Closing Bell - Closing Bell Overtime: Chip stocks had their best quarter ever while big tech lagged. What’s ahead for the second half of the trading year? 6/30/26

Episode Date: June 30, 2026

Chip stocks had their best quarter ever while big tech lagged. What’s ahead for the second half of the trading year? Venu Krishna, Head of U.S. Equity Strategy at Barclays, makes the case that the rally still has room to run and explains what could keep stocks moving higher. Nike headlines earnings. The show breaks down the results before Robert Drbul of BTIG analyzes what they reveal about consumer demand, inventory trends and the company's turnaround efforts. Paul Hickey of Bespoke assesses the market's next phase and explains what investors should watch as earnings season continues. Plus, our Morgan Brennan reports on the outlook for space stocks following comments from NASA Administrator Jared Isaacman and examines what the latest developments could mean for SpaceX ahead of its anticipated IPO. 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 NYC. The Smithsonian National Air and Space Museum ringing the bell. And at the NASAC, it is LGI Homes, doing the honors. Welcome to closing bell overtime. We're live from Studio B at the NASAC market site. I'm Melissa Lee along with Mike Santoli. Sox higher once again. The Dow closing at another record high.

The S&P 500 up a little less than 1%. Nazak gaining 1.5%. The Russell 2,000, higher as well. Much more on the markets ahead. Christina Parts-Nobulus with today's big movers. Rick Santelli is watching dramatic action in the Japanese Yan, Pippa Stevens, covering oil for us, and Brandon Gomez will bring us Nike earnings as soon as they cross. And today, of course, wraps up the first half of the year.

9% gains for the Dow, S&P 500, 12% for the NASAC, 22% for the Russell. It's best start to a year since 1999, but of course, the prevailing theme still continues to be. It's semiconductor's world, and the rest of the sectors live in it. Exactly. And they just re-engaged. I mean, the idea that maybe that little shakeout we had, following micron earnings was enough to cool it off. I doubt it. I was looking at the best performing S&P stocks quarter to date. If you rank them, well, there's a top six.

Sandusk, Micron, Intel, Marvell, AMD, Dell. Today, each of those stocks, they're up an average of 6%. So do you think maybe people decided, let's make sure we show ourselves owning these things, these big winners? So some of that was happening today. There's no doubt about it. It was kind of a 50-50 day below the surface. But the S&P compounding in the first half at a 20% annual return rate.

It's hard to really argue with that. Yields up. I mean, some of the stuff might matter. At some point, you wonder when. Jolt's job openings data was good. Maybe we get a hot payrolls report. And it creates a flutter. And CPI, of course, in a couple weeks, it's going to be key for the markets.

But we did see a little bit of the, you know, in the quarter, we did see other sectors outside of technology, sort of pick up steam industrials, still riding that AI trend a little. bit in terms of those gains. But biotech and health care really perking up in the quarter. And that's important because that is a non-AI, non-tech story there. It's almost like they flipped a switch for healthcare. If you just look at the chart and it was lagging, lagging, okay, maybe it's basing, and then vertical. And it caught up to the S&P on a one-year basis, believe it or not, the health care sector, eco-way, biotech, the whole thing. So maybe that seems a little forced and scripted, but it is probably telling and maybe positive that investors are willing to go for laggards that

They're kind of adjacent to tech to some degree. Exactly. Well, let's get more on some of the stocks driving today's gains. Christina Parts Neville is here with those details. Christina. Yeah, you guys talked about it. It was a record cordial S&P 500. Nasdaq posted their best quarter in six years, Dow, since 2022.

And that came despite a war with Iran, export controls and trade tariffs. Tech led all sectors today on the day and was also emblematic of the actual quarter. You guys talked about chips. I went like this behind the scenes because that's a beat I cover closely. Intel, AMD, Marvell, Sandus, all closing up. Like Mike said, above 6%. Even in video catching a bid, roughly 2% higher on this semi-analysis report. Micron, I'm going to say the laggard of the group, but still higher on the day.

In terms of mega-cap, Apple held up well, the rest of the Mag 7, maybe a little bit more mixed like Amazon closing negative for the day. And then solar caught a bid, solar edge and N-phase, both closing higher after Roiders reported. The Trump administration is working on a ban of foreign inverter imports that move to restrict Chinese purchases would, of course, help domestic. That's why they were higher. Banks, also a soft spot. Morgan Stanley, Goldman Sachs, Bank of America, City,

all lower after Oppenheimer downgraded several names, just arguing the group has largely been discovered after years of being structurally undervalued. Last but not least, consumer staples closed lower. Hormel fell after the group announced it would sell its Brazil business. And then you had Tyson, probably also Hormel too, after the Wall Street Journal reported that USDA plans to pay smaller meat packers up to about $500 million to keep processing cattle, which is a direct threat to the industry's

bigger players. Christina, thank you. Christina Parts and Abelis. Let's turn out to the currency markets as the Japanese yen sinks to a 40-year low versus the dollar. Rickson-Telie watching that for us from Chicago. And I guess the question is, are they going to step in? Bank of Japan, that is.

