Big Drop In Energy Stocks And Holiday Spending 9/3/25

0:02Live from the NASDAQ market site right in the heart of New York City's Times Square. This is Fast Money. And here's what's on tap tonight. Out of energy. Oil stocks by far the worst performers in the S &P today. The sector is seeing its worst drop in more than two months. What to make of the move and where shares are heading from here. And is it ever too early to count down to Christmas? We're still three months away, but new data already suggests this year might not be so merry for the retailers. We'll break down the winners and losers potentially. Plus, glowing Google. Shares at records after an antitrust win.

0:34the latest earnings from Salesforce and Figma, and why the chart master says shares of Ferrari are about to shift into reverse. I'm Dominic Chu, and from Melissa Lee tonight, coming to you live from Studio B at the Nasdaq Market Site, on the desk around me, Steve Brasso, Karen Feinerman, Dan Nathan, and Guy Adami. We're going to get to that story we brought you last night in just one moment. Alphabet locking in its best day in nearly five months and closing at an all-time high, But we're going to start with the big drop in energy stocks, that sector falling more than 2 % and erasing a week's worth of gains.

1:08ConocoPhillips announcing it will cut its workforce by 20 to 25%. That sent names like APA Corp, Diamondback Energy, EOG, Devon Energy all lower in sympathy. While the biggest names in energy, Exxon, Chevron and Shell also took a leg lower as well. Feeding the tumble is a commodity getting slammed from all sides. OPEC Plus is considering another output hike, while tariff concerns inflation and economic uncertainty in the U.S. as traders worried about demand. Could things get even worse for that space, or is there a rebound in store? Ooh, big question. Guy, to you first. Hello, Dom. Welcome, as always.

1:46Thanks for having me. Look, I mean, I've tried to be bullish in oil. It has been foolish to be that way, but it hasn't really gone up or down. I mean, if you look at some of these stocks, for example, Bolero in the refinery space has had a tremendous move off the April lows. Some of these names have been hanging in there. But as you said, the space has been tough. I think it's now 4 % of the S &P 500. I think NVIDIA's market cap is now greater than the entire energy sector. But I'm not ready to leave it for dead. I'll say this, and we talked about it in the months in the aftermath. Chevron announced a$75 billion stock buyback in January of 2023.

2:21That wound up being, if I may use the phrase, the balls high for the entire sector. And if you remember, some of the vitriol that came out of the then Biden administration on the back of that. So it's interesting that that's theoretic good news was actually the death knell for the space. What's interesting is Guy had it kind of halfway right. Energy is half the size, the entire sector of where NVIDIA's current weighting is in the S &P 500. That's how diminished the sector has gotten. Steve, is this anything that we want to buy into or is this that proverbial falling knife in markets? So I share Guy's vision that you can find some value plays in this, but this is not where growth is going to be.

3:02It's been challenged, right? Oil prices are challenged. Geopolitical. If I would tell you that we would have the geopolitical environment, where would you say oil is trading at? Higher. Hundred bucks? Higher. Right. So if you look at supply, OPEC plus is going to be adding 800 ,000 barrels per day. That's with the UAE, 300 ,000. And that's with OPEC plus, 547 ,000 barrels per day. So that is just too much supply for where we're at in the marketplace right now. Then look at the Trump administration. By any means necessary, energy, right? Nuclear, nat gas, oil. This is drill, baby, drill. And not just that, it's also alternative fuels, but not wind or solar.

3:48More tilted, as your point, towards the nuclear. Well, the wind is a really important point. I mean, if you think about the Trump administration, the take that they've had on wind, right? And we know this comes at a time where the demand for energy, you could say the demand for oil isn't particularly great right now for a whole host of reasons, despite some of the geopolitics that you would expect to actually have the price higher. But to come at wind energy because it kills the birds or something like that, I can't remember exactly what the main reason was. I mean, it probably has something to do with the oil lobby.

