Closing Bell - Closing Bell: Time to Go Big? 9/13/24

Episode Date: September 13, 2024

Does the market have it right that the Fed can go big with its first easing move… without sounding an alarm about the economy? Professor Jeremy Siegel, Hightower’s Stephanie Link and Ned Davis Research’s Ed Clissold give their predictions. Plus, top Apple analyst Erik Woodring from Morgan Stanley tells us how he is navigating the stock as pre-orders kick off. And, Alger’s Ankur Crawford reveals how she is trading tech’s big week.

Welcome to Closing Bell. I'm Mike Santoli in for Scott Wapner. This make or break hour begins with stocks flying to within sight of record highs on the wings of doves. Growing chatter favoring a larger Fed rate cut next week is coming together with some reassuring economic readings in recent days to carry the indexes to a fifth straight daily gain. Could be its best week since November of 2023. We're right on the borderline. Could be the best since mid-August. Here's a look at your scorecard with 60 minutes to go in regulation. The S&P 500 within 1% of those record highs set back in mid-July. NASDAQ on pace for nearly a 6% weekly gain. This would be the fifth straight up day for both those indexes. Russell 2000, the real standout on that higher perceived probability of a half percentage point Fed rate cut next week up about 2 percent right now.

Treasury yields, they're slightly up off their lows for the week, but still anchored by that benign inflation data we got and set up for a series of rate cuts. Oil continuing to struggle with that disinflationary story, but also maybe weighing on global growth demand. You see WTI crude actually just about flat right now under $69 a barrel and gold running to yet another record high as all the asset markets position for the Fed next week. It takes us to our talk of the tape. Does the market have it right that the Fed can go big with its first easing move without sounding it alarmed about the economy and with stocks not far from all-time highs. And would such a move be right on time or maybe a bit too late? Let's ask Wharton School Professor Jeremy Siegel. But first, Professor, great to have you here. I do want to first have you listen to what hedge fund giant John Paulson said. He spoke with my colleague Sarah Eisen in a rare

interview this morning about what he thinks the Fed should do at next week's meeting. Personally, I think the Fed is a little behind the curve. You know, rates are, you know, five and a quarter plus and inflation's down to the two and a half percent rate. So we have almost three percent real interest. So I think they've seen enough data that they can start bringing rates down. And I would suggest more aggressively would be better. So I'd be for a 50 basis point cut rather than 25. Professor Siegel, what's your take on that and the Fed's calculus going into next week? I agree 100 percent, but I don't think they will. I think that it would have to be a really bad retail sales report early next week for them to do 50. I agree. As you know, I've been for these aggressive cuts, but the deliberateness of

Jay Powell is 25 basis point. You know, Mike, one interesting thing, it is almost incredible. The Fed funds futures that reflects the June meeting next year, June 2025, is now trading at 3 percent. I mean, that that is actually more than nine cuts under the current level. Now, I think there's risk premium in there, and I've done some taking out some of that risk premium. So I estimate that seven cuts. And what's interesting about that is there are exactly seven more meetings between next week and the June meeting of 2025. So actually, a 25 basis point cut in each and every meeting would actually bring us down to around three and a half and three and three quarters. And I've said that's where the funds rate should be. It should be

between three and a half and four percent. Well, what's interesting about all that is, one, as you say, the market sometimes will kind of over extrapolate or build in some kind of a what if premium into the Fed funds futures. The other piece of it, though, is and this is in the last day or two where you had this Wall Street Journal article and an FT article kind of leaning in the direction of 50 basis points. These former Fed officials were giving voice to this idea that they could see the case for half percentage point move next week. And Loretta Mester, former Cleveland Fed president, has said as much as did Bill Dudley, former New York Fed president, today. to me that the market was willing to actually trade higher on that, in part because it seemed to lay the groundwork for half a point not being in response to outright weakness in the economy.

In other words, we can have it all. We can have a resilient economy and get started on this easing cycle in a bigger way. Does that make any sense? Yeah, it does. But, you know, I know Loretta, you know, very well. Notice that phrase could a case could be made. You know, she was really quite hawkish during, you know, those those early phases of Fed increases. So, you know, that's that's certainly something that makes news. But I think there's a lot of could be made.

