Closing Bell - Rising Yields Test the Rally as Investors Rethink Risk 8/18/26

Episode Date: August 18, 2026

Markets turn skittish as rising Treasury yields and oil prices challenge investors’ willingness to chase stocks near record highs. Priya Misra of JPMorgan Asset Management breaks down the bond market selloff and what’s driving the move. Liz Ann Sonders, Chief Investment Strategist at Charles Schwab, explains what higher yields mean for equities and whether the market can continue to climb. Technician Jonathan Krinsky of BTIG argues it may be time to pare back risk. He breaks down the technical picture and weighs opportunities in financials and energy as market leadership shifts. Plus, Toll Brothers earnings with John Lovallo of UBS. 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 training day at the NYSD, truly bringing the closing bell and at the NASAC, innovative air systems closing out the training day. Welcome to closing bell overtime. We're live from Studio B at the NASAC market site. I'm Melissa Lee, along with Mike Santoli. Stocks lower across the board with tech getting hit particularly hard. The Dow with a loss about 120 points, S&P 500 down more than a half a percent. The NASAC losing one and a third percent, third day of declines for the major averages.

Chips and in particular memory getting hit hard. Invidia down a couple of percent. Micron, AMD, and Sandus. with even bigger losses. Those AI jitters extending to the momentum names around AI. That includes a 13% drop for Credo technology. And once again, the bond market weighing on tech as a 30-year gets to another 19-year high. We'll get more on bonds with Rick Santelli in just a moment.

And oil prices holding steady today despite what seemed to be fading hopes for a peace deal with Iran. And it seems like, you know, you have this problem with yields. And that's the first excuse for DRAM to pull back. It's interesting. I mean, it is a handy excuse, if we want to put it that way, for a market that was up 6% and 12 trading days coming into this week and having had a furious rally in the oversold chips to have a little bit of a backup. What is interesting is yields didn't make any further headway over the course of the day. It's mostly real yields, meaning it's not really inflation expectations flaring up. So I think it's a warning shot without a doubt, and it mostly says what we already knew, which is the world is consuming an enormous amount of capital and the bond market has to wrap. passionate to some degree. So that's what we're, I guess, mostly seeing. What's interesting to me is

the S&P tried to stick at 7,700. We first got there on the fourth, that's last week. That's the day that WTI oil closed at 75 and 10-year, we're at 462. So we're up in both, and stocks are trying to withstand those macro pressures. Yeah, and what do we see offset technology? We saw IBB at a five-year high. XLE, energy, health care also did quite well. Yeah, Mega Cap health care did extremely well. And even within tech, it shows you this kind of seesaw dynamic or Apple is up. And even Microsoft is up because it's kind of relative defense against the semis. Exactly. Let's get more on that continued move higher in yields Rick Santellis in Chicago for us.

Rick. Yes, it is somewhat incredible that everybody is talking about yields today on a day where U.S. yields are actually coming down a bit, but not true across the globe. Let's look at a 12-hour twos and tens. You can see that the 10-year percentages are bigger. It's a curve flattening day today. Flattened about two basis points. You're down two and a half basis points or so in a 10 year. You're basically unchanged, just slightly lower in a two year.

Let's stick with that two-year theme. The high yield close for the two-year is 723, July 23 of 435. So if you take that and go back word in time, that yield was the highest going all the way back to February of 25 on the tens. Once again, 731 continues to be that. high yield. We intraday traded above that 473 and a half, but we're not going to close above it, or at least it certainly doesn't look like it. But should we, we'd be going back to January of 2025. Here's Japan. They were the leader today. Their yields getting closer and closer on their

10-year to 3 percent, 30-year high. And if you look at Germany, around 3 and a quarter, 15-year high, France's 10-year, around 411 and 18-year high. So there's definitely pressure. But one thing, nobody seems to be talking about that could even be the negative aspect of the U.S. that we should pay more attention to, and that's the fact of how many T-bills we've been issuing. I'm going to talk about that on fast money, a little after five this evening, but in the last 15 years, monthly tea, excuse me, weekly T-bill issuance is up. Get this. 300%. That's something I think we need to talk about the government's floating, basically, their debt at a time where rates are going up, where any homeowner knows when rates are going up, you should be fixing your debt.

They should be issuing more coupons. Melissa, Mike, back to you. This is happening, though, elsewhere, too, rec. I mean, the UK has basically canceled schedule issuance of the longer dated end, too. So everybody is going to the shorter and hoping maybe magically rates will come down. Everybody but Germany. Right. Everybody but Germany.

