Closing Bell - Closing Bell: 8/28/26

Episode Date: August 28, 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.

And welcome to closing bell. I'm Contessa Brewer in for Scott Woffner today. This is a make or break hour, and it begins with the market really digesting comments here from Fed Chair Warsh out of Jackson Hole today. The bets among Fed funds futures traders are that the Fed is going to raise rates. Those odds increased to 60 percent, almost 70 percent after his remarks. Let's get a check on where things stand with 60 minutes to go in regulation. Right now, you're looking at all the indices in the The Dow is off just fractionally. The S&P 500 off by a third of a percent. The NASDAQ composite, a little more than half a percent. And the Russell 2000 is showing the most decline down a percent and a third. Treasuries at this hour have been on the move as well. You can see the two-year moving higher, 435 now. The five-year, 4-48, and the 10-year is up to 472.

It's that 30-year treasury at 5-2. So the investors are also digesting more earnings as well, of course, shares of gap surging after reporting results. And a new CEO for its Old Navy brand, which dragged down the parent company, Marvell sliding. We have reports on those movers and more ahead. Marvell's off by 10 and a half percent now. First, it was Fed Chair Warsh's big moment in Jackson Hole. Let's get straight to Steve Leesman, who was there for those comments. Steve, how are those who are in attendance in Jackson,

digesting what Chair Warsh had to say. Well, this first inaugural speech in Jackson Hole from Kevin Warsh was, it was basically more detailed and hawkish than expected by markets and participants here. Warsh said inflation is too high. There are a few signs the Fed is too restrictive, and he's not really confident that inflation is necessarily moving back to the Fed's 2 percent target. Responsibility for 65 months of sustained elevated inflation, sits squarely with the central bank, and that's where it belongs.

So here is my standard. We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do. But he stopped well short of firmly predicting rate hikes and stuck to his announced plans not to offer guidance about where the Fed is headed. What he did do was provide details on the kind of economic indicators. to gauge the economy reacting to critics who said he had previously not offered enough information

on his thinking. Over the last 12 months, 54% of goods and services in this basket showed price increases above 3%. This is well below the post-pandemic highs of about 77%, but it remains well above the level of 32 in a couple of the decades that preceded the pandemic. That kind of hawkish inflation analysis led futures markets to increase the probability of September rate hike. We're now at 57% for a September hike up from 35 before the speech and start to price in a second hike later next year even. But with Warsh not revealing more about which way he's leaning, markets, they have to figure it out more on their own. A point that critics say just leads to more volatility and ultimately higher bond yields, Contessa. Let me just ask, when we're watching those odds moving for

a September rate hike. And by the way, they're doing that on Calci, too. Calci odds that the Fed would hike and whether it would hold. Now they're about roughly even on Calci. Do you think that Chair Warsh has convinced the committee to go along with him, whichever way he moves in September? You know, I have to say that I think Warsh has moved more towards the center of his committee. I'm not sure he came in thinking much about hiking interest rates. And I think he's encountered a a hawkish committee and I think the data has broken maybe marginally more towards

those hawks on the committee so he's sort of moved there. I mean this is a change contestant compared to the press conference where he would not provide any of this kind of information but we made a list of the different indicators that the chair is watching now and not only didn't provide that list things like the quote we

had there which you can say inflation breadth he said he's watching private domestic final purchases that's another thing he's watching and then he provided some analysis of that. So it's really hard to say how and if Warsh has moved because we really didn't know, but he's met his critics halfway on this contestant. And you can kind of

say, you know what? That all leans hawkish. There's more uncertainty out there, because we don't know he didn't say he's going to hike rates or even sort of indicate that. But it's not hard to go from the things he said and the analysis he provided to thinking, well, the right response to that is to move interest rates.

