Closing Bell Overtime: Stocks Surge Day After Fed Hike: 9/17/26

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1:15S &P 500 up more than a percent. And even bigger gains for the NASDAQ indices, nearly 2%. Bond yields also reversed their action from late yesterday, though the two-year yield fell a bit less than the 10-year did. Much more on the flattening curve coming up. And it has been a busy week for conferences and CEO comments, especially in the financial sector. Goldman Sachs with a small gain today, but still down 7 percent this week. Got much more in the banks coming up. But first, let's get the first take on the close the day after the Fed meeting. We had oil come off. It gave permission for yields to come down a little bit and the markets to rally.

1:50A big help. And another instance where the market just avoided breakdown. I know that seems like faint praise, but that's essentially what happened because we did threaten, after yesterday's late-day sell-off to actually go down into this former, you know, months-old range. I do think the oil move, the yield move helped. The upside was not necessarily all that aggressive. To be honest, it was semiconductors up 3.5%. And the other parts of the market that you would have expected to really rip if people decided, oh, the economy is going to recharge, consumer, industrials, and banks didn't really do a heck of a lot.

2:24So I think you sort of check off the box and say we avoided. further downside. And the stress is not really building inside the market. A lot of parts of this market had also been sold down OK going into the Fed. It is striking to read the commentary on the street this morning and see how it translates into the market in terms of the expectation of further rate hikes. And you get everything from one and done to this is the start of a cycle and we're going to stack up several hikes to come. And I think that sort of underscores the uncertainty we are at this point in time with the markets, you know, a few percentage points off of record highs and yields close to 5%.

2:59For sure. It really is all over the map. I think cities saying, oh, probably they're going to avoid another hike in October, and then they'll be cutting by the middle of next year. And then you have people saying three more, et cetera. So I do think the bond market can make its peace with it right now if oil stays contained. The biggest risk was you get disorderly sell-offs in bonds, and then oil rips higher. That's tougher to deal with. All right. Well, tech stocks leading today's gains especially chipped with the stocks up more than 3%. Christina Parts and Elvis is here at the NASDAQ with more.

3:27Christina. Yeah, NVIDIA actually closing more than 2 % higher after CEO Jensen Wong told the summit in Scotland his company will sell twice as many chips next year. The rest of hardware followed. Supermicro, Intel, Hewlett Packard, Enterprise were among the top performers today. Intel specifically rode up 8 % on possible rumors that it would be joining a partnership with SK Hynix on building memory, although SK Hynix has not confirmed that. AMD closed higher for a third straight session. And Global Foundries and Marvell said that they're going to expand capacity for Global Foundries' silicon germanium technology under a new multi-year deal.

4:03That is why you're seeing those shares close higher. In the cloud space, you had Nebius finish higher after raising on-demand rates for some of its GPU, CPU, and memory resources starting October 1st. But rival Corweave fell after a filing detailed a large capital raise. JP Morgan, though, overall, still sees more upside in chips, modeling the semi-industry to grow roughly 118 % year over year, specifically including memory, too, as lower cyclicality really drives a sharper focus on profitability. Not everything in tech rallied. The SMH and IGV both closed higher, something that we've seen as of late, but software still lagged.

4:40Salesforce finished lower. Palo Alto ended roughly flat, too, or down to the negative. Beyond tech, consumer discretionary trended higher. One of the top performing sectors with Lululemon, Best Buy and General Motors leading the group today. Guys. All right, Christina, thank you. Now for more on that pullback in bond yields, let's bring in Rick Santelli. Rick, we retraced a bit of that aggressive move to the upside in yields. Yeah, we did. But, you know, it is a very big deal of how the two year yield outperformed and how flat the curve got. As you look at a couple of day chart of twos and tens, look at the percentages in terms of the moves of the twos.

5:18And this is very enlightening because it is one of the mainstays on why many are looking for a cycle of rate hikes because of how the short end of the Treasury curve is responding after the press conference and 25 basis point hike. And if you look at the 210 spread, realize it was 38 before the Fed meeting. It closed at 26 today. It was at 38 and change when it closed last Friday. And if you look at Fed fund futures, the December contract, look at how the price continues to move down, especially after the Fed meeting. This is once again the investing public voicing their opinion that we might have a cycle of hikes.

5:59Will it happen that way? History dictates yes. But let's remember, we have a different Fred chair. He has task force out there that are looking to review and maybe up and many of the normal procedures of the U.S. Federal Reserve, whether it's a one off or a cycle, may yet have to be determined. And basically, it's going to be data dependent. And there's going to be a lot of data between now and that next meeting. Back. Yeah, for sure. I mean, Rick, nothing obviously sort of preset or really planned. So it's going to be some flexibility in that outlook. How flat would we like to see the curve get or not get?

