Closing Bell - Closing Bell Overtime: Fed Cuts 25 Basis Points — What's Next For Markets? 9/17/25

Episode Date: September 17, 2025

Jefferies Chief Market Strategist—and potential next Fed Chair--David Zervos gives his take on the Fed's decision today to cut 25 basis points. BMO Private Wealth Chief Market Strategist Carole Schleif and Regions Wealth Management CIO Alan McKnight provide comprehensive Fed reaction analysis and what happens next for markets. Gabelli Funds' Macrae "Mac" Sykes examines the financial sector's response to Fed policy. Earnings spotlight on Bullish's first report as a public company and Cracker Barrel's first results since their logo controversy nightmare.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

That bell marks the end of regulation. Garmin, we're going to pose a bell with the New York Stock Exchange, beat our partners doing the honors at the NASDAQ, and stocks are mixed after the Fed's decision to cut interest rates by a quarter point. Check out the intradate chart of the S&P 500, briefly popped into positive territory following the decision, slid as Chair Powell spoke and recovered most of the losses. The yield on the 10-year also shifting.

It fell at first, dipping below 4%, then moved higher. Similar chart pattern for the dollar index down at first, then spiking higher, and gold did touch a new all-time high today before pulling back. Silver down nearly 3%. Copper also lower, maybe profit-taking after a rally. That's a score caught on Wall Street, but winter stay late. Welcome to closing bell overtime. I'm John Ford. Morgan Brennan is off today. Today's big story is the Fed and the market reaction. Got a great lineup of reporters and guests covering every angle, including one of the people

in contention for a Fed seat. David Zervos of Jeffries. He said the Fed's. He said the Fed's should cut by 75 basis points. We'll get to him in just a moment. Well, let's start with the market reaction to the Fed's decision. Our Christina Parts. Nevelis is here with a recap of today's action. Christina.

Well, the Fed cut rates and markets did exactly what you'd expect. Jump first and ask questions later. John, you talked about that. And after the initial euphoria wore off, we saw some selective moves. Starting with the Russell 2000, I would say maybe the wildest ride

out of all the indexes or indices. These smaller debt-heavy companies love rate cuts. hit an all-time closing high before pulling back and closing two-tenths of a percent low higher i should say home builders started strong makes sense with the hopes of cheaper mortgages but couldn't stick the landing both the i tb and xhb did close lower over just about one percent in the red regional banks were the real winners today up one and a half percent roughly snapping a three-day losing streak larger names like truist m&t jumped mostly almost two percent higher rate cuts really

boost loan demand while easing pressures on their funding costs. It's essentially a double win for these guys, but it wasn't all good news. InVIDIA did get hit after China reportedly blocked its AI chip sales to local tech companies that dragged down Broadcom, other chip darlings as well. And then quantum computing, a surprise winner today. The Energy Department announced partnerships with I&Q Honeywell for space applications. And then you also had D-Wave closing roughly almost 18% higher. That's the QBTS there.

Seeing a bump in quarterly revenue, they announced it at a conference in Tokyo, and that's why that sector is doing well. John? All right. Christina, thank you. Now to the reaction we saw in bonds are Rick Santelli joins from Chicago. Rick. Yes, John. You know, it was an exciting day, but after it was all said and done, interest rates weren't much different than they were, well, this morning. Now, if you look at twos and tens on the same chart, a couple things should jump out at you. First of all, two-year traded down as low as 346. Its current low yield close for the year was just last week at 3.48%. So it doesn't look like we're going to make a new low yield close, considering we're hovering at 354 up four basis points. Tens, well, tens traded down as low as, well, 398.

But a U-turn there as well. The key is the low-yield close of the year from early April is basically 4%. I don't think we're going to challenge that either. But the big mover, maybe the big winner in many ways today, was the dollar index. There's a chart of the dollar index after the spread, which steepened. The dollar index had a great reversal. The lows of the session to where it is now is almost three quarters of a cent bounce. And do keep in mind, yesterday's close was the lowest close going all the way back to Feb of 22. So a bounce here? Well, it could be significant, but the

weekly close on Friday needs to be above around 97.5, according to technicians, to really reverse some of the negative sentiment of the last several sessions. John, back to you. Rick Santelli, thank you, a lot of bouncing around. Now, let's get to Steve Leesman, just back from Fed Chair Powell's press conference, Steve. Thanks, John. Fed Chair Powell explaining the rate cut today, but being careful not to promise too much more asked by CNBC if this was a process of recalibration.

