Closing Bell - Closing Bell 9/1/26

Episode Date: September 1, 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, guys, thanks so much. Welcome to closing bell. I'm Scott Wobner, live from Post 9 here at the New York Stock Exchange, and this make-a-break hour begins with tensions in the market, the spike in oil and yields. And what that means for stocks in the month ahead, one that is traditionally unkind to investors, as you know. So we'll ask our experts over this final stretch in just a moment, what's really at stake. In the meantime, here's the scorecard with 60 to go and regulation today. We have been read all day long, led by declines in discretionary and industrial names, sort of playing in that high. higher yield story. Tech is also read today. Apple shares, though, they're interesting. They're moving higher. New CEO, John Turnus, begins his tenure running that company today. Stock getting about a 3% lift. Elsewhere, some notable decliners in the cybersecurity space and that coming ahead of Palo Alto's earnings report in overtime. These stocks have been up a lot. So take that into consideration when you're looking at five, six, and even in some cases, seven percent declines. There it does take us to our talk of the tape. Will September play true to history,

or is there enough momentum in this market to keep stocks climbing? Let's ask Tom Lee. He has Fund Stratt's head of research. He's a CNBC contributor, and he's back at Post 9. Welcome back. Great to see you, Scott.

Good to have you with this month that's now upon us. How are you feeling? Well, I know people are edging into September cautious because markets are down, oils up, yields are up, and people are talking about the seasonality. I'm going to be contrary, and I think this is a setup for actually September to be a strong month for stocks.

Well, I think one is that the inflation fears are likely to quell this month. We have the jobs report on Friday. Next week is August CPI, and then we have, of course, the FMC rate decision in September. I think the sequence of those events is going to show inflation is weakening, and I think the odds of September hike might actually drop to zero. I mean, you thought that August, we could go. get to 79 or 8,000 in August alone. Yeah.

We obviously did not. So are you overly, are you too optimistic about this market ignoring some of the challenges that you did mention? Yeah. Inflation, higher rates, higher oil, you know, more hostilities in the Middle East, among other issues around the AI trade, data centers, et cetera. Yeah. And, of course, it makes sense to be worried about these things.

But 79, 800, 8,000 to me should be a level where investors, are bullish. Like, that's really when markets top is, our people are bullish. You know, these highs were made in August when people are cautious, and people are cautious here. So to me, I think there's a wall of worry here that actually should be viable. I mean, more concerns, as you know, have historically been buying opportunities. And the AI trade still has a lot of strengthening funding. Okay. So it is interesting to me that you do have now a growing chorus of caution. Yes. From many different corners, Citadel Security, Scott Rubner, I highlighted a lot of this on halftime, I'm going to do it again.

Because he says the near-term risk reward has changed. And he points out, say, earnings were great, but they're gone now. They're behind us. Retail remains a buyer, but historically, they become smaller in September. Systematic exposure has rebuilt. The corporate bid is going to fade. Blackout windows come back. He can't do the buybacks.

And then after a significant collapse in volatility, now that's behind us, too. says he would use strength to reduce exposure and add inexpensive protection. Goes on to say, not looking for a broader bearish turn, but a tactical reset. What do you make of that? Those are all valid points. What's interesting is I think that described a lot of the crypto trade last month. You know, VAL was down, retail was smaller, and we had a violent 30% rally. crypto, believe it or not, has historically led the S&P by roughly a month. So I think the setup is very similar for equities. I mean, in fact, the bottom might even be today for equities.

Unless you think that the crypto rebound could have been for a lot of different reasons. Intervention by the Treasury Secretary in the bond market, you know, calls attention to a higher degree to, you know, $40 trillion deficit, that whole deal. So why do you think that what may have been a... a singular moment actually has legs? Well, I think that when I look at the stock market today, I think one of the most loudest things people talk about is inflation. And the fact that inflation's been sticky. You know, we wrote about this last night that, you know, when the Fed studies have shown the core PCE might have a flaw in it because of, quote, the impact from software accessories, which is flash memory. It's accounting for a third of all the inflation, excess inflation this

year, but most people in their lives don't have flash memory inflation. No, but they have like gasoline tank inflation. Correct. So, and gasoline, you know, is unfortunately something the Fed can't control, but the other components of inflation seem to be in line. Core PCE, if you adjust it, is actually almost mirrored on top of CPI, which is 2.4. So if we get a 2.4 print next week on CPI, I think the market loses its anxiousness about inflation. Do you think people are getting too cautious too soon? I mean, because JP Morgan's trading desk, we're moving to tactical. cautious, neutral view. Wells Fargo, we're turning cautious on equities. All these people are wrong? Well, as you know, they're probably not wrong, but when everyone turns cautious, that means

