Closing Bell - Closing Bell: 9/3/26

Episode Date: September 3, 2026

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Melissa Lee and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

All right, welcome to closing bell. I'm Scott Wobner, live from Post 9, right here at the New York Stock Exchange. Good to have everybody with us today. This make or break hour begins with the Waller rally after the influential Fed governor said he's inclined to hold at the September meeting. Yields dropped, hike expectations dropped. Stocks, they moved higher. Take a look at the scorecard here with 60 to go in regulation. We've been green all day long, and it's more than 1% for everything but the Russell. discretionary comm services tech leading the way today. Another nice day for META as well. We're going to have a report coming up on why that stock is suddenly surging, especially over the last couple of days.

Different directions today for both snowflake and Broadcom, one soaring the other sinking, following their respective earnings reports. We'll dig a little deeper into both of those two. We do begin, though, with our talk of the tape, the big rate relief that stocks are feeling today and what it means for your money. We'll get to our panel in just a moment.

Let's first, though, bring in our senior economics reporter, Steve Leesman. So we're going to talk about a few different things, but I'll get your reaction to what just happened moments ago when our own Aiman Javers was in the briefing room, asked the vice president a question, and he responded, and I quote, it's proper and responsible for the Fed to lower rates. I'm wondering what you make of that statement. You know, that the administration from the very beginning, Scott, has not been shy about saying what it wants. the Fed to do and the president has done it. Now the vice president's getting in on the act and I guess we've determined that that's okay for them to voice their recommendation and what they think the Fed ought to do. And the Fed can just sort of ignore it.

I don't think that that has any weight at all on the Fed, although I do think the presidential pressure does have some effects, Scott. I do think the idea that the president does not want the Fed to hike rates is something that weighs on the Fed and they're, you know, what looks like a very close call. I think there was some thought as to whether Fed Governor Waller wanted the Fed to raise rates. And going into these comments that he was anticipated to make today, I think there was some fear, if you want to use that word around that. And he wasn't as hawkish as feared, was he?

Yeah, very much firmly on the fence. I'm calling it that the market is climbing the Waller of less inflation. worry, I think, is where we're at right now, Scott. He's really pinned his decision on the August inflation report, which will come out a week from tomorrow. Notice that the employment report tomorrow is of less significance to the Fed. They think that the job market is stable and not a source of inflation. But Waller said, look, if inflation is not heating up, and there are some signs that we have some disinflation out there, that he could hold rates. where they are, and if it's hot, he would hike rates.

This follows, I would point out the dovish comments, I would say, from New York Fed President John Williams, who also sees inflation coming down. I would say there's a lot of people to disagree with him, and all of this follows, by the way, some pretty hawkish comments from the Fed chair last week, which does raise an interesting question of, what does Warsh want to do versus what two of his senior lieutenants want to do?

I mean, Waller obviously had an impact on the bond market because yields came down, and hike odds came down to 54.6 from 63.2 just a day ago. What's striking still is that the market basically at 50-50, as it was going into the last meeting, is this just the way that it's going to be going into almost every meeting coming up, 50-50? Because it's so unprecedented for the market to be, if you want to suggest, guessing as to what's going to happen. and it's usually not in that position. It obviously speaks to the lack of forward guidance.

Yeah, Scott, I think there's two things. One is I do think it's a close call, and I think that is part of the reason why the market is 50-50 here, but also it's the new guidance or the lack of guidance from the new Fed chairman, and we don't know exactly where he comes down. I will say that people in Jackson Hole thought that the chairman was hawkish enough that he would have to hike here. That was some interpretations of Warsh's speech was that he had kind of really telegraphed a hike.

I didn't read it that way, but there were some very smart Fed observers there who did read it that way. But right now the market is 50-50, and I think this is a new feature. It's something that does lend itself, I think, to higher yields over time in that there's more uncertainty. The market will exact more payment for that uncertainty. We'll have to learn to live with that. We went into the last meeting, I think it was 70, 30 for a hold, and we could go into this meeting, depending upon what happens a week from today with the inflation report, we could go in 50-50. Waller said something else today that I want your reaction to that I felt was a little spicy,

and I want to know what you think about that. Because on the same podcast where he made the comments that we referenced earlier, it almost felt like he took a shot at the, quote, play the ball, not the referee idea that the chair put forth at the last meeting when he was talking about not giving forward guidance to the markets, essentially not holding the market's hand all along the way. Waller used a baseball analogy, Steve, around a pitcher and a batter that they, quote, want to play the ball, but they cannot do that until they know the umpire's strike zone. The players don't expect the umpire to have a perfect strike zone.

