Closing Bell - Closing Bell: Positioning at All-Time Highs 9/18/25

Episode Date: September 18, 2025

How do you want to be positioned with stocks at all time highs? We discuss with Goldman Sachs’ Meena Flynn. Plus, we discuss if tech valuations are getting a little worrisome with NYU Stern School of Business professor Aswath Damodaran. Former Cleveland Fed President Loretta Mester tells us what she thinks the Fed will do next. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to closing bell. I'm Sarah Eisen in today for Scott Wapner, live from Post 9 of the New York Stock Exchange. This make or break hour starts with new record highs for the markets. Look at the Dow. It's up 160 points, S&B 500, up 6 tenths of 1%. And the NASDAQ is the leader, Intel, Nvidia, front and center there. The NASDAQ popping more than 1%. The Russell 2000, small caps on pace for first record close for them since November 2021. So playing catch up. It all takes us to our talk of the tape. How do you want to be positioned with stocks here at all-time highs? Joining me now is Goldman Sachs's Mina Flynn. Mina, it's great to have you on the show from the private wealth department. What are you telling your clients at this point now that we have seen such a strong melt-up in stocks? Absolutely. We're encouraging our clients to continue to stay invested and with incremental capital to really look to put that to work over a six to 18-month time period. And we are expecting drawdown. So whenever you got a market that's at the 10th decile, such as what we are now, it is likely that you're

going to get a drawdown. In fact, there's an 80% probability of a 10% drawdown. That being said, valuations aren't the best predictor of what forward market performance is going to be. So we've been in that 10th decile since December of 2016, and since that time, the market's actually returned 200%. So we're really focused on earnings. What about the sentiment from your clients. I know you represent a lot of family offices and all different types of clients. What are you hearing? Client sentiment, I would say, is relatively mixed. And so I would say that if you look at our wealth management clients, they are neutral to risk on. And so, as you mentioned, work with family office clients. We just did an Insights report that works with, that looked

at a cohort of these clients. And there are actually 30% of them are looking. to decrease the amount of cash that they're going to hold over the next 12 months and go into public equities and private equities. And this is an investor cohort that's already 70% plus risk on. When I say it's mixed, I say that because if you look at the hedge fund levels, you look at mutual fund levels. Despite markets being at all-time highs, this positioning is relatively light. Hedge funds, 40 percentile of net long, mutual funds are sitting on 170 billion of cash. So there's room. So there's room. There's actually a good amount of a right-tail risk to the market as well as clearly left-tail risk.

Yeah, a lot of people say also, you know, the trillions of dollars sitting in money market funds, too. $7.3 trillion in money market funds. And as rates start coming in, you start to see that go out the risk curve, as well as the more confidence you get that the Fed's going to get this right. And, you know, what we see the Fed doing and what we see the economy doing is kind of slowing a little bit into the end of the year and then really picking up in 2026. the economy. The economy. So the Fed said it a little bit yesterday in their SAP and the comments in terms of just this slowdown and then this reacceleration. And that's really driven by

both fiscal and monetary stimulus as well as a weaker dollar. So do you, I was going to, it raises the question, do you have confidence in what the Fed is doing? And do you have confidence on what they will be doing? Because some of those dots on their expectations for rates were all over the place. It was definitely a scattergram. But I think the Fed gave the market, what it wants in the sense that it's cutting and they said that they're going to continue to cut into an economy that is growing. Right. And that and you think that will be the sort of impetus, the force that brings the money off the sidelines? I think there's a multitude of things. One is, one is that. One is the fiscal stimulus that's going to lead to more cash in the hands

of consumers as well as corporations. Another is if you're able to start seeing the attachment points from the AI CAP-X to the revenue generation, the smart. market is very AI heavy, and so anything from that vantage point is going to bode well as well. Right. I mean, so much has been priced in, though, when it comes to the AI spending. And I know that every quarter we have seen those numbers on CAPEX go higher. Question is, how long can that go? You know, you're right. CapEx and AI, if you look at it, it's doubled in terms of spending over the last two years. We've gone from $150 billion to $300 billion of spending. But if you look at these companies spending relative to the cash flow, it used to be when you look at the

tech bubble, you look at 20, you know, you look around that time period, it was 100% of their cash flows. It's 50% of their cash flows now. Also, when you look at the- In other words, no bubble. Don't think we're in a bubble, because look at valuations also. Valuations are at 28 times for the largest five stocks. If you look at 2021, that was 43 times, and it was 50 times during the tech bubble. And you're saying there's more cash even to play with? with here. And there's more cash so play with. And also, you know, these companies, they have a tremendous ROE. Again, the top five stocks in the ROE of 65%. They grew over 20% in the first half. So I don't think you want to be betting against this trend going into the end of this year or

