Closing Bell - Closing Bell: New Month, New Records? 6/1/26

Episode Date: June 1, 2026

We kick off the month of June with our all-star panel – iCapital’s Sonali Basak, Invesco’s Brian Levitt and HSBC’s Max Kettner. Plus, Box CEO Aaron Levie weighs in on the big turnaround in software stocks. And, star analyst Oliver Chen tells us what he’s expecting from a big week for retail earnings. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to closing bell. I'm Leslie Picker in for Scott Wapner today. This make or break hour starts with two major developing stories driving the market this Monday. First, AI giant Anthropic takes a major step toward an IPO, filing confidentially to go public in what is one of the most anticipated listings in years. And in Washington, President Trump making some major headlines in an interview with CNBC about the ongoing war in Iran. We've got full team coverage on both of these big stories. We begin in Washington where Amen Javr spoke with the president just a short time ago. Amen. Yeah, Leslie, that's right. I spoke to the president earlier today. I was asking him about this spike in oil prices that we saw earlier today after those reports that the Iranians had broken off negotiations with the U.S. over the war. The president told me he doesn't care if the negotiations are off.

He said that they were dragging on. And he felt ultimately that the United States was stalling for time. Now, I asked the president if he'd spoken to Bibi Netanyahu about the Iranian demand that the United States or that Israel cease its attacks in Lebanon. And what the president said was no, but I'm going to ask him what's going on with Lebanon, been fighting a long time. They've been fighting a long time. And then we saw this post on social media from the president a short time later. He confirmed that after our call, he did talk to Netanyahu. He says, I had a very productive call with Prime Minister Bibi Netanyahu of Israel, and there will be no.

troops going to Beirut and any troops that are on their way have already been turned back. Likewise, through highly placed representatives, I had a very good call with Hisbalah, and they agreed that all shooting will stop, that Israel will not attack them, and they will not attack Israel. So in that short space of time, Leslie, you had the president saying he hadn't talked to Netanyahu, then he did have that phone call. And then on social media, he suggested that the Israelis have agreed to do, in essence, the thing that the Iranians wanted them to do. So after that, he posted on social media that the talks with the Iranians are back on again and proceeding at a very rapid pace.

So where does that leave us as we approach to the end of the day today? I mean, markets were moving on this headline this morning, moved back as they saw the president's response. And now I think what we're waiting for is some confirmation from the Iranian side that they are, in fact, continuing the negotiations. It takes two to negotiate. One side can say the negotiations are on. The other side can say they're off. So if both sides do say the negotiations are on here, I think that would be a bullish signal and we'll see ultimately that settle itself out in the oil market, Leslie. Yeah. In the meantime, as you mentioned, Aman, there's been quite a bit of whiplash in the last three hours or so since your earlier reporting.

We really appreciate you breaking that all down for us. For more on how this is all impacting the market, let's bring in our panel, I capital, Shinali Bassik, Investco's Brian Levitt, and HSBC's, Max Ketner. Shannalia, I'll start with you because we are still seeing Brent crude up about 4.7 percent on these headlines, but the market is up, too. I mean, it feels like, you know, President Trump told Amon, I don't care, you know, what oil prices do, but the market doesn't seem to really care either. Yeah, I would say the market stopped carrying a little while ago when it comes to the geopolitical uncertainty, realizing a couple things. One is that when you look at the absolute basis on how equities perform, right?

inflation is actually kind of a good thing. Relative to other asset classes, it's more detrimental for bonds. So you do still see this movement into equities for one thing. And the other thing is, if you look at the length of time that oil prices have been high, we're not looking at elevated oil prices as long as we did in 2022 and not as high either. We have nowhere near retested the highs even of the cycle. We haven't gotten to $5 at the pump yet on an average basis for broader America. And so there are a few reasons to look at the whole.