They just need a rough idea of its parameters and some guarantee that it won't change much on every pitch. Perfection is not needed for them to play well. Was that, in fact, a shot at the idea of how Chair Warsh has framed his idea about this issue? How would I describe this? How about a pitch right down the middle in terms of a shot at the chairman and his idea? I will say, Scott, there are a lot of people who reject the idea of Kevin Warsh somehow that's. How does that, the market can set the rate. All of the big bond people who I talk to who manage massive portfolios, they say they will never trade what they think the Fed should do. They will only trade what the Fed will do. And they can do that with more or less information.

And Waller is sort of giving us the conventional wisdom that the Fed needs to provide some guidance about what that box is for a strike. Remember, Scott, it is the Fed that sets the overnight rate. The market does. doesn't do that. There is no market that will do that or is capable of doing it. It can provide more or less guidance to the Fed, but all the market wants to know is what the Fed will do, because at the system we have right now is the Fed sets the overnight rate. My response to Warsh, when he said, the market is now watching the ball, not the referee, I thought that analogy was misplaced, because the Fed is the ball. That's what the market wants to know. The market sets every other rate

after the overnight rate that the Fed sets. But the market needs to know where and how to think about where the Fed will set the overnight rate. I get what Warsh is saying it's possible to get some more information from the market. But what Warsh is saying, and I'm sorry, what Waller is saying, and indeed what many other Fed officials have said, they said it to me in Jackson Hole, on the record, on tape, in the interviews, was that they feel they need to provide the market some guidance about how they're processing incoming information. what information they're looking at. And indeed, Warsh actually took a step towards the market and that conventional wisdom in Jackson Hole. If the criticism was that he didn't provide

his reaction function, he definitely provided some functions, if not reaction. Well, you said Waller threw one right down the middle. This felt more like up and in. To me, you're a baseball man. You know what that means. Steve, we'll talk to you soon. Thanks, Steve Leesman, our senior economics correspondent. Let's bring in our panel now. CIBC's Chris Harvey, Investco's Brian Levitt, and CNBC contributor, Capital Wealth Planning's Kevin Simpson, one and all. Good to have you all here. Is this a Waller rally today? I mean, it's a much-needed relief in the bond market?

I think you're right. I think it's a waller rally. The market's a bit skittish. Rates come down. People feel a little bit better about things. They're waiting for non-form payrolls tomorrow. And you're not seeing much out of the Middle East today. So we get a little bit of a rally.

You have some idiosyncratic news that are getting stocks higher, especially. in the technology space, and that's okay. And we think that next week you'll probably see more of a rally on the percent buyback, but that could be the high water market. That could be the near-term high because that's just going to be, in all likelihood, an ephemeral low on the long end. And we'll go back to talking about higher rates for longer. I feel like people started to get pretty cautious over the last few days. Yeah. Overly so or appropriately so. I think it's appropriate. Markets of double digits, right? Now rates are higher.

The credit markets beginning to wiggle or start to push back a little bit, and that's important to us, right? We have no resolution in the Middle East, and we're out of earnings season. Yes, we do have conference season coming up, and we'll hear some bullish things. But for the most part, with rates doing what they're doing, oil doing what it's doing, it's time to be a little bit more cautious. It's time to start to pull back the reins. Interesting.

I mean, we have called this the cautious cavalry that has arrived. it feels like as the calendar turn, you think it's justified to be so? I don't think it's justified. I mean, even through this period of being cautious, the last month, two months, the S&P 500 is still positive. You have rate-sensitive parts of the market that are not performing well, but in general, performing what I've been saying to investors, look, I don't think elevated oil prices is what takes down this cycle. In fact, we're basically flat since the middle of June. The rise in interest rates reflective of a good nominal growth backdrop.

I don't think that's what takes us down. Ultimately, at some point, if you have an environment where hyperscalers pull back on investment, where there's a bond issuance that doesn't go well in that space, those are the warning signs. Not higher rates on what I would deem to be a good nominal growth backdrop. Counterpoint? Yeah, so we weren't worry about rates, but we're now getting to a level and the hawkishness that we're beginning to hear, and the rates rising across the globe

is a little bit of concern. More so, what dissent is doing, yes, that will send a signal to the markets in the short term, but that doesn't stop things in a longer term. You don't think he can control where the long end goes from here? I don't think so. I think it'll be very ephemeral.

