the u.s. probably the world and taylor swift and the chiefs and the jets are all converging. by the way, it is a sunday night football game on nbc, chiefs and jets, primetime. >> ratings through the roof. >> you're probably right. it is so absurd. i mean, i hope -- >> i'm fascinated by it. >> i'm waiting for more of the products that come from this. like the heinz ketchup -- >> thank you for watching "power lunch." >> "closing bell" starts right now. >> welcome to "closing bell." i'm scott wapner live from post nine at the new york stock exchange. busy friday, make or break hour begins with news that is new on "closing bell," on the record comments from hedge fund legend david tepper. i spoke to him this afternoon about the markets as a dismal month of september comes to a close. he told me the following about how he sees the markets right now. rates are rising, stocks are jittery. tepper telling me, quote, not that complicated right now.

just not in qe times anymore. you're in the qt era. it is a higher rate environment. can't be the same multiples as before. it is not bad, just different. just a different environment. pretty clear from my conversation with the hedge fund legend he's trying to figure out what the right multiin many this market is like all of you is. is it 18 times, 19 times, 16 is it lower than that? if so, that wouldn't be great. that's what he said. not terrible, but he did tell me about a new investment he made yesterday. know what he did? he got 6% on his cd for six months. so he put some cash there. like a lot of you have done. says he didn't tell anything in his portfolio, that's clear. stocks are lower as we come on the air. wanted to bring you that news first as well. government shutdowns looming, that's the overhang today. in part with everything else. let's kick all of it around, comments from david tepper with cnbc's senior markets commentator, mike santoli. let's start with what tepper had

to say, he's always had a knack which i think made him as great as he's been to take a lot of the most complicated stuff, and distill it down into the absolute most easy thing to understand. this, not qe anymore, it is qt. and you can't have the same multiple as before. the question is what is the right one? >> it is obviously encapsulates the struggle that the market is undergoing right now. trying to sort that out and just exactly how much of a haircut you might have to give to equity valuations based on what yields are doing. i guess i would argue that there is nothing special about 4% to 5% long-term yields. we have been there many, many times before, multiple ranged all over the place. it was not qe times in 1962 or 1997 or periods of the '80s where we had a similar multiple today. it is not an either/or. i think it is a relevant discussion for how much of a valuation cushion you want to demand. now what are we going to look at to decide, we're under 18 times forward for the s&p right now,

as of today, about $240 in forward earnings. 18 is upper end of, you know, the norm. and it is actually above the longer term history. as everybody says, you ship out the biggest companies, it is a lot cheaper. i looked for same versus same. i'll take j&j, target, american express, they're at their average 15-year multiples, 13, 14 times. it is kind of an argument you could almost win or lose, depending on how you define the terms of what you are discussing. >> he also made it clear, like, you know there is all this fixation on the top seven stocks and the multiple on those relative to everything else and he's, like, anytime throughout history you could pick probably seven stocks and find them where the multiple is much higher, so be real careful how you use that to decide that the overall market is wholly overvalued, yes, are there good values around? yeah. do you have to be harder in finding them?

yeah. but it wasn't, like, okay, it is all over with, but it does come from somebody who has a pretty good knack of understanding what the fed is doing and what it needs. he came on our network, "squawk box" and whether it was '08 or '09, fed came in big and said everything is going to go up. >> i think we had one of those panic attacks after the fact off the lows and he basically said, you win one of two ways, the economy gets better and stocks do well or the fed comes in for another rescue round and stocks do well. that's kind of what happened. >> yeah. so he's sort of, kristen, taking the temperature of where we are, what about the reality check as he says, you know? and how we need to figure up what the multiple is and that depends what earnings are going to be and we're not going to know for a little bit here, but they're right in front of us. >> i think i agree with those comments in terms of we're in a different reality, we're in a different market, where it is going to be harder to be profitable, where it is going to be more challenging. that being said, i think the

main question that is on everyone's mind right now is going back to the fed in the driver's seat and rates being a critical part of this equation. the questions were how high, how fast, and for how long. and the first two questions we largely have the answers to. the how long is really the question that everyone is debating and how that's going to flow through into the consumer spending patterns, into corporate earnings, and so i think that's the major question on the table. >> the other thing i love is, like, look, made a lot of money and it is worth a lot of money. just like everybody else. he's looking for yield in the safest place that you can find it, and he gets it in a cd. he's going to park some cash there and figure it out. but itunderscores there is still competition. >> there is a psychological hurdle rate for individuals or institutions who feel like they're targeting a specific number that they're comfortable.

