Closing Bell - Closing Bell 10/7/26

Episode Date: October 7, 2026

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Melissa Lee and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

All right, Brian, thanks so much. Welcome to Closing Bell. Scott Wobner, live from Post 9 here at the New York Stock Exchange. This maker breakout begins with the backup in rates, the resiliency of stocks. And what happens next in this record-setting market? We'll ask our experts over this final stretch. Take a look at the scorecard with 60 to go. In regulation today, we have been read throughout this day. As Brian's been documenting, though, coming off those lows, the 10-year hitting its highest level in some 24 years.

Investors also watching yields rise around the world. That's been very much a similar story. elsewhere. How about SpaceX today? To raise $40 billion in a financing deal, stock down about 3%. It's at a good couple of days, highest level really since June. Most of the mega caps lower as well today. It does take us to our talk of the tape. Whether this chugging along tech trade will continue to lead the markets between now and the end of the year. Let's ask Dan Ives. He just initiated coverage on the sector for his new firm, Yorkville Ives. He's back at Post-Nine. Good to see you. I saw you initiated kind of everything with outperform. I was like,

go, wow, there's a shock. But, I mean, it does underscore how bullish you remain. And let me ask you it this way. Why aren't you wavering at all in your bullishness around this space, given what the stocks have already done? And, you know, I guess where expectations continue to go. That's a good question. I mean, for me, it's really, and we'll be in Korean next week, is what we see in chips and what we see on the data center side and enterprise use cases. Look, I'd say right now we're seeing a 30 to 40% acceleration sequentially because it's pretty clear from an enterprise perspective and also on the government side. You have to get in line for these deals because right now, if you sign up for an AI strategic deal, you probably can't even implement until the end of next year. And it just speaks to my view, 13 to one demand supply for chips, which is why from Nvidia to Microsoft to Palantir and others, I just cannot see being barris here, give it, I think,

streets underestiming numbers, 20%. Well, see, that's the thing. Some people suggest that the street is over-estimating numbers by a lot. I don't know if it's 20%, 40% or whatever it is, but that the street is just way over-inflating the numbers. How do you know they're not? That's all the work that we do in the field. And I can tell you that.

Well, these are not morons who are suggesting that we're over-flating the numbers. And that's what makes a market. I mean, you're going to have ones that worry about, like, what happens in terms of the 10-year? Do data centers get lower down? We've talked about a lot on this show in terms to go into the midterms. Can those numbers ultimately, you know, can they not get green lighted? What I could tell you, Scott, from talking to our customers from Palantir, to what we see on the hyperscaleal

of Microsoft, Alphabet, Amazon, what we see on the chips. I think we're going to have an earning season. That's going to be not just a blowout earning season in terms of this quarter, but I look at next year numbers in tech. I think street across the border is underestimated by 20%. It's my view that as they continue to sort of play out, no, there's things like Oracle where for good reason there's skepticism, just given the debt raise and just given what they're doing. I think streets obviously skeptical made for good reason there. You are as well, at least a little bit.

Yeah, because to me, there it just comes down to like you have to be able to do a balancing act as these hyperscaler. Build, take on some debt, spend money, but strategically you're not cutting what I've, would I have. view is sort of the meat, you know, in terms of some of the core talent. I've read your call on Oracle, which I have in front of me, which is in line, the price targets 155. And part of me was like, man, how can Ives be in line on Oracle and then so bullish on everything else if it's all part of the same story? Other companies are raising debt.

This is just running with the crowd that's skeptical about Oracle. How would you come back at me on that? The way I'd say that is that they're trying to be a hyperscaler. When you look at the true hyperscaler, say what Microsoft, what Amazon, what Al-Bet, I'd say at some extent, even in some ways what MET is doing, they're not going to have the issues that Oracle's at. Oracle, the problem is, and I believe they'll get onto the other side of it, the problem is that the debt that they're taking on,

they're having to cut significant costs to get there, and investors will continue to be skeptical about, you know, open AI and the other deals they're able to get done. What I see on the Azure side, it's an acceleration. What I see on AWS, it's an acceleration. What I see on Google GCP, it's an acceleration. That's why I separate out Oracle a bit, and I used to be bullish on it, just the checks that come out and make me more skeptical.

So if Google, Alphabet, Amazon, Meta, Microsoft, and all those hyperscalers are going to continue to hyperscale and continue to spend, where's the money going to come from? Are they going to continue to go to the debt market? Interest rates have backed up? Where's the money going to come from? If they continue to raise their CAPEX, where is that money coming from? Clearly, debt raises are going to have, and you'll see different type of equity offerings.

