Closing Bell - Hot Inflation Read Spikes Yields 5/13/26

Episode Date: May 13, 2026

BlackRock’s Jeff Rosenberg, explains why investors still can’t fully hedge rate risk and what it means for portfolios. Eamon Javers reports from China as President Trump meets with leaders while Eunice Yoon adds the Beijing perspective. Cisco headlines earnings. Amit Daryanani of Evercore reacts to the results and what they signal for enterprise tech and spending trends. Our Kristina Partsinevelos previews the Cerebras IPO and explains why it could be the biggest deal of the year in AI infrastructure. Drew Pettit, U.S. Equity Strategist at Citi, makes the case for sticking with high momentum names that still have earnings support. Our Brandon Gomez breaks down how higher gas prices are starting to hit consumer behavior including beer sales and broader spending patterns. 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 Rollins, ringing the bell, and at the NASAC, its public policy holding company. Welcome to closing bell overtime. We're live from studio be at the NASAC market site. I'm Melissa Lee, along with Mike Santoli. After a one-day decline, tech once again taking the lead, the doubt with a small loss, S&B 500 gaining about three-quarters of a percent in the NASAC up more than a percent. The new twist for today is further move in bond yields, higher, both the 10-year and the 30-year treasury yields, getting back to levels we have not seen since last summer. We're going to get much more on the action in both the stock and bond markets. Plus, an historic summit between President Trump and China's President Xi. What are both sides hoping to get out of it?

And we've talked a lot about 1999 this week. Well, Cisco was one of the big stocks back then. In fact, briefly, the biggest, it's back in focus today. Those results expected in just a few minutes. Remember when it was the bellwether of the market? Absolutely. And we've got a new chair of the Federal Reserve, Kevin Warsh, officially confirmed by the Senate. But what an interesting session that we had.

it seemed like the hotter the inflation print, the more people wanted to go into the quote-unquote safety of the AI trade. Exactly. It represents macro risk. What types of stocks allow you not to think or worry too much about the macro? That has been semis. I mean, a one-day breather is basically all they were allowed at this point, up 2.4% as a group today. Now, below the surface, a lot of stocks are starting to pile up on the new low list, a lot of commentary about that. In fact, as many as new highs, anything touching the real economy is struggling at. the moment. And I, you know, wonder if, in fact, it has to change very quickly. There is a sort of

get-long the strong themes and sort of be hedged elsewhere type of a feel to what's going on right now. People are buying VIX futures and things like that. But for now, it's kind of working. And, you know, even if Nvidia, Apple and Alphabet were the majority of today's gains in the S&P 500. Right. We have to think, in an environment in which 10-year yields are 4.5%, you know, 30 years are 5% at this point. At what point does it catch up? even if it's just the funding of this AI build. I mean, at some point, it all sort of has to touch each other. Right now, it seems like people want to just say, okay, we're going to go with the momentum here.

I mean, Morgan Stanley's Mike Wilson out today, saying $8,300 on the $1,500 in the next 12 months. In next, by middle of next year. Yeah, no doubt about it. That's predicated on a massive further increase in earnings off already record levels with already record margin. So it's extrapolating the trend from here. It is a puzzle as to whether, in fact, we can get. two imbalance here, CAPEX over consumer, and in fact, whether we're going to overheat because of all the CAPEX and leave the Fed in a tough spot. That did happen in like February of 2000.

Greenspan was like, our rake hikes have done nothing to slow this tech driven economy. So we're not there, but we'll see. Interesting setup for incoming Fed chair, Kevin Warsh. Let's get more in the markets as momentum bounces back. Sima Modi's got the details for us. Melissa, the NASDAQ was the outperformer today closing well above $26,000 with Tesla, Google Chips, But there were certain parts of tech that did not work like software stocks, led by Salesforce, ServiceNow and Microsoft, despite investor Orlando Bravo telling CBC that the worst is over in software.

And website builder Wix missing on earnings, setting that stock down sharply on the day by 27%. Oracle was a bright spot following a price target raise at Wedbush Security, citing positive channel checks, and Wells Fargo bullish on cloud infrastructure players Snowflake noting an uptick in interest for their AI products ahead of earnings, which are due in about two weeks. Chips and memory stocks also clawed back on Wednesday as investors await updates from Beijing on President Trump's meeting with the Chinese leadership. We'll wait more details closely. Barclays also thinks the rally broadly in chips can continue throwing cold water on this idea

that is reminiscent of what happened back in 2000. Finally, the stock of the day really had to be nebious, right? Which provides cloud computing, reporting a blowout quarter thanks to demand from AI data centers and partnerships with the likes of Nvidia and Microsoft shares ending higher by 15.6% Mike. All right, Seema, thank you. Well, it was a busy day for bonds

in the U.S. as well as globally. Rick Santelli looking at the big moves and yields. And Rick, while we did tag some levels we haven't seen in a while, it was actually kind of a controlled move. It did not exactly go up too far too fast. No, exactly. As a matter of fact, right now

twos through sevens are lower in yield on the day. The 10s are basically unchanged, and the 20 year that nobody looks at, it's up about a basis point, and the 30 year that everybody's looking at some about a basis point and a half. Let's start at the beginning. You know, the closest expectations out of all six components of PPI was X food, X energy, X trade. We're expecting 4.1.