into 2026. So you're very bullish, clearly. I wouldn't say I'm very bullish. I actually think we're going to hover around these levels into the end of the year because there's a lot that's coming up on the economic data front, labor, inflation. I do think inflation is going to tick up before it ticks down. And so the tariff impact is going to continue to hit us. But you've got some of the other trends in inflation, such as wage growth, such as rent growth, actually coming down. And so that's why you see inflation kind of doing this. And so, and again, you know, very noteworthy of where valuations are as well. And this, you know, this market is not necessarily driven by the economy. It's more driven by earnings. And so that's really what we have to keep

our pulse on. And so, like I said, I think the market's probably going to stay around current levels into the end of the year. And then I think we trend moderately higher in 2026. So I mentioned small caps look set to have their time at a record high, finally. Small caps are definitely on a run. I think they're up something like eight of the last nine weeks. And I think you just said closing at all-time highs. The one thing I would just be mindful of is that the concoction that we have right now is kind of a perfect setup for small caps in the sense of you've got a growing economy and you've got declining rates. But look at last year as an example. Last year, the Fed cut rates 100 basis points. And you also had GDP of 3%. So more than what we have right now. And last

year, the S&P outperform small cap on an absolute basis as well as on a sharp ratio basis. So you're saying beware? I'm saying that I prefer large and mid-cap. Yeah. I know. Every time people get excited about small caps, then the S&P just goes and outperforms. Meena, it was really good to talk to you. Thank you very much. Thank you. Co-head of private wealth management at Goldman Sachs. We do have some breaking news here.

President Trump making some headlines moments ago on Air Force One. Amon Jabbers with the details. Amen. Sarah, that's right. The president on Air Force One talking to reporters a short time ago. And in that conversation, he as much as threatened to take away the licenses of broadcast television networks that have overwhelmingly critical coverage of him. Here's what the president said when he was asked about the Jimmy Kimmel decision by ABC.

He said of television networks that cover him with their news divisions. They're 97% against. They give me only bad press. They're getting a license. I would think maybe their license should be taken away. It will be up to Brendan Carr. I think Brendan Carr is outstanding. He's a patriot.

He loves our country. He's a tough guy. So we'll have to see. The president there referring to Brendan Carr, the chairman of the FCC, who, of course, as you'll remember, Sarah, just before the ABC decision on Jimmy Kimmel, said of ABC, they can do this the easy way or they can do it the hard way threatening FCC action against ABC. We saw the decision by ABC to sideline Jimmy Kimmel after that threat by the FCC chair. Now the president of the United States suggesting that

other television networks, which have news divisions, which cover him in a way that he feels is negative, may have their licenses taken away. He says that'll be up to the same Brendan Carr, Sarah. Back over to you. I mean, is there, have we have, has this been threatened before? Do we know? That would be a pretty drastic step from what's happening now to actually pull their licenses.

I mean, certainly not in my lifetime, right? I mean, you might have to go back to Nixon, you know, during Watergate. But, I mean, if you think of the negative coverage that a Bill Clinton received or George Bush or even a Barack Obama over the years, You just didn't see threats from those administrations to take away the broadcast licenses of television networks. This is a country that has long valued a free press, Sarah, and long valued the ability to people to stand in the public square and be critical of the president. Whether you agreed with that president or not, administrations have tended to agree that that was a right of the broadcast networks to do that. This president doesn't agree with that.

This president is saying here that if they have 97% negative coverage of him, in his view, however he defines that, then he thinks maybe their license should be taken away. And he says he'll leave it up to Brendan Carr, who has been very aggressive on his behalf on this front. So this is a different order of magnitude of a thing than suggesting that, you know, the networks are independently making financial decisions for business, reasons of their own to cancel a Stephen Colbert to suspend a Jimmy Kimmel because in those cases maybe the networks looked at that and said it's too expensive it's causing too much trouble we don't like that business this is a different thing this is the government coming in the president of the United States coming in and saying I'm going to yank your license unless that ratio of 97 percent turns around to a way that I like okay amen thank you very much amen javers in

Washington now to the big corporate story of the day in vidia making a big bet on Intel Christina Partsenevil is here with more. Christina. Sorry, let's start with Intel's share price because it's soaring up, what, 23% on Nvidia's $5 billion investment, but some really question whether this massive move that you're seeing on your screen is maybe a little overdone. The press release lacks specifics on timelines, volumes, or manufacturing commitments.

