Closing Bell - Closing Bell 9/30/26

Episode Date: September 30, 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 it does. Welcome to closing bell, everybody. I am Brian in for Scott. He'll be back tomorrow. Thanks for joining us on this Wednesday. And this make or break hour starts with a continued rally in tech stocks. Even with another major move in bond yields and borrowing costs moving up, tech stocks, they have held up. Here is your scorecard with 60 minutes to go in the trading session. No big gains. But the markets are in the green. He has some be up 3 cents of 1% of NASDAQ. Again, big tech, the big winner. Stop us if you heard this before. Up 8.000. eight tenths of one percent. Ten year yields, five point three. The question is, where is the top? When do borrowing costs stop going up? All right, let's kick off this make or break hour with your talk of the tape, the setup into the final stretch of the day and really the final stretch of the quarter as well, because we enter the fourth quarter. Tomorrow, your market panel is here and ready to go, standing by with their playbooks, their best advice for the rest of the year for you. Joining us, CNBC contributor, Payne Capital is Courtney Garcia, Garcia, Merrill Lynch, and Bank of America's Chris Heisey and J.P. Morgan's Stephanie Aliaga. Welcome, everybody. Appreciate you being here today. Courtney, all right, so end of a quarter. Not a bad one, by the way. September historically the worst month of the year for stocks.

Not bad this year. What is your expectation for the final three months of the year? You know, we're actually very optimistic on the final three months. And I think when you look at September, the big story was what was happening with interest rates, right? And I think you pointed this out at the top of the show where the tech stocks have actually really held up remarkably well, even with rates going higher. But a lot of your interest rate sensitive sector. So think of your small caps, think of your financials. Those have all gotten hit much harder. But I think the idea here is where are rates going from here. And at this point, there's a lower probability that the Fed is going to increase interest rates in October. But we're probably still not at the end of this hiking cycle. But if we're, if a lot of that move has already been priced in and with some of these moves in September, you probably want to take a look at some of those interest rate sensitive areas that have been hit harder. Like what? Like what? Because banks have been awful. Housing's been awful. I think those are actually two good examples. I would take it. Because they've been awful by low. And we're coming right into earning season, banks are going to kick that off. And I actually think coming in with such a low bar, I do think

that's a good opportunity. I think banks are a good example. I think those are a great opportunities. I still own tech, but after this kind of sell-off, I would absolutely take a look at that heading into year end. Chris, I got to invoke Villanova here in the Wildcats. Here's why, because I feel like this market is a cat. Number one, it always lands out its feet. Number two, it feels like it has nine lives because no matter what you throw at it, it just keeps higher rates, no problem. Some kind of headline around Oracle, no problem. Concerns about data centers, no problem. Is it really a no problem market? Oh, it's definitely a problem, but the problems continue to not pull through. And if you want to go with the cat theme even further, you could say you throw it out in the

neighborhood, it comes back when it feels like it. And that's what we have right now. And to Courtney's point, if the earnings growth is in tech, we shouldn't be afraid that tech is leading, number one. Number two, we shouldn't be afraid that it is substantially overwhelmingly a large portion of the market cap. But if you kind of dissect it further than that, you've got 11 sectors of, a 11 industry groups of 25 that are outperforming the overall S&P. You go back to 23, only 70. So I know it's small broadening out. But the broadening out story going away, I think it's overly exaggerated.

Here's my problem with this market. It's maybe problem is our theme, right? Which is that I ran the numbers yesterday. We did it on Power Lunch. By the way, great show 2 p.m. Eastern, tune in. 194 of the S&P 500 were more than 20% down from their 52 weeks. highs. In other words, 38% of the S&P 500 as of yesterday morning were in a technical bare market. That doesn't sound like a broad market rally to me, Chris. But it's an opportunity because if you look at

the overall earnings base of the S&P, it's narrowly focused on just one area because of the excessive earnings growth. But the rest of the S&P is exhibiting good earnings growth. And that's when things come on sale. If you gave me a market that gave us the opportunity, to allow a big portion of it to be on sale. While the anchor is holding it in there, I'll take that. That's what we have right now. All right, Stephanie, what are your and J.P. Morgan's themes, things to watch for the fourth quarter this year?

