Closing Bell - Markets Hit New Highs; Netflix, Alcoa Sink After Earnings 4/16/26

Episode Date: April 16, 2026

Markets push to fresh record highs as earnings take center stage and investors lean into momentum. Liz Ann Sonders of Charles Schwab explains what’s driving the rally and whether markets can continue climbing from here. Netflix headlines earnings. Mark Mahaney of Evercore reacts and outlines what it means for growth, margins and the streaming landscape. Alcoa adds another key signal. Our Morgan Brennan covers the results and has an exclusive interview with CEO Bill Oplinger to discuss demand trends and what they reveal about the broader economy. Darrell Cronk of Wells Fargo assesses whether earnings can push stocks even higher and what investors should watch next. Our Phil LeBeau reports on a potential jet fuel shortage and what it could mean for airlines and travel demand. 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. Morgan Stanley Investment Management ringing the bell. And at the NASDAQ, BHAV acquisition, doing the honors. Welcome to closing bell overtime. We're alive from Studio B at the NASDAQ market site. I'm Melissa Lee, along with Mike Santoli. Sox with small gains today, but good enough for record for both the S&P 500 and the NASDAQ. That makes 12 straight winning sessions for the NASDAQ. Tomorrow, it can tie the record. The last 13-day streak was in 1992. We've got it more on the markets just ahead. Also this hour, earnings from Netflix and Alcoa. We'll bring you those numbers as soon as they cross. And we'll talk to the CEO of Alcoa about the results and the outlook for the steel and aluminum market amid this geopolitical environment. Yeah, gentle gains today and the overall indexes. It really kind of passes a little bit of a breather after this sprint higher. I think market continues to benefit from the fact that even though we're up 11% and 11 trading days or whatever it is, we're only up a percent and a half since Halloween. So I still think you're

benefiting from this fact that you're rebuilding valuations that got compressed. You know, the S&P's all the way back from the prior highs, but the P.E is only halfway back. I mean, if we're going to have to go back to those highs. Yeah, we saw a crush and ball. And speaking at the ones that are getting compressed in terms of valuation, Microsoft continuates. Oh, exactly. It's running with IGV continuing as well. Intel and AMD, really on breakouts here in terms of the moves that we've seen, continuing the moves that we've seen for the past a month or so. Microsoft and Invidia are about a third of this week's gains for the S&P together. Microsoft's of 13% week to date. It's almost uncomfortable for a stock

that size to get that kind of a short-term move when it seems like it's no news. It's just kind of positioning and people feeling like it got overdone to the downs up. Especially before earnings. Yeah, exactly. Let's get more on stocks making big moves today. Seymouty joins us now. Seema. Well, as you guys were just discussing, Melissa, the rally in chips and software, powering the NASDAG led by Microsoft, which is now on track for its best weeks in over 10 years since 2015. The conversation on Wall Street really centering around software's ability to trend higher with earnings around the counter corner. We have IBM and Service Now on Thursday. Bank of America writing that sentiment had gotten too negative, even short-siller Michael Burry, writing on a substack that AI fears are overdone.

Anthropic also easing easing fears after unveiling a less powerful AI model to the market. Cybersecurity and security names rallying octa hire on an upgrade from Raymond James to outperform. That stock higher by around 3% on the day. the best performing NASDAQ 100 stock wasn't a software name. It was a semiconductor giant advanced micro devices hitting a new high after Barclay says it's become more confident in AMD's pipeline, which now includes Nvidia. Excuse me, meta. On this downside, we saw Boeing moving lower on reports that it plans to hire more factory workers to increase output. These hires will also replace recent retirees.

That's according to a report from Reuters. Finally, Abbott Labs plunging after earnings and guidance disappointed, its nutrition business saw weeks. sales and that stock was down 6% on the day. Melissa? Seema, thanks. Seymum Modi. Netflix earnings are out. McKenzie Seagalus has got the numbers Mac. Hey Mel, so those shares down more than 8%. It's a slight beat on revenue here at $12.25 billion versus the $12.18 billion of street expected. EPS coming in at $1.23, but we are not comparing that to the street estimate. It includes the $2.8 billion breakup fee after the Warner Brothers deal when they didn't go through with that. The one other thing I want to say,

single out here. We've got co-founder and co-chairman Reed Hastings not standing for board re-election. I'm going to keep digging into these numbers and come back to you. All right, Mac, thanks. Mack, thanks. Mackenzie Segalos. A quick down 8% on Netflix with a couple misses. The guidance in terms of Q2 revenue guidance looks a little bit light. It does. Now, the history is Netflix is known for conservative guidance, especially in certain quarters, but since they don't give you subscriber numbers anymore, you have to go with the revenue guidance as the current past quarter revenue fattened up by that one-time fee from the breakup. You know, free cash flow looks very strong.