Intel's foundry business isn't even mentioned. The broader semiconductor equipment space, though, is getting swept up. Synopsis, for example, is rallying on hopes of increased chip design activity, while TSMC initially dipped but recovered as investors. really realize this isn't a foundry threat. AMD, down about 1% last I checked as this partnership challenges their server CPU gains. An AMD spokesperson said they remain confident in their ability to continue driving innovation. Translation, AMD isn't worried about this partnership and shares actually rebounded once that

release was put out. Arm, though. Arm did drop about 3%, almost 4% right now in concerns this undermines their NVIDIA partnership. but when I asked Jensen Wong, the CEO of NVIDIA, just about two hours ago directly about ARM, he said, arm should not be down, implying the share price should not be done, suggesting Nvidia still sees this relationship as complementary.

Semiconductor equipment stocks like ASML and Lam are broadly higher as investors bet on increased activity within manufacturing, though the question remains. Should Intel be up nearly, what, 25% on a partnership without any execution details? The market is definitely pricing, in success before Intel proves they can deliver. Right. And as Stacey Raskin told us earlier, just having the blessing from the guy

who is Jensen wrong right now. The Midas touch, right? Makes people very happy. Christina, thanks. Meantime, Microsoft is ramping up its bets on AI data centers. Let's get to Steve Kovac with more. Steve, what's the story here? Hey there, Sarah. Yeah, I'm in Mount Pleasant, Wisconsin right now, just south of Milwaukee. You want to see what $3 billion. looks like, Sarah, just look behind me. That building is Microsoft's latest AI data center. 3.3 billion dollar project expected to go online early next year. I actually got an inside look at this facility.

First time Microsoft has ever let the press inside one of their AI data centers. I saw racks of Nvidia GPUs getting ready to go online. What you're looking at right now, that's the cooling system. It's a closed loop cooling system of water. They don't lose any water. They keep it all within the facility and minimize how much you're taking for local utilities there. The huge fan cooling systems and things like that. It was really interesting to see where all these billions we talk about so much in AI capital expenditures,

just to see it in action and the massive scale of this project that's sitting there right here behind me. I also got to catch up with Microsoft President Brad Smith. He came here. This is his hometown, by the way, he grew up here, just to talk about this facility. and the expected spend that Microsoft will keep increasing over the next fiscal year. Take a listen. Last year, our last fiscal year, we spent about $85, $86 billion, and it's clear the number is going up. It's going up by, I'd say, a significant margin.

And so, yes, you can expect us to keep making these kinds of investments because this is what the industry, this is what the world needs. So Sarah, Microsoft right now is basically on pace to spend $100 billion in the fiscal year that's ending next summer. We'll see how much that is, but they are continuing to go. Brad Smith told me that Open AI and so many other AI companies out there running on this Azure AI cloud, the demand is just so high they cannot build these facilities like the one behind me fast enough. Sarah, I'll send it back over to you. I mean, it is good, Steve, after we talk about that billions and billions of

trillions of spending going into these data centers to get a look inside and to see how actually boring it looks behind you there. But obviously, it's the sexiest story in the market right now. Steve, thank you. Indeed. Steve Kovac. So as big tech ramps up its spend on AI and their stocks hit record highs, our valuation is getting a little worrisome.

Let's ask NYU Stern School, a business professor, Oswath, Damaroden. It's great to have you back on, so are they? Are they getting worrisome to you these valuations as we make new record highs here in the session? It's not just tech, right? Stocks collectively are trading at prices that I think, you know, I mean, they're richly pressed. That's the only way to describe it. I'm not going to use the B word, the bubble word, because that suggests that somehow the prices have nothing to do with earnings. Clearly, earnings have held up.

75% of companies reporting this year have reported better than expected earnings. So I think the market is being held up afloat. the earnings numbers. And as long as the earnings numbers keep coming in, there is no catalyst for an adjustment. But I think that, you know, it's not just big tech. It's not just tech. It's collectively all stocks. But what about big tech in particular? Invidia is up another almost 4% today off this Intel deal. The market does continue to be carried by some of these mega-cap tech stars. I think Nvidia has had some ups and downs in the last few weeks. I mean, there was that there was a brief period where Oracle pushed itself up to the front.