consensus is priced in a cautious scenario. And unless the economy is about to inflect downwards, as you know, the cautiousness then creates, stocks can go up on bad news. That's actually when the last seller sold, that's when markets rebuild. We talked a lot. Every time I think you've been on recently this data center issue, which is now bubbled up. to the point of feels like a boil or on the verge of a pretty steady boil. What's the impact of that on the broader market do you think as September begins? It's a real issue because as we talked about, it's resonating with voters, and we're seeing Republican governors sort of siding with that and supporting moratoriums.

I just think the AI industry needs to do a better job of explaining the benefits. And I think that's, I think they've gotten the message. It is creating jobs, and it's creating benefits for users. And of course, it's strategically important for the U.S. So I think that this is definitely headline issues, even into the midterms. But once that's behind us, I think the AI sort of return on investment story is what's important in those stocks will rebound. Does it change anything about the near-term trajectory for the AI trade? You know, there's a difference, obviously, between how people feel about this issue and how investors should react based on how the people feel.

Yeah. It feels like the trade has seen. has been impacted by all of the negative headlines and the polling and the rhetoric that's been out there. Do you think so? Yeah, it definitely has. And I think we have to keep in mind three things. One is, of course, a lot of people have made money in AI stock, so they're going to be involved with a trade. But there's going to be churning between bottlenecks and semis and memory and downstream ideas. I think we're going to witness churning. And of course, the third is, as long as this is out there, multiples can't really expand. So it does sort of put a cap on it for now. Are you still looking for

a sizable pullback before a nice rebound? And could this be what we're about to encounter? Well, I think we're going to get an index level correction, because we've had a lot of churning within AI and mags this year. But I think it has to coincide with bullishness, and that hasn't registered yet. So I'm kind of saying, I think the drawdown period occurs when we start to see people bullish. That's why I'm leaning towards September being a great month for stocks. I don't know, a few weeks ago, we were saying the opposite. We're saying, like, everybody's too bullish. We're asking the question, you know, is there too much optimism in the market?

Is there too much complacency? What did the VIX got to, like, 14 or even under? So how can we have reversed all of that now where we're thinking, well, now there's all of a sudden a pickup and cautious, so that that's got to be bullish? Yeah, I think part of it is that sentiment hasn't aligned with positioning. For instance, margin debt shrank in July, and it probably didn't rise much in August, and now this month it could be weakening. So we don't have excess positioning.

And then the reliable sentiment measures like AAII are still showing negative sentiment. So I think as long as people are cautious, we're more likely to be higher rather than lower. All right. Let's add some voices into the conversation if we could. Let's add CNBC contributor capital area planning's Malcolm Etheridge and PNC's Young UMott. It's good to have both of you. I hope you heard the conversation. Young, I'll go to you.

Tom obviously puts forth a contrarian view to some. some of the cautious takes that are out there and circulating today. Where do you come down? Well, I think some of the headwinds are building, and that's apparent both in yields, Fed narrative, as well as what's happening now with oil and diesel prices. The question of what is priced in is a very relevant question for sure. I think that probably one rate hike is priced in, in terms of longer term yields, a little bit higher lift from here is priced in, And probably sticky inflation and stickier gas prices and diesel prices are priced in. So the question, I think, is then where do we break from here?

If it's the case that we actually break downward for inflation or oil and diesel prices, that would be positive for sure. But there's also some risks that we break higher than what's priced in the market here in terms of long-term yields, in terms of where the Fed direction is going to go. If it does indeed raise rates in September, there tends to be a momentum of its own once the Fed starts moving in a certain direction. So I think risks are two-sided here, but certainly some of these headwinds are pushing against the market.

