Closing Bell - Closing Bell: 8/14/26

Episode Date: August 14, 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.

Welcome to Closing Bell. I'm John Ford in for Scott Wobner, and this make-a-break hour starts with a retreat, slight retreat, from records. Stocks pulling back from all-time highs as retail sales come in lighter than expected. Here's the scorecard with 60 minutes to go in the trading week. Dow has actually been rebounding a bit throughout the day. Could even hit break even at times during this hour. We'll see where it ends up. The S&P and NASDAQ, though stayed stubbornly lower, though just fractionally, I should note, the Russell fractionally higher. Energy is the leading sector today with oil holding above $82 a barrel,

some little residue of that straight-of-hormuz situation, while tech, health care, and discretionary are trading in the red. And that leads us to our talk of the tape. Should you double down on the record rally as the S&P 500 heads for its third straight winning week? Let's ask our panel. Joining me now is PNC's Young Yuma, HSBC's Max Ketner, and Ned Davis research is Ed Clistle. Happy Friday, all.

Young Yuma, straight to you on this one. Some signs, perhaps, in retail sales, maybe in some other indications. Although the top line numbers look good that the working class consumer might be feeling some stress. Is that anything to be concerned about, or is the strength of overall earnings still carrying things through? Thanks, John. It's great to be here. I'm actually not that concerned about retail sales. we saw some elements where spending is healthy in discretionary areas such as restaurants.

We see strong data out of credit card spending. I don't think consumers are going to be what holds this rally back. I think if anything holds this rally back, it would be if interest rates, long-term interest rates in particular, continue to rise higher from the levels where they are today, that would be more of a head when I'd be concerned about than retail sales. I think those will hold in well based on a wealth effect, based on spending by the upper income and wealth levels and by retirees dipping into savings. Ed, the new Fed chair, Kevin Ward, seems to be trying to take the Fed's desired action a little

bit more out of the equation and let the market do its own thing. So when you think about the impact of interest rates on markets, is it so much Fed watching as it used to be? Well, I don't think Fed watching is the name of the game for long-term rates. It's really where supply and demand meet. here. And there's just a lot of supply that's coming to the market, both of course, from the U.S. Treasury, but also corporations. Corporate debt is at record-breaking levels. Last year was a record level. This year is far surpassing last year's record levels. And the capital markets are deep.

The U.S. capital markets, a global capital markets. But at some point, they're going to start showing strains. That strain is going to take place in the form of longer-term interest rates pushing higher. especially when we have oil prices elevated as they are today. Ed Klissold, give me your take on that as well, especially since you like data center electrification and power as a theme and a lot of what's driving that is some of that debt that young Yuma was just talking about. Well, it works. We'd love to have less pressure on the Fed and when the Fed speak and parsing out individual words in

their statements. So I think it does put the long end of the curve more. in play, if we get about 5% of the 10 year, I think that could be a real challenge for the equity markets. And so in terms of what this means for this long-term AI play, and we think over next few years, this has a ways to go still. But it does mean that over the short term, if there's concerns about the pace of the CAPEX investment, how much it's going to cost those companies, you could see some pullback, which is why we think, you know, between now and the end of the third quarter, there could be a pullback in a broader equity market as we try to digest everything going on

with the CAP-X story, and it is more related to the Fed than it has been in years past. Max Kettner, you seem to be saying that overseas is a good place to look for investment in this environment, not just U.S. Yeah, look, I don't think it's just the U.S., but I think actually that when we look at what happened in June and July, that clearing of momentum positions, that clearing of tech position, the bit of excess leverage taking. Really, that should be paving the way for a bit more tech exposure of way also from the US.