My guess is in the coming months and years, you're going to see more companies from the product and service space, not the architecture space, elbow their way to the front. Because if you look at every big boom going back for decades, initially the architecture companies are the beneficiaries, Cisco during the dot-com boom. Eventually, though, the biggest winner is not one of the architecture companies. It's one of the product and service companies. and Oracle, Palantir, Microsoft, Meta, they all want to be there. And I think it'll be interesting to see which of those companies ends up being the winner,

if any of them. It could be a company that's not listed there yet. Which one interests you more? The hyperscalers that you're talking about, the software players that are in AI, like a Palantier, or the semiconductors? I'll tell you, without the product and services, the hypers, the architecture companies, cannot survive, right? I mean, you need the revenues, the earnings, and the cash flows coming from the products

you produce. I mean, you're just off that clip on Microsoft. Microsoft spends $100 billion in AI architecture. It needs about $300 billion in revenues from AI products and services to cover that cost. So if you extend that across the market, you're talking about a market that's building in an expectation of $3 to $4 trillion in revenues from AI products and services. Right now, I don't see the numbers there.

And that's what I'm watching for. Which of these companies is going to be able to elbow its way to the front and be able to get that kind of revenue from its products and services? I think in your own account, you own a lot of these stocks, right? You like a lot of the Mag 7, except what Tesla? Tesla, and it's not because I don't like the company. I like the company. If there's any company where a CEO can reframe an electric car company into a robotics company,

well, Elon Musk is that. I think my concern with Tesla has become a political stock, and I'm terrible at politics. I don't want to have investments, or I'm trying to figure out what the politics of the moment will look like. So my reason for selling Tesla was not because I don't like the company, but because I don't want my investments in politics to mix together. But I do own the other sex. I mean, I own half of the Nvidia that I owned a year ago, and I'm okay with that, even though

it's gone up, because I think it is so richly priced that I'd rather have my money in Intel than an Nvidia. And actually, my Intel investment's done better since September of last year than my Nvidia investment. Yeah, Intel's caught a nice wave here. And I'm not sure Tesla's political anymore. But Oswald, is there any stock or sector that looks particularly mispriced to you right now? I think there are all, I mean, there are no obviously cheap sectors. I mean, you can point to a sector that traded low multiples of earnings. Relative to their own history, though, every sector is trading pretty much at a premium over its historical pricing. I think the energy might be the one outlier, but even there, there are good reasons for why we're seeing what we're saying.

But I think if you look at every sector, there are no sectors. We look at the sector and say, that's a discount on what I'd have got the sector for 10 years ago, 20 years ago. Which would be a bigger factor for valuations right now? If the Fed doesn't cut as much as the market thinks, or if inflation maybe firms up more than the market things, if the economy does better, what would be the big swing factor? I don't think the Fed is any play in this. I mean, I think much as we like to think the Fed is going to drive rates, rates are going to have a mind of their own.

I mean, it's interesting. The Fed funds rate by 25 basis points. You look at the Treasury markets, basically they have demanded supply driving those markets. I think ultimately what happens to rates is going to be determined more by what happens to inflation in the real economy rather than whether the Fed cut three times, four times or six times. And that's what I'm going to keep my eyes on. Yeah, we are seeing higher yields globally today. Aswath Damarod, and thank you very much for joining us from NYU.

We are just getting started here on Closing Bell. Up next, former Cleveland Fed President, Loretta Mester, is here with her reaction to yesterday's interest rate cut and the message, what she thinks the Fed could be doing next. We are live from the New York Stock Exchange. You're watching Closing Bell on CNBC, tracking for record closes. Breaking news out of Washington on Fed Governor Lisa Cook. Megan Kassella joins us with that. Sarah, that's right. It was just earlier today that the Trump administration filed with the Supreme Court asking the high court to allow the firing of Fed Governor Lisa Cook to move forward.

Cook now through her attorneys filing an opposition to that motion, saying in full here, this is from her attorney. Abby Lowell, the full quote here, granting the president's administrative stay requests now would upend the status quo because Governor Cook, unlike other officers who attempted removal this court has considered, has continued to perform her official duties throughout this litigation, including by participating at this week's FOMC meeting. That disruption would subvert the Federal Reserve's historical independence and disrupt the American economy. Sarah, it goes on from here with Lowell arguing that because Congress has protected the Fed from day-to-day presidential control, the president has no urgent or compelling need to deprive Governor Cook of her role as a governor,

and that temporarily removing her from her post would threaten our nation's economic stability and raise questions about the Federal Reserve's continued independence. There's a little bit more there, Sarah. But little clearly and forcefully arguing here, there's no need for Cook to be removed from her job at this point that the case should be allowed to move forward the way that a federal judge and a federal appeals court have now both ruled. So we'll have to see if the Supreme Court chimes in. on this, but both sides really making their cases clear today, Sarah.