We had 4.4. That was still the hottest since Feb of 23, and it underscores even the headline number up 1.4 was triple expectations, but yet in many cases, PPI, whether cold or hot like today, isn't the big mover that CPI or PCE seems to be. And if you look at the 12 hour of tens, right at 1130, we touch four and a half, as you reference. Big psychological point.

I'm not so sure it's a big technical resistance level, but we touched it, and then we came back off. So it is very controlled, and I'm hearing from sources that it's basically instant, institutions and hedging going on, there's a large swat of volume that isn't coming into the treasuries. Finally, it is a 10-month high close again for tens. And on that 30, it's a one-year high close. And if you look at that 30-year chart, two things should jump out at you.

Yesterday was the first close above 5% since July of last year. And we had an auction that had a 5% handle, and that was the first auction result over 5% since 2007. Melissa, back to you. Rick Santelli, thank you. Sticking with bonds, Boston Fed President Susan Collins, saying today it will likely be necessary to maintain the current restrictive monetary policy for some time after five years of above target inflation. Taking a look at the current year-end Fed rate probabilities from CME Fed Watch, the market seems to agree,

giving just a 1% chance of a cut, a 35% odd for a hike. Joining us here on set, Jeff Rosenberg, BlackRock, Systemic Fixed Income Portfolio. to have you with us. Great to be here. She also seemed to say, you know, she could see the next move, a scenario in which the next move will be a hike and that inflation will likely remain higher for longer. Do you agree with that? And how does that sort of influence how you think about what the Fed does? So I think a lot of it remains to be seen. If you look inside the data today, it was actually a little bit better in the details when people updated the more important inflation number, which is core PCE. You saw some of those numbers come down. That's why you didn't see a big reaction in the bond

market. CPI yesterday was the bigger news, but again, that was a little bit overstated because of the shutdown and the impact that it had on shelter. So there's a lot of things we in the bond market are looking through here, and there's a lot of potential. Actually, this could be the peak in terms of inflation and inflation could be coming down. Now, that's an if, but what Susan Collins and others are saying is we don't really know what the path of inflation is going to be. We don't have a great track record in predicting it. But to the extent that you don't have these kind of increases that the headlines are pointing to. The underlying core measures are looking a little bit better. Tariff inflation is coming off. The big uncertainties to pass through from the headline in

oil. We don't know that. But if you're at the peak, then the Fed's not going to be cutting rates, but they don't necessarily have to hike. And that's why you see such a little percentage that you just highlighted. So outside of what the Fed might do, what is implied in the way the bond market is priced right now? I mean, inflation expectations, market-based expectations have been going higher. From what you just said, it would seem as if you think maybe yields are capped around here and therefore you want to buy. So it's about short-term versus longer-term. And the short-term is going to react to the headline inflation.

So when you're looking at things like two-year or five-year parts of the curve, that's going to be pricing in the impact of headline. But longer-term inflation is about core. Core inflation is a little bit better behaved. The issue for yields is, on the long end, much more a different story. And it's about the need for debt financing. We see it from AI, from energy, from global resourge, resourge, resourcing, all of that is increasing the amount of fiscal deficits around the world.

And so that's about the term premium going up for longer-term interest rates. Short-term interest rates are going to be about the path of inflation. So in terms of the tenure and a 30-year yield, I mean, it sounds like the path is higher. I mean, given what we're seeing inflation and also global rates around the world and the propensity of other countries and other central banks to hike at this point in the cycle, is that in the cards, do you think? I think the difference between the tenure and the 30 year needs to expand. That's actually been coming in on this inflation surge.

So the inflation piece is flattening the curve, but this secular need for financing should steepen the curve. And so we should see that underperformance of the long end relative to the belly of the curve. I think the belly of the curve can be a better spot for investors because you've seen a big increase in interest rates there because the inflation uncertainty. And the extent that we're at the tail end of that, then those yields are pricing the right amount of risk and that's giving you a fair risk return. The back end still has more room to go higher on this fiscal demand piece. Yeah, you mentioned just all the kind of appetite for capital