So I would agree with a lot of what was shared. You know, earnings breadth, I think, is going to really help the market in the back and the later part of this year, the last three months. I also think it's not that markets have just been completely immune to this impact of higher interest rates. If you go back a year from today, the tenure was at, 4.2%. So we've had it at 100 basis points over, increase in the tenure, but the forward multiple on the S&P has gone down from 23 times to 19 times today. So there is that digestion,

that impact from higher interest rates, but this is a market that has faced many headwinds. We've had macro uncertainty. We've had tariffs and so forth. Thus the lives I referred to in the cat analogy. And here we are again. And it's that AI rocket ship that we've got strapped to the back of us. And I think, With the recent weeks, all of this crazier on personal AI assistance. Courtney and I were sharing our own use cases with them. It's just brought the boom in agentic AI demand integrative visibility. Am I correct, though, in suggesting or thinking that your clients, when they meet with you and your team, Stephanie, they know all this, but they're saying how much longer can this go on?

How long can that rocket keep going up until it runs out of fuel? And I think that's the worry. And people, rightly so, by the way, and you guys are all. all paid, I would imagine, fairly well to worry for other people. How much fuel does that rocket have left? Do we even know? Well, we do have good conviction in that fuel, but that doesn't mean that markets should, or investors should not be diversified. We've been talking a lot about bonds to clients, because now you actually get paid for owning insurance a pretty quality amount to own high-quality bonds. So there are opportunities to diversify within AI and outside of AI that are

very actionable for investors today. I would add to that point, too, and it's a very good one. First of all, everybody says 6040 is dead. Well, what is 6040? It's asset allocation. How do you break it up is more important versus just what number you assigned to it. But the insurance is there. Cash on cash is there.

Savers are getting paid. They didn't get paid before. We have 3.5% CAPEX, capital investment, as a percentage of GDP, highest ever of any innovation. You asked the question before, how long can this go on? if that three and a half percent goes to three, goes to two and a half, goes to two, and starts to crest, then you can start to worry. But until that happens, you've got some pull through, and potentially years. So how will we know that?

We're going to go through all the earnings reports. We're going to listen to the guidance. We're going to hear about the capital expenditure guidance, right? That's going to be everything going forward, yes or no, what companies are saying about future spending. And there's no indication, Chris, if I'm right, there's no indication that that has gone down at all. as an aggregate. That's right. And you know this, particularly in the energy space. We're talking about worries right now, bottlenecks. If you have a bottleneck at the front part of the pathway, not good, because it stops the entire flow. If you have a bottleneck later on in the process,

innovation catches up. That's what we have going on. So bottlenecks are fine. They're going to happen. Supply shortages, all that. Companies are, trade their stock, run their companies for public shareholders. And they care about the margin. They care about profitability. So I think you're right. I think we're going to see this in forward guidance. I think we also were getting some good data coming out on the overall economy, right? Because when you look at consumer spending numbers, even though consumer sentiment has not been there, you just got consumer spending, and it's continuing to increase.

And you are seeing that people are dipping into savings, but we're not seeing the kind of like defaults of credit cards or things like that that would indicate we're going to recession. You also saw GDP numbers were just revised upwards. So anything that shows how the underlying economy is doing is people are continuing to hold in strong. despite inflation, despite a lot of the overall concerns that are in there. And I think that is going to continue to hold down the economy. This is such a critical point. Because I understand that when we look at the consumer confidence numbers, they're terrible.

They're miserable. They're in the toilet. But what people say and what they do is very different. And they may say things are tough because they are. No one likes these higher prices everywhere you look, higher, higher, higher. But they continue to your point to spend. I also feel like, Stephanie, there is a part. of this story with rates that we might be missing. Higher rates, again, they're hard on borrowers,

but corporate America is the least levered it has been ever. Or if not ever, at least in my lifetime, which is almost ever. That's exactly. Everyone loves to look back to history. And after the tenure reaches a certain point, 5%. That's when we really head into trouble. But starting points are very important, right? And the starting points for corporate balance sheets are in a very good position. The average net debt to EBITDA for the S&P is at two times. That's below historical realms. Net interest coverage ratios are at 10 times. That's really healthy. What does that mean net interest coverage ratio? The earnings to cover the interest payments that these companies have to make is 10 times greater, which is a really solid level. In other words, like our theme,

it's no problem. Yeah. And it's a lot better the last time it happened at 5%, which is the 1990s. So you look at corporate data, corporate help, much better. Consumer health, great point, our Bank of America Institute data continues to suggest that not only is the consumer resilient, they're actually spending above average. There's a cohort called the boomers out there, right? And they've gotten very, hopefully, I mean, listen, we understand this not everybody, but our audience, not everybody. Your clients, your clients, your clients, your clients. If they've invested for 30, 40, 50 years, I presume they've done very well, right? one of the greatest, if not the greatest bull market runs in modern American history.