You know, my personal feeling and the market's feeling is no for the moment. Boy, what a historic set of days we've had. Let's check out when it all began at the end of April. You see it on your chart there where the dollar had that drop going into the end of the month. And then for the rest of Golden Week, you know, May 1st, May 4th, May 6th, there was a series of interventions by the Bank of Japan, Melissa Lee, to the total tune of, get this, $74 plus billion, the biggest intervention in history. And what did it accomplish?

Well, as you see on that chart, not very much, because the market continues to go higher. And if you open the chart up, yes, should we stay here? These are the highest closes for the dollar against the end since the fall of 1986. And the market is challenging the Bank of Japan, in my opinion, not for an intervention, but for raising rates even more. They raised rates in June to the tune of a total of 1%. They've had four tightening since they were in. at zero for a long time.

And we continue to monitor how far it's going to go before the Bank of Japan scares traders into not selling the yen so aggressively. Back to you. I mean, just on June 19th, Bank of Japan was saying that it would take bold action if this continued and it didn't seem to do much to the markets work. I mean, at some point, this does turn into a political question because the weakening yen really threatens the popularity of Prime Minister Takiichi's government. Right.

But the downside is that should they do another intervention after the record series of interventions that they completed this month, what happens next if it doesn't stop the market? I think playing chicken from the Bank of Japan's perspective, historically speaking, is a loser. And I think they understand that. Fascinating, Rick. Thank you. Turning now to oil, which is lower again, down 20% in June. but the market trying to digest mixed messages on U.S. talks with Iran. Pepper Stevens with the latest for us. Pippa.

Hey, Michael Oil is wrapping up its worst quarter since Q1 2020 when the onset of the pandemic sapped oil demand with WTI falling about 30 percent in the last three months. Very different price backdrops since WTI was sub-20 back then and right now we are around 70. But the drop since April speaks to how quickly the market went from focusing on not enough supply to oversupply, even as Iran continues to reiterate its planned control over-trial. traffic in the street. Morgon Stanley cutting its target for the second time in two weeks, now seeing dated Brent averaging 75 during Q3 and Q4 and into next year down from 195 in Q3 and Q4 on their June 15th estimate. They argued that while Hormuz is reopening faster than

expected, the twin solvers, as the firm put it, of high U.S. exports and low Chinese imports remain in place. This comes after Brent flipped into contango, pointing to the perception of an immediate supply gut, but the bulls, including Kevin Buck, from Clearview Energy Partners, caution that the market needs to differentiate between a transient oversupply due to a one-time evacuation of trapped tankers versus an enduring return to the status quo. Guys? Pippa, you know, this idea that now we are focused on heavy supplies, what was their headline today? Iran has shipped 50 million barrels in the two weeks

since it was allowed to resume exports, I guess previously. It was at about a $2 million a barrel a day pace. Yeah, that's right. And so they have increased those exports, and those could go even higher to the tune of maybe even above 3 million barrels per day, particularly if the waiver is extended beyond that August deadline. But the market narrative has just so quickly shifted to oversupply with a new forecast seemingly every day speaking to what the supply side picture is going to look like in 2027.

I think some other factors that are influencing this in addition to higher Iranian exports is, of course, higher Venezuela in exports, the idea that the UAE leaving OPEC, they might look to increase their output to about 5 million barrels per day, as well as some of these OPEC participants who have seen significant revenue drops because they haven't been able to export to their maximum capacity. They might also want to increase their output. And so now kind of the street is looking towards a much higher production levels potentially for next year. And then you add in all of this crude exiting from the Persian Gulf right now. And there's not many people willing to go along here on the oil sides with Brent's hovering right at about $73. Pippa, thanks. Pippa Stevens. Stocks are wrapping up a strong first half in second quarter. The SB 500 and the Nazai posting their best quarter since Q2 of 2020.