It's not just the US. It's also leaning back into some of the Asian equity universe. I think in Europe, while Europe is mostly really an expression to broaden the Raleigh and to play a broadening of the equity market, I do think within the European equity universe, when you look at the likes of the banks, actually, they still look fantastic. When you look at the earnings picture,

you look at earnings revisions, you know, any kind of sign of a re-steepening of the Bund Yield curve should really help European banks. So it's not just about the U.S. it's also some tech exposure outside of the U.S. in Asia. And even in Europe, I think particularly the banks look great value. So you mentioned particularly the banks, Max, where else would you go within Europe? Because for a while, those markets were less exciting. Yeah, I think actually, but when you look within Europe, right, when you look at the European

Equity universe, you could. you track that against, for example, things like the equal-weighted S&P, that for the best part of the last two-narve years has been pretty much the same line. So again, if you want to be playing the broadening, that actually things like cap goods, you know, when you look at the manufacturing cycle picking up and the manufacturing cycle, also actually broadening away from not just AI CAPEX, but to broader CAP-AX, all of that, actually, within the industrials, for example,

is a pretty good complex. And also when you look at the tech exposure within, Europe, right? Some of the smaller companies, particularly when compared to the U.S. and the behemoths in Asia, actually smaller companies in Europe on the AI universe, again, look pretty, pretty decent value. Okay, Ed Klisold, tell me about health care in this environment. Based on what we've seen this week and just going forward, why you see some opportunity there as we talk about AI and how productivity is going to lift some sectors. There's so much opportunity within healthcare for productivity enhancements for sure.

This health care call, though, is really more about relative valuations, how oversold the sector is. It's weight in the S&P is near its lowest level since 1994. And forget this short-term pullback. The defensive sector should do better. And health care among the defensive sectors looks like it's the best position to outperform in that environment. And Youngmu, tell me about small caps.

and how you view them. They haven't done as much as some had hoped at this point, but the market is broadening. The market is broadening. I think that same broadening thing applies to those previous statements by the other guesses. Well, there are different areas that you want to look to. And particularly, after we've had this nice bounce in AI, you want to see where in your portfolio you can add additional diversification.

And small caps have held up well, especially small cap value, profit margins have held up well for small caps. The other guest, Max, pointed out how European smaller AI companies have also done well. We do think it's time to really focus on a broadening theme and even somewhat of a barbell approach. You want exposure to tech. You want that AI exposure. But you want to make sure that's not the primary exposure that just dominate your portfolio. In small caps, we think have shown resiliency, much more resiliency than people that's expected in July when the market was pulling back. Small caps kind of held their own. and have now bounced higher as the market is elevated.

Well, we're going to talk a little bit more tech right now. Everybody stay with me. Memory stocks climbing their way back today. Christina Parts Nevelas has more for us. Christina? Yeah, it climbed their way back from, what, two weeks ago when memory was ground zero for the sell-off. Today, it's out on front, or in front, as I should say, on the rebound. You go back to late July when the $45 billion AI fund situational awareness got margin called and unloaded its leverage chipbook.

You saw Sandus sink but nearly 47% from its June high to July 29th bottom. It's since clawed back most of that, though it's still running well off 30% from that June high. In general, though, you're seeing SK Hynix, Micron, Western Digital, have all really taken that same exact wave. They fell dramatically post that situational awareness situation. Bulls say, though, there is still lots of room to grow to hit those 52-week highs. What separates this bounce today and yesterday from a head fake is what Sandus put on the table at its investor day just yesterday. The company has locked roughly $94 billion of long-term customer contracts through 2030, so a little bit longer than normal. And its CFO even said at the floor price, margins on those deals shouldn't dip below or under 80%.

On top of that, Sandus plans to hand back roughly 100% of its excess cash to shareholders. And of course, that buyback is part of what's driving the stock just over the last 24 hours. The profit picture lines up. The fact set sees micron earnings up 40 to 55% next year. Sandus, 25% to 35% roughly double the SMP 500. Even Mr. Elon Musk, I just put it on the screen, is in the conversation replying, few realize this to a post saying memory,

not compute is the real choke point for AI. The doubters, though, haven't left the table, citing the inevitable cyclicality of the memory market, fresh capacity from Chinese rivals, although it's maybe two years out. And then these long-term deals that haven't been tested through a real downturn,

in other words, can they just be canceled a few years out? But for now, the group that led the market down is leading it back up. John? All right, Christina, thank you. Max Ketner,

particularly on this memory theme, I think it links into so much of the AI construction boom driving different pieces of the global economy. One has to wonder, with China building, with other companies and countries building,

do we end up with a more nuanced picture of the memory market and of the return on investment on this spend in a couple of years? Even if U.S. companies and multinationals aren't going to buy a lot of Chinese memory, perhaps like European companies did business with Huawei, European businesses will, no? I think from a fundamental perspective, that might be the case in a couple of years' time. But actually, when you look at from a market perspective, from an investment perspective.

