amber: welcome to "bloomberg markets." i'm amber kanwar. matt: i'm matt miller. bit of a seesaw day. we dropped, then rose, and back up again. of a quarter percent on the s&p 500, 4389 is the level we're looking at on the benchmark index. we are dragged down by financials after s&p downgraded regional banks in a move that follows moody's. we have big losses and some of the retailers, and we will talk about those, but that is a weight the next. u.s. 10-year yield to coming down as investors by the bonds.

34.3181. -- 4.3181. we are up across the curve. today we are getting back some of the gains in yields as prices rise. bloomberg u.s. dollar index very little changed. we have seen this over the last few sessions relatively strong level. with high yields, more investors in the assets. nymex crude is down $.17 even as prices at the pump rise to the second highest level we have seen in recorded history seasonally. nymex crude at $80.50 a barrel. amber, what are you looking at? amber: you mention financials are a pinpoint on the s&p 500. so is retail. macy's is under huge pressure right now. sales dropping, and what are they doing in the face of that? they are resorting to

discounting. investors never like to see that. they did not like what big sporting goods had to show in the latest quarter. profit plunging. they have a huge problem with that. it is one of the reasons they have had to cut forecasts. on the flipside we have shares of hasbro is one of the best-performing stocks right now. bank of america bounding the table on this one. nvidia touching a fresh all-time high. it is retreating right now. an interesting set up into what should be a big set of earnings releases tomorrow. matt: we are definitely waiting for nvidia earnings tomorrow. but we are seeing a lot of option trading already. abigail doolittle has more on that. abigail: we are seeing a lot of options trading because we have had volatility for big tech up until today on the upside. a lot of times it clears the decks for the bulls to come back

in. great insights from steve -- he says he doesn't think it is clearing of the deck, it is fomo buying, people wanting to buy the dip. that have been in nvidia up until today where we had a 2% decline. one reason could be the stock's huge move the last quarter. so much to live up to, they raised their guidance by 50%. we are likely to see a big move on thursday. of 15%, of a person, and then down in and for quite -- up 15%, up 8%, and then down in a big way that is the moves we had last time, $143 billion added. this is chronologically a little out of order, but the point is a big, big move. look at nvidia on the year.

making the move in the s&p 500. stock was up 40%. will the results deliver like they did back in may? can they do that two times in a aware where ai lives up to the hype? matt: abigail doolittle settings suffer the earnings from cash setting us up for the -- abigail doolittle settings suffer the earnings report. shares of macy's lower as many retailers and is slowdown in consumer spending. caroline hyde spoke with the ceo of macy's earlier. carolyn: certainly did. we have a conversation on the phone a little bit earlier. this is a person who is trying to steer -- read between the tea leaves of where the consumer is going in the united states. they are concerned about backing credit spending and a tick higher in delinquencies. they are not worried about overall credit stability with

the underlying strict -- or the underlying strength of the consumer. they say the consumer has more headwinds than they do tailwind's. they are seeing interest rates on the rise and have seen inflation. they are starting to see a consumer who is more discerning and wants to spend on experiences. blue mercury a performance, they are pulling back from the way in which we spent on items. that is why we saw macy's sales fall. even bloomingdale's stunning the pullback, too. -- starting to pull back, too. amber: to what extent did e-commerce blunt the sales declines? caroline: this is an area of strength that macy's feels leon. they've been bringing to market something called the marketplace.

more types of things you can purchase like games and the way you might be able to buy a console. you can do that at a bloomingdale's marketplace rather than going to brick-and-mortar. they hired a new executive to focus on how it intertwines with commerce more broadly. they could be healthier than where they are today. they want to grow aggressively. they continue to lean into the world of artificial intelligence and think it could be await in which they break out of the mold and how they directly access the customer who wants different things. it intertwines generative ai and more broadly the way in which we are linking with chatgpt. they want to make it easier for customers to get through boundless amounts we could be buying to get the right thing to buy at the right price point. they've managed to really reduce their inventory some 10%.

the reason they are able to do that is they have leaned into digital and have been leading into data and understand what he called the surgical ability to look at how they reduce inventory that is backed up. matt: caroline hyde talking about macy's dealing with inventory. thank you very much for that. let's turn to retail at large with brendan case. macy's had a big drop, but dick's sporting goods was even bigger. on the other hand, it has had a huge run-up in the stock. they are up 250% last 40 years. what is the problem? is it an inventory issue? >> it's a couple things going on. one of them is consumers are shying away from purchases of nonessential items. this is a story that started last year but if anything yes, of, catching more speed this year. people have less money to spend on discretionary goods after