And you look at those gains and you look at the money that they have made and higher rates are going to play a role. But it sounds like you and your team, Chris, don't think that's going to kneecap the economy or consumer spending or corporate earnings. Right. The runway is very long there. They have negative net savings. They're about to go into negative net savings. Their parents did not. They were savers. So you've got a lot more capital flowing through the economy today. in consumer land, at the same time, a healthy corporate sector. And I know the debt's not good in general in terms of the amount of debt,

but it's in the government, it's in the public sector, which we have to deal with. It was in the private sector, I'd worry. I feel like Courtney, this is one of those times where we've said it a thousand times, and Kramer's talked about it. Stock market and the economy can oftentimes be different things. And so we're talking about corporate earnings, we're talking about corporate leverage, corporate debt levels.

We have to strip out parts of the economy. the economy that are really suffering under higher rates, at least higher relative to five years ago. But there is no doubt that most much of corporate America, corporate America, what we care about from the stock market is doing well. That's correct. Well, I would actually argue, I think the economic data is also doing better, I think, than people expect. Like, yes, the soft data, which we call, so like the consumer sentiment isn't there. But the hard data, I think, is actually showing the economy itself, not just the stock market continues to hold in better than I think people are giving it credit for.

Are you shocked about you? You're a native Californian, as am I. We're both from Los Angeles. San Diego. As are you? Orange County. Fantastic. There we go on. Heisey? Get out of here. East Coast. We got three. West is the best. We got three Pacific timers here. So you go out to California 6, 6.6.50 for a gallon of gas. By the freeway, it might be even a little bit higher these days. And everything's crowded. Correct. It's planes are crowded to get out there. Restaurants are crowded. I'm not talking about high-end fancy places. Yeah. Restaurants are packed.

Stores are packed. I am always gobsmacked when I go out and see that. Yeah. I mean, we even see this. You see it anecdotally in the data, but also just when we're meeting with clients, we hear this. We have concerned about the economy, concerned about the stock markets, concerned about inflation. But then the next breath, they're telling us about the next vacation they're posting or this great dinner they had. Like, that is happening.

People are out there and they are spending and that is going to translate into company earnings. And I think the banks coming out, they always give us that really good indication of how consumer spending. actually is doing and how they're holding up, and I absolutely think you want to follow that. Final comments, Stephanie? I mean, we're probably constructive on the opportunities until your end, but we think... Where are those opportunities? Outside of just the high-momentum, high-flying chips names into a broader set of AI software, AI adopters, AI infrastructure...

I'm noticing a theme. Diversification. But you just said AI, AI, AI, AI. Well, I spent a lot of my time thinking about AI. Diversity inside and outside. That's why I was talking about bonds, and we think alternatives can help stabilize portfolios more broadly, given a lot of the correlations that you're seeing around the AI theme. But we still think there's opportunities in that AI theme. I mean, that is the highest growth area that we're seeing in the market over the long term.

I love it. It was a great conversation. And here's a little historical knowledge. 1994, before most of us were born, I understand that. Interest rates rose 2.5%. And in 1995, the S&P 500 was up, 37.3%. The best year it's had in 30 years. Higher rates didn't kill the economy then. Doesn't sound like any of you think it will now. Great conversation. Stephanie, Chris, Courtney, appreciate it. All right. So speaking of the economy and bond yields and borrowing, we also got more of that data Courtney was talking about today that might impact the Fed's next move. Let's bring in CNBC senior economics reporter Steve Leasman. I thought I just saw you, Steve, on television, but maybe that's a that's a that's a pipe. I'm sure you were champing at the bit to get in on this conversation.

You heard us talking about the data and the economy. Yeah, and it was a surprise to see you, Brian. I thought you were out today. That's why I was filling in for you. But there you were at the head of the 3 o'clock show. But anyway, the point is this, the inflation and growth data giving markets and the Fed, something to think about, as you guys just did. Specifically, maybe there's no immediate need to hike if inflation is not rising,

but growth, of course, coming in stronger than forecast. Here's the numbers we're talking about. PCE prices. Feds for an inflation indicator up zero three. That was at two-tenths higher than the prior month. The year-over-year, though, unchanged 3.4%. Core up 02. That's a tick higher. But the year-over-year, again, 3% unchanged from the prior month. The year-over-year rate was flattered by a change in methodology that changed about 36 basis points off the annual rate. That brings the number down. But inflation remains above the Fed's 2% target. Fed Fund futures traders read it as dove. As you can see, the probability for an October high, fall. on a 37% from 47% before the data. Probably not already fallen yesterday after New York Fed President John Williams raising doubts about the Fed hiking in October. Still markets placing a 90% chance on a rate hike by December. Upward revisions to second quarter GDP, strong consumer spending numbers. They're going to keep the Fed on edge for an economy that still seems to be running reasonably hot along with a better than expected ADP jobs number for August or September

at 90,000. Strong growth along with inflation. That remains above target and a realization that Visions flattered the number. Could be why the 10-year it was ultimately unimpressed with the data. At initial rally turned into a sell-off with yields marching higher now at 529 and change, 532 to 2007 high watermark. The two-year year you had also rallied and then unrallied as the day went on. Fed, not going to react to a single set of numbers here, but the takeaway is that inflation, better than expected after revisions, making some progress, but it's still high. And unless three is the new two, the Fed's going to think it still has work to do, Brian. And we're going to find out that work on October 28th.

