Closing Bell - Closing Bell 9/18/23

Episode Date: September 18, 2023

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, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.

Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with mega caps moment to sizzle or fizzle. And with that outcome likely to decide the overall market, which way it goes in the weeks ahead, comes as the Nasdaq works on its worst month since last December. It was getting a lift today, but look at that as we begin the final hour. It is now in the red. Let me show you the scorecard with 60 minutes to go in regulation. Apple certainly helping the markets across the red. Let me show you the scorecard with 60 minutes to go in regulation. Apple certainly helping the markets across the board that stock looking

to reverse its recent slide tech was the best sector of the day. No longer though. Now it's energy and financials. Textile positive, but taking a bit of a backseat to those other sectors. Oil prices hitting their highest

level of the year today. That's proving to be a headwind of sorts for stocks. Rates, they have been too, but look, a mixed picture depending on which end of the curve you look. It takes us to our talk of the tape. The most important trade in the market and its biggest stock. We are talking tech and Apple, which have both looked a bit shaky lately. It's no wonder that stocks overall have been choppy too. The question is whether that selling in Apple is overdone as the new iPhone hits the market

and some on Wall Street suggest orders are already stronger than expected. Let's ask our Steve Kovach. He follows that story, as you know, closer than anybody. So, Steve, what is this? I've read some notes today that seem to be suggesting that this is off to a really strong start. Yeah. And Morgan Stanley put it this way, Scott, quote, better than feared. That's what they said in their note this morning. And they were looking at data from iPhone 15 pre-orders that started just this past Friday, a few days ago. Now, this echoes several other bullish notes on pre-orders today from JP Morgan, Bank of America, and Web Bush, our friend Dan and I saying that, and all pretty much saying the same thing. Early demand appears strong for the iPhone 15 lineup, especially for the Pro models and even more specifically for the Pro Max, which costs

100 bucks more than it did a year ago. Morgan Stanley saying early demand stronger than it has been in seven years. Wait times are up to six weeks if you try to order an iPhone 15 Pro Max right now, Scott. Even looking promising in China, despite concerns just a couple of weeks ago about that reported ban on iPhones for government employees and those new Huawei phones launching in the country. Wait times are actually longer for the iPhone 15 in China than the U.S. Now, that's good news if you're hoping for Apple to return to top line growth this quarter after three quarters in a row of declining sales. But even if that doesn't happen in the September quarter, better news for next quarter when comparisons are going to look this quarter after three quarters in a row of declining sales. But even if that doesn't happen in the September quarter, better news for next quarter when comparisons are going to look easier

after last year's production delays caused by China's COVID lockdowns. And we're going to get a better sense of this, Scott, after the quarter is over and Apple reports those September quarter results. Well, you just said it. This is really what the doctor ordered. I mean, exactly what Apple needed to reverse those trends, which were going in the wrong direction. Yeah. And it's not just that, Scott. We're kind of learning a lesson over the last couple of years here with these pro iPhones. It seems like people like to gravitate towards those models, even though they're more expensive, even though Apple just raised the prices on that top tier Max phone.

But that's what Apple does now. They put the best features in those pro phones and then they trickle down the following year to the regular line. So, for example, the iPhone 15, the regular iPhone 15 is basically last year's iPhone 14 Pro just in a different shell. So if you want if you're upgrading and you want the latest and greatest and best Apple has to offer, it seems like people are gravitating towards those pros. That's good if Apple is going to return to sales growth. Yeah, no doubt. And whether the stock is going to stabilize as well. Steve, thank you very much. That's Steve Kovach covering Apple for us.

Let's bring in Anka Crawford of Alger. She's back with us at Post 9. It's nice to see you again. Good to see you. You, of course, have, you know, tech is front and center always for you. So Apple's down almost 5% month to date. That's definitely led to a more uncertain and a little bit, I guess, more rocky environment in tech, hasn't it?

Yeah, I think the overall market feels a little bit choppier than we've seen for the first nine months of this year. And in part, you know, China that was supposed to work and supposed to come out of COVID didn't come out. Europe, admittedly, in a recession. The U.S. consumer is showing signs of a little bit more pressure on the consumer. So we're heading into choppier markets, and that's basically just water falling into tech. You guys are underweight, Apple, but do you generally feel as though, you know, as Apple goes, so goes the market right now, just because, you know, it's been a market-weighted show for the most part since the beginning of the year. It's the biggest stock in the market. Yeah, I think that there are other stocks that are leading or also flags for the market,

whether it's Microsoft or NVIDIA, as well as Apple. I think it's not an Apple-only game this time. Yeah. What about the rest of tech? Do you feel it's a little wobbly? Do you think it has the staying power? Do you still feel it's viewed as somewhat defensive that if there is, you know, a bit of rockiness in the market, once things settle out, this is going to be the place to be? Yeah. So as growth becomes more elusive, what we tend to do is go towards growth and in part in companies that have product cycles. And in part, we do that because that growth is somewhat disengaged from the broader economic volatility.

