Closing Bell Overtime: Markets Look to Inflation for the Next Move 9/8/26

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0:56Craig Moffett: The Bells bringing an end to the training day at the NYSE. Eye on Q. Ringing the bell, not the Nasdaq. Vertzilla, welcome to Closing Bell Overtime. Live from Studio B at the Nasdaq Market Site, I'm Melissa Lee along with Mike Santoli. Stocks mostly lowers continued AI optimism. Plays tug of war with oil yields and some of the other factors weighing on stocks. The Dow falling 620 points. Amgen, a big drag there, about 250 points. S &P 500 down two-thirds of a percent. Nasdaq Composite down four-tenths. Small loss for the Nasdaq 100. Oil slightly higher after the latest attacks in the Middle East.

1:26Brent crude getting close to$100 a barrel. Bond yield slightly higher, the 10-year right around 4.8%. And it's a short week, but a busy one. Tomorrow is Apple's big event, the first for new CEO John Ternus. Plus, summer is basically over. Now it's conference season. We'll have the latest news from there.

1:43Craig Moffett: And while we wait for a read on consumer prices, we'll get the technical take on consumer stocks, which aren't looking so good of late. But it's amazing, Mike. I've been away for a couple of days. Yes, welcome back. We've been sort of churning around. The market's gotten a lot thrown at it between rates and a hawkish Kevin Walsh, et cetera. And we're still within this range that we've been in for the past three months. I think the bull case is exactly that, that it survived. And we've sidestepped a lot of decent excuses to back off, which would be higher Fed rate hike expectations, the higher yields definitely pressing on some parts of the market.

2:14You mentioned consumer. Equal way to consumer discretionary is 9 % below its high in a market that's like 2 % below its high in the S &P. So I do think those issues are all kind of offsetting currents here that are keeping the market where it is. You know, last week we actually had a little mini pullback toward the bottom end of this range, didn't break it. So we still kind of remain, you know, on the rails. But it was it was sort of heavy today. And what's interesting about the A.I. trade, and we're going to talk about this quick, is it just keeps kind of morphing around. It's hard to get a handle on, oh, we buying software today because it's going to be fine.

2:47Yeah. So I think that's why it has people's feet moving. pretty quickly. Lots of moves in the AI infrastructure space today, as we suggest that spending stays strong. Christina Parchan-Nevelis has those details. Christina.

2:59Sarah Friar: Yeah, that's exactly it. The story across tech is a simple one. The money's still flowing, and so is the demand. Start with the equipment and design names. ASML rose about 3 % as TSMC, Taiwan Semi, and Samsung committed to its most advanced chip-making machines, AMD, gained after its CFO spoke at a conference that the company now sees a$3 trillion market by 2030. Qualcomm rose after its CFO said it's already in production with Amazon. Chips specifically headed for AWS data centers, with revenue actually starting in December, in the December quarter. So that was bigger news that came in the afternoon.

3:33Sarah Friar: Intel jumped on a DigiTimes report. It could raise PC chip prices by another 10 percent next month. President Trump, of course, also posted on the weekend about the government stake in Intel. He had an AI-generated image, and so that probably helped shares as well. Navitas added roughly 5 % on backlog, now stretching into 2027. The power and data center trade just ran just as hot. And I say that because I ran up, closing almost 5 % higher after clearing a key ERCOT queue in Texas, pulling Applied Digital up with it. Corning popped about 8 % on a multi-billion dollar fiber deal with Verizon. Nebius rose after Palantir named it its preferred sovereign AI partner.

4:12Sarah Friar: And even Quantum joined the party today. D-Wave, Reggetti, and Quantinium each landed$100 million in Chips Act funding, with INQ jumped after it raised its full-year outlook to$460 million. The spending keeps on going.

4:26Craig Moffett: Christina, thanks. Christina Parts Nevelis. Oil prices moving higher as the U.S.-Iran conflict continues to escalate. Pippa Stevens is here with more on that story for us, Pippa. Hey, so we saw a leg higher in afternoon trading here after a report from Iranian state media that an Iranian tanker was attacked by a U.S. target about four miles off the coast of Kargisla. No word yet from CENTCOM about that, but clearly an escalation there. That does follow an attack on Saudi Arabian energy infrastructure, which is what really kicked off the latest move higher. That is seen as an escalation, particularly since it was at Jizan, which has one of their largest refineries at about 400 ,000 barrels per day.

5:00And also that kind of pushes out the potential for when all this infrastructure could be back online, even if her moves were to open, if you have severe damages. And we don't know that to be the case. But if there are damages to energy infrastructure, that does then push out the timeline. Now, we are hearing from Wall Street that 120 is back in the cards here. Goldman Sachs had a notable call yesterday that the risk was skewed to the upside. And they had an interesting tidbit in that report that the options applied volatility of or probability, I should say, of oil at 100 next March has now moved from 6 percent to 25 percent.