I mean, I think Austin Goolsbee is definitely making the case of let's be more aggressive. There will be a side on that. But I just don't think the PPI and CPI were just that good enough. Again, it would have to be a really horrible report. Don't forget, the real indicators are holding in at a moderate economy. I, you know, say let's get down to where we should be as fast as possible. But I think the market is saying, you know what, so it may be a few months longer before we get to where we have to be,

but by the middle of next year, you know, we're 3.5% funds rate. Hey, I'm good with that. Yeah. So in other words, we can still live in a world where good economic news is going to be good for the market. And do you think we're going to get it? Because honestly, you know, we peaked in mid-July for the S&P 500. Obviously, a lot of that was some of the AI plays, some of the air coming out of it. But we've had a couple of these mini panics in August and September, and all of them seem to be based off of weaker than expected labor indicators and the idea that it was a hard landing and the Fed was behind the curve. So it feels like we're not going to be free of that kind of, you know, that psychological swing for a while, even if the

Fed, you know, gets moving. And that's really why those Fed funds' futures, although they seem extremely low, are really hedging that bet because they know that if bad news comes in, the Fed will start lowering by 50, maybe 75. And I want to take a position in that. So really, the reason why those, you know, all of us all calculate probabilities that says 50, 40 percent of this rate cut and 60 percent of this rate cut.

The truth of the matter is, is Fed funds futures are biased downward. They're biased towards more cuts because people hold those because if bad news does come, then they're going to score big on those contracts. So that's why what looks like nine cuts between now and next June is really seven. But that's still an interesting figure, given that that's one twenty five cut per meeting. Sure. No, it absolutely is. And of course, we should, I guess, throw out the reminder that we know that outside of a couple of months ahead of time, the Fed Funds futures market doesn't have any crystal ball. I mean, we were priced for several cuts by the first half of this year at some point, you know, 10 months ago. So I do think all that is in the mix. I guess the other question is just where the stock market stands independent of all of that. Earnings, you know, they've come through fine,

although we're still close to 21 times forward on the S&P. So I wonder if we've already kind of taken credit for this off landing that still seems plausible. I think so. You know, very honestly, you know, even at the beginning of this year, and I remember at the beginning of this year, I said, you know, we could have, you know, 8 to 12 to 15 percent. I didn't think we'd all get in the first half. So there may be a little bit of a front running. You know, you don't want to be short, you know, in a situation where Fed is lowering rates. But you are starting out from a position where it's unlikely that the market will rally sharply. But as you pointed out, Mike, take a look at those small stocks today.

And they started a rally and then fizzled. And now they're saying, hey, maybe now the time is there because they are the ones that are the most hurt by these high Fed funds rate. They finance short term. They don't have as much long term fixed date. They certainly don't have as much equity that is at high price and therefore low cost as the big caps do. So if we do start lowering rates aggressively, I mean, the case really can be made finally

for the small caps and the value stocks themselves. Yeah, that does seem to be the playbook that is getting enacted, at least tentatively right now. Professor, stay with us. Let's bring in Ed Klisseld of Ned Davis Research Group and Stephanie Link of Hightower Advisors. Stephanie, of course, a CNBC contributor. And welcome to you both. Ed, we'd love your take on this in terms of the field position of the stock market. We've had our seasonal pullbacks, at least part of them. We're still up around the highs, but you have done some work about what's the favorable kind of Fed easing cycle for stocks and what perhaps is a little more worrisome in terms of the pace.

So how does a 50 basis point move, if we were to get one, fit into those scenarios? Yeah, Michael, the market has tended to do better when the Fed has actually moved slowly than when it's moved quickly, because when the Fed has moved quickly, it's because they've already made a mistake and they're chasing their own tail, trying to board a recession and usually failing at doing so. Thinking about 2007, 2008 and 2001 versus, say, in 1998, 1995, 1984, the Fed was able to cut, watch things a little bit, cut again because the economy held in there. So if the Fed does go 50 here, they're going to have to be very careful with how they communicate to the markets. If the decision is we're going to cut quickly to get to a still positive real Fed funds rate,

but lower than we are now and then pause, that's a very different message. I still think that could kind of fit into that slow easing cycle kind of mantra rather than panicking because the economy is going into recession. Got it. And, Steph, how much does this build into your thinking here? I mean, we're also weighing some other factors. You know, there's been some anxiety about the consumer, but Visa said things actually had perked up in recent weeks and we did get some corporate commentary this week. So how do you how are you all putting it together? Yeah, I think you have to put all of it together. And it's a