6:36I mean, I guess there's always that question of what the message is if, in fact, you do get longer term yields really coming in aggressively while those hikes continue to get priced into the short end. Historically, Mike, a flattening yield curve is nothing to write home about in terms of an economy or what it portends about the future dynamics of an economy. But I really think that this time it really is different for a variety of reasons, not the least of which is 40 trillion in debt and a Federal Reserve chairman who at many points looks like he's bucking the very hand that put him in that office.

7:09By the way, the cat's out of the bag, Rick. I mean, CNBC viewers know well now the news that you are retiring. And we did want to, first of all, congratulate you on an amazing career. And thank you for for covering the markets the way you have over these past three decades. Secretary Treasury Secretary Besson actually sent you a letter, which is just phenomenal. This is really speaks to your importance in the world of financial news. He said television has produced plenty of market commentators over the years, but there has only ever been one Rick Santelli. And we couldn't we could we couldn't second that more.

7:48Well, I thank you. And it's been a pleasure to work with you. and Mike and the entire gang on Fast Money, both in the afternoon and the evening. Some of the highlights of my career have been with that really wonderful group in the evening, especially. We have learned so much from you, Rick. And I know you'll be watching the BOJ meeting tonight, so we'll let you go. Oh, yeah. Mike, I'm telling you, Mike, not only do we have to raise at this meeting, but the market's going to put pressure on several meetings ahead. Yeah, no doubt about it. We know you're going to be with us for a little while longer, So you'll keep us honest on all that, Rick.

8:21Thank you. Thank you. The Fed hike is now in the rear view, and stocks moved higher as Treasury yields pulled back. Even with the Fed signaling, more tightening could still be ahead. So with the big event out of the way, what's the next catalyst that moves this market? Joining us now is Jim Kahn, Wealth Enhancement Group Chief Strategy Officer Investment Committee Chair. Jim, great to have you with us. How did you view this meeting in terms of how the markets are different, how you view the markets differently from now on? So can I admit on television that I'm actually a fan of Kevin Warsh? I think he's doing a great job.

8:49Even his comments at the summit in Jackson Hole. Are you embarrassed doing that? A little bit. A little bit. I don't think you're supposed to like him at this point if you're a market participant. However, I think he understands the primary goal of the Federal Reserve is to ensure the credibility of its independence. And I think he did that yesterday. And I think he saw the market respond today. Whether there's two more hikes or three more hikes, what we know is that he's not going to let inflation get out of control. And that's settling for my clients. That's settling for bond investors. And it's ultimately good for stocks.

9:16How did you interpret what he said about, you know, he's focused on the timeliness of inflation's return toward target? Obviously, leaves plenty open for interpretation, as it should, because you're not supposed to know exactly what's going to happen next. Look, he'd like it to be 2 percent tomorrow. So to say he'd like it to happen faster is like saying, you know, I wish there were no calories in a milkshake. Yeah. But he also is saying if it doesn't happen fast enough, we may have to do more. So we have to have some understanding of what quickly enough is. Yeah, my guess is quickly enough is probably two quarters.

9:49I think you want to see trends come in. I think what's really interesting here is the oil story because oil is very interesting because everyone talks about how higher energy prices are inflationary. And it's true. But if gas is higher, that means people are spending less on other things. So ultimately, there's a tradeoff. So if gas stays higher, but it doesn't go a lot higher, I think it probably starts to come out of the data. We actually start to see inflation sort of roll over a little bit. So I think that will be quite positive. You are a self-admitted tech optimist, and I think you're proud to say that on TV.

10:18So I'm wondering, is it in any circumstance tech is the winning trade relative to the rest of the market? Well, I said I would call myself a techno optimist because I do believe that, you know, there's so much negative news out there about robots and AI sort of marching down the street. And generally, I believe if you kind of look out, you know, 15, 20 years, which I know is much longer than most investors are willing to look, the future is really more exciting than it's probably been since my grandmother first turned on a light bulb. You know what I mean? This is an amazing time to be alive. And I think we're all really lucky to experience that.

10:48I think in the short term, we can be very disruptive. And we could go through a period of transition where it's very unsettling for people. But that said, I think if we get through that and we have strong leadership from government and from industry leaders, I think we'll get through. And I think it's a good thing. So whether the tech trade is good for the next 6, 12, or 24 months, probably yes. There's going to be some disruption. But I think the long term, we're going to see lots of productivity. And the difference between poor societies and rich societies is how much productivity you generate.

11:14And I'm super excited about what's to come. Yeah, I guess the question is how much it costs right now and where the economics are going to settle out in what we're building. And I think that, you know, there was a kind of crescendo of optimism about that in the second quarter. And, you know, the semis are going to, you know, eat more than their share. And now I think there's a really interesting day by day back and forth debate on that. Absolutely. It's a classic investment cycle, though. Do you remember getting your first flat screen TV, how much that thing costs? And now they give them away if you go visit a timeshare.