I wonder, though, young you, now the fact that earnings are out of the way, and we can't talk about that every day in terms of how great they've been, we're now going to be forced to focus on the things that the market didn't want to focus on before, which was yields and higher oil prices. And the fact that what was said to be a four-to-five-week war is now passing, six months. And now we have even more hostilities and the price of oil back around a hundred bucks, or certainly seems like it's heading in that direction if the situation on the ground remains what it appears to be today. So now we don't have the distractions that got us to

where we were before. We have all these concerns. Yeah, well, I think the market is starting to think in the back of its mind are the best days behind us. Is that big earning surge behind us? You know, Every once in a while, when this type of sentiment starts to take hold, we do get some positive developments that are unexpected, such as new AI developments, new technology developments. You can't rule that out here, but it is the case that we're not going to have that sort of upward surprises and strong earning stories and healthy narratives or robust narratives coming out of companies for quite some time still. So we have to contend with these headwinds and see where they break. So the inflation number is going to be very important. what the Fed does and what signals is going to be very important. And of course, what's happening with inflation, stickiness, oil prices is going to be day-to-day

movements that the market focuses on. All right, Malcolm, near-term risk reward has changed, says Scott Rubner, Citadel Securities, as I mentioned with Tom already. You agree with that? Are you on Team Lee? Yeah, I don't agree with that. I think that Tom is characterizing it appropriately. I think the temporary sentiment shift is probably very temporary.

I think that all of a sudden, us caring about the fact that the Strait of Hormuz is blocked. It's been blocked for six months. Or we're caring about inflation spiking. It's been spiking for a year. Or all year, we've been looking at the 10 year and the 30 year yield spiking. So I think that it's unlikely that investors are suddenly going to find religion about all of the different things that could go wrong, where you just had an earnings period that confirmed that the AI party, is still rolling, and you had Jensen Wong come out less than a week ago and tell us,

we've got visibility into 2028, and the growth numbers are still very strong. So I think that realistically, this is a temporary pause. But wasn't the tell in all of that that the market didn't react like you would have thought? InVIDIA knocks the cover off the ball. Jensen Wong guides 70% revenue growth into 28 longer than they've ever gone before. And what have the stocks done since? Not much. Yeah, but you've heard me say that Nvidia's good news is good.

news for everybody else and less so for them, right? As the biggest company in the world at $5 trillion, it takes a ton for them to be able to move a one percentage point at any given moment. But you look at the shares of like an Amazon, for example, or a Microsoft, for example, or an Apple. All of these companies after Q2 earnings reports have done extremely well, especially the days right after the earnings print. So I just think that it's unlikely that suddenly we're going to stop caring about that narrative

really focused on the things that we've been actively ignoring for the better part of a year now. What do you think? I mean, I'm going to agree because I think Nvidia's multiple is capped. I agree with Malcolm? I do agree with Malcolm, yeah. Because Nvidia's multiple has been sort of stuck in the high 20s, in the low 20s. In the low, high teen's low 20s. It's like the lowest level in like seven years going into the print?

Yeah. I mean, it was stuck in a good place. That's right. And to me, it's a sentiment barometer that invests. can't be that a bully about AI until, you know, Nvidia follows, like, a Cisco path and re-rates to a multiple of the S&P. And I think that we're still quite a ways from that. You think it deserves a higher multiple?

Yes, because they have a recurring revenue business, their dominance in a sector. Based on a lot of assumptions, right, the recurring revenue? Yes, in some ways, Scott, because the future is still uncertain. But actually, we can say five years ago we were uncertain about the future of AI, and they were dominant back then. So to me, they're not getting rewarded for their ability to navigate. This AI trades so successfully and really being central to that future. And then at some point, they'll be traded like an end of one company and have a high multiple.

I want to bring in another point, too, in these markets, because I mentioned it off the opening read what's happening in cyber. Because we are watching software today. That space comes off its best month since May. It's fifth best month ever. Fifth best month ever for software. What a difference a few months make. Well, some key earnings loom after the bill today, including Palo Alto and Dell, are Oliver Renick working up some options action for us in those names. He joins us now from the Sibo in Chicago with more. Hi there. Hey, Scott, Dell earnings after the bell, arguably the AI report of the week. The stock is up 240% this year and options are pricing a 10% swing for the stock, which may seem big until you remember the shares surged 30% and 20%.

percent after its last two reports. In both those cases, the options underestimated the move. And traders today might be taking notice with volume now on pace for three times the 30-day average. Worth noting it was actually below average this morning. But as the stock has pulled back, options traders are pouring in. The volume is split between puts and calls, but the premium is skewed towards calls and the most bought contract across 11,000 trades today is the 450 call expiring September 18th. That's a bet that Dell can hold at least an 8% rally over the next three weeks, Scott. All right. I like that look there. Oliver, thanks so much. That's Oliver running. Let's bring the panel back. What do you think about the software trade right now?