5:29Still pretty low and definitely out of consensus, but certainly something to watch there. Finally, take a look at this chart from Matt Smith over at Kepler. It shows product flows through the Strait of Hormuz as gasoline and diesel remain very much in focus. you can see that even after the June MOU, we never really saw an uptick or a return to the pre-war levels for products. That is because those ships are smaller and so the value of their cargo is lower. That means the insurance premium is higher and so those tankers aren't moving through at the same rate.

5:55Craig Moffett: Are you surprised, are analysts surprised that we haven't actually moved much higher on all the things that you just outlined in today's session? I think that they are now being very cautious on their calls and kind of giving these large targets about, you know, here's the downside, you know, the base, the bear and the bull case, just because at the beginning of this, they said, oh, you know, there's no way that Hormuz could close and it could be under 150. And then the post-war high is 126 on Brent. And so, you know, clearly they're being cautious. But I think that this does potentially mean escalation.

6:23You know, whether or not there's another MOU signed, particularly ahead of the midterms, but nothing really has worked out. You know, that remains a question here to watch. And the amount coming out of the straight seems like it was kind of surprising to the upside for a little while, at least based on the shadow fleet. And we're not really sure if that can last from here, right? Yeah, that's right. And also we had that big clearing out. And so that was one thing. And I mean, there's no question that there is definitely more oil getting through. But it's also what is the longer term cost of that.

6:50VLCC rates are now at records, even for tanker ships from going to China to the U.S. East Coast. That's up 300 percent since the war started because everyone's trying to go through Panama now. And then with the higher insurance through the Babel Mandab, there are certainly ripple effects. Yeah. And maybe not enough water in Panama. Ma, we'll talk about that another time. Pippa, thank you very much. Well, let's get to the bond market as yields have been closely linked with oil, but also waiting for some key inflation data this week. Rick Santelli in Chicago is here. Hey, Rick. Yeah, definitely key data at the end of the week.

7:20If we look at the 10-year, going back to Wednesday of last week, we are definitely flirting with an intraday trade for the third session above 480. So whether it was Wednesday, Friday, Thursday, reaching through it normally, When you start to hit a level intraday three times normally you go through, it certainly does seem like all eyes are focusing on when the 10-year will test 5%. Now, oil and 10s, well, today they were on par with each other until about 11 o 'clock, and then they diverged. And if you look at 10s versus oil since the war started at the end of February, that's a value chart. You know what that means?

7:59The patterns are very, very similar. But I've talked on many occasions. The patterns are similar, but the percentages are not. If you switch that to percentages starting at the end of February, oil prices are up nearly 44 percent. Ten-year yields are up less than 20 percent. And the reason that's important is because the direction on any given day, we attach at the hip and then we usually follow it. Today, we did that till about 11 o 'clock and then we diverge. But ultimately, I've said on many occasions I thought Treasury yields were very well behaved, considering what we're seeing on the energy side and what that may mean for inflation.

8:40I think that chart bears that out. With everybody looking at 5%, Mike, I know I've said this before, but it really is quite astonishing. The last time a 10-year closed above 5%, 19 years, this past July. Melissa, back to you.

8:56Craig Moffett: Wow, Rick, thank you. Rick Santelli, with earnings season essentially in the rearview mirror, the attention now turns to a number of key events ahead that could shake up this rally. The Treasury's bond buyback program will take effect. We'll get two big inflation data points and the Fed will make its rate decision with close odds on whether we will see a hike. What will investors want to see to keep this rally going? Joining us now, Stephen Whiting from CIO Group and Steve Sosnick of Interactive Brokers. Steve and Stephen, good to see you. A little confusing here, Stephen. I'll start with you.

9:27Craig Moffett: we have been in this range for so long the markets have taken a lot in stride and so where does that put us you may do you feel more confident that we can withstand and go into the seasonally week period and be okay or do you think it's time to break well look earnings are growing and we're not at the peak that's the fundamental good news but what else is there there's a fed hiking cycle maybe a little one, that seems fairly good possibility. We're having dwindling energy supplies. And so whether you believe the midterm elections are important or not, you layer that on top of that uncertainty and you've run out of positive catalysts for the time being.

10:05So I think it's time to just be a little bit more neutrally disposed. If we see that the market can hold in here, that's good news. There'll be plenty of growth later on when a few of these issues have been resolved. You know, Steve, if we were going to go into a period when oil was going to go from the 60s toward 100 and you're going to have 10-year treasury yields go from below 4 to 4.8, it's best to have an S &P 500 index structure that was really so not exposed to those two things, which meant it was AI dominated. How much more can we kind of count on this magical rotation and low correlation within the market to keep us moving?