The Russell 2000, the standout winner, posting its best first half in 35 years. Can we expect the same run in the second half? joining us now as Barclay's head of U.S. Equity Strategy, Vinu Krishna. He raises your end price target on the S&P 500 from 7,650 to 7,800. Welcome. Great to have you with us. Thank you. We are chatting at the beginning of the show that a lot of this is, you know, semiconductors' gains,

and the idea that increased cap-ex spending, continue cap-x spending, is going to sort of underpin all the gains in the market, most of the gains in the market going forward. Do you still believe that that will happen? As far as the mega-caps, the hypers-calers, remaining weak, putting pressure on their CAP-X plans, are you concerned that that will go away? Well, so let's start with the semiconductor earnings. So I think there we are confident because there's enough visibility for the next 18 months

to the end of next year. But it's underpinned essentially by the CAP-exp spending of the hypers, which, by the way, has shown no sign of reducing. In fact, it's going the other way, right? And that is precisely the reason why the hyper-scalers have scaled back somewhat as the market is getting apprehensive given the scale of spending. So we are estimating about $1.2 trillion in 28, which is roughly $250 billion more than where the consensus is right now. So I think there the market's emphasis is more about the scale of capital spending and the uncertainty on the timing when it will stabilize, how you will monetize it, and potential issues around funding down the line.

not right now. Funding is very easily available to them in credit markets, equity markets, convertible bond markets. And their operating cash flows are quite significant, even though now they'll eat close to 90% of their cash flows and above in the next few years. So I think it is a mixed back. In fact, we like the whole of tech. So we like the rest of tech who are beneficiaries like semis off the CAPEX dollars because there's visibility because the company spending it have the capacity and the ability to spend. On the other hand, we continue to like Big Tech because their earnings growth 30% in Q1, accompanied by a four-handle decline in their multiples since the start of the year. I love that combination. You are now

sitting at a peg ratio of less than one for this group, right? And so I think the setup is fantastic. And the last point I would make is if you look at Big Tech as a group, which is Mag 7 without Tesla, you know, we look at it separately and some of the parts analysis. there, you know, that portion of the market is completely underappreciated right now. Because everybody, when they think about rotation, is moving away from them. And those are precisely the areas which we continue to like. You mentioned the valuations have come down for that group. Of course, that's also compressed the overall S&P 500s forward PE.

Your new target of 7,800, you say, you know, the multiple can go back to 23 as your raised earnings estimates close to, I guess, what the bottom-up consensus is. Why should we expect the multiple to rebuild from here if 23 times earnings was the market's way of forecasting this ramp in earnings that we're getting, and next year, even though earnings are going to be good, they're going to be a step down, most likely. Yeah. So just to be clear, in getting to our 7,800, so we increased our earnings estimate significantly. So we're expecting 21% earnings growth this year. We expect that to decelerate next year to roughly about 15-16 percent, still very strong. Right.

They're coming off 14.5% last year. But we are looking at lower multiples for all the pieces. That is big tech, rest of tech, and the rest of SNP. And we do that. And the reason is different for each of the buckets. For big tech, our point is that, you know, as the spending is scaling so significantly, there is this uncertainty, whether, you know, they can be a power constraint, whether they can be a funding constraint, whether they can continue to keep up with the model

strengths, which is what is leading to faster adoption. And whether or not they can be ultimately social and regulatory pressures to sort of scale them back. So there's enough uncertainty and we feel the way you want to deal with it is pay a lower multiple. So we're cutting our multiple roughly 5 to 10% down across different groups. And even for the rest of S&P, where we have a model, which takes into consideration interest rates, inflation, and domestic economic growth, in general, that fair value has slipped, right? So, you know, I think I like the combination of being more conservative on rates, on multiples, because the primary risk in the market, in addition to the AI narrative,

on a macro front, is interest rates. You have a new Fed chairman. You have a market completely repricing away from cuts now to a no change in policy, but potentially the higher likelihood of rates going up. All that means is that multiples is where it ends up being the first channel of communication or percolation into the equity markets. So I think the prudent way to do it, let earnings do the work, be careful in multiples, and ride the market. Did you say high likelihood that rates would go higher? Is that your base case, that there will be hikes? Well, we expect no hikes this year as a house. And next year, we do expect potentially one increase, for example. But, you know, that is, if you look at the rates market, that assumption has changed so

dramatically in the last four years, I think it's a little dangerous for equity markets to pay too much attention to that as a cue to what is likely to happen. But it's very clear that with inflation sticky and with AI CAPEX actually leading to inflation trickling into even core PCE, because your memory costs are higher, your server CPU prices are higher, your storage prices are higher, component prices are higher, labor is in shortage. So I think all that does put some pressure on inflation. So it makes it at the very least, very challenging for the Fed to step in and cut rates. So the best case scenario is rates sort of stay where they are, which is what are base cases.

All right. Vino, great to see you. Thank you, Vino, Krishna. Let's get to Brandon Gomez. Nike earnings are out. Brandon's got the numbers. What are they, Brandon? Hey, that's right, Melissa. We were looking for these numbers all day long. It's a beat on the EPS. It's 24 cents adjusted compared to the 13 cents that was expected. Now, that excludes tariffs. In terms of revenue, also a beat here, 10.97 billion compared to the 10.859 billion that was expected. Looking at the different revenue numbers for different regions, North America revenue, was slightly lower than expected, coming in at 4.832 compared to the 4.88 billion that was expected.