If he doesn't do that, over some period of time and the data remains where it is, a real risk of losing credibility. Steve, great reporting out there from Rainey Jackson Hole. Appreciate that. Let's bring in Wharton Schools, Jeremy Siegel. Professor, it's good to see you today. You and a lot of other market watchers really wanted to hear what the chair is watching, what would move him to take some action? What would justify, in your mind, not hiking in September, as Steve just alluded to? Well, first contest, let me say that I thought it was

the best speech that Kevin Warsh gave. And first of all, dear to my heart, as you know, I look at the money supply being schooled with Milton Friedman. Finally, he's mentioning that that's one of the factors he looks at. He said commodity prices are one of the factors that he looks at. He talked about spreads. He did list them out. He didn't say, because this goes up this much, that means we're going to tighten this much.

He said, that's variable. But I think he did answer the critics about. what criteria are you looking at? He mentioned, of course, he said that, you know, all this idea about he caring about the balance sheet. He said, let's be honest, it's interest rates that are really important, something I've said for a long time.

I mean, I think he hit the notes extremely well. Now, it was very hawkish, more hawkish than I expected. He said we saw some good news in July, but, you know, not good enough. I loved his statement. He said, you know, the anchoring of inflationary expectations that we see in the inflation swaps, you know, they look good, but, you know, they can turn bad very, very quickly. It reminded me of Ernest Hemingway's famous quote about how did you get bankrupt. And he said, gradually, and then suddenly.

Yes. It was like, yeah, you got to watch these things. It's not. Don't let them low you into a feeling of confidence there. So, you know, I really enjoyed his talk. I thought the variables he talked about. He said, listen, I don't want to just look at past variables. That's why I looked at current commodity variables.

I think the commissions that he is engaging are going to look at some more current variables and past variables. Yeah, I was encouraged. You know, it's interesting when he was trying to tackle this sticky inflation, 65 consecutive months of the target not being or the actual inflation rate, not being what the target is for the Fed. And he says we need to do this in a timely manner, not his exact words, but something like that.

What's your sense of what the chair thinks is an efficient process to get that inflation rate back down to Target. Well, you know, and then clearly raising rates. And very honestly, there's a political problem now. He has two more meetings before the midterms. Clearly, Trump doesn't want any increases before the midterms. Can he hold it off? I would say if we weren't midterms, I would say we're going to have a rate increase in

September. But, you know, it's wondering whether, you know, he was disappointed by Trump. He talks to Trump often. Can he hold off until December? I think there's a lot of politics that have to do with that. But, you know, when you listen to him, like he said, I don't think the current rate is restrictive. Now, remember the neutral rate that the Fed has talked about

is well below what the rate is right now. I'm talking about 3%. As the neutral rate, we're at, you know, 3.64%. These are statements of someone are saying, we are not restrictive enough right now. Does he have the guts to raise them in September and face of midterms coming up in a month? We will see. It's going to be interesting.

Meanwhile, you've got Treasury taking some criticism for its actions that have sparked some really high-profile criticism, notably from Stanley Drucken Miller this week and from Elizabeth Warren, who sits on the Senate finance and the banking committees. Well, today, Scott Bessent replied to her, criticism with his own scathing letter defending his actions to prop up the yen. He wrote in part, Professor, disorderly yen markets can trigger forced unwinds, which could destabilize global

markets and ultimately raise borrowing costs. And then he went on to suggest, and I quote here, a tutorial on foreign exchange for dummies to Senator Warren. Well, at the same time, Treasury's doubling its long-end bond buybacks. What point do you think does market stabilization become price management and does Treasury risk distorting the very market signals that Warsh said today that he wants the Fed to follow. Well, what's interesting is, as we know, after Jackson Hole, there's no Q&E, Q&A. I guarantee you, had there been one, the first one was, what do you think of Besson trying to twist the curve and lower the long end?

However, I'm sure maybe Steve out there, you'll be the first one to ask Kevin Worsh that after the September S-FOMC meeting. So he didn't have to address that at all. I think that's wise at this point. No reason to get into a tussle with that. But very honestly, I would be surprised if he was pleased with those actions, wanting the markets to give him true signals to what is the supply and demand for securities. All right, Professor, if you'll stay with me, I want to bring in the rest of the panel now. We have CITES Scott Cronert and MetLife's Drew Mattis.