They're going to be buying back stock. But stock has had a huge comeback. Yeah, Reid Hastings, stepping away from the board is also an interesting thing. And you have to wonder what happens next in terms of management here. But, of course, we'll keep an eye on this. So McKenzie will continue going through the numbers bringing in any headlines as they do cross. Again, Netflix shares are down by just about 8% here on the back of the report. All right, oil prices rising today as the fate of the peace talks and traffic through the Strait of Hormuz are very much in doubt.

Pippa Stevens joins us with the latest. Hi, Pippa. Hey, Meg. So we did see oil drift higher for much of the day with President Trump saying this afternoon that he's not sure if the ceasefire needs to be extended and that Iran wants to make a deal and is willing to do things today they were not willing to do two months ago. But the president did add that if no deal is reached, fighting could resume. Now, in the meantime, traffic through Hormuz remains more than 90 percent below pre-war. levels, Eurasia groups saying that the U.S. blockade is unlikely to be completely effective and that the flow of traffic to and from Iranian ports has not completely halted. The firm has a 65 percent probability of the ceasefire holding and being extended, but said if the blockade extends beyond May 1st, it will trigger an Iranian retaliation. In the U.S., the latest inventory report showing a crude draw ending a seven weeks of builds,

exports also rising to 5.23 million barrels per day, increasing by more than 1 million barrels per on the week and the seventh highest reading on record. Guys? Pippa, thanks. Pippa Stevens with that. Let's get back to McKenzie Sagalas. She's been going through the Netflix numbers for more color there. Mac? Email. So you guys were already talking about that Q2 guide being light.

EPS guided, 78 cents versus the 84 cent expectation from the street. Q2 revenue guide also coming in light here at $12.57 billion versus $12.63 billion expected. Investors were also looking at that full year revenue guide. hoping that we'd see that number revised up now that they're no longer facing M&A costs associated with the Warner Brothers deal. That's unchanged in that range of $50.7 to $51.7 billion. And then in terms of operating margin, this is something that investors are increasingly seeing as the key read on margin as the clear as proof of how its three-year-old ad business is doing. And that came in in line.

For Q1, we're looking at operating margin of 32.3% versus 32.4%. And actually coming in light on the Q2 operating. margin guide, 32.6% versus 34.3%. And it makes sense because their ad revenue remains on track for for $3 billion by the end of the year, not upping the guide there. Mel. Yeah, there were already concerns about its growth trajectory prior to the WBD effort. And I guess those fears are still in the stock here. Mack, thanks. Keep us posted. McKenzie Segalos. Let's turn now to the bond market as yields reactive this morning's jobless claims number. Rick Santelli is standing by in Chicago. Rick. Yeah, $207,000 wasn't bad. You know,

slightly under 200,000 takes you back into the late 1960s. These are really, really good numbers. No higher, no fire. Productivity with AI, maybe a big golden positive for the economy down the road. All these things are playing into the market. And if you look at a 12-hour chart of tens, pretty much the minute the stock market opened at 930 Eastern, rates started to go up. And if you look at it now, 10-year looks like it wants to make new session high yields

as it's flirting with the 431, 432 level. That would be the high yield close of the week. Last time we were closing above 430 was last Friday. But what's the market looking at? Well, let's pair it up with crude oil futures, the June futures contract. Wow, right on top of each other, although, as I said,

we're starting to get a little wing here to the upside and the rates, and maybe it's for the following chart. This is a two-week chart of tens. What jumps out at you is the fact that, whether it's 423-ish, 424, this is a zone that the market's finding of footing. I have bigger support slightly lower, but this really does seem to be doing the trick. And when you add in some of the positive notions about the economy when we get past, hopefully get past this conflict, there seems to be a risk on mentality that's starting to creep into the Treasury complex.

Mike, Melissa, back to you. For sure, Rick, thanks so much. Well, the S&P and NASDAQ rising their new highs again today, but underneath the surface, Could the market be telling a slightly different story? Joining us now is Lizanne Saunders. She is chief investment strategist at Schwab Center for Financial Research. Lizanne, good to see you. Good to see you, too, Mike.

Thanks for having me. A lot of talk past couple of days, not just kind of wowing the speed of this comeback in the last 10 or 11 days, but also kind of how narrow it's been. It hasn't been the most inclusive, very few new stocks making new 52-week highs. Is that something we're concerned about or just the way that this market seems to act lately? Maybe a little bit of both. You know, it's not the kind of incredible breath thrust that you often want to see to

suggest maybe longevity in the move up here. But, you know, there's just so much short-term money in the market. And it's, you know, playing the potential for little moves and inflection points. And that's just the dynamics of the market environment we're in, where you don't necessarily see the same kind of, whether it's technical follow-through or breath follow-through, that you've seen in past cycles. the players in the market have such condensed time horizons. So it's, you know, 11 days we got to new all-time highs. There's nothing wrong with that. But I think we need to see a little bit more

