Closing Bell - Closing Bell Overtime: Looking Ahead to Nvidia Earnings; Musk Loses to Altman 5/18/26

Episode Date: May 18, 2026

Our Kate Rooney reports on Elon Musk losing his case against Sam Altman and OpenAI. John Belton of Gabelli Funds previews Nvidia’s upcoming earnings report and where he is placing his bets. Bank of America reinstates bullish ratings on ServiceNow and Salesforce; the analyst behind the call, Tal Liani, breaks down the competition and where investors should focus. Alan McKnight of Regions and Kevin Gordon of Charles Schwab debate the market outlook and where investors should position from here. Plus, our Angelica Peebles reports on a sharp decline in Regeneron and what it means for biotech investors. 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 end to the trading day at the NYSC, Oppenheimer, ringing the bell and at the NASAC, Lazzar, Asset Management, doing the honors. Welcome to closing bell overtime. We're live from studio at the NASAC market site. I'm Melissa Lee, along with Mike Santoli. Sox bouncing off the lows, the Dow up more than 150 points. The S&P 500 with a small loss, the NASAC down, about a half a percent. As you mentioned, we did see a move off those lows right around 3 p.m., coinciding with a social media post from President Trump about Iran. We'll get more on that. Meanwhile, bond yields coming off their highs. The 10-year had hit its highest level in a year earlier in the day. Our reporters are all over those comments from President Trump, the impact on stocks and oil, and also a major legal setback for Elon Musk.

Mike, it felt like it was all about rates. Rates didn't do that much. And so we were able to sort of muddle along. Yeah, the setup was rates at highs, oil at highs coming into the week, and semiconductors with a wobble on Friday. Was that going to continue? It did continue. micron down five, six percent, traded $40 billion worth of its own stock. That's twice as much as Nvidia.

It's four times as much as Microsoft today. So it shows you there's just this intensity of concentration in this group. The rest of the market was able to hold in. I think that's been one of the big questions. Not sure if anyone, any traders specifically in an articulate way, know what to make of the implications of this Iran news. We'll talk about that in a minute. But it did seem to allow for the overall market to sort of entertain the possibility.

of some kind of resolution. Where we saw the most decisive reaction to it was in the oil markets. And with oil backing off of the highs of the session, we did see the ability of other parts in the market to sort of levitate higher towards the close. I mean, you take a look at an intraday chart on Walmart, for instance, that one really lifted and finish at the highs of the day. So that just gives you an example of the concern over, you know, high oil prices, the impact on the consumer and the economy.

Exactly. Let's get to Megan Kassel at the White House for more on President Trump's announcement that he is postponing a new attack on Iran. Megan. Guys, the president says now that he's scrapping a planned military attack on Iran that had been set for tomorrow and that he's doing so at the request of the leaders of Qatar, Saudi Arabia, and the UAE. So President Trump's saying on true social that those three leaders feel that serious negotiations are now taking place and that an acceptable deal will be made. Trump went on to say he had instructed Secretary Hegset and top military officials that we will not be doing the scheduled attack of Iran tomorrow, but that he has further instructed them to be prepared to go forward with a full, large-scale assault of Iran on a moment's next. notice in the event that an acceptable deal is not reached. So guys, the threat remains alive,

but still a dose of optimism there that talks are moving forward. As of this morning, we knew the U.S. and Iran had been exchanging views on the latest peace proposal, but there was no indication that either side was offering concessions that were going to get us closer to a deal. As one example, Iranian state media had reported that the U.S. would lift oil sanctions while talks were ongoing. But a U.S. official then told me that that was false. That left the impression that we were at something of a stalemate so this post now could be seen as an indication that there's new momentum at least towards a deal, guys. Is there thinking, Megan, that Iran is asking the three other nations in the Middle East

to ask for more time on its behalf, or is there some other reasoning going on? That part isn't clear at this point exactly who might have asked for this to happen. What we do know is that, again, Iran's foreign ministry this morning was saying that they had conveyed their concerns through Pakistan, the mediator, to the U.S., and that the U.S. had responded. And if we want to get into reading the T-Leaves, one indication of how things are going on the positive side is that Iran really laid out last week, but was widely considered a maximalist proposal. They were trying to get as much as they could get from the United States. And the president did say at the time it was totally unacceptable, but he continued to engage.