they get done paying for groceries. at the same time, they want to spend more on services. that leaves you out in the cold if you are in the business of selling appliances, clothing, sporting goods. amber: i find the share reaction interesting. investors are more forgiving of a company like lowe's, which posted a decline in sales. brendan: if you look at the big message out of lowe's earnings and home depot, probably a big part of that story is just relative to expectations. both of those companies cut their annual forecasts and there was a lot of doom and gloom sentiment around home-improvement spending. home depot coming out last week, lowe's today, things aren't great, sales are down but it is not falling off a cliff. certainly better than expected, where you can contrast that with somebody like dick's, which has

been such a star the last few years, coming in and saying profits were a lot worse than expected and a lot of uncertainty going forward. matt: what do we know about the consumer, brendan? for a long time to san francisco fed was in a debate with the fed in washington, d.c., about how much excess savings consumers had left. now we have seen credit-card spending go way up and delinquencies as well. how is the u.s. consumer holding up? brendan: the evidence is pretty mixed. it is still a strong job market. a lot of people are making higher wages. certainly not a situation where people are pulling back completely. but if you listen to the retailers, there is a lot of caution, certainly but what macy's said about telling quincy on credit-card -- about delinquencies on credit-card debt getting worse in june and july. walmart, the biggest of them all, has been doing really well first half of the year in terms

of sales gains, but even they are striking a cautious tone going forward. you have student loan repayments coming up, higher interest rates. a lot of caution with consumers out there. amber: perhaps one example of how cap consumers are is the fact that they are stealing, and that is a big problem at dick's. you have seen target bring it up. i think whether retailers are talking about it or not, it does seem to be happening. what are you hearing companies say about that and what they can do about it? we are hearing more and more that they are limited on what they can actually do about the theft. brendan: it really went the gamut, and that was such a big part of the underperformance from dick's. if you look at what other people are doing, lowe's said that it was the worst environment for shrink and the 35 years the ceo has been in the retail business, but he also was at pains to detail all of the things they are doing to mitigate shrink, especially like technology that

means that tools can't work unless they are deactivated by store employees in a certain way. and what lowe's said is that it is not any worse this quarter as it was last year. but then you take a retailers like target, dick's, and one thing people have done is put more goods behind plastic. you see that a lot at pharmacy chains. the problem there is it makes people a little less willing to buy in stores and more willing to buy online and not necessarily from the brick-and-mortar retailer. trying to strike a balance is a big challenge for these retailers. amber: all right, brendan, thanks so much for that perspective. brendan case joining us. coming up next, microsoft pitches a whole new activation deal to u.k. regulators. take a look at shares of zoom after reporting earnings that have analysts worried about the

company's growth. "bloomberg technology" had the cfo on in the last hour to discuss. take a listen. >> it's important to remember that a lot of these customers buy online. it is a really important part of our business and the team is no vetting around how do -- is innovating around how do we bring more product to them and expand the top of the funnel. we have seen a lot of stabilization in the churn rate. we are down to pre-pandemic levels, which is really great. it is going to take a little longer than we expected to stabilize over time, though. ♪

amber: this is "bloomberg markets." i'm amber kanwar with matt miller. time for the stock of the hour.

microsoft's acquisition of activision blizzard got a new chance of winning approval from u.k. regulators after submitting substantially different deal to the country's antitrust watchdog. it would give ubisoft rights to distribute activision games, potentially easing concerns over the dominance in the gaming market. matt? matt: yeah, so it's a fascinating deal, first of all, because of the size and the fact that microsoft is doing it. second of all because i love call of duty. and it's amazing that microsoft is willing to give up the streaming rights to call of duty to another company, ubisoft, for 15 years. to me that means either this is not only about call of duty, or nobody plays video games by streaming them. jennifer re-has been covering the acquisition from the start and joins us now. first i guess the question is does this do it for the u.k.

regulators? is this going to be enough to put them over the line? jennifer: i think it does. the u.k. regulator only had concerns about the cloud streaming market. this removes that problem. ubisoft will be the licensor of the activision games for 15 years to consumers in the u.k. as well as other countries, and that resolves the concerns. this will get it over the line with the antitrust authority in the u.k. amber: jennifer, to matt's point, does it remove substantially the economics? jennifer: i wouldn't say it doesn't because i don't think microsoft would be willing to make the agreement if it did remove the economics. most gamers are still downloading games and not streaming games, particularly games like call of duty, where they want to move pretty fast and they don't want to lag time you can get if you are streaming through the cloud. but they are getting are all of these content creators at

activision and they are getting the rights back in 15 years. obviously it was worth it for them for this deal to go there, and part of it is they want to push into mobile gaming and they think they need the activision content to do that. matt: 15 years ago it was all about halo. call of duty has only been the most important videogame on earth for about that time. there could be something else. maybe microsoft think they will be able to grade the next big thing with activision. jennifer: absolutely, they are getting the content creators when they get the activision assets, and they bought another studio a few years back. they are getting more and more of these content creators, and that is the idea, we will come up with the next greatest game. eventually there will be another halo, another call of duty down the road. amber: they already have the next great thing, chatgpt. that is the big focus for investors.