He'll get rates down. They'll be down for a period of time, and then equal a little billion pricing will start to react again, and rates will probably float back up, right? that's when we begin to start worrying about, okay, is this going to be a bigger issue? And are we going to see rates across the globe go higher? And do we need to start repricing risk?

That combined with what we're seeing in the credit markets gives us a little bit of concern. Not a major concern, but it's now time with stocks up double digit, again, to start to pull back on the reins, to be a little bit more conservative to take some of the problems. I'm sorry, at least in part what's happening with yield just because of anticipating better growth. Yeah, if it's anticipating better growth, right? That's great. But you don't believe that? I don't think what I'm worried about is that rates begin to become untethered for a period of time, right?

We're getting the, not the central, we're getting the treasury to come in and intervene. I don't think that's a good signal, right? They're going to manage things in the short term, but longer term, we have to deal with the fact we may have higher for longer. and what we saw from Jackson Hole was a pretty hawkish Kevin Warsh. We'll see. I don't think they should raise. I don't think there's enough for them to raise in the catalyst, but now we have to price that in, that probability, and that changes the equation. More so, and to get back to Brian's point,

if we do have a bond issuance that doesn't go according to plan or the credit markets begin to push back, we need to reprice things. And with things up double digits, again, it means. make sense that we need to be a little bit more conservative, especially in what I would consider this quiet people. This goes to a note that came out yesterday or the day prior from Citadel securities, that the risk reward has changed. The fundamental story hasn't changed, but the near term maybe has changed for a variety of reasons. We already alluded to those, right? Earnings are behind us, the buyback windows closing, your blackout period, and all sorts of other reasons, too.

No? I'm just wondering if we're talking about is there short-term volatility in the markets? Are we talking about the end of the structural bull market? No, the former. Yeah, the short-term volatility. I don't think. We've already had a lot of volatility under the hood this year. I mean, if anything, it looks like tech's put in a bottom. The saxpocalypse is well behind us, the hyperscalers bottomed at the 200-day moving average. So I don't think so.

And, you know, this whole thing about rates, you know, Scott, you and I, we grew up in a world, 80s and 90s where the 10-year rate was above nominal growth. And then we entered in a prolonged period where the 10-year rate was below nominal growth. So the fact that nominal growth is 6.5% on a year-over-year basis, and the 10-year Treasury is 475, that doesn't give me a lot of cause for concern. It's been orderly. We've been in a relative range bouncing between 4 and 4.75. That's not a big challenge. Even if rates were to go to 5%, orderly. I would not view that as a significant challenge to this market. Kev, you want to solve the debate that we're having on the set here? Yeah, I think I have to. I'm on Chris's side on this one.

I think 5% on the 10 year becomes problematic. And the reason for it has to do, I think, more so with multiples. You know, we look at this bond market and higher inflation and higher yields. And 4.8 yesterday, you know, kissing that on the 10 year, it can get up and approach 5%. But if it lives up there, I don't know that we can run on these same type of multiples. And really, the only reason I think the stock market hasn't reacted already, Scott, is because earnings have just been so darn good. And they continue to hold up in far, you know, if we're looking at guidance for the future,

they continue to be holding up in for one quarter, two quarters. But I continue to look at this and I'm concerned about inflation. I love the fact that we had a little bit of a freebie from Wallward today to give us a reprieve this afternoon. but if inflation continues to hold steady, they're going to have to give us a rate hike. I don't think that's going to come in September, but I do think it'll happen in December. I'm hoping it's not a rate hiking cycle. I hope inflation comes down.

But my concern isn't a deterioration of earnings. It's a pullback on the multiple. And that's what's gotten me a little bit more concern than perhaps I have been for the, really, for the past couple of years, Scott. Sure, but you say the only reason that we've been hanging in there is because earnings remains so strong, as if that's a small variable. That's the whole game, isn't it? I think the economy's strong.