But my view is that from a free cash flow perspective, I think what you're going to start to see play out over the next 12 to 18 months is that it's not just about CAPEX, CAPEX. Now the monetization phase starts. And I think as you start to see that play out from a free cash flow perspective with the hypers because to some extent enterprises, less than 5% of enterprises have gone truly down the strategic AI path, which is why I could argue there's probably 30, 35 billion incremental revenue for Azure that's not being accounted for in numbers. And that's why.

When I look at Microsoft, that could be a six, ultimately maybe $700 stock in the book case. What if you're afraid to use your balance sheet in terms of, the free cash flow because you don't want to go free cash flow negative. One of the reasons why Microsoft has had such a great run is right on earnings where the CFO, Amy Hood said we're not going to go free cash flow negative. Market loved it. Stock has ripped ever since. But you don't want to go free cash flow negative, but if interest rates are going up,

you're sort of hindered by the increased cost of capital, aren't you? Is there no impact whatsoever that you see? There's definitely an impact. And we've sent probably 10 to 15% of data center buildouts. are potentially at risk between what's happened on the debt side, in terms of the 10-year, as well as the midterms in terms of just the political sort of backlash relative to data centers.

At risk for what? Delay? Not being built at all? Not being built, maybe, you know, sort of kick the can down the road. But even when you assume that, that's 800 to 1,000 data centers that are getting built. You obviously have, from a government perspective, and we saw that in sort of the all hands meeting on tech,

now I've been on the same page, it's my view, there's a recognition for the first time in 30 years, U.S. is ahead of China when it comes to tech. And that's just such an important part. And that's what more global money to play the AI trade is going to be on big tech. People like Ray Dalio talking about AI being in what he calls a classic bubble because of all the debt piling up and now the fact that interest rates are going up. Nothing to see here? No, what I'd say is if I was in Taiwan, Korea, and I felt that the chip and the deals and the delays were actually starting to come through. Instead, it's an acceleration. I mean, when I think about where numbers are for the next year or two, you could argue equilibrium

from a chip perspective doesn't happen until early 2009. And I just view it, this is building Vegas strip 1955. And this is, and everyone understands, it's an arms raise. This is the time to do it. And I just think that these numbers continue to be underestimated across, like, and the second, third, fourth derivatives now point out, which are the SaaS apocalypse, why cybersecurity is now starting to get a significant bid, because that's going to be more surface area. Last point before I let you go on the newest hyperscaler, I think it's fair to say SpaceX, you view it as a hyperscaler. They're going to raise $40 billion, speaking about raising money for the buildout for

Nvidia chips. What do you think? So the smart strategic move, and the reason we're bullish on SpaceX, it's my view, they're not just the next hyperscaler, over an 80% chance by the end of the next year that they all and we'll walk down the island merged with Paso. All right, it's good to have you here. As always, Dan Ives, thank you very much. All right, a programming note, too, because we're just moments away now

from David Faber's exclusive interviews today with Palo Alto, CEO Nakesh Aurora, and the White House AI czar, Jay Clayton. You don't want to miss that. As I said, it's coming up in a matter of moments from an event out in California. So we'll hear more about exactly where we are, where we think we're going. Let's bring in our panel now. CNBC contributor, Capital Area Planning Groups, Malcolm Etheridge, and New Edge Wells, Cameron Dawson.

have you both here. Tech has very much led this rally. The whole reason why we got 7,800 closed on the S&P yesterday for the first time has been because of tech. Is that how this market just continues? It's the only show in town. Until we get earnings at the end of this month or early November that tell us something to the contrary,

the entire ecosystem once again relies on tech. Ironically though, we're seeing the shift toward the hypers being the leaders as we get closer to earnings where we find out whether There is some more there there as far as the spending you were just asking. I thought you were going to say it's the only game in town until interest rates go down. I don't know that interest rates actually matter at this moment as much as we want them to. I know that the spike in interest rates today is being blamed a lot for the sell-off that we've seen today.

