Closing Bell - Closing Bell: One-And-Done Dip? 10/15/25

Episode Date: October 15, 2025

Was Friday’s air pocket a one-and-done dip or did it open the way for a more choppy phase of this three-year-old bull market? We discuss with NewEdge Wealth’s Cameron Dawson, Ned Davis’ Ed Clissold and Metlife’s Drew Matus. Plus, former Federal Reserve Vice Chairman Richard Clarida tells us what he expects from the Fed as we head into the end of the year. And, we run you through what to watch when United Airlines reports in Overtime.  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 Mike Santoli, in for Scott Wapner. This make-a-break hour begins with another midday fade, followed by another partial bounce. The index is laboring for a second straight day to hold an early rally and extend Monday's sharp rebound as confrontational trade rhetoric and ambiguous Fed speak flies. The S&P 500, it dropped as much as 1.6% from its early midday high before this partial recovery. You now see it up about half of 1%. The Russell 2000 remains an outperformer, thanks in large part to some of its high-velocity

speculative members, though that index is likewise well below its intraday peak. Semis have been a bright spot all day, of course, on more AI investment news. You see AMD up 9% on the day, though bank stocks, they're mixed. They're actually tilting a little more to the positive side, aside from Goldman Sachs after across the board strong results from those big Wall Street players. And Bitcoin, it remains a bit. heavy at some point today trading back toward its low from Friday's flash correction, which takes us to our talk of the tape. Was Friday's air pocket a one-and-done dip or did it open the way

for a more choppy phase of this three-year bold market? Let's ask New Edge wealth chief investment officer Cameron Dawson. Cameron, good to see you here. Good to see you. So let's do some tape reading, I guess. How are we thinking about this? We had this unusually calm, steady climb toward all-time highs. We finally get barely a 3% pullback. And now the market is kind of trading in that range, indecisive? Yeah, we've been stuck just within that range. And I think Friday was a bit of a wake-up call as to how much leverage there was built up in certain pockets of the market.

So certainly within Bitcoin, but as well as within the speculative high beta stocks, you certainly saw big, huge downside moves. But you're still in an environment where you have a positioning chase that we think could continue on. You're just in the 74th percentile of overall that Dota Bank consolidated positioning. You have earnings that are coming in pretty strong. and you have earnings estimates that continue to rise. Liquidity still appears to remain abundant.

Maybe Bitcoin is possibly calling that into question. So it means that possibly we could continue this drift higher, but it's not necessarily a straight lineup. Yes, and it's interesting because universally people would say, yep, we should lean positive in the fourth quarter. All of the patterns, all of the seasonal tendencies would tell you that's the case. And yes, positioning is not maxed out. And almost everybody said, but we could get some volatility and some

downside action. I guess the big question is, has anything that happened changed the character of this market? I see the VIX is holding above 20. That could be an overreaction to a short-term move, or it could be the market bracing for something else. Yeah, and I think we've been asking the question was September being so very strong, kind of against the seasonal odds, was that somewhat of a pull forward of everybody effectively saying, oh, I'll buy any weakness in September because there's going to be a big chase through the fourth quarter. But I think it comes down to something we think fairly simple, which is that when we get new headlines across the tape, do we have that challenge the current earnings consensus? Does trade headlines challenge us to make us revise

our estimates in any way? And if the answer is no, it means that it likely is something to be faded. So we've been operating under this simple rule is that if the 12-month forward earning estimate continues to make new highs, the S&P 500 probably will continue to make new highs as well. How important is it what is driving the forward estimates higher? I mean, just in terms of where you would want to look within the index. Yeah, I think it is incredibly important because we talk a lot about the K-shaped economy when it comes to the consumer within the U.S., but there's very much a K-shaped that's happening within the overall equity market, which is that what's driving the earnings

revisions hires coming from this small handful of AI names plus the banks. Those two areas have been very strong. But you look at this rally within something like small caps, and you're actually still cutting estimate revision. So small caps have risen by 45% since Liberation Day. we've actually cut earnings estimates for 25 and 26 by 10% since Liberation Day. So the small cap rally isn't necessarily anything based on fundamentals. It's just probably more something on positioning.

Right, which would point to, you know, kind of the lower quality tier of the market that has in this latest phase taken flight. Yeah, and if we wanted any evidence for why this is an abundant liquidity environment, we'd say look at the junk, look at the high beta, look at the more speculative parts of the market. Clearly there's this appetite for risk. And so if those things start to fade, it could be ushering in potentially a new leadership phase of this market. We would think that at the end of the day, quality over the long-term cycle does win out. You typically see these big low-quality rallies that tend to reverse themselves.