participation under the surface to feel some comfort that there is something lasting here. Isn't that a lasting change, the composition of who is trading, Lizanne? I mean, you should probably see it right there at Schwab in terms of the activity of the retail investor. I mean, is this sort of the new normal because of that change in composition? I think it may be the new normal. I think it's also important to distinguish between the retail investor and the retail trader. In many ways, those are two very different cohorts, the retail trader being that younger cohort that grew out of the pandemic and they also gave rise to sports betting and other betting markets. So that's a little bit distinct from your traditional longer term individual investor. But then you've got the CTAs, the

systematic hedge fund community, the long short community. So I, and when you, when you look at what they represent in terms of daily trading volume, the fact that they're starting to trade ETFs more, the month of March, you saw ETFs get up to about 40% of daily trading volume, unlike anything we've seen in the past. So whether there's longevity in those kind of trends, I think it's too soon to tell, but it's absolutely the way markets are being dominated right now. So, Lizanne, for an investor with a longer term horizon, you want to be a, want to just kind of respond in a smart way with your portfolio to what's happening. Do you think we can take the message of the market that it's kind of discounted,

maybe the bad likely scenario of oil staying up here and we're getting beyond the geopolitical conflict? Can we, again, take comfort in that message? Or do you feel as if we're overlooking some of the hazards? Well, I think the market clearly is discounting that maybe the extreme scenario on the downside, the, you know, the ultra-left-tail risk has either diminished or disappeared. inherently, that means that there's risk to the extent we get some sort of highly negative catalyst. I don't want to say that's not our base case because this is inherently unknowable and just the

nature of this conflict, how we get information about it via things like social media post. It does suggest that we still have these tail risks. There's maybe a little bit less on the upside because so much positioning has shifted in favor of that upside and of some sort of resolution. in a relatively short term and a reopening of the Strait of Hormuz, I just think that there are still a lot of unanswered questions. And I think this is an environment where you just want to go back to the disciplines of diversification across and within asset classes. Don't try to make big bets here and use volatility to your advantage by maybe kicking up

the rebalancing schedule, particularly if you were the type of investor to do that purely based on the calendar. That tail risk of oil, maybe, you know, hitting $200 a barrel. and Brent may be gone now, Liz. But to what extent do you think the markets are really grappling with the possibility that crew can say where it is now and what the impact on the economy will be and the spike in commodity prices that we've seen across the board, whether you're talking about copper, aluminum, fertilizers, you name it?

We have clearly not seen yet the full impact of, to your point, Melissa, all of that. It is not just crude oil. It's natural gas. It's fertilizers. feeds into crop production, which feeds into food prices, things like helium, which goes into chip production. And we're only just starting to sort of get meat on the bones of what are the long-term implications from a supply chain standpoint? How are companies adapting to this, particularly those that have many of those resources as a big input cost? What is there a willingness and ability to

protect profit margins? If they are protecting profit margins, how are they doing that? That's why in particular, I think this is a really, really important earnings season because there hasn't been much adjustment on the part of analysts to try to gauge this. For the most part, they're waiting to hear from companies. So as we get into the meat of earnings season, this is as important a macro sort of call as anything. I think we're going to get a lot of valuable information hearing from the companies themselves. Yep. Lizanne, great to speak with you. Thank you. Thank you. Lizanne Sanders. Let's get some more on the Netflix quarters. Those numbers just came out. the stock, as you see there, moving significantly lower at this hour down almost 9% after

beating on the first quarter of revenue. But the guidance is what's taking the stock down. The company expecting second quarter EPS to come in at 78 cents. That's compared to estimates of 84 cents. Its revenue outlook also weaker than expected. Joining us now is Evercore ISI, head of internet research. Mark Mahaney, Mark great to have you with us. What is your take here? We had a very modest beat and lower quarter, and it looks like what they're doing is their front-end loading expenses a little bit more than the market feared or a little bit more than the market wanted, hence the sell off than the stock. This is one where for the stock to have gone up, you need estimates to have gone up and they're

not. They're coming in. I don't think there's anything that structurally changed here. They had said earlier that they were going to ramp up their content amortization expense growth. It was going to be like 10% this year. They're going to grow revenue faster, so margins will keep rising. There's no change to their full year guidance.

But their front end loading expenses a little bit more than Wilson Street models. and hence you get your quick take reaction, down nine, down 10%. I think as the market sorts through this and sees that most of the revenue, subscriber trends, indirectly the subscriber trends that they're still in check, that they're holding, I think that the stock will kind of move back up. I don't think this is really worth that 10% correction. But sure, a little near-term disappointment on the Q2 outlook. Absolutely stock trades off on that.

