Closing Bell - Closing Bell Overtime: 7/6/26

Episode Date: July 6, 2026

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

The bell's bringing in to the trading day at the NYSC's Securitized Closing Out the day and at the NASDAQ, Willis Lease Finance Corporation doing the honors. Welcome to closing bell overtime. We're live from studio be at the NASDAQ market site. I'm Melissa Lee along with Mike Santoli. Sox ending the day higher as tech takes the lead. The Dow is setting a new record here, crossing above 53,000 in earlier trading, up about 140 points on the close. S&PF about three quarters of a percent.

NASDAQ, the leader of more than a percent, the Russell also ending in the green. Investors rotating back into AI hardware and the momentum. trade today. The semis and momentum ETS both seeing gains, while some of the more recent winners, like health care and staples, took a breather. More on the markets ahead. On our radar at the closed, SpaceX joins the NASAC 100, the Cappex cash flow conundrum. And Trump accounts go live. It does feel, though, Mike, like we're reverting to the old playbook as we just await earning season for the next message. We are. The market is kind of just stair stepping and sort of see what got a little bit out of whack on a month-to-date basis, which, of course, was only a couple trading days. The biggest losers,

got picked up. Even with that bounce in the semistar, I was just noticing Micron finished 35 bucks below its intraday high. You know, 3% off its high. It was up less than 1%. So it feels as if things were oversold enough to have a little bit of a rebound in that area. And it's then wait and see beyond that. It's true that kind of the water is sloshing around the pool, but not much is spilling out because we are, you know, within sight of the old highs and the VIX is below 16. Again, it feels like people are are comfortable with stocks at this level, but we'll see if if there's really been any change to the underlying drivers. Yeah.

Let's turn to Christina Parts Nevelas for a little bit more on today's momentum comeback. Hi, Christina. Hi, Michael. Like you said, stocks closing higher today under the surface, a clear rotation, money moved back into tech and out of the defensive corners of the market. Let's start with momentum names, though. They're really bouncing back. There's no single catalyst, but in a Goldman note this morning, they noted the group

just really suffered its biggest drawdown in more than three years last week, and buyers just stepped back in today. Chipmakers did a lot of it. lot of the heavy lifting, as usual for the S&P 500 and the NASDAQ. MD led the index up nearly 7% after Goldman raised its price target to $640 from 450, expecting a strong quarter. Broadcom gained after extending its custom chip partnership with Apple through 2031. But the flip side of that rotation came at the expense of consumer staples and healthcare selling off, Constellation brands and Jam Smucker among the worst performers in the S&B 500, Kyrig, Dr. Pepper,

and Mondelees, some of the biggest losers on the NASDAQ 100, and then healthcare names, including Centines, CBS, Pfizer, Cigna, all closing roughly 2% or more lower. And you can see the XLV ETF down about 1%. One bright spot outside of tech defense. The ITA aerospace and defense ETF closing at an all-time high, guys. Christina, thanks. Christina Parts Nevelas. Let's get to the energy markets as OPEC Plus agrees to further increase output targets. Pippa Stevens has got that story.

Pippa. Hey, Melissa, well, OPEC and its allies agreeing to increase. increase output by 188,000 barrels per day in August, with Middle East countries in buildback mode. Still, RBC is saying the group's leadership will exercise diligence in determining the pace of production increases once the Hormuz evacuation phase concludes, since they believe there is minimal appetite for a supply-driven price washout. But Saudi Arabia slashing the August price for its flagship Arab light crude heading to Asia by $11 month over month, now selling it at a discount to the Dubai benchmark. Eurasia group saying it's a competition for market share in the aftermath of

the war and following the UAE's exit from OPEC. Now, even as this flood of oil exits Hormuz, there is not the same refining capacity available, which is keeping product prices tight. The 321 crack spread rising from about $20 at the start of the year to roughly $60 today. Crew did end the day modestly negative, while gasoline and heating oil futures each up about another 3 percent here. I get the idea of cutting price in order to gain market share, Pippa, but I thought that reserves were depleted in Asia, if there are reserves, and there would be that sort of underlying demand for oil because of even just the replenishment factor. Why bother doing this? Well, I think that their thinking is that they want to decrease prices to a point at which it becomes impossible for Asian countries, including China, not to begin to increase their imports. Once again, we did see Sparta out with a note today saying that for the first time we've seen China now coming back into the market, putting in a bid for an ad not cargo, one of their teapot refineries putting in that bid.