Powell, in fact, said it was the decision we made meeting by meeting and based on the date of the reason, disagreements within the Fed over the outlook for policy, and tension on both sides of the mandate between higher inflation and weakening labor markets. Ordinarily, when the labor market is weak, inflation is low. And when the labor market is really strong, that's when you, I have a careful by inflation. So we have a situation where we have two-sided risk. And that means there's no risk-free path. And so it's quite a difficult situation for policymakers.

And it's not at all surprising to me that you have a range of views. Check out this information about the committee being at odds here. One didn't want to cut at all today. Six committee members want no more cuts after today's cuts. Two want one more cut. Nine want two more cuts and one individual. We think it's Stephen Myron, the new Federal Reserve Board Governor who came from CEA chair. He wants five more cuts this year, or that person does anyway.

Futures market trading, however, with confidence of those two additional cuts, maybe more confidence than Powell expressed. 90% for a cut in October, 80% for another one in December. The key to the outlook may be in the statement itself, which said that downside risk for employment have increased, and as long as that's the case, the Fed may be cutting rates until the inflation and employment mandates and the risks there are in balance, John.

Steve, when's the last time you had this kind of range of expectations for the future from the Fed? I don't know, but it's pretty rare, I can tell you, because what we're talking about is the expectation for the, the end of the year, and there's only two more meetings left. So I'll go back and try to find this dispersion, but I will tell you, John, we made a joke in the, in the press room today, that we were going to need a letter pad in order to, in a legal pad, in order to get that new dot in there that we all expect it to be as low as it ended up being. All right. Steve Leasman,

thank you. Well, a quarter point cut was the vote of 11 of the 12 voters. The loan to center was brand new Fed Governor Steve Myron. He wanted a half point. That's not as much as our next guest. Joining me now is David Zervos. He's chief market strategist at Jeffries and the CNBC contributor. He's been saying they should have cut 75 basis points at today's meeting. Has it met with the Trump administration about the Fed Chair nomination. David, good to see you. So I'm trying to figure out how far off from the range are you here? 75 looks like a big number. But how many more cuts do you think are? needed for the rest of the year after that.

Well, John, first of all, let me say, you know, I talk about what I think should happen and what I think will happen, and I certainly was in the camp that they would only go 25. I didn't think this committee would come to it, but I've added some spice to what I usually say on this program and others with some of your other hosts and other hours offering what I think should happen just because of this contention storyline for me. So I wasn't surprised by much of what Powell said. I thought he was actually kind of nervous about the labor market, a little more dovish than I thought. And I think where the market turned on him was the 50 discussion.

Why wasn't 50 even discussed in any meaningful way? And I think the market expected that to be the case, and it just wasn't the case. And that's why you got the dollar ripping back up and the yields coming back up as well. The market is looking at this like, you know, maybe a small policy mistake that we should be lower, we should be less restrictive. They're taking some undue risks on the employment side, and they have a lot going for them on the inflation side if that labor market forecast is weaker in the future. So I think the market reacted kind of right to that, and I think the Fed did sort of what you expected them to do. and I don't think there was much new here. As for my personal box.

You talk about the market's reaction. Which reaction are you talking about? Because the markets said to do a couple of... To the discussion of 50. Right, but both the stock markets, we just heard from several of our journalists here at CNBC, both stocks and bonds made some moves in a couple different directions after the announcement

and then the commentary. And then, you know, the S&P closed just off a flat. Yeah, look, at the end of the day, These are pretty unchanged markets, as Rick was saying in the beginning from where we started the day. But I think the market was excited about a Dovish Fed. They thought Jay sounded, Dovish. The statement talked about labor market weakness. They focused on labor market weakness.

The balance of risks had moved. Everybody got excited. You take the 10-year to $3.98. You take the dollar in, you know, Eurodollar up to $119 and change. And then you listen to Jay. And then you listen to Jay. And he says, we didn't even talk about 50. And the market turns it around and takes it back to unchanged.