holistic picture here and say, okay, it's not even as bad as we've seen in recent times from an elevated energy price perspective. Now, with that said, I do think that the market is discounting some of the issues we might see later this year when we think about input prices. And you saw leaks of that into the ISM data this morning. And Brian, that's what I was going to say. Earnings were so strong in the most recent quarter. We didn't see much of a dent from high oil prices there either, at least on a composite basis. But I think the question among many is if this continues to go on. if there is a resolution, there will take some time for the straight to open and for oil to continue flowing through. And so, you know, how concerned are you that ultimately this may not

be an issue quite yet, but it could turn into one? I'm not overly concerned. I mean, the markets tend to be forward-looking on these things. And what you've seen, even with a little bit of an advance in oil prices today, is most of the major things that investors were concerned about have peaked and gone the better way. And markets are going to trade on whether things are better or worse. And so clearly, oil prices have gotten better from where they were. Inflation expectations have gotten better. Interest rates have come down. So that's a better macro backdrop. And of course, corporate America continues to be strong. The big difference, Charlie mentions 2022. The big difference is when that war started, inflation was already 7% year over year. When this conflict started,

you had a five-year break, even of 2.1%. So it was a very different backdrop. Earnings are good. We've already adjusted the discount rate in terms of where the Fed's going. So, you know, the market's looking beyond it. And Max, I know you have been Max bullish for quite some time. We're coming off an incredible two-month streak for equity markets. I'm just curious if there's anything you see on the horizon that would provide any kind of headwind to the last two months of activity, which has been largely powered by semiconductors. Yeah, not really yet. I think actually when we look under the hood, there are quite some few signs of stress. I'm not. I think. I think, actually, when we look under the hood, I know that, of course, we're going from one all-term high to another on a headline index basis basis

basis for equities. We're going to the cycle tights in credit again. But if we start with credit, look at triple Cs against double Bs. We're still about 140 basis points wider and triple Cs compared to double Bs compared to where we were in February. That is not a credit market that says, oh yeah, I'm going to go all in and I don't care about any sort of credit risk. Equity is the same thing. If you look at things like retail, transport, home builders, you look at the regional banks. They're all flat or down since the war started. So actually what we are seeing is that, yes, on an index level, things are fine, but under the hood, things are being discounted. There are some worries that are absolutely being taken into account of. I would say,

going forward, the one thing that we are worried really is sentiment in positioning. Once we hopefully have a deal in the coming weeks, you know, is there perhaps a risk that we get a very, very broad-based recovery very quickly? All of the stock. pretty much participating in the headline indices, you know, even the laggards, and from there on, really then perhaps positioning, getting a little bit too stretched. I think after that, that is then the time where you can take a couple of chips off the table, but not before that. So maybe a revision to the mean might not be such a good thing. Brian, you wanted to weigh in? Yeah, it makes a great point. I mean, there is a difference between what the broad indices are doing versus components of the market.

The reality is the market was pricing above trend growth, expansion coming into the year, and that's you saw the lowest rated credits, smaller caps, those types of the market doing really well. More recently what this market is telling you is a slowdown. We've all spent $70, $80 at the gas pump. Things start to slow down a little bit. So the performance has shifted more to the higher quality credit to mega cap growth stock. So to me, it's not a question of will these markets go higher. I do believe they will. It's more a question of the leadership. And that's what the market is so focused on with regards to the straight of her moves. And in the meantime, Shanaali, I know that you, in speaking with clients, they've flagged

just this correlation between bonds and equities recently. That's been a concern of theirs. Are they kind of to the point now where they're looking to diversify in other areas? And what are they telling you in terms of what's attractive? Everyone's trying to, right? But how do you really diversify away from this AI trade at this juncture? I would love to say we're facing a market where broadening is on the horizon. We have seen the Russell rise more than the S&P 500, certainly.

But if you look at the midcaps and small caps within the S&P 500, where you see semis and other kind of more inflated areas right now trading at like 100 percentile ranges on forward PEs. You're seeing under 60 percentile for midcaps and under 20 percent for small caps in the S&P 500. So it's telling you that from a market cap perspective, there is a lot being left behind. And the one area that I think is very curiously left behind in this arena where we see generally strong growth, generally strong earnings, robust capital markets, why are financials being left behind in the way that they are? And it is to me a reflection of what you're seeing in the adjustment in the yields curve. You're seeing basically everyone betting on steepeners heading into this year, see a complete reversal of that trade, as well as concerns about that consumer as we're seeing.

But we've seen throughout the better course of the last couple of years now, the K-shaped really prevail, which means that that top end of the K-shaped has propped up the consumer writ large. we don't see that consumer strain bleeding into the financials writ large when it comes to their earning story, which we think will prove itself out again in the second quarter. Yeah, maybe a little bit about credit quality. And, you know, if the consumer has stretched what that means for kind of the private credit exposure and the alternatives space as well. Max, you mentioned just this idea that the narrow leadership has kind of been a good thing. If we did start to see a broad-based rebound, would that be a sell signal to you? No, no, absolutely not.