And so the idea is that the price is now so attractive that China is going to become a buyer once again. And of course, they've been the big wild card here. And one of the main reasons why we haven't seen a big response in oil is because Chinese imports fell by more than 50%. They also notably have spare refining capacity. They're about the only country in the world that does have that. And so should they choose to relax some of their product export restrictions, we could see some more diesel, some more gasoline hitting the market. But for now, clearly Saudi Arabia wants to make up for some of that lost revenue they had while Hormuz was blocked. And so they are cutting prices in order.

It would seem to incentivize those buyers, particularly in Asia. All right, Pippa. Thank you. As we noted, it was tech that took back the lead today after large parts of the sector saw notable declines last week. So what does today's action? Tell us about the recent broadening out of market leadership. Joining us now with Richard Bernstein from Janice Henderson investors. Rich, it's good to see you. Mike, good to see you. Thank you. And I guess what's your stance on here?

I know you have in the past been pretty suspect of times when the index becomes very concentrated and momentum driven and fixated on just the tech theme. So where does that stand now as the pendulum keeps swinging back and forth? Yeah, Mike. it's really interesting because, you know, we're getting new highs on various indices, and that makes sense because the economy is strong, right? The nominal economy right now is tracking at 5 or 6 percent. A lot of people have come on your shows and pointed out that not only is earnings growth strong, but it's abundant as well, that it's spreading through the markets. And so, you know, what you saw in the second quarter was a very broad market. You saw the Russell 2000

now perform the MAG-7. I think they almost doubled the performance of the MAG-7. But yet, you can't get people away from this speculative environment, right? I mean, my line has always been when people can't tell the difference between financial markets and prediction markets, it's clear we're in a speculative environment. And getting people away from that speculative fervor is very, very difficult, despite what's going on with the fundamentals. Does that make you think that maybe this desire? to be in some of these momentum trades, like let's say the memory stocks, et cetera, rich, will last

much longer than you can anticipate just because there is this sort of fervor going on, as you put it, almost a fever, overriding fundamentals, perhaps, to be in these trades. Right. Well, Melissa, you know, what usually ends speculative periods are the, is the Fed, and that the Fed begins to raise rates unexpectedly so. And we might be looking at that, right? I mean, certainly in the second quarter, we saw people's predictions about whether the Fed was going to cut rates. All of a sudden, people began to say they were going to raise rates. And what did we find? The speculative fervor started to subside.

Right? Liquidity is the lifeblood of speculation. And who provides the most liquidity, it's the Fed. So if we go through that again as we go through the rest of the summer into the fall and we find that maybe inflation is a little hotter than people think, employment stays healthy, maybe we see. maybe we see again that people are concerned that the Fed might have to raise rates instead of lower rates, and that would take the speculative fervor out again. But always, I mean, I think history is pretty much on my side on this one when I say always, that the Fed is usually the reason that you end these periods.

People normally say the Fed takes the punch bowl away from the party. Yeah, I mean, I guess we could look back to 2021-22, and that it was the market sort of taking signals from the Fed that a tightening campaign was coming. And I guess we'll see if we're in for something like that. It seems like there's a case to be made that inflation might be peaking and the Fed can hang out where it is for a while. But I do wonder about the signals that you're pulling from, you know, things like celebrating the Russell 2000s outperformance in the first half. Because if I looked at what got it there, it was a lot of speculative stuff. It's a lot of the derivative AI plays.

Now, in addition to real economy, things that would, you know, benefit from high nominal GDP. So I just wonder where you would look for the incremental dollar to be put in a good place within this market. Right. No, your points well taken, Mike. I mean, even if you look at emerging markets and emerging markets ex-China, that's been dominated by some of the semiconductor and technology stocks in Korea and Taiwan, of course. So you're absolutely right in terms of that happening. However, what you are finding both inside the U.S. and outside the U.S. in the second quarter was you found, more sectors outperform, right? It wasn't just simply small-cap tech or something like that. It was broader in terms of even within the S&P, more sectors outperforms. So I think your point's a very important point. And I think people have to pay attention to that. But I think it's a slightly bigger story than that, too. You like non-US, but also dividends, rich, any particular

areas? Oh, Melissa, dividends. Dividends are one of the easiest ways to build wealth through time. and nobody ever wants to do it. It's way too boring. I get that. But, you know, dividends in the United States right now, you can look in a ton of different areas for dividends. You don't have to say, oh, I just want utilities, right? Or I just want REITs or something like that. You can look in health care. You can look in staples. You can look in energy. There's all kinds of dividends in many, many different sectors. And I think it shows, it reflects that valuation disparity between, say, the tax sector and every everything else, the dividend yields outside the tech sector are actually quite attractive. Rich, great to speak with you. Thank you, Richard Bernstein.

