough evidence to determine if she killed her three young children and if she should be held criminally responsible.

33:29Sharon Epperson: It comes after he declared a mistrial last month, with the jury split 11 to 1 in Clancy's favor. And more than a dozen states sued Corteva today over the spinoff of its seed business into a new company called Vylor. The suit claims the move was a fraudulent attempt to avoid tens of billions of dollars in legacy liabilities related to forever chemicals. Corteva and Vylor are corporate successors to DuPont, which has faced thousands of lawsuits over allegations the company's chemicals have polluted the environment.

33:58Bess Freedman: Mike, send things back to you. All right, Brandon, thank you. Mortgage rates pulling back slightly today, but the average 30-year fix still above 7.5%. That's triple what they were just about five years ago. How much of a chill is that putting on the housing market? We'll dig into that next on Closing Bell Overtime.

34:19Bess Freedman: Welcome back to Closing Bell Overtime, live from the NASDAQ market site. An interesting day for stocks, but not reflected fully in the final numbers for the major averages. The Dow up only 20 points. The S &P and Asdaq can also be described basically as flat. But stocks bounced off to early session lows, coinciding with a pullback in bond yields. The 10-year got above 5.3 percent to its highest since 2002, but right now sitting around 5.23. The move in oil also contributing to the volatility today. Higher on reports the U.S. is sending another aircraft carrier to the Middle East.

34:52Daniel Skelly: Well, Morgan Stanley initiating coverage of the homebuilders today with an overall cautious industry view. You told Brothers the only builder to get a buy rating and a$159 price target, implying a nearly 20 percent upside. The analysts there citing a low price to earnings ratio and less sensitivity to higher mortgage rates from its affluent customers. The firm assigning D.R. Horton and Pulte with equal weight ratings and three builders getting underweight ratings, Lenar and KB Home, in part of because of their exposure to first time homebuyers and NBR over concerns about its lot supply. And of course, so many things battering the homebuilders, not just higher mortgage costs, But higher input costs, higher labor costs.

35:28Daniel Skelly: Labor is a real problem in the sector as well.

35:30Bess Freedman: For sure. And, you know, the relatively low valuations on this group not really enticing things because the returns are still not really going to be there. We just keep bumping along these low levels of activity. And as you say, costs keep going higher. They were lobbying for some changes to the to some of the immigration policies because of that just this week. Yeah. That coverage initiation coming as rates continue to move higher, along with the 30 year fixed mortgage, which is sitting at seven point five for four percent. That's a one hundred and seventeen basis point jump from a year ago and a sixty five basis point move from the start of September.

36:04Bess Freedman: So how's it all hitting the housing market? Joining us now is Bess Friedman, CEO of Brown Harris Stevens. Good to see you, Bess.

36:10Vivek Arya: Great to see you guys.

36:12Bess Freedman: You work mostly New York City area. Obviously, that's its own market. Most of the rest of the country, people buy as much home as they can afford on a monthly payment basis. So what does the rates move mean, I guess, for prices and level of activity? It seems like it's a standoff. It's frozen.

36:29Vivek Arya: It is somewhat frozen. We also do have offices in Florida, Connecticut, New Jersey. But, yeah, for everyday homebuyers, first-time homebuyers, they are deeply impacted by this increase in rates. And you add that with the lack of inventory. And, you know, it is like a standoff because you have the lock-in effect. People who've locked in 2 % and 3 % rates who've decided that they're not going to sell, why would they let go of that rate? So inventory, high prices, higher rates, inflation, you know, everything's gotten more expensive for people. So they're on the sidelines.

37:03Daniel Skelly: So in terms of segments of the market, segments of buyers, it seems like, you know, of course it makes sense. first-time homebuyers will be sort of boxed out. So that means sort of the lower end of the market, the studios, the one bedrooms, maybe even the two bedrooms and the smaller starter homes, those are the hardest hit.

37:21Vivek Arya: Yeah, I think in the country overall, we have a deficit. We need about 5 million homes in the marketplace of the United States to get things moving in a better place. And I don't know how we do that. We're under 2 million homes right now. And so we need more supply in the market. We need more building. Construction costs are high. You know, as you just talked about rates, those are higher. So everybody's feeling that. And so until we get things to come down or settle down a little bit, I don't think you're going to have a complete fluency in that arena.

37:51Bess Freedman: There's a fair amount of kind of lip service to trying to address the housing affordability issue, maybe trying to incentivize more building, reduce these roadblocks to it. But it doesn't feel as if there are levers that are obvious that could be pulled to make this happen policy-wise?