I think that would take at least a couple of weeks. I think, in fact, what we have seen so far as you guys were talking about the reporting season, Q1 reporting season was in terms of the surprise factors, in terms of the B-trades, really the best ones since reopening since the beginning of 2021. Now, what's lacked so far is not the broad-based fundamental performance. It's not the broad-based earnings performance. So far, it's the price performance that's lacked. So to me, I think really the next step is that people are trusting that the data is not just good

because of some sort of inventory build going into this Middle East conflict. But it is really in the truest form, some sort of strength in the US going on. Yes, we've got a K-shaped economy. We've got it dominated by the large caps and by the mega-caps. We've got it dominated by the higher-income households. But they are really carrying this economy. And we see that in credit card data in weekly retail sales and all the hard data, all the high-frequency hard data as well,

All of those really have been picking up since December last year already, and that has not changed in the last three months. So I do think a bit of broadening really going into some of those cyclical, rate-sensitive sectors, like the regional banks, like home builders, that at the moment really makes a lot of sense. All right, everybody stick with me. We have some big news today on the IPO front as Anthropic filing confidentially to go public.

Let's get to Kate Rune with the latest on this story, Kate. Hey, Leslie. So Anthropic does appear to be pulling ahead. of rival OpenAI here and might be the first AI lab to go public today, Anthropic, filing that key paperwork with the SEC. And just two weeks ago, we reported that Open AI was doing the same. They were preparing to file their own prospectus and looking to list as soon as September. That was according to a source familiar. No update, Leslie, on if that has officially been submitted. But investors in both AI companies tell me that there is pressure to be the first out of the gates here,

frame their financials to Wall Street and some of the losses around these companies. It is a very capital-intensive business as they spend big on compute. Anthropic now has an almost trillion-dollar valuation after closing that major $65 billion fund raise last week. Also won't have paid Open AI in private markets on valuation, which if you look at Open AI, it's about an $850 billion price tag. And then we did get a peek into the financials with that fundraise $47 billion annual run rate for revenue. I have heard from sources that the company is on track to hit its first profitable quarter in Q2, guys. Kate, you know what was interesting when Faber, when David Faber asked Sam Altman about just the race to go public first, Sam Altman kind of brushed that off. He said there's not a race for that, I guess implying there are much more important races that he is kind of undergoing in terms of the competitive space. They're at least important to him. And he says going public is a financing event. We'll do it when it makes sense. But there is, I mean, so much of what they do is so capital intensive, that that financing event is more than just your average run-of-the-mill

IPO, right? I mean, they need the financing event to actually go well. It's a great observation. Leslie, I thought that was, first of all, a very diplomatic answer by Sam Altman, to say, you know, everybody can win here. We know behind the scenes, these companies are fiercely competitive. But when you look at the financing, one thing that stood out, and investors have talked about this, the CFO has talked about this for OpenAI, the ability to be public and actually tap debt markets because of how much capital. they need to do those data center projects, as we saw David Faber and Sam Altman out there today. They need access to even more capital. It's unclear if the private markets are tapped

out at this point. But the numbers that we're talking about, it does make a lot more sense for them to be public, have that financial profile and be able to use debt as part of this. But we heard Sam Altman say, you know, no lack of demand. They're doubling down on that and spending big. But it calls into question what their S-1 looks like. I know you and I will be very interested in that one when it comes out. I know. We've got at least a month and a half to wait. We'll do our best to be patient there, Kate. Thank you so much. Kate Rooney for us. So, Janali, you know, you and I have covered IPOs together in the past. This is so different in terms of what the supply means for the markets and what it means for just retail investors, index providers, the plumbing of the markets, SPVs, ETFs. I mean, there's so much at stake here for these to go well. What are you hearing from clients in terms of their expectations and I guess just kind of any insights in terms of demand for these prospective listings? Yes, we have a lot of clients who are exposed to all three companies and then some after, right?