pretty big, it's a pretty good picture. We're growing at about two, two and a half percent. Inflation is coming down. Commodity costs are coming down. Gasoline prices are down 15 percent year over year. And rates, of course, are coming down. And that's favorable for corporations, for people, individuals. And I think at the end of the day, it is all about what the companies are saying on a real-time basis. And it's pretty good, Mike. Goldman Sachs had their conference on technology and Nvidia kind of started the whole event

with a bang, really. And then it was Broadcom and then it was Lam Research and then it was Oracle's earnings. And then now it's Oracle raising guidance at their analyst day. And then we also had the Barclays Bank or Financial Services Conference. You mentioned Visa. You had mixed commentary from J.P. Morgan, Goldman Sachs, Ally. Got that. But you had pretty good data from Bank of America, from Truist Financial, American Express, Morgan Stanley. And they all of them,

even if it was mixed data or not mixed data, all of them said the consumer is in good shape. That's 70 percent of our economy. And so I think consumer is in good shape. If you listen to the banks, you listen to the retailers and in retail, there are haves and have nots. And the haves are winning and showing that growth, supporting that the consumer is doing OK. Yeah. And I guess I would also wonder how this sort of attempt at a rotation in this market is playing into your your view as well, because, you know, alongside this sort of hard, soft landing debate and how much will the Fed go and what does it mean, depending on what they do, we've had this idea that we're transitioning from

a mega cap growth led market from the first half into something else now whether that means just more volatility and maybe a retrenchment or whether it means the rest of uh the tape can pick up the slack what are you seeing in terms of the evidence of the market behavior itself yeah there does seem to be a rotation going on and and the fed and the macro view is part of it but also the reality situation is a lot of these mega cap growth stocks, where they're still going to post really good earnings growth, it's decelerating fairly rapidly. Historically, the small caps have outperformed when the Fed has started to cut rates, especially if it's in these slow, non-recessionary Fed easing cycles. So you'd

expect kind of the junk stocks to do well because it's a good combination. Economy's all right and rates are coming down. But mid-caps are really interesting to us here because it kind of got swept up in some of the challenges for small caps, but they're a lot higher quality. Much fewer companies in mid-caps are unprofitable, unlike the Russell 2000, where it's like 40% of the stocks. It's less than 20% for the Russell mid-cap. Also, they have what we call a better PEG ratio. That is PE to growth rates.

Mid-caps have pretty good earnings growth, but their valuations are lower. So if you're trying to find a nice balancing act, you're rotating out of mega-caps, look at mid-caps. They could offer some benefits without maybe getting whipsawed so much on the day to day whims of the of the Fed watching. Makes sense. Professor Siegel, I guess the piece of this that coming into the week, there were these sort of expected nodes of potential volatility. And of course, that was CPI and PPI, but also the presidential debate. And, you know, we've traded through that. Maybe we just needed to get past it. But we here are within two months of a presidential election. We know that the, you know, the historical record

is sort of mixed, except to say that usually if the market's up between Labor Day and the election day, the incumbent party is tended to win. But how does that jive with what we expect out of policy? Are you paying any attention to that? And is it decisive or a swing factor for the market? I mean, it is it is a factor, you know, in the market, you know, very definitely. But it's sort of interesting, even with the debate, which, you know, most people believe the common did well in the betting markets actually began to move her. It didn't really have a negative impact on the S&P. That being said, we all know that December 31st of next year, there will be a huge renegotiation of all taxes, Trump tax cuts, everything. And, you know, I actually think the market wants a split government because they want to go easy. Let's let both sides weigh in and and not have one group sweep one way or the other.