So I think because of that and because of this AI story, because of the product cycles that big tech is bringing to the table right now, that will act in a more defensive way. What about valuations? Some would suggest that they're still, you're smiling, because I mean, you know everybody's talking about this very question as to whether, you know, where real rates are,

whether overall valuations are too rich, and then the front and center, they zone in on tech, and these mega caps say, well, they're way above their historical averages almost across the board. Yeah, and I would counter that by saying, which company are they talking about?

You take Meta. Last time I was in here, you asked me the same question about valuation. And I said, you know, Meta is cheap. Well, Meta's numbers went up and the stock is 6% lower than it was into the quarter. So the stock is still inexpensive, kind of trading at a mid 15 times multiple on 15% type growth. So the valuations don't necessarily seem that stretched to me. Some of them you have to look at one year out, like in Microsoft's case. But remember, 85% of Microsoft's revenue is recurring in nature. I'm looking at some of these stocks over, let's say, the last week. I wonder how you feel about Microsoft. Microsoft's not getting a lot of talk these days

after sort of stealing the show, as it were, with AI, until NVIDIA, of course, blew everybody out of the water. But this idea, you know, the stock's down 3% over a week, hasn't had the greatest move of late. How do you look at that now? Yeah, look, I think when you think about some of these businesses, you have to take a purview longer than a week, longer than four weeks, longer than a month. And for companies that are up 40 percent, 200 percent, 150 percent, they need time to breathe.

And, you know, by looking at these stocks on a daily basis, it can actually be confusing for investors. So you have to kind of look at the phrase and not kind of the staccato and individual notes. First question you asked me when you sat down was about what stock? Remember? NVIDIA. You asked me, what's NVIDIA doing? Well, right now it's red. And, you know, it's been a little shaky lately, a little bit. How do you view where that valuation has actually come down? Yeah. Right, over the last several months. It was, you know, once that company, the last two quarters,

once it reported earnings and gave the guidance, it actually, on a valuation standpoint, got cheaper. Yep. So NVIDIA, on the whisper number on the street today, trades at 22 times. That is not a great, on 2024, that is not an egregious multiple for NVIDIA. If you look at the long only holders, there's a lot of big long only holders that are still underweight the stock. The demand for the stock to buy is still there. I think the whisper on the street is, oh, if it comes in a little bit more, we're going to top up our positions. So,

you know, again, I think when a stock goes up 200, 250 percent, we've got to give it time to breathe. And it's healthy for the stock as it consolidates in place. I mean, if you look at the fundamentals for NVIDIA just last week or two weeks ago, they put up a software update. It doubled their performance. You know, there's no denying the dominance that NVIDIA has in this market. You own Tesla. It's had a great, it's up 23% over one month. That blows all of the magnificent seven, the other names, out of the water. It's not even close. How do you view Tesla here?

So I think Adam Jonas and Morgan Stanley actually made a really good point in his upgrade. In that dojo, which is their AI or their neural net, which is driving FSD, which is full self-driving, is going to be a gateway to all other things AI for Tesla. Whether it's humanoids or the robots and they get into automation or delivery or robo-taxis. There's numerous other things that need vision in order to operate. So if Tesla can figure out FSD, highly likely it throws open the gates to TAMs that are enormous. Yeah, there's a look at the stock, as I said, 23.5% over a month. Quickly on broader market before I expand the conversation, Fed meets this week. What are you expecting in what is obviously been a historically challenged month for stocks? Some say after you get through quadruple witching, the options expiration that

we had on Friday, you've got many weeks of a rocky market. How do you see things settling out? So as for the Fed, I think they need to just wait and watch as and see how the economy unblossoms, per se, and the consumer reacts, how much it slows. As for as we go into earnings, however, you know, consumer consumer conferences, consumer companies seemed confident about back to school. Software conferences, companies seemed confident about their numbers. So as we go into earnings season, I expect that the market will perk up a little bit as the numbers at least stay flat, if not go up. I mean, Secretary Yellen, Treasury Secretary Yellen today on this network. Now, I totally get she's a member of the administration now. She's not the chair of the Federal Reserve. So she has to project a message that the administration wants to get out.