it's going to have to come out of the bomb market one way or another. There's been a lot of celebration in how the corporate market has absorbed to supply so far, right? A lot of the kind of very well-capitalized, large tech borrowers are able to place tremendous amounts. Do you feel like that's at some point going to get to be too much in the way of supply that's going to kind of gap spreads or rates out? So there's a lot. of concern around this maybe a year ago about the financing, the AI trade is coming to the debt markets. A lot of that's gone away as we've seen this just exponential growth in the demand side. And it's really kind of changed people's calculus around whether this supply can be absorbed

and the risk premium at which it can be absorbed. There is a ton of liquidity. Credit spreads are very tight. We're in a very good shape to, as credit markets go, to absorb that issuance. And with the pace of demand kind of taking off some of that tail risk, I think the supply side from the corporate bond is less of an issue than the supply side is for the long end on the fiscal government issuance. The government is a little bit more risky in this market than the corporate bond issuance is, especially when you look at as your earlier segmented, just the incredible amount of revenues and cash flow that are being generated in that space. The auctions of late have not been good. Yeah.

I mean, Rick Santelli gave, I think, the 10-year yield auction yesterday, the 10-year auction, a C-minus or somewhere in the C-range, which in my view is not very good at all. And 30 or two. Exactly. And it's a reflection of that supply demand mismatch. Now, it's not the end of the world because the price will reset and it will get those auctions to clear. That's the difference in government versus private. Private, you can have a failed auction. You can have a company that can't finance. Governments will find a way to clear, but the price may have to be lower the yield higher

in order to attract those investors back in. And that's the point about the term premium increasing there on the back end of the curve. Well, that does compound the fiscal issues, obviously, if they have to pay more along the Jeff, great to talk to you. Thank you. Thanks, guys. Appreciate it. All right, now let's turn to the high stakes star-studded summit taking place in China. What is each country hoping to get out of it? We've got both sides covered. Amen Javis, following President Trump and Yunus-Uing covering the Chinese side for us. Let's start with Amin. Amen. Yeah, Mike, this is going to be a real diplomatic dance here because there are so many pressure points on this relationship. We've made a list

of them for you. A lot of them are obvious, but there's some concern here about potential Chinese weapons sales to Iran. How does that affect the talks? The Strait of Hormuz blockade, obviously a lot of Chinese oil coming through the Strait of Hormuz. That is deeply uncomfortable for the Chinese government. The U.S. relationship with Taiwan, the Chinese definitely want to push the U.S. on that one. How is President Trump going to respond? Is he willing to give on an issue that American presidents have not been willing to give on because of the unique situation we find ourselves in, a trade war on top of a hot war in Iran. And then, of course, AI, both countries racing for AI dominance. Is there a deal to be had there? A lot of skepticism that I heard on

the way in to this summit that anything really substantive could be done on AI this week. And guys, NBC News is reporting just in the past a little while that there are now some Chinese registered ships that have been able to transit the Strait of her moves. We're going to try to confirm that ourselves. But if that NBC News reporting is accurate, it does look as if the U.S. side is now allowing some of those Chinese flagships to go through. They've worked it out with the Iranians as well, and that indicates some effort here by the Trump administration over the past 24 hours to try to ease some of the tension here in Beijing ahead of that summit. That's a really interesting development and one that we should definitely keep our eyes on over the next 24 hours.

see how that develops during the summit itself, guys. Back over to you. Yeah, for sure. Amen, the list of kind of unknowns and maybe it's going to be hard to come to terms that you had set out there, it goes against this notion, I think, that maybe a lot of the work is done in advance of these actual summit meetings, and we have things on paper and kind of templates that are just going to be filled in and announced when the leaders meet. That doesn't seem to be the case this time? This one feels more spontaneous, Mike. I'll tell you that. I mean, And what I was hearing last week is that negotiations were coming down to the wire. That's part of the reason I was told why Treasury Secretary Scott Bessent was meeting with his Chinese counterparts

in order to try to firm up some of these deals that were on the table at least, but not across the finish line ahead of this summit. So we'll see what they're able to announce tomorrow that I think these sort of assumptions are baked in on Boeing jets, soybeans, and beef. those purchases sort of are assumed. Anything beyond that, though, is a real wildcard. And the question is, what were they able to get done in time for this summit tomorrow? Amen, thanks. Amon Javvers. Cisco earnings are out.

Those shares are surging 12% or so after hours, 14%. Now, Christine Perts Nevel's got the numbers. Christina. Yeah, let's start with the earnings per share. It's a beat. Two cents beats $0.06 adjusted on revenues of $15.84 billion. The quarter was driven by product revenue that came in stronger. than expected service revenue a little light. Gross margins for Q3 came roughly in line at 66%.

The company did increase their AI orders for fiscal 2026, and I think part of that is adding to that big bump. So initially it was $5 billion. They're now saying their AI order will jump to $9 billion. Another big driver for this name, too, is their guide. They provided a Q4 EPS guide of $1.16 to $1.18. If we can just hold on because I'm going to get to that quote. And that's much higher than what the street anticipated on Q4 revenue of about 16.7 billion to 16.9 billion, much higher than what the street anticipated. So you had those AI orders, the guide. And then this last little part that came through the 8K, Cisco announced a restructuring plan.