And, you know, probably a split government does does look like we with such a close election. So I don't think it's disturbing the market throwing at this point. Yeah, I would seem. I mean, it's certainly not at the index level, at least not yet. And Steph, I want to get your sense of this recent run of somewhat defensive stock outperformance that we've got. I mean, that's one of the things a lot of folks have been watching to say, you know, maybe we should start getting a little more worried about the economy. You see utilities and staples running. Yeah, they're yield sensitive. But I just wonder if you see a change in complexion of the market or if you're just kind of, you know, using that as a way of

finding opportunities that are getting left behind. Yeah, I don't think you want to be defensive. I do think there's a distinction, though, Mike, between staples and utilities. I think people are playing, both of them are interest rate sensitive, of course, I agree. However, I think people are playing utilities for the power grid electrification theme, as well as the interest rate side of things. I think staples, I think that they're overbought. I don't know why you really want to own them, other than to say that commodity costs coming down, inflation coming down, inflation coming down will help their margins. But they are not cheap. I would much prefer to be buying the cyclical stock, cyclical stocks, because I do think when the Fed starts to ease, they're going to start,

they're going to try to stimulate the economy. The economy is already on sound footing. And that looks like we we lost stuff, although I do sometimes like to point out that when it comes to the consumer staples, Costco and Walmart have been two of the best upside leaders there. So maybe that's not quite as as defensive as it would seem. And Ed, just want you to weigh in here as we as we wrap things up. Do you feel as if the market has kind of passed the seasonal test that we were all expecting? I know people are going to point out that it's the second half of September sometimes gets rough. But is there a way we can make a judgment on that?

Well, you're right. If you want to divide the market up into 24 segments instead of 12, the second half of September is the weakest two week period of the year. Now, if you want to look at, say, investor sentiment, which we spent a lot of time on at Ned Davis Research, short-term sentiment has gotten fairly pessimistic. So I wouldn't be surprised if a lot of the traders had gotten past some of the seasonal headwinds. But intermediate-term sentiment, if you're trying to look out a couple of months, hasn't really gotten quite down there as much. So perhaps once you get past the news of next week, I wouldn't be surprised if maybe there's a little bit more choppiness before we get into that true year-end rally.

Perhaps the professor is right. Some of the election uncertainty and angst could be part of that. And finally, Professor Siegel, I mean, I know you said you still think that the Fed might settle on 25 basis points. It seems as if whatever Powell decides is the right answer. He'll have, you know, enough votes behind that, perhaps. But do you think we're setting ourselves up for a little bit of a sell the news? Because it feels as if, you know, 25 basis points, if things are as they stand right now, might sound a little bit stingy. But don't forget, this is a big quarterly meeting.

We're going to have a dot plot to contend with and all the SEP projections and, of course, the news conference. So how he spins it and what the SEP projections are are going to be a big part of it, along with, you know, whether it's 25 or 50. So, you know, we're going to listen closely to what he says. If he says I'm willing to go 50, if I see the data, you know, deteriorate. But so far, I see good data here. I'm willing to go 25. That, I think, will be reassuring to the market. All right. Yeah, he'll absolutely say the dot plot isn't a forecast, but we're going to treat

it as something worth combing over no matter what, as we always do. Professor Siegel, Ed and Stephanie, thanks so much for the time today. Let's send it over to Seema Modi for a look at the biggest names moving into the close. Hi, Seema. Hey, Mike, shares of RH are on track for their best day since March 2020. The home furnishings retailer soaring after posting stronger than expected second quarter results. And in a letter to investors, company CEO Gary Friedman said demand accelerated into the third quarter and he expects that to continue into 2025. Those rate cuts or the potential rate cuts expected to help there.

And then there's Norfolk Southern's new CEO admitting the company has been, quote, in the news for all the wrong reasons at a conference today. Mark George spoke at Morgan Stanley's Laguna conference saying it's just a speed bump and that the company is fully on track for the third quarter. Norfolk Southern's fired CEO Alan Shaw this week after determining he was involved in an inappropriate workplace relationship. We're looking at shares down about 3%. Mike?

Seema, thanks. Talk to you again in just a bit. We are just getting started here. Up next, iPhone 16 pre-orders officially open today. We'll hear from a top Apple analyst, Eric Woodring of Morgan Stanley, with how he's playing that stock right now. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. Pre-orders for the iPhone 16 beginning today with many expecting Apple intelligence to drive a multi-year device upgrade cycle.

Morgan Stanley's Eric Woodring thinks it could be Apple's largest ever. And he joins me now. Eric, great to see you. Apple shares since the event on Monday have actually underperformed. They've lagged a little bit. Does that mean it was a sell the news response or did the market not find anything in the presentation to get greater conviction in the strength of the upgrade cycle, do you think?