From what you say, Mark, I'm gathering you wouldn't agree that there's some kind of strategic question being asked here or should be asked here in terms of, hey, maybe they were going after WVD because they felt as if they didn't have as much of their own organic momentum happening. Reed Hastings, not standing for your election to the board. Is there anything bigger picture happening here? That's a, that's, you know, I get the thesis. That kind of bare thesis will kind of creep in, especially when you look at kind of the third party data on engagement and on ours, and it's been kind of punk, kind of flattish,

you know, very little growth in hours. The company talks about hitting an all-time engagement. quality metric, but they don't quite tell you what it is. So it's a little fishy. That all said, I look at this asset and I look at the growth opportunity for it ahead and there's two or three areas that I think are still very large for it. So I think they'll be able to sustain, you know, call it low teens revenue growth, margin expansion, share buyback. So you're talking about a 20% earnings keager company. And I don't think that story has changed at all. So I still think I'm looking forward to more. I want to see more investments and more success with live entertainment,

live sports. I want to see advertising continues. It's going to double this year. I want to see really healthy growth rates the year, next year and a year after that. I think if you get those, I think these kind of near-term concerns over why did they chase Warner Brothers, I think those

concerns will fade. Mark, I'm curious when you started factoring in the price increase in UK, United States and Canada, into your estimates, because I think a lot of analysts were not expecting a price increase to later in the year. And so that would imply that miss on Q2 is an even deeper miss because they should have the benefit of that price increase.

That's a good point. Just to remember, though, that the U.S. is actually a pretty tiny market for Netflix. It really depends on how quickly and how successfully they roll that price increase out to the rest of the markets. Typically, it's a one to two-quarter lag before they really roll that out successfully. You know, the survey work that we had done before they announced the price increase made is pretty confident that they would do it and they'd be able to get away with it. I still think that's the case. I don't see anything in the results that really changes that. I looked at their Q2 revenue guide. I thought it was pretty much in line with models. I don't think street revenue numbers change. It's just that what's going to happen is the scope

or the slope of the operating income this year is going to be kind of lower in the first half, higher in the second half. So that means the market's going to wait a few months and then get into the stock in the back half of the year, hopefully with some good content hits. I think there are other stocks I like any area. I continue to like Netflix. There are other stocks that are just more dislocated, more interesting going into the print. was high here. They didn't meet it. That's why there's a sell-off. But I don't think there's a dramatic change to the thesis here. And then, so do you feel like you have a decent glimpse into whether they have ad momentum at this point or is it still sort of subscale? Oh, it's definitely

subscale, Mike. You know, they're doing a billion and a half last year. That's nothing. Even if they get the $3 billion this year, I mean, you know, you got Pinterest and Snap and Reddit that they're at that size or bigger. So you really don't get that interesting until you're, let's get well north of $5 billion. But I would think that they'd be able to get, you know, knocking on $5 billion in ad revenue next year. That's in 2027. And I think there's a path in, you know, three, four years to them to get $10 billion

in ad revenue. That's when it gets super exciting and super interesting. So, yeah, they're also telling you that 60% now. I think I saw that date a point of their new subs in the quarter are coming in on the ad supported plan. So sort of the inventory is there. What they need to get is more and more advertiser. man, our industry checks were suggesting that that demand is there, but these numbers are still

tiny. But, you know, they better double their revenue. It sounds like they will. We'll get serious, more serious about it next year. You're so bullish the name despite this 9% pullback in the after hours mark. But in terms of valuation, are we seeing what we need to see for a stock that is priced like a growth stock? We were, what, 43 times forward at this point, roughly? I got it clocking in at about 25 times next year's earnings estimates. I don't think street earnings estimates are going to change next year. But I want to put this in context, Melissa, last year, back half of last year, Netflix was doing 35 as much as 40 times earnings.

I don't think it'd get, I mean, I think there was unusual market circumstances that were behind that. And I don't think we'll get back to that. I think this is an asset that should trade somewhere between 20 and 30 times earnings. We're right in the middle of that range. So I think it's a quality compounder from here. And what's going to take it up or down from here is going to be kind of signs of success against ramping up that ad revenue one, signs of success in terms of getting more live entertainment,

live sports onto the network. And then, you know, kind of quarter in quarter out sustaining consistent revenue growth, call it low teens. And then, you know, keep chugging along. We want 200 pips of margin expansion going forward. You do that. You buy back stock. I think the stock will kind of hold this multiple mid-20s and kind of fluctuate probably

between mid-20s and high 20s. And when you get the stock at low 20s, that's when you step in and get aggressive on it. Here, you know, there's probably a little bit oversold, but there's not a dramatic buy opportunity here. It's a modest buy. All right. Mark, great to see you. Thank you. Mark Mahaney.