But I'm not convinced it's not the last point you are making today, which is related to the SpaceX debt issuance at $40 billion in the market, starting to read through that as maybe we're running out of a little bit more runway than we feel. thought we were, or we're getting signs maybe that the runway is decreasing, and we've got to start to make some moves there. I know, but look at what's happened over the last month. I mean, I'm not even really talking about today. Today doesn't really mean much to me, but if you look over the last month, if you look at the

performance of the RSP, the equal weight versus the NASDAQ, one goes like this, the other one goes like that. What's happened in the last month, the 10 years backed up by like 50 basis points. So it's obviously had an impact on every other part of the market. beyond tech. Yeah, the casualty of higher rates has been the effect of really weak breadth in this market. The fact that you can have a new all-time high in three-quarters or three-fourths of the market are below their 50-day moving average is a function of the fact that you have these high interest rates. We're a year away from the bottom in interest rates back October of

last year, the 10-year bottomed about 4%. So we're up 130 basis points since then. In that time, the multiple in the S&P 500 is down 20%. But the market's up 16% because earnings have been so very strong. So it raises the question in 27, the earnings growth rate is set to go from 34% this year to 16% next year. That's a lot less buffer to absorb some of these macro shocks, which the market has been able to do well just because that earnings growth has been so extraordinary. So to your point, we're at 19.3 times right now we were at 23 times a year ago. earnings are so robust. So that's that story.

Yeah. Right? I mean, are we not worried as much about the rate issue because earnings are so strong? I think that it forgives a lot of sins. It allows you to be able to absorb the rate shock in a more meaningful way. And you look even at the tech names. The tech sector is trading at 21 times forward earnings, which is a very low premium for the largest growing or the best growing EPS sector of the market to be trading.

Now, part of that is a function that the quality of earnings has gotten worse. If you look at the Mag 7, they used to be free cash flow generating machines. They deserve to trade it a big premium. But now they're burning cash flow. You should not trade them as much as high of a premium. I think with semiconductors, there's a certain aspect that semiconductor valuations are down a lot from their prior peak. Some of this is the market pricing in that are we close to peak earnings. We're certainly at peak earnings growth this year.

Semiconductor earnings are going to grow 110 percent. But how do we think about a deceleration in earnings? And that probably explains the multiple compression. I mean, do you agree with Malcolm that tech, I mean, it is, it certainly looks like the only game in town. Yeah. Over the last month, obviously, it has. Is it going to stay that way as a result of everything that you said? I think given the fact that higher interest rates have the potential to weigh on the growth of other sectors of this market, but not nearly as much on tech, people are going to where the earnings are going.

So if you see relief in rates, if you see relief in oil prices, it ends up becoming a binary. outcome where maybe the market can broaden out again. But that means that in order to bet on a broadening out, you have to bet on knowing where the tenure is going to go, knowing where oil's going to go. Well, do I need to then know where the Fed's going to go? I mean, do you have any confidence in buying other areas of the market, you know, cyclical areas that have gotten hit pretty well until you know how many rate hikes you think are going to happen because that's going to directly impact the movement and interest rates, among other things? I don't because I think it's more than just interest rates that impact everything else. Cicicles included.

you think about energy prices and the fact that the energy markets are still on edge, that's going to have an impact on things like retail, right? Those higher transportation costs are going to get passed through to somebody. We'll find out during this earnings period to what extent. But if we talk about next year's earnings growth, it's got to come from somewhere. It's probably partly there. Does it matter to you that you have such a large number of stocks within, you know, the market that are below their 50 or 200-A moving averages?

We focus on closing above 7,800. It skews the whole story. And on one hand, when you say, when people say not you specifically, oh, well, the market's looking beyond rising interest rates, no, it's not. It's just, you know, part of the market is. And that's skewing the whole picture. Well, I think the mechanics of how we get next year's earnings picture, that rotation that it sounds like you're leading to it. And to Cameron's point about how expectations next year are down, which means we've got to diversify who the leaders or what the leadership looks like within the S&P specifically. I think the mechanics of that can be pretty brutal.

Because what that means is we're no longer relying on the hyperscalers to spend at the level that they have been to buy the chips from the companies that they're committed to. And that whole disconnection is going to be pretty catastrophic if that happens as aggressively. What about the bubble talk? The debt that's been raised that still needs to be raised probably for the buildout. The idea that you're doing at a much higher cost of capital than you were when these announcements first came out. Yeah, look, I think that there is a big question about how we continue to see this hyperscalor spinning machine continue to run. Look, we know that hyperscaler spending on CAPEX is going to slow next year.