Great. Thanks to be with you. Thanks. Well, Microsoft's AI buildout is getting bigger and more expensive. The company's annual CAPEX has gone from $28.1 billion in 2023 to a projected $190 billion in calendar year 26. That's its highest investment level ever as it looks to keep up with AI demand. A portion of that spending reflects higher component pricing, including memory, where prices are not expected to come down anytime soon. At what point does a spending become too much for the balance sheet? With us now, Alex Zuckin, managing director and head of software research at Wolf Research. He maintains an outperform rating on Microsoft, cut his price target to 525 from 570.

Also, Alex, you raised your CAPEX estimate for fiscal year 27, higher by about $40 billion. At what point do you think the company could be pressured, maybe because of the company? of underperformance relative to its peers, relative to other hyperscalers, to cut its CAPEX? Yeah, look, we think that right now this is a race, and it's a race for market share and market gains. And I think that the problem isn't demand, the problem is supply. It's been a problem for a couple of quarters. We think if Microsoft can paint a clear picture of the returns, and that doesn't have to happen next year. We think that we're still in year one of, you know, a five or 10-year cycle of AI adoption in the enterprise, and Microsoft is in pole position

to make that happen. But in order to make that happen, we think they do need to spend a lot more than is currently projected by the consensus estimates, which is why we raised our CAPEX targets, why we lowered our free cash flow estimates, why we lowered our gross margin assumptions. And we do think that this is kind of the messy part of the curve, where you have to spend before you can see the returns fully out there in the income statement. That said, we do see the company accelerating growth for the next few years. We do see their Azure business continuing to grow at, you know, historically high rates above 40% for the next few years. We're ahead of consensus there as well. But we do think it's going to be an interesting, you know, reset point for some of the

numbers out there in terms of the spend intensity for the company this coming year in fiscal 27. I mean, Alex, I guess the question is whether investors are willing to hear that, how much detail would they need to know about the returns that Microsoft sees on each new bit of capacity added in this world where, you know, last week's news from meta that who knows, maybe we'll decide to rent out some compute and folks are adding nuance to that and saying, oh, it's all about whether they want to concentrate on new model growth or inference and using older chips. It's very complicated, but the one rule has been the company's spending the most have been the most out of favor recently. Yeah, it's a great question. Listen, I think for the last few years, Microsoft stock has generally traded on one number, and that's been Azure growth. And that's the highest kind of growing piece of the business.

It's what powers most of the growth in intelligent cloud. I think even as last quarter demonstrated, great Azure growth is not enough. And I think this is the quarter where you're going to have to see them paint a picture of the future of the PPP business, of the, you know, Office 365, Microsoft 365 business, and how they can start monetizing agents within the, you know, constructs of productivity software, whether that's co-pilot, co-work, GitHub co-pilot, this new, you know, functionality around autopilot, to the extent that they're able to paint a picture

of how that business, that software business, can start to accelerate as they monetize some of the capacity that they're bringing online, both from first-party models, first-party products, that, I think, is what investors are going to need to hear a lot of clarity and conviction around as to the reason that the spending is going up. Are you optimistic that they're going to show progress in monetization within co-pilot? And I'm just wondering if there are other ways that Microsoft can sort of optimize that maybe by using, for instance, a cheaper Chinese version of Deepseek to power co-pilot

co-work, for instance? I think everything is on the table right now. Now, Melissa, I honestly believe that in the, you know, kind of the next few years, we're still super early on the agentic adoption at scale with an enterprise of this. I talked to someone very recently who said, I think we're 2% of where we're going to be in five years today. And I just believe, honestly, that Microsoft is well positioned at each part of that stack, but that it's still very, very early.

And yes, I do think they're going to look at using all manners of models. whether it's the one that they're building themselves, post this agreement with OpenAI, that they've been able to actually accelerate the development on, whether it's the Chinese models, whether it's being able to use a variety of other open source technologies, such as what you're seeing with Palantir and Nvidia. I think it's all on the table.