She maintained the economy still strong and, you know, no sign of the consumer fading to any degree. What do you put to that? You know, the consumer is still strong. Surprisingly, we've been waiting for the consumer to fall out of bed for a while, and the consumer hasn't fallen out of bed. However, our job is to anticipate what's going to happen over the next six to nine months. All right. Keith Lerner, Truist, good to welcome you to the conversation as well. How do you see things in the here and now? Yeah, great to be with you, Scott. You know, I think we're in this tug of war, Scott.

I know that's not, you know, a fun place to be, but there's a lot of cross currents. Our thought, you know, moving into August and really throughout September is we're going to chop around. But as you all have been discussing, we had these big gains in the beginning of the year. And the reason why we had those big gains is expectations were low for the market. And we surprised on the economy. We surprised on earnings and we surprised on inflation. And I think on the near term, there's just a lack of near term catalyst to really break this out of the range. So what are we doing with that is we're being patient and we're really more in line with our allocations versus stocks versus bonds versus cash right now and waiting for an opportunity

to present itself. But right now, like I said, we've got to be patient. Yeah, I mean, catalysts you talk about what are what are they on the horizon earnings because we're a little while away still from getting real numbers as expectations have crept up. But the numbers better live up to the hype where the valuation of the market is given rates. Yeah, well, you know, markets can correct in time or price. We're having more of a time correction right here. You know, if you look at earnings, the forward 12-month estimates are at a 52-week high. So they've been relatively resilient. Market valuation has come in a little bit.

It's not cheap by any means, but it's reasonable. And I do think the next catalyst is probably going to be the earnings season. But near term, going to the discussion about the Fed, what is Jerome Powell going to tell us that we don't know today? I think the market has already shifted towards higher for longer and pushing out rate hikes. I'm sorry, rate cuts further out next year. So we're in this chop back and forth. I think as you get moved to more of an oversold condition condition test support, that's probably time to move some money in. And if we have an overshoot on the upside, maybe sometime, you know, an opportunity to take some money off the table.

But in the interim, you know, I think, again, be patient. There's some relative, you know, relative opportunity among the sectors that we can talk about as well. Yeah. Ankur, do you think earnings expectations are too optimistic? For 2024? Yeah. Well, for the rest of this year and 2024. I think not necessarily for this year. I think for 2024 they may be, which also will lead us to a choppier market. Now, there are some that expect that earnings are going to be down 10% to 15% next year.

I'm not in that camp. I think we're going to have a softer landing than that, anywhere from up 0% to 5% versus up 10%. What about for the remainder of this year because they they have sort of you know they've gone from three consecutive quarters of negative earnings growth now we're positive they get even richer as you get into the fourth quarter and then as you said into 24 they're even more optimistic than that yeah so there's going to be i mean as we go through this earning season i expect numbers will stay flat to go up um you know, industrials a little bit weak. If you look at each sector by sector, again, tech software inside of tech seems OK. Semis kind of

deteriorating. And that's because it has a global footprint. Industrials feel a little weaker. They have a global footprint. So businesses that have exposure to Europe, China, you know, EMEA, those those guys are all under pressure right now. And I think numbers come down. U.S. based businesses that are e-commerce, U.S. consumer led numbers likely go up. Keith, I mean, Ankur's talking directly about a sector you like being industrial. She's making the case of why you don't want to be there. You suggest you should. Why? You know, we still like it because I think it has some secular tailwinds. I agree that short term has been some weakness, but you do have some secular tailwinds as far as the fiscal stimulus, as far as the IRA bill is

still going to help them out as far as the infrastructure bill as well. I think the geopolitical landscape is only going to get more challenging. So I think there's going to be multi-year tailwinds for the sector, even though acknowledging some of the short-term weakness here. Yeah, but I mean, what kind of time frame are you talking about with short-term weakness? I mean, if you expect the economy, which some do, to continue to weaken, whether it's at a slow pace or not, and you know that China's recovery seems uneven at best and Europe seems like it's weakening. Are industrial stocks with that global play really a place you want to be? Not to mention what's been going on with the dollar, too.

You know, it's a fair point. And I'm saying the near term as far as the last couple of weeks and maybe the next couple of weeks as we move through this shop. But even as we move into year end, I still like the sector. And talking about China, I think right now expectations are so low in China that they continue to have this drip coming in as far as these small stimulus measures. That likely will help at least firm some of the global economy. Again, we're not looking for something robust. And then you add on to that as far as some of the trickle on as far as the stimulus. I think it's an interesting sector.