Evercore. Up next, we're all over these after hours earnings. In addition to Netflix, we got Alcoa, also reporting. We'll dig into those numbers next. You're watching Closing Bell overtime, live, from the NASAC market site. Welcome back. Avis Budget, ticker symbol,

car is off to the races again today. There have been 11 trading days in April so far, and Carr has been higher in 10 of those days, yesterday being the exception. And these are not small gains. Eight of those gains have been 10% or more on a daily basis. And as we mentioned yesterday, due to its high stock price, Avis has a huge impact on the Dow transports, boosting that index to another record high today. Well, Alcoa earnings are out. Morgan Brennan's got those numbers. Hey, Morgan. Hey, Melissa, that's right. So take a look at shares about Alcoa. They're down. about five and a half, six percent right now post-market. And that's because you had a miss on the top and bottom lines for Alcoa. So adjusted earnings per share coming in a dollar 40. That

missed by nine cents. And revenues slightly lower than expected as well. About $3.2 billion versus $3.3 billion in consensus estimates here. As you might expect, impact from this war in the Middle East. You saw a drop in both aluminum production and shipments as well as, or in alumina as well as shipments of aluminum. In terms of the guidance, though, that's where it gets kind of interesting here, because Alcoa is reiterating its prior projections for both alumina production and shipments and aluminum production and shipments for the full year of 2026. That said, you're going to see some more noise here in the current quarter. So Q2 aluminum segment adjusted ebada. The company is expecting sequential unfavorable impacts, and this is tied to

that Middle East conflict. However, for aluminum, as we see those prices, those futures trading, at multi-year highs right now, Alcoa does expect sequential favorable impacts. They're talking about inventory repositioning and even though they have higher costs tied to Section 232 tariffs on U.S. imports of aluminum from Canada, the fact that you do have those aluminum prices that are elevated, they expect some benefit there as well. You guys were just talking about it. Supply shock commodity impact with Lizanne Saunders. Aluminum is another one of those commodities that is getting heavily hit here, impacted, at least the supply side of it, from the closure of the Strait of Hormuz. And so we're going to dig into all of that with Alcoa's CEO, Bill Opplinger. He's going to join us

in just a few moments to break down these results and his outlook for the aluminum market. And he's going to do that before he dials in with analysts. But as I just mentioned, shares are down about 5%. Keep in mind, though, we're up 180% over the past year for Alcoa. Yep. Morgan, see you in a few. Morgan Brennan. For years, Nvidia had been the darling of the retail investor and it paid off handsomely, but has the money moved elsewhere in search of the next big thing? Over time, be right back. Alcoa trading down about four and a half percent after reporting Q1 numbers just moments ago. The stock has had a nice run recently as aluminum prices rise after supply shocks from the Iran War fallout. Shares touching levels not seen since March 22 earlier this

month. Alunum futures hitting a more than four-year high today. Joining us now for an exclusive interview is Alcoa as CEO William Oplinger, along with our Morgan Brennan. Morgan. It's good to be on with you guys. And Bill, it's great to have you on the show, especially before you speak to the Wall Street community here, too. We just talked about it. A miss on the top and bottom line. You've seen some impacts here from this war in the Middle East. On the one hand, you have aluminum prices at multi-year highs. On the other hand, your ability to move alumina and bauxite through the Middle East right now is being hindered. So how would you lay out the quarter and what does it mean for the rest of the year?

So Morgan, it's so good to see you again, and thanks for having me on. When we consider the quarter, we essentially met the expectations that we had laid out in our outlook and met our own internal expectations. The quarter was strong from a safety perspective. Operations were strong, even in light of the conflict going on in the Middle East. We delivered $600 million of EBITDA. We executed on our strategic initiatives. and we're guiding to a stronger second quarter. And so even in the light in the face of some of the difficult conflict issues that we've seen,

we deliver a pretty good quarter and are expecting a better second quarter. Yeah, I realize there's a lot of uncertainty here, and you have a market more broadly that's being moved by every headline regarding the straight of poor moose. But in terms of what it means for the aluminum markets globally, what is your outlook? And even if you were to get the straight opens today or tomorrow, how quickly can that normalize? So the conflict is having, as you can imagine, a massive impact on the aluminum industry.

So if you step back, close to 10% of the production of aluminum in the world is inside the Strait of Hormuz. So that's roughly 7 million metric tons. Around 2.5 million metric tons of that has already come offline. What that means is that we're seeing a very tight aluminum market. It started the year tight, and with those curtailments, it has gotten tighter. However, as you noted, we have a big Illumina business, and our Aluminah customers, some of those sit within the Gulf.