You're right. Italy, France. They're all doing it for the same reasons. They just are praying that rates go down so they don't lock in higher rates, and it's working against them. Germany, Germany has the lowest debt to GDP, 65%. Half of what most other advanced economies have, and you're exactly right. They don't overissue T-bills. There is something they passed in 2009, and that backstop for rates is really working,

and they have some financial responsibility in Germany. I wish that the U.S. and some of the other economies would demonstrate. Yeah, it's obviously hard in the moment for these government issuers to pay up front, because obviously we have a positive slope yield curve, even if you know it's probably better to lock it in over coming years, Rick. Thanks so much. So can we expect this global bond sell-off to continue? And what will it mean for central banks around the world? Joining us now is Priya MISRA, Portfolio Manager at JPMorgan Asset Management.

Pretty good to see you. Thanks for having me. So, I mean, kind of jump right in there. On one level, we're maybe getting made uncomfortable by where longer-term yields are going. On the other, it occurs to me over the last three years, the 10-year has spent all of 10 weeks above 4.6, right? In other words, when we've gotten to these levels, it hasn't necessarily been the beginning of another leg higher. Can we expect different this time? Yeah, I think we're at that inflection point.

The fact that risk assets are now paying attention is telling me that, I don't know, for 70, 480, what's the that magic level, but you can tell the broader economy, you know, to your point, why haven't we been gone higher is because the inflation dynamic is coming down. We're still seeing supply-led inflation. We're not seeing demand-led. That's why the Fed cut for the last two years. I don't think they're cutting rates, but there's a big question around the Fed reaction function. If they clarified, I think some of the pressure on the long end can stabilize. Now, to your earlier discussion, there's just a lot of competition for capital, whether it's sovereign, whether it's AI, There's a lot of long end supply as well that's coming from the AI side.

And I think we'll be watching that. There's been a lot of supply. It's been taken out just fine. But as there's more, if there's more in September, October, there may be some more pressure and rates. But I think there's a self-limiting component because there are introsensitive components of the economy that will start to slow down. We saw bad housing data today.

And if that can continue, I think that's what puts that, it's a push and pull. And, you know, I do think we're nearing that peak, given that this has been long. end rate driven, real rate driven. And look at the fundamentally economic data. It actually does not support Fed rate hikes here. We've had slightly weaker payrolls, weaker inflation. So I think we're sort of nearing that price clearing event. What is going to be sort of that grist in the wheel here?

I mean, in terms of halting the march higher on yields, I mean, is it to the point where it'll just get too expensive? And so on the issuer side, and we already saw a monthly record, I think, in August, on Monday, on the issuant side, the yields are too high and we can't spend that much. I mean, where does it come from? We know the governments, we need to keep funding or spending, so that's not necessarily going to stop. Right.

So on the supply front, I struggle a little bit to see what, you know, governments have to issue. They've got right from energy, security, independence, defense, they've got all of that to fund. The AI issuers, if they're getting 20, 30 percent return on investment, another 50, 100 basis points is not enough for them to slow down. So I don't think the supply necessarily. reduces, I'm looking at the demand side. We're continuing to see inflows into bond funds. I think people are looking at all in yields of six, seven percent without going down in credit and saying, actually given equity valuations, maybe I do want a balanced portfolio. And for all of the angst around interest rates, if you look at the ag this year, it's down half a percent.

So, you know, you could have been in a bond index, not lost a lot of money. So I think the demand side is one. You're asking about the circuit breakers. I think that's one. I think the Fed clarify. I don't think the Fed is in the wrong place. But communication has been muddied. I think if the combination of the minutes tomorrow, maybe Jackson Hole next week, if we hear from Chairwash this credible way that they can get inflation back down, that they're serious, they'll hike if the data makes them hike. I think then some of the angst around is this a political Fed or independent I think that can start to come down. And then we're watching global rates. You talked about Japan. Does the BOJ hike? I think very likely they hike. And what does Japan do with fiscal

And then if you can get some stability in global bond deals, I think that creates that stability in the U.S. too. I know you were kind of evoking 2023 as something that maybe this seemed a little bit like when longer term yields went up. I saw another analysis today that if you look at the weeks after a Fed meeting and you see two-year yields come down and tens and thirties go up, you see this twist action, that's what happened in 2023 because the market was saying, well, the Fed's less hawkish than we thought it might be, or maybe it's even accommodated. versus the economy, and yet we have to at least price things on the long end as if, you know, whether it's inflation or it's real rates, we have to account for something like that. Now, rates didn't stop going down at the long end back then until stocks took notice, and they actually had a big pullback. Right.

And I think we might be at that point now. I feel like the last few days, you all have been talking about the bond market when you look at the broader risk sentiment. So we might be getting there. I think financial conditions are paying attention to bonds. And I think people are just thinking about, you know, is the economy really not sensitive to interest rates? And parts of the economy are. So I think the 2023 comparison is actually more where we are now than 2022.