That's basically the story of the afternoon. completely understand why the market did it, kind of completely understand why they did the 25. I'm a little not unhappy, but I just don't, I find the idea that we're not even discussing 50 to be a little bit of a silly idea. And I think the market reacted accordingly to that. You know, when Jay was asked as well, you know, would you, I think Nick Timmeros asked him about, you know, would you consider the 50s and how do you think about 50s? He might have made some argument that those are only in really special times and really unusual. times, like during COVID or like during major crises of sorts, which doesn't really bode well for what he did back in September just before the election. So I think it's a little bit suspect

why the 50 wasn't even discussed. And I think the market reacted to that. Well, when we see what the different voting members of the Fed are expecting for the rest of the year, and I guess maybe more than just that, where do you fall on how many cuts? Because maybe you're saying you just think that a bigger cut is necessary up front, but you're more in line with the rest of the Fed governors on where we end up? You know, I guess the way I think about it, John, is most of the committee wants to get there. They seem to want to get there in the next 12 weeks. Why not get there sooner?

Risk manage a little bit more to this unbelievable change in the labor market outlook after these two sets of revisions that we had, both the revisions recently and then the 2024 revisions that were seismic, really. So the whole model is basically thrown out. The immigration story is now being replaced with a productivity story. I think you go take out a bigger insurance policy and say, look, we're going to wait and see, but this was a very significant change in the labor market outlook. And by the way, Jay sounded like he thought it was a very significant change in the labor

market outlook. So I don't really think you you had a storyline that didn't warrant at least an active discussion of 50. So I think that's why the market was modestly disappointed. I would be happy to see 75 lower and then and then we just go meeting to meeting and watch it and see what the data says. Okay. But he did say though that there's a two-sided risk and so therefore it makes it a tough call. You seem to be saying that the risk in the near term is not so two-sided. You think it's weighted much more toward labor market weakness. Am I hearing that right from you? Well, I think so, John. Think about it this way, right? And he's saying we've got this labor market weakness. That was the surprise. The real surprise has been how weak the labor

market has been. You've got that working on your side for inflation, right? That's now a headwind for inflation, meaning if we have a weak labor market, we would expect in all these models to suggest that there would be some disinflationary pressures or weaker demand. So you've got the new data, which is labor market data, probably telling you that you shouldn't be as worried about inflation. And in fact, Jay said to that point that he's less worried about inflation than he was back in April, May, June. So I think that risk balance is important. And I guess the other place I come sort of a little bit differently than maybe many on the committee would be that I just think neutral's I think neutral is probably closer to two than it is three, and the committee's still stuck

in this three, maybe three and a quarter area. So I think we're actually probably more restrictive than many people think. Well, back in the spring, to be fair, Chair Powell was probably more worried about inflation than you were. So for him to be a little less worried about inflation, maybe that's bringing him to that two-sided risk in a different way than you are. Now, he also said that tariff pass-throughs to consumers. are present, but smaller than expected. Do you agree? Are you seeing those tariff pass-throughs to consumers?

And might your outlook and opinion change if those get bigger than they are now? I think we're all watching that, John. We're all watching how this inflation dynamic comes through. And it's definitely come through better than expected by the inflation hawks. The inflation hawks were very nervous and very concerned about significant passers and breakdowns in inflation expectation, meaning a de-anchoring. And we haven't seen that in the survey data or more importantly, the tips data. So I think it's all gone much better from April to today on the inflation side than many would have expected. And the good side has popped. But again, we're a service economy and the service price storyline still seems very much intact with where it was back in April

or even before that. And it's come down dramatically from those peaks that we saw in the 2021-20. 2022 era. So I feel like the trajectory on inflation, I'm more confident on it than I've been. Okay. It sounds like the Fed's more confident that it's not going to be a problem than they were even a meeting ago or certainly back in April. Well, speaking of how the Fed is feeling there's a wide dispersion of opinion about what should have been done in this meeting and what's going to happen next. Do you read that and what we can figure perhaps as soon was Stephen Myron's contribution as healthy for the Fed to have this wide range of outlook, or is it a sign of something unhealthy or chaotic? Actually, I thought to me it was a little bit more together than I would have

expected. I thought there were risks, as many in the market thought that we could see Chris Waller and Mickey Bowman moved toward Stevens Camp for 50, and they didn't. They stayed kind of with the crowd. So to me, there was more of a togetherness in this 25 move, and it's idea that there's some sort of a lack of cohesion at the Fed, really, you know, Stephen, you expect given where he's coming in. But I thought this was a much more cohesive announcement that they're comfortable with a 25. There's two more priced in. The balance of risks is cuts. The market's pricing, really two more cuts for the end of the year. I think they got what they want. They didn't get an overly doveish storyline built into the market. Maybe they didn't even want that. And the