People tried to write it off. Seems like a little too early. That's right. I think people gave up on software thinking AI was going to eat software, but it's proving to be what we consider a downstream trade to AI. And I think that the good companies are going to have new. durable business models built around AI centricity. Malcolm, you've got some exposure in this space, obviously. And now what do you look for with Palo Alto reporting tonight? Yeah, that's putting it lightly. I've got a ton of exposure here.

I added considerably as the SaaSpocalypse started to come upon us. And I'm glad to be vindicated in a lot of these names. Palo Alto specifically, though, I'm surprised to see it trading negatively today. And I'm curious if maybe the fact that it's up like 170. from its earlier, its lows earlier this year. And maybe because it's trading at like 85 times next year's sales, investors are just looking and saying, maybe I better take some profits here before we get the earnings print just in case it goes the wrong way. Because looking at the week we had last week in cybersecurity names specifically, I would have expected the opposite

effect. I would have expected folks to be piling into Palo Alto here. So it's a little bit curious to me. Young, do you feel like we've, we've turned the tables here that what was, at least seemed to me, overwhelmingly semis over software, now that the momentum trades having all this trouble, are we back to software over semis? Well, that's what it's been recently, right? And I think the sentiment in the software space just got far too negative. And probably the sentiment in the semi-space got overly exuberant. And then we have more of a moderation in both of those areas.

Probably right now, I think what we're seeing is just some healthy profit-taking in the software space. I do think there are a lot of durable business models out there that are going to find a ways to implement AI and utilize AI in a way that can grow their business. But I think both of these has kind of found more of a middle ground, both the semi-in-the-software space. What do you recommend right now? Well, you know, I do like the AI downstream names, so I like the software names here in the mags and crypto. Better than semis? I think for the moment, yeah, because semis are still, you know, corrections are multi-months. But it doesn't mean I'm giving up on the AI bottleneck trades.

I do like financials and industrials, and I still like small caps. But the role in momentum is curious. I'm wondering what you think about that. It's tumbled momentum. More than 9% since July 1st, lagging behind the S&Ps almost 3% gain. On track is momentum for the biggest quarterly underperformance in 25 years. Yeah. It's understandable given the high.

profile situation with situational awareness and how it caught many people off guard. And I think there was a second sort of tremor, which caught a lot of tech pods off sides on around Nvidia. So I think you had a double whammy to momentum. Yeah, I know, but there was a nice rebound right after that, like a three or four day rebound that was probably the most powerful we've ever seen in the factor. Yeah, that's right. But there might have been people who were trap lungs that needed to get out. So I think it makes sense that you've kind of had some seismic effects and it might take a while. The other issue, I guess, Malcolm, is that as long as now rates are so much in focus, trades that looked pretty good on the cyclical side of the market aren't looking so good.

I'm thinking of discretionary and industrials, and I wonder whether that now calls into question the durability of any broadening that we thought was going to carry us higher. Yeah, I think that's a fair point. I think the spike in yields on bonds globally, not just here in the U.S., have certainly created some concerns, at least in the last couple of the last couple of of trading days, and maybe we need to digest what that does to the thesis in all of those other secondary and third order companies and sectors that are impacted by the AI trade. But even more so, I would be curious how much the spike in interest rates is going to impact

these hyperscalers that have been going to the debt markets all year and whether they're going to have to slow down the level of borrowing that they've been able to do because of the spread disappearing between what you could get in treasuries versus picking up the bonds of some of these companies borrowing to build their next data center. So that could have a longer-term impact on this AI trade and be the thing to sort of slow it down a lot sooner. Young you, same question to you. The idea is broadening, where it goes from here? Well, broading is going to struggle as long as long-term yields keep pushing higher. And this 4.8% level of the 10-year treasury is the same range where the equity market has struggled in the past. So this level actually is important. I don't think

stocks are going to fall apart here. But as we push toward 5%, it's going to be a choppy market that we have, and it's going to be difficult to make continued gains, especially because a lot, the concern is that a lot of the growth that we've seen recently does have a debt-fueled element to it. And so as yields push higher, I think that growth gets called into question here. All right. Good conversation, everybody. I enjoyed that. Thanks for being with us. Malcolm, we'll see you soon. Young, you, of course, Tom. You as well. We're just getting started. Coming up next, the data center debate, the buildout backlash growing coast to coast now is yet another big Wall Street firm weighs in on what it all means. We'll tell you what they think it means to the AI trade coming up.