So they could invest in silicon optic security and AI. They haven't really provided details about what this restructuring plan means. But in connection with it, Cisco estimates that they're going to recognize pre-tax charges of up to a billion bucks. consisting of severance and other one-time termination benefits as well as other costs. I wonder if that means job cuts are coming. Cisco said that they're going to be recognizing roughly 400 million of those charges in this current quarter. This is Q4 for them, with the remaining amount recognized next quarter in fiscal 2027. Guys?

Christina, thanks. Christina Parks and Nevels against Cisco shares up 14% on the back of these results. So what is the Chinese delegation hoping the talks between President Xi and President Trump will yield? Unis, Unis, covering that angle for us, Eunice. Thanks, Melissa. Well, sources and analysts have been telling me that both sides want to see stability in the relationship. But from the Chinese perspective, they have an agenda to promote their technology as well as manufacturing capacity. So the stability could help them pursue those priorities without American pressure. So the Chinese are looking to make President Trump happy.

The Global Times, which is a Communist Party paper, had flagged this, saying that in an editorial that China and the U.S. should join hands. Now, as fixated as President Trump is on trade, President Xi Jinping is very focused on Taiwan. There's an expectation, as Amin had laid out, that the Chinese are going to try to press President Trump to change the U.S. language on the island, which Beijing considers as its own. And then the ask would be to shit from does not support Taiwan independence to opposes Taiwan independence. And today, the state media was more explicit about that, saying, oppose. Choosing Taiwan independence should rightfully be a shared responsibility for both China and the United States today. And indeed, it must be a critical consensus that both sides strive to forge. Indications from sources are, though, that President Trump would not be interested in taking up those measures.

Guys? Eunice, thank you very much. Well, speaking of China-Asian markets mostly higher today, especially tech, the China Internet ETF, posting its best day in four months. on strong volume. JD.com and Alibaba were the leaders. Alibaba reporting its 11th straight quarter of triple-digit AI revenue growth, while JD saw a robust expansion in its retail business, Baidu, and PDD catching a bid as well.

And Alibaba, a lot of scrutiny of those numbers, obviously a decline in actual earnings as they spend heavily elsewhere. The market doesn't mind. Yeah. It's also getting help overall, just in EM trade. Yes. People want to reach for outside and they want to go to EM. And as we talked about before, Korea is a big part of it. China has a big part of the EM trade. Without a doubt. Taiwan's slightly larger, but now it's almost like EM is AI but cheaper.

Exactly. It's kind of the way it comes out. I do and Alibaba, all those are regarded as. Coming up, analysts' reaction to Cisco's results, the stock seeing big games out for hours. And check out forward having its best day since March of 2020. We'll take a look under the hood. You're watching closing bell overtime live from the NASAC market site. Let's get another check on Cisco. Those shares are moving higher after third quarter results, rising about 14% right now.

Company raising guidance and saying AI orders are higher than expected $9 billion worth of orders for the full year compared to its previous guidance of $5 billion. The stock did hit an all-time high today even before this move. Joining us now is Amit Daryanani from Evercore ISI. So, Amit, talk about this acceleration on the AI line. I assume that's what the market is seizing on, even if it remains a relatively much. modest percentage of the whole in terms of revenue? Yeah, I mean, this is the AI number. I think, you know, five billion was the initial expectation to get up to nine. I'll tell you, most people are hoping and expecting that number would go up to six, six and a half. So nine billion

is a much, much better print than anyone expected. The other part I'll say this growth they're seeing while AI is exciting is getting to be much more broad-based. So the total product growth, even X-AI, was up nearly 20%, 19%. So you are seeing this diversity of growth. You are seeing this diversity of growth and potentially, the thing to watch on the call is, you know, is this a sign that enterprises are starting to upgrade their network to get more AI ready? If that's the case, this thing could have a lot more legs than it's had so far. Did Cisco answer the questions and the concerns about memory pricing with the gross margin that it reported? You know, listen, the one blemish on this is gross margins are not hanging in the way they were

supposed to, especially in the revenue upside you think they would go up. So there is an element of memory impacting the gross margins. But Melissa, what I say is like, memory as an input cost for networking is under 5% of your bill of material. So it's not nearly as big of a headache for them as it is for servers and PCs and other parts of the tech ecosystem. So I guess to like the stock from here after this run that it's had, you really have to buy into the notion that it's going to be further re-rated to the upside, right?