And the market is saying it's going to be a work to a rate hike, correct? I mean, that's the move. Well, not October right now. October has come off, Ryan, as you see there, at 37%. It's now a December story more than anything right now at 90%. Probability. That's really what's happened. John Williams yesterday gave us a notion maybe the Fed didn't have to hike in October.

And maybe December's a little overrated right now because, you know, Maybe if you're not going to hike in October, maybe you don't need to hike in December either. Well, there is an election in November. I don't know if that has anything to do with the thinking about October. Maybe they just want to wait for the data. I don't want to put my tinfoil hat back on. Steve Leesman, thank you. Appreciate it.

All right, let's talk about all of this and bringing former Dallas Federal Reserve President. Goldman-Rober. Goldman, Robert, great to see you again. Good to see you, Brian. Thank you for joining us. What do you make of that? October, reduced down, December up. could that be political or is that more, let's just wait and see how the data cooks out?

I think more of the latter. For me, if I were in my old seat, the bar would be high to move in October. It's not that I wouldn't do it, but I need to see more evidence. Why is that? While the economy is strong, it's powered mainly by all things related to AI, either infrastructure adoption, defense spending, and interest-sensitive sectors and low-modered-income consumers, I would argue those sectors are sluggish. And the other comment is the core inflation readings are a little bit calmer. Headline inflation because of oil is more elevated. I would love to take a little bit more time to see how that shakes out. I want to be more deliberate here.

And so I wouldn't mind skipping October right now and then looking at moving in December. and I think that's what John Williams said yesterday, and I basically agree with his project. No urgency then on the inflation side? I think that, listen, I don't know, I didn't agree with that. There's a feeling of urgency because we're above target, and we've been there for a while, but I don't want that to cause me to abandon my judgment and making sure I make the right decision. So they feel the urgency, but I think I would be inclined to be more deliberate, and I don't see a problem.

if we don't see a compelling reason to move in October, I'd rather wait until December. Yeah, we've been above target for six years. Let's switch gears. The bond market did not wait for the fact. No. The bond market, as Stephanie said in the last block, she said that we've gone up 1%, over 100 basis points, 1% to the layman out there. The bond market moved. Is the bond market seeing something, or did the bond market see something that the Federal Reserve did not?

I think the bond market, I think, I believe, is pricing in a couple of things. Number one, it doesn't, it's still not sure it understands Kevin Warsh and how to decipher Kevin Warsh. Remember, the dot plot median was two hikes, including December, but immediately after the press conference, the market priced in more like 100 basis points than hikes. I don't think they're sure how to decipher Kevin Warsh, and they're building it a risk premium for that, And then there's a second thing. There is a tail risk that the war and diesel could be elevated for far longer than we may think. If that's true, then diesel, for example, is going to bleed and is already starting to bleed into 30 or 40 items.

And I think they're pricing a risk premium for that. I was actually tweeting about that earlier today because diesel is greatly impacted by what's happening with Iran and Hormuz, but it's maybe as much or more being impacted by what's happening in Russia. Russia, as Ukraine deservedly so, by the way, keeps pounding about 50% of Russian refineries are either fully offline or damaged and running at reduced capacity. There's no indication. Even if Iran settles down that Russia and what's happening there with Ukraine is going away anytime soon.

So how does the Fed factor in that type of thinking? It's got to monitor it carefully because if you want to ship anything in this country, food, you name it. You're going to use diesel and other oil derivatives. And so that's why the Fed is going to watch this carefully. And that's why it couldn't wait, it had to act in September. It's going to be prepared to act again. The only issue is, I think in their minds, they're going to move twice this year in the dot plot

and maybe move again in early 27. So you get three hikes. We may get three all told, including September. Quarter point each? Yes, but we've already gotten one. That gets you to four and a quarter, four and a half. The market has already jumped ahead of that, and I think the market may be overestimating

what the Fed actually does, but time will tell. So quickly, will bond yields fall once we start getting more? I know it sounds counterintuitive. But at the bond market's ahead of the Fed... You need oil and diesel to settle back down would help. And I think the bond market is building in risk freemia, more than usual, and it's because of these issues we just talked about. I'll opine on the energy side. Oil may calm down. I'm not sure diesel will because of what we just