Where at that point, the Fed was so off-sides. They had to hike, you know, 500 basis points. Now, even if they hike, the market's pricing in two hikes. So we're already, we've baked in the hikes. I think a credible Fed looking at the data, explaining that, you know, they don't really need to do a whole lot to get you know, inflation back close to target, I think that will reduce some of the agita that is in the bond market here. Is there any part of this move higher in the long end of yields that feels a little unmoored to you or irrational? I mean, we've been up 40 basis points since the end of June on the 30

year alone. Right. And it's been driven by real rates, which is odd. Because if you look at the economic data, whether it's inflation, whether it's growth, that's not very obvious. So it feels like the market's pricing in this higher risk premium because of all of the supply coming. And at some point, that hits the self-limiting point because it starts to slow either resentment or the economy longer term. It just takes a while to show up. So I do think some of the move in the long-end real rate, I mean, these long-in real rates, forget about the post-GFC time period. We're back in the late 90s. We've gone back to those levels of rail rates.

So I think these real rates, that's where we find value in the bond market. I mean, there's a lot of value between credit between these real rates. There's opportunities across the board. Yeah, I was going to say, if you believe the market's pricing of inflation over that period of time, the real rate is compensating you, I guess, for holding. Yes. And if you think AI is this disinflationary in the longer term, medium term, you know, mode, then actually these real rates can be extremely attractive.

That helps. Priya, thank you. Good to see you. So how will a rise and yields impact the stock market? Could it put an end to this record rally? Joining us now, Schwab Center for Financial Research, Chief Investment Strategist, Lizanne Sonders. Lizanne, great to see you.

So as an equity investor, you're riding high in the markets or defending 7,700, we're close to all time high. I mean, should this worry us? Well, I think it's part of the reason for some of the weakness you're seeing in the longer duration segment of the equity market. You know, there's several factors when you're looking at bond yields and the influence it has on stock prices. Some of it is level. I think there's psychological levels like 470. Some of it is speed of move. And we haven't had that rapid a move.

But directionally, we're heading in the wrong way. But also the shape of the yield curve right now is still large. to the benefit of both the economy and the equity market. So I think it's a multiple of those three forces that you have to judge as a feeder. That said, we're in negative correlation mode between the 10-year yield and the equity market. And I think we're going to stay there in a somewhat secular way, further distinctions from the Great Moderation Era, where it was the opposite. Right. So that would mean we're kind of flipping back to the pre-2000 period where you did have, you know, essentially stock and bomb prices.

move roughly together. What does that mean for? I know that it's kind of a loose relationship over time in terms of what a given level of bond yields might mean for equity valuations, but folks try to, you know, make a science out of it, I suppose. Yeah, I mean, actually, the thing that is a bit more correlated to equity valuations, both range and level historically, and this drives bond yields, but it's inflation rates. So we've looked at data over decades in looking at various ranges of the CPI and what the average low and high has been on a forward PE basis for the S&P 500. And the sweet spot, maybe not coincidentally, is right around that 2% CPI range. Of course, again, that feeds into bond yields, but that more direct relationship

comes through the inflation channels. And Lizanne, we're at a period where we're looking ahead to the midterms, and typically this is a period of volatility. And I'm wondering how you think this all factors in. We have higher rates and then we have higher gas prices. We've got the midterms. And what do you think that does to this rally? I'm not a big believer in seasonals, election related or otherwise. I think there's kind of back pocket things to be mindful of. But maybe I would phrase it in saying that to see about a volatility here or some continued weakness or pockets of rotation, it wouldn't surprise me at all, given everything that you mentioned. I think that's there is heightened sensitivity to energy prices, more so than even a few months ago, because

stockpiles have been drawn down more significantly. Savings rates have been drawn down more significantly, so that feeds into consumption patterns a little bit more. So a bit more heightened sensitivity and just then the emotional toll that a contentious election like this takes. And that's one thing that's we've been reminding investors is try to keep your emotions in check in an otherwise very emotional time as we head into the midterms. You mentioned, Lizanne, pockets of rotation.

It feels like all we talk about on a given day is exactly which direction these rotations are moving. And today we had another one of these examples where, you know, semiconductors down for whatever reasons or none at all. And the rest of the market picks it up and apples up a percent and a half. And I just wonder what it says about sort of the tactical drivers of the market in the short term. Well, I think momentum has been, I mean, rotation has become the new momentum trade. So you have so many more short-term players that are now playing just the whole narrative of rotation. And the shelf life of the narratives driving those rotations has collapsed to a large degree. I think the difficult thing for many investors, even though from a trading perspective,

it may seem like it's right for trading opportunities trying to get ahead of that, I think, is a really difficult task. What to me, this suggests to investors is they think about volatility-based or rotation-based rebalancing, where you maybe pick up the pace of rebalancing, don't have it be driven by the calendar, and take advantage of these rotations by staying in gear, by reacting and, you know, adding low and trimming high as opposed to trying to get ahead of it, given how short the shelf life is of some of these narrative changes. Lizanne, it's always great to see you.