how should investors think about whether this is a needle mover or not? jennifer: i think it is. it is a $69 billion deal and microsoft expects to get great assets through this deal and will get these rights back in 15 years and will also be making money. ubisoft is going to be paying microsoft a wholesale price, but they will be paying as the exclusive licensee of these games. there will be revenue that comes in from this ubisoft agreement. this is a good deal for microsoft going forward, and again, microsoft wants to push into mobile gaming and they think they need this activision asset in order to do that. it is going to help them in that area. amber: jennifer, thanks so much for that perspective. coming up, financial stocks are in focus right now after s&p global ratings downgraded and lowered its outlook on multiple banks. this is bloomberg. ♪

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amber: this is "bloomberg markets." i am amber kanwar with matt miller. bank stocks are underperforming the broader market as s&p global ratings downgraded a handful of lenders after a similar move by moody's. sonali basak joins us now. there wasn't anything materially new in these downgrades, but it seems like investors still don't like to hear about it. sonali: to the point you are making, we have seen significant downgrades by moody's, and the munis news was somewhat worse because you have seen firms placed on negative watch, whereas you have s&p saying there is a lot of stability on the most recent action. you have the kbw bank index down another 2.2% on the day, and if you see the banks that are moving the most, regions can financials, and zions. not all the banks have faced potential downgrades.

s&p said zions in particular remains negative after the review. the uncertainty would weigh on the heels of these banks. remember also there is another thing as well if you are concerned about the direction of interest rates and the impact it is having on the banking sector in terms of the available securities, in terms of the health of maturity securities, and the price paid for deposits. two-year yield surging above 5% doesn't help that story and the direction of travel there. if you look the movements and the banking sector, that explains some of it. matt: the use of the downgrade -- keybank, comerica, valley, umb, and associated bank. i looked at the kre and saw that it still hasn't recovered from its initial plunge back in march. if you look at the big drop, the regional bank, spider s&p regional banks etf, the big drop in march, we are still at

that level. things haven't gotten any better even if they haven't necessarily gotten worse. sonali: you look at the kbw bank an overall, there is only three stocks in the green in the index, and those include some that are not technically banks. capital one financial is up 9%, that had been a bigger gainful even that firm, which has been doing well in creating, -- in trading, has pared some of its even the likes of morgan stanley are down 2% on the year. the banking sector is feeling a lot of pain even for the biggest of the big, which has largely benefited. one problem that you watch as these downgrades take the steam is the idea of issuing bonds into the market. we've had a record amount of issuance, $2 trillion globally, most of that in euro bonds. the u.s. has lagged europe a bit. but the reason the money is being raised is to meet total

loss observing capacity ratios that these banks need to meet for regular tory standards. -- regulatory standards. there is potential that the cost of funding for the banks continues to be more of a problem on the heels of these downgrades as elected tap -- as they look to tap on markets to make the buffet larger. amber: i want to pick up on the point you made that we are not just seeing this in the regional banks, you are seeing big banks taken down. i'm looking at shares of citi, it has erased almost all of its gains from the october low and is trading back at the lowest level since october 2022. is it getting painted with the similar brush, similar concerns about where they are going to be with respect to their capital levels? sonali: this is going to be an interesting quarter because while capital levels have been a big question for the larger banks, another thing i was looking at is where cit has been trading since jane fraser took

over. it is down 40% or more since that time. we fished the covid pandemic, and they are the most global of banks. there's also the question of strategy. many of these banks are facing massive strategic questions in the middle of any financial worries about the direction of travel moving forward. goldman sachs down 7% on the year. it is the second worst performer behind citigroup. wells fargo is up on the year after a massive selloff in higher years -- prior years. golden like citigroup is facing massive transformational questions in the middle of a tough economic environment where both firms are seeing pressure in trading. there is another story on the terminal about how currency trading has just fallen off a cliff this year after booming the last couple of years. without those fees, you better hope for more microsoft-activisions down the corner. [laughter] matt: sonali basak, our wall street star, thanks for that.

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>> i'm scarlet fu. >> i'm katie greifeld, kicking you off to the closing bell. we have about two hours to go. that bounce we saw, fading a bit. the s&p off by .3%. that bounce fading in big tech as well. the nasdaq 100 off by .2%. pretty small moves overall. still definitely a down day and markets -- in markets. a little bit of a bid coming back into the bond market after the long end of the curve. treasury yields down about two basis points.