talked about. Yeah, may not. Robert Kaplan, I know you got to jump. We're really appreciate always sitting on CBC set. Good to talk to you, Brian. Have a great day. All right. Let's send it out with Brandon Gomez for a look at some of the biggest names that are moving right now heading into the closed. Brandon. Hey there, Brian. First up, competition for a Navy contract sent Northrop shares sliding today, the defense contractor lost the multi-billion dollar contract to its rival Boeing. And Northrop offered the Navy an advanced six-generation fighter, but it will now likely push its B-21 bomber to the front line. Boeing also trading lower today down less than 1%. Meanwhile, Ford also in the red today, as sales for its profitable F-150 trucks are expected

to drop in Q3. Ford CEO Jim Farley told reporters that a supplier issue led to a temporary production halt. The automaker also dealing with fires at a key aluminum. supplier, crucial for production, with overall U.S. sales down 10% through August. And then General Mills, edging lower today as well. After announcing a new CEO, the Consumer Foods Company, unanimously voted for CEO Dana McNabb to succeed current CEO, Jeff Harmoning, who will become executive chair. Now, both will assume their new positions on January 1st of 2027, Brian. They're going to have to figure out what they can do about cereal demand, Brandon. Is that correct? That's a lot of the story.

carbs and sugar, nobody wants it. What can you do? But, you know, the runners like me, they'll take it. Yeah, cereal, big part of the GIS story. General Mills ticker, Brandon Gomez, thank you very much. All right, folks, we are just getting started here on Closorbell. Coming up, Washington, turning up the heat on AI. It's happening today. The FTC launching a sweeping probe into Open AI, Anthropic, and other big players. We'll give you more on this developing story after the break, as always. Live right here at the New York Stock Exchange, you are watching. watching Closing Bell on C&BC. All right, we are back on closing bell, and this is a big story that is coming out of D.C. today, despite a rather feel-good meeting and lunch at the White House yesterday.

Today, the Federal Trade Commission opening up a sweeping investigation into Open AI, Anthropic, and other leading AI companies. Amon Javers joining us now with Wash from Washington with more on this, I guess, continuing to develop story. Amen. Yeah, Brian, that's right. There's a lot more that we don't know at this point than what we do know. tell you is that we've confirmed that Andrew Ferguson, the FTC chairman, has opened an investigation looking at some of these top AI companies that you just listed there. And the question is,

you know, is there consumer harm happening inside these companies? But we don't know, as you take a look, we have some video of Ferguson yesterday. He was at that meeting. This is on the sidewalk outside. We were staking out some of the CEOs as they were arriving. and a little bit surprised to see Ferguson attending that meeting with the AI CEOs because he was not on any of the official list that we saw on the way in. And then he showed up at the meeting. So clearly he has a role there. But what we don't know is, you know, what information specifically are they looking for from these CEOs? What is the deadline for this investigation? How sweeping really is it? So a lot more to find out here. But clearly it is a signal of regulatory intent.

by the FTC to crack open some of these companies, take a look inside, and take a look at the possibility anyway of any consumer harm, right? You know, I don't, Amon, I know that you have spoken with Chair Ferguson as well as I have. We had him on the exchange, I think about a month ago. I did a one-on-one with him out in Colorado about two months ago. You've talked to him, knowing him, not as, I don't know him well, but chatting with him, this doesn't surprise me.

Does it surprise you? No, it doesn't. And it doesn't surprise me that, you know, sort of Washington wants to keep an eye on these guys from a regulatory perspective, right? I mean, this is a brand new, powerful technology that's going to impact just about everybody in the country one way or another. So there's clearly, you know, a regulatory interest from Washington's perspective of understanding it and getting to the bottom of it. What I'd like to know more about, Brian, is what started this, right? What was the impetus? Are they seeing something specific that they're concerned about? Was there a specific complaint that came to them that they're following up on? A lot of those details are details that we don't have right now.

And I think that's why it's hard to say, you know, how serious is this? How far is it going to go? Well, is it raising costs, right? The FTC, Federal Trade Commission, one of the big missions that it has, if not the primary mission, is it not, is to monitor consumer costs and consumer trade. so it likely has something to do with money, costs, maybe costs of data centers, who knows? Right, yeah, exactly. I mean, harm to consumers in any way.

And so, you know, given how sprawling AI is and how much impact it has in every different sector, it's really hard to say where this is going. So I think if you're an investor and you're looking at this, it's hard to even calibrate, you know, does this move the needle on these stocks in any way? Because we just don't know exactly where they're going. I think, you know, at some point, you'll start to see, you know, If CEOs are getting invited to come testify, if we're starting to see public hearings, that sort of thing, you'll get a better feel for what this is. But right now, I think it's, you know, Washington with a raised eyebrow, certainly, toward these companies and taking a hard look.