We've just heard it. The names that really led us down in June and July are the ones that are now leading us up again. It's pretty much the same theme because really what we've done in June and July is sort of forgetting about the fundamentals and only really focusing on the rise of levered ETFs, the rise of this excessive risk-taking,

excessive leverage-taking and sort of pretending as if really the fundamentals have completely deteriorated. What that obviously led to was that across the board, in the semiconductor space and in the memory space. Actually, earnings estimates have gone up even further in June and July. That then was more than confirmed in the earnings season. So that, to me, is not something that is nuanced just yet.

It's really a picture across the board where we've just seen it as well from Elon Musk, where actually it's compute, it's not competing. It's really the memory side of things, which is the constraint, and that continues to be the case. I think it's much more of a broad-based picture when you want to play those capacity constraints in the memory space. Okay, I hear you, Max, but Ed Klissold, it seems to me we might be two years away from capacity coming online from this new construction, but we might be only a year,

maybe a year plus away from the headlines about commitments on that new construction, actually affecting the way the market trades, no? Yeah, I think we have to be paying attention here to what the market's pricing in, and it's really priced in this fantastic earnings growth. This earning season, we've had the highest beat rate percentage of companies exceeding expectations, except for last quarter was a kick higher. And then you have to look at COVID. Otherwise, best quarter on record, looking at 30% year-of-year earnings growth.

And for the year, we're looking at about 25% for the S&P 500. But the question is, when does that start to slow down? Can we repeat this quarter after quarter? I even think this earning season, the market hasn't priced in that good news quite as well. well. And so that could be part of a pullback story as we start to wonder, you know, when does earnings growth inevitably slow down? I mean, we've never seen this far into economic expansion get this kind of earnings growth. So it's natural to think it could slow down some. Young You finally, we're talking about the market broadening, and I know that you're advocating

for diversification here. What are the first places investors should look to diversify in this kind of market? you definitely still want exposure to technology, and these themes are still, as we've seen in the past, earnings cycle, they do still have a ways to run. Where to look for diversification. I do think you want to look to areas of the market that haven't gotten as much attention. You want to look at small caps where profit margins have held up. You want to look at areas where the valuations are cheaper, such as health care, even materials as well. It's a very small part of the S&P 500, but an area that you need materials to filter into these industries as well. And internationally, you know, a lot of the international areas are also quite levered to the AI theme, especially if you look at

emerging markets, Korea and parts of China as well. So you've got to be careful on what you load up on here because there's correlations that exist that didn't exist in the past that are stronger. But I think you want to pick your spots here in areas of the market that have been a bit neglected. That can include value. That's that can include small caps, healthcare, a few other sectors, include biotech. I think you want to have a lot of targets out there as you are probably already levered to this AI theme as most people are. A little homework over the weekend. Thank you, Young You, Max, and Ed.

Have a great weekend. Now, let's send it back to Christina Partanelos for a look at the biggest names moving into the close. Christina. Let's start with Reddit shares. They're surging right now in news. The social media company is going to join the S&P 500 at the start of trading, next Tuesday. The company is set to replace Avalon Bay communities, which is merging with equity residential. That's why you're seeing shares up 12%. Shares of Fox are also in the

green following upgrades to overweight from analysts at JPMorgan and Wells Fargo. Both firms are just optimistic about the company's agreement to buy Roku with J.P. Morgan saying it improves Fox's growth value and eases valuation concerns. shares are up 5%. Last but not only, Cisco shares slightly lower, almost 2% lower, on a downgrade, a hold from buy at HSBC. Analysts over there, say fourth quarter results, which are out earlier in the week, were solid, but the stock just lacks any near-term catalysts. There's some concern, too, about gross margins because of memory components. Shares are down about 1.5% and 8% on the week, John. All right. Christina, thank you. And we are just getting started. Up next, OpenAI's

talent exodus, raising some red flags, a wave of high-profile departures ahead. of an expected IPO. What's behind the shakeup? Should investors be worried? We'll bring you the latest. We are live from New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back to Closing Bell. Retail sales tumbling in July. Their biggest drop in more than a year. This is some key names in the retail space. Get ready to report results next week. Here to share his top picks from the sector, BMO Senior. Wait, Guggenheim analyst, Symeon Siegel. You were there. Yeah, six years. Yeah, yeah, six years. So you got used to saying that.