It's growing about 100% this year, down to 30% next year. But free cash flow, negative free cash flow will swell next year because your cash flow from operations is not seeing the return on that investment yet. So if you look at consensus numbers, they're expecting a massive inflection higher in cash flow from operations in 28. meaning that you're going to start seeing the benefit. If you don't or if it's delayed, or let's say potentially somebody like Anthropic or Open AI can't raise capital as much as they need, they pull back on their own spend,

which is 30, 40% of the backlogs of some of these hyperscalers, you start getting into an environment where you start questioning that hyperscalor capex growth and that, of course, feeds into semiconductors and the earning story. I think what helps to make that point clear, too, is that we're seeing a shifting in the fixed income market, its willingness to take up these bonds that you're talking about in the high-yield space. Just back in April, Amazon issued bonds that were meant to fund the hyperscalor build-out.

The ones they issued in September just after didn't have as much fanfare, and they had to actually increase rates and covenants to get them done. And we're seeing a lot more of that kind of stuff happen in the bond markets now from these companies, like a SpaceX, going out to the market and saying we need to issue debt, and we have to see where people are willing to take these bonds up. I think that that changes, the appetite for that changes in 2027, which could pull back on these companies' capacity to spend regardless of whether they want to or not. And that could be pretty meaningful for that earnings picture.

Got to leave it there. Guys, thanks. Good having you both here. Malcolm Etheridge, Cameron Dawson, right here post-9. Brandon Gomez has a look at the biggest names. Moving into the close for us. Hi there. Hey there, Scott.

Yeah. First up, Penguin Solutions up today after a strong Q4 earnings revenue boost and raising fiscal 2027 guidance. Multiple banks raising the tech company to a buy while Barclays maintained its underweight rating, but did increase its price target. The company you can see up about 13% today. Next up, shares of LG electronics fell today after the company released preliminary Q3 earnings that show profit coming in well below market estimates. The South Korean electronics company down about 11% right now.

And then finally, Hewlett-Packard Enterprise in the green today after the company announced four new servers powered by AMD's processors that could max maximize compute performance and improve AI-related workloads shares of that company you see now up about 3%, Scott. All right, Brandon, come back to you in a bit. Thank you, Brandon Gomez. Just getting started here coming up next. The exclusive interview I mentioned, newly appointed White House AI czar. Jay Clayton, Palo Alto, CEO Nikeshaura, with David Faber next. All right. Welcome back. Executives from a cross-tech are meeting in Napa Valley with AI, obviously, all over the agenda. David Faber joins us now with Palo Alto, CEO Nikeshaara and the White House AI czar. Clayton. David, take it away. Thank you, Scott. Yeah, it is our first opportunity to speak to Jay Clayton, since he was appointed the leader of this so-called super intelligence force. Gentlemen, good to have you both. And Jay, let me start with you, because as I said, you're leading this SI force.

You said it's intended to ensure the U.S. stays the leader in AI. You've also said that the interests of the American people will also be put first. And I'm curious how you see balancing those two goals, particularly when we have frontier labs worrying about safety, talking about pacing this technology. Where is the balance then in those goals, both keeping us safe, so to speak, or at least putting us first, but also being a leader? Well, David, thanks. Thanks for having me. Look, people talk about balance, and it's kind of like, well, I have to increase slowing it down or slow it down in order to have safety, it's actually the other way around. You have to develop technologies in a way that promotes safety.

And that's what can be done here. I think there's a real false dichotomy in that there's a tradeoff of speed and safety or a tradeoff of American leadership and safety. Let me tell you, American leadership is absolutely essential to safety, and it's absolutely essential to this technology having the maximum benefit for the American people. All right. Well, I know you're early, obviously, in your work here. You've got about 120 days to do it. But, Jay, what have you learned so far that gives you that belief that you can do both and do both so that you're not slowing anything? Well, what I have loved and what President Trump and Speaker Johnson did in bringing together that historic White House summit was developed a candid dialogue with the leaders in this industry.

And there are others in this industry. We have to recognize it's not just five or six companies. This is 20, 25 U.S. companies. And in that dialogue, it is clear that they recognize that the safety of the American people, the freedom of choice for the American people, the comfort that this technology is going to be developed with their interest must not only be what we say, it must be demonstrated. And we're going to take 120 days to get this on a path. where that is demonstrated to the American people,

not just by the government, but by the industry. That's the goal, David. Yeah. Nikesh, let me come to you, because I think soon after we heard from Dario Modei at Anthropic, Sam Altman as well, talking about pacing the frontier, you had a social media post in which you said, you believe deep down that that was a commercial strategy.

You went on to write a ninja strategy, the liability associated with a model gone rogue, has the potential of wiping out the economic opportunity of any frontier company. How do you best show the duty of care? You show that you care. How do you make sure you don't lose out to your competitors? You get them to do the same thing.