market thought they might have that. But then he pulled that back. when he said 50 wasn't discussed. But I don't think it's a huge setback. There's a lot of other great things going on for the stock market and for the outlook for earnings, investment, returns on capital. We don't need monetary policy to be neutral. It just would help, and it probably would allow more jobs into the system, and it would be a tailwind to more success

rather than a headwind to the successes that we already have. Okay. David Zervos, thank you. Appreciate you. Always a pleasure, John. Well, bullish, the company reporting results for the first time as a public company. Those details are coming up next. Plus, President Trump's state visit to the U.K., we will bring you the pageantry and the business side of the trip. And shares of Hologic jumping in the moments before the close on reports of Blackstone and TPG might be interested in acquiring the company. They initially made a bid for the company in May, but Hologic rejected the $16 billion offer over time's back in two.

Welcome back to overtime. President Trump getting quite a welcome in the U.K. There were horses, hundreds of soldiers, a castle, and, of course, a king, but business taking place on this trip, too. Let's get to Aiman Jabbers for that side of the story. Amen. Hey there, John. A royal banquet in Windsor Castle, St. George's Hall began just within the past hour with a powerhouse group of American CEOs joining the president and the king for the white tie affair. including Larry Fink of Black Rock, Tim Cook of Apple, Jensen Wong of NVIDIA, Stephen Schwartzman

of Blackstone, Brian Moynihan of Bank of America, Sam Altman of Open AI, and others. Now, they've been hosting state banquets and official dinners in this room since Queen Victoria's reign, and it's an impressive venue. The long table there runs 164 feet across the whole length of the hall, and we are told it takes eight people three weeks to clean and polish the service in preparation for for an event like this and what's more. It takes staff five full days to lay the table with the dining service.

Each guest usually has six classes at their place setting, which will come in handy for the drinks portion of the evening. We're told that guests are being served 1945 vintage port in recognition of President Trump as the 45th, as well as the 47th President of the United States. Also, Hennessy 1912, Konyak from the president's mother's birth year. So a special note there. The series begins tomorrow.

All the serious business begins tomorrow with a business roundtable event featuring the CEOs, many of whom have announced billions of dollars worth of economic development deals in conjunction with the trip, John. So we'll keep an eye out for headlines tomorrow for any more announcements that may come from that group after dinner wraps up this evening. Amon, how common has it been for presidents not named Donald Trump to travel with a retinue of the nation's top CEOs like this? I can't remember it happening quite this way before. Yeah, not quite this way, John. I mean, CEOs have always hovered in and around the presidential orbit, right? I mean, you know, the classic line was, you know, what's good for General Motors is good for America and vice versa, right? So business and politics, especially in these international settings, have always been part and parcel of the same thing. There have been invites to high-profile CEOs. But this president has just a deeper entourage of business folks who go with him to all these events. And I think they feel an expectation. that they will attend all of these.

And the president notes it if somebody he expects to be there is not there. So I think this is very much a must-do event for a lot of these CEOs. Okay. Amen Jivers, thank you. You bet. Well, the Fed meeting, Powell's press conference. That's in the rearview mirror now. So what's the next big thing the markets are looking toward?

Mike Santoli is going to tell us next. It was a big day for Chinese Internet stocks. The crane shares China Internet ETF jumping to its highest level since late 2021. Baidu leading the way up 11 percent. That's its highest level in nearly two years, rising for the fifth straight session, getting more than 28 percent in just those five sessions. Now let's turn to senior markets commentator Mike Santoli for a look at the next fundamental driver for the markets. Mike?

We're done with this Fed stuff, right? At least for another several weeks. We're almost all the way through the third quarter. And here's how earnings estimates for S&P 500 companies are holding up much better than normal is basically the takeaway here. The current quarter you see basically holding up at the initial estimates. Now, normally you see this erosion, it's downgrading of expectations throughout the course of a quarter. Now, recessions and stuff really dragged that number down. But also, this is in defiance of what we've seen in recent quarters where you really have had slashing of numbers into the reports.

that's created a load bar for outperformance. This is generally a sign that companies are confident that people had already cut their numbers enough after the tariff panic, and they're still feeding off the fact that things don't look quite as bad as they did then. Now, how profitable are companies? That's one of the big, longer-term bulk cases, is that we now have this sort of renaissance of productivity, or at least the composition of the S&P 500, is telling us that we have much more profitability per employee than we ever have before. Now, that's clearly the case. You see it kind of goes in these bursts, and then cyclically, it backs off a little bit.