38:08Vivek Arya: No, it's hard. It's done at the state level. But what Mayor Adams did was a great example of that when he got City of Yes passed and got more zoning. Those sorts of things will help. So I think we have to have the discussions. It's super important. And the other thing that's creating an issue is these private listings, these private listing networks, which we spoke about. I mean, people don't have access to inventory. They don't know what's going on. And if the largest brokerage in the country is hiding inventory, that's going to hurt affordability and it threatens fair housing as well. So I think these are things that politicians should be talking about and addressing immediately.

38:47Daniel Skelly: How do we see sort of the discrepancy in the market in terms of price points? And we were just mentioning wealthy buyers. They can always buy. They've got the money. No problem. They're buying cash. But even right here in New York City, we were discussing off camera, you know, the price per square footage of a super luxury new build is, what,$3 ,500 you mentioned. So how does that compare to a sort of co-op, you know, one-bedroom studio apartment or something like that?

39:12Vivek Arya: Well, as Louise Sunshine said, not all square feet are created equally. So a co-op and a condo sit side by side of the square footage. The price per square foot could vary. So it just depends. And co-ops that need renovation have to get through the board. You know, it takes time. It's time, value, money. So people are less willing to get involved if they think they have to spend a lot of money, get through the board. So it all depends. You can't look at any, like, street and say this is the price per square foot. That's why real estate is so nuanced, especially in New York City. You need a professional to help you and guide you through that.

39:45Vivek Arya: And I'm not selling my book. It is really the truth. Like, you need somebody to help you in the process because it's a sophisticated market.

39:52Daniel Skelly: I guess my question really is, is our mortgage rates to the point where we are seeing the price pressures in terms of listing price in sort of the smaller properties, even here in New York? Not so much.

40:04Vivek Arya: And remember, New York is big in cash. Yeah. I think more than 60 percent of the deal outside the country.

40:09Daniel Skelly: Are we seeing that yet?

40:10Vivek Arya: You're not really seeing what you're seeing is that people are, as you said, they're sitting on the sidelines. They're not moving forward. So I think we're going to feel that for a little while. We have the war ongoing. People are unable to afford things today. Americans are. Until we figure that out, I think it's going to take some time.

40:29Daniel Skelly: That's great to see you. Thank you. Great to see you both. Thank you. That's Friedman.

40:32Bess Freedman: All right. Up next, we'll look at one piece of data that could explain why Treasury yields have been surging despite a cooler than expected inflation report.

40:48Daniel Skelly: check out shares of Mattel soaring late in the trading session the Wall Street Journal reporting authentic brands is privately discussing an offer that could value the toy maker at more than six billion dollars sources confirming those talks to CNBC but saying at this point they are very preliminary officially both companies declined to comment on the report. Before today's gains, Mattel shares falling nearly 50 percent this year, and the company just announced a CEO change on Wednesday.

41:12Bess Freedman: Well, we got a little bit of relief on the bond sell-off, the surge in yields today, but really still up at this level that has a lot of people asking exactly what's been driving it. Is it for good or bad reasons, even as inflation has flattened out, at least, based on last week's numbers. Now, here you have the gross domestic income. It's a kind of a version of gross domestic product that's more about what we're earning off of production. And historically, it's correlated, you know, with some gaps with 10-year Treasury yields. This goes back to 2000. It's from Greg up at the Wall Street Journal.

41:42Bess Freedman: So there's the 10-year Treasury yield, year-over-year change. And this is a pretty significant curl higher in gross domestic income. So it does show that the productive part of the economy is starting to propel higher. And it would basically be equivalent to mid-2000s level of growth. And that's when we had about 5.5 % Treasury yield. So on the one hand, it shows some justification for where we are, if in fact this is going to continue. On the other, maybe we don't have to go much higher if it's just about the economic fundamentals and the fact that real yields probably need to be a little bit higher.

42:13Bess Freedman: So many other things go into it, but this shows you, I've been calling it a normalization shock, right? It's sort of, yes, these are levels of yields that we've got used to at various times in the past generations, but it happened all at once and we got used to much lower levels.

42:26Daniel Skelly: If there were the one thing, like the one it's different this time around, what would you say that was in terms of this chart?

42:33Bess Freedman: I would argue the speed of it. Now, also, you know, you have to say the fact that it is very global and it's happening all over the place, which creates this fear or narrative that it's about global fiscal stress and that essentially all governments are going to be constantly having to run these huge deficits and there's just not enough willing lenders.