That's a quote from you. It's kind of a cynical view. I mean, do you not take them seriously when many of these safety people inside these labs seem to be very concerned? Look, I've got to, first of all, thanks for having me, David. I've got to go reinforce what Jay just said. The focus needs to be on a,

increasing the pace of deploying this technology safely and securely. The challenge is not to slow the technology down. The challenge is to make sure that we put the right safety and security harnesses around this technology. And I think that is immensely doable. It's as much of an engineering problem as it is to build these amazing frontier models. I think we're not going to win the super intelligence race if we don't focus on making sure this stuff gets deployed at speed, but with the right safety and security guardrails. We cannot give AI agency without having a reasonable understanding, actually more than a reasonable understanding,

of how the deterministic outcomes are going to be created by this technology. So the notion that you can have thousands of researchers racing ahead building this technology and not want to pay attention at the same time to safety and security is unfair or false, as you said, is false dichotomy. We have to balance both together.

And you think they can do it. And David, let me jump in. I mean, I want to understand why you guys think that this is possible when these very researchers seem to be throwing up some of their hands and saying what we're seeing is really scary. Look, David, we have had many technologies that had the potential to do harm and where the researchers have said, if it's in biotech, if it's in aerospace, if it's in other things,

where researchers have said this, and how have we attacked it? How have we attacked those issues with control and monitoring? To go back to what DeKesh said, and to try and simplify it, these models must have control and monitoring that is not only acceptable to their developers in the companies, but is acceptable to the American people. And I would say that in a month's time, over the past month, we have transformed this from, hey, this is a technology that's coming, but we don't know if we control it, to this is a technology that's coming and we must control it. That is a very important mind shift.

And that's where the industry, that's where we're going to hold the industry. to it. We're going to hold the industry to that commitment. Jay, you've made it clear that, you know, there is a risk of not being first and that this is a race, namely with China. Why? Multifaceted, David, multifaceted. There's the economic side of this, which is continuing to lead in the economy is very important. This is a transformational technology across the economy. It is in technology. You know, technology builds on technology. Our leadership in technology has kept us in head. But then there's a much more narrow and acute one, which is to the extent there

are risks. Let's just pick hacking risks with this technology. If you're not ahead and your adversaries are, your vulnerability across your critical infrastructures goes up dramatically. And that's, David, that's why it's not just me on this force. We've got Emil Michael, we've got Andrew Ferguson, we've got Scott Cooper. We have people with expertise in all these areas, and we're going to address infrastructure. We're going to address the consumer. Andrew Ferguson at the FTC and his ability to put the consumer first is fantastic. And Scott Cooper knows all these players. I'm counting on him to deal with these people. But is it just liability law that you're going to rely on that's going to make them all good

actors? Well, you said it and actually, Nick Ketch, look, so well is that if you want to survive, you've got to behave. I think so. Like, I think... Go ahead, Nikesh. There's ample... No, no, I was going to say, there's ample responsibility

at the frontier labs and people who are in the model development business. They understand that they need to do this in a responsible fashion. I think some of the extreme behavior we're seeing with AI are testing the boundaries of AI to understand what the capability is.

And as Jay said, you could take any technology in history and we said, let's test the boundary of fire, let's test the boundary of knives, let's test the boundary of guns. Guess what? Really bad things. happen. Let's fly our test flight over a city. You know, you don't take a test jet over a city. You do it over the desk. No. Right. You also have the FAA.

When we deployed this, we have. Well, and look, David, we have a number, exactly, we have the FAA. Where this technology is deployed and applied in aviation, we're going to expect the FAA to step up and do exactly what it does, which is insurer safety in that area with a whole. of government coordination approach. By the U.A is a very interesting analogy because the FAA had two mandates. Their one mandate was to make sure flying is safe, and the second mandate

was make sure a lot of people are flying. It's kind of like the super intelligence force. Their mandate is to make sure that superintelligence wins and gets deployed and make sure it's done in a safe and secure manner. So I think it's a great way. And David, I'm not saying that this is easy and is not going to require... The reason what I would say is some of the

most influential business people in the world, not the most influential people in the world right now, came to Washington, is we understand this is going to take a tremendous amount of effort, but we're ready to do it. Well, let me, yeah, all right. You know what? You guys are tight on time. It's a much larger conversation, but let me end with you then, Jay. I mean, what does a successful report look like for you? You've got a lot on your plate, obviously, as Director of National Intelligence. I'm curious what you think after 120 days is going to represent success for you.