10:44How long? I don't know. But you've hit on the key. And you raised the point even in your earlier part where you said that there's all the rotation within tech. And so we were rotating from sector to sector. We had that the bout of SPW outperforming SPX, the equal weighted. Now it's basically just sort of let's circle around. Let's go into, you know, this week it's software, this week it's chips. And that doesn't that can't last forever, you know, in its own little bubble. But I guess as long as the psychology remains strong, you can get away with it. But when that psychology breaks, that's the million-dollar question.

11:17And the problem is, as you both alluded to with seasonality, it's a fickle friend because last two Septembers were up 5%. The four Septembers before that were down 5 % or 10%. So even there, it's kind of a crapshoot as to what September brings.

11:31Craig Moffett: Right. And the idea that AI is not correlated at all to oil and to interest rates. It holds pretty much for now, but at some point it could with all the financing needs that AI and the CapEx spending cycle bears. So how do you view rising rates and the point at which we should get concerned about the strength of this particular sector? I think, look, industrial activity highly correlated to AI. And someday we're going to pay a price for that. Probably not now. Rates here, I know 19 year highs, but 100 years, this is not that big a deal. And if the Fed is going to go from, you know, 350 to 4, let's say it's 50 basis points, you know, what would a normal 10-year yield be?

12:14Long-term history says 5 percent. So this is not the kind of thing that will absolutely crush the economy. A variety of these other things, when they go, will be relevant later on. I would just point out, you know, the beginnings of new Fed tightening cycles, anything other than 1982, we're talking about five and a half years of growth after. So this just isn't that big a deal for us if we can hold the economy in. And like you said, again, get through this period where we have these negative factors like oil. Steve, you mentioned September, you know, sure, has a tendency to the downside. I always say, look, we go back 100 years in this history.

12:51100 Septembers is not very statistically significant. Not at all. No, it's a coin flip. You know, these LLMs would say, eh, we're going to spit that out. Now, that being said, a lot of the other stuff says every time the market is up appreciably up when you're entering this part of the year, usually the year follows through. OK, obviously markets go up over time. So any of these things look like they're kind of comforting. But how do you think people are positioned into it? Have they kind of in a preliminary way become more cautious or are they gunning their way through it? For better or worse, they're gunning their way through it still.

13:22I mean, we still see our customers. If there's a dip, it's bought. You know, now, it worked out very well for them in Broadcom last week. That was the most bought stock on our platform. And, yeah, they recouped all their losses. But we also saw them moving into VOO, which was fascinating because that is really an investment vehicle. That's the Vanguard S &P 500. Vanguard S &P 500. They trade spiders because of the liquid options and the liquid markets, but they position with VOO. So the buy-the-dip mentality, the psychology, as you alluded to before, remains so solid. what there's a million things that can break it.

13:55But we're climbing this wall of worry like we're Spider-Man. We're just you know, it's not presenting a problem to us.

14:01Craig Moffett: At the same time, I mean, we had a six percent pop in the VIX and was still only at 15 today. So, I mean, as this is happening, as they're buying the dip, are they hedging as well, taking advantage of the fact that, you know, volatility is so low? Not as much as you'd think. Now, there's a couple of things to think about. You know, one of my mantras is VIX is not a fear gauge, but it plays one on TV. It is really a point of estimation of what the volatility will be over the coming months. When things are volatile, people assume they're going to remain volatile. A lot of it does, though, come back to correlation.

14:32If you have a lot of decorrelation or a lot of correlation, the VIX is higher. If you have a lot of dispersion or decorrelation, VIX is lower. It's because all the parts sort of grind against each other and you end up nowhere. So the VIX has been a tricky a tricky thing to watch right now because of the dispersion and because of the weird rotations that you're getting within the market. It's kept VIX. A lot of people will say artificially low, but it's it sort of should be low. But lately we've seen correlations pick up, dispersions drop, and VIX remains relatively stable. That's what I'm watching.

15:05Craig Moffett: But a VIX, a low VIX indicates lower premiums, right, on the index level. And they're not taking advantage of that. They're not. Yes. Insurance is cheap. They're not buying it. Steve, Stephen, thank you very much. See you again soon. Thank you. Well, Meta unveiling a new personal AI agent in the last hour, going head-to-head with OpenAI, Google, and Anthropic. The new app called Muse gives users a personalized agent, which they say acts as an assistant. It's just the latest entrant into an agent world. It's getting more and more crowded. So how does this fit into a constantly shifting AI trade?

15:37With us now to discuss is Tony Wong, T. Rowe Price, Science and Tech Fund Portfolio Manager. Tony, it's good to see you. Let's jump right on the Meta story here. The stock had a little bit of a blip higher, then backed off. You know, it seems as if this might be one way for Meta to show that they're getting a tangible outcome from a lot of their spending. Yeah, absolutely. I think the first way was definitely visual advertising and see how AI is driving ROI from them there. But this is the second leg, right? And so I think this is the bigger prize that all that compute can be put to use in an agentic way.