We've been working with those Aluminah customers to make sure that we reroute that product outside of the Gulf. But at this point, we're not seeing any Aluminah going. into the Gulf. In terms of how long you think this tight situation will last, Bill, I'm curious. J.P. Morgan just had a note out today outlining what they think will be the impact based on the two Iranian strikes on the two aluminum sites in the Middle East saying that those sites, even if we're able to start today, won't be restarted for nine to 12 months. What do you foresee in terms of where we go on price specifically, given where we are now? So prices today are up around $500 a

ton versus what we achieved in the first quarter. So prices today are up over 15 percent versus what they averaged in the first quarter. I think those analysts are right that if the conflict were resolved today, it will take up to a year to restart some of that capacity and potentially even longer. As I said, we started the year in a fairly tight market environment at the beginning of the year based on a couple of curtailments that had occurred around the world, not ours, and strong aluminum demand. Now you have two and a half million metric tons that have been announced coming offline. And every day that goes by with this conflict, the remaining four and a half million metric tons of capacity becomes more at risk within the Gulf.

And so what we're seeing is that we really fundamentally believe that within, the U.S. markets specifically, many people are underestimating the tightness that we're going to see in the May June timeframe. Bill, given what's happened with prices, are we in the zone of having to talk about demand destruction or substitution or is that not really in play? It's a great question, Mike. And what we're seeing today is actually a pickup in orders. And so it is very difficult for us to bifurcate the strength of the order book that we're seeing, today that is based on the fact that people have to reroute or our customers have to reroute supply chains that were in the Middle East and they're looking for alternative supplies. So again,

you see the strength of the second quarter that we're projecting because we're picking up a lot of orders. And then, you know, at the beginning of the year, we saw demand being fairly strong. We continue to project even today that demand growth around the world for aluminum will be in the 1% range. But for us, we're starting to really see a pickup in short-term orders and for the entirety of 2026 based on supply chains that have been disrupted. Bill, we're having this conversation. In the background, you still have tariffs here in the U.S. And you just had those Section 232 tariffs actually amended. You talked about it in your earnings results about imports from Canada. How are you navigating it? And what does that mean in terms of

your ability to build out more production here, stateside, amid this? entire geopolitical conversation? So, Morgan, there's a lot of questions built into that statement. But let's go back to what I've told you for the last two quarters. Building capacity in the United States is really going to be based on low cost energy. And at this point, we don't see opportunities to build in the U.S. greenfield capacity because we can't get energy at the level that we want to get it at. With the tariffs that are in place today, we're paying over a big of the business.

billion dollars of tariff costs, but that is getting picked up on the revenue line because that is getting, that price is getting transition to our customers. And so we continue to bring metal in from Canada and fulfill orders in the U.S. Bill, great to speak with you. Thanks for your time. Go and jump on that call, Bill Ophinger, and of course, our thanks to Morgan. Brennan. We'll see you tomorrow 5 a.m. Morgan. Time for CNBC News Update with Pippa Stevens. Hey, Pippa. Hey, Melissa. The FBI is reportedly analyzing DNA. evidence from the home of Nancy Guthrie. That's according to ABC News, which reports the DNA was

just recently received. The 84-year-old mother of today host Savannah Guthrie was abducted from her Tucson House on February 1st, and police have so far not publicly identified any suspects. President Trump is nominating Dr. Erica Schwartz to be the next director of the CDC. Schwartz, who was also a rear admiral in the Coast Guard, served as Deputy Surgeon General during the first Trump term. There hasn't been a permanent director of the CDC since Susan Moneras was fired last summer after clashes with HHS Secretary Robert of Kennedy Jr. And Top Gun 3 is officially in development with Tom Cruise set to return. Paramount made the announcement during CinemaCon today. The 2022 sequel Top Gun Maverick is the highest grossing film of Pruse's career, bringing in $1.5 billion

at the global box office. Still no word on when the movie will be released. Melissa? I can't wait. I say sarcastically. You had to wait 34 years for the second one. I never saw Maverick. So, you know, maybe before the third one. I don't know if you're missing anything. Thank you, Pippa Stevens. Straight ahead. We'll turn back to Netflix, which is down big after hours on a big guidance. Miss Guy Dami will join us with the trade on the stock.

Is this a good opportunity to buy or do you pass? Over time, be right back. Welcome back. McKenzie Segalos is back with more on Netflix. So, Mike, we're hearing from LSEG that analysts are including the 2.8 billion-dollar breakup fee from the termination of its Warner Brothers deal in their estimates. That leads to an earnings beat of $1.23 versus the 76-cent estimate, nearly 50 cents. And then looking at its shareholder letter, Netflix saying that its ads business has been a major

monetization priority. They say their ads plan now represents over 60% of all Q1 signups in the markets where they're offered. And their ad buyers up 70% year over year. Also getting some color on how they're using Gen A.I. to make better recommendations for users. They also talked up their acquisition of Interpositive. That's Bet Afflix Film Tech Company that develops AI-powered tools for filmmakers. And then finally, engagement was a big question going into this print with some analysts modeling softer growth there.