He didn't move right away into attack. So that gave some indication that the fact that talks are even ongoing. And now with this latest post, maybe that's an optimist. sign that whether or not we're actually close to a deal, the U.S. at least isn't looking to re-escalate, that they're trying to do everything they can to avoid doing that. That's one way of reading this. On the other hand, of course, the threat remains alive, even just in that post. We hear it from the president repeatedly that he's willing to return to military action at a moment's notice if he needs to. So it's not off the table, but we know at least that they're trying, it appears, to lean towards diplomacy at this point. Megan, thank you. Megan Kassel at the White

House. Oil prices did move on the back of those headlines. Let's bring in Pippa Stevens with all the details there. Pippa. Hey, Melissa, so oil is off the best levels of the day after President Trump did say he would hold off on a military attack on Iran. And since the war began, we've seen a lot of knee-jerk reactions in the oil market based on the latest true social and ex-posts. Although oil holding its gains today could suggest traders are looking through some of the noise. CIBC Private Welsh, Rebecca Babin, did add that positioning is meaningfully lighter this week. And more traders, especially dip buyers seem to be shifting into more of a weight and sea mode. Meantime, the U.S. Treasury is saying today that it will extend a waiver on Russian oil for 30

days, marking the third such extension since the war began. And one buffer for the market has been the shoulder season in many countries when fuel demand is typically lower, but we're now approaching summer when people drive more and crank their air conditioners. We're now seeing European gas prices back above that 50 euros per megawatt hour. Guys? Yeah, Pippa, it's always tough to divine exactly what the market is assuming at any given price level, but it wouldn't have necessarily seemed that before we got this post from the president saying, we're going to put off on the attack, that the market was at all poised to anticipate an imminent attack. Yeah, it seems that since the war began, there's been a more muted reaction here with some of these posts,

given that in the beginning we would see these big swings in either direction than nothing came to fruition. So it does seem that we're more drifting into this higher for longer weight and sea mode for the markets and a growing recognition that this is going to take months to resolve and that even when the straight is open and it seems that the U.S. and Iran do remain very far apart here on a deal as Megan was just talking about. But once things do start get flowing, it's going to take months for these oil and fuel routes to normalize. And so it seems that the market is drifting higher and maybe not necessarily reacting in the same way that it once would. but I do think that it's important to watch here once we do get into the busy summer season, especially with Europe trying to refill their storage capacity and then also with temperature

is rising and increasing AC demand, also in the Middle East. We are going to see demand start to rise and then demand destruction, of course, will be what has to balance the market. For sure. Pippa, thank you. Well, there was a mixed picture for stocks today with the Dow managing to close with some gains. The NASDAQ posting its first back-to-back losing sessions nearly a month. Christina Partinevill is joining now with more on the action. You guys talked about higher oil, higher bond yields, and really technical exhaustion that helped drive an unwind and tech momentum names today. Usually we look at the M-TUM momentum ETF closing more than 1% lower.

Positioning in tech had been back near multi-year highs just at the end of the last week. So investors used today to take profits. And the optical networking names were among the hardest hits. Many of those stocks have been up more than 300% over the past year. Applied optical electronic closed about 9% low. lower today. Other names, too, just in the red. Memory names also reversed as the Samsung strike story started to cool off. A South Korean court took steps to make sure Samsung's chip lines kept running, even if the strike moves forward on Thursday, just easing some fears of a major memory supply

disruption. You can see Micron shares did close almost 6% lower because they had risen higher on that potential supply disruption. Separately, as Samsung advisor and former executive also warned at a Korean form that memory prices could fall in the second half of next year of Chinese. these companies successfully ramp memory production. So that was also weighing in the sector. But software was a bright spot. Mike, to your point about rotation, you saw service now jumping about over 8% after Bank of America said the company

stands to benefit from AI rather than be disrupted by it. That analyst will be on your show later in the hour. And then you also had cybersecurity names continue to outperform with Paulo Alto networks, Fortinet, Crowdstrike, all closing higher today after really strong runs just over the last three months, guys. All right, Christina. Thank you. Thanks.

Let's turn out of the big tech story of the day. A federal judge ruling in favor of OpenAI in its legal battle against Elon Musk following a three-week trial. Kate Rooney has the details outside the courthouse in Oakland, California. Kate. Hey there, Mike. So within just a couple hours earlier, the judge rejected Elon Musk's claims against OpenAI and its CEO, Sam Altman, ending what has been a dramatic chapter in this tech rivalry. The jury decided that Musk did not actually file the lawsuit on time. streamlined their entire decision. It was an advisory jury, meaning that the judge actually had the final say, and the judge of Von Gonzalez-Rogers in this case followed with her own ruling. It came just a few minutes later. She agreed with the jury that Altman and OpenAI are not liable, dismissed the two claims. They were breach of charitable trust and unjust enrichment as untimely. The judge did show some skepticism about an appeal. She said there is, quote, a substantial amount of evidence to support the jury's finding. We did talk to lawyers on both sides.