yeah, absolutely, you don't have to stretch to grab risk to lock some of that in. you know, we could talk about what a more efficient portfolio looks like over time and everything. and, by the way, the logic also applied at the beginning of this year, you could have gotten your 5% in money market funds and if you're happy with that, great. s&p 500 is up more than twice that. you have to understand what the opportunity cost is in certain types of environments. i think if the s&p is going to earn 240 in the next 12 months, a lot of questions around that. i think the market is probably insulated against a huge down draft, usually it finds its way if -- >> earnings number is -- >> that's why the multiple, you have to argue about both sides. i think the multiple, again, is one part of the equation, but if earnings come through, you know, i think it is hard to think that it is going to be a disaster. >> he would be the first one to say that and sort of alluded to that. if you believe, kristen, that

some of the numbers out there from goldman and otherwise, we can put up, if we have, guys, in the back, where earnings growth projections are, right? you get a little tick higher, finally in this quarter, and then 24, they start to really edge up. there it is. if these are right, then we're probably good. if they're not, bigger questions. especially relative to where rates are. >> they look a little rosy for 2024. this is something that do we see earnings growth in 2024? absolutely. is it that high, if we're in a higher for longer regime? that's challenging. while earnings have troughed here, the growth trajectory from here will be more modest. i think one good news is when you look at the fact that all this talk about the contraction and recession, i think the fact that the prophets recession is behind us is something certainly that is good for risk ssets, it is just how much upside are you anticipating for here over the next 12 months. >> let's hold the conversation. i have breaking news regarding the uaw strike.

yet another thing we need to keep our eyes on. phil lebeau has the latest. what do we know, phil? >> you know, scott, if you want to see how far apart ford and the uaw are, they held a briefing with reporters and analysts talking about another ford plant was on strike. in that briefing he said this is a case where he believes the uaw calling the strikes premeditated, they're holding the representation of future ev battery plants as hostage in these negotiations. he blasted the uaw. now the uaw is out with a statement from president shawn fain. and here's what he says. listen to this carefully. i don't know why jim farley is lying about the state of negotiations. it could be because he failed to show up for bargaining this week as he has for most of the past ten weeks. if he were there, ed know we gave ford a comprehensive proposal on monday and still haven't heard back. he would also know that we are far apart on core economic

proposals like retirement security and post retirement healthcare as well as job security in this ev transition, which farley himself says is going to cut 40% of our members' jobs. like a good neighbor, we're available 24/7. name the time and the place you want to settle a fair contract for our members and we'll be there. that last point about being a good neighbor is in reference to jim farley saying shawn fain is on tv more than the state farm guys on tv. bottom line is this, scott, we're nowhere close, nowhere close to a contract being reached between ford and the uaw and basically you can say that with the other automakers as well. long ways to go before we see this resolved. as i said for some time, do not be surprised if we see more strikes in the weeks to come. >> yeah. phil, thank you for the update there. come back on if you learn anything more, please. that's phil lebeau. mike, before we bring in erin brown of pimco, where does this rank on the list of your own

sort of concerns if you want to call them that on what is a growing list? >> i would say it is not one of the top concerns, but everything that you put on that list seems to be an exacerbating factor for the top one, which is can the economy handle what rates and the oil price are now throwing at it. i've been saying that for weeks and shutdown moves in that direction too. i think strikes and shutdowns are one of those things that the market does its best to put off to the side as a distraction and a temporary thing where you get a payback once they're resolved and kind of get a little bit of a mulligan on the economic data during that period, and it is not necessarily a bad thing, but, know, coming as it does, when we have one thing after another, all pushing against the growth story, i think it is not welcome. also you saw the headline sensitivity to the shutdown headlines today. it was going to be okay, now two weeks, didn't get the vote passed. >> stopgap failed.