Think Databricks, which is the next in line. There is a lot of nervousness insofar as understanding how these lockups end up working out and how the post trades go. There's also a lot of questions about, okay, fine, there's index inclusion, but what about investor behavior? first quarter, second quarter, because to the point that that was just made by Kate, these are companies that require a lot of capital. That's not going to stop just because they go public. In fact, the fact that OpenAI and Anthropic have both raised debt capital and private markets the way they have has been very promising because it shows you that the market for, quote-unquote,

venture debt is still alive and well, which we would expect to still be the case after going public. They will tap debt markets as well. draws the question, how comfortable will investors be with this generation of tech giants that burn this much money, that are not free cash flow giants as we've seen of the Magnificent Seven, largely speaking of the last several years? And then finally, I've got to say the questions around token economics are drastic at this point, this question of how long will you see this usage-based pricing dynamic continue or give way quickly to seat-based pricing from those. who have power to demand it. This is a major looming question because it just does tie directly to the fundamentals of how the economics work behind these companies. Yeah. And I guess there's also a question, Brian, about just price sensitivity. They're, you know, SpaceX is looking to have 30% of its allocation. Go to retail investors, for example. They just amended their filing today to say that 5% would go for a directed share program of, you know, employees and friends and family of office.

officers and so forth. Retail investors are known to be less price sensitive. Index funds, obviously, less price sensitive, have to be by nature. So, you know, what does that tell you about the potential volatility for a name like SpaceX? And if that is kind of the model for the other mega IPOs that we see down the road? Yeah, there's an irony to this because you have people on either side of it. You have some who can't wait to be a part of it. You have others telling me this is the sign that the end is near. And so what I try to do is calm some of the concerns around the end is near. This is the April 2000 moment. I mean, the fundamentals of this market are sound. So I do try to ease concerned about it. I don't think you're going to see a different level of volatility in the

aggregate market as a result of this. I think these markets, well, there may be some noise in there. these markets will ultimately continue to trade on the fundamentals and what continues to be a good earnings backdrop. Leslie, just real quick on this, this is seen as one of those Facebook type moments, Amazon-type moments, once-in-a-lifetime access to companies that will fuel the future of a new technology economy at the end of the day. So even if there is nervousness on the front end as it pertains to the listing and maybe the first couple of quarters, there's a lot of hope that is really planted on the sidelines.

on what these companies will mean in terms of how they fuel the AI race moving forward. Yeah, I do kind of wonder if Anthropic does something similar to what Google did, kind of back in the day where it was more of a, you know, tried to be creative with things and make the IPO more of a do-good process for everybody. It'll be interesting to see kind of what creativity they bring to that process. But I wouldn't be surprised if a company like Anthropic tried to do that. And to your point, I mean, the Facebook IPO didn't go great. Look at us now.

Google wasn't seen as the barometer of, you know, changing the way IPOs worked. So it was just a point in time. And obviously, these companies have come a long way since then. Shanali, Brian, and Max, thank you so much. Appreciate it. Sticking with the IPO race, our David Faber just caught up with OpenAI CEO, Sam Altman. He joins us now with some of the highlights. Hi, David.

Hey, yeah, I heard you and Kate talking about me, Leslie. So I figured, why not? We're set up. I'll just come back on television. Come on TV. Yeah. I mean, you wrapped up a lot of what Altman told me. Of course, I did not ask him directly, have you filed or not. But certainly we know about the race that Open AI is in with Anthropic to some extent, although Altman doesn't think they're in a race to go public. Take a listen. I think there is a race to deliver the best technology and build the best business. But, you know, going public is a financing event. And I don't think that's one that we're focused on the timing of. We'll do it and we think it makes sense. But you will do it as well.

I assume we'll do it someday. Of course, we talked about a lot of other things other than just the possibility. And at what point, Open AI will become a public company, including what has been a story of late about companies that are using an enormous amount of compute, getting billed for it, of course, usage charges going through the roof, but not certain as to what is being put to the best use and how that is actually going to impact those companies in terms of their view of AI. I asked Altman about it.

Here was his answer. I think this is the most fair criticism right now of AI, which is you hear companies saying, I am spending a ton of money on AI. And I know some great stuff is happening, but I know there's a ton of waste. And, you know, how long do we have to wait for it to really show up in revenue and how long they have to wait to really get the costs under control? And I assume that the industry will figure that out pretty quickly. But I think that is a fair issue. You do.

Yeah. Quickly being... I would bet that by another year... or two from now, there is a much better rationalization of companies spend relative to outcomes. Of course, Leslie, it was a long-ranging interview that we had not that long. Of course, I would have rather had much longer, but as long as we could get from Mr. Rotten plus some time that he probably, as people didn't want to give. And we hit a lot of the different areas. Of course, we are here in Staling Township in Michigan at the site of this data center for Stargate,

one of many around the country that ultimately will be filled up by servers that will be used by OpenAI customers being put together, of course, by Oracle. And as you well know, Leslie, the numbers themselves continue to stagger me, 16 billion just to build it, but then another 30 plus billion to put everything in it. And you do still have the key question, of course, which we started off talking about as well, as will there be a return on just what's being invested here, not to mention what's being invested across the industry, Les me. Yeah, the numbers are staggering and so important to be there in person.