4:16I'm just going to throw that out there. But when you think about the demand for energy, we keep hearing about this from data centers and we keep hearing about the data centers that are going to be built. It just seems like you would want to actually create the capacity for all of this access because we know that bringing a lot of these nuclear reactors online or building new ones, it's going to take years, right? And so, I don't know. I just think it's kind of a curious situation. I mean, oil stocks, they have been left for dead. There's nothing particularly interesting going on there. And if you have OPEC that is thinking about, obviously, increasing supply, I just don't know why you'd go out and buy these stocks.

4:46Why would the Karen? I mean, from a value manager's perspective, oil and gas is probably a good trade. If you want to look at it fundamentally, that we need energy, that Nat gas is a proven way to get it in a relatively clean format compared to, say, other fuels. Why is this traction not happening for oil and gas companies and stocks? I mean, I thought that for a while that we were due for a bounce and the stock was I mean, the whole sector rather was much higher than where it is now. It's in my acronym as I forget T for terrible. It's it's really been bad. And, you know, I think the Trump administration, it's nice to have oil here.

5:26Right. When you think about we're flirting with inflation numbers that are really too high. Think about if energy were to add fuel to that fire. So I'm fairly, you know, I'm still long. That's been the wrong place to be. For a long time, the story has been, wow, these are newly disciplined companies, right? We're not going to see any more of that overdrilling. We're not going to see, we're going to see balance sheets that are in good shape. We're going to see cash flows going back to shareholders. All of that's true, and yet it doesn't matter at all. I mean, it's, when I throw in the towel, that will be the time to buy it.

6:03I can assure you that. Think about passive investing. All the index investors out there. Exactly. How much money is coming in to other spaces other than oil? No one's sitting there reaching. Even though you see the XLE will have great days and bad days. Everyone wants tech. And you're not reaching for energy in those ETFs in the passive world. All right, Guy. I mean, this is one of those scenarios where, to that point, passive means every dollar I put into an S &P 500 index fund, only$4 of which is going to that sector, right? And only a handful of that is even going to Exxon. That's right. It needs to be 11.

6:35By the time it's done. Right. It's not NVIDIA, where$8 of every$100 is going into that. So they lose on that. We've talked about this for a long time. One of the things we talked about for Apple, the reason why Apple hangs in there as well is it's in over 400 ETFs, of which it's, I think, one of the top 15 holdings. And obviously all these indexes as well. So they win. Passive investing, the big companies in that space that Steve just talked about, are absolutely going to win. What you have to be concerned about, if there is some rotation for whatever reason, when passive becomes active, it's never active on the way up.

7:07And I think that's where energy does wind up with. By the way, it's a conversation for another time. But active ETFs are growing way faster than passives now. So maybe it's just a matter of time for the stock pickers get in on this action. All right. For more on the headwinds facing energy right now, let's bring in RBC Capital Markets, global head of commodity strategy. You know her, Halima Croft. She does this for a living. So you heard the conversation around the table, Halima. It's a supply and a demand issue, right? Of course. And I think today's move was really driven by headlines that OPEC plus might consider adding additional barrels when they meet on Sunday.

7:44Now, they have officially written off the two point two million voluntary cut. The question is, do they move on to this one point six five million voluntary cut? Do they start slowly unwinding that? The one thing I would say, though, is that is a big headline number. But the reality is that most of the OPEC producers are producing basically at full capacity. So when we talk about any incremental ad right now, we're really only talking about a small number of countries that can put on those additional barrels. So it would be Saudi Arabia, the lion's share, and then potentially some smaller incremental ads from UAE and Kuwait.

8:24But again, it will not be the full headline 1.6, just as it wasn't 2.2. It was really only about half of that that came onto the market. And before today's price action, early in the week, we had Brent sort of, you know, approaching$70 as there were concerns about what's the path forward on Russian production, what's the Trump administration policy going to be towards Russia. So again, I think we do have to pay attention to what happens on Sunday. And I don't think a decision has been made yet on what the policy will be. Halima, I know you focus a lot on OPEC and its partner countries, OPEC Plus.