after that decision. He's a formidable adversary, of course, and he hires terrific lawyers, of course, and he is tenacious in his opinions, of course, and his positions. But we find that the persistent application of legal principles and the remorseless search for evidence is what wins cases, even against Elon Musk. I have a one-word reaction. Appeal. So OpenAI and Microsoft teams were celebrating outside of the courthouse and inside the

courthouse, it is a major sigh relief for Open AI as that company looks to go public guys. Was it ever thought, Kate, that this would be a barrier to the IPO or it would delay the IPO in any way? If Musk got what he was looking for in terms of remedies, absolutely. And the worst case scenario for Open AI would have been an undoing of the restructuring that happened in the fall. And that would have really thrown a wrench in the IPO and really set back their ability to go public, but also completely undone the more traditional for-profit structure. Sam Altman could have lost his job. And then there were the more than $130 billion worth of remedies. So if that had actually happened, yes, absolutely. But it was a long shot for Musk to get all of that. And I think there was a

surprise at how quickly this decision came. But there was also some skepticism that Musk would have gotten everything he was asking for in the first place. Yeah, I mean plaintiffs can always throw a number out there. Doesn't mean that's what might have come, even if he had won the case. And I guess the other question, Kate, is whether any of the backstory, the revelations has done much to color open AI and the people who are running it in a way that's going to matter longer term? It's a great question, Mike. That has been one of the focuses of this trial, especially on the plaintiff's team, tried to paint Sam Altman as untrustworthy. And a lot of it went back to when Sam Altman was fired from the board three years ago, which was, in a lot of ways,

water under the bridge. The company has moved well past that event. And, and a lot of it went back. But we did hear former colleagues under oath. It's a little bit different when they're up on a witness stand versus when this is all sort of leaking through the press. Altman had to respond to that. There were questions of are you trustworthy, are you not? As he looks to go and win the trust of Wall Street, it's going to be a big question.

I think there's some PR damage that's been done. It's been brought to the attention of a lot of people who weren't necessarily paying attention to this story. It seems to me like they've gotten past that. He's obviously, you know, the figurehead, the face of Open AI, and it just unsurfaced a lot of unsavory things about, you know, leadership a few years ago. Going forward, I don't think it's going to throw off the company's ability to compete, but it was definitely a distraction. I mean, Sam Altman was here for weeks

on end when he, at a time that he is fiercely competing with Anthropic, trying to get this company ready to list at one point. They were talking about some of the witness testimony, and the plaintiff sort of gave him trouble for not being there every day. He kind of jokingly said, hey, guys, I'm pretty busy. You know, I've got a day job. I'm not paying attention. into every moment of this. And it was a good reminder. You know, Sam Altman is running a $850 billion company and at the same time dealing with this. So a sigh relief that they're able to move forward on the open AI side. Yeah. And I guess the other part of it, to whatever degree, the principle that these AI

developers should be mindful of the long-term adverse consequences, if that was on trial as well, I guess we're, you know, left with, well, we don't really have a decision on that. The AI safety conversation came up from the day we got here with jury selection and the preconceptions about AI, the safety conversation. And it's interesting, we talked a lot in this trial about what happened five, ten years ago. The AI landscape has changed completely. Even the Microsoft partnership, Microsoft, we should mention, was a co-defendant in all of this. And so we talked about the both sides talked about a time that was really completely different from the AI landscape where we are today. But I think one lingering question is the populist pushback and unpopularity of AI in general.

That was sort of on the stand here and a reminder that, you know, the average jury in Oakland is not a big fan of AI. You know, they might not have been a fan politically of Elon Musk, but also we're just seeing a lot more pushback. There's sort of this open question about AI safety. We asked most lawyers about it and he said, you know, it doesn't feel great. We're sort of at this crossroads where a lot of people don't trust it, not a fan of it. And that could be also a headwind as these companies look to go public and get a big retail base. It's not clear that it's as popular as maybe even was a year ago. Yeah, say it again, the risk factor section in these IPO findings are going to be interesting for that reason.

Kate, thank you so much for breaking it down for us out there. Let's stay with tech. Invidia is set to report earnings on Wednesday with the stock up 22% in the last two months. So how important are these earnings to keeping the tech rally alive? It has accounted for a big chunk of the recent move higher in the indexes. Joining us now is Cabelli Funds Portfolio Manager, John Belton. John, good to see you. Right, good to see you, too. On one level, it's hard to imagine investors getting any more convinced of the durability of the AI

you know, CAPEX infrastructure trade. But how did the Nvidia numbers fit into this? Yeah, I think it's just, it's like a short-term, long-term dynamic where short-term, as usual, I think numbers are going to be, I would characterize it as amazingly boring. just they've been consistently blowing away numbers, especially the last couple earnings. Market is sort of traded with jitters around Nvidia because I think long term is the question. So they're the beneficiary of all this AI CAPEX.