Thank you. Good to see you, too. Thanks. Lizanne Saunders of Schwab. Coming up shares of Bidu posting their worst day in five years as a company deals with a threat from AI competition and the cost of trying to keep up with that competition. Meta also hit by AI spending concerns, but it may have even bigger issues. The details coming up on closing bell overtime, live from the NASAC market site.

Welcome back, Kalshi, looking to expand its offering in perpetual futures. It's filed with the FCFTC to launch a perp tied to a stock index, essentially the S&B 500. It already has approval for perps tied to cryptocurrencies and is planning to launch perps tied to gold and silver as well. Shares of exchanges such as CME and CBO fell in early June on Consumption. that these products would be competition, but they bounce back from the lows. We should note that CNBC and CalC have a commercial relationship, including a minority investment. We should know too. CME was actually hired today's session, and they have a slate of all sorts of other products that they're offering to, to sort of get that retail, fast

trader into their sites. Trying to counter it. Of course, he may also trying to counter it legally in suing to have the CFTC disallow these perps as a really just sort of a regulatory work around. CME's argument is these are not futures, therefore not CFTC approved for nationally use. There are swaps. I actually see the kind of merits of either side. So we'll see how that plays out.

CME and the other exchanges were all up today. They almost trade as sort of along with software a little bit, like anti-tech hardware, but we'll see if that was one of the reasons or not. Shares of Bidu having their worst day in more than five years after missing on second quarter earnings and revenue with profit dropping 60. percent year over year. The company's search engine business has been hit by AI competition. And while it's been spending a lot to beef up its AI position, so far, investors seem unimpressed with the results. The company is expected to spin out its chip unit and listed in

Hong Kong this year. Stock is down 30 percent so far in 2026, 13 percent today. I mean, I don't know, maybe this is a glimpse of what Alphabet would look like or Google would look like if it didn't have its own kind of AI play in a big robust way or cloud business. Right. You feel like the existential question about, you know, the hyperscalers here have finally made it over to China. We should note that half of its revenues in Q2 were AI-derived revenue. So it's not like they're not making money, but the question is the return on the investment at this point, especially with Quinn making all the headlines. So is that return there? And just the pure search business seems like it's over time maybe going to get displaced.

Yeah, so a lot of the same questions there. Coming up, we are waiting results from the Home Builder Toll Brothers due out shortly. And they comment as Home Depot CEO says the housing market may be frozen. We'll take a look at the state of housing coming up on closing bell over time. Welcome back. Shares of META down 4% today as a landmark trial kicks off in California. The company is accused of building Facebook and Instagram to addict children. Meta could face potential penalties of more than a trillion dollars

and be forced to make fundamental changes to the way its social platforms operate, including the removal of limitless scrolling. And that's not the stock's only issue as it continues to face scrutiny over its AI spending a little more than a month ago. It started an 11-session losing street, culminated in a big sell-off following its results. The stock has bounced back. What is trending lower once again? And speaking of spending, Mike is taking a look at some trends where companies are using their cash.

Yeah, the Bank of America Global Fund Manager survey every month. Today, the grand conclusion was, manager, very bullish. Within it, they always ask, how would you prefer companies to be prioritizing their uses of cash? So here are two of those choices. improve balance sheets or increased capital spending. Well, what we see here is those saying that they should improve their balance sheet and maybe deemphasize CAPEX has just surged above increased CAPEX. So clearly, shareholders are saying maybe enough for now

or maybe you want to have an eye toward exactly what this is going to cost in the long term. In fact, increased CAPEX is really at the lows you've ever seen here. So I guess people feel like that's enough. And the other times when they wanted companies to improve their balance sheets, that was like macro crisis. That's COVID. That's the global financial crisis. So it does show you that maybe investors are going to start to push back a little bit. Is this where we saw a lot of the cap-exp spend being announced? Right after it, I think. Right after it. Yeah, I think it was kind of right in there would have been when pre-track GPT.

What is interesting is over the whole kind of course of that sort of aftermath of the global financial crisis, when everybody's buying back stock and everything else and they didn't want to reinvest in their business, investors were telling him to do it. And they weren't doing it. I should mention the other choice here is return cast to shareholders, but that hasn't really changed too much in trend. All right. Time now for our CNBC News Update with Kate Rooney. Hey, Kate. Hey, Melissa. The U.S. Forest Service says it's filing a proposal to rescind the 2001 roadless area construction rule. It restricts road building and logging across nearly 45 million acres of wilderness in the U.S.