I think there's opportunities to be efficient at all layers of the stack. They're obviously also working on their own custom silicon. So I do think that this is all kind of par for the course of what's to come. Alex, great to speak with you. Thanks. Alex Zuckin. We've got a news alert here on Vertex. Angelica people's got the details. Angelica. Hey, Melissa. Well, Vertex says it is acquiring Krenetics, and that deals about $10 million, and that's inclusive of the cash. So Krenetics has both a commercialized drug and also a drug in phase-through trials. These are endocrinology drugs, which relates to how your body produces hormones.

So this is a really big deal for Vertex. This would be their largest acquisition ever. The last acquisition, the last largest one before this, was about $5 billion. This is the biggest play that we've seen from them. And this all relates to Vertex trying to diversify away from those cystic fibrosis drugs that have really underpin the company's success so far. So this is just one more leg that they are taking to try to move beyond what they're known for, guys. You can see Kronetic shares up by about 100% at this point.

Was chronetics considered a target by other companies? It does seem to be in that sweet spot of $10 billion and less in terms of targets. The price is right. It's not one of the names that I had been hearing, but that is also because I think so many people were focused on autoimmune diseases. That's really been the hot area. But this is one that really fits in vertex's sweet spot. They like to go after these rare diseases, not ultra rare, but definitely not the ones that some of the other pharma companies are going after. And so again, you know, this just speaks to them to find another way to find more growth.

Yep. And vertex shares, we should note. Not really moving much on the back of this announcement. Angelica, thank you, Angelica Peebles. Coming up, the auto parts stocks among the weakest in the S&B today as Takeover Talks Service. We've got the details. Speaking of Takeover's, Global M&A just had the strongest first half to a year since 1980. With technology leading the way.

Will the action continue in the next six months? We'll dive into that. Ahead. You're watching closing bell overtime, live from the NASAC market site. O'Reilly closing out the day as one of the worst stocks in the S&P 500 and NASDAQ 100 after reports that it is interested in buying genuine parts, auto parts retail business for $10 billion or more. This comes after genuine parts said in February that it was planning on splitting up the company. Other names like advanced auto parts and auto zones also falling on the back of this supposed deal. You know, a lot of the commentary on O'Reilly's reported efforts here was, you know, really dissonant compared to what people want to.

see from O'Reilly, which was like smaller tuck-in acquisitions, buying back stock. It was always this pretty good organic growth story. Now, we don't really have any confirmation here. Genuine parts, it's the Napa auto parts division. It might not be, it's a big bite, no matter what happens, if it were to acquire it. But really interesting how the whole group was seen to be at a disadvantage here. I mean, it seemed like there's a lot of skepticism surrounding this deal for many reasons. First of all, 60% of Napa stores were within a 10-minute drive of O'Reilly stores. So it's like, why would they need to expand that footprint?

They would have to close a lot of stores. Then also, does O'Reilly want to expand overseas? Because that's what it would get with NAPA. It would go to Australia and Asia. And it's like, why would it want to do that, to your point, instead of getting smaller and leaner and a little bit more? Yeah, and the way the market reacted, it seemed as if it would be sort of irrational for the whole industry. I don't know if that's really true or if it was just a reflex.

We'll see. We'll see. South Korea is looking at creating an investment fund backed by excess tax revenue from its fast-growing tech sector, to finance long-term economic growth. Samsung and S.K. Hynix alone are forecasted to post-record profits that could collectively bring in more than $65 billion in annual corporate taxes, according to estimates. The government is saying part of the profits would go to addressing what they called K-shaped polarization. The country's policy chief made waves in May when he suggests the country could look at paying citizens a dividend using excess revenue from AI profits. Any new fund

would require parliamentary approval. And this really goes to sort of the political malae surrounding AI, the haves and the have-nots, the workers who are making this all possible aren't getting their fair share of it. We saw this a while back, a couple months back, with the strike at Samsung or the threatened strike. Workers were saying, we demand more of this. That's sort of the undercurrent. That's not only in South Korea, maybe it's more pronounced there, but also here in the

United States. Who is benefiting from AI, except for these big companies? Totally unclear. There's obviously a grassroots backlash to data centers. Of course, we had the reports last week that opened the eyes to talk about handing a 5% stake to the government, which in theory would, I guess, forestall some of the criticism or public backlash and give, you know, the citizens, I guess, some kind of a stake in the future growth. But it is really fascinating, especially in South Korea where so much is about, you know, automation of labor, a demographic, you know, kind of shrinkage of the population, really long term. But it creates this anxiety under the service.