And again, the defense spending. So, yes, by year end, we expect it to still be an outperformer from where we are today. You like discretionary too. And I always, I feel like we need to be careful when we talk about that sector because, you know, Amazon and Tesla, as I was just talking about with Ankur, can sway the performance of the whole entire sector. Are you suggesting to buy it broadly or how would you, how would you go about that? Well, I think to your point, I mean, we're not bullish on the deep retailers. I think as you look at that sector, we call it a quasi-growth sector. So I think the areas that we like within the discretionary are more of that growth

component. I don't recommend individual stocks, but the growth, as you mentioned, as far as the Teslas and the Amazons, we think are better relative performers from a sector standpoint relative to the retailers where we've seen some weakness. And we expect that likely continues as the compounding of these higher interest rates, student loans, and some of this reduction in excess savings weighs on the sector. So yes, it's a bifurcated sector. Yeah. Ankur, last word to you. Rising oil prices, highest level of the year today. Energy, is it going to wake up? Is it in the process of waking up? I think it's woken already. You know, we are overweight energy, which is unusual for a growth manager.

And in part because there's a big change going on in the oil sector. We think that it's going to be supply constrained, not necessarily a demand equation anymore. It's all on the supply. So we think it's, you know, higher energy prices. All right. Good to see you as always. Ankur, thank you. Ankur Crawford. Keith, we'll talk to you soon. This is Keith Lerner of Truist joining us as well. Let's get to our question of the day. With the Nasdaq pacing, as I said, for the worst month since December, should you buy mega cap tech stocks on that dip?

You can head to at CNBC closing bell on X to vote. The results are coming up a little later on in the hour. Arm shares, they're getting crushed today. Christina Partsinovalos is here to tell us exactly what is going on. Christina. Well, there was a lot of excitement for this IPO last week, and although shares are still over the $51 a share pricing of the offer, not everyone is impressed with Arm sending shares down 7%. Everyone being Bernstein right now. They're initiating an underperformed rating with a price target of $46,

saying it's still too soon to call ARM an AI winner. And why is that? Well, think of ARM as a coding language in which companies like Electronic Arts or Apple use to design their own chips. But ARM specializes in the coding architecture for central processing units, CPUs, not the AI graphics chips we keep hearing about. They're also 45% exposed to smartphones, a sector that is very cyclical. Hence why Bernstein doesn't think ARM should be called an AI winner because they won't reap the benefits from all that AI spending, unlike, what else, NVIDIA and its GPU chips. Needham also initiating a hold last Friday for the exact same reason, saying ARM has

not been able to replicate its smartphone success into data centers and the cloud. So both of those reasons why you're seeing the stock drop as of Friday afternoon and today. Yep. All right. Good stuff. Christina, thank you. We'll be back with you in just a bit. We're just getting started here on Closing Bell. Up next, golf legend Fred Couples. He joins us live for the Barenburg Gary Player Invitational Charity Golf Series. We'll get his thoughts on the PGA and Live Golf merger and the future of the game itself. And later, grocery games. Instacart is set to price today in overtime in the latest test for the IPO market.

We'll ask One Top BC whether this signals an end to the IPO slowdown. What names could be next? We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. All right, welcome back. The Barenberg Invitational kicking off today at the Glen Arbor Golf Club in Bedford Hills, New York, with some of the world's top players competing to raise funds for pancreatic cancer research. Around $1.5 million has been raised in the past two years.

They're hoping to cross the two million dollar mark this year. One of the players, Golf Hall of Famer and former PGA champion Fred Couples joins me now. Fred, it's good to see you. Welcome to Closing Bell. Thank you, Scott. Nice to be on. Yeah, it's not the best weather, obviously, to play golf in today, but a great cause, as we said. Tell me a little bit more about what drew you up there in New York. Well, I think, you know, I've been with Barenburg about seven or eight years now, and I've been to this every year, and we used to have one in England, and Gary Player is their ambassador, and Gary and I have been lifelong friends, even though I think he's 22 or three years

older but it's a nice nice spot to be I and I love all the guys at Barenberg I'm off the course right now so it's okay for three holes I'm going to miss to talk to you but uh Barenberg does a lot of things that that I enjoy seeing as I'm like an ambassador but I'm a golfer so I wear the hat I go play I do the best I can Henrik Reimer is the one who really takes care of me he's their number one guy and we've gotten to be great friends and then the pancreatic cancer side of it is just amazing and just to my right over here when we're done playing we're gonna go in and have a dinner and there'll be a little bit of a show and in some song and dance And they're going to raise so much money so fast that even I leave here shaking my

head, Scott. Yeah, well, we wish you the best, obviously, in raising as much money as you can. I don't think it's news to anybody. You've been one of the most popular players on tour for an awfully long time, you know, well before you even won the Masters in 92. So when you speak, people listen to what you have to say. And you've been one of the most outspoken players, I think, about the Live Tour and the future of that relationship with the PGA Tour. I'm wondering, what was your first reaction when you heard of this potential deal between Live and the PGA Tour? You know, what a question.