Thanks for having me, Mike. So I do think that we are entering a seasonal period of relative underperformance for Apple. The iPhone launch event is historically a sell-the-news event. Apple historically does outperform into the launch event by a fairly considerable margin. We saw that this year. So I wouldn't interpret the market behavior over these last few days as being all that abnormal relative to history. But I also do think that is representative of the reaction that investors have to what was announced on Monday, which is still a relatively measured, slow and staggered rollout of what is the key feature this year, which is the Apple intelligence platform. What would represent kind of a success

or an upside surprise in terms of initial orders coming through for you? Sure. So these first few days are very noisy. There's a lot of data when it comes to pre-orders over the weekend, lead times, which I'd remind everybody are dictated by both supply and demand. And actually, lead times are important on a per-model basis. Lead times for one individual model does not dictate a cycle. It dictates how well that specific model is performing. So there will be a lot of noise over the next week as we go from the pre-order date today to the date of availability, which is a week from today. It's my job to dissect that noise and ultimately try to maintain a fairly clear narrative. And I think what I'm really looking for is the directionality of lead times,

right? Day one lead times, at least reports have indicated, are a bit lower than past cycles. What matters to me is now how that lead time trends from here. Does it go up? By how much does it go up? How does that look relative to history? And importantly, how does that look across all four models? I don't want to focus too much on one specific model simply because Apple is going to ship over 200 million units across 13 different models. There's a lot that is riding on not just one model. That's really what I'm focused on over the next, let's call it seven days. And the features that have been showcased, the Apple intelligence features,

do you feel as if that's going to create any sense of urgency or is it just a matter of, well, this is going to be one fewer reason for me not to upgrade if I need a phone because at least it's going to be ready for whatever comes down the pike? I'm wondering the ways in which Apple is long term going to get paid, so to speak, for AI capabilities. And is it just about stronger hardware cycle or are there other ways? Listen, first and foremost, it will be about a stronger hardware cycle. Hardware represents 75 of total, 75 percent of total revenue, about 60 percent of total gross profit dollars. So it starts with hardware. We've made the argument several times that there is a multi-year device upgrade in front of us. That is kind of a number one what we think is important. But I do think that services has to be part of this conversation,

services being 74% gross margin, growing double digits. This would be seemingly incremental to what we see the current run rate of services being. Meaning if Apple can charge for something like a high-end subscription service to Apple Intelligence, that becomes incremental, that becomes new. If Apple Intelligence is indeed the platform we think it can become over time, that can become a significant driver of incremental services revenue. You can think about better monetization of the App Store, potential or reason to charge higher prices for first-party applications and services that Apple sells. Today, there's a number of different kind of areas where services can be monetized,

and just given how high margin they are, and that this would be incremental, I don't think we should leave services out of this conversation. It's just the initial read through will come through on the product side before you see it on the services side. Services think of as kind of a long tailed annuity. And how do we think about these reports? Apple might be among investors in open AI. Is that just a hedge? Is it a way to just make sure you have access to what's next or what? It's all of the above. And it's likely a belief in the technology that OpenAI is rolling out. There's a reason that Apple has partnered with OpenAI first and foremost to integrate ChatGPT into the Apple intelligence platform. So I think it's all of the above. It's maybe a

checkmark in terms of Apple's trust into what open AI can bring over the long term, again, to this kind of hybrid approach that Apple is taking to generative AI. All right. We will see how it plays in coming days. Eric, thanks very much. Appreciate it. Thanks so much. All right. Up next, Alger's anchor Crawford is back, how she's navigating this big week for tech and why she's forecasting more volatility in the months ahead. And don't forget, you can catch us on the go by following the Closing Belt podcast on your favorite podcast app. We'll be right back. Welcome back. The tech sector leading the comeback this week.

The rally led by chipmakers Broadcom, Supermicro and NVIDIA. Here to share other opportunities in the tech space, Alger, Executive VP and Portfolio Manager. Ankur Crawford joins me here at Post9. We've had a bit of a reset in at least psychology with regard to the mega cap tech stocks. They led us in the first half of this year. You've had some churn and sideways action. It seems like the market wants to be more discerning about winners and losers and what we're paying for these things. Big picture, the AI story, all the thematic elements of it. Has it caused you to reassess anything or not? Not really.