But high beta has held in a heck of a lot stronger than we were expecting, at least in the last month, given how strong it was coming off of the lows. Exactly. So it's not as if we're coming out of a trough for growth scare. So it's a little bit odd. I guarantee, as you make the rounds with clients, they want to know your take on an AI bubble in the making, an AI bubble that's here. Is it irrelevant to talk in bubble terms? Well, we think that you can have a bubble in earnings just as much as you can have a bubble in valuations. And I think that's an important point, because if you look at some of the valuations of the AI-related names,

not necessarily those quantum natives, but just our kind of classic Mag 7 AI names, they're not necessarily in bubble valuations. However, they have had super normal earnings growth. So I think the biggest question, 2026, is the CAPEX is set to slow. We all know this. It's the law of large numbers. Will the market care about that CAPEX growth rate slowing, that second derivative slowing? And will that cause people to kind of reassess this up into the right kind of super normal trajectory of extrapolating huge earnings growth for all of these players?

Right. So, InVIDIA, arguably, in retrospect, maybe you seem to have been over-earning right now, and it's only one way it can go. We should not forget that semiconductors at the end of the day are one of the most cyclical industries in the U.S. We are in a super cycle, which is fantastic, but super cycles do eventually end. The question is when.

And being early is the equivalent of being late. For sure. Cameron, stick here. Let's send it over to Leslie Picker over here for a roundup of today's big bank results and the reactions. Les. Yeah, Mike. Clean sweep, top and bottom line beats for all six large U.S. banks. hasn't happened in five quarters, but most executives noted the uncertainties out there. We guys are just discussing, particularly as it pertains to rates and tariffs, and they note

the need to be prudent with risk management. However, most banks actually took their provisions down during the quarter, meaning they're expecting less future loan losses. Morgan Stanley reporting zero dollars worth of provisions for loan losses in the quarter. BFA was part of the syndicated loans to the now bankrupt auto supplier first brands. The firm reserved for that exposure in the quarter, and CEO Brian Moynihan seemed pretty confident about the rest of the book. When a deal goes up in the market, we actually look around and say, is there anything that we can see? And so we feel very good about our credit quality.

But I think for the investors out there, for the regulated banking sector, there's extreme reviews in their portfolios as part of all the regulatory process. But half the asset classes of all different asset classes are outside the banking system. So that's a different question. Moynihan said he is not worried about the loans they make to the non-bank financials, but noted there were a lot of borrowers in that category that they don't do business with, but could, Mike. So kind of reading between the lines there about where he sees the cockroaches and how he is utilizing his own spray.

It is fascinating on one score, which is for a decade and a half, the CEOs of big banks have said, we want less regulation. And now they're saying, hey, we're regulated. You don't have to worry so much about our book. And by the way, all those non-regulated entities, that might be where the cockroaches are running around. I mean, whether that's true or not, it's an interesting case. Well, it's interesting, especially because the two bankruptcies that have gotten so much media attention lately really had very limited exposure from private credit. They had a lot of exposure to the syndicated loan environment.

And so, you know, you saw that with J.P. Morgan's results yesterday. Bank of America had some exposure as well, I mean, literally drops in the bucket for all. either of those two banks. It's not, you know, something that would move the needle at all. But, you know, as we think about kind of where the risk is and think about whether this is idiosyncratic or whether this is a private credit issue, whether this is a traditional banking issue, it's important to note kind of who was exposed now that we've seen the documents. And the big banks, of course, on the consumer side, likewise, see very little to be too concerned about incrementally.

Yeah, and we'll continue to get more regional banks throughout the rest of the week, too, to add to that base case. But so far, very muted environment as it pertains to credit issues. All right. Leslie, thank you. Let's now bring in Ned Davis's Ed Clisshold and MetLife investments, Drew Mattis, and of course New Edge, Welts, Cameron Dawson, still with us. And, Drew, let me start with you here about your read of the macro. I think we have an interesting situation here where investors are questioning, oh, do we pay attention to the GDP tracking numbers, which are reassuring or the weak jobs numbers? Do we pay attention to this anecdotal, you know, credit blowups or corporate credit spreads that seem okay?