Amon Jabbers in D.C., Amon, really appreciate that. Thank you very much. All right, well, this probe would follow OpenA.I diving into the AI agent's race. We talked about it a bit yesterday. Kate Rooney joining us now. Let's talk about it a bit more. you've got dots now of OpenAI. You've got Muse of meta. I presume those are not going to be the last that we see, but how big is this Open AI news?

Well, Brian, it's a theme. It plays into this theme. I'll tell you why, but Open AI did jump into the personal agent race with its own new Dots product. As you mentioned, it was out yesterday at their demo day. Sam Altman on stage described these as sort of always-on personal assistance that can work in the background. You can name them, which is similar to Muse.

Altman did say on stage as well that they are remarkably capable, is how he described them, said they're built to handle really anything you can think of. And it is a sign of where this technology is going. It's getting a lot more proactive versus just reactive like chat GPT has been historically. And that is how CFO, Sarah Fryer, described it when we sat down with her at that event. Dots is now of productivity. It's the agent that can tap you on the shoulder and remind you that you, forgot to do that LinkedIn post for tomorrow. I was just telling you about that. We think it's

going to be very powerful in the enterprise, particularly because of all the ability to plug into the apps that matter most to you. And Brian, Open AI is offering may be reminiscent of what we heard with meta and muse, but there are a few key differences. So first of all, you got to pay. These are, they're not free. And they're slightly more focused here on enterprises with integrations into Slack and Microsoft teams. For now, it is not widely available. Either it's just for chat GPT Pro and business premium. So you got to wait if you're not a paid subscriber, Brian. And we will.

Kate Rooney, thank you very much. Appreciate that. So as a company, though, meta and their muse still riding high on that momentum. Let's talk about the meta side of this mega story. I'm going to stop using M's. Julia Borsden joining us now, I guess, with more. So I lied. It's an M.

Well, Brian, the competition between the competition between. META and OpenAI is heating up during Kate's great interview yesterday with Sarah Friar. Friar accidentally said MUSE, which is META's AI tool, instead of Open AIS DAUTS and quickly corrected herself. Now that prompted Alex Wang, META's chief AI officer, to take a jab at OpenAI and X sharing a video of Sarah Friar saying, quote, it's okay, Sarah Mews is thinking about you too. Now, while Dots is only available for paying customers, META's Mews is available for free with the option for power users to pay for a premium subscription. Wall Street seeing this distinction

in business models as an advantage for Mark Zuckerberg to continue meta's stronghold on the consumer market. Now, Censor Tower just today projecting that Muse will surpass five million U.S. downloads today. That's in 22 days since launch. It took ChatTBTBT, 56 days to hit that same milestone. Mark Mahaney at RBC saying, quote, we see meta with Muse as the clear leader in the personal AI agent space, the longer term contest will depend on whether meta can convert its consumer reach into habitual use before OpenAI expands dots to lower priced and free plans. Now, meta shares are up about 27% in the past month on bullishness about that new Muse AI tool. Brian? All right, Julia Borson on the meta side of the story, Julie,

thank you very much. All right, coming up here on closing bell, another M. Micron, getting set to report its results in overtime. We're going to run you through what to watch, talk to a shareholder about what has been an absolute rocket ship coming out of Idaho. That's next. All right, welcome back. shares of Micron. They have absolutely been on fire this year in the company getting set to report earnings and give its guidance right after the closing bell in like, I don't know, 20 minutes. Sima Modi joining us now to give us the expectation heading into the print. Seema. Well, Brian, investors want to know if the tightness in the memory market is starting to ease. And if not, When does more supply come to market?

That answer, Brian, will provide a crucial read on pricing and whether high band with memory micron sells to its semiconductor and hyperscalor customers can go up from here. Now, Morgan Stanley believes memory pricing still has room to expand by about 15 to 20%. Analyst will also be looking for any mentions of META's muse. And if Micron is a supplier to META, lastly, buybacks. Following that NVIDIA buyback, will Micron do the same? Milius Research says the company could buy back well over 10% of its market cap,

This year, the stock, as you pointed out, up over 270% this year. It's sold, though, in the third quarter on concerns that the memory cycle has peaked. So we will see if CEO Sanjay Mahothra can change that narrative, Brian. All right, Sima Modi, Sima, appreciate that. So let's talk more about Micron and bring in a Micron. Shareholder, CNBC, contributor, capital wealth planning's Kevin Simpson. Kevin, all right, you know, I love you, brother. But I got to say this.