Greater China, a slight beat there, 1.297 billion. And then when you look at gross margin, 49.2%. Now, that's including a 900 basis point benefit. due to the recovery tariffs that we knew we were going to be hearing about in this print. So we are not doing the comparison there. We will get a little bit more clarity on guidance once we get the earnings call underway, which I'll be monitoring and bringing you any headlines right now shares up about percent and a half. Just to be clear, Brandon, also on the EPS number, you said 24 cents. It seems like a huge beat over the 13 estimate.

But you said that's X tariffs? Yes, X tariffs. That's correct. Yep. Okay. Brandon Keep us posted on all this. Brandon Gomez. And, of course, the key will be, I mean, 49% gross margin versus a lot. with 40% and it really have to see how that shakes out. Yeah, I mean if that was

900 basis points, it means it was like 40.2, it's just a slight beat over what was anticipated at 39.9. Right, and of course, guidance will be key. It's going to matter quite a bit. Right. Has beaten on many, many quarters in a row and the stock has done nothing because of the guidance. The 24 cent estimate, one

year ago, this quarter was supposed to be 35 cents. So obviously it's been downgraded quite a minute. We'll keep your posts on this and the stock is a volatile in the after hour session on the back of these numbers coming up. We'll get your reaction to those numbers and ask an analyst if there are signs a turnaround is finally taking hold. You're watching closing bell overtime live from the NASAC market site. Shares of AT&T down once again today. Lowest closed in nearly two years. Biggest one-day decline

in more than a year. Worse month since March of 2020, the latest bit of news weighing on the stock, potential competition from SpaceX in mobile phones. That's also hitting Verizon, which is down again today, down 9% in the two days since being removed from the Dow. The dividend yield on both those names now topping 5%. All right, let's get another check on Nike shares with Q4 numbers out just moments ago. The stock popping initially, but giving much of those gains back, it was up around 4% initially. Greater China sales topping estimates, but falling 12% compared to last year. You see it up about a percent and a half at the moment.

Joining us now is Bob Durbel, BTIG Consumer Retail analyst. He has a buy rating on Nike and a $55 price target. Bob, good to see you. Thanks, Mike. Good to be here. You know, first impressions here, obviously we're kind of looking for a fundamental bottom. I mean, I think the time frame is the discussion, right? Like, I think where we are with the stock and where the company is, like, the strategy is in place.

And, you know, we're watching this, you know, constructed very quarterly, slowly, slower than we thought. You know, but I think progress. And I feel like from the, you know, the fundamental piece of it, you know, Elliott's been very clear with what he's trying. to do, and I think he's on the right track. I wish it were happening faster, but I do think that, you know, we're making progress. Do you see anything from this particular quarter that is like a brick in that story of the turnaround? Well, I think, I mean, part of it is China has a huge discussion around the long-term profitability, you know, earnings power of the company, and China was guided and expected down 20, down 13. you know, okay, it wasn't down 25, right?

That's like the, that would give you that brick, right? North America, it seems like, came in a little light. North America is, they've had great growth. They've really sort of put themselves back on the map within North America. So, you know, is North America sustainable? And I think it is. We think that, you know, it's a tough battle. It's a really competitive marketplace.

But I feel like, you know, the product, you know, you think about what's happening in basketball. You think about where we are with soccer. you think about what they've done and running, I just think there are some pieces in place, but we just need some time for them to really gain traction. Given how much the earnings, the current earnings, have come down relative to multiple years. I mean, per share, we're back to 2015 levels or something like that.

So the Bull case has to rest on the idea that they obviously have unusually depressed margins, and it can go up from here. There's new CFO. I mean, what are the elements of getting that performance back? Well, I mean, I think, first of all, I just want to keep the marketplace clean. I think from an inventory perspective, you know, don't oversell, don't sell in if it isn't really working. I think they've been really good at that, you know, over the last few quarters and into the, you know, over the last, since Elliott took over, really.

I think the other side of it is, you know, what's the innovation pipeline look like? And I feel like there are some good shoes in the marketplace. I think there's some new stuff coming that we're pretty excited about. You know, overall, I think it's just going to take some time. And I think, you know, earnings have come down. The new CFO, it seems like his initial incentive is more of an, you know, even margin growth story, not a revenue story. I'll take that.