So this is revenue per worker in S&P 500 companies. I mentioned the composition, obviously, all that market cap being in these super large, high profitability tech firms, which obviously have a lot more earnings per headcount, is swaying this, but it's one of the reasons people try to justify elevated valuations. Interesting. Now, Mike, back to the first chart. How can you tell whether it's that? companies are more confident now versus being more cautious than usual 90 days ago.

I think it is absolutely both. And maybe not 90 days ago, but 180 days ago. So essentially, analysts feel like there's not a tremendous amount of benefit to being aggressive on the upside in revising higher their expectations because the companies like to beat. Let's just be honest, right? That's the reason 70 or 80 percent every quarter beat published estimates, but I think what you can say is they're not seeing any reason to pre-announce, to try and massage the numbers lower right now. And what really matters is whether this feeds into next year, because next year we're talking about potential for 10% earnings growth based on the consensus. You know, hopefully something like that comes through because we're

trading at pretty expensive levels at this point. So, you know, that valuation would be mitigated if those earnings do manage to actually show up. Maybe potential for front-loaded optimism? Yeah, there always is. No, there's no doubt about it. And, you know, we'll see. Again, third quarter is often tricky for many reasons. A lot of times they say, oh, the conference season gives companies an opportunity to kind of lower the bar. They haven't done it yet. We'll see if that's still to come. All right. Mike Santoli. Thank you. And time now for a CNBC News update with Bertha Coombs.

Bertha. Hey, John. Four Western states led by Democrats issued their vaccine recommendations on three major seasonal vaccines today. Health officials from California, Oregon, Washington, and Hawaii gave guidelines on the full COVID-19 and RSV shots that are in line with major medical organizations. The guidance comes just one day before a federal advisory panel appointed by HHS Secretary Robert Kennedy is set to meet to go over possible changes to vaccine recommendations. Social Security and federal benefits recipients will no longer receive paper checks by the end. of this month. The federal government is switching to electronic payments in response to an executive order signed by President Trump back in March. The move aims to prevent fraud and reduce spending, according to the Trump administration. And Times Square may have lights that are brighter

than Vegas, but it will not be home to a casino after a community board voted no on a proposal today. The $5 to $4.4 billion plan was backed by Caesar's entertainment. Rock Nation and S.L. Green, one of New York's biggest commercial developers. Another casino called the Avenir in Hudson Yards was also voted down today. So I guess you'll just have to play the lotto and bet on teams instead. Yeah, these things are a roll of dice. Bertha Coombs, thank you. Coming up, much more on today's market reaction to the Fed decision and Chair Powell's press conference

and a closer look at one segment heavily dependent on the Fed. financials have been one of the top performing groups this year. Could a new rate-cutting cycle mean even more gains ahead? We'll be right back. Welcome back to overtime. An exciting day for the markets, even though the final numbers don't necessarily reflect that. A 250-point gain for the Dow, but small losses for both the S&P and the NASDAQ, but those averages jumped after the Fed decision to come.

cuts rates, but then they pulled back as Chair Powell spoke during the news conference ended close to even. The opposite for bond yields. Initially, the 10-year yield fell below 4%, then closed higher even as the Fed cut rates. And Cracker Barrel reporting results for the first time since that controversy involving its revised logo that then went back to the old logo, results missing expectations by six cents a share, guidance for revenue also short of estimates. The company says it sees store traffic falling four to seven percent for the full year.

About that logo, the CEO thanking customers for sharing, quote, their voices and their passion. Not sure President Trump is a customer, but he certainly shared both. While the Fed cutting 25 basis points, meanwhile, the market's making big moves this afternoon, but ending close to where it started before that cut. So with this catalyst off the table, where does the market go next? Let's bring in BMO Private Wealth, Chief Market Strategist, Carol Schlaif, and Regions Wealth Management, CIO, Alan McNight. Guys, welcome.

Alan, you didn't get a whole lot of new information here, but at least the Fed in its initial decision on a quarter point was mostly aligned. I mean, they've had more dissent in the past. What does that say about the future? I think the most positive thing for us was there wasn't this major surprise. We had so much aajda and angst going into this where it was going to be this big major deal and all these things are going to happen when, in fact, it was pretty quiet and pretty calm. And so as we look out over the future meetings this year, our hope is it will have similar type of situations where it's pretty well communicated. The market doesn't react in a visceral way.