So where do you come down? I mean, I think you have to look at what data you can get, and what data you can get is suggesting the labor market's not in the greatest shape. And eventually that'll play out into the rest of the economy, right? If you want to know where the U.S. economy is going, history has always shown that you look to the U.S. consumer. And if the consumer's worried, they're going to stop spending. and if they stop spending, then a lot of the assumptions people are making about how things can continue are going to be shown to be wrong. And, Ed, as you assess where we are in the bull market and how it is sending signals about the macro,

what are you reading into it, in terms of what the leadership profile is, you know, what parts of the market are performing? I think there's two main things going on right now, Michael. of strange bedfellows, but I think it makes sense considering the macro environment. One is that growth continues to be value, and particularly amongst large caps, this has to do with the AI buildout and the fact that growth elsewhere is so starved. Only 8% of stocks in the S&P 500 are posting sales growth about 15%. At only one time in history has been lower than that, and that was during the financial crisis. So if growth is so hard to come by, you're going to look for growth. Now, the

other side is kind of the opposite corner of that style box metric, which is small caps are doing pretty well here too. That seems to be more of a junk rally. I agree with what Cameron was saying earlier. A lot of this has to do with the Fed probably doing a couple more rate hikes and maybe the market was looking for. But the fundamentals of small caps aren't quite as strong. You've seen earnings divisions come down. If you look at profit margins among small caps have come down. So this is more of a risk appetite increasing toward the end of the year as maybe a lot of managers are behind the S&P trying to play catch up. Probably the longer term view is that if you're in a growth-starved environment, focus on growth. But this is overall pretty healthy for an ongoing

bull market. And, you know, Drew, if you say that ultimately the economy will track toward what consumers are doing. And we have an absence of data on retail sales, obviously on jobs. The beige book came out this afternoon. And of course, that's kind of aggregated anecdote. But it suggested the market, the economy is kind of just idling, I guess, or holding steady at this point. What does it mean for the Fed and what the Fed can do for the parts of the economy that are not really performing that well? Well, so first of all, we can all stop paying attention to inflation because the Fed doesn't care. They know inflation is going to be above their target. They've accepted it and, you know, they can move on from there. So, you know, that divorce is

finalized. What it means that is that if you're going to have a relatively higher inflation, you need to have the growth to go along with it, right? Because the worst scenario is a low growth, higher inflation environment. So the Fed's going to go for option two, which is a higher growth, higher inflation environment because those are the two options they have available and the second option is a lot less bad. So if that's going to be the environment looking forward, what's the explanation for why longer term treasury yields have been so tame? Because no one cares about the deficit. You know, the deficit gets attention. People love to talk about it. But the reality of it is no one cares. And until someone actually cares or until there's a reason to care,

then it's not going to go anywhere. If we see long-term inflation expectations, what we're talking about is two and a half to three. We're not talking about five. So there's no real reason for yields to move significantly higher. But it is the reason why we're having trouble pushing yields or pulling yields lower despite all the expectations for Fed rate cuts. Right.

And Cameron, you have the four percentage 10-year treasury yield. There's been kind of this resumed downtrend on shorter-term yields. At the same time, gold's flying. We don't know if that is that telling us anything anymore, except that it's been going up and people are excited about it. Yeah, I think that the speculative part of gold and the momentum trade is certainly very strong, because if this really was debasement and about long-term inflation being hired to the earlier point, that you would see that upward pressure on longer-term yields. Maybe we're not seeing that because you still have Treasury issuing so much at the front end.

Because they're not doing longer-term issuance, you don't have that kind of supply and demand imbalance that's necessarily making it that we really see that upward pressure on long-end yields. So given the fact that you have all of these really bullish narratives with Atlanta Fed at 3.8% in AI revolution, and you have an overall market that seems to be very abulient, and yet at the same time, you have 10-year treasury yields falling to sub-potentially 4%. That kind of raises an eyebrow of what the bond market is pricing in versus what credit and equity are. Right. I mean, the other way to look at it is bomb prices are up along with everything else. the gold prices and equity prices.

I don't know if you just flip it upside down. Ed, I'm interested in your conclusion, given we just talked about sort of the junk rally in small and microcaps, given the fact that you obviously have had months of upside momentum in the AI trade, that by your readings, sentiment remains relatively subdued. How do you square that?

First of all, we have proprietary sentiment composite. That's about 25 different data series in it. It's flat at neutral. And so I think a lot of this has to do with the fact that the rally off the lows in April caught so many people off guard. And they've been looking for a chance to get back in. You know, we look at seasonality at Ned Davis research some. A lot of other people don't. I heard so many strategists talking about the seasonal weakness in September to the point where I think it just didn't happen because everybody was looking for it.

And so the fact that there's so much consternation about the changes from the Trump administration, economically means that this is a really hated bull market, but that also means there's still some dry powder on the sidelines. And from talking to hedge funds, I get the sense that while they've gotten back into the market, they haven't gotten back in as much as they normally would in a year like we've had or as we go into the year end, there is a possibility that there's been chasing of the market so the momentum can continue, at least until we get in 2026. Yeah, and I imagine those hedge funds have been destabilized on the short side, too, because the heavily shorted stocks have just been to the moon, and you would think it would have cleared that all out.