11:44It's the same thing with these chips, right? There's a huge investment that's going on now. That investment has to happen. Eventually, we're going to see costs basically collapse for compute. When that happens, it becomes very cheap, broadly available. The limitation is going to be amount of energy. But we're going to solve that problem, too. I believe that. We'll come up with a solution for data centers, whether they're in space or on Earth. And then the question is, well, what's next? Like, what can we do with this technology when it's ubiquitous and cheap? Right? What can we do? Look at all the flat screen TVs in the studio.

12:12Look what we've decided to do with flat screen TVs. It's the same thing with AI and with the technology. And then following that quite closely is going to be the robotics revolution. And actually, the AI revolution, everyone knows, is much further ahead than the robotics revolution. But the robotics revolution is catching up. And so I think this might be a really unique time, as Rick was saying, this time is different, where you actually get two investment cycles back on back. So you get the AI investment cycle followed by a robotics investment cycle. I think that could be very interesting for markets.

12:38So there's a physical investment on the infrastructure side, but also on the physical AI side, which is actually happening now. I mean, when you think about self-driving cars and all of that, that's all powered by AI. Absolutely. I think that's what people are sort of missing, which is we went from these big tech companies selling digital products with really high margins to selling actual things in the real world that are immediately useful, immediately useful for all of us. And so I think we've sort of missed the expansion. Like your toaster is going to have legs, right, at some point. And it's going to bring you your toast.

13:09And when that happens, you're going to need a new toaster. And so that replacement cycle is going to catch up. And I'm really excited about what that means for investment and consumption. All right. They should make the toaster see-through. I thought that was going to be the innovation. Oh, yeah. That sounds like a Johnny Ives thing. We'll call him after this. Yeah. All right, Jim. Good to see you, Jim Kahn. Thank you. Thank you very much. Earlier this week, Barclays held its 24th annual Global Financial Services Conference, where at least a couple of big bank executives hinted at some lackluster trends in the third quarter.

13:38On Monday, Bank of America CEO Brian Moynihan said the quarterly sales and trading revenue would be flat compared to last year, and that investment banking fees are likely to fall more than 10 percent. And yesterday, Goldman Sachs CEO David Solomon highlighted the strength of Goldman's equities business, but fixed income currencies and commodities are coming in a bit softer. Those comments dragging some of the rest of the big bank names this week. But do these comments foretell what's to come from bank earnings? Joining us now, Jason Goldberg. He is the U.S. large cap bank analyst at Barclays.

14:08And give us some broad takeaways, Jason, of the conference. What were, you know, we got these, you know, what came off as a little bit jarring short term for investors on the institutional banking side. But what would you say were the most prevailing themes that came out of all the. I would say the overwhelming comments were constructive. So loans continue to grow, deposits grow, net-ish margins are holding in, credit quality really, really benign. Fee income, X sales and trading investment banking should certainly grow sequentially, expenses controlled, and companies continue to buy back stock.

14:41Third quarter trading, as you alluded to, particularly in fixed income, may not be as strong as we expected, but still it's going to be a very, very strong third quarter. One of the best third quarters we've ever seen, just maybe not as strong as we thought a week or two ago. And investment banking fees, given the summer low, should decline from the second quarter. But the outlook there looks particularly strong just given that investment cycle we were just talking about, AI and robotics and multi-year capex spending. The banks are going to be a big part financing that. So I think the outlook there remains bright.

15:11We highlighted the comments from Brian Moynihan, and on that day that he gave those comments, the stock was off and sent the rest of the sector lower as well. And then the next day, David Sullivan came on, and things felt a little bit better. And I'm wondering if you think there's a Bank of America-specific issue here. Yeah, I mean, you know, they're certainly going to have a weaker quarter relative to the third quarter of last year than other market participants. Their fixed income trading will be down. We think everyone else will be up. But it's, you know, each quarter kind of tells its own story.

15:39And, you know, their third quarter a year ago, they had a better quarter, so they have tougher comps. So it's hard to look at trading, I think, in any one quarter. But the trajectory over the last several years has been higher. And, you know, we think it should remain strong. Just a second, Jason. We do want to show you the closing bell at SIBO in Chicago. That ends the regular trading day for options. When it comes to what happens after this Fed rate hike, if we get another one, the implications there for some of these banks in terms of deposit costs or other, you know, net interest related items.

16:12Is that significant? It's certainly something watchful. And, you know, listen, as, you know, the Fed hikes, you know, you'll see deposit costs rise, but also assets are repricing higher. and the majority of banks remain asset sensitive. So those assets will reprice quicker, which is actually constructive for net interest margins, all else equal. All else is not always equal. So what you have to watch is to the extent that that hikes, does that slow the economy, you know, slow loan demand, reduce capital markets activity, and, you know, maybe weighs on credit quality. 25 basis point hike, 50 basis point hike is probably not enough to do that.