Coming up on closing bell overtime, airline earnings are set to kick off this week with the sector soaring. in the past month. So will it continue to be clear skies ahead or have the stocks gotten ahead of themselves? And check out shares of Dell. The stock jumped mid-morning after the president once again said to go out and buy Dell computers. According to government ethics filings, the president bought more than $1 million worth of Dell shares on February 10th. He said that with Michael and Susan Dell, I believe, behind him in the Oval Office in the Trump accounts announcement, the stock, Dell, that is, is up more than 225 percent since the president first. recommended people by Dells. We're back in two.

Welcome back. Shares of Terawolf jumping, although closing off the highs of the day after announcing Anthropics inked a 20-year lease to use its data center in Kentucky, that deals expected to generate roughly $19 billion in revenue for the AI Data Center infrastructure company. Earlier on Power Lunge, Terowulf CEO discussed the red-hot data center demand for electricity. You could create all the disruption in the spaces and the technology. you could manufacture more silicon, you can manufacture these chips. You just cannot create overnight megawatts. And there are very few sites that are consistent with the requirements, both for quality and redundancy,

like what we brought to the table here in this anthropic transaction. We have a number of sites behind this to go. I think demand is very significant. And the evolution in the space is, you know, we're at the tip of the end. iceberg here. I mean, let's be clear, this is a pivot. This used to be a cryptocurrency minor, and it's pivoting those legacy assets to provide, of course, energy for data center. So the next hotspot it is getting into. And it's interesting because Bernstein had a note out today on Bitcoin, and in it they said they expect a lot of the miners to actually stop mining and maybe go into something

like this. Bitcoin mining stocks, other ones did jump on this news, basically saying this is you know, just a new avenue of revenue and growth for this group. It is really fascinating considering that, you know, so much of the Bitcoin mining story was, we're creating the one true money. This is true believer stuff. In reality, they were just like they had the infrastructure to just use power in a directed way, wherever it was needed. Well, airline stocks are taking off this year outperforming the S&B500, despite surging jet fuel prices. Shares of United Airlines, Delta, JetBlue, American Airlines, and Southwest.

all up double digits this year. Delta is kicking off earning season for the sector on Friday. Can investors expect the momentum to continue? Joining us now is Barclays Senior Airlines analyst Brandon Oglenzky. Brandon, great to have you with us. Hamless. Thank you. How much of the recent out performance in the sector is just oil prices are coming down and that's a real tailwind for them? Well, I think that's a lot of it. But, you know, these stocks went down a lot too when we started dropping bombs in Iran, unfortunately. But I think the real resurgence in the stocks is because of the strength. of the economy and really the consumer in the U.S.

Because remember, the S&P took a pretty big hit when we went through Liberation Day last year. Travel actually went down. Airline spending's up quite a bit this year. And remember, Spirit actually liquidated, you know, at the beginning of May, which has really helped pricing outcomes for a lot of these companies. So I think investors are looking through saying, hey, look, jet fuel price is going to be very high in the near term. Airline earnings are going to be pretty difficult, you know, this last quarter.

But looking ahead, it's really the revenue and demand dynamic that matter the most. The outlook for firm ticket pricing and discipline on capacity, it would seem to suggest that somehow, you know, the capitalist forces are not going to be coming into play and these companies are not going to be driven to add capacity and compete on price, even as energy prices come down. Is that valid or is we just have this window where it's going to work for a while? No, Mike. I mean, it's a great question. And again, last year, we actually pulled back on air travel spending this year or not. And again, spirits now out of the equation. So pricing's up a lot. But if you look at airline yields, which is just a proxy for pricing, I think we're up about 12% through the end of 2025. That's versus a baseline of 2019. Now, CPI is actually up about 26 to 28% in that same time period. So I could argue the U.S. consumer is actually getting quite a discount on airfare.

So the step up in yields that we're seeing, I think, was actually very much needed. That's why we're seeing carriers like Spirit actually go out of business. It was not at a sustainable level. Are we saying similar strength in consumer travel as well as business travel? It was a great question. What we hear is that it's across the board. And, you know, the last few years, it was really high-end, premium demand, maybe long haul, a little bit of corporate recovery.

But this year, every carrier that we talk to says it's across the board from economy cabin to the first-class cabin, international domestic. So we're seeing it really on all fronts here, which I think is a very healthy side. You cite Southwest as a possible beneficiary and also, characterize that view as controversial. Why is it controversy? I mean, it's all relative, Mike, but some of the longshore funds out there believe that, you know, the Southwest commercial rechange that they did here, you know, effectively selling a basic fare, having assigned seats and bag fees is really going to backfire and maybe a result in some market share loss.