And I've answered it the same every single time um it affects the PGA tour immensely but really what affected me is how these guys leaving not all of them some of them I shouldn't even say five of them we're talking about the PGA tour how bad of a tour it was how wrong was, how they're better off playing in the live tour. You know, I've spent, this is my 43rd year in the PGA Tour. I represent it the best I can. I've played a long time. The Champions Tour, Scott, as you know, is great. But it just offended me that go play your golf, go play in your 54-hole events. We all know that's funny to talk about. And sometimes I felt bad about what I said

But you know when I talked to other people, I really don't think I said anything horrific I just reacted to what some of the guys that left said Brooks Koepka Dustin Johnson I don't talk to Justin that much but Brooks I've kept in touch since this Ryder Cup thing We laugh every other day about stuff and I have no qualms with 99% of the guys. It affects the tour. I'm no longer on that tour. But what it affected me is just the things they had to say. Do you hope it doesn't happen? I never thought it would happen. I never thought they would get off the ground. But I guess, you know, when you have, I'm not even smart enough to figure out how many billions you can get people to follow the money

I Don't know if it's gonna go away, you know again Scott. That's a another great question I'm I'm so old that I don't I pay attention to every golfer that plays on the PGA Tour, but When if it goes away is that gonna be good? I don't know if that's going to be good or not. Can we intertwine? I'm not smart enough to figure that out. I'm sure they will try and do something, but we do have Brooks Koepka on the Ryder Cup team. He's not really a PGA Tour player, and every player on that team wanted him, so we still have some nice feelings about the live guys. But would I want to see it go away? It doesn't matter to me really anymore. Their tour is set. They have their 48 guys.

I don't think any new guys have joined in five or six months. So it is what it is. You mentioned you're obviously on the Champions Tour, but I know you care deeply about the PGA Tour itself. Do you worry about the PGA Tour financially and what it's going to potentially be 10 years from now? I never really worried about it until, you know, what, eight months ago when we had no real idea and we're asking tournament sponsors to no longer have a $12 or $13 million event, to have a $20 million event. So now you get a company, you know, for five years, if they want to upgrade and so-called get the best players in the world, you know, it's going to cost their company another $40 million. That's a lot to ask. So I'm more of a golfer. You know, I listen to your show. I watch it all the time. I have very

interest on that clicker that's going below me. But as far as the money part of it, yeah, I think when you're, you know, it's like getting into a fight. If you have a sword versus a gun, you know, you're in big trouble. And they have a lot of money. They went out the tour hard. We fought back as best we could. And now we're trying to possibly go together. But, again, I don't speak with Jay Monahan or the tour on this stuff.

But I don't really have a voice, but I listened. And I kind of think it's slowing down. And their tour is, you know, they're playing in Chicago, I guess, this week. Because Brooks will be leaving from there. And so I don't watch it. I do see who wins. I'm entertained by who wins their events. But I'm an all PGA Tour guy.

Sure. We followed you for so many years on the tour. And I remember, obviously, you wearing Cadillac, sponsored by General Motors for an awfully long time. And the financial crisis obviously had something to do with you not endorsing General Motors anymore. You're now with Ashworth, which you actually wore, which people might not remember, when you won the Masters in 92. Correct. Go ahead. No, I was just saying, I'm curious as to whether, you know, at this stage of your life and your career,

you look at endorsements and sponsorships differently than you did, say, say 20 30 years ago I look for the best fit that I possibly can and I'm lucky enough that you know I still have clothes that have sponsors on them right now I think I've whatever side fidelity and UKG and Barenburg. And now I'm back with Ashworth. I was with them for close to 30 years. It's great to be back.

They make unbelievable clothing. I wear the clothing proud. But my sponsors, yeah, are well chosen. You're correct. I wore Cadillac for 100 years. And every year, it was a done deal with Pete Giroza. And Pete's still alive and doing well. And he's a very good friend. And I signed with my manager every year.