Gentlemen, great of you to join us. Thank you. Drew, I want to start with you. You still think that the Fed is going to hold? Why? Our view is still a hold. I don't actually really see the case for a rate increase here. And I think if you look at the response of the markets to Warsh's speech,

he gave the markets more than they could ever hoped for in terms of being hawkish. And once he get for his troubles, he gets higher 10-year yields. That's probably not where he was hoping to kind of end the day. So, you know, he gave up a lot and he got nothing in return. And I'm not sure why you would continue down that path when hiking interest rates is not going to do anything to restrain AI investment. And the most you can hope for is that you're going to hurt, you know, lower income consumers who are trying to borrow money to kind of maintain consumption. I'm just curious. I mean, is it really that you think that AI spending is what is driving the inflation? No, I don't think anything that, but here's the thing. I don't think anything that's driving inflation is actually all that interest rate sensitive. And so I'm not a big fan of performative policy moves. I don't think Chair Warsh is a fan of performative policy moves. I think he kind of got forced into his comments today. And, you know, I think if he can figure out, he's a way out, he's a lot.

going to take it. All right. Let's go to you, Scott. If we're looking right now at your target of 8900, right, 8100, sorry. Yeah, 8100. Eighty-nine would be really high. And then you've got the Warsh potentially hikes coming down in September. What do you need? You need AI strength and broadening. Which one of those would be more susceptible to a hike? Well, I think the broadening trade is more susceptible to the negative to a hike, right? I think the broadening trade needs fed rate hikes to get priced out, get a little bit more confidence in soft landing, if not Goldilocks economics. And I think the speech today is telling us that that might not be in the

immediate future. So I do think you put a little bit more of the burden on to the mega cap growth and AI influence trade, which obviously got a shot in the arm from the NVIDIA results yesterday. Professor Siegel, what do you think the market should make of what's happened in Jackson Hole? And not just that, you know, some of the earnings that we've seen coming through here, you've got Nvidia coming through and the software names rebounding. Yeah, I want to push back a little bit on what Drew said, that Bush got nothing. We did see a flattening of the curve. The two-year went up much more than the 10-year.

The flattening of the curve shows increased confidence in the head of the central bank to control inflation. So I think there was a gain there on the fighting inflation front. As far as earnings, I mean, wow, what a blockbuster with NVIDIA, you know, and, you know, with Salesforce, you know, all the software coming together, blowing out estimates, forming a partnership. Wow. Now it is interesting. No follow through now, which does mean that that high that NASDAQ hit a few months ago, you know, is a pretty durable ceiling there. And I think if we're going to see a big bull market into the second half of this year, it's going to have to penetrate that level. And if it doesn't, there's there's an overhang to be sure. Yeah, Scott, you're actually cutting your tech exposure back right now. Why? Well, we did that going into Q3. And it was on the. heels of the strong semi and hardware performance in Q2. I would point out that as part of neutralizing our tech weight down to market weight, we actually lifted our software underweight up to market

weight. So we've been viewing this fairly from a fairly neutral perspective going into Q3. Obviously with the correction we saw in parts of the tech area during the July timeframe and then the quarterly result reporting period, I think we've got the reset we were looking for. But the market's still back and forth and how it's thinking about the AI trade, its components, and the timeframes for evaluating all these on. So I think the ongoing volatility under the surface on the AI trade is going to persist, but I still think that the inertia that's supporting it is in pretty good stead. That's what we're going to be focused on here. It was interesting to hear the Fed Chair talking a bit about pricing and about American households

having to factor some of that in. When you look at the market from September through to the rest of the year, how are you factoring in consumer sentiment, which remains quite low? Well, I mean, I think here's the challenge, right? And it was shown in the speech as well, which is, you know, inflation expectations are incredibly well contained. And yeah, they can move, but it's been a few years and they haven't moved. And I think, you know, that's just a signal, quite frankly, that, you know, the Fed should actually spend some of their credibility here. I think consumers are actually really dependent on the equity market continuing to do well. I think if you see a break in the equity market, you're going to see a break in the consumer.