I mean, so this follows a pattern where the Trump administration, you know, files to try to fire her, basically, and then her lawyers come out and dispute it and they make it about Fed Independence. Have they filed anything, you know, in response to the actual allegations that would render her innocent? Not in this instance. They have been arguing more broadly and saying that there isn't cause here, and they're arguing that case as well. they're responding just to the motion that the administration filed this morning, which was that she should be removed from her job right now and not be allowed to work while the case moves

forward. They're saying that even doing that or maybe even saying especially doing that would really threaten the Fed's independence because the case is still outstanding at least before the Supreme Court. That's what they're arguing here. Got it. So we'll just wait to see whether the Supreme Court takes it on. Thank you. Megan Casella. Let's bring in a good guest here on all this. Former Cleveland Fed Presidents, NBC contributor Loretta Mester. it's good to see you. Do you see this issue about Lisa Cook as a real threat to fed independence?

Oh, I think it's definitely a threat to fed independence because basically what they're trying to do is remove a governor based on an accusation. So if they are successful in doing that, that means that they can remove anyone just by accusing them of doing something that they view as an issue.

But she hasn't really put forward any, concrete evidence that it's false, has she? Well, I think there are documents that suggest there's some ambiguity there. But, again, right, it's an accusation. That's not what the argument is, right? The argument is that, right, it's not up to her. The Trump administration put it in the court system and the legal system. And to my mind, once it's entered that realm, then you have to do what the lawyers that you've hired, you know, are advising.

you to do. So I think they now have to let the legal process go forward and, you know, see how that turns out. But to my mind, if they can remove, if a president can remove a governor or any other, you know, official from the Fed based on an accusation, that's a very serious threat to independence, because that can happen to anyone then who might have policy views that aren't aligned with the presidents or the administration. So I think it's a very serious issue here. What do you make, then, of the market's response or really lack thereof?

I mean, if there were serious questions about Fed credibility and independence, don't you think we'd see that more? Inflation expectations becoming unanchored, long-term rates? Well, I think this is a process that will play out. I mean, the markets tend to focus on sort of the next decision. So, of course, there was a lot of interest in,

yesterday's meeting and what would come out of that. But again, this is a very serious threat. And I would submit that if they are able to take Lisa off the FOMC and off of the Board of Governors, then I think the markets will react. And they'll react because that means that we now have a system whereby, right, interest rates are not going to be set by the Fed necessarily to try to achieve the Fed's dual mandate goals of maximum employment and price stability. And that gives you a bias towards lower interest rates because administrations typically want lower interest rates than may be appropriate. We've seen President Trump wanting the Fed funds rate to go all the way down to 1%. They're going to be inflation premiums and risk premiums on that long end of the bond

market. So it's really even not productive in terms of what the president says his goal is of lower long-term interest rates. This is going to add higher premiums on that long bond yield. Speaking of, what did you make of yesterday decision? First of all, it was fairly unanimous, except for one dissent. We will be exclusively speaking with Stephen Myron, Fed Governor tomorrow, on money movers about what he advocated for inside the Fed meeting. But the fact that they all voted for 25 basis point cut, but we're a little all over the place when it comes to the projections for what happens for the rest of the year. What do you make of it?

Yeah, I mean, I think it was the data basically supported a 25 basis point cut, and the chair explained during the press conference that that was sort of the consensus among a lot of parties. He mentioned that they didn't seem to have a strong contingent that wanted 50 basis points, and I think that's right based on the data. I mean, I think of it as being downside risk to the employment part of the mandate, have come more into focus, and that's more of their concern at the moment. And so they took out what I would call an insurance cut. The labor market has softened, no doubt, but it's still

basically in balance, but the concern isn't maybe it'll weaken further. At the same time, we know inflation is well above the target still. It's been above target for four plus years, and there's upside risk to the inflation target, in my view, because we know that firms are going to pass on at least part of that tariff, maybe a long and drawn-out process, but we're going to see higher prices. So they need to balance those two goals, and the 25 basis point move does that. The disparity in what happens going forward, I think, is perfectly reasonable as well, because, I mean, frankly, I'd be more concerned if they all agreed on the path going forward, because I think there's a lot of uncertainty about how this economy will eventually evolve.