So look, we'll see. We had one of those chases last year, for sure, with a catalyst in the election, and see how it unfolds from here. Cameron Eddrew, really appreciate the time today. Thank you very much. Let's send it over to Sima Modi for a look at the biggest names moving into the close. Hi, Sima. Hey, Mike, I want to point your attention to shares of AMD continuing to rip higher while Nvidia

shares trade lower, are now basically flat on the day. That comes after AMD announced that deal with Oracle to buy, for Oracle to buy 50,000 of AMD's high-performing AI chips, providing a vote of confidence. And Woodbush securities are out with a new note that is pretty bullish, saying that this partnership will provide a clear line of sight to huge revenue growth for AMD. The analyst there raising the company's price target to 270 from 190 and shares are trading at 238 right now. Let's move on to shares of F5. dipping around 4% after the cybersecurity firm disclosed that a nation-state actor gained access to its system. The filing with the SEC Commission says intruders stole source code and vulnerability details.

F5 said that the breach has not hurt its operations, but the stock is down about 3%. And finishing things off with progressive. Shares are tumbling around 6% after posting third quarter profit and revenue results that missed street estimates. The insurance company was hit partially by a Florida policy change that caps insurers' profits shares down about 6% so far this year, Mike. Yes, I did also notice Allstate down in sympathy there about 4% as well. Seema, thank you. We are just getting started. Up next, former Fed Vice Chair, Richard Claretta, is back.

He'll tell us what he thinks the Fed's next move might be amid the government shutdown. joins me after this break. We are live from the New York Stock Exchange. You're watching closing bell on CNBC, the S&P. up half a percent. Welcome back. Investors eyeing a slew of Fed speak today. Let's send it over to CNBC senior economics reporter Steve Leesman for the highlights.

Hi, Steve. Hey, Mike, the Fed's page book telling a story of a lackluster economy suffering from uncertainty, low hiring, and inflation. The collection of anecdotes from the around the Fed's 12 districts said economic activity was little changed from the prior report. With three districts reporting modest growth, no seeing any, sorry, five seeing no change and four seeing a slight softening. The Bayes book went on to say that consumers spending inch down on retail goods with

EV demand boosting autos, leisure and hospitality, seeing declines to international travels and strong demand by high-income earners and low- and middle-income households were looking for discounts out there. Manufacturing was hit by higher tariffs and waning demand and costs were rising. due to tariffs, labor demand was generally muted. Fed Governor Chris Waller, meanwhile, giving a speech on artificial intelligence, saying it was generally bullish long term but said there could be job losses before there are job gains. He specifically cited the possibility of white-collar job losses.

Fed officials have been increasingly talking about AI and the effect it's going to have on the economy. No clear consensus out there emerging. But Waller said that while there are unique risks, security and things like that, He expected to be generally positive for the economy that would take time to see those results. Mike? Yeah, it's interesting, Steve. I wonder if the AI wave is coming up as one extra reason for companies to go slower on hiring. I think there may have been a hint about that in some of the Bage book commentary,

and not necessarily that it's remaking business, but that it's, you know, it's another signal to sort of see how things play out. I think that's right. it's having an interesting time of sort of generally soft labor demand that may be unrelated to AI. I can tell you, Mike, I was in a couple conferences at the, or sessions at the NAB conference over the last couple days. And there are many, many studies being done and a lot of uncertainty out there. First, try and identify the jobs that are going to be affected. That's one thing and how they're going to be affected. I remember one example was out there for radiologists, which is something that ultimately AI is seen doing very well as reading those MRIs.

At the same time, you could see costs coming down and then maybe people using more MRI so there could be more demand. And it's one of those things where I think Waller's sense of history is really important here, that there's a thing out there called a J-curve when it comes to productivity. Imagine you get a new piece of software, you don't know how the heck it works. Productivity goes down for a while until people figure it how it works and then it comes back up. So I feel like with our new computer systems here at CNBC, I'm on the downslope of the J-curve and maybe hopefully soon on the way back up. Exactly. Yeah. I mean, look, there was one point we all had to remember our voicemail code and everything else. And, you know, it flummoxed us for a while.