We're live from the New York Stock Exchange. You're watching closing bell on CNBC. All right, welcome back. The debate over data centers still raging. Our Kate Rooney joins us now with the very latest there. Hi, Kate. Hey, Scott. So just in the past 24 hours, we have had. a few developments that highlight this fight right now. The data centers, over data centers, I should say, is heating up. For example, we had PIMCO's head of public policy writing that we are likely to see more opposition at the local level. And quote, you know you have a problem when conservative Texas governor Greg Abbott

and then socialist senator Bernie Sanders agree on the same issue. Elsewhere, and I know this morning from Morgan Stanley, analyst over there saying, quote, federal policy remains supportive of data center construction permitting power. generation and associated energy infrastructure. However, they also note midterm results could signal a change in that attitude. And then you had Pennsylvania governor Josh Shapiro's stance, which has gotten a lot of attention lately. He put stricter requirements on data centers overall that have been built in his state. He explained some of this on CNBC earlier. Here's what he talked about and what he expects from developers. Number one, you've got to earn local support before you can

come to the state for permits. Number two, you've got to just. generate your own power and you got to pay for the power. You can't saddle local homeowners and businesses with that. Number three, you've got to protect our water supply and our air quality. All of those things are common sense. And Scott, President Trump also weighing in on this debate on truth social, as you highlighted yesterday, saying communities who resist data centers will end up, quote, backwards and poor, adding, let data rain.

The Wall Street Journal editorial board also chiming in on what they're calling data center panic in a piece praising the president's position and warning about competition with China, but never a dull moment in this debate, Scott. No, certainly not. It doesn't seem to be going away anytime soon either. Kate, thanks. That's Kate Rooney. Speaking of our, Leslie Picker, spoke with an investor who's been putting money in that space for decades. joins us now with that side of the story. What do we know here? Hey, Scott, yeah, this is an interesting perspective. Mark Gansy, who, as you mentioned, it's, been investing in data centers decades before they were in vogue, sees signs that market may be climbing too high, too fast. I think we're definitely in a top-y-esque moment. I think it feels, in a way, very similar to the late 90s

in the sense that when you start seeing capital structures get stretched and you see loan-to-value ratios moving from, we're typically 45 percent levered across all our businesses. but when I begin to hear people are levering businesses to 70, 80% loan to value, I get altitude sickness is what I call it. Gansy is the CEO of Digital Bridge, a 30-year-old firm with $121 billion in assets under management, focused specifically on digital infrastructure. In December, Digital Bridge agreed to be sold to SoftBank for $4 billion as part of the Japanese

firm's AI stack. In our interview, Gansy said he's not concerned about the data center market backed by investment grade tenants with long-term contracts. He calls those, quote, islands of safety. His fear lies with newer operators that don't have credit ratings at all and are seeking to finance their buildouts using more aggressive private structures, he said. I asked him what he thought about Invidia's $500 billion plan to bring together a group of six alternative asset managers in order to help provide credit to those who couldn't otherwise afford the chips.

and he said that capital that's backing Nvidia's endeavor is, quote, priced to perfection. For more from Gansy and other alternative asset managers, please subscribe to our newsletter Inside Altz using that QR code on your screen there, Scott. All right, Leslie, Leslie Picker. Up next, the billionaire behind the Rams and Arsenal

and others. Seems like he owns, now he's going to own a team in every sport. Making one of his biggest sports bets yet. We have the breaking details next. Big news in the world of sports crossing just moments ago. Stan Cronky buying the LA Angels. Alex Sherman joins us now to add to his already vast and successful portfolio of sports teams unrivaled. Scott, is it just me or are we talking about a different sports franchise changing hands twice a week these days, the two of us?

Yeah, the latest news here that the Stan Cronkey sports empire, which owns the last. Los Angeles Rams, the Denver Nuggets, the Colorado Rapids, and Major League Soccer Team, Arsenal, the European Premier League team, the English Premier League team, now adding the Los Angeles Angels Major League Baseball team expanding this giant sports empire, the Denver Nuggets, the NBA team. This is, he'll be the, you know, the only owner, I believe, of every major, Maybe there's one other owner. I can't quite remember of every major American sports team in this giant empire of

ownership. This is a controlling interest that he's buying from Ardi Moreno, who has been the owner of the Los Angeles Angels for the last 23 years. Obviously, the St. Cronky Empire has done quite a bit of winning. If you take a look for sort of ticking off one by one of those teams, the Rams have been wildly successful in recent years. The Nuggets, of course, Arsenal. So I think fans of the Angels probably approve of this deal,

considering the Angels have gone through some rough times in the past 15 years or so. This is a controlling stake. We don't know the price yet, but based on the comparables for other deals, it would certainly be no surprise if this deal were the largest major league baseball sale of all time. Topping the Padres, which again, just a couple weeks ago, that team sold to get the Padres. We've got Liverpool that sold recently, a minority stake, which could turn into a majority state. Of course, the Lakers, which sold very recently.