President Trump has pressured the agency to increase logging in wilderness areas and to thin forest to prevent wildfires. Environmental groups are expected to sue. Meanwhile, on the U.S. today, the U.S., I should say, imposed sanctions on the president of the International Criminal Court and a senior trial lawyer there. Established in 2002, the court prosecutes war crimes, genocide, and crimes against humanity. The U.S. is not a member of the court. Secretary of State Marco Rubio said the sanctions are the result of the court investigating and prosecuting officials whose governments have not consented to jurisdiction. And finally, TikTok is reportedly exploring a feature that would let users send money to each other in direct messages. Bloomberg reports it would use a TikTok pay feature that's already

being used in parts of Asia to handle the transactions. TikTok tells the outlet it isn't being tested in any market yet, suggesting it's very early in development. Watch out Venmo guys. Back over to you. Kate, thanks, Kate Rooney. The financial sector is up for a record 11 straight weeks up next will break down the chart to see whether the sector will keep rallying or whether you should start taking some profits. Closing bell overtime. Be right back. Stocks falling today. Third straight day of losses for the major averages. The S&P 500 failing to hold the 7700 level with this recent volatility in the market. Is it time to start looking at some hedging strategies? Joining us now is Jonathan Kronski from U.S. Bankrupt,

BTIG. Jonathan, it's good to have you. I know you've been mapping out this very persistent dynamic in the market where we just sort of rotate away from danger and something is always managing to support the indexes, whether it's the equal weight when semis and mega caps are selling off or vice versa. Seems like you think maybe we can't count on on that continuing so painlessly for a while. Yeah, hey, Mike. So something we look at that you're well aware of is you can look at the percentage of stocks in the NYC that are declining, the percentage of volume in NYC stocks that's declining on a day. And typically on any given year, on the average year, you see 21 days where you see at least 80% of all NYSC volume in declining stock.

So that's kind of that correlation one day where every sector is down, that sort of thing. We've never had a year where we've had less than five of those days. This goes back to 1996. So far this year, we have not had a single day that's been more than 80% downside volume. And to your point, we just keep getting this offset. Yesterday you had semis, we're up big, and breath was one of the worst breath. days in the last couple months for the S&P, and then today's semis are down big, and you actually had S&P breath green. So it's just this constant, I would have been calling on a musical chairs,

and we think, you know, eventually history says the music likely stops, and you just don't want to find yourself without a chair. There is one group where you think the music might stop financials that are up a record 11 straight weeks here. So what do you see with the chart here? Yeah, so that's the longest streak in history for the financials surpassing. There was a nine-week winning streak back in 2004. Now, just because it's up a lot of weeks in a row does not mean it's an automatic sell, but I think when you look at the chart, it's bumping along this resistance trend line that's been in place for the last decade or so. And when you combine it with the fact that the overall market, you know, to us again, looks vulnerable. We highlight that

in midterm election years, the equal weight SMP 500 has seen at least a 7% drawdown in the August to October period. Every time back to the time back to the year, in 1990 with the exception of 06, which saw that in May to July. So I think that, you know, the setup, seasonality speaking and the fact that we haven't had that correlation one sell-off, you want to be certainly looking to reduce exposure in the market broadly at this point. And energy, it's top sector so far this month. Oil prices, of course, have rebounded. So how do you play the sector, especially given, you know, the XLE did clock a new high today? Yeah, and I think that's a good point. That is one of the reasons why

we haven't seen an 80% downside day this year because if you go back to March when the overall market was down, it was because energy was up, right? And so you've had that offset there. When you look at the chart of XLE and XOP, the E&P producers, I mean, it's a pretty strong chart. I think our hesitancy is that there is a lot of headline risk, right? You can be a tweet away from, you know, a rug pull on energy. But I think the fact that the energy stocks have done so well, given, I mean, let's be honest, crude oil, it's not falling a lot, but it's not back at $100. And so I think the strength in energy stocks in the face of a moderating WTI price is certainly worth watching here.

What do you see for refiners, though, specifically? Well, refiners are definitely the probably even the bright spot within energy. So, you know, they have the momentum even within a sector that's been doing well. We don't have any specific comments on them, but I don't think that's the area that you want to be putting new money to work just because it's, you know, it's, you know, had such a good run here. And then, Jonathan, in terms of the bond market and treasury yields and whether, in fact, we're looking at just then bumping up against the bit of a ceiling here or about to break

out, any indications? Well, look, we've been saying if you look at the chart of 30-year U.S. Treasury yields, if that was a stock, we'd be an aggressive buyer because you had three years of it bumping up against kind of the 520 level in 30 years, and then it just spent a couple weeks above that and is now pushing to the upside again. So, you know, just from a purely technical standpoint, you want to be favoring higher long-end rates. I think the 10-year probably matters more to U.S. to equity markets. We haven't made new cycle highs yet there.