I think earnings are beyond anything we could have possibly expected. And you're right, that is the whole game. But stocks trade on two things. They trade on earnings and they trade on the multiple that we assign to them. So if we have higher interest rates, like let's just say you can get 5% risk-free in a money market, it's going to change the dynamic of being in equities. Maybe not for us as equity players or the retail investor. But if you're an institutional trader, if you're working on quants and you can get 5% risk for,

you're going to move money from equities and you're going to move them into fixed income. That's a concern. But really more importantly, than anything else in my calculus is the earnings can hold up, but I'm not sure that the multiples can't. I'm just not sure, Brian, you're going to do that. A, when are you going to get back in? And why would you do that if you, and I know you do believe because you just said it and others believe, too, that there's nothing changed about the trend itself or the structural bull market

that you think that we're in. And we got to 4.8% what yesterday or a couple of days ago, without much incident in the credit markets. And with the S&P 500 near an all-time high, I don't know what another 20 basis points on the 10-year rate would do. I don't think rates are going to 5%. I was just suggesting if they do, then I don't think that that's a major warning sign for the market. In fact, multiples have been coming down throughout the year because earnings are so good. When you think about where earnings are, I would actually think that multiples would be higher than where they are right now. And on the other point, look, inflation, no. The five-year break-eavens $2.35. That's not inflation. We don't have big inflation expectations in this country. We have price

control. We have price control. We have price stability. Even if the, even if there's, we don't know, they raise rates, this isn't the beginning of a prolonged rate tightening cycle. Maybe this is just a rate scare and people are looking to make too much of it. What do you think? I think it's a little bit of a rate scare. We'll find out more next week with CPI. CPI comes in light. It's going to be tough to push that hiking. If it comes in hot, you're going to hear a lot more about hiking. The other thing that we didn't mention is, yes, earnings are good, but when does earnings growth peak? And we have to start looking into 2027 and saying, okay, when are we going to see that peak and begin to start discounting?

You think they peak before others do? I mean, that's going to be the great tell. You keep hearing about 28. Yeah, I think they peak probably mid-27. And I think that's what you're saying. That's why multiples are beginning to compress because the market's looking ahead. And how much more can you pull out of the credit market? A ton of this earnings growth is from issuance and issuance going to cap X and that multiple

eye effect. All right. Believe it there. Guys, great stuff. I appreciate the conversation. We'll talk to everybody soon. Let's get to some of today's other movers, starting with Meta, the stock rallying for a second straight day. And Julia Borson following that action. So what's going on here? Because it's two pretty strong days, right? Yeah, that's right. Meta shares are up about 3.5% today after gaining 2.5% yesterday. That brings the stock up about 8% over the past week. Now, this after yesterday afternoon, META announced the release of its latest AI model, Muse Spark 3.1, showing what the company says is meaningful progress over its own models and also many of its rivals. Third-party research from artificial analysis saying that meta's model outperforms Google's Flash 3.8 and Anthropics Fable 5. And that makes it ahead of all rival models except Claude's two most powerful. Met as AI Chief Alex Wang telling CNBC that this shows progress in coding and agentic abilities, saying, quote, we've been moving really fast, we're feeling really good about our momentum and pace,

we're working on much more exciting larger models and we think the community will be really excited about these. Now, Wang's saying that you can give the new model open-ended objectives and it will come back with a finished deliverable. Today, Bank of America with a buy rating on the stock, saying the new models suggest a strong pace of AI development. Also noting that those agenetic improvements are noteworthy ahead of a launch of meta's AI agents, which is expected soon. Scott? All right, Julia, thanks so much for that. That's Julia Borson. InVitia, meantime, inking a deal to buy the AI platform hugging face.

News announced right here on CNBC. Christina Partinevlos has the very latest for us. Tell us more. Yeah, news announced this morning. and at that almost $13 billion price, Nvidia is essentially buying control of where AI gets built. Invidia, we know, already owns the compute side of AI. Its chips and CUDA software are a huge portion of that.

Hugging Face is the other end, the platform where 18 million developers find and download and deploy open AI models. Invita just bought that front door. It wants that door because its biggest customers are also its biggest threats. Google, Amazon, Open Air, Anthropic, all buy Nvidia chips, but are also, building their own to need it less.

A strong open model ecosystem is demand. InVIA can eventually shape on its own. Amitya CEO, Jensen Wong, says the price was worth it. Listen to him. We pay $12.9 billion because, one, that's what it's worth. And two, open models means so much to us. And if a hugging face was looking for the next chapter and a home for their company, Nvidia should be it.