Alignment of the American people with the development of this new technology, which I believe is coming. If it doesn't come from the United States and it doesn't come from our leaders, it's going to come from elsewhere. Align the Americans' people's interests with the commercial development of the technology and do so in a very transparent way. with the kinds of testing and safeguards that we've had in other industry. That's it. Gentlemen, you've got a conference to get to that obviously Nakesh is putting on. I appreciate you taking some time. It's obviously part of a far larger conversation that I hope we can continue.

Jake Clayton, Nikeshachsh Aurora. Thanks to you both. Thanks, Dave. Thanks, David. All right. Scott, let me send it back to you. David, I appreciate you bringing that to us. Thanks so much. That's David Faber.

Coming up, the moving rates putting fresh pressure on an all-red strained housing market, the new numbers out today when closing bill comes right back. Mortgage rates taking another jump today. Diana Oleg has those details for us. Hi, Diana. Hey, look, after taking a breather to start this week, mortgage rates moved even higher again today. The average rate on the 30-year fixed rose seven basis points to 7.63%. According to Mortgage News Daily, that is the highest in this recent run-up. And they're now up 74 basis points or almost three-quarters of a percent. since the start of September. And I'm showing you that chart for a reason

because pending home sales in September dropped a steep 8% year over year that according to a new report from Zillow. Pending's are signed contracts. So that's people out shopping in September as rates really took off. And that's a big number. But honestly, it should come as no surprise

because mortgage demand has been tanking steadily. Last week, applications to refi were down 56% year over year and applications for a loan to purchase a home down 15%. Now, the adjustable rate or arm share of applications is sitting very high at just over 10% of all applications. These riskier loans do offer lower interest rates, and so consumers are clearly looking for any relief that they can get on that monthly payment, Scott. Diana, thank you. Diana, Oleg up next, the biggest movers as we head into the close.

Brandon's back with that. Here, Scott, yeah, denim giant heads into earnings. A media name gets a bearish call from the street, and an online broker plunges on an investigation the stocks that are making those moves right after this break. About 15 to the bell. Back to Brandon Gomez now for a look at the stocks to watch. What's on your list? Hey, Scott, let's start things off with shares of Levi lagging ahead of the clothing company's third quarter earnings, which we'll get after the bell today. Shares have dipped 19% in the past three months and are down almost 5% in today's trade. In the meantime, we have Skydance also in the red just one day after Paramount officially completed its $110 billion acquisition of Warner Brothers Discovery. Barclays maintained an underweight rating, lowered the stock's price target to $7 from a prior nine.

You can see shares there down about 7%. And it'll cap things off with Webel. Seeing a big drop after a bipartisan congressional committee found the trading platform to be linked in structural ways with the Chinese government. That's from a report shared exclusively with CNBC. A Weble spokesperson said that the report contained, quote, significant inaccuracies. Still, though, shares down around 19%. Scott. Brandon, thank you.

That's Brandon Gomez. Coming up next shares of Eli. on the move today. We'll tell you what's behind the action in the zone. It's coming up. For now, the closing bell market zone, Mike Santoli and CNBC contributor paying capital is Courtney Garcia here to break down these crucial moments of the trading day. Oliver Renick standing by live from the Cibo Global Markets in Chicago. Leslie Picker looking at the action in the banks today. Anna Kaan Kemp Konstantino and what has shares of Eli Lilly moving higher. Michael, what's your thought on how this market has traded today? Yeah, I mean, it's another chapter of the pretty horrible breath, but barely a scratch at the index level.

Very defensive, I'd say, in terms of the tone. Banks and small caps kind of hate this firming up of Bonnealds, even though they came off their highs. And the rest of the market, you know, memory and Apple and some of the defensives are managing to hold it together. So, you know, I still kind of feel as if we might have been in another rerun of what we saw a couple of months ago with a little bit of a burst to a new high, obviously tech reasserts its leadership. The AI trade is based on earnings and not macro. That's helping the index stay in the game. But I don't think it necessarily means we had the makings for a real strong and broad push higher,

at least to sort of escape velocity for the index. But so far so good. It's not like a lot of index level damage is really being permitted in this whole phase. Any reason to think anything's going to change anytime soon, as long as we just stay in the same dynamic? I mean, I guess earnings could shift things around a little bit. Sure. I think there's a possibility of that.