16:12And I think Meta has a distribution advantage. You know, when you look across, like, what they can do with consumer agents, like they've got Instagram, they've got Facebook, they have WhatsApp. And so that context and distribution layer I think is really powerful, and that's what they're playing for. And like I said, it's the rise of the agents, it's the battle of the agents, and I think it's going to be a really important race here.

16:34Craig Moffett: I thought what was really interesting about this piece of news, Tony, is the transactional element that Muse enables, that it can actually not just negotiate on your behalf for various things, but it can also, with your permission, have the ability to purchase. And that seems like a leap in this sort of AI race. And I'm wondering how you think about that in terms of, you know, if I'm a consumer, if an agent is actually empowered to do all these things from start to actual finish with a transaction, then it is more useful for me. And that is a better use case. Yeah, it's super important. I mean, so far, like you look at most kind of LLMs, they've been like research focused.

17:17And so, like, you'll dig deeper in a topic, you'll do work. But then when you ultimately purchase, you'll go to like, you know, a booking or an OTA or the actual website. And so for the agent to kind of become the purchaser is a big step. And it requires a lot of security, requires a lot of trust. But this agentic layer is kind of where the battleground is being fought. So I think there's like you see like new kind of consumer agents like Instinct kind of pop up where they're, you know, you just text it. And so I think there's going to be a lot of innovation here. But, you know, I think that at the end of the day, you still want the context.

17:55You still need the distribution. And as a result, you know, it doesn't need to be a winner take all, but it definitely is a step function improvement. I think that's what we kind of need in this like AI trade to continue is a new use cases here. I mean, it comes on a day when, of course, the new open AI model was getting a lot of excitement and it drove a lot of the connected hardware companies, the neoclouds on a day when not much else was happening. So how does it knit back to a practical investment case for one part of this sector or another? You know, semis are still 20 percent off their highs.

18:33Software haven't regained back all they had before. or NVIDIA kind of give or take in terms of how it's responding. So how are you thinking about what this means for longer-term demand? Yeah, so I think that what really matters is the end demand, right? So, you know, what's really important is do the agents do work and time on task? Is it extending? And I think that what Astra kind of demonstrates is that it can take on more of the workflow. And, you know, instead of maybe a junior coder, it can be almost more of a senior coder. And, you know, you can have the model go off and do more things and be more just on its own to complete tasks.

19:13And so to me, like time on task and completion of task is what needs to drive productivity. And I think about like that probably just increases demand for the bottlenecks within semis. And I think that, you know, those areas can be memory, can be the networking. And increasingly, you know, it's also like capital, too. So I think what NVIDIA is doing with its consortium of financing partners, you know, that's really important to, like, be an asset to back against GPUs. But it all goes against, goes back to, like, that end demand. And you mentioned software, too. Like, I think software is an interesting battleground here, too, where if you are really important in the enterprise context, then these agents can actually help your customers do more.

19:57And so, but I think that if you're just a feature, like it's increasingly more risky there for software. So I think it's not going to evenly be distributed there at that layer.

20:07Craig Moffett: Tony, great to get your take. Thanks. Thanks. Tony Wong. Coming up, Labor Day weekend marks the end of summer, the beginning of conference season, and we're already starting to get news from some of the big speakers. More on that coming up. And a sign of the times and AI build-out momentum, Darling is joining the S &P 500 with a bigger weighting than some well-established brands. That story coming up on Overtime.

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22:03Craig Moffett: Shares of Stryker ended the day lower following comments from the company at the Wells Fargo Healthcare Conference. Stryker saying some of the challenges they saw last quarter in their peripheral vascular business is continuing in Q3 and may extend it to Q4. In their joint replacement business, the company saying, quote, we did not see the recovery that we expected so far in the quarter. The stock is now off 20 percent this year. Well, speaking of conferences, OpenAI CFO Sarah Fryer making some bullish comments at the Goldman Sachs Communicopia Conference. This on the heels of the company's newest AI model launch this weekend.

22:34Kate Rooney joins us with the highlights. Hi, Kate.

22:37Sarah Friar: Hey, Mike. So CFO of OpenAI Sarah Fryer was at the Goldman Sachs Communicopia Conference this morning. The line to get in to see her was out the door. So you had bankers, investors lining up to hear thoughts ahead of an IPO. This company has filed confidentially. Fryer on stage said that while the consumer side of the business is growing at a very nice clip, she talked about the enterprise business, said that has been, quote, on a tear. She also highlighted some of the July revenue numbers. The run rate grew about 20 percent month over month into July. And then enterprise business comparing that grew about 32 percent during that same time period, confirming some of our reporting for an employee all hands this summer.