Steve, thank you very much. Let's bring in former Federal Reserve Vice Chairman and Pimco Global Economic Advisor, Richard Clare to Rich. I wonder in the absence of the official government data, what your... Your take is on where we are in the economy with that softening labor market, yet the rest of the CAPEX-driven growth hanging in there, and how the Fed's current stance relates to it? Well, you are right. We don't get official data. There's a lot of alternative data, high-frequency data, and I think it will show eventually

when we get the GDP numbers, a pretty strong third quarter ending in September. Remember, you are right, there are two big forces in the labor market. You've got reduced labor supply due to immigration policy changes, but probably reduced labor demand as well. The Fed has formed the judgment that it's worried about the downside risk to the labor market, and thus that's the rationale for the rate cut on risk management considerations. And then finally, I overheard your segment with Steve. You know, it may take a while for AI to show up in the productivity data, but it's already showing up in the economic data with CAPEX spending and investment in software.

It's a big driver. When we do get the official data, it's a big driver in the economy right now. For sure, yeah. I mean, and maybe one reason that, you know, markets are okay for the moment with slightly less labor demand. So the game right now, I mean, based on what most of the Fed policymakers are saying is, there's room to get rates back toward neutral or too neutral, whatever that number might be. What does the path look like to you from here on into next year? Well, I do think, especially after hearing from Chair Powell yesterday, that we are going to get that cut.

It's an early meeting this year. It's, I guess, October 29th, not in November, so just in a couple of weeks. And I would expect one more cut after that. You know, as we get into 2026, we're really looking at the. announcement of the new Fed chair nominee and the handoff at some point from Chair Powell to the new nominee. And so I do think as you look ahead into next year, you have to start factoring in potential changes at the Fed. You know, we do agree there is some room to get rates down to neutral, which we judge to be around a fund's rate of around 3%, which is sort of in line now with what's

priced in. The mix between how much of that we get under Powell and how much we get under the next person's going to depend on a lot of factors. And then, of course, as well, the standard policy rule models, Taylor-type rules, would suggest that as long as inflation is staying above two, and it certainly is above two for now, probably into next year, that you might take your time getting rates all the way down to neutral. So I think that's also going to be a factor as well. We were discussing just a little while ago about how the longer end of the Treasury curve has traded. It's been relatively tame, right? I mean, I know Fed Governor Myron has pointed out that if cutting rates and expecting more cuts were

viewed by the markets as a mistake, you probably would see rates go higher, as perhaps happened last year. So does that mean there's more room to get toward 3% quicker, or do we have to simply, you know, see how inflation and expectations of inflation develop? I think that's really going to depend on the next chair. I mean, as I said, standard analysis would be to cut rates towards neutral, but not really to get all the way there until one or two things happen. Either you've misjudged and you've thrown the economy into a recession, in which case, you know, in a recession scenario, you cut below neutral, or inflation comes down faster than folks expect. You may have a new Fed share who's more focused on rebuilding the supply

side of the economy and contributing to that and may take a different approach. But, you know, the standard analysis would be to proceed cautiously so long as inflation is hovering above target. Chair Powell in his remarks yesterday did sort of throw his support behind the idea of ceasing to shrink the balance sheet within the next few months. This has been something that's been handicapped roughly in that range. What are the implications of that? Well, it's a good question. It's pretty well telegraphed. You know, the Fed, certainly when I was there in continuing, the Fed does a pretty good job at telegraphing these moves. So, for example, earlier this year, they downshifted the pace of QT, I think really at the urging of Lori Logan at the Dallas Fed. And so the Fed's been doing QT,

but at a slower pace. And so I think most folks, including us, have been expecting the Fed to stop QT, probably in the first quarter of next year. So based upon what the chair said and also based upon a pretty noteworthy decline in reserve balances in the last month or so, we could maybe see the QT coming to an end at the end of this year. So sometime in the next three to six months looks to be what the Fed is expecting to do. And then quickly, Rich, I wonder, you mentioned under the next Fed chair and there's going to be a sort of shaken up makeup of. of the committee over time. Do you think that perhaps doing things

to suppress longer term yields is going to be expected or will it be more of a generally discussed issue? There has been some talk about that. I mean, Treasury Secretary Besson says that's been, you know, that's his benchmark is the 10-year yield. And I wonder if we should expect an opening toward measures that might enact that. Well, you see, I think that's a very good point

And it will depend on how they think about doing it. You know, one model would be for the Treasury to basically reassert its authority over the maturity structure of the debt. You know, the Treasury's been doing some buybacks. And so one possibility is if Besson wants lower 10-year yields, he can just buy back longer maturity. So the Fed doesn't necessarily have to be part of that equation. You know, the challenge that the challenge that they may face, however, is that if people perceive, the Fed is in the business of suppressing yields, that can push up inflation expectations and really get out of hand pretty quickly.