So it's just one after another here in this very interesting moment in time where the valuations of these sports franchises across the board are soaring. Padres were 3.9, which has people speculating that this is four, which would top that. Or more. And it's interesting that, you know, you point out what you did at the very beginning of this conversation, that we're having these conversations every week. Why? Because valuations, as you also suggest, are doing what they have done,

and the sellers see that too. And I wonder what they think about the current environment and how long valuations can continue to go up the way they have. It is an interesting moment in time, right? I mean, whenever there's a sale, there's a buyer and a seller, but clearly we've reached an inflection point here where there is a group of sellers out there that feel like now is the right time,

to sell. And obviously there's a group of buyers out there that would love to get in at these valuations and say, you know what, look, if you look at sports franchises, you know, over not only the past few years where there's been a real skyrocket up, but even over the past 10 or 20 years, you know, they more or less across the board rise steadily as these are trophy assets, they're limited ownership assets, and they continue to rise in value, even as the amount of people that can afford to buy them become smaller and smaller as the various different leagues out there

allow private equity ownership as a minority stake to help foot the bill for these teams. He's had unparalleled success actually on the field too, which is worth, I think, noting. I mean, the Rams are the favorites to win the Super Bowl for the upcoming NFL season. Nuggets win the NBA title within the last handful of years. Avalanche win the Cup in the last handful of years.

We'll see what happens with The Angels Premier League Arsenal just won the last iteration of that season. So I don't think we've ever seen anything like it. It's quite the run for sure, which is why I said earlier. Angels fans probably very happy with this development, especially with how that team has struggled in recent years. Alex, thanks, as always, Alex Sherman. Coming up, your September setup, Renaissance macros, Jeff DeGraph, he weighs in.

What are the charts telling him about where your money is going from here? He'll tell us next. We are back on the bell. Will September live up to its historically bad billing? Let's see what the charts might be suggesting. Jeff DeGraph, Renaissance macro chairman, head of technical research. Welcome back. Hi, Scott. The first line of your note says stay long and intact trend. It's still intact? It's still intact. I don't think the setup is great, but the trends are intact and I think credit's intact, even though bond yields are pushing higher. We're not seeing it in the set-up. the public corporate credit markets, which tends to be good news for equities. So there are certainly reasons to look over your shoulder, but we still see the uptrend intact. And so, you know, generally we're still more supportive for equities.

Interesting. When you say you don't love the setup, what's wrong with the setup, do you think? Well, there's a couple things. One, we hit on it earlier, right, which is government bond yield. So our yield impact model, which there's a very good relationship between yields, both on the short end and the 10-year yield and the forward returns for equities. that's starting to hit that stress zone. Now I want to caution people. What that really means is that you end up with flat returns over the next quarter. It's not like a crash or something, you know, cataclysmic. So I think that's important. September is historically a pretty soft month, so we have to keep that in mind. And then what's really interesting is, as we've had kind of

this churn going on, we've seen the percentage of issues above their 20-day moving average actually contract. So the breadth that the margin is weakening a little bit. Yet when we look at ETF flows, when we look at the positioning within the futures market, people are pretty, pretty, gunned up. They're pretty bullish. And so that combination tends to be just something that gives you a little softness, you know, a little uncomfort or discomfort here and there. So, look, I think we're going to trade to something like 7300, but I think that's within the context of a consolidation and then have a pretty decent fourth quarter. Do you have any intel on the momentum trade where you think that's going from here? I do have intel on the momentum trade. Funny you should

ask. You know, look, we were, we were bearish on the momentum trade back in June just saying it was, you know, historic and it had cracked. And there's two ways to look at it from the very, very near term, what we call the 65-day momentum, tactical momentum, you've rinsed it. I mean, it's been bad. And, you know, let's just use semiconductors as the top momentum names and software as the bottom of the name. So you've seen big, big reversion there. We're in the second percentile of what we've seen over the last 40 years. So it was real. And the, the, the washout has been real. The trickier part is what happens on a longer-term momentum basis, which was also, by the way, historic, we're only in about the 88th percentile of that reversion. So that has longer to go. I think the acuteness of it is done. In other words, I think kind of the pain, the slope of it is probably behind us, but I think the grind is still in front of us. And I think that's going to be what challenges people for the next, call it six months or so. The slope both ways. right, both down and up. Now you settle into a more normal pattern?