So if you get 10 years above 480, 45, and as always, it's the velocity of the move. You know, if you get that in a swift manner rather than a grinding manner like we've had, that's when I think stocks will notice. But, yeah, I think you continue to want to give the benefit out to the upside on rates. So on the 30-year yield, I'm just curious. What would the price target be if it were a stock, Jonathan? Well, I think 6% on 30 years is not out of the question if we get a swift move. And I think that's what would really surprise investors.

So again, it's tough to make that call at this point. But I think if you're at 520, I think 6% is more likely than, you know, 4.5 on the downside. Yeah. Maybe have to reload for another move high, but we'll see how it goes. Jonathan, great to catch up. Thanks. Thank you. Disney launching a First Amendment fight with the FCC over what it claims is an attack on free speech,

details on the potential impact on the media giant stock straight ahead. Toll Brother earnings are out. Diana Olegs got the numbers. Diana. Well, there's a beat on the top and bottom line for Toll Brothers third quarter. That is the luxury home builder. EPS came in at $2.97 to share versus estimates of 293. Revenue at $2.65 billion versus estimates of 2.608 building. And adjusted gross margin came in at 25.6% versus estimates of 25.25%. As CEO Carl Mystery said they delivered solid results in a challenging market, he also said this underscores the strength of our luxury brand, the resilience of our affluent customer base.

We've been talking a lot about how the affluent consumer is doing much better in the housing market and the higher end of the market is performing well. The rest of the housing market, not so much. deliveries were a little bit like 2,662 versus estimates of 2,675. Q4 guidance on deliveries was in line. And I would note that while Toll Brothers is not hugely mortgage dependent because of that affluent customer base, we did see mortgage rates in that quarter start May 1st from 6.44% according to Mortgage News Daily and ending the quarter at 6.83%.

Today we're at 6.75, so still on the higher end. But again, Toll Brothers buyers are not as mortgage dependent. They're also not as sensitive to these types of moves in mortgage rates. Back to you guys. Yeah, therefore, I guess the affirmed guidance for deliveries in the quarter, not affected by that. Little moving rates, Diana, thank you very much. Shares of Buy Now Pay Later lender, Clarner,

Sinking after issuing weaker than expected third quarter and full-year revenue guidance because of softness in Germany at its largest market by volume. Clarna also announcing the departures of its chief financial officer and chief marketing officer. Down 23% on the day. I mean, it's came public a little less than a year ago. It's been just like a $50 stock toward the beginning of trading there.

You know, at the same time, we have these executive departures. Clearly, the market hates that. I think there's a lot of questioning as to just sort of what the edge is and buy an outpaid letter. It's kind of commodified. And I think it was in the Times. There was an article saying it's become the working capital for the middle class. Right. Like you just kind of have it going, even on smaller purchases.

doesn't mean it's necessarily a big growth business. I mean, there had always been the thought, you know, it hasn't gone through a credit cycle. And so what happens when it does? And maybe we're sniffing out at the beginning of one, possibly, where rates actually matter to the consumer. And all card issues seem to offer this. You know what I mean? Right, exactly. It's kind of not that special, yeah.

Exactly. Well, Disney filing a First Amendment lawsuit against the FCC, alleging the regulator's early broadcast renewal process is a result of retaliatory campaign over its programming. Julie Borson's got all the details here. Julia. Well, Melissa, this is a bold move by new CEO Josh tomorrow to push back on the FCC's early renewal process of ABC's broadcast licenses. Now, the FCC initiated the early renewal process after comments by Jimmy Kimmel about President Trump, which drew political backlash from the right. Dizzy's saying in its filing today, quote, the commission is using its regulatory power to retaliate against plaintiffs for programming and editorial decisions.