>> we're skittish because of what else is going on. >> i mentioned erin brown will join us. she will now. erin brown of pimco. not that complicated to mr. tepper and not to you either. we're doing qt, can't have the same multiple. it is not bad, it is just different. >> i think that's right. i think that you really have to consider the fact that over the next couple of months, really into next year, you're going to be in a very different environment that we have all gotten used to over the last 15 years. and it is going to be much more volatile, both in terms of the trajectory of the market, but also the trajectory of earnings. and so that, i think, leads you to be much more defensive in your positioning, really hold cash, hoard cash for better opportunities than dislocations in the market. and it is going to be a little bit more of a dynamic trading environment rather than staying invested in holding on, you

know, in -- for the -- for keeping your money in. you're going to want to be more dynamic in terms of how you're trading it, selling when it is high and buying when it is low and keeping cash on the sidelines and able to take advantage of the dislocates in the market. >> as one of the greatest investor who ever lived doesn't know what the multiple is in the market, how does anyone else know? do you feel like you have a great handle on where we should be? >> i think a lot of the dialogue and conversation that you had with the previous guests i think is right in the sense that right now the market when you look at it, you know, x the magnificent seven is fairly valued relative to 240 on the s&p 500 or a number slightly below that. the market today is not overvalued when you just look at sort of the average s&p component. however, i do think that you're not going to be, you know,

likely in an environment with 19, 20 times forward earnings. i think something in the range of 17 to 18 times where we sit today is probably a comfortable level. so we're able to grow into that with strong earnings. i think that the multiple isn't going to be a deterrent towards further price appreciation. but it does make the market more skittish, just given the fact that we're fairly valued, but still have pretty robust earnings expectations out there. i think the market probably settles in with, you know, somewhere a little bit shy of 240 next year. but i don't think that's going to be an impediment to growth as long as you see further breadth of the market performing next year. >> it all depends on what rates. in thor ine ernear term, that w topic of conversation at delivering alpha. here is bill ackman on what he thinks rates might do. >> i would not be shocked to see

30 year rates well into the -- through the five barrier and you can see ten-year approach 5. that could happen in the very short term, like literally weeks. >> kristen, ackman has been short in size, he's described it that way. the long end thinking that, like, the 30 year, you're going to get a spike up to 5% if not more and maybe other parts of the curve do the same thing too. >> i think the long end is where it gets trky to be fair. this is coming not just at the 30-year, also at the ten-year in saying who are the buyers today you japan out of the market, china out of the market, more dialogue going on yield curve control. i think something getting a little lost in this conversation is the fact that, yes, it is attractive to invest in t-bills, 3, 6 months, levels close to 5.5%. talking about extending duration, because the market is so overweight, cash and cash equivalence, extending duration means going two years, three years, five years. we're not even getting out to

the ten-year, 30-year, and there is value in terms of diversifying and actually eliminating some of that reinvestment risk to take advantage of yields where they are today without having it that duration risk. >> i'm glad you went there. it is a perfect segui te to the conversation with rick reider who you spoke with for pro. he likes the shortest end of the curve. >> and grabbing on the three to five area as well. it depends on what expectations you want to build toward. three to five year. but it is not really extending that far out. so i guess it is one of those things, you take what the market is willing to give you if you are relatively risk averse, if you think that we're not going to be cutting rates anytime soon, you don't have the reinvestment risk on that. i would also say as maybe eye catching as 5% prediction is, it is half the distance from here to 5% as we traveled in the last two months on the year.