It's already trading at, you know, probably a 20-year high PE, even though it's not particularly high for tech at this point. How are you thinking about that in terms of the valuation and what it captures? Yeah, listen, up until yesterday, before this print, my take was it's the only tech stock that's trading under 20 times only it's not broken and it's attracted from that reason alone. Now, if the narrative becomes this is starting to catch the momentum of not just AI for hypers, which the 9 billion does, but also that enterprise tailwind where enterprises have to start upgrading for AI, that would imply that, hey, perhaps this company can grow 10 to 15% structurally on the top line, 15% plus on the bottom line. If you can get that kind of momentum

going, then, you know, I think a $6.00 earnings power and perhaps in mid-20 PE is probably the right place to the stock to end up with a bulk of the stock in the 141.50. Very constantly. They also announced a restructuring plan, and as part of that, I'm at their layoffs, to less than 4,000, but I'm wondering what that restructuring in your view allows Cisco to do what it allows it to do maybe more efficiently. Yeah. Listen, this is a tough part of what all these companies are going through right now, which is they have to invest in the AI ecosystem more aggressively.

And at the same time, I'll tell you, a lot of this, as excited as the 9 million of AI orders are, it is a lower gross margin business for them. But at the same time, they don't need the same amount of OPEX or headcount to support that business. So, you know, I think I suspect, and we'll hear more about this on the call, a lot of these restructions perhaps to optimize the headcount that they have and perhaps to orient the headcount a little bit more towards the AI deployments versus not. But I think it's more to defend operating margins, Melissa, given the fact that there

is some gross margin pressure they'll have to deal with with this AI revenues right here. Just to quickly, is there a clear read-through from what you're seeing in this result to other members of the food chain here? Yeah, I mean, the easy one would be AI momentum is alive and it's starting to spread in a very big way, so that's going to be a positive. Certainly the name that will come to my mind is Dell could be a big beneficiary of this. If enterprises are truly starting to get AI ready and Cisco is a way to talk about that on the networking side, Dell is the one that will benefit on storage and service, right?

So I think Dell, to some degree, HP Enterprise would be beneficiaries of enterprise start to deploy AI. That's one part. And the other part of it says if AI generally with hypers is doing well, it's a good read for companies like ERISTA and others on the networking side. Amit, great to see you. Thank you for your analysis. I'm at Dariunani. That full screen was like a throwback. Cisco and Dell. Yes. Leaders there. It's remarkable. Cisco, Dell, and then look at Cisco and Intel. A 30-year chart looks the same. Looks like a hammock being, you know, strung up on two on two ends because they've gone vertical, both in 99,000 and today. So it's sort of like if you survived, you know, that long trough, low growth period, AI is coming to rescue shareholders here.

Exactly. Coming up, we'll take a look ahead to tomorrow's big IPO, which is expected to be the largest of the year, and how SpaceX is making an impact on the public markets while it stays private for now. Overtime, be right back. Welcome back to closing bell over time. Cerebrus set to price its IPO this evening and begin trading tomorrow. It is expected to be the biggest IPO this year. Let's bring Christina Parts in that list for more on this. Most of the day I was saying the biggest chip IPO this year, but we're going to say the biggest one. And look out for the ticker, CBRS.

Source familiar tells me the deal is going to be valued, or the IPO at roughly $50 to $60 billion range, at least $150 to $160 a share, more than double its private valuation from just three months ago. Cerebris, though, for those wondering, is just built entirely around inference. It's the part of AI where models respond to users in real time. The company makes a chip with memory built directly onto the silken, so it's a little bit larger. But they claim eliminates the bottleneck that slows down GPU systems. It sells the chip, the full computing system, and it runs its own cloud. That's roughly almost 30% of the business.

Open AI signed a $20 billion compute deal in January. AWS has a binding term sheet. Demand for the IPO is more than 20 times oversubscribe. There are, of course, risks. 86% of last year's revenue came from just two customers in the UAE. Margins are in the just barely hitting 40%. And the competition, no doubt, coming. NVIDIA's CEO spent roughly $20 billion to acquire the IP from GROC

that specializes in fast inference the same market, Cerebus is targeting. That technology is being built into NVIDIA's next generation Vera Rubin chips. Cerebus is definitely going to have to prove it can stay ahead of, especially that GROC chip. Updated pricing is expected in the next, I would say less than 40 minutes. The next-gen, Reuben, cheap,

is that supposed to be the direct competitor to this chip that Ceribus makes? Or is it just that they also do inference? Cerebus right now is comparing their chip to the H-100, so actually a lower-tiered version saying that their memory is 7,000. If I remember the stat, 7,000 times higher than our H-100, H-BM-3 bandwidth.

So just the advanced memory bandwidth on that chip. With the new Verra-Rubin, the assumption is it's just going to be incredibly faster for memory. And D.A. Davidson put out a note this morning saying once that chip is out, you really don't have cerebrous being able to argue that their memory is a lot faster and better and more efficient on the chip because Verrubin has that special groc technology. And the chip is already more advanced and smaller in itself.