16:44So you can kind of get the best of both worlds, right? Continuing economic growth, some uplift in rates, which should be beneficial. So it's certainly something to watch. But as everything stands today, you know, listen, this group put up double denier growth in 2025, first half of 2026. And a lot of the same conditions are in place for the back half of this year, even into next for that to continue. In terms of loan demand, where are they seeing the strongest or what kinds of banks are seeing the strongest loan demand given where rates are right now? It's fairly broad based outside of mortgage, which is certainly impacted by where rates are.

17:14But commercial role in demand is quite robust. You know, part of this AI investment cycle, part to changes on depreciation at the start of the year, given the tax changes, part, you've seen a kind of a pullback in private credit. And that's helped as well. And, you know, just broad based economic growth, commercial real estate, which is kind of, you know, had a few years of not so great growth. Banks are kind of returning to that as kind of some of these office fears subsided. And credit card borrowing continues, right? Consumers have jobs and they continue to spend. It's remained quite resilient.

17:44This whole setup of, you know, credit quality looks pretty good. Loan demand is picking up. They have productivity opportunities from tech and AI, this regulatory relief. It feels like it's a very widely embraced, understood story for the banks. Is it now reflected in the stocks or not yet? I think there's more to go because I think you'll get, you know, the double digit earning growth we talked about. And then you look at valuations. They're still, you know, in line with historical average, despite the fact, to your point, right, it's a better than average historical environment based on PE. And listen, I think the bigger banks continue to have bigger leverage economies to scale and continue to continue to grow.

18:21And we think that can happen as long as the economy continues to produce. Jason, great to see you. Thank you. Thank you. Goldberg. Well, did the markets just take another big step towards 24-7 stock trading? We'll discuss that story. And McDonald's has been getting fried this year, down nearly 20 percent. We'll tell you what analysts are saying about the stock ahead of its investor day next week. Over time, be right back. Legacy Credit Scores only look at a brief snapshot in time, and that limited view often leaves millions of qualified credit seekers out of the picture. Vantage Score is changing that by modernizing credit scoring.

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19:30You're building a business with global ambitions, but hidden fees are eating into your margins. With Wise Business, you can pay overseas suppliers without exchange rate markups. Have customers worldwide get payment details in 22 currencies, so you get more of each hard-earned payment without hidden conversion fees. Be smart. Get Wise Business. Download the app. T's and C's apply. Ever notice how every new AI tool asks you to explain your business to it all over again? Google Workspace with Gemini skips that. You get Google's AI built right into the premium versions of Gmail, Docs, Sheets, and more.

20:09No new tools. No extra logins. Just one subscription that gives you personalized AI right inside your actual workflow. Make work less work. Try Google Workspace with Gemini at goo.gle slash workspace with Gemini. Shares of McDonald's flat today, but it has been one of the worst stocks in the Dow this year. It's down 18 percent. Today, Citigroup cutting its target on the stock to$310 a share, keeping its buy rating. McDonald's has an investor day coming up, and Citigroup says, we think it'll be a tall task to sell investors that a McDonald's has the right recipe for U.S. same-store sales over the near term.

20:48Pretty poor sentiment around the name. It's rarely traded at a discount P.E. to the S &P. it's doing that right now. It's like a few months in the last 20 years when it's done that. But to Citi's point, I guess people are a little confused about revving the engine of growth again. Yeah. I mean, they're going to want to hear about the remodel cycle, which they're going to embark upon, as well as the value menu. And that was a big miss in the last quarter, that the franchisees did not execute well. And so there's part of the McDonald's story that is self-inflicted. Franchisees didn't execute that$3 value menu, but also just the macro of rising gas prices hitting the consumer.

21:24So there's a couple of things going on. BTIG makes the point that the stock is excessively cheap. And I looked at, I didn't realize the average, the five-year average P.E. on McDonald's is 27. Oh, yeah. It's well below. It's often been a super premium multiple. These contentious relations with franchisees, nothing new. It seems like it's kind of cyclical, but the franchisees are being asked to probably cut margins. And Citi had some interesting stuff on labor cost increases over the last five, six years. It's been very dramatic almost everywhere. Well, today, the SEC clearing the way for the tokenization of certain stocks, which could eventually lead to 24-7 trading.

22:03The so-called innovation exemption would allow certain platforms to offer tokenized stock trading under certain conditions. Several stocks rising on this news, Robinhood, Coinbase, as well as bullish and securitize. And you sort of wonder, who wants to do this? It's a really great question. It's like the middlemen feel like it's this great opportunity. Now, right now, the likes of Robinhood have tokenized shares of public and private companies overseas internationally. They can't list them here. But those conditions that were set as part of this rule suggestion are significant, because if you owned a token, they need you to have the same rights as a shareholder.

22:39So that would presumably mean dividends and voting rights and things like that. I'm not sure that's necessarily baked in. And then the issuers of the stocks have the right to say, don't do it for our shares. And so, you know, if those conditions remain in place, it's unclear how much you'd really get traction on this idea. Yeah, we should. But then again, nobody's asking for double levered single stock ETFs either. And yet once they're listed, they trade like Mac. Exactly. So maybe it's one of the we invent and you shall come. Exactly. All right. Over the past month, the Mac 7 stocks are up 5 percent as a group on index tracking.