I feel like, you know, we want to see some margin expansion, some margin recovery. You know, I don't know if they're ever going to get back to 12 percent, average margin. But if they can get close to 10 percent, the stock is screaming at you at these levels. Do you think the best days of Nike in the stock are over? I think that Nike has to find its way back into culture, into, you know, I feel like the brand itself stands for sports, stands for, you know, sort of authenticity. You know, I feel like they're doing it very slowly, and I think Elliot was there in the heyday. I think he knows that sort of magic sauce that's necessary. I feel like they're trying as hard as they can in a very competitive market.

And I know you think that, you know, the NICS America's team winning is a big deal. So we'll see if that effect. I think it helps, right? All right, Bob. Good to see you. Thanks, ma'am. Thank you. All right, Constellation Brands, earnings are out.

Brandon Gomez back with those numbers. Brandon. Hey there, Mike. Yeah, an EPS beat $3.43 compared to the 320 estimate slight revenue beat, $2.43 billion reported compared to the $2.39 billion that was expected. Beer revenue, also a slight beat. You can see that helping lift share is about 2%. But in line, basically, adding some momentum to grow.

growth last quarter, $2.283 billion compared to $2.24 billion, expected with operating income of about 891 million EPS guidance show at the, I'm sorry, showing at the midpoint, falling below expectations ranging between $11.20 a share to $1190 versus the 1174 adjusted. That was expected. We'll wait to hear more as to the health of the consumer and how the new CEO, Nick Fink, is navigating the macro pressure hitting alcohol shares. Mike, Melissa. All right. Brandon, thanks. Space-related stocks taking off this week after a rough month of June, how NASA announcing new deals, now NASA is announcing new deals with intuitive machines,

Firefly Aerospace, and more. We'll hear from the NASA Administrator next on Closing Bell Overtime. Welcome back to Closing Bell Overtime. NASA announcing this afternoon that it has selected astrobotic, firefly aerospace, and intuitive machines to receive awards to help land four new missions on the moon in 2028. Space-related stocks have had a great first quarter with both Firefly and Ineastern. intuitive machines rallying more than 32% each, but the month of June wasn't so kind with both off more than 36% as SpaceX went public. Morgan Brandon got a chance to speak with the new NASA

administrator. She joins us now from NASA headquarters. Morgan. Hi, Melissa, that's right. So I'm here at NASA headquarters. I just spoke with NASA administrator, Jared Isaacman, as well as moon-based program manager Carlos Garcia-Gallon. They just announced, as you mentioned, four more lunar lander contracts worth in total, about half a billion dollars, intuitive machines. Firefly Aerospace, two to Astrobotic, which is being acquired by Voyager Technologies. And I asked Isaacman and Garcia Galan how confident NASA is in its timelines to build out a permanent moon base and have astronauts land on the lunar surface. Now we're saying, look, we're going to do everything we can to help you get it right,

but you're going to have a lot of opportunity to do so. We're going to launch uncrewd landings on the moon, again, on a near-monthly basis, starting in 2027. We're going back to stay. We're going to want to be able to put a lot of tonnage on the surface of the moon, and we're not going to want to throw away our spacecraft every single time. So we've got SpaceX and Blue Origin working on very hard engineering problems that are either involved on orbit assembly of the spacecraft or cryogenic prop transfer. That means lots of launches need to work in order to put those astronauts on the moon.

Is this something that's going to be solved? Absolutely. Can it be done within the timeframes we need? NASA is throwing everything we've got at it to make it happen. Now, I also asked about SpaceX's IPO. You just mentioned that. The administrator telling me that he, quote, has no issue with important partners to NASA being well capitalized, especially since realizing a sustainable space or lunar economy is going to need to extend beyond government. When you have a company that's incredibly well-resourced that knows how to solve, really challenging engineering problems, saying, look, I'm going to do data centers in space.

We can't lose the AI race. I'm going to 3D print regala on the moon. I'm going to build a mass driver on the moon. That's all music to our years. So all of this as the NASA administrator and others from NASA today also basically put out a request for tech demonstrations and other types of, and putting it out there that they're interested in other types of infrastructure as well, longer term, as they realize this $30 billion moon base. Including, by the way, right next to me, this is a mock-up of a Mars rover. They actually have one sitting in California and storage, and they're now looking to send that to the moon here in the coming years as well. So we continue to see these lunar ambitions realized and realized pretty quickly here for NASA. You saw the stocks, too, Intuitive Machines, Firefly, and Voyager, which as I mentioned is acquiring astrobotic, moved to session highs coming into the close as well.