42:54Daniel Skelly: A new proposal from the SEC could expand investor access to private markets. Up next, we'll take a look at the pros and cons of making it easier to become an accredited investor. Closing Bell Overtime, live from the Nasdaq Market Site. Be right back.

43:14Bess Freedman: A new proposal by the SEC could make it a lot easier for many investors to get access to private markets. Sharon Epperson is here with the details. Sharon.

43:24Sharon Epperson: Mike, the SEC proposal could create a new path to becoming an accredited investor, a status now based mostly on income or wealth. Under current rules, people generally qualify with$200 ,000 in annual income or$300 ,000 for couples in each of the last two years, with the same expected this year. Or they could have$1 million in net worth, excluding the primary home. Under the SEC proposal, by passing an exam developed by FINRA, those 18 and older could also qualify and opt in to an accredited investor status. There is no test yet, but SEC officials say it could be modeled on a FINRA exam that already exists.

44:06Sharon Epperson: 75 multiple choice questions could be expected, two hours to complete it, and about a$100 fee. Topics may include securities and investment structures, investment risks, disclosures and financial statements, conflicts of interest and corporate governance. Financial knowledge, though, doesn't necessarily mean someone can afford risky, illiquid investments. That's what some experts say. But supporters say the exam could broaden access to private assets. You can learn a lot more about it by signing up for my Money 101 newsletter at CNBC.com slash money 101. And Mike and Melissa, the SEC will also be seeking public comment on this proposal.

44:44Bess Freedman: Yeah, Sharon, the point you make about, you know, you can understand that there are risks and various implications of these investments without necessarily being all that well equipped to absorb potential hazards of them. Those standards as they exist right now don't seem particularly demanding or onerous. I have a feeling they've been they've been at those levels for quite a number of years.

45:06Sharon Epperson: Since the 1980s, you're talking about the income and net worth guidelines. Those have been in place since the 1980s. And so that's why many are arguing there needs to be some update to this. And because some people simply equate accredited investor at this point with sophisticated investor, people are saying they're not really sophisticated necessarily just because they earn that amount of money or they have that amount of wealth. And so having an exam to really make sure they understand the investment risk is going to be key, but it does not encompass what their personal financial situation is.

45:42Sharon Epperson: And that is the part that some financial literacy advocates are concerned about because they say people may not understand that first they need to secure emergency savings, their long-term savings or retirement savings and other things before getting into these riskier investments and alternative investments.

45:59Daniel Skelly: It's amazing. This also comes at a time, Mike, when there are so many of these sort of more illiquid investments that are being marketed to the public. Absolutely. They're creating vehicles. Public wrappers and things like that. Yeah. Right.

46:10Bess Freedman: Also reminds me of didn't South Korea demand take a class if you want to day trade or borrow a trade on margin? So, yeah, we'll see if that works. Sharon, thank you very much.

46:21Daniel Skelly: Let's get you set up for tomorrow's trade today. There are no earnings on the calendar, but it'll be a big day for economic data when the September jobs report is released. Economists are expecting non-farm payrolls to rise by 84 ,000. The unemployment rate holding steady at 4.1 percent. Average hourly wages are seen rising 3.1 percent year over year. I think the action on the two-year yield will be really interesting because we sort of took out some of the expectation of Fed action. And so how quickly would that get built back if we don't sort of meet these expectations? Definitely.

46:50Bess Freedman: We've got a stronger than expected ADP private sector payrolls on Wednesday. Maybe that got some of the official estimates for tomorrow's number higher. On the other hand, you know, August numbers are often revised lower. So there's all this kind of noise factor in there at a time when the Fed has basically said job market's fine. We're worried about inflation. That does it for overtime today.

47:10Daniel Skelly: Fast Money starts right after this.

47:42Sharon Epperson: We'll be right back. sleep apnea, OSA, and obesity to improve their OSA. ZepBound is approved as a 2.5, 5, 7.5, 10, 12.5, or 15 milligram injection. ZepBound contains trisepatide and should not be used with other trisepatide-containing products or any GLP-1 receptor agonist medicines. It is not known if ZepBound is safe and effective for use in children. Don't share needles or pens or reuse needles. Don't take if allergic to it, or if you or someone in your family had medullary thyroid cancer, or if you've had multiple endocrine neoplasia syndrome type 2. Tell your doctor if you get a lump or swelling in your neck.

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