From 2019 to the middle of 2025, Mike Ron did nothing. For six years, it was flat money, it was dead money, DRAM prices were in the dump. The stock has gone from 60 bucks to over a thousand bucks, but you still like it. Make the case. Right, not only do I like it, I don't even have a covered call written against it. Now, you bring up a period of time, and we know how cyclical memory is, and that was a long cycle of depression. I think now we're in the complete opposite side of this. I mean, at some point, yes, the party's going to end, the music will stop.

But I think this is really a super cycle for memory. So today's earnings are probably the most important data point that we're going to get all week, maybe second only to the jobs report, maybe. So what are we looking for? We're looking for a few things, but not so much about what they did, which will be great. It's not a question of did they beat or didn't they? I think earning somewhere around $31 a share is going to be really, really impressive. But the biggest number, Brian, the gross margin.

We're looking for about 86% gross margin, which is insane. same. And some people are saying it could be even higher, like 87 or 88%. I don't know if it can get that high, but this is a crazy good stock. So the pricing on it, even here from the valuation standpoint, isn't overly inflated. Now, that's a big if. Like, the earnings have to keep pace to make this thing go higher, but we think they can. So the three things we look for, margins, HBM demand, high bandwidth memory. And then lastly, there's supply discipline, because you don't want to see this thing get messed up where they can't meet the supply. So there's a lot to look for in terms of the guide. And like so many earnings reports this season, Brian, it's about what they say moving

forward for the next quarter and the next year, way more so than what they did the past three months. Well, we'll see in about 15 or 20 minutes. By the way, 52 analysts covering the stock, 49 buys or strong buys. I think three holds, no sells. Stock has been a rocket ship, made a lot of people very rich. Kevin Simpson really appreciate that. Thank you very much. All right, still ahead here on closing bell. What the options market is expecting from Micron's report and what it might mean for the macro market, NASDAQ's up eight tens of a percent. Closing bell, back right after this.

All right, got about 11 minutes here until the closing bell. Let's get back to Brandon Gomez with a look at some of the key stocks to watch heading into that close. Brandon. Hey there, Brian. Yeah, shares of Moderna trading lower today on a city downgrade to sell. And that's despite positive results last month from a cancer vaccine trial. City says it needs a phase two-like effect. and trial consistency to justify the current market cap.

Moderna down 6% today off from its all-time high in August. Meantime, HPE shares are gaining after the company said during its investor day that it expects solid revenue growth for its networking business due to AI demand. It also said the cloud provider, Vulture, made a $1.2 billion order for HPE to deploy AMD's Helios AI rack, shares up almost 5% there. And finally, Mattel, in the red today, after announcing board member Roger Lynch as its new CEO Lynch, who will be leaving his post at Condi Nasty CEO. We'll take over from outgoing Mattel CEO, Enon Cries on October 2nd, Brian. Shares there, like I said, looking lower. All right,

Brandon Gomez. Brandon, thank you very much. All right up next, the trade on the final moment of the third quarter. It is your market zone, and it's next. We are now in the closing bell market zone. We got Mike Santoli. We have Crescent Grove's Andrew Cry. here on set to break down the crucial moments of the trading day. We got Oliver Renekiaz at the Cibo Global Markets in Chicago. Welcome, everybody. Mike Santoli. We're going to see you, I know, in a couple of minutes here. Then you'll see me, by the way, on fast money. What is your market theme of the day so far? Yeah, so let's start the relay race, Brian. I mean, the third quarter is dying as it lived, which is to say with a relative handful of big growth stocks, the AI trade,

managing to hold up the headline indexes, while the median stock kind of buckles under the the pressure of this relentless selling in treasuries, which, of course, is lifting yields to these multi-decade highs. It's pretty orderly. It's not like there's some kind of urgent rush away from the average stock, but it is sort of a drip-drip of weakness. Getting pretty extreme, arguably, in terms of how weak breadth has been relative to the index. How does that resolve? Is the average stock oversold? If we get some relief on the yield front, does that mean we have some kind of a big comeback rally in the making or at least a big exhale? I think there's a chance of that. But we've been in this situation for really a few weeks right now, and it's not really resolving.

You have the NASDAQ up a half a percent, the median S&P stock down a half a percent. That's been the story for a little bit now. All right, Mike, thank you very much. In a couple of minutes. Oliver Wrenick, what is the options market set up on Micron? Is it like a coiled spring? Hey, Brian, stakes certainly seem high, but market makers are actually pricing a 7% move after earnings, which is small by Micron's recent standards.