We appreciate you bringing us so many amazing interviews today, as well as the pictures live on the ground there as well. David Faber, appreciate it. We are just getting started up next software rallying again today. Box CEO, Aaron Levy, standing by with his take on the sector turnaround. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. We're back on closing bell. Box bouncing today as software appears to find some firm footing.

Let's get to Dear Toposa live with Box CEO, Aaron Levy. D? Leslie, thank you. Aaron, hello. And that is a great place to start. How firm exactly is this footing? In other words, how do investors know that this is sustainable versus software, just clearing a lower bar here? That is above my pay grade. So I won't be able to talk about the trading dynamics of of the street right now. But what I can say is, you know, last week I think was great evidence from a variety of earnings calls, really across security, data platforms, systems of record that all showed that these businesses are extremely healthy right now. We had a fantastic

Q1 we just reported and we're seeing momentum really across all segments, all industries, and geographies. And the common trend from our customer base that we're seeing, and I think it's true, you know, not to speak of, you know, too much for sales force. Octa, Mongo, and others is, and Snowflake is, enterprises need to be able to have core systems where their data and their workflows can go and be managed and secured and then connect it up to all of the AI agents that they're using. So I think you're seeing a lot of resilience in these platforms that's showing up in the Q1 numbers and I think obviously reflected in, you know, much of the rebound in conversation that we're now seeing over the past couple of days.

Right, though we should note that rebound is somewhat uneven, some of the names. mentioned they've clawed back gains entirely or losses entirely this year. Some of them haven't. But Aaron, I want to ask you about something Sam Altman said on our air not too long ago to David Faber. He talked about this AI sticker shock that a lot of companies are now experiencing, blowing through their budgets, hitting margins. He said that it was the most fair criticism of AI so far and that he expects in another year or two from now, there will be a much better rationalization of spend versus outcomes. What are you seeing and how do we actually get there? Yeah, I think we're in the wave right now, which is this is such a brand new technology, and each company has to go and figure out in their own unique environment, where is the upside

that you can get with AI? And to some extent, you can quickly determine that set of upside if you have lots of people trying the tools, using the technology, experimenting, and effectively, you know, sort of letting a thousand flowers bloom on these use cases. But at the end of that journey, you do need to be a bit more top-down and figure out where are the parts of the business that are seeing differentiated and disproportionate outcomes with the power of AI. And that's not necessarily going to be every use case that you saw in the kind of democratization period. So I think we're in the wave right now, which is AI is being sort of broadly adopted by end users in the organization, starting with chatbots, moving now to more agentic systems. There's still a lot of work to be done

to actually implement these AI agents effectively in a number of workflows in the organization. And then in that process, companies are figuring out where is the best ROI being delivered. And then I think the next phase after that is you'll see much more kind of targeted approaches, which is frontier intelligence

that is the most expensive per token will go into the highest impact areas where that intelligence represents the most amount of upside in a workflow. And companies might peel off other use cases that are sort of, satisfied by either cheaper models or more efficient models and use those in other parts of the workflows. So I think we're going to just be in this evolution for the next couple of years.

What it does point to, and this is super important, it actually really points to making sure then you have separation between where you manage your data and where you manage your workflows from where you're getting your intelligence, because ultimately you want to be able to mix and match then the best intelligence for the job across your data and across your workflows. So we think this actually gives a natural edge to software platforms that are the place where you manage that data, you manage the context for agents, and then you can bring in different agents and different forms of intelligence into that data depending on which workflow you're trying to automate and at what cost profile you're looking to deliver. Aaron, you know, as you say, a lot of companies have

just let a thousand flowers boom, and with agents doing more and more, that has been extremely expensive. What are you seeing from your customers? Is it harder to look for ROI when you're spending so much, when do we start seeing companies pull back? Is that the case? You said they're going to go to lower cost models, but how does that evolve? You said a few years? Do you think companies are already starting to think about pulling back? I think pulling back, we have to caveat pulling back appropriately. I would probably predict that the spend on intelligence in the form of AI models and inference is only going up. And it's going to just continue to increase going forward as far as we can tell. What will happen, though, is on a per work.

basis, you over time want each workflow that you're automating to get cheaper and cheaper as you get more compute efficiency, as AI model progress improves, as you optimize the workflow to better use agents with your data. And so what will happen is, I think companies generally at a macro level are going to be spending more and more on AI over time. But on each individual workflow, once you can solve that individual problem, you should be able to drive down the cost. Now, the reason why expenses are still growing, even on an individual task basis, is only recently did we have AI models that could actually go and really satisfy a lot of these mission-critical workflows.