And I think they're positioned themselves so that they can address, you know, if inflation risks turn out to be the higher risk and inflation moves up, they're in a good position to address that. If the employment part of the mandate seems more of that issue, then they're in a good position to do that. Which do you think it's going to be? I would say, watch. I'm more concerned at this point with the inflation measures than I am with the labor

market. But again, you have to see how the economy is actually evolving. So the job now is risk management, but making sure that you keep your policy rate well positioned, no matter which way the risk turn out so that you don't have to do what we had to do when in the post-pandemic period, which is we waited too long and then had to really increase at a quick pace, which entails risk in and of itself. That's why I kind of think the dots are pointless And people just focusing on them and investors trading off of them is hard because if the whole thing is you have to see how the economy unfolds and be data dependent and we don't really know which is going to be the bigger risk, why have the dots to throw everybody up? See, I like the dots because it gives you a snapshot of where are these policymakers thinking at the moment? And, you know, you write down what your best, you know, what you think is the most likely outcome and what's the policy that supports that.

And so that's the way I do, and I liked seeing that there were disparity of views. Again, if they had all agreed and it was just a point, everybody agreed, I would be more concerned because that means they're not really thinking about, oh, there are scenarios here that we have to consider. So the fact that you have policymakers sitting around that table with different views, I think, is one of the strengths of the Federal Reserve System that they all come together. they express their views, and then they reach a consensus. And sometimes there's dissent, sometimes they're not.

But I think the dot plots give you some insights into the thinking around that table. Were you surprised that Waller didn't dissent for a bigger cut? Not really, because, you know, he had said the timing is not an issue. I think, you know, in some sense, Mickey Bowman and Chris Waller, right, they've got sort of a cut, which is what they wanted. And there's a path in that that suggests that, you know, there may be more cuts coming. So, again, there really wasn't a lot to dissent on at that meeting given where it turned out, you know, to be. The chair was very clear in the press conference that they have shifted intention to the employment part of the mandate. We'll see how it goes forward.

The data will help inform that and inform their view of which risk, you know, is the one. that they need to be more concerned with at the next meeting and further meetings. So I think, you know, they basically got what they wanted. Okay, well, really valuable to have your take on the Lisa Cook breaking news and policy, of course. Loretta Mester, former Cleveland Fed president. Still ahead. We're going to get you set up for FedEx and Lenar earnings in overtime. And we are on pace for record closes across the board.

And yes, it includes the small caps today for the first potential record closed here since 2021. We'll be right back here on Closing Bell. Up next, top picks for your playbook, Obermeyer Woods, Ali Flynn, Phillips, standing by with her three biggest ideas right now. She'll join me after this break. Closing Bell, we'll be right back. Stocks hitting all-time highs again today, putting the Dow, the S&P, the NASP, and now the Russell 2000 on track for record closes. Our next guest shares where she's seeing an opportunity at these heights.

Let's bring in Obermeier Wood president and partner, Allie Flynn-Phillips for her top stock picks, of course, recognized in the Barron's top financially. advisors, Forbes best in state wealth advisors, Abby, Allie, it's great to have you. So let's go through some of your picks. One I'm interested in has to do with housing with the Fed now cutting rates. Yeah, well, first, it's great to be on here. To one of us, one of those cases, where just in general, we think the market is pretty lofty, but the nice things about it, we do think there's great opportunities within small cap value sectors, health care, and housing. One example is Home Depot. We'd like to set going very much. much into Fed rate cuts. Housing to us is like a coiled spring, and there'll be a big economic

unlock if we get back to more of a normalized housing environment. One thing, obviously, is rate cuts make key locks cheaper, and that'll help finance repairs and renovation. But the key thing is, you think about it, is the housing market, the boom was in 2005, so 20 years ago. And at 20 years, as we all know, the fact that you're going to have a big milestone for big renovation project. So that's for air conditioning, kitchen and bathroom, windows, and that should be a real move for a Home Depot. Also, existing houseover is still really low. So if we get back to more than normal environment, that's yet another catalyst for that company. Yeah, a lot of people have been waiting for a more normal housing market. We'll see if the Fed rate cuts do it,

