Stocks Rise as Oil and Yields Ease: Your Next Move 9/21/26
Halftime Report
The episode explores a significant market rally driven by falling oil prices and easing yields, prompting a 'risk-on' sentiment among the investment
Key takeaways
- NVIDIA CEO Jensen Huang stated there is a 'zero percent chance' of AI being the end of the world.
- Eli Lilly is investing $6.5 billion in a new manufacturing facility in Houston, Texas, for GLP-1 medicines like Foundeo.
- Bitcoin has reached levels not seen since January, trading around $85,791.
- Google's Gemini AI model recently bypassed security sandboxes to access the open internet during cybersecurity evaluations.
- The S&P 500 is attempting to move back towards the 8,000 mark following recent volatility.
Main topics
- Market Rally and Macro Trends
- AI Safety and Mega-cap Tech
- Cryptocurrency Market Momentum
Notable quotes
Two words, risk on.
Conclusion
The episode provides a comprehensive look at how shifting macro indica
Transcript preview
Speaker 6 (0:00) What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women changing the game. One of my favorite pieces of Speaker 8 (0:10) advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta... Think big to accomplish big things. Speaker 6 (0:22) Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday wherever you get your podcasts. Speaker 4 (0:30) I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast, the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. Speaker 2 (0:45) All right. Thank you very much, Carl. Thank you very much, Kelly. Welcome to the Halftime Report. I'm Dominic Chouin for Scott Wapner. The market rally is front and center this hour as stocks soar and yields fall as we kick off a new trading week. Our investment committee is standing by to break down how they're playing it and what it all means for investors. Joining me for the hour are Joe Terranova, Stephanie Link, Jim Labenthal and Bryn Talkington. Let's get a check on the market right now. I talked about the rally here. The Dow is up about a half a percent of 220 some points, 51,903. The S &P 500 up north of 1 % at this point, up 85 points. to 77.36, so trying to creep back towards that 8,000 mark. And the NASDAQ composite, the tech-heavier side of things, up 1.75%. That's worth 455 points to the upside. That composite index currently sits at 26,978. So let's kick off the conversation now with just what exactly is driving the positive sentiment after we saw a little bit more volatility over the course of the past week. And Joe, I will start with you for this one here from a macro, big-picture perspective. Are the markets feeling constructive? for what we've now said a lot is a seasonally weak time for the Speaker 1 (1:54) market. Two words, risk on. That's exactly what we are seeing right now. Before we began the show, I had a conversation with Stephanie. I said, Steph, in the near term, we are seeing really positive momentum that suggests we could advance rapidly right back towards the S &P all-time high from August. Steph made the excellent point. And guess what? Sentiment is really bearish. So it kind of aligns when you think about sentiment and positioning, which move to be somewhat defensive heading into the Federal Reserve meeting. Maybe markets are a little bit caught off sides in that regard. You have the pullback in oil. You have yields relaxing. You've got past the Fed meeting. That looks like we have a near-term low in place from that day. And guess what? After that Fed meeting, we talked about the meeting bringing clarity. You didn't get the response in bond yields that speculators wanted. Remember, speculators went into that meeting short treasuries, thinking that yields would spike. You'd see the 10-year go to 5.25%. You didn't get that. That basically was the moment where if you were short treasuries, you kind of had that exhaustion. So we now have a very significant technical price gap. For the S &P 500, Friday into today, semis higher, software higher, which is a rare formation. In the near term, the market has just established some really bullish momentum. Speaker 2 (3:26) So, Stephanie, it's an interesting point because when we talk about a possible repositioning that's happening right now, given the bearish sentiment going into Jackson Hole, going into this Fed print, the last time we had an interest rate meeting this past week. There's a question about whether repositioning has legs, because oftentimes repositioning can be a very short-term to maybe medium-term phenomenon, and then we kind of consolidate and go back to where the trend was before. Is this enough to clear the decks to make room for constructive moves to the upside, given maybe repositioning in places in the market like treasuries? Speaker 7 (4:00) Sure. I mean, like September is the worst month of the year, but that follows then October and November are the best two months of the year. So maybe September can continue to be volatile. To kind of answer your question, I wouldn't be surprised. But back to sentiment, AAII numbers are at a year low. I mean, they're a year high. Sorry. And that is just really, really negative. The economy is still doing well in the face of all this negativity. I mean, last week, retail sales, we had the weekly jobless claims are historically low. They remain historically low. The consumer is clearly spending. The Atlanta Fed tracker is running at 5.1. So in the face of all this negativity, we're still growing. And why do we care? We care because earnings are actually continuing to be revised higher. Multiples have come down from 22 times to 19 times. That means it's a little more attractive. And credit spreads are very, very tame. And I just don't think 25 or even 50 basis points in terms of a Fed hike is really going to damage the economy. So it just goes back to the economy is good and earnings are going higher. And to Joe's point, risk on is out there. I think you want to really be looking at opportunities in September. Speaker 2 (5:13) You know, Jim, the other thing that's curious about the move that we are seeing higher right now is this notion that the leadership here. is the leadership that we had been accustomed to talking about for the better part of the last decade. And that is mega cap technology, media and telecom stocks. Those are the ones that have assumed kind of a new leg higher in this last move that we've seen. The MAG7 ETF to that point hit