23:17Sarah Friar: She also talked a lot about value and cost for enterprise and this entire industry shift that we're seeing to price per outcome versus cost per token. She also said that customers just want to see ROI return on investment. She also did talk about building a moat for this company amid a lot more competition from cheaper open source and open weight models out there. Says those will have a place, but where creates a durable moat is partially their approach on compute right now. She said they will, quote, continue to lean in on compute and then inference as well, building their own custom semiconductors.

23:50Sarah Friar: She also said they will continue to self-build some of their own data centers and highlighted growing revenue per GPU. So trying to grow while they also spend. And then finally highlighted the consumer business, one billion weekly active users for ChatGPT, the ads business. She said that It is the fastest growing product and product line to get to a billion dollar run rate within opening.

24:12Craig Moffett: I guys did she give us any more specific metrics about how quickly the enterprise side of the business is going since she's mentioned it's on a tear on a tear.

24:21Sarah Friar: It also in terms of how much it makes up, she said in the beginning of the year was about 60, 40. She said they're trying to get to parity. They are there. It's about 50 percent of total revenue. So she talked about, you know, the run rate, which is sort of a snapshot in time. but it is significant that it's making up a larger chunk of overall revenue. And also sort of this natural hedge that they have with Chachi PT, the consumer side of the business, and enterprise. It's interesting. I've heard her talk before, and in prior comments, she's really talked just about enterprise and growing that.

24:51Sarah Friar: It seems like they're now trying to differentiate from Anthropik, saying we have both. We have this natural hedge in the business and sort of doing the dual comparison here and saying that it's actually good to have both. It's great to win an enterprise, but they talk about ChatGPT becoming a material side of the business with advertising as well. It's not as much of a money loser. If you have a billion users, you want people to pay for that or you want advertising to help support it.

25:17Craig Moffett: Kate, thanks. Kate Rooney. Thanks, Mel. Well, Bloom Energy is surging today after the announcement that the fuel cell maker will join the S &P 500 in its latest quarterly rebalance. The stock gaining 9 % today, now up more than 200 % so far this year. Those gains driven by investor optimism about the AI buildout, which is also evident in other recent additions to the S &P 500, including Marvell and Lumentum. Bloom now has a market cap of around$80 billion, putting it slightly ahead of other more established names in the index, including General Motors, FedEx and Target. And Bloom is one of these names.

25:51Craig Moffett: Every single time there's an opportunity for the S &P 500 to rebalance, is Bloom going to make it? You can see the pop. And finally, it's happened. So that trade finally worked. Yeah, I mean, the market cap was demanding that speculation. I wonder if it's the shortest time ever from a company leaving the Russell 2000, which happened in June for Bloom, and then going into the S &P 500. It doesn't have the most extensive history of profitability, which you're supposed to have, but it does have numerous quarters of profitability. And you mentioned the other kind of AI hardware plays. That's just, by definition, the index is going to chase where the market cap has gone.

26:27So it's going to become even more levered to that theme, for better or for worse. I also think today, Bloom's not a super heavily shorted stock, but it's got higher than average short interest. You also had iREN and you had the neoclouds rallying on news. And the non-profitable Goldman Sachs tech index was surging today, even in a really kind of down risk off market, because I think a lot of these things just caught people on the wrong side. Well, coming up, a look at how the broader AI sector is looking to reassert its market leadership. Plus, a big difference or divergence rather is developing in the consumer discretionary trade.

27:02We'll look at some names breaking down and some that are breaking out. Closing Bill Overtime is back after this.

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28:54Welcome back to Overtime. Well, we've been talking about how the market has kind of narrowed back out after a broadening phase and also some of the big tech platforms have tried to kind of re-engage in terms of market leadership. Here's one way of glimpsing that. The QTOP, this is an ETF that's the largest 30 stocks in the NASDAQ 100. So I like it because it's broader than MAG-7. It includes all the MAG-7, but it also has Micron and AMD in the top 10. and obviously a few non-tech in there. And you see kind of a couple of times it sort of fell back into parity with the average stock in the S &P that's the equal weight.

29:25Did it again this summer. And now we've blasted out. I do think what's relevant, though, is we're still kind of not taking out the highs. And that's going back three months or so since we've made a new record high. The clock's kind of ticking until, you know, this starts to seem like we're faltering in terms of leadership. And you can look at something similar against the MAG-7 itself, this QTOP ETF. obviously created some upside separation. But again, both of them have a very similar shape where they've recovered off the lows, but not yet fully in gear and driving the market forward.

29:58Craig Moffett: So if that divergence is going to close, what's the guess on how it closes? It would close mostly, I think, if the more defensive Mag7s, like Apple and NVIDIA, believe it or not, acts as a defensive play. And if Meta can kind of recover a little bit, outperform semis. Pure semis would probably take this down a little bit because of the micron and AMD exposure. Time now for a CNBC News update with Brandon Gomez. Hey, Brandon. Hey, Melissa. A federal appeals court upheld a ruling today barring the IRS from sharing taxpayer addresses with immigration authorities. A three-judge panel in D.C. sided with the lower court, which found immigration and customs enforcement requests for nearly 1.3 million people were illegal under privacy laws.