They're certainly going to benefit from kind of hitting the market at a time when the appetite is just off the charge for this type of thing. I am mindful, though, the pattern last year with the hottest IPOs, basically the first-day pop, where's your high? Figma, circle, a bunch of those. What about Corweave, though? Corweefe was, what, 40 bucks, and now it's like above 100 and something? That's true. It's a bumpy ride.

Bumpy ride, but if you have the patience for all of these IPOs, then some can stand to benefit. Yeah, we'll see if tomorrow's opening represents a lot of patience. We'll see how that looks on the screen. It'll be fun to watch something, by the way. I'll be here. Thank you. All right, time for a CBC News update with Angelica

Peebles. Angelica. Hey, Mike, the A drug addiction counselor who delivered doses of ketamine that killed Friends star Matthew Perry was sentenced to two years in prison this afternoon. Eric Fleming is the fourth defendant sentenced over the actress' 23 death at his Los Angeles home. Perry's former assistant, who allegedly injected Perry with the drug, will be sentenced later this month. And ahead of the World Cup, the Trump administration is suspending a requirement that foreign

visitors from certain countries pay as much as $15,000 in bonds if they have tickets to the World Cup. The State Department imposed the bond requirement last year on 50 countries it said had high rates of overstayed visas or other security issues. Five of those countries qualified for the World Cup. And AI is apparently forcing Princeton to change its 133-year-old Honor Code. Since 1893, proctors have been banned from in-person exams because students pledging not to cheat was considered enough. That changed this week with faculty voting to require proctoring because of the perception that cheating with AI for in-class exams, has been widespread, so certainly one to watch as AI becomes more widespread.

Guys, back over to you. For sure. All right, Angelica, thank you. After a one-day pullback, tech and momentum names, once again, leading the market higher. Another record high for the NASDAQ 100. Up next, our guest explains why he thinks you need to keep riding this wave. Overtime. We'll be right back. Welcome back to closing bell overtime, live from the NASDAQ market site. Stocks mostly higher today.

The Dow did post a small loss, but the S&P 500 in NASDAQ, Once again, closing at record highs. The NASDAQ up more than a percent. Apple cracking $300 a share for the first time ever, closing just below that level. Alphabet up 4 percent. Also a record close. InVIDIA up for the fifth straight day, and its closing level is another broken record. Cisco meantime closing above $100 a share for the first time ever and heading even higher in the after raising guidance on strong demand from hyperscalers.

But doximity getting hit hard after missing by two pennies on earnings per share. the guidance for its second quarter and for the full year, both below current estimates on earnings and revenue. All the market rewarding high momentum names once again, and strong earnings are helping back up those moves. So is the play for investors to stick with the winners with us now to share his playbook is Drew Pettett, U.S. Equity Strategist at City, Drew. You know, there's a couple ways, I guess, of characterizing momentum. There's clear price momentum. There's earnings momentum, revision momentum, things like that.

I guess there's a lot of overlap right now. So what are your models drawing you toward? Yeah, it's the earnings momentum side. And to be clear, like revision momentum, yeah, it's interesting, but we want to make sure there's follow through. So a lot of like, I would say the 2026, 2027 numbers are going up, especially the 26 numbers. But a lot of that is because of big Q1 beats. We want to make sure earnings momentum has not just the Q1B, but also the follow. through in upside in Q2, 3, and four numbers as well. And we're seeing that in a lot of the U.S. mega cap stocks right now. I guess wouldn't there be a limit as to when, in fact, it seems as if you want to actually

latch on to these stocks at a given price? I mean, it's just looking at how the semiconductors have had strength upon strength. They look very overbought, even though the earnings have been coming through, in fact, much better than expected. It's what's priced in to us, and it's not about PEs. A lot of people want to talk about forward PEs relative to growth. We get it. Peg ratios are actually near 20-year lows, but that's not the reason to buy.

The reason to buy is we think the market is pricing in a growth rate. Let's call it for the NASDAQ of about 17.5% compounding for the next five years. That is extremely high. That is an extremely high bar. But if you look at analysts consensus, the humans analyzing these companies, they think these companies are going to hit 18, 19 percent. So to us, as long as growth comes through, you can deal with the high multiples. You can deal with the high embedded expectations you get from price ripping higher. But it's all about earnings.

If it comes through, you can stay in this part of the market. Not only, though, Drew, do you like momentum here in the U.S., but you're also overweight specifically Taiwan and South Korea because of the exposure to memory. So can you talk about your overall exposure to the same sort of trade, the same momentum that's powering the U.S. markets that are powering your overweight in the emerging markets? Yeah, look, got to give our global team credit here. They've definitely stuck their neck out and stayed here with the earnings momentum trend. Look, there's not a lot of real easy stories now. Geopolitics, oil prices, inflation. It makes a lot of stories hard to buy into and stay in.