And I think that kind of thing can fall apart really fast. And the thing that will speed that along is rate hikes for performance purposes instead of for, you know, some sort of actual constraint on inflation pressures. Drew Mattis, Scott Croner, Professor Jeremy Siegel. Thank you, gentlemen. appreciate it. Let's get right over to Christina Partinevallus for a look at some of the biggest names moving into the close. Hi, Christina. Hi, Contessa. Amazon shares, seeing a nice pop to close out the week

on strength of the new price target from Evercore ISI analysts over there saying for the first time, they're actually seeing agentic AI as a positive for the company's retail business. They had a survey, and the survey showed 57% of Alexa AI users are actually buying a product. They were not previously aware of. Shares up 3.5%. Rubik shares following them. off of their earnings momentum, taking a tumble today. The security and AI operations company saw earnings above expectations, even hiked its annual outlook. Not enough.

Margins, though, are what's weighing on the name as those missed estimates shares down almost 12%. Auto desks, I should say, also missing out on the software rally. Contessa, you brought up just recently. An earnings miss certainly didn't help, and guidance also fell short of what Wall Street was looking for. The one-day SaaS rally on Salesforce earnings has already come and gone for Autodesk.

Shears down 4%. All right, Christina, thank you for that. We're just getting started here on Closing Bell. Coming up, turbulence ahead for tech, why our next guest sees a week September ahead for that space. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back.

A broadening tech trade continues to strengthen, but some key risks here are on the horizon. Here to discuss it and share his top picks in the sector, Baker Avenue wealth management's chief strategist, King Lip. Good to see you today, King. When you're looking at these themes that have been playing out over this year, this broadening of the AI trade and the strengthening they're in, seems to be really crucial. What drives it through September and the rest of the year? Yeah, we see the tech trade as moving away from, you know, show me the model, if you would, to show me the money.

So we've definitely seen in the last 48 hours a strengthening of the fundamental AI story. The bar has been raised for investors, however. We do see the themes sort of playing out this year, return on CAP-X, broadening of the AI trade, as you mentioned, going into September, and the industry moving from AI training to inference. So lots of balls to juggle, we would say, in the next month or two. And when we're moving to inference, you're really, looking at some of these companies tailoring how they're using AI for specific tasks and making

money that way. So I'm looking at your top picks here. Talk to me a little bit about Broadcom and the way that theme or that thesis plays into Broadcom. Yes, so Nvidia has been great for training models, but for huge repetitive type workloads, Broadcom is our top pick for the next evolution in custom AI chips and inference play, you really don't need Nvidia to lose, you know, for Brockcom to win in that space. What opportunities do you see in software? Well, software's been an interesting one. You know, the easy AI trade has been buying chips. The next phase is requiring which industries are going to make money from those chips. So, in our view, the whole first half of the year, if you would, was spent on which software companies are going to get destroyed by

AI. Now we're asking which software companies will actually make money from AI and make it more valuable. So we think the software winners are going to be the ones that have proprietary data, mission critical workflows. However, AI will destroy the rest if they don't have a vote. Dan Niles told us this morning on Squawk on the Street that he thinks that Nvidia sales numbers were inflated with double reporting companies, putting more on the order books than what they are ready to buy just because they want to hold their space in line, so to speak. Do you think that NVIDIA's numbers reflect that? And does it make you doubt what NVIDIA is predicting for next year, that's 70% growth? It's a good question. That's actually one of the risks that we flag,

and we call it the four hours of risk. It's about revenue quality. I would say it's a yellow flag. I won't say it's a red flag. AI financing is getting more complicated. When suppliers start to help finance their customers, investors should pay attention. With that said, the fundamental demand is clearly real. But we do need to separate organic demand from demand stimulus revenue. Well, now that we mentioned the 4Rs, you talked about revenue quality, but you might as well go into the rates.

We want to hear about that, the ROI. and of course the rivals. Exactly. You know, high rates, we're facing that now. We think that higher rates would be a headwind, certainly. It lowers the value for AI names, which have a longer duration earnings. R.O.I. Investors are moving away from just show me the CAPX to show me the return on the CAPX,

and they're punishing those type of companies with a lack of RLI. And finally, on rivals, the deep seek and kemee threats are real. cost increase, customers will be looking for lower cost alternatives. Almost every guest that I've talked to this week has mentioned in some way, shape, or form the moratorium on data centers. The challenge of not in my backyard, the political risks with regulation that hampers development of data centers. Where do you come down on that? We do think it's a significant risk. I think that's the reason why a lot of AI companies are thinking.