I think those are all relative comments. If you look at what Southwest is doing, they're actually pricing their product to the market now, which I actually think adds to industry momentum here. So Southwest should be doing probably just as well, if not better, than some of the other domestic carriers this year. How is the picture overseas in terms of, you know, European or Asian carriers? How are they competing against U.S. carriers now that maybe jet fuel is a little bit more expensive over there, harder to come by? That's a great question. I mean, I think a lot of people were worried about jet fuel scarcity, but then we found out that we do have supply across the globe for the most part. But look, I think that's a big issue for the U.S. airlines because you do have lower cost.

international carriers that have bilateral agreements to fly to the U.S. And I think that's a point that Scott Kirby was making. I know he's not going to be buying American, but his point is we need more scale internationally with U.S. carriers. So I think that's a longer-term dynamic that the industry has to deal with. Brennan, thank you. Thank you. Thank you.

I appreciate it. Well, time for our CNBC News Update with McKenzie Segalos. Mack. U.S. Senate candidate Graham Platner says he's taking time to reflect on the path forward for his campaign. That statement coming via video on X and following a Politico report that he sexually assaulted a woman he was dating nearly five years ago. In the statement, Plattner said the allegations were false and added that he was focused on defeating Susan Collins in the November election. The Supreme Court declined to block a Texas law limiting children's ability to purchase or download apps.

The law requires app stores and developers to verify users ages and to get parental consent before making app store purchases. A youth advocacy group and a tech trade group argued that the law restricts children's free speech. An AI-created actor Tilly Norwood will star in a comedy drama called Misaligned. The London-based company Particle 6 says the movie is a hybrid production with film and TV professionals working with AI specialists. The AI-generated star will play an AI being with no real body and no lived experience, but who has access to everyone else's. Guys, back to you. I don't know how I feel about that. I think it's kind of cool, but very creepy.

Mack, thank you. Mack, thank you. Mackenzie Seagallos. The urge to merge up next, the top Wall Street dealmaker and why merger discussions are at the highest levels in a decade. And the industries, he thinks, are ripe for consolidation. And speaking of deals, shares of Canadian garbage company, GFL environmental rallying today in reports, it is listening to offers from private equity firms, including Apollo. The stock has been hit hard over the last year due to higher fuel prices and pressure on recycled product prices. Closing Bill Overtime, be right back.

Welcome back to Closing Bell Overtime, live for the NASAC market site. Stocks, ending of the day higher with the Dow closing above $53,000 for the first time. The NASDAQ was a leader up more than 1%. Chip and memory stocks were among the big winners, regaining their lead. Western Digital AMD Broadcom among the biggest leaders. AMD also getting a boost from a price target hike over at Goldman Sachs. The Aerospace and Defense ETF hitting an all-time high, its first since early March, Axon, Boeing, Archer Aviation, among the biggest winners there.

It was, though, a down day for. for staples with large number of stocks off more than 3%, including Constellation, Kirk Dr. Pepper, J.M. Smucker, and General Mills. Meantime, check out Honeywell spinoff Solstice, the stock posting its worst day since its debut after announcing a nearly $15 billion acquisition for industry peer elemental solutions. It is the latest in a wave of mega deals. Those are transactions worth more than $10 billion that drove first half M&A to a record total, the value of up 44% versus 2025, according to the deal logic.

So should investors expect this to continue in the second half, especially as capital markets, continue to support major outlays for AI. CapEx build out and await two more monster IPOs in OpenAI and Anthropic. Joining us now is Eric Mandel, Guggenheim Senior Managing Director, where he advises on major deals in the tech media and telecom sector. Good to see you. Great to be on with both of you. Thank you. Kind of a dynamic moment here, I guess you'd say, with all the money flying around in terms of investment in the private markets, but also, I guess, has every company figuring out if they're disruptor or disrupted and what they're going to have to do.

So how is that feeding into the M&A conversation? Great, great way to set it up. So there are three things going on almost simultaneously. If you look at the first half of the year, everything was about AI disrupting software. We saw that play out in SaaS, but we also saw it play out even with some of the mega caps. the likely scenario for the second half of the year is AI is going to need software. So your disruption question is spot on. The stress here for a lot of people with AI acceptance is, do I want to give these people my data?