And we're able to actually get through the end of the year with the FOMC almost removed from being the major discussion point. Let's get back to earnings. Let's get back to what are companies doing? where they seen at the tip of the spear, rather than expending so much energy on trying to prognosticate what the Fed is going to do. Carol, with the market fully valued now and the Fed out of the way, is it all on earnings to justify that? Is there upside? Well, first off, thanks for having me on. Second off, earnings and fundamentals have definitely undergirded the way the markets behaved all year. We don't necessarily think the Fed and discussions around the Fed

are off the table. And I think one of the reasons you saw the volatility in the market today is initially a lot of investors came out and said, oh, good, it looks like we're opening the door for more cuts. They were hoping for more clarity, much like what we got out of Jackson Hole, and we're left with more of a dotted line sort of decision tree instead of a straight, solid line forward. And so I think the Fed will be part of the discussion in terms of what does it say about the broader economy, but also clearly employment will be there. Luckily, we're coming into an earnings season, and as your prayer commentator was talking about,

there's a lot of strength coming into this quarter and a lot of good solid fundamentals, but that keeping people employed and keeping those earnings rolling is going to be really imperative to get us through the fourth quarter. Alan, what is the role of fixed income in portfolios now? It's been disconnected from tradition lately, but do you see it still having a role there? We think it has a powerful role now, specifically because it now actually, generates income again. There was a time not that long ago when you're actually almost paying someone to hold your money for you, but now you're actually generating income. It's a ballast

in a portfolio. We always think of it as this idea that you can't control the wind, but you can control your sales in a portfolio. And fixed income allows you to do that. So yes, spreads are pretty tight on investment-grade corporate bonds. And yes, we've actually already seen a pretty nice run this year, but we think they can still do pretty well over the course of this year and in the next year, assuming no major or challenging time periods from an economic perspective, and that's our base case. Carol, what sectors do you like? We continue to like technology communication services, but underneath that, the industrials, especially as you're building out the infrastructure to support what's going on in the AI and data center build,

but also more bringing back manufacturing, there's a lot of really pro-business attributes to the one big, bill that have pulled some of those projects that were shelved earlier in the year and put them back in. And so there's a lot to be said for industrials and manufacturing, even though the numbers coming through economically have been a little tepid. We expect to see some pickups going into the back half of the year. Alan, how about you? What do you like? Offense, defense? We still like some offense and we like to balance it out. So we like comm services similarly. We think they're generating significant cash flows and earnings are there. I have to say first time in my career, I'm actually talking about utilities, knowing my wife teases me.

She said, you've never talked about this in 23 years, and suddenly I am. Your wife teases you about utility? Oh, yeah, she, obviously, I talk way too much about this sort of thing. I'm boring the whole family with it. But the reality is now it's a growth story. And so we're excited about things like that. We're excited about mid-cap companies that can actually generate more growth while having lower valuations. And we think the market continued you well over the course of the year.

Carl, our small cap's going to finally make a sustained run at it? It's more difficult, and the question is still there for small caps. They definitely have started a run recently, mostly in anticipation of a Fed cutting cycle, not just a one-in-pause sort of thing. But the biggest challenge that the smaller and the mid-caps have right now is the fact that they do have higher leverage, but more specifically are more impacted potentially by tariffs because they have less negotiating room, if you will, to try to negotiate some of the way around. And so it's very, it's definitely worthy of active management. It might be tough for them

to sustain long term going into next year. And Alan, what is that move we saw in Oracle tell us about the continued stamina of some of the bigger names? I have to be honest with you, we were a little concerned when you see a stock rip like that. Is the company worth 40% more in one day? Some could argue maybe no. But the idea that behind that this with AI, the power generation component of it, and really just this productivity boon, because as we see services costs are coming down, we heard that from the Fed today. We've seen that in some of the inflation data. So we need to continue to try to be more productive, deliver more efficiently, and we think companies like Oracle and some in the tech field are really going to be able to deliver on that.