I mean, yesterday you did see a little bit of a hint that you could get some of the deeply washed out laggard groups working again, at least on a technical level. You know, utilities are holding yesterday's bounce. Staples are hanging in there. You probably could get some relief in consumer if rates and credit would allow it. And I think that's going to be, you know, one of those questions. The credit spreads are not across the board. at concerning levels. But everyone now all of a sudden is reading up on French fiscal situation and everything

else. And I think that's keeping us a little on the defensive maybe through CPI. It looks like October's not happening in terms of the Fed. So at least you don't have that really to worry about. So, you know, so far, I think you're counting on the idea that this churning phase has gotten positioning and sentiment kind of reset to a certain level where, you know, we allow for the possibility of upside surprise and a little bit of a chase. I wonder how we're going to get out of the gates, too, an earnings season. I'll talk to Leslie

in a minute about the bank's stock performance, but I wonder what we hear from them and how that sort of sets the tone from right off the jump in what's going to be another critically important earnings season. Yeah, the market has seemed to latch on to this idea. There definitely was a bit of a lull in activity, certainly in the capital market side. In the third quarter, does it mean it's going to, you know, continue on in that way from there? You know, and I think, you know, think, too, that people bake in the idea that earnings are going to beat by a lot. I think, you know, it's 25% in terms of consensus for the S&P. Everyone's assuming it's going to be another 30. And I'll continue to point out the overall index has made very little headway since before

last quarter earnings season started. And then we got the 30% then. We're getting another 30 now. So the market clearly is looking through some of these really gaudy growth numbers. Give me an idea of what you and Mell are going to do in less than 10 coming up on Sure. We actually had Henry McVeigh of KKR, who's going to talk to us really on a global sense about this whole investment cycle, what it means for rates, central banks, and various investment themes. Yeah, I mean, I would assume that he'd weigh in on what's happening globally in rates too. And, you know, Mike, honestly, you look at the activity today, this market just proves to be so resilient around what's happening globally with rates. I just need to underscore again, we're still sitting at 7,800 on the S&P. I know that masks a lot of the under the surface damage, but nonetheless, not just getting overly, overly concerned about that.

No, I mean, obviously a lot of this is structural. I was basically writing about this early this week, too, where if you're a passive index investor, the S&P 500 methodology has just protected you. It's kept you really levered to the strongest theme and the most fundamentally sound one in terms of AI hardware earnings, all the rest of it. And it's allowed the macro stresses to really be dissipated so that you don't have to worry about it. At some point, is the index going to be completely overplaying the AI theme and be loaded up with busted growth stocks and stuff that's going to have an unwind? Yeah, maybe, but it's not happening at the moment. All right, good stuff.

We'll see it a little bit. Mike, look forward to overtime. Thanks for that. Go to Chicago now. Oliver Oliver Renick playing some options action for us. Where? Hey Scott, looking at bonds, it might sound crazy to call a sell-off in this unrelenting bond sell-off. It might be crazy to call a bottom. But actually over the last week, we've seen some pretty bold bets stack up that are doing just that, looking like a turnaround for yields. And we did see that today as futures managed to hold last week's lows.

Trading in the TLT today is very call-heavy with above-average volume as traders bought more than 300,000 calls versus just about 80,000 puts. of the top 10 traded contracts in TLT today were all calls. There was plenty of calls selling, but seeing just one put contract in the top 10 suggests traders think the risk reward of betting on higher yields isn't great. And here's the kicker, the most popular trade

in the October 30th expiry for TLT was buying the 82 strike call, which would mean that TLT and long bond yields then unwind all of the ground they have lost since September 22, which was the nastiest stretch of this year's sell-off, Scott. It's a good look for us. Oliver, appreciate that. Thank you, Oliver Renick.

Affirmation, Leslie Picker is here with her own look at the banks as we do walk towards earnings season. They'll be here before we know it. What do you think we should be thinking about? Yeah, the countdown is on, Scott. Bank stocks in the red, though, again today. Deepening the declines that we've seen ahead of those earnings next week. The recent weakness has been driven by the macro picture

with higher yields and sticky inflation perceived as a net negative for the industry. And also, investors have been spooked by the prospect of agentic AI, namely met as Mews, instructing customers to move deposits to higher yielding products. That's the fear there, which could thwart margins. Additionally, there's some concern about the Wall Street side of the business as well, that the industry's best days in sales and trading are behind it, and that underwriting fees could be weaker than expected as several IPOs have gotten postponed, Scott. That's a good look for us. Leslie, thank you. That's Leslie Picker.