It was a one-year deal. And it just finally ran out, I think, after 18 years. But, yes, UKG, Fidelity, Title, and obviously Barenberg. I couldn't ask for anything better for me. Lastly, before I let you go, I know you've been pretty close with Tiger over the years. He's spoken so fondly about you. You guys play practice rounds all the time. Do you think he's going to be able to play all four majors next year? Just how do you see the progression from here forward for Tiger? I never asked Tiger any of that, but I've heard from other doctors that said, you know,

maybe he had this last surgery so it might not help him immediately, but down the line where he can play four events. Scott, if you've watched, you know, he still plays very good rounds. This year at Augusta, I made the cut and I played. It was so wet, so cold, so sloppy that he just couldn't play 72 holes, which is really a crushing blow to us. But to talk to him at night, it's just an emotional letdown for Tiger. So hopefully he can come if he plays the father-son, which we all know, and he plays four majors. I think that would be enough for the golfing world. And maybe he might come, Scott, and play a few with us on the Champions

Tour. Well, if he plays anywhere, it'd be good to see. Fred, I appreciate your time so very much. We'll see you soon. Okay, thanks. Keep up the great work. I appreciate that very much. Thank you. That's Fred Couples joining us again.

Great cause, plenty of little golf, too, on the side of that cause. Straight ahead, don't call it a comeback. Star venture capitalist Rick Heitzman is here. Get his thoughts on the recent IPO market resurgence and which companies he expects to be next in that pipeline. Before we go to break, though, here's a quick message as CNBC celebrates Hispanic heritage. I find that many Latinx grow up in America trying to fit in. And fitting in is very different from having a sense of belonging. This country is what it is in big part of because of our contributions.

So owning that, being proud of that, and then looking up to those who have achieved their dreams, it is a big part of leveraging our Hispanic heritage. Arm Share is down nearly 6% today, despite an initially successful market debut last week. We're expecting Instacart to set their IPO pricing in overtime during the next hour. Joining me now is First Smart Capital founder Rick Heitzman. Welcome back. Hey, Scott. How are you? Good, thanks. So Instacart, let's look forward. I'll ask you about Arm in a second, but what are the expectations here and what is going to be a down round the way you look at it? Definitely going to be a down round. They raised money at $38 million a couple of years ago. It's going to be down 70 percent. Wow. But it's structured,

so it's going to be a well-performing IPO. So they cut price, they limited the float, and priced it for a pop. What goes through the mind of a venture capitalist, an investor who got in at 39, and who is sitting there today? Just put me inside the head. I mean, I don't know how you think about that. So there's two versions of venture capitalists, right? They're the people who got in at 24 cents. Yeah, of course. They're feeling really great. And then there's the guys who did it at 39. The

guys who did it at 39 billion are saying, I need to get liquid. I can hold it on my books at some artificial rate, but that doesn't do anyone any good. The best thing to do is get the stock liquid, get the company- In other words, go public. Go public. Go public because otherwise, you're just waiting, pushing off the inevitable. What does it just suggest about where we were and where we are and the tremendous reality check that's taken place over the last 18 plus months? We've talked about it for two years. We said, hey, there's going to be a lot of companies who are going to have to face their comeuppance, even the best performing companies. And we're looking at both Klaviyo and Instacart this week. They both perform at the top end of their metrics in the SaaS market and the consumer market. And they're both going to take a discount

to go public. And then we said the IPO market will not function until people capitulate on value. And there's a reasonable reflection of value in that IPO price. And then we also said the first people that go out will be companies with very good metrics, growing nicely, strong margins, profitable. These are Instacart's profitable. Profitable, growing quickly, great consumer retention metrics, and we'll price it a discount for a pop. So this is the last piece.

So it'll have to pull buyers, IPO buyers, back into the market. And we saw a little bit of arm, although that's really kind of a false, true IPO. But these two will show how receptive those buyers are to the market. How will that mentality of what you described, they want to get liquid, like later stage VC people who got in where the valuations were super rich and now that they've come down. How is that going to impact the pipeline of other companies that are in the queue and the push-pull? Some wanting them to go public, get liquid so that they can get out versus waiting for the right time. Well, I think the mature venture capitalists or mature private market investors are going to say, hey, the market is what the market is.

So what we paid two years ago might not be a true reflection of value. Where the market is today is a true reflection of value. It's in the best interest of the company and even ourselves to let the company trade at a market price, begin to get liquid, return that liquidity to our investors.