if you told me or the average equity investor, it is only going to get to 5 and this is not going to be some kind of extremely messy head long increase in yields where who knows where it ends up and it breaks something along the way, i think you almost take it. it is not to say that the stock market is going to love it, but that, to me, is not the extreme bear scenario. >> no, because some have sort of put everything, erin, on keeping their eyes on the so-called prize of, yes, i understand that interest rates in the near term may very well go higher. the ten-year might go to 5%, that could be dislocating for stocks in the near term. we're on the precipice of a rate cutting cycle. listen to what altimeter's brad gerstner said at delivering alpha too. we can talk about that. >> we're at the precipice of a rate cutting cycle. very different set of facts. but we also may have, in fact, stepped on the economy, or

slowing it down. the fed intends to slow it down. so i'm very optimistic over the course of the next two or three years. why? because we're not going to continue to hike rates. and we're at the beginning of one of the biggest tech booms in the history of technology. a.i. is going to be bigger than the internet, bigger than mobile, and bigger than cloud software >> how about that, erin? >> i think the biggest impediments to markets right now is the rates at which they're sold off. if you look back over the last year, i think that the pace and the speed at which rates have sold off and rates have risen is the biggest concern for markets right now. think that if you were to stem the pace of rate rises, i think that that's going to go a long way in terms of stabilizing not just bond market volatility, but equity market volatility as well. and you will start to see equity markets regain their footing and

start to do well again. but i think that if you continue to see, you know, rates selling off, that's going to be a really challenging environment for equities. i don't think that we're quite at the precipice of rate cuts, but i would say that over the next one to two years the likelihood of a 100 point basis rate cut is more likely than rate hikes at this point. we think we're a far ways off from rate cuts, but likely over the next couple of years we'll be back in a rate cutting environment. >> also i mentioned on halftime today if you look at the movement in rates today, which were largely lower across all parts of the curve, now we're green on the ten-year and 30-year. there is still rate volatility. any smidge of movement higher in rates. where is the naz sdaq now? now where it was. it was up more than 100 points at one point, now up 33.

it is so sensitive to that area of the market. >> it is sensitive in the moment without a doubt. i would say i guess it depends how you want to approach it. s&p had 7% drawdown from the highs in late july and we raised to 16-year high in ten-year yields. it is one of those things, is that underreacting, is that properly accounting for the potential risk? we don't know. we have to see the economy perform over a matter of months in this now rate environment. >> you want to address before we move? this tech trade, so much money has gone towards, held the market up to where we are. now what? >> you know my thoughts on that, it is driven not only by a.i., but driven by the free cash flow generation of these companies and this idea, where do you want to be invested, higher for longer, hard landing, soft landing, you want to be investoredinvestor ed in companies with long balance rates. there are areas of the market,

profitable, small and midcaps, where you have the benefit to get in at a valuation discount that is upwards of 39%. and that is some of the opportunity that you may be a little bit early in terms of some of the rate pressure here that that is some of the opportunity that still exists within this equity market. >> i appreciate it very much. thank you. we'll see you later. and kristen, swwe'll see you so. everybody reacting to the comments from david tepper, which we'll continue to talk about with our other guests as well. our question of the day, we want to know will the fourth quarter be positive or negative for stocks? we got the results coming up a little later on in the hour. now a check on top stocks to watch as we head into the close. pippa stevens is here for us today. >> ab inbev is higher today. bank of america upgrades the stock to buy from neutral saying that margins could expand as the brewer moves past the backlash to bud light this year. analysts also say bud is relatively defensive stock for

the current environment. and two restaurant stocks on the move. brinker international, parent company of chili's, is upgraded to buy from hold by stifel, saying its playbook could deliver a successful turn around. and texas roadhouse getting upgraded to buy at north coast research, which cites a steady flow of customer traffic, both of those stocks in the green today. scott? >> all right, we'll see you in a bit. we're just getting started. up next, the case for caution. chris toomey is raising the red flag on a few key reasons why he's staying defensive as we round out this quarter. he'll join us after the break. icy hot. ice works fast. ♪♪ heat makes it last. feel the power of contrast therapy. ♪♪ so you can rise from pain. icy hot. you founded your kayak company because you love the ocean- not spreadsheets. you need to hire. i need indeed.