30:40Eric and Lyle Menendez, the California brothers accused of killing their parents in their Beverly Hills mansion in 1996, will be eligible to go before a parole board next March. That's about 17 months earlier than expected. They were first denied parole in August of 2025, with the board saying they still displayed antisocial personality traits. And the TSA launched a new program that allows non-travelers to meet their friends and family at airport gates, something that has been banned since the 9-11 terror attacks. The new program is called Gateside. It allows people already approved for the TSA pre-check program to apply one to three days in advance to pass through security, even if they're not flying.

31:19The program launched last week at Los Angeles and Dallas-Fort Worth International Airports. Michael, something's back to you. All right, Brandon, thank you. Well, just ahead, Apple is the second best performer in the MAG-7 this year. Will tomorrow's big product event under its new CEO keep that momentum going? or will it be a buy the rumor, sell the news event?

31:50Craig Moffett: Welcome back to Closing Bell Overtime. Live from the Nasdaq market site, the Dow down 628 points. Amgen responsible for a big chunk of that. We'll have more on that coming up. The S &P 500 down about a half a percent, a little less than that for the Nasdaq Composite and the Nasdaq 100. And shares of Service Titan tumbling after hours. Earnings were 40 cents a share, a nickel better than expected. Revenue would beat, too. But third quarter revenue guidance is slightly below the current consensus estimates. A big week for Apple as it holds its major product event, with some people betting on a foldable phone.

32:20It's the first big event for new CEO John Ternus. Mackenzie Cigalos has more on what to expect. Matt.

32:26Sarah Friar: So, Mike, the real swing factor tomorrow is how aggressively Apple pushes the iPhone up market. The foldable, apparently dubbed the iPhone Ultra, is expected to start at around$2 ,400, with higher storage versions potentially topping$3 ,000. Early supply could also be extremely tight. Nikkei Asia says production is only a few hundred units a day versus the tens of thousands typically needed for a mass launch, as Apple works through strict quality control requirements around the display and hinge. But that scarcity could actually work in Apple's favor, effectively becoming part of the marketing and adding to the sense that this is an exclusive, hard-to-get product.

33:03Sarah Friar: It's part of a broader move up market. The street expects pro price hikes ranging from$200 to$500 versus comparable iPhone 17 models, and that higher-priced mix should lift average selling prices and help Apple protect margins as memory costs rise. And then outside of the iPhone, expect new Apple Watches and AirPods with a smart home hub also possible as new CEO John Turnus kicks off what is expected to be the biggest run of device releases in Apple's history. Guys?

33:33Craig Moffett: Mac, thanks. Mackenzie Cigalos. How important is tomorrow's event to Apple and how big of a market could a foldable phone actually be? Joining us now is Moffitt Nathanson, co-founder and senior analyst Craig Moffitt. He raised his price target on Apple from$270 to$304, still a neutral rating on the stock. Craig, great to see you. I mean, all the products are important considering where Apple is valued right now, 30 times forward consensus. And so I'm wondering from your standpoint, are you seeing anything here, any glimmers of hope that that this foldable phone, for instance, can actually fulfill a fill a hole in Apple's product lineup, that it can be sort of like the thing that drives additional sales as opposed to cannibalizes current sales?

34:16You know, probably not, Melissa. Look, I think it's going to be a gorgeous device. I think we're all going to be wowed by the foldables as a technological marvel. But they don't drive the numbers all that much. In the report we published this morning where we went through the math, the challenge is, as you say, most of it is going to be cannibalization. There might be some pull forward, but the people who are buying the foldable are not going to be new to the Apple ecosystem. They're going to be existing Apple owners. So they're buying this instead of another upgraded phone. That's great. And it'll be a higher ASP, as McKenzie was just describing.

34:57But even with the higher ASP, because of the additional cost of materials, you know, we're estimating there's probably at least$1 ,200 cost to manufacture the new foldable. The margins are not really going to be any better. You've got a relatively small uplift, therefore, to earnings that comes out of this. Craig, you know, Melissa mentions the valuation. I know you think it's pretty full here, 33 times earnings. It's basically the only large stock, large tech stock that has held near peak valuations over the last year. There's no compression in it. What's your explanation for that? And can that persist?

35:36I just wonder if it's being kind of used as a universal, you know, hey, if all this AI spend doesn't work out, at least I have Apple. Yeah, I think you're right. Mike, you've done a lot of great work on this yourself to show that it trades with a largely inverse correlation now to the rest of the Mag 7, particularly the semis, because it's viewed as safe. And fundamentally, that's right. Whether or not you buy an iPhone is not really driven by whether it's a good idea or a bad idea to build a giant data center somewhere. So it's operating on a completely different narrative than the big AI stocks, and that makes it a good place to hide.