8:59How much of this story can really be influenced by the U.S. production that could be coming online and an administration that is looking to put more of a medium to longer term tailwind behind oil and gas when it comes to capacity here in America? Well, sir, if we go to the fourth quarter, there is a concern in the market about an oversupply situation. not just because of the United States, but because of countries like Brazil, Guyana production coming off, and a concern that we're going to start to see a growth in stockpile, that essentially China has been doing a lot of buying. Will they basically say we're tapped out and will we start to see inventory builds in visible markets?

9:41That is the theory of the case for a very shaky fourth quarter for all markets. Again, what we simply don't know is what the OPEC policy is going to be. And frankly, as we look out to next year, we see U.S. production declining because this is not an optimal price for U.S. production to grow. So in a sense, OPEC and these sovereign producers that have lower cost of production, they are going to be more in a dominant position going forward. Halima, it's Karen. Thanks for being with us. Talk to us about peak shale. So again, I mean, if we look at the really important question is, like, at what price do you need to sustain really robust U.S.

10:27production growth? And this has been the sort of, I think, contradiction or the confusing part of the Trump policy, because he is very much a drill baby drill president. Like, he really talks about American energy dominance, not just from an economic story for the U.S., but also for a foreign policy story. But the price points that he throws out when he talks about wanting oil at$50, potentially low 60s, that's not an optimal price for U.S. production to sustain growth levels. So, again, the question is going forward, if we stay in this muted price environment, where are the additional barrels coming from?

11:04Now, production is set to come on from Brazil and Guyana because those are more long lead time projects. Now production is coming on regardless of price, but the U.S. is much more price sensitive. So if we stay in this muted price environment, we have the expectation that we will see declines from U.S. producers next year. Halima, I'll use the term, you know it, our audience knows as well, but crack spreads continue to widen and the companies that buy crude and sell refined products are winning. And that's been going on now for a while. Do you think that continues? Again, so for me, I don't really cover the companies.

11:41But I just would say as we look out towards the end of the year, I do think we have to, again, pay attention to a couple of key factors. Like, where do we think China is going to shake out? Because we do have a lot of concerns over the economic situation in China. Are we going to see China essentially slow down? What does that mean for really builds across the complex? Are we going to start to see crude builds in very visible markets? What has been helping the oil price over summer is that we haven't seen crude builds in visible markets. So do we start to see a real change as we go into Q4 when we're expecting a more seasonally soft market?

12:22Again, I think there's a lot to be sort of up in the air in terms of how OPEC has to think about this. Because if you are going to start to bring on more barrels, the question is, like, how would you calibrate it, given the concerns that are out there? All right. Halima Croft, head of commodity strategy over at RBC. Thank you very much for that. We appreciate it. We'll see you soon, Halima. Thank you. All right. Steve, I mean, she was a former analyst with the CIA. She kind of knows a little bit about what she's talking about here. What do you think? A lot of it. Yeah. You know, when you look at break evens, though, counterintuitively, U.S.

12:55companies have lower break evens because the break evens for OPEC are based on their national budgets. So those are higher. Their cost to pull it out of the ground is cheaper, but they need a certain level to supply for their budgets. So I think that OPEC needs to hold on to market share and USA needs to keep pumping. But they have they have the ability to watch how much they're pulling out of the ground here versus there. There you go. All right. Meantime, another check on Alphabet right now. After last night's ruling in the antitrust case against Google, the company avoiding the most severe consequences proposed by the Justice Department, allowing Google to keep its Chrome browser.

13:37But barring the company from exclusive contracts, the 9 % gain was its best since April 9th. Apple, also higher. Google pays the tech giant billions of dollars every year to be the default search engine on iPhones. The stock also getting a boost late in the session on reports it's planning an AI-powered web search tool for Siri to rival the likes of OpenAI. Karen, what do we think here? I like it. Yeah? Yes. I mean, you know, this sort of giant overhang on the stock, one of two, has been lifted, which was how bad were the remedies going to be? And they turned out to be way less bad than what could have happened.