Means a lot to him, but open models also mean a race with China. On Hugging Face, Chinese models now lead in downloads. With Alibaba's Quinn overtaking Metas Lama, owning the platform puts Invidia right inside that fight. The catchers, of course, neutrality, some concerns there. Hugging Face works because it stays open to everyone, including AMD, Intel, Google. Invidia says it's going to keep it that way. He promised it in a blog post this morning. And now the company that sells nearly everyone, their chips, owns the platform that they also depend on.

big news. Okay. Christina, thank you. Christina Parts and Nelves. Let's talk about Robin Hood, because it's rallying big time today. Oliver Renick tracking some big options trades in that name live from the CBO global markets in Chicago. So the stock up more than 15 percent. What do you see in the options market? Huge day, Scott, as financials hit a new high, Robin Hood is soaring back into positive territory for the year. We flagged a big bullish action in this name yesterday after that analyst report. Those bulls are doubling down on more than triple average daily trading volume today. Traders are buying almost three times the amount of calls as they are puts,

and eight of the top ten most heavily traded contracts are on the call side. The most popular is the 120 strike call expiring tomorrow. Those are going for about four bucks a pop. It's a bet that Robin Hood keeps the rally going into the weekend. What's notable here is even after today's 15% move higher and huge trading volume, Implied volatility in Robin Hood is still below its historical average and a full 30% off its 52-week high, Scott. Oliver, thanks so much. Oliver Renick. We're just getting started here. Up next. The battle over AI moving from Silicon Valley to America's backyards. Protests over data centers are growing. The backlash is as well and could threaten the massive build-out powering the AI boom.

Dan Ives is here next. Welcome back to the Data Center debate. taking new turns today, the backlash growing, a conference in Austin, Texas, drawing protesters demanding a moratorium there while a $100 billion planned project near a historic battlefield in Virginia sacked. For more, we're joined now by Dan Ives of Yorkville Ives, just back by the way from Nebraska after seeing some data center sites in that state. Welcome. Why'd you go out there? I mean, to me, it's really, it's trying to understand this. The AI data center buildout, well, how it's happened in the Midwest. And I think it's really trying to get a pulse of, you know, in terms of people that live there, the investments that are happening. And when you think about the

AI revolution, the hearts and lungs of this are going to ultimately be the data centers. And I think we're going to see this accelerate as we go into the next few months, and especially into the midterm election. What did you find? There's a good note from Oppenheimer on this topic today in which they say 241 new U.S. data center projects are facing backlash as of the first quarter of 26, more than double the prior quarter. Washington Post today, how the data center backlash is growing in statehouses across this country. I referenced in the intro to your segment, what happened in Austin, what happened in Manassas, Virginia. What'd you find? I mean, to me, look, I'd call it a thousand on the low end, maybe 1,500 data centers that ultimately are either in the process or in motion

Our view is probably about 10% of those, potentially 12, 15% could get ultimately cut. My view is what I see in Nebraska. You're talking about Southwest Nebraska, the amount of innovation that's happening there on data centers from meta, from Google, the jobs that ultimately be created. Not necessarily in the data center, but engineering talent, the companies that are going to invest there. And I think part of it for me is that for the first time in 30 years, the U.S. is ahead of China when it comes to tech. But these data centers are, they are the key. And I think as we go into the midterms, and I see it in the Beltway as well, you know, talking to so many politicians, that I view is the biggest threat to the AI revolution. It's not cap-backs.

It's not use cases. It's not what I've used, the bulk. It's really politicians getting involved in the AI build-out. Okay. So if that's the biggest threat, are you also suggesting that it dies down after the midterms? doesn't feel to me like the people of this country, irrespective of what the politicians say and when they say it and how they say it, are ready to let the issue die anytime soon.

Yeah, it's not going to die anytime soon. I do believe we are going into a critical six to nine month buildout. Because if we sit here and you start to have 25, 30 percent of those data centers get voted down, then I think the calculus changes. I think that's why this is a key few months ahead, especially what we see in Midwest, Southeast, and a lot of the data center build us that we're seeing in key states

because what we're seeing play out today is enterprises are accelerated. As they accelerate the AI demand and it goes to the hyperscalors and it goes to the neocl clouds, it comes down to you need data centers to get built. When you say the calculus changes if things go the way that you fear that they could,

what does that mean? In terms of what? For what does the calculus change? I think base case 10 to 15% get canceled. I think that's something that wouldn't drastically change the bulk case. If that doubles, what that affects ultimately is customers are going to have to pay more. Churn could happen. Data Center buildouts, as that ultimately goes throughout the system, there's going to be a musical chair where some could be left without a chair, right?