So the details will be important in how they think about doing that. Let me also say if I've got some time, that I think Secretary Busson's done an incredibly good job of communicating with markets. He's only been in the job for six or seven months. He has a lot of credibility. And I think he's a very important reason why 10-year-Tresury yields now are where they are. Right. Yeah. So I guess if they did try to, you know, affect the curve that way, it's different than the old Operation Twist Days when we were trying to get inflation expectations higher. This is a different starting point. So, Rich, really appreciate the time today. Thank you. Thank you. Yeah. All right. All right. All right. All right.

Still ahead. Crossmarks, Victoria Fernandez joins us with her market playbook. Plus, we'll tell you what has Papa John's popping in today's session. Closing Bell, be right back. Up next, a big tech double play. Apple's Tim Cook touring China while Salesforce kicks off its annual Dream Force conference. The details are coming up. Closing bell will be right back. Welcome back to closing bell. Apple's Tim Cook is in China this week, following. the release of the iPhone 17. Steve Kovac is here with the details. Hey, Steve. Hey there, Mike. Yeah, it's another tour around China for Tim Cook this week in the middle of a very pivotal year for its business there. He's also there to play politics a little bit and promote Apple's iPhone 17 lineup. Now, this is Tim Cook playing it both ways, wooing customers and politicians in China while working on the side to shift production

out of the country after lessons learned during the COVID pandemic lockdowns and President Trump's tariffs. For example, state media reporting this week, Cook promised new investments in China, though did not give specifics. And over the last several hours, more evidence cooks moving away from China. You have Reuters reporting Apple's lobbying to change a tax law to get a break on manufacturing equipment. And Bloomberg reporting that upcoming gadgets like a security camera and tablet for controlling smart appliances will be made in Vietnam. That tracks with the vision Tim Cook laid out back in May when the tariff threat was at its worst. Over time, Apple plans to move as much production as possible for U.S.-bound iPhones to India.

And by the way, that is a strategy that's working out. Jeffrey's analysts estimate only about 9 million iPhones in the quarter sold in the U.S. will come from China. Other products like U.S.-bound Macs, watches, and AirPods, they are already made in Vietnam, Mike. And Steve, do we have any sense of how this charm offensive is playing in China? I mean, either on the demand side in terms of the new iPhone model or this. idea that he says he's going to invest there. He's got a big presence there, but it's looking to

diversify our way. Yeah, China is actually showing some signs of life again. Mike, we saw that last quarter with a little boost in sales. And early indications on this iPhone 17 lineup show the exact same thing. Part of that is the base model. That is becoming a really popular model there because of those subsidies from the government in China, effectively giving customers a discount. So they're seeing increased demand for that base model in a way they haven't seen a long time. That seems to be boosting sales. some more data on that, though, in just a couple of weeks when they report earnings. All right. We'll listen for that. Steve, thank you. Well, Salesforce kicking off its annual

DreamForest conference in San Francisco. Seema Modi here with the latest on what they had to say. Seema. It's interesting when you take a step back, Mike, how some companies that have been announcing partnerships with OpenAI have seen their stocks rally like AMD, for example, and Oracle. But Salesforce hasn't had that luck just yet. It revealed yesterday an expanding partnership with OpenAI that will allow customers to access their Salesforce debt. on chat GPT, CEO Mark Beniof, in conversation with Jim Kramer, reiterating that these AI agents will help empower software companies not eat their business, yet the stock continues to slump. It's now down about 30% this year, trailing its peers in the broader tech industry.

Question is whether this afternoon's Investor Day will provide more data on the return on investment on AI agents amid a very competitive backdrop, cost tied to building and deploying these AI agents, and examples of how Agent Forrest's deals are or sort of moving through the pipeline. Morgan Stanley, a bit more optimistic writing that they think the market is underestimating how the company is focused on margin discipline. Well, interesting to see if tonight

will change the narrative at all because the stock really has underperformed this year given what we've seen in software. For sure. I mean, Service Now has also underperformed maybe not to the degree of Salesforce. I just wonder what the market's determination is here about that sort of layer of software as a service

and whether that is exactly. exactly in the crosshairs of AI applications. And in a way, you are seeing this divide within software, winners and losers, and you take a look at one shirt that's been circulating Oracle versus Salesforce so far this year. Both are leaning into AI.