You can have treating me well too. That's good to hear. So what stocks should investors expect to treat them well in retail, especially from the crop coming up next week? I know Ross is in there and you don't like it, if I recall. So Ross, so it's interesting. Ross was the one that now we've flipped. Okay. I think Ross is going to be really special.

Okay. So Ross, we have caught two weeks to find out if what they did in the last year was just a reflective of the market doing well and everyone doing well with tariffs. or whether they've now triggered a multi-year story. And I think we're going to see that. And I think what's going to happen is forever. You and I have been talking about TJX as being V-off-Pricer to love. It looks like Ross is taking their playbook. It looks like Ross can be the one that now I will always tell you.

You know what, Ross is the one that's taking share and how are they doing it? Going a little bit more upscale. Adventure shopping happening at Ross. Adventure treasure. How are we going to be able to see in the numbers if that, in fact, is panning out? So what's been really special. What you and I talked about last time was this. idea that everyone in retail saw this revenue acceleration, right? These aren't hyperscalers,

but when my companies grow 8, 9, 10% on average, that's through the roof. Ross comps 17 in Q1. That's a big number. And so we're going to see a deceleration, but the question is, does that come down to a 10? Does it come down to a 5? Does it work its way? Off prices are supposed to grow three to five. If Ross can keep showing us that they're going to see a healthy but still above average growth, then you and are going to have to start asking, how are they doing it? Are they grabbing price? Are they grabbing new people? Are they doing both? Okay, so if we're comparing Ross's results in, say, Walmarts, they're in totally different universes in a way, but there's this overall strain on the working class that's probably playing out to help Ross gain share if they've

got the right playbook in this environment. How do we see it in Walmart? How much of it is grocery tilted and even them gaining share in that 100,000-plus household cohort? And it's funny to lump them together. It used to be a lot easier. Now there are like several zero's different on the market cap perspective. But I think that's, listen, what's going to be really fascinating is it's not just, I know the cave shape economy is the big conversation, but it's not just luxury works, off price doesn't, discount doesn't. You have to figure out who's taking share within them and who's doing well within them. And there's winners in every subsector. And so that's what we go through. And so that's why I think what we are going to look for

is you're going to see, okay, who's incrementally grabbing more? But if I could ask every company for one thing and know that I'm going to get it, right? Because a lot of times we'll ask and dance around it. I just want to understand in the last 12 months, did you drive revenues by selling more, bringing new people in, or did you just get that tariff lift? Because if you just got that tariff lift, which is a funny thing to say that tariffs were positive, but they did raise prices. If that's all you got, it's going to get a lot harder starting next quarter. Like we're in August, we're going to start seeing that. Those that were able to bring new people in, new people yesterday, means more sales tomorrow. If you're looking at retail, you know, playing at home, investing,

what's the company and the metric in earnings coming next week that are going to teach you the most about how it might play out for the whole sector? So sometimes I've got a really exciting answer for you. I'm going to go boring as anything, revenue growth and gross margin, but you need them together. Why? Because I need to know that I'm going to still get revenues, and I want to go forward because this quarter that we're reporting still has that tariff benefit I'm talking about. Average so far, we're halfway through earnings, give or take. They're still seeing 8% lift. I want to know what they're guiding to. I want to know what next quarter looks like, because that's when it becomes new, but I need to know that it's healthy.