I mean, and in part, if you believe in where AI is going and the idea that AI, at some point, whether it's three, four or five years out, is going to provide us with superhuman intelligence. All of the capex that's being spent today is wholeheartedly justifiable because the opportunity to monetize that AI at that period of time is beyond, I think, what anyone has really contemplated in the market so far. And just's, I mean, just to point to NVIDIA in particular, obviously there have been these periods before where it kind of, you know, consolidates for three months and people wonder if you can actually extrapolate the demand growth into next year and beyond. What have you heard from them recently?

And I guess how are you mentally modeling it out in terms of how long this can last? Yeah, so I think there's many different ways and many different vectors of growth for NVIDIA and the slope can change in any given year. However, so let's just go back to what happened at the earnings call. Earnings call, the numbers didn't go up. And it was the first time in, I think, seven quarters that the numbers haven't gone up for NVIDIA. The stock comes in as people are saying 2025 is peak. Goldman Sachs conference, which was just this past week. Jensen gets on stage and talks about how co-auth capacity has to grow in 2025, but it also has to grow in 2026. That basically marked the bottom for the stock and the stock went from 104 to 120 where it is today. So you know it is very sensitive

to the growth trajectory of 2026 and whether or not 26 will be a growth year. Now in our opinion given how much CapEx needs to be spent, 25 is not peak CapEx. We think 25, 26, 27, and potentially 28 are going to be big CapEx years for all of the hyperscalers. Really? It was interesting to me to hear Larry Ellison from Oracle talk about AI on their conference call, where he kind of had some impatience about this question of how are we going to get paid for these products? And he essentially says it's going to be everything. It's like everything we do is essentially going to be built around these AI technologies,

which is interesting to me, except it also goes back to this idea, well, technology always gets better and faster and cheaper. So how is this different right now? There's just an accelerated phase of it. Yeah. And we have to have like an hour to have that discussion. But I think in a nutshell, and I'm going to, it's going to sound a little bit Terminator-esque. So bear with me. But if you can have a coworker that has equivalent intelligence to you and it can be effectively your foil and do everything that you need it to do and then some how much would you pay for

that co-worker so if Microsoft for example opens up that opportunity for for the world or for enterprises how much are you willing to pay for that co-worker is a $40,000 a year $50,000 a year right and and that co-worker works 24 7 yeah so today Microsoft monetizes at a rate of about a thousand dollars $50,000 a year, right? And that coworker works 24-7. So today Microsoft monetizes at a rate of about $1,000 per seat. So the opportunity is 50-fold. So when you put it in that kind of context, you know, the big picture on AI is that it's a complete transformation of the technology and how we use it.

And I think that's the part that sometimes gets lost in this AI. Is it a trade? Are we a peak? Because the end point is very, very different than I think the market thinks. So it's not just the same. And we hope nobody comes from the future to try and hunt somebody down like in the market thinks. So it's not just the same. And we hope nobody comes from the future to try and hunt somebody down like in the Terminator. I do know that you, in sort of less cosmic terms, have found interesting ideas in narrowly focused companies.

Applovin, for example, I was noticing that move this week. Tell me a kind of thumbnail of that story. Yeah, so Applovin is a platform. It's a gaming advertising platform. And they're using AI in order to, you know, basically make you download more games. And they can monetize their inventory better than anyone else can. They have 70% market share. And they're going into e-commerce as well. Instead of serving you up a game, they'll serve you up a product and are able to monetize their inventory even better than they've been able to do before. Interesting because all of their cost structure is already embedded.

For every dollar of revenue they get, they get almost 100% fall through on the margin line. Massively cash flow generative. The street has $6 in earnings in 2026. And the stock is I think 111 today. But we think those numbers are too low. And again, they generate massive amounts of cash. And it's a real U-turn from like a round trip from shortly after its IPO, I know.

It kind of had a rough patch and now it's all the way back. Yeah, it was kind of a different business when it IPO'd. And we just met with the CEO yesterday. And first of all, what a phenomenal CEO with a great command of the business. But also had the wherewithal to understand that he needed to pivot his business. And he's pivoting it again. So, yeah, we love it. $37 billion market cap.

All right, Encore, great to have you. Good to talk to you. All right, up next, we are tracking the biggest movers as we head into the close. Seema, standing by with those. Mike, have you ever had a problem with an Uber driver? How about an Uber that has no driver? We'll have the details next. About 17 minutes until the closing bell.