because again, we saw 10-year yield move up on the back of those, that rate cut. So still some questions about what's going to happen in mortgage rates. What about ASML in the semiconductor space? Semis have been so hot, but this one, not as much. True. And the nice, about is this company really powers the chips behind the next generation of AI. So to us, it's viewed a little bit of a catch-up trade within the tech sector. It's still about 25% less than its height that we saw in 2004. One of its biggest customers are Taiwan Semiconductor, and Taiwan Semiconductor's second nanometer is expected to be large, and TSM is already making plans for the build-out for the NVIDIA orders. And all that requires the infrastructure of ASML equipment. So as these companies be able to build this

out, we see a backward of orders and really do think that ASML should benefit from this continued focus on AI chips. And then finally, I want to get to Motorola solutions because this is not your grandfather's Motorola. This is a very different business. Tell us about it. True. I mean, when we think of Motorola, we look at it's kind of like from emergency call centers to defense tech, Motorola systems is really a dominant player. Public safety, as we know, is very topical and really important to object. For example, Motorola's products earn 65% of 911 call centers. Also, state and local budgets are pretty healthy. If we don't see a demand drop, we can actually see them building out these networks more and more. Finally, they just did a new acquisition, pretty

attractive within the drone communication space. Sulfus asset, we think they'll create a great new platform for Motorola to acquire more new defense technologies. So for a company that's able to have strong cash flow and earnings beats, do feel in terms of this company has a lot of over a time plus a healthy dividend. Really nice looking long-term chart as well. Greg Brown, long-time CEO, also beloved. Allie, thank you very much for joining us with some of your picks. We appreciate it.

Great. Thanks so much. Up next, we are tracking the biggest movers for you as we head into this record closed. Closing bell will be right back. Just under 12 minutes until the closing bell. Let's get back to Christina Parts in Evelis for a look at the key stocks to watch. Christina. Let's start with crowd strike because those shares are jumping on new innovations as well as solid guidance. The cybersecurity company announcing expansion of its Falcon next generation identity security to protect non-human and AI agents. Yesterday, the company announced a partnership also with Salesforce and an acquisition of an AI security firm. And that's why you're seeing shares almost up 13% right now. Shares of Nova Nordisk up about pretty much, let's see, 6% after news of a successful trial for its weight loss pill. The maker of Wagovi reported that the pill alternative resulted in a 16.6% weight reduction over 64 weeks.

And that's where you're seeing shares higher. Last but not least, Live Nation sinking right now, about 3% on the Federal Trade Commission's lawsuit. The FTC alleges Live Nation and its subsidiary ticket master allowed scalpers to unlawfully purchase tickets to increase their profits. It's on track for its worst day since July 31st. Yeah, just more headaches over there. Thank you, Christina. Up next, we're going to run you through what to watch when FedEx and the home builder, Lanar, report in overtime.

That and much more when we take you inside the market zone. We are now in the closing bell market zone. CNBC senior markets commentator, Mike Santon, here to break down these crucial moments of the trading day. Frank Holland is here with what to watch from FedEx after the bell and Diane Oleg, of course, on top of Lanar for us. Mike, we'll start with you here. You could have made the argument. You could have, if stocks sold off today that, oh, well, the Fed wasn't that definitive on what the rate path is going to be from here. Yields actually went up. Treasury sold off across the board day. But, you know, glass half

full market rallies to record highs despite some of those questions out there. I mean, the equity markets there definitely is endorsing this step. I think in general, it was clearly expected, and the markets in general did get to the correct spot in advance of it. So, yeah, maybe at some point there'll be a rethink of it. My take on the bond market is, yeah, we're selling bonds on the news, on the reality of, you know, this further but measured rate-cutting cycle, but they're starting from such unthreatening levels that it's not something that stocks are going to really have a tantrum about,

especially because it's not to the point where we're saying, oh, it's handicapping a flare-up in inflation or anything like that. So most of what's going on in stocks, though, is this benign rotation, right? So small caps are up four times as much as the S&P 500 is up. NASDAQ is mostly a few stocks on this NVIDIA news. So I do think mostly it's rotational at highs. It's still net positive, but not necessarily some kind of exuberant, you know, game-changing type of a move we're getting today.

The fact that small caps are joining the party, is that a healthy sign to you? I mean, I think in general it's healthy. I don't know that it's sort of a changing of the guard necessarily. It's taking some of the pressure off small caps. Remember, they haven't had a new high in almost four years, one that really stuck. So clearly, there's a lot of room to make up if they actually get a little bit of a run. The other piece of it is the Russell 2000 is, as diverse as it is, a lot of the speculative, retail aggressive stocks move that index to a fair degree. And those are ripping today.