I need to know that you're not promoting. July retail sales, e-commerce was actually down in this report. Now, I know you've got to take a longer view. This is just one. But who should we look at that perhaps reflecting and affecting, or is that just the shift in prime day? I mean, the easiest answer is look at Amazon, but Amazon's growing beautifully. And so I think there's an element here. Remember, we have to retail sales is a confusing metric that the government loves to give us

because it's sequential as a headline, but you and I want to look year over year. And so it's very important to look year every year. And overall year every year, we got a mid-single-digit number. It's a nice-looking number. So I think right there, e-com definitely seems, the amount of times I hear Gen Z love stores, people love to go back to this idea that the mall's back. And that's powerful, and that's interesting,

because, again, you and I have kind of joked around this. There's nothing better than a store. Because in a store, your shopper is your employee. You get to stack those racks with clothing, and then the store comes and does all that magical stuff that Amazon has to pay their employees to fulfill. Right? They walk over the rack, take the clothes,

walk it to the cash register, walk it out the door. That's all that shipping and fulfillment that the shopper is doing. So if this is true, and so far it seems like it is, speaking to your point about e-com, there's nothing better for retail than when people come back to stores. I mean, you try it on, you know it fits, you walk out. That's a pretty good deal. Simon, thank you. Great to see you.

All right, coming up, new reporting this hour on the big shake-up happening inside OpenAI. Our Kate Rooney is going to join with the latest next. Welcome back. Open AI's Talent Exodus, raising some alarm bells ahead of its IPO. We're getting new details from an investor meeting today. Our Kate Rooney has that reported. Kate. Hey, John. So OpenAI, CFO Sarah Friar and President Greg Brockman, from what I'm hearing, held a meeting with investors earlier today. I spoke to a source who was there and shared some of the behind-the-scenes details. The first headline we're getting is that Open AIS CFO told investors that that business, excuse me, that business revenue, I should say, has topped chat GPT and the consumer side of the business,

Friar saying that they entered the year at about a 60, 40% split, but Enterprise has now accelerated much faster than expected, and she said those lines have now crossed. Also added that the majority of revenue, as she put it, is now Enterprise. It's a higher margin business, and it really is what investors want to hear. It's been a big growth area. It's also ahead of the company's own forecast, which was for parity. By the end of this year, the meeting was with current shareholders.

It was planned well in advance, according to a source. But it does come a day. after one of OpenAI's biggest hires, Denise Dresser stepped down as chief revenue officer. These executives from what I'm hearing were asked about that. Greg Brockman thanked Dressor, but did sort of pivot to talk about the new CRO, Dolly Rogic. He is a cybersecurity expert, former COO of WIS. And from what I am hearing, Greg Brockman also brushed off some questions about open source and competition. He said it's a misconception that open source is just cheaper.

He says there's room for both. Other highlights, John Friar, talked a lot about cost and said that the enterprise customers have moved from talking about token maxing to now focusing on what she described as cost per unit of intelligence. Friar did talk about the newest models for OpenAI being more efficient, about 54% more efficient, she said, on agentic coding tasks

and then some recent price reductions of their suite of model. She was also, no surprise here, John. Everyone wants to know it with the IPO timing, especially those investors, they would not comment on it. They're on file with the SEC, so not a lot they can say there. Yeah, Ken, I wonder what you're hearing and learning about how that revenue increase in enterprise might be correlated with some of those price reductions

that open AI seem to take versus anthropic. I mean, sure, their latest models are getting very solidly reviewed for how well they operate versus a fable five, but also a lot of the talk is about how much more affordable they are. And for businesses that are losing money overall, I wonder what that means for margins in market share and if there's any talk about it. So a lot of talk about margins for sure, but I would say what I'm hearing in terms of the revenue inflection, as executives are describing it, it's thanks to the uptick encoding, that a lot more people are using codex. According to executives, again, this is them framing it to investors this way, but that they have said that enterprise is booming because of that. The cost discussion, they have done their sort of internal model routing saying you can use the most expensive models for the most difficult tasks, but we also have cheaper options. it's not something I'm hearing in terms of driving revenue yet,

although it could very well be the cases. These are, of course, private companies, but the margin question and any sort of profitability on that. Revenue, of course, is one thing. When we look at the top line, we don't know what the margins look like, and I think that's going to be the biggest questions. When these S-1s flip is what does that look like, how deeply unprofitable are these companies?