14:14The other thing about, all right, is search under threat? So we're going to see them lose share in search. But I think the valuation here, I know it's at an all-time high, but the valuation here is still not, as Guy would say, undemanding, right? And they have a lot of cash. And, I mean, there's a lot of things going right here. So last night I said if I owned none, I would have bought yesterday in the after hours. I still think that when you look at the whole tech space, you look at the bank seven, you look at valuations, Alphabet is the cheapest. And now having this removed, that's huge. So I like it here.

14:50I think, you know, and you've got Waymo and you've got Google Cloud and you've got YouTube and you've got still a great search basis. And you have a ceiling that's been now lifted higher, right? See, Karen and I are kind of on different sides of this. And I think Karen obviously was right last night when the stock was up 5%, 6%. She'd say she'd buy it right here. And, you know, if they can pull up a day chart, not that one. It's really fascinating, actually. Like the opening tick was the low tick of the day. And then you see it just basically flatline within a 1 % sort of thing. It just tells you, like, there are folks out there just buying this stock.

15:20They're sitting there on the bid. Look at that. You don't see that sort of price action too often, especially when you see a massive gap that's equal to hundreds of billions of dollars. Now, going back to the fundamentals, I have not been in the camp that there was some big overhang to the extent like the worst case scenario was a very low probability outcome, in my opinion. Right. And so if you think about this being lifted, it's the bigger issue to me is really the fact that 90 percent of queries on the Internet go through Google. Seventy percent of the advertising revenue digital is going to Google.

15:51So how much more share are they going to take in an environment where they've already been deemed to be a monopoly? The judge did say that there are many challenges within this space. Those challenges are squarely at Google. So when you think about them having to cannibalize themselves with these AI overlays for their searches, not only are they going to have to convince consumers that are already hooked on OpenAI. OpenAI has like 600 million monthly active users, and that's just scratching the surface right now. So it's growing faster than any app that's ever existed on the planet. And you can say, well, they're coming after squarely an alphabet.

16:27So to me, I don't mean to be really negative about it. I just don't understand a 9 % gap given something that I don't think was like a huge discount in the name. And I think the bigger issue is really what's coming at them right now to their core business that, make no mistake, is a monopoly. Does that mean, Guy, that Gemini is not enough or even the endeavor to make it competitive with all these other AI tools? I get what Dan is saying 100%. The point we were making last night is as much as it's about that, it's more just a multiple expansion game. Because I think that the announcement last night, in my opinion, gave an all clear to go from the multiple it's trading at, which is trough multiple, to what should be a market multiple, which is somewhere between 22 and 23 times next year's numbers, which is 11 bucks.

17:11We had Julian Emanuel on last night, by the way, whose best case scenario said he could see the S &P trading at 30 times. And, you know, I don't know if that's going to come to fruition. But the point is, all those things being equal, it's still a cheap stock just in multiple basis. All right. That's the story on Google. Coming up, we've got our eyes on a couple of names reporting earnings just in the past hour. The details out of Salesforce, American Eagle, and Figma's first report since going public. All that next. Plus, shop till you stop, right? Why this holiday season might not bring the cheer a lot of people are looking for and what it could mean for retailers.

17:46Don't go anywhere. Fastest Pack at 2.

17:58Welcome back to Fast Money. An earnings alert right now on Salesforce. Shares are under pressure despite top and bottom line beats. The software company forecasting a weak current quarter. The conference call is underway. CNBC's Steve Kovac has the latest details on Salesforce. Steve.

18:16is a little light which is dragging on shares right now so it wasn't a pretty picture going into this report anyway with shares of salesforce down about 23 percent year to date now revenue is up 10 percent year over year in this report but no signs yet how much artificial intelligence is contributing last we heard from ceo mark benioff salesforce's ai product which they call agent Force is on a$100 million annual run rate. But that's nothing compared to the projected AI sales for leaders like OpenAI and Microsoft, which are all expecting over$10 billion in AI sales this year. And this has been a trend, Dom, that we've been seeing playing out in the software space, difficulty incorporating all that AI and driving growth from their products.