23:14the other 493 is down nearly as much. So is the market starting to get top-heavy again? We'll take a closer look next on Overtime.

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24:54Shares of Apple gaining today, heading for its fifth straight positive week, about 10 % over that stretch. The iPhone 18 goes on sale tomorrow, and analysts are encouraged about sales, thanks in part to promotions by wireless carriers. Wamsi Mowen at Bank of America says carriers are offering up to$1 ,200 in trade-ins, taking some of that sting out of the$2 ,000 price tag for the duo. I know he didn't even have to be in good shape, right? iPhone 14s that are kind of beat up. Well, Apple, of course, one of the very largest stocks, has been for more than a decade. Here's the concentration of the S &P 500, the weight, collectively, of the 10 largest stocks over time.

25:28I remember when we crossed above the 1999-2000 peak, above 26 % right in here. Everyone thought, oh, no, it's peak concentration. Sorry, no, we got up to above 40 percent. And this helps to explain why the S &P has held in there better, because these very largest stocks have pulled back less than the median stock has. So obviously, we narrowed back out after that broadening phase, and that's allowed the S &P to hang in the game. Take a look here at the QTOP. This is an ETF of the 30 largest stocks in the NASDAQ 100 that I highlighted a while ago. It's kind of the MAG-70 plus type of group. And you see here on a one-year basis, it's actually started to really outperform the equal-weighted S &P 500.

26:08The equal weight's still like kind of below its 50-day, so that's struggling a little bit here. So the question is, is this the new regime, which is the same as the old regime, or is it another one of these kind of phases as the pendulum swings back? Yeah, there's been so much hope this year that the rally would broaden. But, of course, it's careful what you wish for, right? Always. And it's more susceptible to volatility. Exactly. And, you know, everyone wants a stock picker's market. it also makes it easy to pick the wrong stocks. Yeah, exactly. Time now for a CNBC News update with Kate Rooney.

26:35Hey, Kate. Hey there, Melissa. A federal judge is now ordering the Kennedy Center to give 30 days notice before making any major changes to that building, including demolishing it. He also denied Democratic Representative Joyce Beatty's request for an emergency hearing on the center's future and rejected a request for an order that would fully bar it from being torn down. Meanwhile, the man who sprayed vinegar on Democratic Representative Ilhan Omar during a town hall earlier this year will spend 14 months in prison. Omar was not injured, but that attack came during an immigration crackdown in Minneapolis and moments after Omar called for then Homeland Security Secretary Kirstie Noem to be removed from office.

27:22And finally, the Knicks had to pause individual ticket sales today because the team said prices were mistakenly listed too high. The cheapest tickets for the season opener against Philadelphia were listed at more than$1 ,000. Nick says the team will reset prices to last year's levels, plus an average increase of 12%. They're getting that playoff boost, it looks like, guys, or championship boost in the wake of that. Maybe still stuck at that level on ticket pricing. Kate, thank you. Kate Rooney. Ten-year treasury yield dipping below 5 % after moving sharply higher in recent months. Up next, BlackRock's Deputy Chief Investment Officer of Global Fixed Income.

28:02We'll discuss where rates are headed next and how investors should be putting money to work in bonds right now. Closing Bell Overtime. Be right back. Welcome back to Closing Bell Overtime live from the Nasdaq market site. Markets moving higher following yesterday's post-Fed decline. The Dow up 316 points. The S &P 500 gaining more than 1 % on the day. The Nasdaq 100 up nearly 2 percent. Chip stocks leading the way. NVIDIA higher by two and a half percent. Supermicro and Intel also with strong gains and bond yields pulling back, reversing their post-Fed spikes. The 10-year yield falling back below 5 percent.

28:37Well, today's rally coming as bond prices climb. 10-year yield pulls back, as Mike had mentioned, from 5 percent. So was that recent surge in yield just a blip or are U.S. investors entering a higher for longer bond market regime, much like other developed markets. Joining us now, Russ Brownback. He's BlackRock Global Fixed Income Deputy CIO. Russ, great to have you with us. Afternoon. We were discussing the reaction. You thought the reaction of the bond market was right to the Fed. Where do we go from here? So, you know, listen, I think there's so much momentum in the economy, and I think that's what's been reflected in the move higher in yields.

29:09And I think, you know, listen, there's so much hand-wringing about rising yields. People want to talk about this being a bear market for bonds. It isn't really. So rising yields don't necessarily equate to a bear market if they don't turn into lower prices. And so, you know, when you look at all the statistics, the bond market, when yields rise, it becomes a much better opportunity. It's like the P.E. dropping in the equity market. And so when you have strong fundamentals that justify higher yields and you have these unbelievable all in yields at the front of the belly of the curve, you know, I think people need to get over rising yields as being a scary thing and realizing what an unbelievable opportunity it is.