Is that KEPX generating a return? I think that's a question that's going to be playing out over the next couple of years. I was joking with Mike that it only matters, excuse me, if Nvidia misses. It's actually negative numbers. Excuse me, I use my voice. Sebo closed there. We want to show you Canon Design

and bringing the closing bell at the CBO, marking the end of regular trading, options trading there in Chicago. But John, I did want to ask you about the durability because there are some comments being made today at a JPMorgan conference by the Seagate CEO basically saying, you know, why are we not adding capacities? Because we're not sure that demand is going to bear it out

by the time the capacity comes online. Throwing into question this whole idea that there's, that the rate of demand, right now, it's going to keep up and it's going to keep pace and it's going to be there forever. I mean, he's openly questioning that himself. I mean, definitely not what we're hearing from Nvidia. I do think anytime demand is growing at this type of exponential, it's both impossible and in some cases dangerous to try to extrapolate that.

So I think, you know, those comments are coming from a place of conservatism. But I think for Nvidia, we heard from them intra-quarter. We heard from them in March at GTC. they gave an update to the long-term revenue forecast. They're now seeing a trillion-dollar order book at least through calendar 27, starting in calendar 25. That was a big uptick from the prior guide they gave in October. So we'll have to see if they update us on that again this time.

But clearly, Nvidia is not talking about any sort of slowdown in demand. They still remain supply constrained. From an investor's point of view, as you're kind of looking for, I don't know, the next beats of this whole story as it goes along, where are you most, spending your time or is it just kind of, you know, keep it simple and go with the established winners? Yeah, no, I think for Nvidia specifically, I'm not spending a ton of time trying to nail the quarterly numbers. I just, I really don't think it's that important at this point. I'm looking for is this company broadening out its customer base because that is a big risk. Half the business is

from basically five large companies, which have collectively taken free cash flow to about zero now. So how durable is, is growth within that part of the business? So are they broadening out the customer are they broadening out the product set? So they've definitely done some interesting things with networking. That's been a big success. They now seems like they're going to start standing up standalone CPU racks later this year. That could be a new opportunity. Same thing with this GROC acquisition.

So I like what I'm seeing. They're interested in hearing from them on that front. And then capital allocation, the other area, you know, they made some announcements at GTC on this front. They're going to be returning half of free cash flow to shareholders. They're going to generate well over a trillion dollars. and free cash flow for the next couple years, half coming back to shareholders, that can start to move the needle for the stock. So those are the types of things, in addition to, obviously, the fundamental story for AI and return on CAPEX.

The AI trade has been remarkably durable during the entire Iran conflict. And I'm wondering if there is a point in time where, you know, rising rates, the tenure being at, you know, 4.6 plus percent at this point, concerns about, you know, the impact of higher energy prices plus higher rates, putting pressure on GDP, global recession. I mean, these are all concerns. Is there a point in time where that meets sort of your portfolio construction? You think, oh, you know, it's time to think twice about it. Definitely thinking a lot about that. I mean, I think in terms of the higher rates, depends why are rates going higher. Is it inflation? Is it something else? Equities historically have been, you know, sort of an inflation hedge. So that in isolation

doesn't matter as much to me. But I think for stocks, generally, it's, they're driven by earnings. And what have earnings expectations done not just since the start of the year, but since the start of the Iran war, in large part because of the AI dynamic, earnings expectations are going higher. That's why stocks are going higher. But we looked at recently and talked about it at our annual shareholder meeting last week. What have stocks done historically during conflicts? And it's pretty, what's happened this time around follows a pretty consistent pattern, initial sell-off and then a recovery, because at the end of the day, earnings drive stocks. And the conflict in the least just hasn't had a big impact on earnings, at least yet. In terms, though, of the costs of capital to fund the AI buildout, though, is there a concern on that part in terms of, you know, too much fundraising out there going on? Well, let's remember where is this, where is this capital being, who's spending this capital? It's highly profitable companies that are, by and large, spending it out of free cash flow.

So any debt financing that's gone towards the AI infrastructure buildout so far, that's just been capital structure optimization. That's not because it's requiring debt financing because they're burning cash. So I think, you know, that's sort of how I think about that. John, great to see you. Thank you. Thanks for having. Belton. Coming up, Tale of Two S's, Bank of America says it's signed a buy service now in sell sales force. The analyst behind the call will join us to make his case. And Intel has been on a tear in the past year up nearly 400 percent. We'll hear from CEO Lip Butan exclusively on what he sees is the next big opportunity in AI straight ahead. You're watching Overtime, live from the NASAC market site.

Service now closing out the day as one of the top stocks in the S&P 500 after Bank of America reinstated the stock as a buy with a $130 price target, the firm citing the company's leadership in agentic AI opportunity as reasons to buy service now. But Salesforce is not receiving the same enthusiasm from Bank of America. The stock reinstated with an underperform rating as it faces several headwinds from AI. Despite the negative call, the stock was one of the Dow winners today. Joining us now is the analyst behind the. the calls Taliani from Bank of America.

Tal. Great to have you with us. Thank you. You know, the argument that service now is deeply embedded, it's mission critical, it's difficult to replace. You probably could have made that argument at the beginning of the software. So-off. Is it just valuation now people are willing to listen to that argument? Not at all.