36:20The challenge is safety stocks are usually cheap. When you're paying 30 times for a safety trade, it's hard for it to compound in a way that is compelling for new investors. It might be satisfactory for people to say, well, I want to hold it. But putting new money to work at 30 times is a pretty tough challenge. And remember, this year, partly because you've had this relatively strong echo boom in iPhone sales of the iPhone 17 over the past year, you've got something like 18 percent earnings growth this year. It's going to be good next year, but probably something like half that by our estimates in the coming year.

37:07And typically for growth stocks with very high multiples, even if it's a decently high growth rate, if it's sharply decelerating, it's a harder setup, obviously.

37:19Craig Moffett: Sounds like you're a reluctant neutral, Craig. No, I just think, look, it's a wonderful company. It's got great products. I fully buy into the idea that the fundamentals aren't materially at risk. I just think that at 30 times historically, it's not a great time to put new money to work. So it is what we call it. It's a stock that we use the terminology neutral, but other people would call it a hold. I'm not suggesting people go out and short it or sell it. I'm just saying that it's hard to see putting new money to work at 30 times given the earnings setup. Yeah. I mean, expensive defensive properties.

38:01Maybe Apple shareholder Warren Buffett would say, hey, it's like Coca-Cola. It never got cheap, even if it goes to sleep for years at a time. Let's you also sleep. Craig, thanks for the time. Always good to catch up with you. My pleasure. Thanks, Mike. All right. Coming up, consumer discretionary has been the only sector in the red so far this year. But our next guest says a breakout in some pockets could be ahead. We'll look at the charts next.

38:34A news alert this afternoon, LiveGolf filing for Chapter 11 bankruptcy protection. This move was not unexpected as late last month it laid off the majority of its 300 employees. Once reorganized, the company is expected to be majority owned by the players. LiveGolf says it intends to emerge from Chapter 11 and begin its new era in early 2027. Well, speaking of the consumer, the S &P 500 is up over 12 percent in 2026 and within 2 percent of its 52-week high. while the discretionary sector is in negative territory. That's the fifth time this has happened in the last 30 years, according to our next guest, and the prior four times came near market tops.

39:12Joining us now is Jonathan Krinsky, chief market technician at U.S. Bancorp BTIG. Jonathan, doesn't sound great, although I guess a small sample size. How does discretionary look kind of on a relative basis, and what's the macro message here? Hey, Mike. Yeah, so I mean, look, the fact that discretionary is underperforming is nothing new. We're hitting 10, in some cases, 15-year relative lows, depending on if you're looking at cap weight or equal weight discretionary relative to the S &P. And so, to your point, it's a small sample size, and maybe the consumer sector is not as meaningful as it once was.

39:49But at the same time, I don't think we want to ignore the fact that broadly, we are seeing a very weak consumer discretionary sector. And that's whether you're looking at traditional retailers, apparel, home builders, we know have been weak for a while with the interest rates complex. And then recently, I think that maybe going a little bit more unnoticed are the hotels. I mean, that's been a very bright spot for consumer over the last few years. And across the board, the hotel names are breaking down below uptrends and in some cases, even 200-day moving averages.

40:24Craig Moffett: And then you take a look at a name like McDonald's in the discretionary sector. And I'm wondering what you see there that's trading right now at two year lows. Yeah. So the restaurants are, as a lot of parts of consumer, very bifurcated right now. McDonald's is one that's losing its 200 week moving average, which is pretty rare for McDonald's. Prior times when you've seen that, it's been a pretty quick break and then recovery back above it. And so it's a tough setup because, you know, again, historically, a break of the 200-week moving average for McDonald's is a good entry point, but it's kind of taking longer to bounce this time than any prior instance over the last couple of decades.

41:04So I think you kind of want to wait and see here. It's certainly not, you know, not extended on the upside, but I think you just have to be a little bit cautious given how long it's taking to bounce. Well, you mentioned restaurant sector is bifurcated. So on the other end from McDonald's, we have Brinker. Yeah, I mean, this is a name that had a great run a couple of years ago, kind of consolidated for a while, maybe 12 months or so, and then broke out again to the upside. And so it's, you know, look, this is not going to be immune if we see a correlation one type sell off in the overall market, which we do think is coming.

41:42But I think if you're looking for that relative strength in a weak sector, this is certainly one that fits the bill.

41:48Craig Moffett: And is there a flip side to the weak consumer, Jonathan, in your work? I mean, when you take a look at the weakness overall and consumer discretionary, do you see strength elsewhere? I mean, is tech, for instance, the answer to this consumer weakness? You know, so look, we've called it kind of musical chairs or hot potato, if you want to say. Some people have called it a broadening, but really we've just seen money sloshing from one pocket to the other since the AI trade peaked in late June. And so ultimately, we think this resolves with kind of a high correlation move lower. You know, one of the stats we've been talking about is the fact that we're almost coming up on a year now without an 80 % or greater downside volume day on the NYSE.