And if we made a bad investment, if you lose 50%, that's okay. But holding out some false hope, I don't think so. All right. So ARM last week, right? We got Instacart, Klaviyo, you said, and there are many others in the queue and people mentioned the same names over and over again. So what is the state of the IPO market? Where are we? We're all on the edge of our seat. We're all waiting for, you know, the next couple of days, you know our seat. We're all waiting for the next couple of days. You're pricing Instacart in the next hour. The anticipation is they've already moved up their range. Hopefully, we'll price at the high end of the range and hopefully trade up. And you start getting those signals of a traditional IPO pricing at the high end of the

range, pricing in the multiple band, that there's a lot of people with their finger on the button of draft to submit their S1 to the SEC. How do you look at the ARM IPO? It was successful that day and the day after. Here we have a pullback of some 6% today. Very small float. Customers participating in the deal. Was it as good as it seemed on the surface because of those variables? And there was also, it's also of size. It's also in the mobile ecosystem. There was a

number of buyers that had to buy. So they were able to take advantage of a lot of insider buying or customer ecosystem buying to artificially create that pop but they also pretty fully priced it so i don't think anybody was expecting that stock to either to double or persist and it was also a mature stock not not growing priced at you know 20 plus times revenue whereas you know this next wave of companies are more the traditional tech growth stocks all right good stuff uh we'll continue to use you as our guide on all things tech and ipOs. Thank you very much. Rick Heitzman, Fertsmart Capital joining us once again. Up next, we're tracking the biggest movers as we head into the close. Christina Partsenevelos is standing by once again with that. Christina. Well, a company wants to mass produce flying taxis from Ohio,

and that could mean commercial passenger service is around the corner for you and I. I'll explain next. Alright, we're about 15 out from the closing bell. Let's get back to Christina Parts and Nevelos now. For the key stocks, she's watching. Christina. Well, Joby Aviation announcing plans to invest up to $500 million to build its first large manufacturing hub.

And what do they want to do? Mass-produce air taxis from Dayton, Ohio, I should say. Joby is working to win Federal Aviation Administration certification for its flying EV aircrafts so it could begin commercial passenger service in 2025. And that's why shares are up almost 5%. Unity Software is falling, even as it starts walking back the new fee that stoked backlash from developers last week. The company apologized for the fee, which would have charged customers for every installation of a game,

and said it would share updates in the coming days. And that's why shares are off 7.5%. Day two. Day two. All right, thank you, Christina. Christina Partsenevelos. Last chance to weigh in on our question of the day. We asked, with the Nasdaq pacing for its worst month since December,

should you buy the mega cap tech stock dip? He tried to say. Head to AdCNBC Closing Bell on X, the results after the break. Question of the day, should you buy the mega cap dip? The majority of you said yes, you should. Buy that dip intact 57 near 58 as a matter of fact up next retail stocks getting hit today we'll tell you what's putting pressure on that group this afternoon that's just ahead when we take you

inside the market zone all right closing bell market zone cbc senior markets commentator mike Santoli is here to break down the crucial moments of this trading day. Plus, Diana Olick on what falling homebuilder sentiment could mean for those stocks. And as we dig into some moves in the retail space, we will talk about that as well. Mike Santoli, to you first, bit of a choppy day. Interesting, our poll, buy the mega cap dip. That is ultimately going to decide in some respects where we go from here, at least in the short term. Yeah, to a large degree. And, you know, whether they, I would say, earn the status as defensive.

That's always the question. Right now, we actually have a bit of a defensive tone in the market. We have, you know, cyclicals on the weaker side. Banks are down again. Everyone knows it's supposed to be a tough time of year. And I generally agree that the index is likely captive to what the largest stocks do in a big-picture way. But I'll say coming into today, Apple was 12% off its high. Nvidia was 12% off its high.

The S&P was 3% off its high. There are multiple paths to getting where you want to go. But nine VIX, I mean, move today, right? Even with all the concerns out there, if there are said concerns, VIX is up shy of 3%, still 14. No, I mean, this is just a Monday rebuild of volatility type of move. I mean, when the index is flat, the VIX can't go anywhere. I mean, unless there's something really strange anticipated. Also, bond market volatility has really come off the boil.

And correlations among stocks and sectors, Goldman had some data on this, it's basically at two-year lows. So when you have correlations low, everything offsets. The index itself does not get swung around on macro moves. You know, we had one 1% down day last week. It was the first one in almost a month. So there's not going to be a lot of volatility coming out of that type of environment, even if we know it's a tough time of year and we have this sort of late cycle kind of signals that are that are peaking out. All right. Diana, what are we learning about home builder sentiment these days?