And stocks pay a price for that? No doubt. Stocks would pay a price when you think about hypers, when you think about some of the neoclods, even derivative on the software side. My view is it's why we're going to continue over the coming months be out there across Midwest, across Southeast, across West, to understand in this country to get a pulse from ourselves what's ultimately going to happen.

I came away from our view over the last few weeks, Midwest, Northeast, and what I see, I do think you're seeing ground swells within a lot of these states. They do want to see the data centers built because of the jobs, but we go into the midterms. It's going to be a boxing match debate. What do you make of what the Treasury Secretary said from the G20, that the companies you cover, right? The AI companies, he said, have done, quote,

a horrendous job of explaining themselves to the American people. And I think we need a big reset on this. They're going to have to take some of the blame. What do you make of that? A black-eye movement for big tech. Big tech's created a lot of the PR issues. If you tell the average American that they're going to lose their jobs in the next 18 months and their electricity bill,

is going to go higher? Why would they be happy about a data center? Now, you're starting to see a change from Dario, from Alderman, from others, but I do agree. I think this is a PR issue where there a lot of misinformation, but a lot of is created by doomsday type of scare tactics that we saw from big tech, and now they're trying to course correct. Can they do that? And how do they go about that? I mean, I remember, gosh, what was it, Bill McDermott, I think, right? The CEO of Service Now, I think, sat on this set within the last six months and said there was, you know, the job prospects for college graduates was, you know, terrible. That's a paraphrase, but it's the point that he was making because of what AI means. People hear that. That's your point. And then they grow more scared of a technology. They

can't physically get their arms around. Yet I could tell you 15% of college grads that I know, they're working at either a data center in the Midwest or some engineering-related job relative to that build-down. I think that's why McDermott have strong respect for him, but I think that was a tech narrative, and job glosses are definitely there, but now you're starting to see that curtail a bit.

And this is, look, this is a key debate, because guess what? Every data center that gets voted down, you know who wins? China. Good to talk to as always, Dan. Thanks, Dan Ives. All right, coming up,

the billionaire benched. Steve Ballmer. suspended. The Clippers hit with a stunning fine could haunt the franchise for many years. We'll have more on the NBA's massive crackdown next. As Los Angeles Clippers facing one of the stiffest penalties in sports history following an investigation into alleged salary cap violations. Our Alex Sherman joins us now with more on this still developing story, Alex. Yeah, let's start with the new Scott. Just an enormous historic penalty that the NBA levying against the Clippers for salary cap circumvention.

Steve Ballmer, the owner of the Clippers, suspended one year without pay. Gileon Zucker, the president of business operations, suspended a year without pay. Lawrence Frank, the director of basketball operations, suspended for six months, a $30 million fine, and then five first-round draft picks stripped from the team. All of this for the Clippers allegedly and sort of backed up by, evidence from a 35-page report from the law firm Wachtell Lipton that the NBA hired them to do over the past year. Quite a bit of evidence there that the Clippers set up sponsorship deals with Kawhi Leonard

in order to basically pay him off the books in essence so that Kauai Leonard was making millions of dollars through these sponsorship deals facilitated by the Clippers money that would not count against the NBA salary cap. So in essence, paying their star player money off the book so that it could pay other players on the team money that was in fact counted against the salary cap. Of course, that is a major no-no. It really gets to the heart of the league's competitive balance and fairness issues, hence such a strong penalty levied against the team. I mean, and the clippers aren't taking this sitting down. I mean, their response pretty forcefully, right? What are they saying?

Basically, the Clippers are saying that they feel like this investigation was biased, that there was sort of a predetermined outcome, in essence, potentially set. The reason this investigation happened in the first place was that Pablo Torre, the investigative sports journalist, put out a series of different podcast episodes that basically led the breadcrumbs to the conclusion that the Clippers had, in fact, circumvented the cap. Wachtell came to basically the same conclusion. In fact, dug up even more evidence suggesting this was the case.

But the clippers are saying, wait a second, you know, this investigation is biased, and we want to challenge it. And in essence, saying perhaps we will even go to court to challenge this verdict. We will see if, in fact, that does happen. They were also designated as a prior offender, correct? And I wonder what that factored into this, especially harsh punishment. Yeah, I think a couple things factored into the harsh punishment. One was that they, in fact, yes, have been dinged before for a more minor offense regarding a former player on their team for salary cap circumvention.