Thinking of innovative ways to have the general populace, if you would participate in the upside of AI. I do think new technologies will develop. But I think there's going to be political developments as well as technological developments. You know, King, I think that if we did a podcast together, we could get a real royal following. King and Contessa together. All right. Thank you for your time. Have a great weekend. You too. Thank you. Tim Cook is handing the reins to Apple's next emperor next week.

Let's get over to McKenzie Sagalos with more on that. Hi, Mack. Hey, Contessa. So Tim Cook is making a lot of the difficult, unpopular decisions on his way out, particularly the ones aimed at protecting margins as Apple deals with a tougher cost backdrop. Now, just this morning, the company raised prices on Apple TV and Apple One in the U.S. After already pushing through increases, averaging 20% on Macs and iPads, it's also cut jobs across parts of its AI and software teams out here in Silicon Valley,

while pushing out a round of less consequential hardware updates just this week before the handoff. Now, taken together, Cook is absorbing a lot of the friction right now, pricing, personnel, product housekeeping, so that John Turnus can start with a much cleaner slate at his first big public moment on September 9th. We are expecting a foldable iPhone, the upcoming series, 18 series, and the broader rollout of Siri AI. And then a recent leak straight from Apple points to eventually the rollout of camera-equipped AirPods and even more radical iPhone form factors ahead, including an almost all-glass design. This could be Apple's most ambitious hardware stretch in more than a decade. And John Ternis gets to begin his tenure as a face of it. And yet you've got Tim Cook remaining as the chair.

What are, you know, your Silicon Valley insiders predicting happens with, you know, the boss still staying somewhat in charge? They say that this is the best possible outcome because you've got Tim Cook navigating the difficult relationships with the White House, essentially handling all those conversations about how to safeguard the supply chain, using Chinese chips, getting clearance from Commerce Secretary Howard Lucknix to work with CXMT in Shanghai. He's got to deal with Beijing, of course, because they've got to deal with. got to get Siri AI cleared. Tim Cook has been meeting with EU regulators to try to get clearance in that neighborhood. So this chief diplomat role will basically take a lot of things off of John Turtus's plate so that he can focus on what he does best. This is Apple's hardware chief,

and they're about to go into one of the most revolutionary phases of hardware launches that they've had in over 10 years in terms of a new product lineup in over 20 years in terms of iPhone redesign. Well, I say bring it, because I'm ready for some new hardware. wear myself. I want apple glasses. I want something new. Mack, thank you. Up next. Beef prices are climbing and relief may not be coming anytime soon. We'll take a look at what is driving the squeeze. That's next on closing bell. Welcome back to closing bell. Wheat, corn, soybeans. They're all up big on the year. Look at that. You've got wheat up more than 54% on the year. Not the only food group either where prices are surging. Beef out of control. That's what our Pippa Stevens is looking at

for us. Pippa, what are you finding when you look at beef? Well, contested, cattle futures are off the record level from earlier this year, but still elevated, and that is keeping beef prices stubbornly high, adding to the inflationary pressures consumers are seeing. Beef prices are up more than 9% in the last year, outpacing overall inflation with a pound of ground beef, now approaching $7 as consumer demand remains sticky. Now, much of this is driven by the shrinking cattle herd now at its lowest in more than 70 years. The Trump administration trying to take action, today taking aim at the Packers while last week relaxing some tariffs on beef imports for the next 90 days. But the reality is these are short-term moves for an industry that is cyclical

and thinks in terms of years and decades. And while ranchers are profiting now, it follows years of losses with many still recovering. Add in growing costs from feed to equipment as well as a drought in much of the Western U.S. And there is a little indication that ranchers will look to meaningfully rebuild their herds, and that contesta could keep prices for beef here higher. And fuel. I mean, diesel fuel is expensive. And so that's not only what it takes to run your farm equipment, but also getting