And we are back to talking about a narrow equity market and narrow fundamental stories. And the AI story, it's most comfortable to buy it in the United States, but you can buy it XUS. It's in EM. It's in those emerging markets, specifically South Korea, Taiwan, like you mentioned. I don't know. Aren't long-term gain supposed to come from doing the things that aren't easy or comfortable? I'm just wondering at what point you might kind of detect an inflection point where some of the out of favor parts of this market start to work. Yeah, we've watched that really, really closely. We've liked the barbell with a little bit of U.S. and small midcap on the value side. I would say the pain point now is people being a little shy of price momentum and looking to kind of take money off the table on some of those trades.

So I wouldn't necessarily say just because it's gone up, it's easy money from here, Mike. But the inflecting growth on the other side, you probably have to step into it, but you have to have some conviction that some of these inflation differentials and rates are going to come down. That's kind of our trigger to start working more into that side of the barbell. For now, again, price momentum, if it has earnings momentum, is where we think you can make money in the near term. It's sort of a weird thing to think about, Drew, in terms of going to the momentum trades because it's defensive against the macro uncertainties. But that's effectively what you're saying. You're saying the momentum is going to give you the defensive area you want to be in. Think about the fundamental story and who they're selling to.

The hyperscalers are starting to see their cash ROI's level out right now. And look, if you're selling into a customer that has really, good fundamentals, good cash profile, that's not really price sensitive, you're going to be macro defensive. If you're selling into the lower K of the consumer, just let's say any consumer at this point, there's a little bit more price sensitivity there. So fundamentally, they're actually resilient. It's not just price action that's telling us they're resilient. Right. Drew, great to speak with you. Thanks. Drew Padet. Well, ad spending on streaming platforms is expected to hit roughly $20 billion in the next three years. Up next, we'll take a look at what's at stake for the streamers. And as we had to break, check out the four Dow stocks that hit new highs today, Apple, Nvidia, Cisco, and United Health. Closing bell over time. Be right back. Ford, one of the big stock movers today, leading the S&P 500 and trading on heavy volume. No major news from the company. Morgan Stanley writing,

that the company's energy business is underappreciated, and it could sign an energy storage supply deal with a large customer, maybe a hyperscaler in the next few months. The firm, however, keeping its equal weight rating and $14 price target, stock up 13%, which takes it all the way to almost eight times forward earnings, right? So this is like one of these dirty, you know, consumer cycles, nobody thinks can grow, you know, over a cycle, and it gets a little bit of a whiff of data center. for scale or action. Yeah.

I mean, we were commenting that this announcement about energy storage was made a long time ago. In fact, it was made at the end of last year. And so when the analyst is saying it's underappreciated, it's been underappreciated for months now, only now saying, oh, well, it's got a licensing agreement with CATL, which we did know already. Right. But that gives it an advantage in terms of signing up these new customers. It's really much more a tell on the kind of market we're in right now, where it's just everybody grabbing for some unexploited AI play. Exactly. Well, the Home Builders' ETF down 4%.

this year as high mortgage rates continue to pressure housing affordability and way on demand. The 30-year fixed rate mortgage is up 15 basis points since last Friday at its highest level since March, sitting at around 6.57 percent. Home improvement stocks like Home Depot and Lowe's under pressure this year as a result with Home Depot trading at Lowe's not seen since November 2023. It will be interesting to see if the market differentiates sort of the core of the businesses for both of them. City was out with a note earlier this. week saying lows could be at an advantage because they specialize in sort of the more do it yourself. Yes.

The contractors, will that make a difference or will they all just be swept up with this affordability is tough, mortgage rates are high, it's a bad trade. They have traded in lockstep. Also, this kind of inflationary wave is not helping at all, either goods-wise. I think investors better hope that Home Depot is no longer the kind of bellwether it used to be. I saw some analysis saying that when Home Depot has been this week and yet the S&P was at a high, it has meant. a pretty important divergence in prior cycles. So we'll see if that changed. It's like a sample size of two before this one, but still, keep an eye on it. Well, it will stay with the consumer.

As more viewers are shifting away from traditional cable and going to streaming options, so are the advertisers. According to an ad consulting firm Madison and Wall, advertising spend on streaming is projected to hit $20 billion by 2029. That is on par with traditional linear TV. And recently streaming services have been, have seen massive growth in subscribers. The major platforms added 65 million net users in the past nine quarters, despite the rising cost of those services, with many of them hiking their prices last year,

with YouTube TV now charging $6799 a month. I guess that stands in for what used to be a cable package, a general bundle. Live sports and all that with YouTube TV. You know, hours viewed on streaming has surpassed linear as of early this year. So it's not random that advertising dollars would. And in fact, if anything, linear TV kind of gets more ad dollars than you would think for the viewing hours because of live sports. And because there's a concentration of attention on certain shows as opposed to streaming where it's just kind of dispersed all over the place.