So AI coding being maybe the most representative example, you're going to see spend on AI coding only increase for at least the foreseeable future because we're seeing the performance gains that we're getting out of these model upgrades. So I wouldn't expect the cost of coding to go down anytime soon because we still have more performance gains to get from these latest frontier models. But you might do something like data classification as an example. We have a lot of customers that are trying to classify documents and better secure them. That over time might get more and more cost effective because we are able to then go and ride on more efficient models over time as those improved. So I think you're going to

stratify the use cases, but the spend on AI is certainly only going to go up from here. Right. Maybe you cut down on things like token maxing, right? Aaron, thank you so much. First of Talking maxing was, I think, a very narrowly applied trend in about probably less than a lot of money. Took up a lot of tokens, though. Okay, Aaron, always great to talk to you. Talk to you again soon. Leslie, back over to you. Great.

Thank you, Deerja. Great conversation. Thank you, Aaron. Still ahead. Your retail setup. It's a major week for that sector. We'll hear from top analyst Oliver Chen with the key names he's watching. Closing Bell will be right back.

We're back on the bell. some key retail earnings reports coming our way this week. Here to share his latest playbook is TD Cowan's senior research analyst Oliver Chen. Oliver, thanks for being here. My pleasure. Live in person. So what should we be expecting? What's your read on this quarter's earnings?

Yeah, the consumer is fundamentally strong but sentimentally weak. So consumers continue to look for value. They want convenience and they want a little magic. Our top idea is Walmart. We like it at this price. Walmart's also a big beneficiary of AI. as well. Their Sparky assistant is driving bigger purchase sizes as well as a lot of mobile users are using it. So what we're thinking, Leslie, is intensification of bifurcation being an issue in

the case-shaped economy. So we like retailers that offer you exceptional value, such as Walmart and Costco. And I was just with Cartier as well. We love what's happening at the luxury side, somewhat selectively. That's working as well, too. When you say value and consumers wanting value, Is that in the form of discounts and sales? Is that in the form of trade downs, maybe to places like Walmarts? Are those the places that are the best poised to prosper in this environment? We're seeing a little bit of everything in terms of consumers strategically trading up and trading down where they can. They want to be bougie with the budget.

So consumers are looking for deals. That's certainly happening with the Kirkland brand at Costco. Excellent. And it's also a big part of the business model at Costco and Walmart is everyday low prices and members being happy. So all of this is working in conjunction. And you need a flywheel, but you also need extremely fast delivery, and you need product that's relevant for Generation A and Z. Beauty is also a brighter sector. Beauty in many ways is an essential good. We like Ulta. Ultas doing a great job there too. So lots of cross currents. And then as I underscore AI, retail actually doesn't need frontier models.

It doesn't need compute. It just needs more implementation. And we're seeing that happening. And we're seeing that happen at Walmart where there are results coming through in terms of bigger check sizes, more frequency, and getting the right stuff at the right place and the right time. But the consumer is bifurcated, so a much stronger high end and a middle and lower impacted by gas and consumer confidence, which has been highly volatile. Yeah, I was going to ask about kind of the impact of gas. We heard Bank of America CEO Brian Moynihan speak last week at the Bernstein Strategic Ideas Conference, And he said that in May, consumer spending was up 5%.

And that kind of matched the pace from April as well. So it feels like on aggregate, consumers are still spending a lot. And obviously higher gas prices filter through into that, but they are still employed. The labor market is still very strong. And I'm just curious whether people are being more choicful as it pertains to gas spending or if it hasn't had as much of an impact as it may have in previous cycles. Yeah, Leslie, we're excited to have Costco. at our conference tomorrow.