beef to where it's going, the cows to where they're going. Yeah, exactly. All right. So what about imports? Like, are we now relying on imports to lower the prices, and that would come in particularly handy before the midterm elections, but something that beef farmers or ranchers don't want. That's right. So the Trump administration announced that they will allow 100,000 metric tons in September, October, and November, of course, coinciding here with the midterms to be imported

at a lower rate. And the reality is that is not that much of overall U.S. demand, given that we consume about 35,000 metric tons daily. But it is a lot of our imports, and basically a lot of that is frozen, so then it goes to the food service industry versus being sold at grocery stores, which prioritize that freshly ground stuff that is oftentimes produced in the U.S. So that means it's not really going to be beneficial for consumers. Ranchers are very upset about that, and who that benefits is the Packers. But then today, the Trump administration said they are looking in to the four largest Packers, which together control about 80 to 85 percent of the market.

So clearly they're trying to address this, but the issue is a structural one. It's long term. And ranchers clearly, maybe they'll maintain their herds with these prices, but little indication they'll look to meaningfully grow their herds. Pippa, thank you very much. Appreciate you. Up next, our next guest says the most consequential part of Fed Chair Warsh's Jackson Hull speech. Maybe the part that's getting the least amount of attention.

Alianz's Mohammed L. Arian joins us. That's next. Fed Chair Warsh expressed concern about inflation and advocated for a quieter central bank, or certainly less forward guidance in his Jackson Hole speech this morning. Our Steve Leasman asked Chicago Fed President Austin Gouldsby for his reaction. I found myself in agreement with a lot of the details that he was talking about the economy, the emphasis that the job market is stable and that really the problem side of the dual mandate has been the inflation side.

And I think that's where. where we should be. And as I look at the data, I agree with the analysis that the chairman put forth. Let's bring in Alianza's Muhammad Al-Ary. And it's great to see you today, Muhammad. Give me your take. When you're watching that speech and so much writing on it for the Fed chair, what did you glean for where the Fed goes from here? Thanks for having to contest that. So I think there's a longer-term issue. in a shorter term issue. And everybody's focusing on the shorter term issue, understandably. And what we got today is a very clear message that the economy is doing well, to the extent

there are threats to the dual mandate is on the inflation side. And the main instrument for dealing with that is interest rates. Is that enough for me to say that we will get a rate hype in September? No. And this is the spine. chair was recommitting to the PCE 2% inflation. Now, why is it not enough? Because he also said inflation expectation are stable. He also pointed to the longer-term productivity effects of AI. And in the past, he said, you know what,

if you look at certain segments of the economy like housing, financial conditions are pretty tight there away. So I think the market got what it wanted, which is clarification on the reaction function. But I think it's getting carried away in terms of pricing a September rate hike at almost 60%. Let me ask you about that whole inflation expectations are stable. Because we just heard from Austin Gulsby that he likes that the labor market is stable. It reminds me, you know, in journalism, when you're looking after a car crash or a violent accident,

they say, oh, his condition is stable. That there's no such thing as stable. There's critical but stable. There's good but stable. I mean, is stable the condition that we really want, or could it be something better? You know, like, it's problematic, but stable. So we want the inflation expectation to be stable at where they are, because where they are, longer term is near the inflation target.

Where you are right, and Cher was spoke about it, is we've had 65 consecutive months, so over five years of inflation above target. And that is a really long time. And I'm really glad that finally, you and your colleagues are looking at this, because for the first four years, people were just ignoring it. So what about the level of inflation? There, we're seeing it come in line with expectations, and you could see a path towards lower one. So whether it is expectations or actual, I think you need to see a deterioration before you will be confident about a rate-high-consumption. at the other thing is that, and look, we've spent a lot of time talking about the potential

for a rate hike in September because the odds of it have moved, the probabilities. I want to talk about the AI piece of this, about the possibility that AI becomes a really pivotal part of and consequential part of production. How do you play what Chair Warsh had to say about that with what we see unfolding all around us? So that's the critical element. and I think that's the element that is not attracting enough attention. He used the following phrase to describe AI

potentially a factor of production. In economic terms, means you're bringing into the supply side something that allows you to grow faster without inflation. That is what a new factor of production would do. So, like him, I really do believe that we are on the verge,

of something absolutely transformative. And it's not just AI. It's AI, it's robotics, it's life sciences, and soon, quantum. The issues we have to deal with the cost of funding this AI. And that is where you get it on the demand side before we get it on the supply side. And something that the Fed is going to have to discuss, are they willing to look through the demand effects

that are likely to be short-dated in order to get to the supply effects, which are likely to be long-dated? that's going to be a debate in the next few quarters in the FOMC. Mohamed, thank you very much. I appreciate your time today. I appreciate your expertise, as always. Have a good weekend.