There you go with the power generation again. You tell you one. Alan and Carol, thank you both. Thank you. Well, financials have been one of the top sectors on Wall Street this year. Up next, we'll discuss whether there's still an opportunity to bet on the banks following the Fed's rate cut. And later, what big gains by upstart fintechs like SoFi say about the appetite for risk in this market. Overtime, we'll be right back. Welcome back to Overtime. Workday, a big winner today up 7%. Elliott Investment Management unveiling a $2 billion stake in the HR software company,

praising management for its multi-year plan. The state comes the day after Workday announced its buying AI firm Sanaa for more than a billion dollars. Workday CEO is going to discuss all that news, an exclusive interview, coming up 6 p.m. on Mad Money. Now let's turn to financials. They initially popped on the back of the Fed's rate cut, but then, came off those gains. Still financials have been gaining in the past three months up more than 7%. The gains continue now that we got one rate cut with potentially more on the way. Joining us now is McCrae Sykes, portfolio manager at Gabli funds. Mack, welcome. You know,

the KRE up there, near 65, can it keep moving higher if we get as many cuts as the Fed governors expect? Well, it's pretty exciting day today and certainly a lot of cross currents in terms of politics, the Fed conference, et cetera. I think from our perspective, in our investment process, we don't get too caught up in trying to predict the next 25 basis cut from the Fed or figuring up that. Although we do feel confident in the environment today and getting to a normalized yield curve in terms of the neutral balance in a couple of years. And what that means is a very healthy spread between short-term deposits and lending at 6%. And so that's a great environment for banks. And so over the next couple of years, we continue to think this yield curve and

the environment that we're in will create significant tailwinds, and it's a great place to be investing. Well, Mac, what about the difference between different types of banks here? How much does it matter? How much consumer exposure a bank has, like, say, a Bank of America, or small business exposure, like some of the regionals versus the M&A exposure in this environment? Yeah, there's a lot to parse out there. I mean, and a lot of individual banks, like Wells Fargo has just gone through a major catalyst with their asset cap and certainly consumer at Bank of America. They're hosting an investor day first time in many years to talk about some of the good things

going on there in November. So we've been focused on the bigger banks. We like the diversity of revenue. We like the capital market cycle. And we like the leverage to the asset values in terms of wealth and asset management. So those all continue to perform well. At the regional level, one bank we would highlight is for citizens, you know, we have very very entrepreneurial bank, creating shareholder value, bought back 11% of their shares over the last

year with still excess capital and a $4 billion buyback in place today with a $23 billion market count. So given what you said about the capital environment, does it favor banks like J.P. Morgan, Morgan Stanley versus a Bank of America or Wells Fargo or no? Absolutely. On the banking side, I mean, we've just seen the outperformance by Goldman Sachs, et cetera. So I think it's still a very healthy capital markets announced M&A. We have an easier regulatory environment, as you know, across all industries. And so those strategic sponsors, et cetera, excited to get out there and perform deals, et cetera. So I think that's a pretty health environment.

We did hear from the CEO of Goldman Sachs last week, and he's very constructive on that outlook. So it definitely behooves those firms in terms of their entire vertical and IB, capital markets, and issuance. concerned it all about consumer credit? So at the moment, it's always something to worry about actually going forward. But, you know, we heard from America Express last week, pretty healthy trends there. Trust data, Capital One, also pretty healthy. You know, and then we had a pretty good retail sales number yesterday. So I think, you know, there are pockets where we've seen some stress, as we know, that's continued. But for the most part, we think it's a pretty healthy consumer outlook, and we see those trends at the big banks.

The Fed talked a bit about it being a low-hire, low-fire market about the risks being balanced. And we've seen a slowdown, perhaps, in spending from the working-class consumer. Is that a matter of as long as the labor market holds up, it's not too much to worry about, or is it something to keep a very close eye on? Well, I think you're right on keeping a close eye on. You know, a lot of the credit metrics are determined by employment. So that's a big sensitive bucket in terms of looking for the deterioration, credit. And we have seen the jobs, you know, decelerate as we know. But we have a, you know,

there's still some pent-up demand here in terms of the consumer going forward, commercial. And then we have this tax break in terms of the cap-x cycle going forward. And that should kick in, you know, with the big, beautiful bill, getting an aggregate. So that will help with trends going forward. And also business confidence should help, too, in terms of hiring. So something to keep in mind, definitely a big part of the credit cycle, but at the moment, pretty stable. as lower regulation helping the banks? So two big factors to that. First, you know, we know going forward we'll have a change in SLR,

we'll crystallize the Basel 3, changes on capital requirements, RWAs, et cetera. So that's specific to them, but then you also have changing regulations in terms of affecting M&A, business appetite, et cetera. So in terms of deal activity, that also accrues to them as well. So they're benefiting both from their own industry changes as well as outside from policies, by the executive branch. Mack, thanks. McCrae Sykes from Gubelli Fund. Thank you.