Is it secure? And am I training somebody who potentially may be competing with me in a very short period of time? So when you kind of jiggle that all up in a bag, that creates a very ripe environment for a lot of people saying maybe there are ways in which I can solve those issues if I merge. And you'll see partnerships announced that are precursors to mergers over the course of the next couple months because you're just going to have to be able to solve these problems that way. So you're talking about AI companies acquiring or partnering with software companies. And why hasn't this happened earlier when software was really? under duress and the valuations really came down and, you know, the private management companies, credit management companies want to just offload their portfolios. Yeah, also a great question.

I think what's changed in the last couple months is there's a fair amount of self-imposed pressure on these AI businesses that are not yet public. I think SpaceX and its success is a wonderful thing for IPOs, but it also is a very atypical company. It is not exactly like the LLMs, and it has a component of it that has a lot of government contracts, demonstrable future cash flows. The disconnect between the way in which the CAP-X is being spent and how it will be deployed in value still creates a lot of stress in the public market. So to your point, we may see in the first instance AI companies wanting to partner with very large public companies, not necessarily the mega-cap folks that are already investors,

but some of the SaaS companies that were hurt pretty hard. But the customers are going to be driving this, not necessarily each of those companies. And the reason for that is customers want to work with both. They want a hybrid approach. They want to be able to access these very, very cutting-edge frontier models. But they stress about how their data is going to be held. So the companies that are going to be able to work together

are going to be the ones that will likely be able to keep those customers. And I would predict that the frontier models that work together best with SaaS companies will be the first ones to be able to go public. In terms of the possibility of actual transactions, do you have a software company, even some of the big ones saying, look, we're down 50% from our peak price? It's going to take a while before we can reckon with the idea of selling well below that peak. I think if we wound back that question a couple of years ago, there was that sort of year you had to go through to admit that this was a re-rate on my market. evaluation, that year shortens to a quarter or two if you have a board member saying, listen, I just, I don't understand what the long-term model looks like. I really need to, I need to be walked through how you're going to achieve the type of free cash flow multiple

that gets us back to where we need to be. So let's parallel path that. Let's partner with people that can allow you to continue to acquire customers, but also could be a potential acquirer. I can tell you, once again, at the beginning of this year, there were very few. conversations on public company M&A, it has pivoted in a material way where companies who are at least thinking about it doesn't mean it's going to happen yet, but you see the beginnings of it. And that usually is a sign that you're a quarter or two away. Eric, great to get your perspective. Thank you so much. Great to be here. Thank you.

Well, Trump accounts officially making their debut on Wall Street today. Up next, we'll look at how those accounts work and whether they could be a boon to the overall market. Closing about over time. President Trump rang the NYSC and NASDAQ opening bell today to celebrate the launch of Trump accounts. And at least one analyst says these accounts are part of the reason he sees a strong summer rally ahead. Wells Fargo's Osang-Qan, writing that he expects nearly $20 billion in price insensitive inflows, mostly in the third quarter. Of course, we saw Robin Hood as well benefit because they're one of the platforms that will offer these Trump accounts. Yeah, I mean, year-to-date equity, ETF inflows are like $800 billion.

So I don't know if 20 in the next couple of months is going to make or break this market. Very fair. But it's, yeah, obviously it can't hurt and it would be additive to it. Robin Hood definitely, I think it's a marketing opportunity because in their last quarter, they took on $100 million an extra cost to be able to handle them. And they got dinged for it. Right. And then it was viewed as a pop.

And, of course, it's going into very low-cost index funds, which is great for people who hold the accounts, but just nobody's going to make a bundle. The assets, though, are probably very sticky, I would imagine. And you have connections with those families, for sure. from birth almost. Sharon Everson joins us now with more on what parents hope their children will learn from these investments. Sharon. Thank you, Melissa.

Well, you know, families signed up more than six million children for Trump accounts ahead of the July 4th launch. That's according to the Treasury Department. About 1.4 million of them were newborns and young children who receive a one-time contribution of $1,000 from the federal government. Parents, grandparents, loved ones can contribute up to $5,000 a year. and funds are generally not accessible before age 18. But at that age, the account converts to a traditional IRA. Parents that I talk to believe it's a valuable investment in financial education. Bergman set up Trump accounts for his children.

The CEO of a company that provides self-directed retirement accounts and a former tax lawyer, Bergman wants his sons to take advantage of tax-free growth. What is your goal with the Trump account? What is your goal for your two children? What is your goal in making sure that your family has one? It's twofold. They're going to be tax-re millionaires. I'm going to explain to them what I'm doing.