A normalized pattern where momentum actually isn't that helpful for, particularly those names, right? And it just kind of, it just grinds people. Good news isn't responded to on the upside. AMD will be interesting tomorrow. And bad news is, you know, the oversold conditions end up holding. And it just becomes kind of a malaise. And really what happens there, and I think that's the interesting part of the sentiment that we're talking about, is you have to really just kind of drain that sentiment, that bullishness out of people.

And you don't have to do that through price. You can just through it through time, which, you know, the stocks just aren't reacting as they, as people would like them to. And they just get frustrated and move on. And I think what they're doing is they're moving on to health care. And we're seeing that in some of those names here. I was going to say that. Yeah, momentum's pain has been health care's gain. And we'll see if that continues.

Good talking. As always. Jeff, thank you. Good see. Take care. All right. Up next, we track the biggest movers as we head into the close. About 10 from the bell. Back to Brandon Gomez now for the stocks that he is watching. What do you see?

Hey there, Scott. Let's start with Fervo Energy, surging 28% after announcing a power purchase agreement with Google. Fervo says the 396 megawatt deal is the world's largest enhanced geothermal power purchase agreement to date. The project is expected to come online in 2028, supporting Google's potential data center development. Meantime, dualingo shares are up 6% after Evercore ISI upgraded the stock. doctor outperform from in line and raised its price target. Analysts there see Duolingo going through a comeback similar to Netflix in 2022, where successful product changes improved revenue growth and margin expansion. And Axon Enterprise falling 8% down about 14% over the past week.

The move today seems to be from a filing showing the company's president's planned share sale worth about $10 million. The taser and other law enforcement equipment maker down 30% over the past year. You can see shares down about 8 in a pat-up. eight and a half percent today, Scott. All right, Brandon, I'll see in the zone a little bit. Thank you. Coming up, two big earnings reports are out.

Speaking of, I'll tell you what to watch for. When Dell and Palo Alto crossed the date, that and much more in the zone, which is coming up. Closing Bell Market Zone, Mike Santoli and Morgan Stanley's Andrew Slimin are here to break down these crucial moments of the trading day. Oliver Renick standing by live from the Civo global markets in Chicago. We do have, as we said, two big earnings reports out in O.T. Mackenzie Segalos, watching Dell, Brandon Gomez, watching Palo Alto. We'll get to that in a moment. I'll begin with you. September's trying to live up to its billing early.

Yeah, for sure, Scott. I also think the setup was conducive to having some of these pressure points be felt as we get into this month. You can see this leg in the afternoon lower in the S&P 500 shows you how tightly interlocked these markets are. It was exactly as a 10-year yield touched 4.8 percent, exactly as WTI crossed back above $90 a barrel. And so therefore, you had a sort of full return and a test of the bond. of this August range, this breakout range, going back to, you know, really takes you to the highs of May. So I don't think it's really changed the overall story except, you know, I sat here all of July and August, surprised that the rotation was working so elegantly. We didn't have any slippage. You didn't have really a profound index-wide pullback. And now you're seeing the gears grind in that

process just a little bit. So we'll see if it has to have any kind of more comprehensive pullback or if this is enough. And of course, look, bonds look pretty stretched in terms of yield to the upside. So I think a little bit of soft data, maybe Waller's not as hawkish as expected in a couple days. You could see a bid go into those markets. You have to be at least open to that possibility. How do you tackle it coming up in about six minutes or so? Yeah, both stock and bond asset classes really on the table here. As we have top strategist from BlackRock's I shares talk about whether to still consider AI tech the core of a portfolio. And then also we're going to get into bonds with a lead manager from Wellington. Oh, good stuff. All right. We'll see you then.