29:47Yeah, I've been trying to kind of point out that once you have yields up at this level, they create this buffer. And as an entry point, they kind of can do their job in a portfolio. It's funny, the psychology around the yield moves, where if somebody were to buy a stock, they wouldn't say, yeah, but if I buy it now, the price might go against me by a couple of percent. That's kind of what people are saying with rates. Absolutely. And bond math, it's geeky, But it's really powerful. The higher your yields, you get this cushion, this carry break even. And that's why, you know, the aggregate index yields have risen each of the last three years.

30:18It hasn't had a negative return in any of those years. And now you can take front to belly of the curve, real rates, risk free, add corporate credit, securitized assets on top of it. And you can build a six and a half, seven, maybe even seven and a quarter portfolio, single A rated. that's like a 5 % real yield or approaching 5%. So, I mean, forget, you know, just maintaining your purchasing power and fixed income. You know, you can double your purchasing power in 14 years at a 5 % real yield. I mean, you're actually making the case that no matter what yields do, there is a case to buy bonds here.

30:53There's absolutely an asymmetry. So if yields back up further from here, there's a cushion because you can earn your way out of it. If we just stabilize, you take advantage of these really, really high yields. And if growth comes off the boil a little or we get a little more progress on inflation and yields rally even just a little, you could be approaching equity like returns in an investment grade rated portfolio. You mentioned that the yield structure at the longer end reflects the economic growth momentum. Obviously, also a lot of attribution to the demand for corporate borrowing to build out AI.

31:27To what degree is that sort of testing the market's appetite for new investment grade paper? So, you know, where we came from was a world of too much money, not enough yielding assets. And so you had had negative net issuance from corporate America in the public markets over recent years. So now you have a change. You have positive net issuance. It's a welcome development for a yield starved market. And so, you know, you've seen some repricing where the supply is very concentrated. But the rest of the credit markets have not had their spreads widened. So that's the market finding an equilibrium clearing level for bursts of supply.

32:06You need a new issue concession. And that just helps round out the opportunity set where you can build these diversified portfolios, take advantage of that new issue concession. A big driver or a driver of this rise in yields is higher oil prices, though. So if we see a retreat in oil prices that allow bond yields to relax, does that bond math change now? What level does a bond math change for you? You know, so I think yields are high today to reflect the strong growth, the incremental supply, but also, of course, energy prices. And that's particularly true at the front end of the curve. If you watch the inflation markets from day to day, it's the front end of the curve that reacts to that.

32:43The back end is more of a real rate story. So if you started to see energy come back down, hopefully we'll see that soon. I think you'd find that more reflected in the front end of the curve. Some of that prospective Fed tightening may come out. That's going to flatter those returns that I talked about. That's that positive scenario. And in terms of the market's current stance on the Fed outlook, obviously pricing in a likelihood of a couple of more hikes. Is that going to be enough to change the equation in terms of restraining growth or constricting financial conditions? So, you know, it's already priced in.

33:14So if it were going to be restrictive, it would be doing its work at these levels. We think there's an asymmetry to the pricing today. I think it's very hard to come up with a fundamental outcome where the Fed out hawks what's priced. I mean, if they do, that's fine. It's already there in the price. But if they don't, again, this is going to lead to this scenario where you get these equity like returns. When you're thinking about what the Fed might do and where interest might interest rates might go, is there more uncertainty in your forecast? Is there an asterisk because we don't really know how this Fed is going to act and react?

33:48So I love the approach. We live in a world where you have unprecedented influences coming together. And I think everyone needs a great deal of humility of trying to sort of forecast where we're going to be. So I like the idea of not guiding ahead of kind of any preset policy path, seeing how the data unfolds. Maybe you get some relief from the energy markets. And I think it's pretty hard to imagine an economy that doesn't come off the boil a little bit from what was nearly an 8 percent growth, nominal growth quarter in the second quarter. So just a little bit of the law of large numbers. It's hard to repeat growth at those levels.

34:27So, you know, we'll wait and the Fed will assess the conditions on the ground when they meet again. But nothing is a foregone conclusion. That presumes you wouldn't be too sorry if the dot plot went away? I'm not a fan of the dot plot. Never have been. And don't put a lot of emphasis on it. Yeah, I would say the only value is to see where the lopsided consensus is. Like this last one, it was like nobody sees downside risk to the economy. So we've got to be alert for some of that. And in March, they were forecasting rate cuts. Exactly. There you go. Russ, great to see you. Thanks so much. Thanks for having me.