the administration dislikes. The FCC firing back with a response to the lawsuit saying, quote, Disney is obviously very concerned about the FCC's proceeding, as evidenced by their ongoing campaign of disinformation as well as their decision to ask a court to stop the FCC from further pursuing matters. I asked Disney's CEO Josh tomorrow last week about the company's battle with the Trump administration. He told me that Disney is going to stand up for what it believes is journalistic integrity and that he's not going to be told how to run that side of their business. Melissa? I mean, this whole thing seems to underscore the notion that it's got a bolstered streaming business. I mean, the streaming business is the area of Disney where the FCC would not have any

purview, correct? Well, look, I think that Disney does believe that it has a right to continue operating its linear business as it has historically. But in terms of the streaming business is a real growth area for Josh Tomorrow. He has talked a lot about how they really want Disney Plus to be part of this robust bundle with ESPN. They're bringing over more sports content into Disney Plus itself, as well as with Hulu with Live TV. So they're pushing that bundle, and they're really pushing streaming as sort of the destination for all things Disney. And I think we're going to hear more from him about that, and this idea of really trying to drive subscribers to that bundle and with that bundle, minimize turn. And to that end, in terms of thinking of what could be an alternative to

linear TV, DeMorrow did say and did break news in our interview that they are definitely going to be doing a free ad-supported version of the streaming service Disney Plus. So think about how that might give people a good alternative if they don't want to pay for streaming. Right. Julia, thanks. Julia Borsden. We've heard about making, you know, Disney Plus sort of the hub for all things Disney, this new ad supporter, and nothing, nothing is waking that stock up. No, it isn't? In fact, you remember last week, wasn't it, where an analyst said maybe they should get out of streaming. I mean, as if, like, owning the connection to the consumer is no longer worth the trouble. I'm not sure that necessarily flies or if Disney's going to buy into that,

but it does show that you got, they got to a certain scale. I mean, clearly it's still, it's profitable as a streaming standalone, but it's not an accelerant necessarily. It's kind of just mitigating some of the declines. I've thought for a while, that because of Disney's experience with ABC Network, that they've been kind of strategically shrinking its cost footprint over a couple of decades now. Maybe they can execute something similar with ESPN. I guess they are doing that.

It's just not enough of the street. I mean, it's a 14 times earnings now. I know. Very cheap. Yeah. And the question is, I mean, is it a value trap at this point as opposed to a value stock? So that's sort of the debate that's going on.

Home Depot CEO says we are in a frozen housing market. So is it time to let it go? when it comes to housing stocks, that is next. And housing may be frozen, but here are some S&B 500 stocks that are red hot and hitting new highs. Amgen, Marathon Petroleum, Philip 66, and Charles Schwab, closing bell overtime, live from the NASDAQ market site. Be right back. As our country celebrates its 250th anniversary, CNBC spotlights the leaders driving business and the nation forward. America's superpower is creativity. The ability to come up with new ideas, the ability to express those ideas,

and the ability to bring together people as one community through creativity, I think that's America's superpower. I'm Anil Chakravarti. I run the enterprise business here at Adobe. When I think of America as the land of opportunity for me personally, I am very grateful to America for all the experiences and success I've had and my family has had. I came from India when I was 21 years old. I had the privilege of going to MIT as a master's and then a PhD student.

America has been very kind to me. I went from being an aspiring scientist to an aspiring businessman. And, you know, only in America, you can go from doing one thing to saying, no, I want to do something else. And you know what? The country always gives you a chance. America's success over the last 250 years, one has been around the values of the founding of the Republic. Liberty for all the continuation of democracy and making sure that the expansion of rights to everybody. It has taken through its own twists and turns, through the civil war and through many other historical events to get there.

But those values have really sustained at the growth of America. Then you go back to creativity and innovation. It does have been critical to powering America's economy and society. To me, the American dream is the ability for anybody to build their own career, to build their own family, and build their own community. As long as you are putting your best foot forward and you are not taking anything for granted, you will have a tremendous amount of opportunities. Welcome back. Shares of Amalek's pharmaceuticals touring after announcing its experimental drug treating hypoglycemia in weight loss surgery patients met its primary and secondary goals in a late-stage trial.

The drug would be the first of its kind approved by the FDA, which could come later this year. He's trying to understand the mechanism of this. It kind of counters GOP-1 type activity? It's trying to suppress. Suppress. Suppress. Suppress. Right.

Right. Okay. So that the blood sugar can go higher. Got it. Okay. So it's the opposite. It was going to say it's the opposite of what you would want, GOP wants to promote.

Yeah. But I think, you know, yes, you can look at this individual stock, but overall, biotech has done extremely well. As you mentioned at the top of the show, five-year highs. It doesn't matter about rates. There used to be this old adage. Rates will kill. biotech stocks. That's clearly off the board at this point. And you're just looking at sort of the anti-AI trade, the trades that can go higher without DM.

Anti-AI, but also seemingly they're getting better at isolating certain things and having higher, you know, hit rates on trials. Exactly. Told Brothers reporting earnings moments ago was stock moving slightly lower after hours. While EPS and revenue came in above estimates, the CEO said it is a challenging market right now. This comes after disappointing July housing data. spending home sales dropping 2.3% last month below estimates. Housing starts fell more than 12% hitting their lowest levels in nearly four years, all while mortgage rates continue to climb. Home Depot, CFO, adding to the caution telling CNBC, quote, we continue to operate in what I call frozen housing market conditions. Joining us now is UBS Home Builders analyst John Laballo. John, great to have you with us. Thanks so much for having me.