If you speak to any large software company, you will get the same answer. They will all tell you, we're deeply embedded in the workflow and we cannot be replaced. But that's not the issue. That's not the debate. Salesforce is also extremely embedded in the workforce or in a workflow. The issue is can you translate, can you take AI and turn it into a growth engine? Is AI going to replace you? Or can you use AI?

Can you lever it up in order to grow? And that's the difference between the two companies. When it comes to service now, the company, when you deploy agents, when you deploy AI, you still need to govern, to route, to audit the trail, and you need to deploy AI in a responsible way. And ServiceNow is so embedded into the workflow that now that they have the right portfolio to address AI, they could actually turn it into revenue growth.

And you can see it, revenue growth engine, and you can see it in the numbers, right? The company is growing about 20%. Now, when you look at Salesforce, it's the other way around. AI is a major risk for the company, because companies are looking to, it's not about, by the way, replacing sales force. It cannot be replaced.

The question is, what about the growth? Can you accelerate growth or will growth decalry? And the issue is finding new customers, upselling to existing customers, and maybe launching AI products that actually could find traction. And the agent force that they launch is no finding traction. So I actually see the two companies

in the far two ends of AI. One is benefiting, and what could be replaced, at least the growth could be replaced by AI. Talia, your target for Salesforce, I guess nine times free cash flow for its enterprise value, pretty significant discount, right?

We're talking about 11% free cash flow yield. That suggests not a lot of long-term growth. Is there anything that Salesforce can do in your mind to kind of reorient itself and capture some of that future growth that you don't see it again? getting now. So first, why? Why only nine times? Because it's not anymore a growth compounder. It's a mature, very stable company that will continue to be a cash cow, generate

cash flow, and will grow below 10% a year. That's why it deserves about nine to 10 times free cash flow. What can he do? It needs to continue and invest in AI and try to find ways. I don't have the answer. I can only observe it. Try to find. ways to turn AI into growth. And that means expansion. What we've seen, by the way, across the board is that companies try to expand elsewhere. Take, for example, service now, just as an example. They not only they expand into AI, they also expanded into cybersecurity. And they complemented the AI solution with cybersecurity. I'm not saying that Salesforce need now to go on a shopping spree and buy companies, but you have to grow into new areas in order not to stand still and not to turn into

just a mature company, mature software company, rather than a growth compounder. Seems like Salesforce and ServiceNow are the opposite ends with the spectrum in this sort of SaaS apocalypse trade talent. I'm wondering where you think Microsoft would fall in this spectrum. Completely different story. So it's always, it goes back to workflow. I told you, all large software names are very embedded into the workflow. Microsoft is embedded into productivity. I cannot imagine corporates replacing the office suite or any other dynamic suite with something else now can the company take it and grow into a gentic AI absolutely this is what Microsoft is trying to do it is trying to implement AI but they're

trying to be the orchestration layer of AI meaning it's not about Microsoft providing you the best quote-unquote chat GPT which co-pilot right it's not about giving you one LLN that will outgrow competition like Gemini or or Anthropic that's not what Microsoft is trying to do. What Microsoft is trying to do is to give you a layer of AI, whether behind it you have Gemini or Anthropic or Open AI does not matter. They will give you the best answer from all the LLMs, all the models that are existing. So the profile of Microsoft is to lever its well-established position in the enterprise space and grow within the office suite. I'm not

expecting them to be a standalone LLM and compete with Gemini. That's not the issue. So I think that Microsoft within its target market is doing a great job. Of course, they're always starts and stops, but they're doing a great job. They're directing the right direction. They're going in the right direction. It's going to take time because AI just started. Don't forget that the implementation of AI by the enterprise market is limited right now, but they're doing the right things to grow.

Yeah, I guess they have yet another big transition to navigate Microsoft, as they've done in the past couple decades, I suppose. Tal, great to talk to you. Thank you. Thank you. Kaliani. Coming up, we've talked about Nvidia's results coming out this week, but numbers also do out from Walmart and Target as consumer concerns grow.

And Seagate is the third best stock in the S&P 500 so far this year. It's up 170 percent. What the company's CEO said to cause today's big decline. That's next on closing bell over time. InVity earnings may be the tech headliner, but we'll also get a good glimpse into the consumer. When Target and Walmart report results, we get Target on Wednesday, Walmart on Thursday.

those stocks up double digits this year. Investors will be looking for signs on how the consumers navigating higher costs from rising oil prices. The retail sector has been under pressure this year with the S&P 500 retail ETF down 7% year today. And you could make the argument these are more important than Nvidia in that, you know, the consumer is an engine of GDP. And this is going to be a great read on the consumer this week. Certainly has a macro signal, without a doubt. And, you know, Walmart also just sort of within portfolios, It's kind of like the preferred quality name if you're going to own one retailer.