35:00Up next, we'll break down the charts to see if investors should be aggressively buying any more weakness in this market. And here's a check on some S &P 500 stocks hitting new highs today. Dell, CrowdStrike, F5, Marathon Petroleum, and Valero. Closing bell overtime. Be right back. The Nasdaq 100 gained 1.7 percent today with names like Intel, Arm, and Estera Labs driving the index higher. Those names also lifting the S &P 500 by more than 1 percent on the day. When you take tech out, though, the rest of that index has pulled back recently, sitting on some interesting technical levels. Here to help us make sense of it is Macro Risk Advisors, Head of Technical Strategy, John Kolovis.

35:36So, John, S &P XTech. Yeah. So here we go here. So what's interesting with this chart, and this is something I've been telling clients over the last couple of days, is that the trader in me wants to buy the tape. Right. But the analyst in me right now needs to see a little bit more evidence. And so if we take out the technology sector on the S &P 500, this is what we have here is what we what we see is this. A pretty decent uptrend that is in place. But we have one that is actually starting to weaken, which is called a rising wedge formation. However, what's interesting to note with this chart is that it's still above its 200-day moving average, and it's rising, and the RSI is getting pretty darn oversold.

36:16And also, if you take your eye and you go across to the support levels, this is at a perfect spot from a trading standpoint to want to get involved and to step in. Additionally, while it's not in this chart, also is that internals are very, very washed out right now. The percentage of stocks above the 20-day moving average is only down to 20%. And interest rate sensitive groups like discretionary utilities, health care, they're all very oversold right now. But at the same time, John, you're seeing credit spreads and they look like they're entering some dangerous territory. Yes. So when it comes to credit spreads, and I think this is a really good way to, I guess, to capture what's going on in the macro environment.

36:51My model captures CDS spreads. It captures mortgage spreads, all your traditional bond market measures. and it's about ready to go into sell territory by going above the 50 line. And the last time it did it, it did it in 25, and that was like a mini bear market. And then it happened again over here in 22 when we had a proper bear market. We're very, very close to that level right now. And that's the analyst in me or the strategist in me right now that's saying, OK, I got to be a little bit careful here until we get some more improvement from, let's say, yields or from oil. Might have had a little bit of help today, I guess.

37:25Spreads looks pretty strong after the Fed today. But, John, China is in the spotlight a little bit here. We have this President Xi meeting with Trump next week. Yeah, correct. So the way I'm looking at it is the reason why I brought it today was to kind of bring in this point where a lot of stock markets or indices or groups are coming down to very important inflection points on the chart. So with the CSI 300 index, it's down at well-defined support over there and also from March and currently right now. This, again, with a deep oversold condition on the RSI, that's telling me as a trader that I want to be buying this here.

38:00However, the analyst in me also notices that this could very well be a bit of a head and shoulders top, that if we do want it breaking underneath this support level, we may have a pretty decent drop there. But again, the point here on this chart is not only is China down at important support level, shows the European Stock 600 Index and many other cross assets as well. They're all at inflection points that they should, in quotes, start to recover. We got questions, John. You got to come over. Both the trader and the analyst. And I think that's where my question will start. It's sort of like how you interpret things.

38:34But the bottom line here is you do think the S &P 500 is what, a buy? It's a tactical buy. And again, this is me being a sell-cider and hedging myself a little bit by saying that this is where it should bottom. The pullback on the S &P 500 since August was very benign and orderly up until yesterday afternoon. We call it a bull flag formation. Got overbought. You pull back and down to the support level, which is about coincidentally with the 50-day moving average is. And this is where it should recover. And today's move was interesting enough. I would say that if the S &P over the next week or so gets above 76.60 and then follows through 7 ,700, we're up.

39:11But until then, I think you still need to be a little bit cautious, have some hedges on just in case oil decides to rip and interest rates decide to stay buoyant. I mean, there's been a lot of focus on, you know, September or this time of year or the midterm election cycle or the fact that the bull market itself is about to turn four years old. Does that tell us anything? Yes and no. I was actually talking to a client before about like what I'm thinking for next year. And I'm penciling in a nine handle on the S &P. And I am worried that, yeah, this is going to be like the fourth year of double digit gains.

39:42And that's is that sustainable. But my playbook has always been let's be mindful of the cycles. We're in a presidential cycle right now. This is supposed to be the deep oversold of the four years, and next year should be very, very strong. So as we go into these oversold conditions, I'm inclined to want to be buying the market, right? And so long as we hold above the July and June lows of this year, those correction lows, then we're fine. If we break underneath that, then I start wondering to myself, maybe this is a head and shoulders top. We need to actually work a lot lower. It doesn't hurt your thesis that you think oil is going to run out of steam at this point and that we've hit the target on the 10-year yield, and that's pretty much it.

40:18Yeah. So, OK. So, again, this is the tricky part. I do think that oil and interest rates start to moderate their advance here. It's going to be a pullback within an ongoing uptrend. OK. My worry. So I got really bullish on oil a couple of years ago, but it was demand driven. Things were good. Now it's supply. So now it's kind of going up for the wrong reasons. And I think oil is wagging the tail for yields right now and eventually to credit spreads and eventually to the dollar and to bubble fill in the blank, everything right there. So I do worry that my my longer term target, which is 180 to 200 in oil.