It's also not surprising to me. I mean, it was surprising when you read it, 67991, which I had no idea about. Right. But given it its live sports and also the fact that it is the number one competitor to Netflix for iOS. So it's like your broadband bill plus the $68, plus Netflix is probably the old bond. Yeah, exactly. All right, well, talk about a buzzkill up next, why high gasoline prices at the pump are starting to take a hit on one industry that's been trying to make a comeback. And as we hit to a break.

Here's a look at some S&P 500 stocks hitting 52-week lows today, including Nike, IBM, Boston Scientific, Best Buy, and Hormel. Closing bell overtime. Lock in the NASDAQ market site. It'll be right back. Welcome back to overtime. High gasoline prices across the nation are forcing drivers to just fill up their tanks, but not pick up their favorite six-pack of beer from gas station convenience stores. Brandon Gomez has those details.

Hey, Brandon. Hey, Mike. Yeah, beer demand is suddenly looking a lot weaker. And Wall Street says rising gas prices may be partly to blame. The latest Nielsen scanner data shows U.S. beer, malt beverage, and cider volumes fell more than 6% year over year. That's a sharp slowdown from earlier this year when declines were closer to 3%. Now, the pressure is especially visible at convenience stores, places like 7-11, Wawa, Shell, Exxon Mobil gas stations, where beverage volumes are down roughly 9% over the last two weeks.

Now, analysts at Bernstein say higher fuel costs may be squeezing discretionary spending and impulse purchases tied to commuting and travel. Now, California, where gas prices are topping $6 a gallon, showed the steepest beer sales deterioration. And Arizona and Texas also posted notable declines. Now, this may not just be a beer problem. Bernstein says weakness is now spreading across other beverage categories two, signaling broader pressure on the U.S. consumer as confidence levels hit multi-year lows. Among the brewers, Mikola Bultra and Constellation brands are holding up relatively well, while Bud Light, Budweiser, Boston beer, and Molson Corps continue to struggle. Again, this is a conversation

we've been having within weakness in the industry and just one more headwind coming their way. Yeah, I mean, Brandon, I can remember more than 20 years ago, I did an interview with the then CEO of 7-Eleven who talked about the stores where they sold gasoline. That was a lost leader because people were going to leave whatever they had left in the store. I do wonder, though, if, I mean, are people basically foregoing the six-pack altogether? They just buying it at places where you have better prices like, you know, supermarkets or warehouse stores or something else. Yeah, look, we talk about, right, those wholesale deals that you can get. consumers are really looking for value here. And so perhaps they might be thinking differently when they're at the pump, right? They're already putting $6 a gallon of gas in California in their car.

They're not then going to go buy a six-pack there. They may do it later on at the grocery store. I mean, it's a great point that you bring up, right? Perhaps it's just shifting where the consumers are. We'd have to really dig through the credit card data and see if that's the shift. That's the shift that we're seeing. Brandon, thanks. Brandon Gomez. Along the lines of the 7-Eleven. I remember it used to be the rap that places like, you know, an alimentation cuch tart, which runs Circle K. in Canada and the U.S. They would see declining our earnings because people would be paying higher gas prices

and not buy things at the CircleK store. But actually, a recent interview, the CEO said, you know what? People are still coming and they're still spending. They're just breaking up how they fill their tank. They don't pull it all the way. Right. They'll just come more often.

Right. You're just going to buy $10 worth of gas and then spend whatever it is on the rest. The other areas that you might see sensitivity like that is it's always breakfast at fast food places. Right? You're driving to work and it's so discretionary. And usually that kind of trails off.

Yeah, like that extra coffee or a muffin or whatnot. Let's get to set up with tomorrow's trade today. Applied Materials, the big name on earnings. But we will get results from Viking Holdings, Clorna, bullish, and verset media, which of course is a parent company of CNBC. And on the economic front, we will get weekly jobless claims, April retail sales, and import prices. Yes, PPI, it was hot, but didn't cause that much of a bond market response. We'll see about retail sales, if that kind of convaled.

firms or refutes the thoughts we have here about spending. And then Cisco, seems like it's going to be a story going into tomorrow as this stock gets revalued as an AI play. Yeah, this will be, of course, a new high for shares of Cisco, which already closed at a high today. We'll see if this sort of helps the other names in this trade. Just go back and see where the market kept sits relative to its peak. It was like $600 billion at the peak in like $99,000, but they bought back stock for a decade straight. And they were really just the cash cow company for a long time. I remember. Remember, at 1.8% free cash flow yield and very high dividend yields. And now they're, you know, they're trying to, I guess, get to the fountain of youth through AI gear at this point. All right,

that does it for overtime. Fast money begins right after this quick break.