Yeah, Morgan, I was wondering these contract awards, is this part of a pool of government contracts that investors were kind of watching and seeing where they landed? Is it incremental to what we were thinking was going to come the way of these contractors? So it's interesting, the NASA administrator, Administrator Isaacman basically said this is episode two for moon base updates. And yes, that is a Star Wars reference. But the idea being that they're going to regularly release tranches of contract awards and interact with industry to continue to invest toward this moon base goal, which will be realized here in the coming years. They're looking to move very quickly and bring these timelines down from multi-year to not just yearly. timelines, but monthly timelines as well and get much more aggressive. He has been very plain spoken

and he was again now in terms of this idea that the U.S. is in a new type of space race to counter China and to realize permanent presence on the moon and then from there be able to move on to Mars. Did he have any comment about SpaceX's, you know, grand goals, for instance, of, you know, colonizing Mars? I think SpaceX and NASA are relatively aligned in terms of that. This idea that you need to first go to the moon, you need to build out the infrastructure on the moon, and then from there you can start to realize this long-term vision of colonizing Mars.

NASA has talked about it for a very long time. NASA has invested hundreds of billion dollars towards that goal, ultimately, as well. So in that sense, I think, again, it goes back to those. comments about, you know, watching the SpaceX IPO and looking at the vision that Musk has and the technologies they're looking to invest in and build as very positive towards that goal for the U.S. and for NASA as well to realizing that. Again, because it's not just about the government spending money to do this, right, but about the government basically seating these new types of economies for commercial players

and private investment to come in and help realize it long term as well. So it's just a different way of contracting and interacting with investors, and certainly you're seeing that come to fruition and the SpaceX IPO was definitely a milestone towards that. Full interview, by the way, going up on CNBC.com and we're going to bring more to morning call tomorrow kicking off at 5 a.m. Eastern. Look forward to it. Morgan, thank you. Morgan Brennan. Time now for a CNBC News update with Pippa Stevens. Pippa. Hey, Melissa, hard-line conservative allies of the president today blocked a major defense policy bill in the White House led by Florida's Anna Polina Luna. They are vowing to block any and all bills that come up in the house unless leave. advance the Save America Act, which tightens voter ID and citizenship requirements for federal

elections. But Senate Republicans have repeatedly said they don't have the votes in the upper chamber to pass the measure. Israeli Prime Minister Benjamin Netanyahu visited southern Lebanon today, telling soldiers, Israel won't withdraw as long as Iranian-backed Hezbollah remains of threat. It was Netanyahu's first visit to the territory since both governments reached a security agreement last Friday. And the White House is reportedly preparing to give a financial lifeline to smaller meat packers as cattle supplies dwindled to a 75-year low. According to the Wall Street Journal, the Agricultural Department plans to pledge $500 million to small and medium-sized meatpacking companies.

The country's four largest meat processors are excluded. Beef prices are currently at record highs, according to the USDA. Mike? All right, Pippa, thank you. The SMH semiconductor ETF just finished its best quarter ever. Micron and Intel tripled over the last three months. AMD almost did. So what can they possibly do for an encore in Q3?

That's coming up on overtime. And as you hit your break, check on Nike. The stock has now turned negative by almost 3% in after I was trading. Following its earnings report, got about a half hour until that conference call. We'll be right back. Welcome back to closing bell overtime. Live for the NASAC market site, green on the screen for the second straight day. The Dow up 136 points, but that is a record closing high.

S&P 500 closing just a hair below 7,500, NASAC higher by 1.5%. This sends a very strong quarter for the markets. 15% gain for the S&P 500, more than 20% for both the NASAC and the Russell. But it was a brutal quarter for Bitcoin. That was down 14%, down for the third straight quarter. For the first half of 2026, it's off 33%. That's its worst first half of a year since 2021. Well, semis have been one of the markets' big momentum trades this quarter with the Sox ETF, up nearly 95.

5% at its best quarter on record. But after such a big and rapid move higher, is the rally starting to resemble late 1999 before the dot-com bubble burst. With us now is Paul Hickey, Bespoke Investment Group co-founder. Paul, good to see you. Good to see you both. As you always point out, you should probably welcome semiconductor leadership of the market. It's got a good kind of growth plus cyclical message. Is there too much of a good thing? It's also the source of a lot of the kind of single stock volatility out there. Right. I mean, we're the biggest fans of the semis, and when they're outperforming, we always say it's a great sign for the market. But even this after a run like this quarter, you have to say, are we getting a little bit ahead of ourselves here?