And also, Wachtell said that the clippers were often evasive in the discussions. to try to dig up evidence, particularly pointing to Gillian Zucker there, the president of business operations, saying she was not all that forthright in our questions. And in fact, we think that she was not telling the truth in certain instances. So therefore, they sort of suggested that the punishment may be stronger. And in fact, she was suspended for a year, as opposed to Lawrence Frank, who they said was more forthright in answering the questions. He only got six months. So I think it is a severe punishment because of the second offense, but it's also a severe punishment to send a signal to all of the other teams in the NBA

that this is a serious offense and not one that should be repeated. I guess the open question there is, are other teams doing this? Have they done this? Clearly, there's a lot of evidence that the Clippers were doing this, but the same level of scrutiny has not been doled out to other teams. So it is an open question if the Clippers are. were the only team doing this, or if this perhaps is more widespread throughout the NBA? I'm also thinking about possible recourse for season ticket holders,

who certainly pay a lot of money for those tickets, and who now face the prospects of having a less competitive team for the next five years, if not longer. You know, the irony here is that the NBA is actively trying to push against purposeful tanking. they've completely modified their NBA draft rules to try to alleviate the pain of teams putting out a poor product for their fans. And yet the Clippers are now put in a position over a course of several years that not only are their first-run draft picks taken away, but you'd have to imagine that any free agent that was thinking about the Clippers

as a possible destination is going to be looking at kind of a rocky runway for that team. and they may decide that is not the best place to sign. So for sure, Clippers fans, this is a sad day for them as they kind of look forward over the next few years to say, you know what, the chances are a lot higher that we're not going to be very good than we're going to be competitive. At the time that the league has changed its draft rules around to the point where they're saying to fans,

look, we want all of these teams to try to be as competitive as possible. Talk to you soon. Appreciate the insight. Thanks, Alex Sherman. Quick note on the sports front, by the way. CNBC's official NFL 2026 team valuations list drops next week ahead of the season kickoff. You can catch the big reveal next Wednesday, September 9th. It starts on Squawk Box.

I'm sure we'll have something here as well. Plus, we'll speak with Jacksonville, Jaguars owner, Shot Khan, right here on closing bell. We look forward to that exclusive interview as well. We're back in two. All right, 10 to the bell. Back to Christina now for the stocks. She's watching. What's on your list?

Tesla. Those shares, gaining ahead of its cybercab event scheduled today after the bell. Investors are expecting new details after Elon Musk teased, quote, a series of cybercabs in a post on X overnight. Tesla originally debuted the cybercab design almost two years ago. The stock right now up 6% pacing for its best day since the end of June. Shares of Victoria's secret, though, moving the other direction on a revenue miss and just slowing comparable sales growth.

The company still boosted its full-year sales outlook, but you had high expectations heading into this report with the stock up over 50% this year alone. Victoria's Secret now having its worst day since April 2025 shares down 12.5% Scott. All right, Christina, thank you. Christina Parts of Nevelos. Coming up next, what to watch for

when Z-Scalor and Lululemon report earnings in overtime. We'll do that in the market zone, which is coming up. Now in the closing bell market zone, Mike Santoli and Christopher Zook from Kaz's investments are here to break down these crucial moments of the trading day. Two big earnings reports out as well. Seema's watching Z-Scaler, And Gomez taking a look at Lulu Lemon.

Michael, I'll begin with you. Some much-needed rate relief. No surprise, I guess, what stocks are doing as a result. No, for sure, Scott. I mean, rates seeming like they might get on anchored, might keep making new highs, I think it was mostly a pretty good excuse for people to keep their kind of risk budgets, you know, close to the vest for a little while. The scene was set, though, for this little release higher in the indexes when the S&P 500 held that line.

we talked about a couple days ago, did not go back into the summertime range, just enough rotation, you got cyclicals a little bit oversold, and Mag 7 reengaging. This move higher has been largely a narrowing back out of the market to some of the mega-caps. So that's help for now. S&P is still below last week's high, intraday high. So, you know, we're not really in the clear just yet. Also, not dramatic moves in yields at this point. So we're still going to be, to some degree, in suspense about the date over the next week,

what it means for the Fed and all the rest of it. But right now the market is pretty comfortable in this zone with earnings as the big support. And then obviously, you know, maybe you see the Fed not getting hostile and rates being able to stay contained. Is that what you're going to look at in about five minutes or so? Yeah, largely that. We are also, of course, going to dig into the Lulu numbers with a stock picker who covers it. But also we've got Nick Colis, who's got some good thoughts on rates, whether they're a threat and what the Fed, how it might make its next decision. Oh, good stuff.