Thank you. You too. Up next, we're tracking the biggest movers as we head into the close. Christina parts of Neville standing by with that. Christina. Well, we have a software winner storing on earnings as biofuzz builds. A chip named beats, but weak guidance just really helps the stockfall and a betting fight headed for the Supreme Court. Stay with us.

12 minutes until the closing bell. Let's get it back to Christina Pritzenevallus for a look at some of the key stocks to watch. Hi, Christina. Hi, Contessa. Let's start with Workday shares because they're one of the software winners today, still riding high after posting a second quarter earnings beat. Software companies' earnings coming as rumors just continue to swirl about a possible take-private deal in the near future. Shares up 6%.

Marvell moving in the other direction, despite earnings beat, but it's really the guidance that failed to wow investors, a revenue deal. Revenue from his deal with Google from last month is, counted so there's not necessarily new visibility into where more growth will come from here. October 6th, next big catalyst for this name shares down almost 10%. And typical betting players, Draft Kings and Flutter are winners today after a Nevada appeals court ruled against prediction market platforms. The decision contradicts one made by a different appeals court in April setting up the Supreme Court to have the final say. But Contessa, you know all about that.

Yeah, I mean, you've got Flutter up 5% draft kings up of 4% or so. Like, They would tell you they're agnostic because both have entered prediction markets on their own and offer it. But the interesting thing here is Nevada said that Nevada can, the court in Nevada said, that the state can enforce its rules on gambling against these sports events contracts. In New Jersey, the third circuit sided with Kalshi. So two same level federal courts, one level removed from the Supreme Court disagreeing this case, I predict. headed for the Supreme Court. Then you don't think that more states will be following suit with their own type of... I do. And they already have. There's already states that have filed and that they're in the works. And the backlash against especially sports betting contracts because it takes

away from the licensing of sports betting in those states has been the real problem child to be determined what happens with elections and the like. All right. Christina, thank you. Up next, PayPal on pace for its worst day since February. We'll break down what's behind the sell-off. Plus, gap shares surging after earnings, what the results could signal for retail names, still to report next week. We have that and much more when you take you inside the market zone.

Time of the day, we're now in the closing bell market zone. And Mike Santoli and 314's Warren Pies are here to break down. Crucial moments of the trading day. Oliver Renick is live at the seabo, Global Markets in Chicago. Brandon Gomez has more on why gap shares are searching, and McKenzie Seagalos on what PayPal shares are doing. and slumping towards the bell. Let's start with Mike Santoli.

Mike, what are you watching? Yeah, Contest, I mean, we made it through the week. I think that's my main assessment of this market with small gains at the index level, even though, you know, we had to deal with NVIDIA's report, obviously a huge upside surprise. It managed to carry for at least a day and keep the S&P 500 right on its bullish trend.

And then get through the Kevin Warsh speech today. Obviously, we had to reprice for the higher potential for Fed rate tightening in the months to come. And we're testing the market's tolerance for that today, falling back on that old habit of grabbing for the Mag 7 stocks like Amazon, Apple, and Microsoft to protect the indexes. Most stocks are down today. It actually is a little bit weaker below the surface and consumer and industrial.

But so far not really changing the overall story. We're heading into September. We now have the Fed more in play, probably. Volatility is low right now. So it could get interesting from here. but so far market is not giving you too much directly to worry about. Yeah, we're seeing that 10-year rise now to 4-728. All right, I know you have more on that coming up in the overtime.