Oracle, we were just at AI World, the big conference yesterday where they're announcing these new cloud products, this tie up with AMD. That stock is up 80% this year. The investors are sold on Larry Ellison being able to deliver profits, even though that is going to be a big topic

tomorrow on their analyst day. Question for Salesforce is, can they really prove that AI monitor? monetization. And so far, investors don't want more answers there. Yeah. It's not like those two companies are competitive or anything like this. Sure. Broader software. No, no, I'm joking. Just because, you know, Benny Off used to be Oracle. I mean, it was, it's been a fun history of back and cool. So, Seema, thank you very much.

All right. All right. Up next, we're tracking the biggest movers as we head into the close. We'll be right back. Less than 14 minutes until the closing bell. Let's get back to Seema for a look at the key key stocks to watch. Hey, Sim. Hey, Mike. Let's take a look at him and hers. popping around 10% after announcing it will offer treatment for premenopause and menopause for women. The telehealth company says starting today women can work with a platform provider to access treatment plans. The company does expect to surpass $1 billion in annual revenue in 26. The stock is up nearly 19%.

Let's move to Sun Run, shares of the rooftop solar panel maker rising around 5% after BMO capital markets upgraded the stock to perform and raised its price target to $19. Analyst there say Sun Run is a better position company to boost shareholder returns through share buybacks and dividends. Stock has had a nice run up 135% this year. Finishing things off with new scale. Shares are jumping about 15%, almost 16% after the U.S. Department of Army announced a program to develop next generation nuclear power. The Army's program will build micro-nuclear reactors with new scale develops, which new scale does develop. And the stock has been a big winner this year, up nearly to 200 percent, Mike.

Yeah, as a lot of those have. Thank you, Seema. Up next, we'll run you through What to Watch when United Airlines reports in overtime. That and much more when we take you inside the market zone. We are now in the closing bell market zone. Kate Rogers tracking a big move in Papa John's. Philibault here with What to Watch from United Airlines earnings in OT. And Crossmark Global's Victoria Fernandez is here to break down these cruisels.

moments of the trading day. Kate, talk to us about what's behind this Papa John's move. Yeah, Mike. So Papa John's stock up again today about 10% on reports from Reuters that Apollo has submitted a bit to take the pizza chain private at $64 a share. The stock is up nearly 30% year-to-date. And prior to this, it was one of a few positive restaurant names for the year. PE firms have been interested in the restaurant space for years. It began in a big way with Rourke Capital and Buffalo Wild Wings years ago. In racing years, other names that have been acquired include Subway, Duncan, and Jersey Mikes. Papa Johns, of course, is in a much more desirable state for this type of deal today than it was years ago.

It had an activist-led turnaround under former CEO Rob Lynch, who came in. You may remember after sales slump surrounding scandal with its founder, John Schnautter, being ousted. Former Wendy's CEO, Todd Pentagon, took over the company last August. And in the most recent quarter, it had better than expected sales in the U.S. and internationally, the company, though, declining to comment on this. Back over to you. Kate, obviously a big premium, $64 if a deal happened there to what the stock is traded at recently.

But I just looked back a few years ago. I mean, the stock was like double that level. Does that more reflect pressures in the sector, things going on with the company or something else? I think it's sector-wide pressures. I mean, we just heard from its main competitor, Domino's yesterday, whose business is faring quite well. But they are talking about kind of a macro pressure within the environment that no company is really. immune to you. You're going to see a lot of different ways in trying to figure out whether it's limited time offers, something Papa Johnson's been really big on, you know, value discounting we're

seeing at McDonald's. But as you said, yeah, the stock had run up quite a bit and has fallen off from those levels, Mike. And I guess their own costs have really not gone down with all that as well. Kate, thank you very much. Phil, United, see how they follow Delta. Yeah, and, you know, Delta and United, they're the two profit drivers within the domestic airline. So when United reports its results in just a couple of minutes. A couple of things people are going to be focused on. First of all, what was the profit growth? I think people are going to be focused on the margins that United reported and reports, I should say, how do they compare with what we saw from Delta last week? And there's also the question of premium and loyalty revenue. Premium and loyalty have been a big part

of the success, not only at United, but also at Delta. Everybody knows that's where the money is right now for the domestic airlines. And finally, what's the guidance for Q4? Look, United had a strong summer. relative to spring. They do not want to go back to what they saw in the spring when they had the issues at Newark, which really compounded a lot of their results for the second quarter. They've improved their operations at Newark. So it's a much better run situation at Newark, albeit at a lower flight schedule. So that'll be questions for the conference call for CEO Scott Kirby. Again, we get those results. They're coming out shortly and we'll bring them to you in overtime. Mike, back to you. All right, Phil. Check back with you soon. Thank you.