40:53But that's supposed to be years from now. If that happens relatively soon, forget it. You know, my idea of buying the tape here or even a little bit lower, it's not going to work out. John, thanks. OK, thank you. Love us. Palantir CEO Alex Karp weighing in on AI safety concerns and the growing AI rivalry between the U.S. and China earlier on CNBC. Either we are going to win and provide the stack to the world, and stack doesn't mean you have to take the whole part, or they're going to win. And that means the danger is not just the danger of dangerous things happening to humanity, which, by the way, what business isn't responsible for minding your own safety?

41:31Up next, we'll look at what is at stake for the future of AI when President Trump and China's President Xi Jinping meet next week. And coming up at the top of the hour on Fast Money, we'll discuss how the Fed's interest rate hike, what impact it'll have on the housing market with Ivy Zellman. Another day, another case of AI models going rogue, or six cases to be exact. And a blog post disclosed yesterday, OpenAI says it found six new incidents of concerning AI behavior, including agents engaging in unauthorized communication, fabricating information, generating instructions to disregard normal constraints, and concealing mistakes in task summaries.

42:08OpenAI calling all of those incidents a misalignment in introducing a new framework for tracking, probing, and disclosing future issues. But it's a thorny thing to think about, an AI model that is, it's tasked to do something, so it's going to find whatever way is the fastest to do it. Yeah, there's a lot of focus on whether, in fact, It's just kind of sloppiness in terms of how these things are being given instructions or if it's really just, you know, kind of runaway deviousness by the models. And then you have the second layer of a lot of cynicism of why are these companies telling us these things?

42:41Is there an ulterior motive because they want essentially, you know, to kind of slow down and solidify their head start, you know, Anthropic and OpenAI and and all the rest of it. So I think it's tough to figure out exactly what to what to make of it. The one upshot is the market doesn't seem to have any doubt that the spend on the hardware side is going to continue. Yeah. Almost no matter what. Right. No matter how many of these instances, no matter how many government types chime in, it doesn't it doesn't make a difference. It is amazing. It is amazing. And in fact, you've even heard people say, hey, if they want them more aligned, you're going to have to have bigger models and more compute.

43:15Right. Exactly. Well, I will be a hot topic conversation when President Trump hosts Chinese President Xi Jinping in Washington next week. Eamon Javers joins us now with more. Eamon. Yeah, Melissa, absolutely. We're going to see AI on the agenda next week for sure. And this weekend, too, during preparatory meetings between Treasury Secretary Besant and the Chinese vice premier, Besant said in a statement that the U.S. would be open to discussions on avoiding shared risks on AI and avoiding bifurcation of the two systems. But the big question is what the two sides could actually get done next week.

43:50And for now, at least, expectations from people around D.C. are really quite low. Bank of America analysts say the two sides could establish some sort of AI dialogue on safety, but they see what they call limited scope for policy changes, including around China's access to advanced chips. Part of the thinking is that neither of these two leaders really wants to see much in place by way of guardrails. For Xi Jinping, here's how Craig Singleton with the FDD think tank put it. He says Beijing recognizes real AI risks primarily in relation to the Communist Party's grip on power. But that doesn't translate to China wanting a nuclear-style arms control regime with the United States on AI.

44:32Now, on the U.S. side of the equation, President Trump this week has called concerns about AI safety a hoax and a scam. So discussions of AI, yes, for sure. But concrete policy deliverables next week, there's a lot of skepticism around that, guys. I mean, I don't think it's very surprising that there's not a lot of expectation. On our shores, we cannot decide what the guardrail should be for the industry. So how are we to expect the two sides to come to some sort of agreement? What's interesting, too, is whether or not the issue of distillation will come up and the notion that the Chinese have, quote unquote, stolen from the frontier models, because that has historically always been a rift between the two countries.

45:13Sure. And there's just one of so many flashpoints here. If you look at the Chinese government's view on this is very much about what kind of new technological progress could threaten the Communist Party's control over the entire nation. AI getting misaligned for them means misaligned to the Communist Party. AI getting misaligned in this country means AI disrupting the economy and maybe killing us all. Those are two very different things. And so the two countries are just coming at it from totally different lenses. And then, of course, you lay on to that the fact that the president believes that all of the AI safety concerns have been raised over the past couple of weeks are nothing more than a hoax.

45:53So the president doesn't believe there's a threat here at all. So throw all those things into the hamper. And what you get is a situation where not much is likely to come out of this at the end of next week, but probably a lot of conversation. Yeah. Also, Eamon, thank you. and some fascinating coverage of the Wall Street Journal about how some of the other folks in the administration are trying to get the president to maybe focus a little more on the unpopularity, at least, of the proliferation of AI. All right, that does it for Overtime today. Fast Money starts right after this quick break. Hi, I'm Angie Hicks, co-founder of Angie.

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