19:01We've seen it at companies like Adobe as well. Now, the call just started, nothing concrete from Benioff as far as how AgentForce is performing, and any more ideas how they can use it to juice the AI business. We'll be monitoring it as it goes on over the next hour. But after that call, you can catch Benioff on Mad Money with Jim Cramer next hour, Dom. All right, Steve Kovac with the latest on Salesforce. Thank you very much on CRM there. Dan. Yes, sir. What do we think about whether or not this Salesforce trade is one where you can make it the indicative trade of AI? You can't right now. I mean,$100 million recurring revenue on a company that's meant to do$44 billion in sales, it's a rounding error.

19:42And this is a company that's been telling a story about agentic AI for a while. If you think about what the first kind of use case was, was consumer, you know, customer relations or consumer management. I mean, the name of this company is CRM, right? So they've been talking about this for two and a half, three years. I believe Mark Benioff will figure it out. I don't think as far as from a competitive situation, at least in the enterprise, you know, like they're going to be so far behind, but they just need a customer like uptake of these products and they're not getting it. And that's one of the reasons why the stock has been in the penalty box.

20:15The last thing I'll just say is like them announcing a 20 billion dollar buyback. It's probably not what you want to hear for a company that was once a growth company that now has high single digit revenue growth and that sort of thing. So to me, I think that investors right now, you can just see by the performance of the stock, not just down four and a half percent right now, but the way it's traded over the last couple of years. They're not buying what they're selling. And there's a lot of companies that have gained hundreds of billions, if not trillions of dollars, a market cap based on the story and the performance that they are getting out of AI.

20:45If there were a lot of reasons to break a lot of eggs to fuel growth, it would be the AI story. But it's not playing out right now with Salesforce, Steve. Yeah, Benioff is a great leader. But when you look at the growth, the growth has really decelerated. And when you look at their nearest comparison, when I look at ServiceNow, ServiceNow has a growth rate of 20 percent. CRM has a growth rate of 8 percent. And ServiceNow really dominates that IT service area. 50 percent market share. You have a lot to prove with AI. And if your growth is decelerating, that's a problem. All right. That's the trade there.

21:19Coming up on the show, more earnings action. the details from Figma's first report since going public, as well as the numbers out of American Eagle, Hewlett Packard Enterprise, and more. You're watching Fast Money live from the Nasdaq market site in Times Square. We are back after this break.

21:44Welcome back to Fast Money. The hits keep on coming. Another earnings alert here shares of Figma plummeting after its first earnings report since going public. The design software company's conference call is underway. Mackenzie Sigalos has the details. Mack, what do we know? So, Dom, Figma is in sell-off mode as investors digest breakeven EPS revenue that was in line with expectations and then guidance that did actually beat estimates. Now, on the call, CEO Dylan Field just said the company may rethink its reporting framework and warned that margins will come down near term. He also stressed Figma will keep chasing organic and inorganic growth, even if that's not what investors want to hear.

22:21RBC's Rishi Jaluria told me that at these valuation levels, the stream is looking for a blockbuster quarter and faster growth. Now, one reason for the slowdown, Figma hasn't yet monetized AI or new products, but it has already built in the costs. So that means that Q2 reflects higher expenses without factoring in potential new revenue streams. Dom? All right. Mackenzie Segal is with the latest on Figma's results and that drop in the post market. Karen, what do we think here? Well, remember, so this stock came out a little more than a month ago at 33, priced at 33. I think it traded up to 145 on the first day.

22:58So already the bar was exceedingly high. So but fast forward to today. All right. Stock closed at 68. when you have that kind of just enormous, I don't know, exuberance. Or a gap in expectations. Yes. Then it's going to be really hard to jump over that and coming in a little light of that. I'm actually surprised it isn't down more. More. Right? So, I mean, you know, I understand what she's talking about, about them, you know, having expenses up front and hopefully bearing the fruits of that later. That's not good enough when you've had this history in the one month that has been public. In a short amount of time, Guy.