We got the S&P 500. It's up modestly. We're still about a percent and a half below last week's record high after that wobble we had on Friday. Has anything in terms of the underpinnings of this rally, you know, a steady economy, Fed going to cut rates, the AI excitement. Is anything change or have there been reasons you see to question those premises? Yeah, Mike, I don't think there's been a huge change in what we've seen. Now, we have had some of the momentum, that underlying momentum in the market pull back a lot. little bit. Think of like number of stocks making 20-day highs, that type of information. That has pulled back. So you're getting a little bit less driving the market internally. But all the items that you said, those are still there. Earnings, obviously, we're just kicking off earnings, but earnings are strong. That will probably be a nice tailwind for the market. I mean, earnings are expected to grow, what, 8, 9 percent, revenues at 6 percent. And the most important part, and you guys are just talking about it for the other two companies a moment ago, or the

margins, those are looking to be 13%. So I feel like there hasn't been a huge shift. There's not been a rotation to defensives in the market. That's what we'll be watching for as a signal that there's a true change coming. Yeah, that's been pretty consistent, right? I mean, you have seen most cyclical sectors doing better than the outright defensive sectors. At the same time, you know, we realized that we got some soggy job growth in this economy, at least in recent months. and the consumer seems pretty bifurcated. So in terms of an investment approach, what would you emphasize right now?

Yeah, really, when we're talking to our clients, we were in a meeting yesterday and going through our concept of it's a bull market, but it's a high-risk bull market. So there are these elements that we think we need to be watching. We're seeing some growth concerns. We're seeing the labor market weekend. We're not getting some of the data

to really know what's happening. Is inflation moving higher? But yet you have these tailwinds to the, market like earnings that we were talking about or like the up trends that you see in tech and financials that continue to push the market forward. So you want to be invested, but I think you need to be a little bit cautious and just keep an eye on those warning signs to let you know when maybe you move a little bit more defensive. It's interesting, given the fact that a lot of these concerns have been surfaced that you're

seeing some of the lower quality parts of the market do a lot of the heavy lifting recently, the more volatile, higher beta stocks. So does that suggest to you that quality is a relative bargain, or should you just kind of play the game that's underway? Well, we don't want to play the game in the low-quality stocks, right? We want those stocks that have good earnings quality, good free cash flow, so that quality is important to us, but you're right. The lower-quality names, look at the rebound we saw on Monday,

that's what was really driving the market. So I don't want to play in that space. I would rather take a little step back, buy the dips on some of the higher quality names that I think will do well. Like we said, tech is doing well. Industrials are doing well. Utilities are well. We love the financials we always have. So there's some parts of the market you can go in and buy some good names at a discount right now, even though valuations are pretty high across the board. What's your thought on where the bond market trades right now? I mean, 4% 10-year yields, corporate credit spreads. they've, you know, they've leaked a little bit higher, but they're still very, very tight. Therefore, corporate yields also lower.

Is that sending us a strong message about disinflation and good balance sheets, or is there some risk in there as well? I think, like, it's one of the reasons the market is kind of ignoring warning signs is because credit spreads are remaining as tight as they are. It's telling them that people aren't really concerned of a credit event coming in to cause a downturn or a recession. So I think you can go in the bond market on the upside. I think you're looking at a 42430. If we close below 4% on the 10 year, then you've got to go probably down to around a 370 level. So we'll see how we close out the rest of this week.

And what are your thoughts about how the Fed takes things from here? Obviously, an October rate cut is almost entirely baked in and most likely another one in December. Is that as far as we go for now? I think it might be as far as we go unless we get some really significant information coming in. I mean, you look at the dot plots we had, what they're expecting lower unemployment, they're expecting lower inflation, higher growth. None of those are things that tell you you should be cutting rates. October meeting, they're kind of getting a little bit of a pass without

the data there. They can take it as an insurance cut. And then we'll see what data looks like going into the December meeting. But I would anticipate a pause going into next year as we have a lot of stimulus coming, monetary and fiscal, in the first few months of next year, especially related to tax refunds, that's the middle income consumer that will reap the benefits there, and they're the ones that are likely to spend. So we could see it pick up early next year, and that could put the Fed on pause. Yeah, that's the reacceleration scenario, along with the sort of rolling tariff price impact. We'll see if that really does change the story into 2026. Victoria, thank you very much. Appreciate the time today. We've got less than 30 seconds

to go into the bell. The S&P 500 is tracking to be up about 0.4%. It was up more than a percent earlier. It has had an intraday fade a couple days in a row. Russell 2000 is going to be up 1% on the day. It is holding above that 2,500 level as some of the racier members take it higher. That does it for frozen bell to finish overtime

with Morgan Brennan and John Ford.