42:28That is unheard of. We've never had a calendar year with less than five 80 % days or correlation one sell-off days. And the average year sees 21. We have yet to see one this year. So we think that's coming. But certainly, look, today was a nice offset for the AI trade. We just would be a bit cautious on how long that can last.

42:47Craig Moffett: All right, Jonathan, great to see you. Thank you. Jonathan Krinsky. Amgen down 10 percent, a huge drag on the Dow today. A closer look at the pharma ripple effect hitting that stock. Closing bell over time live from the Nasdaq Markets. I'd be right back.

43:13Craig Moffett: Breaking news on the Iran war. Eamon Javers has got the details. Eamon. Melissa, that's right. A U.S. official is confirming to our colleagues at MS now that American forces have struck multiple Iranian tankers tied to the IRGC in response, they say, to more attempted missile attacks on a U.S. Navy warship. So this back and forth military activity between the United States Navy and Iranian forces is continuing in the Persian Gulf region this afternoon. That follows overnight attacks that we saw and attacks throughout the weekend. And we're seeing a couple of reports from Iranian media that might be worth flagging here as well.

43:53Iran's Tasnim news agency says that an Iranian tanker was targeted by a U.S. missile attack four miles from Karg Island. And their Fars news agency says that they could hear the sound of explosions near Jask in Iran. So it looks like we're seeing reports now of explosions in two locations and a U.S. official now confirming that American forces have struck multiple Iranian tankers that they say are tied to the IRGC. So this flare up is continuing at this hour. No confirmation that this is the end of this exchange of fire. But we'll bring any more details if we have them, Melissa.

44:31Craig Moffett: Right. We're seeing a little tick higher in WTI of three percent. Brent is just below 100. but we're still holding below. Thank you, Eamon. Eamon Jevers. Healthcare, the worst performing sector today, down more than two and a half percent. Amgen, the lead laggard there. Let's get to Annika Kim-Constantino for that story. Annika. Hey, Melissa. Novartis has had a rough last week reporting several trial setbacks, one of which is dragging down other names like Amgen. Today, Novartis said a drug for a muscle wasting disorder failed to meet the main goal in a late stage study. And that treatment was the centerpiece of the company's roughly 12 billion acquisition of Avidity Biosciences last year.

45:07The other key trial setback we saw came on Friday when Novartis said its cholesterol-lowering drug failed to meet the main goal in a phase three trial because it did not significantly improve cardiovascular outcomes. Guggenheim analysts did tell me that the study was incredibly high risk, but the results are casting uncertainty on the broader class of drugs targeting what we call bad cholesterol. So that's why we're seeing shares of other companies developing those treatments, trading lower today, namely Amgen and Lilly. Novartis today maintained its sales outlook of growing 5 % to 6 % a year on average until 2030.

45:41But investors will be watching closely to see how the company can offset upcoming patent expirations of blockbuster drugs, Melissa.

45:49Craig Moffett: How big of a drug was this expected to be for Amgen, Annika? Got it. And sorry, were you asking about the muscle-wasting drug or the LP little a drug? No, the cholesterol-lowering drug for Amgen. That's a great question. And so this was seen as a multibillion dollar product. You know, there were three kind of key data readouts that analysts had kind of pointed out here. It was that muscle wasting drug. It was the LP little a lower cholesterol drug. And there was also a multiple sclerosis drug, which had the sort of highest analyst estimates here. But this definitely was a multibillion dollar estimated drug here.

46:22Annika, obviously disappointing results often hit these stocks, but it feels like maybe the reaction was more dramatic because we came off this huge outperformance of health care stocks. And also just a run of actually very encouraging trial results. I guess it's coincidence, but it seemed like a dramatic impact. You're exactly right, Mike. That's what some analysts have told me today, that it does feel like a little bit of an overreaction here, especially coming off the positive results that we saw for, again, the multiple sclerosis drug just last week. You know, the analysts I talked to did say that, you know, these trial results are disappointing, but it is a little bit unfortunate that they were back to back and really brought a lot of attention to the company in a way that, you know, may not be well-deserved in terms of, you know, the kind of questions about its growth strategy here.

47:06All right.

47:06Craig Moffett: Annika, thank you. Annika Kim-Constantino. Key thresholds again as we go into tomorrow. 4.8 on the 10-year. Also, we keep talking about the conferences. Communicopia is going to have a lot of tech and media tomorrow. And, of course, with the latest news out of Iran, we'll see if oil gets another leg higher. Okay, that's broke time. Fast money starts right after this.

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