So they're seeing a consumer that's doing a little bit of both, buying some premium meat, but nobody loves the $1.50 hot dog too. So a little bit of both, but gas is definitely causing strain on the middle and lower income consumer. And consumers are managing their pocketbook and their own working capital and looking to save where they can. That being said, don't bet against the U.S. consumer. As we look globally of the U.S. consumer,

the wealth effect, the equity markets, the multi-year gains, in the technology innovation, there's lots of runway for luxury companies in the U.S. And the U.S. is growing faster than China. So there's a lot happening that continues to drive this momentum at the higher end, the wealth effect. So a little bit of both, but don't bet against the U.S. consumer because the consumer has money and is spending.

Basically, there's savings on the sidelines, $800, a billion to a trillion, unemployment's low at 4.3%. But the big watchout here is real wage growth. So for the first time, inflation trended at 3.8 and nominal wage worth was 3.6, that's something that we need to keep on watching. Also, consumers don't really feel great. They're spending, but they don't feel great. So we have this situation with a fundamentally strong consumer, quite a sentimentally weak and volatile consumer. Yeah, which is a trend we've seen for quite a while, too, just that soft data versus hard data component. Oliver, thank you so much.

My pleasure. Been here live from Post-Ni. Appreciate it. Up next, we are trying to be here. Tracking the biggest movers as we head into the close. We're back after this quick break. 13 minutes until the closing bell. Let's get back to Christina Pardsonavis for a look at the key stocks to watch today. Christina. Hi, Leslie.

Well, let's start with Humana shares because they're up roughly about six, almost 7% up to the health insure reaffirmed full-year guidance in an early morning 8K filing. So just remember, Humana missed first quarter profit. It's just in late April, hurt by lower Medicare Advantage's star ratings for 2026. So standing by that guidance suggests that company. doesn't see those headwinds as necessarily getting worse from here, so that's why shares are up. Shares of Taylor Morrison home surging, roughly 22% after Berkshire Hathaway, agreed to acquire the company for $6.8 billion. Brixter's CEO, Greg A. Abel, calling Taylor Morrison a

best-in-class home builder and adding it to Berkstra's portfolio will actually help more Americans buy homes, according to him. And science application international jumping roughly 10% after posting a profit and revenue beat for the quarter. The engineering and IT services contractor says work with the defense sector and AI integration has been a main driver against economic uncertainty. All right, Christina. Thank you. Up next, we'll run you through what to watch when HPE reports at the top of the hour.

The market zone is next. We are now in the closing bell market zone. Mike Santoli and Farley as Katie Stockton are here to break down these crucial moments of the trading day. Plus, Oliver Renick is standing by live from CBO Global Markets in Chicago. Christina Farton-Avelace has a look at what to expect from HPE after the bell, and Contessa Brewer is tracking the bounce in MGM. Mike, let's start with you.

Yeah, Leslie, it's pretty hard to argue with the market's ability to keep making modest upside progress at least, even when it's very uneven below the surface. Today's another one of those days with this modest gain in the S&P 500. We're now up 20% off the intraday lows of March 30th. Lots of the leadership groups in that rally seem like, maybe they're a little bit played out or time to hesitate, but it's not really destabilizing the whole tape just yet. And I would point out, you know, this huge surge in software.

I think a lot of folks would have imagined that would happen with a sharp sell-off in semis. Those have been the opposite ends of the poll. And it hasn't really been the case because semis are kind of a give and take story today. So as long as that manages to stay the case, it's hard to necessarily say that this is over with, even though it feels as if, as I said, a lot of parts of the. market feels like they've already been pretty well exploited in the short term. Yeah, only two sectors in the green today, tech and energy. Mike, what's coming up on overtime? Well, we're going to have a look obviously at all of this. We're going to get deeper into the AI trade as we heard a lot

of commentary around that. Dan Niles is going to join us for that among many other things, including a check-in on ASCO for the latest in the biotech news. All right. Looking forward to it. Mike Santoli. Thanks so much. Let's get to Oliver Renick. with a look at the big move in discretionary stocks today. Second to biggest laggard, we're seeing. That's right, Leslie. The broad market's shrugging off a spike in oil prices today, but consumer stocks definitely are not,

after President Trump said he doesn't care if negotiations with Iran are over. Discretionary and staple stocks are two of the worst performing sectors down as much as 2%. And options flows are bearish in both, with more than six times as many puts, trading in calls in XLY, and twice. as many in XLP. These are not the deepest options markets, which is why one very sizable trade stood

out in XLY, a $4.5 million purchase of 15,110 strike puts that expire September 18th, a bet that discretionary stocks will fall another 8.5% from here. Perhaps the counterpoint is that options flows around energy products like crude oil futures, the USOETF, and XLE energy stocks are not obviously bullish with about as many puts, bought as calls on crude futures, and more puts trading in the USO ETF than calls, Leslie. Interesting. Oliver, thank you so much. Let's send it over to Christina Parts-Nevelace for a look at what to expect from HPE's results. Christina.