We're going to talk about what we're going to invest in together. Bergman plans to contribute $5,000 a year, the maximum allowed for each child before they're 18 years old. At that age, what's officially known as a 530A account becomes a traditional IRA for the owner to use as they see fit. Even though they're set up by parents, kids are the owners of Trump accounts. I think it helps people want to invest. Bergman and his wife are already encouraging their 15-year-old to convert the Trump account to a Roth IRA at 18 to continue tax-free investing.

Unlike a traditional IRA with a Roth IRA, the owner can withdraw funds at 59.5, with no taxes due. Will Matthews missed the age cutoff to receive $1,000 in seed money for his two young children. children. He still set up Trump accounts for them expecting each will be eligible for a $250 charitable contribution from the Dell Foundation, offered to children 10 and under who live in a qualifying zip code. But Matthew said he and his wife are unlikely to add more money to the accounts. If it's free money, we'll take it. But honestly, like, these accounts don't have that many crazy tax advantages for me to go, like, be gung-ho and putting all my eggs in this basket. You can sign up for my Money 101 newsletter to learn more and use the QR code there on the screen or go to cnbc.com slash

money 101. We also have a lot more about Trump accounts on cnbc.com. I've got a lot of questions because I'm wondering if I should do the same for my kids who are too old to get that $1,000 seed money. But is it advantageous to do so? Because if you max out your contribution to a 529 plan, for instance, can you then switch over to a Trump account? What a lot of people are telling us is that it's important to think about stacking different investments. So making sure if you're thinking about your kids and you want them to have money for college, again, the Trump account is really supposed to be an IRA so that you don't take that out until 59. You allow that money to grow.

With the 529, you have a lot more flexibility in paying for private school tuition K through 12 as well as college. And so if you can afford to do both, that's what some families are doing. I was just looking at the uptake of 529 participation. It's 30 years since 529s were created. And I think it's like 13, 14% of eligible families participate. So it feels as if Trump accounts, because of all the hoopla around it, have more of a head start in terms of millions of folks already. So many people already know about it. And so few people know about 529 counts beyond what the college savings is.

They don't understand that you could do an apprenticeship. You could, you know, go back to school yourself and get a certificate for nursing or for your, you know, tax certification or whatever you need and use 529 plan money. And so that kind of education has not been out there, but it's on CNBC.com. All right. And hopefully this whole, all the hoopla will spur people to really get educated about all these options. Exactly. Well, that's the point.

And to get them to be educated early, to listen to a 15-year-old, describe how they're going to see their money grow, knowing the taxes are just as important part of growth of a portfolio as putting that money in. That was kind of fascinating to figure that out at 15. He's really ahead of the game. Absolutely. Sharon, thank you. Sure. SpaceX shares have come back to Earth after its massive IPO.

Up next we'll discuss whether the stock joining the NASDAQ 100 tomorrow could send shares back into orbit. Welcome back. It's been a turbulent ride for shares of SpaceX since going public on June 12th. Shares rocketing out of the gate but have come back to Earth since then. SpaceX was under pressure again today as it gets set to join the NASDAQ 100 tomorrow, forcing index funds to buy the stock. announced in March, it would fast-track SpaceX into the index. Normally, a newly public company has to wait at least three months before becoming eligible. Now, these new rules, they now apply to all mega-caps, I guess. So anything that's, you know, I think it's $100 billion or above. But,

yeah, obviously meant to ease SpaceX's way in there. So the index funds would kind of buy it at today's close. It's in the index as of tomorrow morning. Stock was down. Clearly, this was well telegraphed. Also a pretty small weight because the float is so low. It's like 1% of the NASDAQ 100. or because of this of the, it's a free float market cap waiting, right? So only the ones that actually trade as opposed to ones that are held. And so that has an impact. Right. So in almost $2 trillion market cap.

And now that float will go up over time as the lockups expire and more shares become eligible to trade. Now that's kind of a mixed blessing because you're going to have more that could be sold into the market. But I think it's a lesson that index inclusion in itself is not some magic formula for the stock going up. And it really is kind of a one-time thing. Once these index funds have it in place, and net inflows, they'll get more. But look, there's a lot of stocks in NASDAQ 100 with a lot bigger the 1% weight that basically have crashed because the fundamentals dictated that couldn't sustain it. Yeah, absolutely. Well, that's going to do it for overtime today.