It's the one that's considered to have figured it out. Real kind of swapping of fortunes over the past several years with these. If you remember, Target had that huge run during COVID. It actually see the outperformance there in 2020 and beyond. And now it just trades at the super discount. Nobody's confident that they can necessarily execute this turnaround plan or though glimmers of hope starting to get into the stock. Yeah, both CEOs for both companies, new CEOs, I just say.

So it should be a very interesting conference call. But Walmart has to prove its value. basically. No doubt about it. Yeah, super premium. Well, Intel shares have been on a tear in the past year up nearly 400%. The market is now watching to see whether this run is just momentum or whether the company can actually execute. Mad Money's Jim Kramer sat down with CEO Lit Bhutan exclusively and asked him what the next frontier of AI looks like from here. Take a listen. Next frontier going to be the physical AI. And that means that you're going to mean a lot of agents. a lot of digital worker, and this is changing the whole application. And that's why I think it's very exciting for me. Sometime in life, you want to have some breaks. The big break is the CPU becomes sexy again.

You can catch that entire exclusive interview with Intel CEO Lit Bhutan on Mad Money tonight at 6pm Eastern Time. He does characterize it as luck, right? It is. I mean, in some ways. An unexpected turn. I don't think that the CPU becoming sex. See, again, to use his terminology without anybody's bingo card a year ago or even six months ago.

And all of a sudden, now you have Intel and AMD really catching up in the AI trade. I mean, the massive performance. It's true, although if you see the tail end of that chart of Intel, I mean, it has had a little bit of a sharp comeback. So the sort of super momentum piece of the semi-trade, it definitely is maybe in for a little bit of a retrenchment. But it is fascinating, this whole tech cycle where we're kind of going back in time and down the value. chain to find these companies to enjoy it. Del. Yeah, remarkable.

Saying the taxi gate down big as fears it won't be able to keep up with memory demand. The company's CEO speaking at a conference saying it's trying to meet demand by improving technology, but saying building new factories would, quote, take too long. But should we, we should put today's move in context. The stock is up 587% in the past year. So it's a little blip in terms of a pullback here. But I think it sort of calls on this question, this whole idea that certain areas of the market need to be re-rated, that there's a whole new business model involved.

Yeah. Maybe not so much. And Seagate shares going down again, you know, off this massive peak, could also be that, well, somebody's going to build it, right? In other words, you know, there's always this tragedy of the comments thing. Everyone's going to build it once. Or sometimes it's, you know, the company willing to take the risk and accept lower returns longer term and build capacity is the one that gets the volume, but the others don't enjoy it.

So it's an interesting dynamic and nobody. White knows whether it's different this time with memory. Time now for a CNBC news update with Christina Parks and that. Christina. Thank you. Well, you have police in San Diego right now responding this afternoon to reports of an active shooter at an Islamic center. Very few details just at this point.

But police say the situation is, quote, active but contained. And that the threat is neutralized. According to NBC affiliate KNSD, law enforcement, sources said two suspects right now are dead. A nice agent accused of shooting of Venezuelan man in Minnesota. soda during the immigration surge and then lying about it charged today in Minneapolis with assault and falsely reporting a crime. The Department of Homeland Security has yet to comment. Prosecutors say there is a nationwide warrant for his arrest. The EPA today proposed repealing limits on four types of forever chemicals in drinking water. Shortly after the president returned

to office, the agency signaled its intent to rescind Biden-era limits against the compounds known as PFAs. According to the Natural Resource Defense Council, all 50s,000, States have reported levels in drinking water that are above EPA standards. Guys, back over to you. All right, Christina, thank you. The NASDAQ down for the second straight session, kicking off what is a huge week for tech with NVIDIA's earnings coming up. We'll look at what else investors need to be watching.

Overtime, we'll be right back. Welcome back to closing bell overtime live from the NASDAQ market site. A mixed day for the markets as the Dow closes with the gain of 160 points. The S&P 500 basically flat. The NASDAQ down half a percent. Money moving out of chips, including memory names, as well as networking stocks. The big chip ETF's down 2% or more, while the software ETF gaining more than 1%. Also a rotation into financials, consumer staples, and energy, all those sectors gaining more than 1%.

And a big power deal today, next era, paying $67 billion for Dominion. The deal coming as power demand surges thanks to AI, as well as reshoring and electrification. but obstacles to the deal exist, it will require a number of approvals at both the federal and state levels. Well, while investors get set for Nvidia earnings Wednesday along with the slew of retail reports, the yield on the U.S. 10-year touching a 15-month high today, that along with elevated oil prices, and an uncertain labor market has more than doubled the odds of a rate hike by December. So how does that change the calculus for investors? Joining us now here on set is Kevin Gordon, Schwab Center for Financial Research,

head of macro research and strategy and Alan McKnight Regions CIO. Gentlemen, great to have you both here. Kevin, I'm going to start off with you because you think the best days of the rally are behind us. Really? Yeah, I think the strongest. I mean, when you get to this point when positioning starts to get a little bit stretched, you have a lot of the catch-up that has already been in place, particularly for people who were not exposed to the equity market, certainly heading into the year.