A lot of the Mimish-type stocks, quantum, things like that. All right, Nvidia, Intel, Pallentier Crowdstrike, having a good day, almost 13% synopsis, 13%. Mike Sittitek, we'll send it over now to Frank Holland, find out what he's watching for from these FedEx numbers coming after the bell, Frank. Hey, good afternoon, Sarah. So FedEx shares are pretty much flat since their last earnings. The parcel giant's been impacted by a number of issues,

tariffs, the ongoing freight recession, and the removal of the de minimis exemption that allowed small volume items to be imported without tariffs. Back to the numbers, both revenue and earnings. They're expected to be pretty much flat year over year. A big reason is that de minimis impact. Bank of America estimates just about 17% of FedEx revenues come from outside of the U.S. And while not all of that was shipped under that exemption, BFA says a large percentage was and they expect air freight rates to be essentially impacted by that change. The big question of this report, will FedEx give its four year guidance that offer guidance for the current quarter of $3.40 to $4 a share with an estimate

just a penny below the midpoint. Also another big question. If the company's plan to cut $1 billion in cost this year, that plan remains intact. Okay, Frank, thank you. We'll watch for all of that. Let's get to Diane Oleg now with what to look for from Lenar, which has had a very nice run-up just in the past few weeks or so into this report. That certainly has, Sarah. But there's going to be a lot in this report, not just the impact of interest rates. Mortgage rates were higher during Lenar's Q3 and didn't make that sharp drop until September. So we'll be watching for incentives, rate buy downs, and, of course, price cuts and on how the margins are holding up under all of that. Lenar's gross margin on home sales was just below 18% in Q2 of this year.

Compare that to 29 and a half percent in Q2 of 2022, which was the hottest pandemic year for housing. Also, we'll watch spec inventory. Lanar has gone heavy on spec homes, despite waning consumer demand amid affordability issues. Housing starts nationally dropped more than expected in August, and builder's sentiment also fell. So the question is, did buyer demand through Lenar models improve it all during that period? Guidance will be key for the fall housing season, which is the second busiest, of course, behind the spring, Sarah. Okay, thank you very much, Diana Oleg. Of course, Mike also will be interesting to hear if they do have any commentary now that the Fed has cut rates.

And a lot of these home builders have run up in advance of that. Which sectors stand out to you now that we're in this, you know, we got what you have been saying that the market has wanted, which is the rate cut. Powell himself called it an insurance cut with a relatively healthy economic backdrop. Yeah, I mean, all of that still holds up. I mean, clearly the bank stock strength today is worth noting because kind of as you suggested,

if that was not the case, if they sold off on this, it might have been conspicuous. So I do think that kind of fits along with the script that this is kind of a second, it's like the second annual soft landing easing campaign. It's a very, very similar dynamic. We did 100 basis points last year from September to December, maybe something similar to that now,

and really not a lot of recession risk as being perceived or priced in or is in the credit markets. All that's to the good. It's much more about, you know, does the bar get raised for just exactly how much it's going to take to please this market from here? Clearly, we have earnings coming up. The third quarter estimates are holding up quite well. That, again, makes it tougher to beat by a lot, but usually it means there's confidence among the quarter. sector. So it's hard to poke too many holes into it except for valuation and then be mindful

and keep an eye on the sentiment and positioning stuff. I don't think it's crazy extreme right now. So maybe there's room for that to continue. A lot of folks are talking about the fourth quarter performance chase. It often makes sense to think in those terms. The question is, do you need to have a little bit of a cooling off beforehand late September, early October? And really quickly, will you say positioning doesn't look that stretched? Not terribly, not across the board. I mean, retail activity has even come off the boil. You look at things like Goldman Sachs, their hedge fund positioning indicators do not seem as if hedge funds are excessively long.

Now, it's not so much to say that they're fighting this market. This is not a hated rally. People are involved. It's very much like David Tepper told us this morning. You're involved. You can't fight the tape or fight the Fed, but you're not that happy about the prices you're having to pay to get involved. Okay, Mike, thank you.

We've got the Dow up 150 points. looking at records all around here at the closed. S&P 500 being led by technology. Thanks in part to NVIDIA, Intel, synopsis, all working today. But industrials are strong, communication services, health care, real estate. The bank, as Mike says, and Ansel's joining the rally. And small caps as well, up two and a half percent today after the Fed touched race yesterday. First record closed since 2021. That does it for closing bell. Now into overtime, it's Morgan and John. Thank you.