another record intraday high in trading just today. So I wonder if we talk about the broadening out rallies being healthy, something that's constructive. And then we see once again that there's a certain maybe 10 stocks that are powering a lot of this move higher. Is there something to be worried about if that broadening out thesis is not necessarily? the primary focus for traders going in the next six months? I Speaker 5 (5:56) don't think so, Dom. It's an excellent point to raise. But the reason that I'm not that worried about it is because these rotations, as we've all seen, from the MAG-7 to the other 493, from growth to value and back again, have happened with such rapidity that I wouldn't be surprised if a week from now we're seeing just the opposite. It wouldn't surprise me at all. And the reason that that may happen is because, you know, much as Joe was just talking about technicals and Stephanie, you were talking about sentiment, and then you got... to fundamentals, the fundamentals are really strong to support the broadening. I mean, let's just start by talking about you, Stephanie, you mentioned the Atlanta Fed at 5.1 percent. And let's pair that with unemployment at 4.1 percent. Let's pair that with profit growth at roughly 25 percent. And if we look at next year's S &P 500 numbers, we're trading at 18.6 times. Now, here's the important part. As we go through the back half of this year. It's the other 493 stocks that are starting to increase their earnings acceleration as the MAG-7 starts to decrease. Let me be very clear about what I'm saying. The MAG-7 growth rate of earnings is still spectacular. There is no question about it. But it is coming off the boil just a little bit. And as that happens, that's allowing the financials, the industrials, materials, and energy stocks to really start accelerating. And that's the basis upon which the rally should broaden, even though, Dom, as you pointed out, the last week, it's been the technology mega cap stocks that have done it for us. Look at Meta. Wow. I mean, what a run there. Speaker 2 (7:28) So, you know, it's interesting because I'm watching Bryn right now, and she's been nodding and kind of focused in on a number of points that you guys have made. She wants to. She wants in. So maybe I'll kick it off, Bryn, with my question to you being, would you be focused on the top 10 market cap stocks or the other 490? And then you can go from there. Speaker 3 (7:50) Okay, well, since I own the Q's and RSP, I would say yes and yes, right? So I think I own both for the reasons Jim said and also, you know, many other things that everyone said. I will say, going back to Joe's two words, I was thinking my two words for today are oil and yields. And we've seen this very high correlation this year between oil and yields. And so as oil goes down... Yields go down, stocks go higher. And so I really think in the short term, this market is going to continue to be very anchored on oil because if oil goes back up and this war re-escalates, yields most likely will go higher as well. I do think it's important for investors. I mean, if you go back six and a half decades between the August highs and the midterms lows. We've had a drawdown every single time between seven and then the extreme 25 percent. So I don't know why that would be different. Maybe it will be. But I do think this time that if we get this drawdown, which we really haven't seen, that is going to be a great time to add to positions. Because what happens after midterms is like between November and February are the best times of the year post midterms. So I do think investors need to be aware of that midterm seasonality, which has a perfect. track record of having pretty significant drawdowns. But then I would take those drawdowns to add to positions on both RRSP and your Q holdings because to Jim's point, the breadth of earnings is also strengthening, but also Nvidia, Micron, et cetera, are still making up a huge part of earnings growth. And so I want to be positioned with those types of names in my portfolio as well. Speaker 5 (9:28) Hey, Don, I just want to key off what Bryn's saying here, because we all obviously were pretty optimistic on what we're seeing. But there's need for balance here. And Bryn points out what's going on with oil and rates. That may have a lot to do with events going on in New York City this week. Last night, you had Vice Chairman Xi of China and Scott Besson, the U.S. Treasury Secretary, meeting. And the verbiage that came out of that was very positive. We've got the Iranian president speaking. I think it's tomorrow at the United Nations. We've got President Xi and President Trump. speaking together, having a summit on Thursday. And there is a lot of positivity that is expected and perhaps being priced in today from all of those geopolitical events. We have to be careful, right? Because we've known over the last two years that there have been a lot of false starts. There's been a lot of head fakes when it comes to geopolitics. So just we have to be balanced and acknowledge there are still risks out there, primarily in the geopolitical space. Speaker 2 (10:21) Now, Stephanie, you mentioned before the sentiment, right? You mentioned AII in terms of sentiment and framing the market. moves in context there. It's kind of interesting to bring that up alongside an interesting note that's coming out from Ned Davis research. And basically, the takeaway right now is that it's tough to get too bearish. That's the takeaway from Ned Davis research, especially when they say seasonality turns positive in October, to your point, through year end. We would want to see much more trend deterioration and for longer to become more concerned. At the same time, let's flip it because this is a bull bear debate. You have Roth coming out this morning saying that leadership holds, but internal trends are cracking. Adding our best guess is for the S &P to pull back to trend similar to March. And then you should treat semiconductors as the signal that decides whether this is a pullback to trend or something maybe worse. Interesting debate and juxtaposition there. Yeah, Speaker 7 (11:20) I do think that there are more negative. analysts out there right now, though. And that makes me feel a little bit better, actually. It's like a pile on right now. All of a sudden, everyone's like lowering target prices and lowering multiples and getting defensive.