But then when you got into that deeper sell-off phase, you know, that sort of gets you to the point, I think, where, yes, you can move higher as long as earnings growth, continues to look robust and the macro environment looks okay. But I think from a positioning standpoint in how stretched things have gotten probably means that you don't see, you know, as sharp of the rallies that we were seeing certainly off the throes of the low in March. I mean, I guess we always have this issue of what we are referring to and we refer to the market, right? Because all the work is about how dominant the AI theme has been, Alan, and kind of how narrow in some respects the market cap gains have been. I guess the debate is, do you consider,

that healthy, it's following earnings, or you consider it a little bit dangerous to some degree? I think it's a little bit dangerous, but the beauty is, as you talked about at the outset, we're seeing this rotation, which means to us that the market is finally starting to broaden out a little bit and actually benefit some of the other industries and sectors that haven't really benefited over the last 18, 24 months. So we would take the counterpoint to Kevin in that we think that markets can actually broaden out. Maybe the overall market stays roughly where it is, But if you start to see this broadening within these industries and sectors, that's a really healthy market situation. We had a super broadening from like October 29th to the end of February.

The S&P went nowhere and it didn't necessarily allow the market to withstand this shock. That's true. But I think what we've seen now is that when you look at the earnings component of it and you look at how we're like, so April 1, we saw that earnings expectations were going to be up 12%. By last week, they had actually positioned to plus 18%. And I think that's really what's happening. here is that earnings are the real tailwind and the backdrop for all of it. And it doesn't mean that it's going to be an easy path over the next six to 12 months. But we do think that the tailwinds are there and really have this foundational support from earnings growth. In terms of the headwinds, though,

they are there as well. When we mentioned higher oil prices, we mentioned the 10-year yield, for instance, and yields rising around the world for that matter, Kevin. So at what point do you start getting concerned about, you know, you sound worried about the rally, but, you know, you're not calling for a pullback, per se. At the point do you start saying, you know what, the chances of a global recession are a little bit higher, the chance of stickier inflation, they are higher and that will impact our forecast. Yeah, I mean, the ultimate variable is the one that no one knows in terms of the timeline of the war, how long and how prolonged the closure is for the straight-of-form musin, you know, how does that ultimately filter through to the U.S. labor market? I think if we learn

anything in this post-pandemic era, this ultimately comes down to labor and whether you start to materially impact how many non-farm payrolls and the stock of payrolls that we have, have in the U.S. because, yes, you could look at how much the flow slowed last year, but we got into that really dangerous territory around fall. But then we sort of rebounded off of that. And in that entire period, you really didn't have the total stock of payrolls changed that much. So even though, yes, there are major affordability concerns, you could see a lot more pullbacks in discretionary spending on the part of the consumer. I think you would need a lot more than that in terms of job loss for this to become more of a bare market type scenario for the U.S.

equity market. But I even think, you know, in the broadening sense, and I think both of what we're saying, to some extent, could be true because this mostly comes down to the largest names in an index like the S&P 500, the top 10 being 40% of the market cap. If you're not getting participation from them and the rest of the market's doing fine, the cap weighted S&P 500 is not going to look that great. That's essentially what was happening in the beginning of this year. Vice versa, of course, it starts to get more concerning. So I think both can be true where you could have a broadening of the market, but if tech is still doing well, the outperformance skew is still going to be in their favor in terms of their contribution to the index. I guess the debate has moved,

Alan, to some degree to whether don't fight the Fed means being bullish or bearish, because what's the Fed's next move could help determine that? Without a doubt. And I think rates and oil are the two things that really give us the most ajia. When you start to look out over the next 12 months and you think, what will the Fed do, given what's happening with inflation, with oil prices and commodity prices more broadly, it's hard for us to envision a scenario where they're going to cut rates. So now that that's on the table in terms of actually having to raise rates and not just the Fed, but also other global central banks, that puts a lot of pressure out there from a capital allocation perspective when you think of the cost of capital and then overlay that when you go into the summer spending season,

how is that going to challenge the U.S. consumer while they're also paying more at the pump? And so I think the rate side of things is the one big variable out there that could be challenging for the economy and therefore for earnings. Does that imply you don't think there's value in bonds around these yields? We don't. We actually think that you're really catching a fallen knife right now with bonds. We think we could actually see pressure all the way out to 480, even up to 5. We got out to five back in 2023 and hit 462 today. I think it's going to be a challenging time for bonds. And it's really that bond vigilante mindset, which is regardless of what the Fed is doing, the bond market is saying we're not convinced you have inflation under control. Yeah, globally for sure as well.