Well, Sherr is hit an all-time high earlier today, and they're up on two things. First, a new server powered by NVIDIA's Vera Chip, and then a wave of bullish sentiment following blowout results from competitors Dell and Lenovo. Both flagged strong AI and traditional server demand, with Adele specifically calling out CPU acceleration from Magentic AI and broader enterprise compute momentum. That is a good setup for HPE heading into the earnings this evening. But the bar have to say is high, so watch for a few things. How server demand is holding up both AI and traditional. What is management seeing about supply chain? Last quarter, they flag triple digit DRAM and nan

price increases that hit margins. And then on networking, any updates on the Juniper integration. And then finally, guidance. The company previously called for revenue growth roughly 17 to 22%. The street is definitely going to want to see a number higher than that. Absolutely, Christina. Thank you. Let's end it over to Contessa for a look at this bounce in MGM on some deal news this Monday. Yeah, MGM is up more than 16% right now. Barry Dillers People Incorporated offering $18 billion to buy MGM at 4830 per share. As you can see now, the shares are at 5078, so over that. But it was, it was, the offer is 10% premium to its last closing price. Diller's company previously called IAC has been building a stake in MGM since 2020.

Now it holds more than 26%. Diller sits on MGM's corporate board, and he wrote in his letter to fellow directors that MGM's assets are undervalued, and he doesn't think it can be fixed in the public market. He's also called MGM's management team superb. Diller says the acquisition would be funded with cash on hand and other financing, And if this were to be approved, people Inc. would own a little more than 50% for control over the business, but include minority ownership by other investors. For instance, maybe one of them would be Keith Meister. The hedge fund manager also has a board seat after his fund, Corvex Management, bought a big stake in MGM in 2019. Look, it must be the season of billionaires in Blackjack, though, because last Thursday we got the announcement about Tillman Fertita's offer for Caesars at $17.6 billion.

standard general founder Sue Kim is buying valleys. A leading gaming executive told me this spring to expect casino acquisitions and take private offers. In fact, Sue Kim said to me today, you know what? It just shows that we think there's more value in our businesses than what the market's pricing in. The public markets have been meh. And we're ready to eat our own desserts. So there you have it. MGM, as you can see, up high, Penn Entertainment, up 7%. There's been speculation about what could be other acquisitions to come, Leslie, because those gaming share prices have been so pressured. Yeah, I was going to say there must be something in the water at these casinos

to bring all these billionaires to the forefront of these deal talks. Contessa, thank you. As we head toward the bells, let's bring in fairly Tadie Stockton. Katie, tremendous performance in the equity markets over the last two months. To you, does that signal more upside from here or that a pullback could be imminent? It's kind of both good and bad. We've had nine consecutive up weeks for the S&P 500, and naturally that does reflect positive momentum. Momentum is positive now, short-term, intermediate term, long-term. And we saw a series of flag pattern breakouts. Those are

essentially sharp run-ups, followed by brief consolidation phases that are then resolved higher. The most recent and obvious example perhaps is Dell. These run-ups are really explosive. Unfortunately, that also means they tend to end in dramatic fashion, but we don't have any indications yet. Any confirmed cell signals from our overbought or sold metrics to suggest that this is over. At Mike's point about the semis versus the software trade,

we are seeing that rotation unfold behind the scenes. So if you look at the ratios as opposed to just the semis on the surface, which still look very strong, they have lost a little relative strength versus software. So that is something that could end up being meaningful right now. We're just seeing it as a benefit to software as opposed to something that's detracting from the momentum behind semis, but definitely something to keep an eye on. And in this environment, we're just watching things like the 20-day moving average, fourth-term moving averages that are really attuned to the volatility,

and they will be rolling over in a way. ultimately that should help us avoid a significant back. Yeah, a really good point about that ratio of semiconductors to software. Katie, thank you so much for being here on this Monday. We're looking at the doubt of about 1%, the SBF about a quarter of 1%. That does it. So, Trulgin, the election over into overtime with Tulsa Lee and Nightstand Soli.