Best quarter ever. You know, you've talked about it as well, the volatility, only one day this month where the socks didn't move 1%. That kind of frenzied activity just can't keep up. So I think over the long term, you know, we still like the semis, but I wouldn't be a great. towards it here. This is, this bull market is an AI-driven bull market. That's the theme. If this bull market is going to continue, it's going to be led by tech and probably semis, but they don't have to be consistently, and they can't go in that kind of pattern for good. So I think in that respect, they've gotten a little bit, a little bit, to put it mildly extended. So I would maybe take a breather here. I mean, it's a bull market led by CAPEX spending. And it's also,

So it's a bull market that will continue higher only if there is not the inflation that is spurred by all this KEPX spending. I mean, we're in a very interesting spot here in the markets in terms of the impact on the consumer, but at the same time powering the bulk of the market higher. Yes. So, I mean, two things for, and this run-up in the semis comes into this month where both the inflation and technology is going to come into play. Earning season. Earnings estimates are up by a lot. It's concentrated the growth into technology and industrials.

So the expectations bar is a little high there. Where we don't necessarily see the high expectations is consumer discretionary, financials, and health care. Those sectors could be in line for upside surprises. And what I think is really interesting about the consumer discretionary sector is, obviously the declining gas prices. That's going to help out, that has the potential to help out the inflation numbers. And back in May, we did this analysis looking at inflation,

elevated inflation levels. And when inflation stuck between two and four percent historically, that's been a great environment for the stock market. And that's what we had for 35 months. We had that scenario. Then the May report came out in June, and then we got up to 4.2. Historically, when you break out of those ranges, upside breakouts are much weaker market returns going forward than downside breakouts. I think the caveat, there's always a caveat, is that this, next, in two weeks when we get the inflation report for June, there's a real chance that the year-over-year CPI number could come back to 4% or below. And if that, if it stays elevated, that's going to be a problem because you're going to get the more hawkish talk about the Fed. But if it comes back below 4%, I think it's a great environment for the market.

Somewhat related idea, and I've heard people start to angle out there that maybe we're entering a good news is bad news type of scenario, and if we get some strong payroll numbers or something like that, the stock market might not take it well. I kind of hate that because it often is just not the case, but are we set up for something like that? Well, so the market has taken out four rate cuts over the last several months here, and it's primarily because inflation going higher, but also the labor market is stabilized, like said.

So if we see that, like the good labor data may not be great, but lower inflation numbers, I think, will be greeted with, you know, open arms by the market, and I think the market would certainly like that. But it's less likely the Fed's going to cut because we do have that stronger labor market. And a lot of the pricing was because the labor market was unsteady. But our point is always that when the Fed is cutting rates because they need to cut rates, there's usually a problem. And that's not good for the market. So if the Fed doesn't have to cut rates because the economy is doing great, that's fantastic news. You're mentioning health care before, and we're commenting how health care really took off.

I mean, it's really a story of the month of June where you see this chart just go higher. And, you know, in terms of being positioned for that upside surprise, do you think we see that sort of parabolic move higher continue? You know, I mean, we came up right to the highs that we've resistance levels that we've been at. But there's no sector, I think, that has more opportunity for better efficiency than the health care sector from AI. So I think in that respect, it's a long-term good picture. I think within health care, these biotech stocks have been really breaking. out and on a long-term play, I think that's an area. If you want to go into the health care sector, look in the biotech sector, because that's an area where you can really see some material

improvements from AI. All right, Paul, good to see. All right. Good to be here. Thanks. Thank you. Up next, we break down the charts to look at whether the market broadening bowls could soon be running wild on Wall Street. And what a quarter it's been for the small caps. The Russell 2000 posting its best quarter in six years. Here's a check on some of the notable winners in that index. Max Linear, Oscar Health, Riot Platform, Biasat, and Digital Ocean. Of course, that index rebalanced and a lot of the big winners left on Friday. Closing Bill Overtime. We'll be right back. Welcome back to Overtime. So, of course, there's been some celebration in recent weeks

about this broadening pattern in the market, which means essentially smaller stocks, the median stock outperforming as measured by the equal weighted S&P compared to the standard market cap weight of one. Some perspective here. This is a three-year chart of. the equal weighted versus market cap weighted S&P. This is the last few months rebound. So you can see, it's done nothing yet to kind of challenge that downtrend line. We've been in for a while, and you see all these various episodes where we did have this period of time where mega caps took a seat, a backseat, and the average stock did well. So it doesn't mean it can't break out from here. Doesn't mean you can't have further room to catch up. But I always like to say when you really

get the equal weight outperforming is an overall market downturn. when larger stocks go down typically more than smaller ones. I mean, it would have to take a huge pullback in terms of the tech trade and semiconductors in particular in order for that to happen for an upturn in industrials and health care and financials to overtake what we saw. The math of the index is getting very tough, more than ever probably. Yeah. Yeah. In terms of the small cap outperformance, that sort of, though, shows a broadening, at least in market cap.