Let's get back to SEMA for a look at the key stocks to watch. Well, Michael, United Airlines says it will offer free in-flight Wi-Fi beginning next year. The carrier will use Starlink from Elon Musk's SpaceX. It's the biggest in-flight Internet deal yet for the satellite service provider. Airlines having been invested in faster in-flight Wi-Fi in a bid to attract higher paying customers like business travelers. United is slightly higher today via one of the companies that currently provides United's Wi-Fi, tanking on the news by over 16%. Uber climbing more than 5% today after announcing it will team up with Alphabet's Waymo. The two will offer robo-taxi services in Austin, Texas and Atlanta beginning early next year.

Uber CEO Dara Khashoggi telling CNBC today people are getting more used to the idea of driverless cars. Austin and Atlanta, I hope the technology is pretty good in traffic. It'll be a good test of that in those two markets. Appreciate it. Thanks, Simon. We also are keeping an eye on shares of U.S. Steel. Pippa Stevens here with what is behind that pop. Hey, Michael.

U.S. Steel is adding about 3.5 percent as the White House is reportedly delaying a decision on whether to block the acquisition by Nippon Steel. That's according to The Washington Post. And it comes as concerns grow about the economic fallout should the deal fall apart. And a ruling might not be made until after the election, according to the report, citing three people familiar. Now, it's the latest twist in the fight for U.S. Steel's future. In addition to President Biden, who opposes the deal on national security concerns, presidential hopefuls Trump and Harris have also spoken out about Nippon's proposed $14.9 billion acquisition.

For its part, U.S. Steel has said that thousands of jobs will be at risk if the deal does fall through and would raise serious questions about the company remaining in Pittsburgh. The stock is up about 15 percent for the week, but it's still below where it traded prior to December's Nippon announcement. Mike. All right. Another chapter. Pippa, thank you very much. Still to come, shares of PDD dropping while Etsy and Wayfair are popping following a major move by the Biden administration. Of all those details coming up, closing bell. Be right back. Welcome back. We're getting some news on Sam Bankman Freed. Mackenzie Segalos has that for us. Hi, Mackenzie. Hey, so Sam Bankman Freed has filed an appeal of his guilty verdict. He's currently serving out his 25 year sentence. But lawyers for the FTX founder say that the judgment

should be reversed. They're asking for a new trial in front of a different judge. Now, Bankman Freed is saying that his trial wasn't fair and that there was a rush to judgment. His lawyers are specifically characterizing this as a sentence-first, verdict-afterward scenario, that 89-page legal filing claiming that the insertion that Bankman-Fried stole billions of dollars worth of customer money driving the company into bankruptcy has since been proven wrong. Part of that narrative, of course, coming from the fact that the bankruptcy estate under John Ray is making customers whole. Yeah, it's an amazing turn of circumstance, Mackenzie.

Thanks so much for that. All right, up next, Boeing shares sinking after factory workers went on strike earlier today. What is at stake for that stock ahead? And don't miss Interactive Brokers Chairman Thomas Pederfee following the company's decision to allow investors to bet on the presidential election. That's coming up at 4 p.m. Eastern in a first on CNBC interview in the Market Zone. We are now in the closing bell Market Zone. Boeing workers going on strike for the first time in 16 years. Phil LeBeau brings us the latest there. Plus, Megan Casella on what a Biden proposal on Chinese low value shipments could mean for key e-commerce players.

And Angelica Peebles on what's behind big moves in Novavax and Moderna. Phil, Boeing trading off about 3.5%. Set us up with this labor news. The shares are trading down because there's genuine concern about the financial impact of this strike we're outside the 737 max plant in renton workers started striking at midnight last night look 96 of the machinists who voted on the contract they voted to strike they overwhelmingly rejected the contract agreement between the union leadership as well as with Boeing's leadership. The CFO today for Boeing at an investor conference said the focus for now, at least near term, is conserving cash and the credit agencies, both Fitch and Moody's, warned about cutting the credit ratings

of Boeing if this is an extended strike. Fitch writing, an extended strike could have a meaningful operational and financial impact, increasing the risk of a downgrade. Because of that, because of how much they will be losing in terms of not bringing in money that would be coming in if they were delivering airplanes, Boeing wants to get this resolved as quickly as possible. Boeing management out with a note as soon as the strike was announced saying, we want to get back to the table. We heard from CEO Kelly Ortberg over the last couple of days that he was in the plant talking with machinists, asking them to vote for the contract. The pressure is on him as well as the union leadership to see if they can get back together