We know they're not making money, but how bad is it? What's the site? What's the line of sight to getting there and being profitable eventually? And with all these special deal, that Sam Altman has been making. It's going to be even hard, I imagine, in the S-1 to understand all that. Kate Rooney, thank you.

Now it's bringing CNBC contributor Plexo Capitals Low, Tony, to talk about this. I just want to start on the Chief Revenue Officer issue from what they seem to be saying at this investor meeting. Enterprise revenue is trending really well, which would make it surprising that a chief revenue officer might be leaving

after eight months. But then again, Sam Altman has endured a bit of a mutiny in the past, in part supported by some of the executives at the company at the time. So maybe they're picky about who they keep around. Yeah, the way that I would look at this, John, is Sarah Friar remains in the CFO role. So that's an important person to manage the finances and provide great leadership and operations. And at the same time, you know, I would say that AI executives in general, I mean, and researchers, I mean, they're very entrepreneurial. these days. I think this is a different generation. They have extraordinary access to capital.

And so I don't think we should expect folks to stick with companies for, you know, 10 or 20 years like we saw at Google. I think this is also potentially, we don't know, cultural as well. There's that dynamic. You know, strong culture companies develop strong immune systems. And sometimes a senior exact might create what we like to call organ rejection, or the organ itself may decide they don't like the host. So the test isn't... I'm not sure what a chief revenue officer's job is for an anthropic or an open air right now,

in the sense that a lot of the chatter that I see, say, on X, on LinkedIn, et cetera, about why people are embracing certain model families more than others, It has to do with the results that they're getting and then the price that they have to pay for those results. And that can shift just based on a model update. I don't know how much it has to do with the sales team strategy. Yeah, I think, you know, Chief Revenue Officer definitely is thinking strategy and probably where does the company need to be to be able to have enterprise be meaningful and then kind of guide the sales folks to kind of position those opportunities. So I think that's an accurate assessment on your end. And so therefore, what does it mean if Open AIs, enterprise business is now bigger than consumer

when we had seen Anthropics valuation really surge on the sense that Anthropic was doing better on that line than Open AIs does? This has put pressure then on Anthropic to be able to say, hey, our enterprise business is growing even faster. Or, hey, we're holding the line on pricing and we can afford to because we believe or our our customers are showing that they believe our models are better? I think there's a few things to unpack. When we look at the general sentiment and in my conversations with senior execs that are in

leadership roles on the technology side, without question, there is more of a sensitivity to the cost of models. And so I think with OpenAI and their movement towards enterprise and the success they've had with their new coding models, that is showing success. and that is, from what we can tell, has been an inflection point for the revenues for OpenAI. I would also say, and this is the case with Anthropic, Anthropic got there earlier, right? It's not only about the enterprise itself, but when you look at Claude Code, when you look at OAI Codex, what that also signifies is a movement up the vertical stack towards the application layer.

And that's really where a lot of the value is, right? there's extreme amount of pressure on the API business for models and kind of selling that intelligence. And we primarily see that from the emergence of the open models. And so, you know, I think part of this is going after the enterprise and part of it is also movement up the stack where you have applications at that layer that have a better profile structure for margins. So given that we're in a week when we're seeing workday pop on the possibility that it gets taken private, should investors be thinking about these frontier model providers as potential acquirers of certain application resources as well, certain application companies as well, if moving up the stack is a benefit to them,

is it possible that they make that kind of move in order to secure the kind of data and model-building intelligence that they'll need to grow there? John, I think that's a very astute point. Strategically, it's logical for those model companies to have an eye on any opportunities. Because what you want at that application layer is that is the place where there's great customer lock-in that also initiates. that also initiates the intent of what intelligence is needed to accomplish once the APIs are tapped. And so that's very valuable. It also provides some good lock-in. You know, people get accustomed to a certain type of workflow. And it also becomes this kind of record for the company as to where all the data is and how those workflows are performed and managed.