The company says their internal engagement record reached an all-time high, but they don't actually say what it is, certainly raising questions like it did with your guest earlier. Mike? All right. Mack, thanks, Mackenzie Seagallos. Joining us now on how to trade Netflix in the back of these. earnings. Let's bring it fast money trader, Guy Dami. Guy, the stock is down a swift 8%. I'm here to talk about Netflix. We hope so. Oh, I wish the producer, I'm kidding around.

I'm messing around. All right. So let's be crystal clear. Last night on the show on inter earnings, I thought you got to stay long Netflix, just so we understand each other. That was clearly wrong, given the after-hours move. I totally get it. But you look at the quarter and you say operating income, great numbers up 18% year-over-year, margins better than last year. Even their ad revenue, I think is up like 30% or so year over year. I mean, they're doing things well. Two things, in my opinion, are why the stock is going lower. Reed Hastings, number one, and they sandbag guidance number two.

Because if you look at the quarter, I think it's fine. Did you see anything in that quarter that disappointed you? No, I mean, it's not even giving back what it's up this month. Fair. So I think that's obviously part of it. I also think people own Netflix, and it's this core growth stock position because it's such a clean story. It's just like, got this network effects and there's no surprise. prizes. And I think that therefore it causes people anything that looks like a hiccup inside the

numbers. The reason to question. I think that's fair enough. And I'll say, I mean, given this move and given what I just went through, I think this quarter is fine. I think the guidance is a little bit of sandbag. And obviously, the Reed Hastings thing is maybe a little bit concerning for people. I think they'll get over it. I don't think valuation is stretched. I think it shows that Netflix is still, they're in the poll position. They've never really left the poll position. I think that whole acquisition noise around the stock for the majority of last year clearly concerns some people, but we're through that now. So I think you've got to be long Netflix. Well, even if you rewind to prior to that WBD, there were concerns about the Netflix story then.

So it's not like anything that's happened since. I agree. It's alleviated those concerns. And it was June of last year when Tom Rogers was sitting right there, if you recall, I know you remember this. You have your notebook. You write things down. He had been bullish in Netflix forever. And that June quarter gave him some pause.

and he was concerned about it, and he was spot on because that was a high. Now, I think it overshot to the downside, and the fact that they thought they needed to make an acquisition, I think concerned people. But in my opinion, we're through it, and I think this shows that Netflix is still best in breed. Yeah, I mean, I guess the other counter argument is just not even that they needed WBD, but that there's a level of maturity, and they don't have quite the head start they had, you know, in past years, and maybe the competition has better scale at this point. But, you know, that remains to be seen.

is, I think, a reason why you can start to, you can question valuation. If that is, in fact, true, I get it. I'm not there yet, but I understand what people are looking at. You're going to be setting the price on sports rights and all the way. The World Baseball Classic, which I did not watch, they crushed it. You know what I watched just now? The freaking Yankees getting smoked in the Bronx. If you were taping the game, don't bother.

Sorry, Mel. I know you were going to watch it later. Stop on the VCR. Guy will see you. Yeah, you'll see him. 15 minutes or so. And speaking of earnings, will they be enough to keep this market moving higher with stocks at all-time highs? We'll dig into that next. Welcome back to closing bell overtime shares of Pepsi, closing higher after the company reported a solid earnings beat and returned to volume growth in its North America food business. The division had been suffering with revenue at its Frito-Lays division turning negative in 2024. That's the first time in a decade.

Analyst attributed the drop in large part, I should say, due to Pepsi's recent price hikes with Doritos at the center of the conversation, the price. of an average bag rose nearly 50% in four years to an average of nearly $6, with some areas seeing prices of more than seven, like in New York City. In February, the company announced it was slashed prices by 15% on some snacks, including Doritos after pressure from Elliott Management. The CEO saying today that affordability initiatives have helped improve performance in the quarter. The CFO, though, on the call did talk about inflation to come. Yeah. This notion that inflation is out there, it will trickle down into prices, and we are assuming that we are going to see that again.

Yeah, I mean, that chart showing negative volume growth for like five straight years is very telling. They have to obviously become less aggressive on price, but maybe there's limits to how much, you know, they can give on that, given that they're going to have to absorb. Right. Although they are trying new products to cater to sort of the new taste and the demands of the market, like smart food fiber. Sure. I think that's what the industry calls innovation. Yes. Very innovative.

Yes. Alchemy, turning, turning. What was their phrase, fun for you and good for you and all that stuff? Yeah. Well, meantime, stocks have had a record run. 12 up days in a row for the NASDAQ markets hoping strong earnings will keep the momentum going. With us now is Darrell-Fargo CIO for Wealth Investment Management, President of Wells Fargo Investment Institute. Darrell, great to have you with us.

Thanks, Melissa. Good to be good to be. It's interesting because it seems like analysts were pretty excited about earning season overall in terms of estimates being fairly strong. Markets are at record highs. And yet we are starting to see the commentary like what Pepsi was saying, inflation to come. And we don't know how that's going to translate into prices. We don't know how that's going to translate into consumers and hitting consumer demand. That's very true.