and hammer out a revised deal over the days and weeks to come. Mike, back to you. Yeah, Phil, And, you know, obviously, you know, the chance of a credit downgrade is pretty significant. There's a lot of debt on Boeing's books. I wonder how it plays in terms of this negotiation, because sometimes, you know, management wants to be able to go to workers and say, listen, you know, things aren't great here in terms of our finances. We have to kind of find some accommodation. You want to know what I heard from workers whenever I brought that up, Mike? Yeah.

Not the credit rating, but whenever I brought up the health of the company not being that good, all of them said the same thing. We didn't create this problem. This was the problem created by management. Now, you can quibble with that and say, well, look, there's some issues in terms of the rank and file and the quality controls and the workmanship that's been done or has not been done. With certain aircraft and so as a result the rank and file just look at this and say we need more than twenty five percent. Regardless of the condition of the company we need more than twenty five percent over the next four years. All right yeah so this will get strung out at least a little while. Looks like Phil, thank you very much. Megan, these stocks, e-commerce stocks,

moving quite a bit on this Biden proposal. What's that about? Absolutely. Mike, shares of PDD holdings down about three percent today because of that move by Biden to make Tmoo, which PDD owns, and Sheehan pay more in taxes. So in focus for the White House is what's known as the de minimis threshold. It's meant to benefit small businesses by allowing shipments worth $800 or less to be imported to the U.S. duty free and with less inspection. But because Xi'an and Timu ship directly to China from China to their consumers, they've been able to take advantage of the loophole and pay little to nothing in recent years in import taxes. Biden now moving to tighten that up, saying any imports already subject to tariffs, which the majority of textile and apparel imports

from China are, will no longer be eligible to use de minimis. Wayfair and Etsy both stand to benefit from more of a level playing field here, up about 6% and 7% or 8% now on the news. Mike? Yeah, amazing. I mean, that move down in PDD shows how sensitive their business model is to those lower costs for stuff coming in. Megan, thank you very much. Angelica, vaccine makers on the move as well. Yeah, Mike. Moderna having another bad day today after its R&D day yesterday. The company is saying that it's focusing on its new and improved COVID vaccine, a COVID flu combination shot, and its RSV vaccine.

Now, there's not much excitement about any of these opportunities, and the big disappointment is Moderna's cancer vaccine. For a long time, they had been saying that they might be able to get accelerated approval based on the data it's already presented, but Moderna this week saying the FDA is not supportive of that plan, so it probably won't be on the market until 2027. RBC today cutting its price target and saying that it believes in the long-term opportunity, but it's concerned about the near-term headwinds. On the other end is Novavax.

Those shares are up about 13% today. The company is saying that its COVID booster is now available at major pharmacies across the country. And that company getting a new lease on life, but we still need to see how competitive they can be this season. Mike. And Angelica, quickly, how big do we think the vaccination season, the booster season will be at this point? That's the big question. Last year, about 20 percent of adults got the booster. And the big question is whether we're going to see more people get it or whether we won't. And remember, there's been this big summer surge with a lot of people having just gotten COVID. So it's not clear whether they're going to want to go back and get another

COVID shot. But the companies will say that they think people will. Yeah, of course. Well, absolutely. We'll see. Reminds folks of what they were there for in the first place, this surge. Angelica, thanks very much. One minute until the close as we head for five straight up days in the S&P 500 and also for a 4% weekly gain for the S&P up more than half a percent today. And it's actually the underperformer among the indexes. You see the Dow up three quarters of one percent or thereabouts. And the Russell 2000 up two and a half percent. All of this building from this some dovish chatter about the potential for a half percentage point Fed rate cut next week instead of a quarter point. And alongside some benign inflation numbers we got

this week, as well as some firmer economic indicators, it feels as if soft landing perhaps preserved. But we do have three trading days until that Fed meeting. Plenty can happen. A very broad rally today. 85% of all volume in the New York Stock Exchange to the upside. 370 new 52-week highs against only nine new lows. So a strong finish. That's going to do it for Closing Bell.