So I would not be surprised strategically it makes sense to be able to have control. of that layer. When we look at a lot of these new companies that are providing routing services to be able to determine which model to go to, you know, that's a place that the service now is the sales force. They want control there. But then you also look at the model companies. They'd like to have control as well. I'll keep an eye on it. And the software shorts should as well. Lo, Tony, thank you. Thank you. Up next, we are tracking the biggest movers as we head into the close, Christina Parts-Nevilus is standing by with that. We have a drone rally on a new tariff, a chip name sliding on its own guidance,

and a faded meat stock's desperate move to stay listed. Those stock movers next. 13 minutes for the closing bell. Let's get back to Christina Parts and Nevelace for a look at the key stocks to watch. U.S. drone makers are rallying right now after President Trump announced he would impose new tariffs on the sector. Drones with sensitive military capabilities are set to have. a 100% duty while smaller drones lacking those capabilities are going to have a 25% tariff.

Unusual machines, which, by the way, added Donald Trump Jr. to its advisory board back in 2024 is up 23% Red Cat, 8% air environment, a little bit higher, not as much, 2%. Meantime, applied materials. This is equipment manufacturer. Shares are sliding after the management wouldn't put a number on how much its business grows next year. They did post an earnings beat for its most recent quarter, but they missed buy-side estimates for gross margins. So some nitpicking specifically there, shares are down 5%. Last but not least, beyond meat. You could see raising the stakes, shares are surging after the company said it previously announced

a one-for-30 reverse stock split went into effect. It comes as the company looks to preserve its NASDAQ listing after it received a delisting warning back in March. Shares are up 10% almost. Raising the stakes, but are they real stakes? That's up for debate. Christina, thank you. I eat them because I don't even eat.

They don't know any better, I guess. I'll take your word for it. Up next, crypto clarity on hold. The SEC delaying a key vote on new digital asset rules. What that means for the industry and investors when we take you inside the market zone. Be right back.

We are now in the closing belt market zone. Fair League strategies. Ken Stockton is here to break down these crucial moments of the trading day. Julia Borson is at Disney's D-23 Expo and joins us after speaking with the company CEO. Plus, Contessa Brewer has more on reports. The CFTC is investigating mention markets.

And McKenzie Segalos on why PayPal is rallying right now. Julia, let's start with you and Disney. That's right, John. Well, Disney's new CEO, Josh Tomorrow here at D23, telling me that he wants to move with more speed and urgency. And he's not happy with the stock, but he has a plan, including executing on streaming and converting ESPN users more to direct to consumer subscribers. And for the parks business, tomorrow says he's working to grow capacity or demand.

The parks, I think, were a big surprise to people, and they just keep generating returns for the company streaming and expanding margins. We're delivering on everything that we said we're going to deliver on. I think there's clarity inside of the organization in terms of where we need to go next. In terms of where he wants to go next tomorrow, telling me that launching a free ad-supported streaming business is a no-brainer and saying that he wants to bring more sports into Disney Plus. He also said he is not interested in selling ESPN or ABC. As for all the M&A in the space right now, tomorrow telling me does not think that a combined Paramount Warner Brothers discovery will pose a real competitive threat to Disney. And he said he sees their rivals trying to do deals to look more like Disney. John, I also asked tomorrow what his plans are for AI now that the SORA deal that Bob Biker struck is over.

He says that a lot of AI companies have been calling him up to work with Disney, and he said he sees a lot of opportunity in the technology. Back over to you. All right, Julia, thanks. Now to Contessa Brewer, who has more on Mention Markets, Contessa. Yeah, so John, Mention Markets are getting a lot of extra scrutiny now. that mention markets are event contracts that ask, will a public figure say a certain word, yes or no? And they focus most on politicians and business leaders, celebrities and sports figures. But now federal regulators have launched an investigation looking into whether those markets are being manipulated,

according to a report from National Public Radio. CNBC has confirmed the CFTC, the federal regulator that oversees prediction markets, asked Kalshi to review its sports mention markets a couple weeks. ago, we still aren't clear whether it's only sports that is the focus here or mention markets more broadly. It does not appear, though, that there are any sports mention markets currently available on Kalshian. Remember, CNBC has a commercial relationship with Kalshi. The big question here, John, is the rules that are being set up around what kind of event contracts can be offered, and really, the CFTC is still working to establish those rules. Okay. Thank you. And now that