Maybe more people are just eating Doritos because they're taking GLP ones, right? And you can offset the two or something. Only need one. Yeah, exactly. No, look, the bar is certainly high, right? And we know that coming in, 13% earnings growth for this quarter, sixth straight quarter of double-digit earnings growth. You assume a 3-4% beat on that, which you normally get in an earnings season.

You're talking mid-teens earnings growth again right now. But I think what's really important, what you see showing up in stock prices, it's all about forward guidance. Everybody expects this quarter to be a solid delivery quarter. We know it's good. I think what's really encouraging there is when you look at revenue growth, right? Revenue growth at 8, 9, 10 percent across the index and across many sectors. Boy, if I can drive that through operating leverage down the income statement, you can sustain

some really healthy earnings numbers for quite some time. I mean, just to knit together, the conversation we were just having, I mean, it feels like the markets are kind of geared for this high nominal growth type backdrop. Yes. Clearly, you know, yields can't stay down, Treasury yields. And the question, I guess, is if we're talking about 3% running, rate consumer inflation. Is real growth two, two and a half on top of that? You're getting more of it from inflation than from real growth. Is that okay? Well, it's interesting. Mike, we're just

having that conversation right today. If you go back years ago, I've been in this business of 34 years, the nominal GDP growth should equal the 10-year year year. Yeah, that's one of those rules of them. Yeah. Like, so if you think about that, you know, rates should be going higher here. If we can settle the Iran conflict, you know, you know inflation premiums are coming. up on the long side of the curve. Growth premiums as we move out in the summer will probably continue to come up alongside the curve. If you look at the term premium alongside the curve, it's basically flat, right? It's not gone up in a full year. So we would say yields need to be higher. I think the important point for equities is at around four and a half, four and three quarters on

that tenure. You get much above that and it really starts to give indigestion to equity prices and earnings growth. So I think rates, you know, everybody is fixated on oil prices right now. to me are the great underappreciated element here as we move into the summer and the fall, because all of us equal, they should be higher than a 430 tenure. How do you feel about the recovery that we've seen in stocks with stocks currently at record highs? I mean, do you feel like it was too far or too fast and without that sort of traditional capitulatory action that we all expected to see? Yeah, we didn't get to the 10% correction. We got down a little over 8% to 9%, but recovered in 11 trading days has been well documented from the trough. That's one of the fastest

recoveries ever on record. So that's good. Positioning was off sides. We needed to square it, right? It got squared. I think it's tougher from here, right? It's hard to get to 7100, 7,200, 7,700, 7300 on the S&P. Financials and tech are 46% of the market cap weight. So they've got to play, right? We just upgraded tech on April 6th, about two weeks ago now. It's already up 11% and we funded it with energy, took energy to an underperform. When, we're, we're in, we're whale was 110. It's already down 5, 6% on the GIC sector and energy. So that's a 15% Paris trade in two weeks. There's been under the surface a lot of movement. Right. I guess the question is whether we just had our expected midterm election gut check and it's okay from here. We got it ahead

of us. We'll have to see. Darrell, good to see it. You too. Thanks, Mike. From Wells Fargo. All right, the International Energy Agency issuing a dire warning about jet fuel shortages from the war in Iran. What could, what that could mean for the airlines and the global global economy straight ahead. Closing bell overtime live from the NASDAQ market site. We'll be right back. Welcome back to overtime. A new warning about jet fuel shortages could cause major problems for your summer travel plans. Phil Leboe has the details. Hi, Phil. Hey, Mike, here's the warning from the International Energy Agency today. They believe that there is just a six-week supply of jet fuel remaining in Europe. That means the fares that have already gone up, they're likely to rise even

further in the weeks to come and expect schedules to be trimmed by some of the airlines that are there. This chart says it all. Northwest European jet fuel. It's the most expensive relative to the Mediterranean, relative to the U.S., up more than 150 percent this year. I mentioned schedules being trimmed. Air France subsidiary, KLM, has already scrapped 160 flights that it had on its schedule for this summer due to fuel costs. We may see more. And quickly, I want to take a look at the airlines here in the U.S. who are going to be reporting next week because jet fuel is. is going to be front and center when we are talking with these CEOs next week. Bottom line is this, guys.

This warning should be a wake-up call for everyone that we could see higher airfares as the airlines adjust around the world starting first in Europe. All right, Phil, thanks for LeBeau. We were just talking about rising prices. Everything is going up at this point because of the war. Right. And even though the commodity prices are off, their highs, we don't know how they're working their way through. Exactly.

Corporate numbers and earnings reactions and all the rest. That's going to do it for overtime today. Fast money. We'll start right after this quick break.