But after the situational awareness blow up this summer, maybe a more measured rally and lower VAL would be a welcome change. What's most encouraging is that there's a lot of put open interest down at $1,000 and then further down at the 800 strike. So if there is a sell-off, there should be profit-taking to help soften any blow and maybe set up for a bounce back. Also in today's session, we saw more selling of call strikes at the upper end of the implied move from 1,100 to 1250 strikes, meaning the real surprise would be a very big rally,

certainly a welcome one for many, but traders largely betting against that coiled spring and new highs, Brian. All right, Oliver, Rennick, Oliver, thank you very much. All right, let's bring in now Crescent Groves, Andrew Cry. Andrew, welcome. What is your key market theme? Maybe not today this year so far. And today, by the way, last day of the third quarter.

Yeah, well, I think it's rates. You've got to point to rates and just look at the fact that we've had real yield. driving rates higher. This hasn't been an inflation break-even story, which I think a lot of people are sort of conflating based on the fact that we've got stubbornly high inflation. But if you look at the 10-year, the 30-year, again, it's real yield. It's a global competition for capital because you've got really interesting investment opportunities right now in AI, in defense spending, in re-industrialization alongside some of the more troubling issues with government debt and, you know, fiscal sort of large-est. But nonetheless, I think you've got to look at rates as kind of the key point.

Andrew, sit tight, because I've got some breaking news. I've got to get you right now. in Washington, D.C. Megan, what's going on? Brian, we finally heard from President Trump responding to the Inspector General report about the Fed building renovations earlier today. Now, the president has a long post on this. I want to show you just how much he has to say

on all of this, but what he's saying here is that too late Jerome Powell, as he describes him, should be forced to resign from the board. He says he can't manage a building, and he certainly shouldn't be allowed to manage his high interest rate policy. Now, as for what he's actually asking here, President Trump says he's asking Attorney General Todd Blan to study the report and make a determination as to what to do about a relatively small building complex

that has hundreds of millions of dollars over budget. Now, Brian, there's much more to come here, but he says at the end, this is Jerome Powell's fault. He should be forced to resign immediately. If he doesn't resign, he should be sued at the highest level by the United States government. So, Brian, finally there, we've heard from President Trump on this, wanting to see former Fed Chair Jerome Powell forced to resign over these building renovations. All right, Megan Cicello without breaking news. We'll see what develops from that.

I'm going to go back to you. Thanks very much. Okay, so, you know, that aside, I don't think the market's going to care about that, right? No. Trump, he doesn't like Powell. He's, we've known that for a long time. Yeah. But Powell is still on the Fed.

Does that in any way impact your thinking about what the Fed does or doesn't do? No, I think we saw that Warsh established credibility at the last meeting and through the rhetoric, you know, Jackson Hole. Like, I think he's got now the credibility card in his, you know, in his stack. So I think we don't have to worry about Worse. We don't have to worry about the Fed in terms of how we think about power. I think there was a school of thought that 5% yields in the 10-year we're going to sort of end the stock market rally. Can we tuck that to bed? Can we put that away right now because we're at 5-3 and the market just keeps going up on, at least for big tech?

That's right. That's it. Yeah. I think, again, as we point to this fact that it's real yields driving higher interest rates, again, that suggests to us that it's strong economic growth, strong underpinnings of growth in a corporate earnings environment right now where you've got a high, nominal growth sort of backdrop, which is supporting corporate earnings. So, yeah, we can withstand higher interest rates in this environment. And even at that, I wouldn't argue that we're restrictive right now. Yeah, you're in from Milwaukee a place. I spend a lot of time in your city. You know that and that surrounding area. Just the amount of consumer spending and wealth creation from

AI to me in your area and others has been amazing. Is that a theme that maybe we're missing in sort of the New York markets? Yeah, I think there could be an element of that. I think Milwaukee's doing well. Yeah. I think if you look at the middle of the country, yeah. You are starting to see some of that expand, you know, some of the wealth creation expand into other areas beyond just some of the coastal areas. And I think that's a theme for us is applied AI. It's the enablement of businesses that are outside of the tech realm using AI to increase profitability. Because that goes to corporate earnings, which goes to multiples, which goes to a market that many people will say is not overvalue. That's right.

Yeah, you look at the equal weight right now trading it 16 times forward earnings. You know, that's not a demanding multiple by any means. And then we look at non-U.S too. Look at the EFA, right? Trading it 15 times. trading it 10 times forward earnings. Not particularly demanding. Can you hear how much they liked your answer? Appreciate that.

I mean, that's how much they liked your answer. Andrew, real pleasure. Thank you for coming on set. There is your bell, everybody. I'll see you on Fast Money. Thanks for watching, closing bell. Now, it's done as overtime with Mike Deng-Kill.