Kevin, Alan, thank you very much. Appreciate it. Up next, We'll put the recent rally in momentum stocks in historical perspective and discuss whether they can keep driving this market higher. So you just discussed. Momentum stocks as a category were downside leaders today, but that comes after a truly extreme historic run of relative outperformance. Goldman Sachs put this together. Now, this only looks at instances where the momentum factor, long short, high momentum factor in the market, has had at least a 20% surge in three months. So that's what this threshold is. A 20% surge in at least three months. This is the average of all prior periods, 11 prior periods. We are at the very top of it. In fact, higher than any other single instance. So in other words, there's plenty to give back in terms of this momentum surge without it necessarily, meaning it's totally the end of the story longer term, or that the market as a whole necessarily has to take an equivalent gut check. But it does show you this the extreme narrowness of the leadership. Now, earnings growth has also been extremely narrow. and a lot of bowls will say, hey, prices are just following earnings, but it does seem to be very lopsided here.

So this is AI infrastructure as a category. That's earnings revisions to the upside over the course of this year for 2027. Massive move. Energy, understandably, also rated higher. So overall S&P is right in here in a 10%ish range and then nothing for the rest of the S&P. So on a net basis, flat earnings estimates for 2027 outside of these themes. But isn't this what you want to see if you want to see? that momentum could, I mean, this is the exact chart that you want in order to say, you know what, we have the power to continue. You definitely want to see it be substantiated by the earnings revisions. That's necessarily not the case in every moment that the stock prices haven't overshot, even the higher earnings estimates.

But yeah, it's sort of rationally euphoric is kind of the way the market has been. Right. All right. We actually have a developing story to tell you about Elon Musk is responding to today's verdict in his case against Open AI. He writes on X, regarding the Open AI, case, the judge and jury never actually ruled on the merits of the case just on a calendar technicality. There is no question to anyone following the case in detail that Altman and Brockman did in fact enrich themselves by stealing a charity. The only question is when they did it, I will be

filing an appeal with the Ninth Circuit because creating a precedent to loot charities is incredibly destructive to charitable giving in America. OpenAIA was founded to benefit all of humanity. So that is the latest Elon Musk's response to the judge's decision in the Open AI case. Well, Regeneron, one of the big losers in the S&P 500 after a disappointing late-stage trial of a skin cancer drug sparked several analysts downgrades. Got all the details straight ahead. Welcome back to overtime shares of Regenron down sharply today on disappointing news from an experimental skin cancer drug. Angelica Peoples joins us with the details on the story. Angelica. Hey, Melissa. Well, Regeneron's experimental cancer drug failed that phase

through a trial in melanoma. And the company disclosing the news and a press release, late Friday night. That's not exactly helping the sentiment here. So this was arguably Regeneron's biggest catalyst of the year and a failure here is clearly seen as a major letdown. This isn't the end of the program. Regeneron says that a separate phase three trial testing the drug head-to-head against Bristol-Myer Squibb's up-dualogue is ongoing. But that said, analysts say that the odds of that working are now much lower. So BMO is actually removing the drug sales from its model entirely. They previously estimated $1.8 billion at annual peak sales and leering today downgrading the stock in part because of this setback.

And bigger picture, this failure is just not great for optics. So Regeneron had another setback last year for an experimental COPD drug. And now there are questions about the pipeline that are growing even louder. And so its biggest source of revenue depicts it, that has patent protection until the early 2030s. But of course, in this space, investors are always wondering what's next. Multiple analysts saying that regeneron needs to go out and do deals. So we'll have to see exactly what they're going to do about this. Doesn't have the cash to do the deal?

You know, I did see a note that they have about $19 billion of firepower, and so they do have the flexibility. And the question for them, right, is what exactly do they spend it on? It's been a company where, you know, their big players in immunology, and they also have some of these other spaces like cancer. They're also trying to get into obesity. It's just a matter of, you know, if they really want to do that and what exactly they're going to do it in.

Angelica, thank you. Well, let's get you set up with tomorrow's trade today, pending home sales is the only economic data on the calendar. Home Depot is the big name on the earnings front, along with Toll Brothers, Eagle Materials, Kava, and Amher Sports. Home Depot, by far the largest, probably the most significant as a bellwether. Rates not cooperating. Home Builder sentiment, not so great. We'll see if maybe sentiment is washed out around that stock. And what that could imply for a lows, which is much more of a sort of DIY exposure as opposed to a professional contractor. So Home Depot is definitely a read on the consumer, but more so on the renovation trade.

Yeah, no doubt about it. And then really it's one of those days, too, where you see how the market kind of reacts to itself, you know, reacts to today's kind of churning around and whether, in fact, it was just sort of a pause in this rate move or not. I mean, 4.6 on 10-year, doesn't seem like it's some kind of make-or-break number, but at some point we're going to be testing those level, for sure. All right, that's going to do it for overtime today. That's when he starts right after this quick break.