Well, Scott, look, the builders had been benefiting big time from the low supply of older homes for sale, but high mortgage rates are just killing affordability all around now. And as a result, builder sentiment fell into negative territory in September for the first time in seven months. Mortgage rates went over 7% at the end of June, and they have not come back below that line yet. Today, it's 7.32%. So builders are going back to incentives. 32% said they cut prices in September, and that's compared with 25% in August and the largest share since December of last year. Average discount 6%. That may be why builder stocks are kind of not taking it so well. The home construction ETF ITB was flat on the day, but in the red for the month. Lennar last week reported strong earnings,

but the stock dropped immediately because Lennar last week reported strong earnings, but the stock dropped immediately because Lennar reported also lowering prices. So again, mortgage rates really hitting the builders hard. Yeah, no doubt about that. Looking at consumer discretionary today, for example, is down 1%. Those are stocks, of course, within that group. Diana Olick, thank you so very much. A number of retail stocks are selling off today. Speaking of discretionary gap, Kohl's, Burlington, among the names that are hardest hit in a session. Evercore out with a note this morning saying it's time to play the space defensively, highlighting Costco and Walmart as some of its top picks.

What's your take here? Yeah, Costco and Walmart, of course, are just kind of, when you're worried about the consumer, that's the place you go. A lot of things piling up. So we all know everyone's trying to run the student loan repayment restart through their numbers. Gasoline prices where they are. Everything you're seeing kind of pop up seems to move in the direction of it's going to be less to go around for discretionary. Also, intentions for holiday spending, not that encouraging,

even though we're a couple of months out. It usually doesn't necessarily follow. I just think it's a tough time right now to feel as if this is the moment to start taking risk, even in what look like cheap stocks. You know, coal's down a bunch today. The dollar stores have kept going down, even after they had their post-earnings dumps. Dollar Tree and Dollar General look pretty awful, almost to the point where you wonder if it's finally getting to a washout state. So, you know, nobody really thinks that

unemployment is going to shoot up. It's much more around the edges of we already had front loading of good spending. We know the housing related spending is not necessarily looking like it's poised to take off. And everything else is like, you know, people traveled a lot. We spent our money where we were going to spend it. On the lower end, you know, if you look at the Bank of America consumer credit weekly survey checkup, I think things look pretty stable, even though credit card usage is up a couple of percentage points

among low-income households, yet still not as high as it was in 2019, right? Everything looks like that. Not as good as it was, but. Everything looks like that. Not as good as it was, but still better than it was before the pandemic. I'm looking at just certain stocks. Tesla today, down three and a third percent, just adding to the discretionary weakness, of course. The other thing, Fed complacency. Do you sense any within the market? Because we pretty much decided they're not going to do anything in a couple of days. If there's complacency around the Fed, I don't think it's basically assuming a hold on Wednesday,

meaning I don't think anyone's going to be surprised about an actual rate move. Whether they change their outlook enough in a way that makes it seem like they need to restart the fight against inflation, whether just things aren't cooperative, and then putting November right back on the table and then suggest there might be one after that, I guess, you know, we might brace for that. But I think they're going to use the luxury of time. And I think that's the Fed's orientation is we think rates are roughly where they're supposed to be, give or take a little bit. We just want to see what the effect of the amount of time spent at those rates seems to be. So they wish to be done. We do get this, you know, the so-called dot plot of this time around

again. So it'll be helpful to sort of get a look at the outlook and wondering whether this rise in oil prices is affecting that outlook by what they think about where inflation is going. Highest level of the year today, north of 91. Yeah, the commentary around that might be interesting because you can play that both ways. You know, obviously all they seem to say they care about is core non-housing services inflation. That's nowhere near fuel. And headline inflation going up, if it detracts from spending in other places, it's not necessarily the scary part. Where it does come into play is inflation expectations. So if they saw the consumer inflation expectations start to go up,

that sometimes goes hand in hand with gasoline prices going up. At the same time, as consumer confidence comes down, that's where it seems like a little bit of a tricky spot. I keep saying $90 oil. We've been here enough times in a smaller economy. It shouldn't be that big a deal. But the psychological effect probably shouldn't be discounted for that. Your point's well taken, too, about this, you know, what the Fed is really focused on.

You know, they could make the argument that goods inflation's come down, housing inflation's coming down. It's that non-housing services, which is the sticky part and the real question mark. Mike, I appreciate it very much. That's Mike Santoli, our senior markets commentator. So Dow's green. S&P is green by a few points. We can still settle.

So we'll have to see how that goes.