Well, Stubhub striking out in its first day of trading following its highly anticipated IPO. Up next, find out what the online ticketed company's CEO says about how all-in pricing is impacting revenue. And there's no place like home

for Zillow investors today. Bernstein upgrading the online real estate company for Market Perform to outperform, hiking the price target from $85 to 105, citing great. progress in monetizing user engagement. Be right back.

its IPO price, co-founder and CEO Eric Baker weighing in on all-in pricing earlier this morning on Squawk on the Street. We used up of it very publicly lobbied for years to get to all in pricing, and the reason that is, is that it's just a better customer experience in the long haul. So as you say, in the short term sometimes it causes some people to drop out and not convert, but over the long haul, it's a much cleaner experience, and the great thing about having one uniform rule is that all, competitors and everyone has to do it because you can't give that experience unilaterally right but does it result then in this year being a down revenue year versus last year yeah for the first 12 months we've seen this in states like New York that have done it you have a drop off and it hits about 10% and then what's your expectation oh then it's just back to normally you're growing off the

base disappointing first day performance for an IPO after a series of solid performances even big first day pops for some recent debuts now speaking of IPOs, take a look at shares of Gemini Space Station. That stock falling again today, down nearly 13 percent, now below its IPO price just a few days after taking a bow. Gemini is the Bitcoin company founded by the Winklevoss Twins. Up next, Mike Santoli's back to consider what lifts outperformance of Uber this year says about investor enthusiasm for that market, and New Corps falling in overtime as its guidance for the third quarter falls short of estimates, saying all

earnings in all three of its businesses will be lower than the second quarter. We'll be right back. Let's get you set up with tomorrow's trade today. On the economic front, weekly jobless claims on the earnings calendar, FedEx, Lenar, and Darden restaurants. And we'll also get an IPO from cloud and AI security company NetSco.

that's expected to price this afternoon. Now, take a look at shares of Lyft. They drove higher after Alphabet's Waymo announced it will partner with Lyft to launch a robot taxi service in Nashville next year. The news has helped the company outperform Uber today after playing catch-up for most of the year. Mike Santoli's here for more on that.

Yeah, I guess we could call it a trend. I found at least three examples, so we all know that qualifies. Take a look at Lyft versus Uber, even over a longer span. You look at it two years. And the dynamic here is the less advantaged, more distant competitor with lower quality financials, but a more volatile stock and maybe more room. It's kind of a higher torque proposition for traders.

You see that catch-up trade right there. Another one would be Costco, which has been a long time outperformer, and of course it's the stable quality name in retail. And now you see Macy's making this vertical run. Again, it's about small bits of incremental positives on a lower quality name. that drives short covering and a burst of enthusiasm. Another one that is fun, too, is J.P. Morgan, which has a massive, massive safety premium over the rest of banks and SOFI, which is now overtaken it on a two-year basis. So it's reflective to some degree of the character of this current market, which is, you know,

kind of the fun part in a way, in the sense of people are willing to kind of go out on the risk curve, make up some ground quickly, look for these kind of high reward, maybe higher risk plays out there. But it's true with kids, it's true with markets, Mike. It's all fun and games until somebody gets hurt. The fact that they're all doing that at the same time when the market's been running, is that a sign of precaution? I struggle with this a little bit. I often say this is kind of a bull market acting like a bull market.

You're always going to find some of this aggression in the tape. And, you know, most parties, they don't go out of hand or end as soon as they start being fun. And so I think that's where we are, somewhere in that mix. I don't think this market is kind of, there's a lot of. a low-hanging fruit anymore. It doesn't really owe you much. I think a lot of the bigger, more quality names have actually built their advantage and their valuation premiums already. So I think you have to kind of have a little bit of a nuanced sense of where we're at. It could always get crazier. Weird that those in gold are running at the same time.

Yeah, gold is funny. I mean, investors have given themselves permission to say, you know, gold is making new highs, not because of anything scary, not because we have macro systemic stress, not because, you know, we have policies that are going to run us aground, but because people want to own more of it in the dollars week. All right, Mike, thanks. We'll see. And bullish, slightly higher in overtime after its first report as a public company, reporting net income of 93 cents a share.

That's not enough analysts covering the stock yet to provide a consensus estimate, but it did report trading volume of nearly $180 billion in the second quarter, what expects that number to be lower in Q3. We'll have to see how the market reacts to the Fed on a second day, The first day doesn't always tell the story that's going to do it for here at overtime. Fast money starts now.