Thank you for that, Mike. Let's get to Oliver Renick at the CBO with the options action, Oliver. Contessa, if you look at options, there is a solid case to be made that this was a win for Warsh and Equity Bulls. Coming into today, the options market was pricing in the S&P 500 range of about 6 tenths of a percent. Right now, we are well within. that down about 19 points despite odds of a hike surging, gold and Bitcoin selling off, and in video reversing. At one point this morning, VIX hit a fresh year-to-date low. A sign the market

seems braced for whatever the Fed throws its way. What's more is that if you disagree with that, it's never been cheaper all year to buy protection for your stock. And in the second half of the day, we saw a lot of traders doing just that with above-average options volume on VIX and particular interest in long-dated calls as far as six months out, where the spread, and VIX futures to spot is now steeper than it's been 96% of the time the past year, Contessa. Oliver, thank you for that. Let's watch Shares of Gap now surging into the clothes. Brandon Gomez has been watching Gap today. Hi. Hey, Contessa, yeah, busy week for retail. Gap gave a mixed picture, the namesake brand delivering

a 10% jump in Comps, but company-wide fell 1% with Old Navy and Athleta declining. Gap now bringing in Michael Francis as the new Old Navy CEO, management acknowledging its summer marketing missed the mark. Gap CEO telling our dot-com reporter Lai Aneela Kondin, the consumer is, quote, resilient but discerning, which sets us up well for Lulu Lemon next week, investors watching whether it can re-accelerate U.S. growth while keeping an eye on international momentum, Contessa. Apparently, Gap's consumers just didn't like what they saw at Old Navy. All right, Brandon, thank you for that. Shares of PayPal slumping today. Mackenzie Segalos has been watching those moves. Hi, Mike. Hey, Contessa, those shares in PayPal are plunging down some

13% because the takeover bid that had been juicing up the stock is now reportedly off the table with the Stripe Advent Group walking away after the two sides failed to bridge a pretty significant gap on price. Now the buyers had offered about $53 billion, our David Fabers, reported there were substantive talks, but PayPal's board wanted a number well above that, and the buyers were never going hostile, hence the stalemate. What makes today's move especially significant is that takeover speculation had been one of PayPal's biggest catalyst in years. The stock had rallied 50% since June, and now a lot of that deal premium is being lost in real time. All right, McKenzie, thank you. Let's bring in 314's Warren Pies.

Warren, you get bragging rights today because a couple of weeks you downgraded equities thinking that the risk of a September hike was underpriced. Where do you think it stands now? Yeah, thanks. I appreciate that. I'll take bragging rights whenever I can get them. I think that the move today is about in line of what I would expect. I think the market, though that Fed odds has gone from as low as 30% in the last month of a September hike. And that's moved up to almost 60% in the back of Peven's Beach. Are you more constructive on stocks now because of what happened in Jackson Hole?

No, I'm less constructive, if anything. I think that the equity market is still digesting this. The initial move off of these Fed meetings is always a little tricky. You saw the market try and rally at the beginning of the day. and that obviously faded. I'm looking for more weakness from the equity market between here and at least till the next data card gets flipped over. So we still have CPI, PPI and a labor report that could save us.

But if those things stay the same and oil stays where it's at, we're going to get a hike in September. And the market is not price for it. So if equities is not the place to be, what are you looking at? Where's your holding pattern? When we downgraded stocks, just to be clear, we took it from overweight to benchmark weight. So we've been overweight right in this bullmarked.

market and just wanted to reduce our excess risk. So I don't think I'm overly bearish, but we took that money and put in cash. I think this is a time to, you know, if the Fed starts hiking, we're going from environment where the Fed had your back to an environment where potentially the Fed's trying to break your back. So we went from an underweight cash to an overweight cash position. I think the cash is king until you get a little more clarity here. And then looking beyond the Fed to the midterm elections, you know, I don't think the market has really priced in either of those risks appropriately. And if you were betting, how many hikes would you say are coming between now and end of the year?

My best guess is we're going to get two, one in September, one in December. I think it's a fed mistake. I wouldn't be hiking, but I play the field as it lies, not as I want it to be. So I'm expecting to hike in September and then one in December as well. And I think it's not just pretty tough.