Anika Kim Constantino taking a look at Eli Lilly. What's the story here? Hey, Scott. So Lily is in the green today after a series of catalyst over the last week. Morgan Stanley late yesterday slightly raised its price target for the stock, reinforcing the street's confidence in Lilly to grow beyond its blockbuster Zepbound and Mujaro drugs. That came just days after the FDA expanded the label of Lily's oral cancer drug J. Perka. so it can be used as the first treatment for patients with two types of blood cancer. The street was also impressed by several data sets Lilly released on its obesity and diabetes pipeline last week. That includes new data showing that its experimental amylin drug showed greater weight loss when combined with Churzepotide, the drug in Zepadon, Mujaro, in a phase two trial on patients with obesity and diabetes.

BMO analysts said Lilly's pipeline should reinforce its leadership in the obesity market. Scott. All right. Then I came Constitino. Thanks for that. Courtney Garcia is sitting next to me here post nine. Are you thinking a lot about what's happening with yields, not only here but elsewhere and what the impact ultimately might be? I think we all have to be thinking about that, right? I mean, that's like the obvious headline that's happening in the markets right now. But you pointed this out earlier. The markets continue to be remarkably resilient even with rates going higher. And I think ultimately that's because earnings are the backdrop here. And we're coming into earnings season right now, which if earnings remain strong and the idea is they probably will, if expectations are met and or higher, That is going to sustain this rally despite the fact rates are higher. It's not going to derail the market. It's way people are worried it would. I mean, normally you say, well, rising rates not good for long duration assets like tech, but I think you underscore the point that the idea in the mega caps of being able to play both offense and defense is because you can count on the durability of the earnings. And it supersedes, at least for the moment, whatever is happening with the rising cost of capital, the backup in rates, whether it's here,

or France or wherever you want to talk about next. Yeah, and I mean, when you look at like the hyperscalers, for example, their margins can sustain these higher rates, and especially when they have the demands to back it at this point in time. It's anything that's interest rate sensitive and has less breathing room on the margins. That's what's getting hit a lot harder right now. But our thought here is you're probably seen a majority of the rate increase has already priced in. So could they go higher? Yes, but how much higher from here?

I don't know, which is why anything that's been hit exponentially harder by the rate increase. That's something you want to start to nibble out here. So look at bonds, look at small cabs. Look at... You really want to do that now. Because that means you can go down the list. You could say, well, look at discretionary. Look at industrials, you know, on and on and on, because those are the areas you're talking about. How do you know it's not too early to do that? We'll keep out again. But, I mean, at this point, why not take advantage of rates being this high right now? Especially like banks you brought in Leslie to bring up the banks here, they're going to kick off earning season here. And I love the fact that banks are done going into earning season.

I do think they are going to be affected by rates, but she also brought up the fact that that Muse is affecting, you know, are people going to move their deposits to higher yielding banks? Are they're also worried about what that's going to mean for trading? I think probably that's a little more fear than it's going to be in reality. So I think you absolutely want to be buying into the negativity here. I mean, it's a different conversation, too, talking about trying to buy some of the beaten down areas and then the competition that you get now with bonds and treasuries and how that's offering an alternative to stocks for the first time in a while as we go under two minutes before you'll hear that bell ring. I mean, you're starting to hear, you know,

people talk more about competition for stocks for the first time in a while. There is. And it's been the first time in a long time. You've actually had the opportunity as an investor to take profits from the things that are doing well because markets have been holding up and reinvesting into bonds to lock into those higher yields. Because there is still a lot of concern where, you know, is there going to be some sort of downturn stock markets after such a good run we've had? If there is, the best thing you can do is have those bonds as a cushion to be able to reinvest back into the markets. So you can lock into higher rates and wait for an opportunity to rebalance later. Why not do that? We haven't had this opportunity in several

years. You think the Fed, how many more hikes do you think we get? Thinking about that? Of course, we're thinking about that. I think at this point of time, October is price in that it's unlikely to happen, but it's higher that, or a higher likelihood that it will happen in December. Given everything this happened, we're probably going to see that in December. Yeah. So are you gaming on that, and is that it? Or we've got more after that or what? We're going to keep watching.

We're going to figure probably at least one more after that, but we've got to see how the data comes in. It's good having you here, Kurt. Thank you. It's Courtney Garcia here post-9 yields. They do really remain part of the story. We can show up what the 10 years doing once again because it was at the highest levels in some 24 years today. It was above 530. Diff back a little bit, but we still watch that.

We still watch what's happening. in crude oil, and it is impacting the trade, as we said. We'll still go out. It looks like, well, we hope 7,800 is a line in the sand, at least for this moment. They'll clap it out. Bell's going to ring, and we'll see how we settle. I'll see you tomorrow.