That's Mike Santoli. Let's go to Chicago to the Cibo Global Markets, Oliver Renick playing options action. Which name are we looking at? Scott, Apple stock is arguably stealing the show today as the shares rally 3%, possibly reflecting confidence in the next CEO, but also adding to a month-long trend in the stock that is now breaking records. I'm talking about how the company has been reliably doing the opposite of what the NASDAQ does on a daily basis. The 30-day correlation between Apple shares and the Q's is currently negative 0.8, the lowest in over 20 years. And options traders are positioning bullish on the stock.

More than twice as many calls are trading as puts in Apple with more than half a million calls bought today versus just 200,000 puts. Apple options were second most traded after Nvidia, and the most aggressive action we saw was in the 330 strike calls expiring tomorrow. traders taking out 75-cent bets that Apple posts a back-to-back 2% rally, Scott. All right, good stuff, Oliver. Thank you. Now to those earnings we're talking about, McKenzie Segalis takes Dell first. What do we need to know? So, Scott, the expectation is for another beat and raise from Dell.

Bank of America says AI server demand remains strong, but it's also looking for momentum in traditional infrastructure, storage, and commercial PCs, a sign that Dell may be evolving into a broader beneficiary of the AI buildout is no longer just a seller of GPU heavy servers. J.P. Morgan is similarly bullish, pointing to stronger demand across both AI and non-AI infrastructure and expecting another increase to Dell's full year outlook. One thing to watch is whether AI starts pulling through more of Dell's own products, especially storage attached to those server deployments.

And increasingly, the question is how quickly Dell can actually turn that demand into revenue. B of A says the limiting factors are now memory and SSD availability. ability, along with how fast customers can get data centers ready for deployment. So after the bell, the bar is another raise and evidence Adele can keep this momentum going into next year. Those shares are selling off into the close more than 7% down now, Scott. All right. It'd be interesting to watch. Mack, thank you so much. Let's go to Brandon now on Palo Alto. What do you see here? Hey there, Scott. Yeah, shares down over 5% investors looking for clues about the cybersecurity spending environment and the company's growth outlook for next year.

Wall Street expects Palo Alto to report adjusted earnings of 98 cents a share on revenue of $3.35 billion. Coming off a strong quarter where revenue jumped more than 31% to $3 billion. Investors will be watching ARR growth and whether that momentum continues in network security. Any updates and commentary on agentic identity traction? And there's a big story here to Scott. Palo Alto recently added CyberArk in Chronosphere. So investors will want to hear how those deals are contributing to growth. expectations high after strong results from rivals like crowd strike and octa last week as well scott.

All right, good stuff. We'll see what happens there as well. We'll look for you in overtime. Let's bring it to Andrew Slimman now. How do you see these markets on what is a traditionally bad month starting off with a whimper? Well, you can check the box. Scott, it's right what it's supposed to do in September. You know, what Mike says exactly right, because we have rotation in August but not risk off. That's what it happened in August. And the playbook says, this pop in in september and that's the way we're started i think what what the good news is tonight maybe we'll we'll have some earnings reports that remind investors that there is fundamental momentum and when we focus on that but when we get back to the macro like we did after earnings

reports in august it wasn't a great time to be investor feel it feels like a growing chorus of people they're getting cautious on the market here. Do you feel like that's warranted? Well, I think last week was really important. Ben-tier Warsh said we might raise rates. Then again, we might not. I think that warrants and more of a risk-off, you know, investment portfolio where you need a little bit more defensiveness in your portfolio because if they raise rates, we remember what happened to the market starting in, you know, 20-21. 2022. Do you actually think they would raise rates, though, especially in September ahead of the midterms and given new Fed chair pointed by the president? Can you imagine what that's going to be like?

I do not. I do not, Scott. But the fact that they put, I think in itself, warrants a little bit more of a temperate approach, or at least positioning. So it doesn't surprise me we're seeing this rotation, even if you don't think they will raise. I think the champion, you know, maybe the CPI number will come in strong next week. Maybe the payroll number will be strong on Friday. If that happens, the course of raising will go up, and that will lead to even more defensiveness. All right. Andrew, thanks for joining us. See you soon. Andrew Slimman and joining us here. We'll take a check of the market here again. We're going to close up. Not far from the lows. Let's be honest, it hasn't been the greatest session to begin with.

Reports midday about more hostilities in the Middle East, only adding to some of those tensions. Oil moved higher on that news. Stocks took a leg lower on that news. We obviously are watching everything that's been happening with interest rates. Some of those software names like the cyber stocks really rolling over today. And that means there's even more emphasis on Palo Alto in overtime.