I'm seeing about four. Look forward to that. That's Mike Santoli. All right, Seema, tell us more about Z-Scaler. So, Scott, the street will want to know if Z-scaler's cybersecurity offerings are seeing increased demand as hacking incidents tied to AI continue to rise. Here's what's interesting, though. Cyber competitors, Paula Alto, Crowdstrike, and Octa have seen their stocks outperformed this year. Z-Scaler has interestingly been left out as down about 17% in 2026. Z-ZKaler's model is a bit different. It protects networks, data, user access, while CrowdStrike, for example, protects devices and workloads identities to hack those internal compromises. Beyond earnings, look for commentary on MNA as we do see more consolidation across the cybersecurity

sector, Scott. All right, team, we appreciate that. Brandon, how about Lulu? Yeah, investors looking for signs the struggling athletic-aware giant can turn things around. Shares are down 42% this year on weak U.S. demand, elevated promotions, and increased competition in the category. Here's what the street is looking for. $1.79 earnings per share on roughly $2.45 billion in $1.4 billion in

revenue. Those estimates have dropped significantly following the company's last report. The bigger focus is on guidance. Lulu already cut its full year outlook last quarter. Analysts now watching to see if management does so again. There's also a leadership transition underway. Heidi O'Neill, taking over as CEO next week. Key question tonight, though, Scott. Can Lulu stabilize U.S. sales, protect margins, clear inventory, and can investors have confidence? Growth is coming back. Retail's been a mixed bag this quarter. All right, Brandon, appreciate that. Thank you. That's Brandon Gomez. See what happens with those earnings reports, of course. Christopher, how do you see these markets here? You know, I like these

markets here to an extent. I think they're very, very expensive, but they've got some good tailwinds, and I also think that you do have strong earnings to be able to point to, but you really got to be selective. Forty percent of the S&P 500 right now is just 10 stocks, basically, so you've really got to be careful where you are, and so we are in a stock pickers market, not just buy everything. What leads you to believe that stocks are, in your words, very, very expensive? Oh, When I look at any valuation metric compared to any of all times, I mean, as an example, price to earnings, price to cash flow, price to EBDA, every aspect of it, when you take out just the Big Ten, and you look at it across the board, we're expensive, and particularly expensive

relative to interest rates. We've got a $5.25, 10-year Treasury, or 30-year Treasury right now. Your yield on stocks right now is expected to be less than four and a half because we're over 21 times earnings. Therefore, you're getting paid much, much less for the risk that's being taken in stocks broadly. there's some nice opportunities, but you've got to be real selective, and so not real comfortable with just the S&P as a whole. I mean, you had me at expensive relative to rates. I suppose I could give you that, but expensive relative to earnings, you lost me there. Well, I mean, there's lots of data to be able to support that. We're at literally the top 10 percentile of basically any valuation metric one wants to look at, whether it be price to sales, price to book, price to earnings.

That historically has not ever really been in this stratosphere. than two periods. 1999, tech bubble, and then obviously 2007 right before we saw the global financial crisis. That doesn't mean that they can't keep going up, but it means that people have to understand the risk that exists, and they might find themselves with a 2002 experience where you see a lot of those top names get hammered.

That obviously means you can take a meat clover to these valuations of so many other stocks across the board. All right, we'll talk to you soon. Appreciate you being with us, Christopher. Thank you. Thank you very much. All right. They're going to ring the bell in a moment. It's been a pretty good day.

as you know, we called it the Waller rally at the very beginning of the show. Fed Governor Christopher Waller, not as hawkish as maybe some had feared, some had anticipated, rates got some relief, and certainly stocks took off. One of the big winners, of course, helping the tech trade, helping software yet again, Snowflake, knocked the cover off the ball, and the stocks are home run today. There's no question about that. Broadcom going in the opposite direction, but that's been affecting the momentum trade. But all in all, Bulls are going to take it because it's going to finish green across the board. I'll see you tomorrow. I'll send it into overtime.