It does. It's very similar. And probably more dramatic, actually, on a year-to-date basis, because you do have all. All the small cap index is up more than 20%, but it's coming also from a pretty deep hole on a relative basis, too. So you have to kind of broaden it out to see exactly what the overall trend is. The IMF issuing a big warning about tech stocks, and it's not about their valuations. We've got the details straight ahead. And speaking of those tech valuations, here's a look at the big winners in the NASDAQ 100 this quarter,

as Sarah Labs, Micron, Intel, Marvell, and AMD. Closing Bell overtime, live from the NASAC market site. Be right back. Welcome back. Recent commentary on AI raising some red flags. IMF's director of monetary and capital markets department warning today that AI debt issuance is more of a threat to markets than soaring valuations. Quote, there's a potential maturity mismatch in between the duration of the physical assets and the duration of the debt. Meanwhile, respondents to the Dallas Fed Service sector outlook survey noting that AI has not had any material impact on cost reduction or growth acceleration, despite an increasing amount of investment.

Well, many are concerned about the cost of AI executives at Amazon say it is not too expensive, but it is being used. Expeasively, in a tutorial sent to employees, AWS had said about 95% of AI usage still runs on the most expensive frontier models, even for simple tasks. This is like buying a Ferrari for the school run. So I think there are a lot of questions around AI overall about whether the spend is going to be worth it, how we're using AI, how companies will use AI, if it's going to reap any efficiencies, whether it be in terms of the jobs savings or just

efficiency savings, productivity savings. And it's reflected in the markets. First of all, you buy a Ferrari, you can only bring one kid to school at a time, very expensively at like 10 miles per gallon. So that's a good analogy. But it's interesting how the market has gone in these phases, right? In 20, 23, 24, you're rewarding Microsoft. And then Nvidia.

and then Google's going to be on the outs and then Google's going to be a winner. So the market is trying to rationalize this as it goes along. What's really fascinating right now is the AI memory hardware food chain. It's now still trading as if there's no choice and that they're voraciously going to kind of raise all this capital and pour it into their free cash. So there's still reckonings to be had.

And I find it interesting what Amazon is saying about, you know, we're kind of in this just experimentation phase. Right. And it goes to, you know, this debate about buying the most expensive CPUs and GPUs versus buying a TPU, which is going to be a lot less expensive in using that model much more efficiently or using the cheaper model like a deep seek sort of model. So there's that sort of debate going on. Right. The whole good enough is good enough. Right. But the debt mismatch, I think, is something that we haven't thought about collectively as a market. I mean, if you were going to issue bonds that are, you know, 10 years out or whatever it is, and the depreciation of the asset is, Five years. Well, what do you do? Exactly. It's a pretty ferocious debate, actually, in terms of whether even the stated useful life of GPUs and other things is really understated. It was a Michael Burry bear case for a little while as well. So see how that plays out over time. Let's turn to the jobs market. Job vacancies increased slightly in the month of May, adding 9,000 openings from April to $7.59 million that beat Wall Street estimates of $7.3 million. The month got a boost from a trade-related field from trade-related fields, adding 71,000 vacancies, but there was a decline of 115,000 in health care and social assistance openings. That's despite the steady demand for workers. Hiring activity remained

flat. Layoffs came in at $1.7 million. It's about unchanged from April. So not too bad. Certainly relative to consensus. It creates this picture of a weakening job market into the end of last year that's now basically stabilized. Right. And it's not necessarily that bad to see the relative of weakness beat in health care and social service, which had been driving most of the job growth for a while. But you pair that with AI adoption and you think, well, AI hasn't really taken away jobs and maybe, you know, AI is not reaping any efficiencies on the job front for companies yet since we're seeing this stabilization. Yeah, that is true. I mean, I still do think every job discussion has to reckon with like a quarter of a million baby boomers retiring every month. So I don't know.

We're just kind of backfilling as they leave the scene. Let's take. one more check on Nike. The stock reversing course now down and after hours trading the company reporting earnings of 20 cents a share compared to the estimate of 13. Now that excludes a gain of 52 cents a share from a tariff refund gain. Most analysts not including that gain in their estimates since it is a one-time item. North American sales were disappointing. China sales did top estimates but are down 12% year over year. Yeah, we should note too that when Lulu reported They noted weakness in North America, too. So you have to wonder if it's endemic to the market, if North America itself, there's

something about this market that is going to be challenging and challenging as Elliott Hill tries to turn this company around. And it's interesting. You look at that stock chart of Nike. It's been unrelentingly weak. It doesn't look like there's a World Cup going. I mean, there was a time when it would get the benefit from World Cup and then even Olympics last year. It didn't really seem to matter. So maybe there is something structural going on in the category.

And clearly the market felt like there was. noise in the numbers and it didn't know how to trade this. So we'll see what happens as we get into the conference call in just a few minutes. And that's going to do it for overtime today. Fast money begins right after this quick break.