It sounds like you, though, are starting to see signs of a thaw. Look, I think the most important thing that we've learned over the past month, and I would say this is across the housing complex, are there are definitive signs of stabilization. Now, I'm not saying recovery. I'm saying stabilization. And why that's important is if you think about a cyclical industry like housing, the market's not going to wait for that recovery to happen before they start bidding up the stocks. They're going to do it in anticipation of the recovery. When you get a better line of sight into where the bottom is, that's a very good time to get invested in these names. and I believe that we're very close to that inflection point.

Yeah, I was noting today, John, even though it was so much focus on where yields have gone and Mortgantrich are going to go. You know, the home builder sector today was down, but not tremendously. You just sort of wonder if it's kind of digested something around these levels. But, you know, you mentioned stabilization. What metrics are we pointing to to say we have stabilization in terms of supply demand? Sure. I mean, inventory has stabilized across key markets.

We find that in all of our channel checks and in talking to the public builders, the private builders. So think about markets like Florida, Texas and Phoenix areas that, you know, had too much inventory in 2025. I think a case and point is if you look at the housing start number today, the builders are doing the very rational thing. And that's pulling back on production in order to manage inventory. And, you know, you can say, well, that's not what the government wants. But keep in mind, Trump has been very clear at Davos, the state of the union, and in his economic report in April that he doesn't want to do anything to negatively impact existing home prices. And pushing volume into a market that's unreceptive would be very much against what he would

want. So in fact, the builders are doing what's good for them, but also what's good for the industry and what Trump is really looking for. I mean, clearly the administration wants housing affordability to improve, but at the same time as if what you're saying, the supply is not increasing because they're sort of rationalizing, they're seeing what this environment is and tamping down on production. If we do see a drop in mortgage rates, which I think is what the administration would ultimately like to see, that just drives prices higher, no? I mean, how should we think about that? Well, not necessarily, Melissa, because if you think about it, into Home Depot's comments, the part of the market that's frozen, I mean, I think you peel the onion back one layer.

The new construction market has been reasonably good at between 6,000 and 700,000 units per year over the past few years. That's the new home market. The existing home market has been frozen. at 4 million units over the past three or four years. That's at GFC trough levels. So if interest rates come down, we can start getting a little bit more inventory to come back into the market as this lock-in effect eases. And that will help kind of bring more inventory to the market and just got the flywheel moving where you start seeing more turnover across the entire group.

So lower rates, even if it brings back a little bit more inventory, is very good for housing. John, what did the first look at Toll Brothers results tell us about all that? Yeah, look, I think they looked really good. They beat it in the top line. They beat on gross margin. They beat on deliveries. And keep in mind, they beat their gross margin outlook in 15 in the past 15 consecutive quarters. They beat their delivery guide in 15 in the past 16 quarters.

So these guys just execute. And I think what this tells us is that the market, hey, maybe it's not quite as bad as people think. And, you know, everyone thinks of Toll Brothers as this luxury builder, beneficiary of the case-shaped recovery. But you know what? they build homes at 500,000, which are, you know, down looking at kind of first time and first time move up. So they really run the gamut. So they're a better gauge of the market than I think people give them credit for. All right. John, good to catch up with you.

Thank you very much. Thanks for having me. Let's get you set up with tomorrow's trade today. The minutes from the latest Fed meeting are the only item on the economic calendar, but we will get new reads on the state of the consumer when Target, Lowe's, TJX, Estee, Lauder, and Viking Holdings report earnings before the bell. I guess those Fed minutes in the afternoon, always stale. I do wonder if we're going to see evidence of this family fight, right?

That's what Kevin Ward says he wants. We'll see how much of that, if any of it actually happened, comes through in the kind of usually very kind of neutral description of the discussion at the Fed meeting. Yeah, but in terms of the earnings, I think Target's going to be most interesting. I mean, there's so much writing on this as the turnaround story, target over. Walmart in 2026 and will they actually see their they had a massive product refresh, perhaps one of the biggest ones, the broadest ones that they've seen in years. Has that paid off? Yeah, and the stock has had a great run. It's sort of a little bit of a pendulum swing back toward Target. Obviously, since the pandemic, it had a real rough run relative to Walmart.

So we'll see if the expectations were raised there and all the logic pointing toward better discretionary spend really does play out. That's going to do it for overtime today. Fast money starts right after this quick break.