McKenzie watching shares of PayPal Mac. And John, those shares are popping on a Wall Street Journal's story saying that the fintech firm is in talks to sell itself to a group that includes Stripe and a private equity firm Advent International. Now, it was just a few weeks ago that the PayPal board weighed a bid by Stripe and Advent when they proposed paying $60.50 a share for PayPal, a price that the PayPal board viewed as insufficient at the time, according to some of the sources speaking to the journal. Now, what I will say is that the two sides, according to this report, have been negotiating since then on a potentially higher price.

So it's possible a deal could come together in the next few weeks. So shares popping on the prospect of it, John. All right. I'm McKenzie. Thank you. Now let's bring in Fairleet Strategies, Katie Stockton, as we head toward the close. Katie, maybe starting broad, how does the S&P look here near these all-time highs after all the data that we've gotten. We're not at the very highs, but we're not far. Yeah, you know, yesterday,

the S&P 500 pushed out of a consolidation phase that had taken the shape of what we call a bullish flag pattern. It's essentially a sharp run-up followed by a consolidation that lasts a few days, and then it's, of course, resolved to the upside. So that's what we believe happened yesterday, and it is a short-term positive development, and it does follow, of course, the previous breakout out from the trading range, which looked a lot more like a correction for the NASDAQ 100. So the action has certainly improved from a short-term perspective. We're seeing a lot of stocks clear their 50-day moving averages, and that can contribute to a bit more upside before we see the next consolidation.

So does this look like a healthy broadening that we've been seeing or just temporary? Well, there's not been much broadening with this move. In fact, we have seen the leadership quite concentrated back in the tech sector. And yet we have some other runners up in the commodity-heavy sectors, both materials and energy, have surfaced or resurfaced, I should say, this month or month to date, with big gains from the likes of gold and silver, even copper is quite firm. The energy commodities haven't been quite as strong, and yet just by the nature of them remaining firm and then the strong tape from a top-down perspective, we have also seen energy stocks

kick in in a meaningful way. We saw some very positive reactions to earnings from the oil services complex, and that is impacting the charts positively as well. So looking for more upside from these commodity-heavy sectors of the market, but the leadership, of course, is coming from technology. For a long time, I was looking at Bitcoin as a proxy for risk appetite, but it's stuck right now below 63,000. I don't know if stuck is a fair word, but it's been kind of in that sub-65,000 range for a while. What does the charts tell you? It has been more neutral in its price action of late.

The pullback takes it into some short-term support just around 62,600. So we're watching it very closely in here for a reaction to short-term oversawled conditions. Should it not manage to hold this support, which is very close by, we would look for a test of the longer-term support, which is very close by. we would look for a test of the longer-term support, which is very strong once you hit about 60,000 for Bitcoin. Longer term, we are seeing some signs of downs at exhaustion, and that comes from measurable indicators, things like the demarc indicators and the stochastic oscillator. They are showing that Bitcoin and also ETH and some other altcoins seem to be putting in major lows. It seems like this market has gone from caring about memes sometimes. to blockbusters like Invidia sometimes, and now maybe trends like the memory stocks.

As you look at the charts across those different things, what can investors learn about the durability of this stuff? Because so often, you know, if you just chase what's happening today, it stops happening tomorrow. Well, you know, momentum stocks, I think to that point have resurfaced as well. And momentum has been such a force this year ahead of the corrective phase. We saw those memory stocks, the likes of Micron and Sandisk and others do really, really well, but their retracements were so severe.

So I think that's shaken some confidence. It hasn't prevented this rebound above the 50-day moving averages, but it could be just a B wave of an ABC correction, meaning an interruption of the correction, not the culmination of that correction. So we'd be treading cautiously, but we're all for trading when there is strong momentum. and of course when we see breakouts, those act as positive catalyst. So the long-term damage is there, but the short-term still is all right. That is the doubt, and that's going to do it for closing wall.

Half and five, all the major averages lower, except the wrenshaw, because of the positive, because of positive, that's going to go over time.