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welcome back. a losing september all but guaranteed with the major averages on the cusp, confirming a sharp monthly decline, that may be all the reason why our next guest needs to stay defensively positioned. chris toomey runs one of the highest rated advisory teams in the country. good to see you. you've been largely defensively positioned for many, many months. i want your reaction to what david tepper told me, chris, it is not that complicated, you're just not in qe times anymore, you're in the qt era, higher rate environment, can't be the same rate anymore. not bad, it is just a different environment. what do you do with that? >> it sounds familiar. we have been concerned specifically around the effect of qe being removed and moving into qt and we also have been concerned not just about the pace of rate hikes, but also the duration of rate hikes.

it seems like the market moved away from the transformational powers of ai and the hope that rates are going to come down and really focused in on what really is the side effects of rates moving so dramatically higher and to david tepper's point, not having qe and now being focused on qt. >> what is the right multiple for stocks, chris? >> it is twofold, right? if rates are here, or potentially going higher, you would have to expect multiples would have to start to come down a little bit. i think the bigger issue is around earnings, right? we have seen the situation where going into the year we, like many of the others on wall street, we're expecting gdp to be suboptimal. and earnings to be down, and instead, we saw a real situation where the consumer stepped in, they had $2.2 trillion worth of savings, which they aptly put to work, we saw the federal deficit

blow out 7.5%. and importantly, which people are starting to focus in on, especially because it is up over 30% this quarter, gasoline prices went from $5 down to $3. right? and so those are kind of one off type situations. and i could make the argument we're actually in reverse right now, with oil goes back towards $100 and the consumer, instead of sitting on $2.2 trillion worth of savings, actually looking at a situation where credit card debt is over $1 trillion, and that debt payment is over 20%. so, in addition to qt, pull in liquidity out of the market, you also have credit card debt pulling money out of consumers pockets. >> so, the flip side, i guess, is i hear you, those are all the risks of everybody who is negative or cautious the market would suggest you need to be keeping an eye on, what about the idea of this fourth quarter chase? money managers who just missed

it for the beginning of the year. miss positioned as some have suggested and that's going to result in a dash to the finish from those who went to get at least while they think the getting can be kind of good, who knows what happens next year with earnings, do you put anything into that? >> look, i mean, that is a part of, you know, the wall street kind of seasonality. whether september being bad, or window dressing at the end of the quarter, or managers chasing at the end of the year, but the market is up about 12%, you strip out the magnificent seven, it is up 2%, or 3%. you look at healthcare, fairly defensive area, over two-thirds of those stocks are actually negative this year. so this is the weakest quote, unquote bull market in the last 60 years and this is a situation where the majority of stocks in the s&p 500 are actually below

their 200 moving day average. 25% of the stocks are actually negative. so there is a little bit of deception with regards to what is going on in the market. so if you're a money manager, and you're trying to chase this market higher, i think you have to be really concerned about how you chase it, right? are you going to go back into these higher multiple stocks that are actually starting to sell off pretty dramatically or are you going to start looking for opportunities in names that have been beaten up? my thinking would be that the economy and some of these other areas are just going to weigh on the overall market, and to david tepper's point, it might make sense to be more cautious sitting in six month cds paying 6%. >> the so-called deception you mentioned works both ways, depending which way you want to frame your argument. now, people who are, you know, more cautious would say, the market, the multiple on the market is too expensive. it is trading 19 times, no way the market is worth 19 times. is it really 19 times? it really isn't. if you strip out the seven

stocks that we have talked about, the equal weight s&p, that's not trading at 19 times. it is obviously much cheaper. so it skews both ways. >> i think your question is what is going to drive this market hig higher, specifically money managers chasing and bidding up stocks and pushing these indexes higher with higher multiple stocks a bigger part of the index, are they looking at individual stocks in the underlining index that may not have as much to do with the index or you look at a situation where you start playing defense because of all of the concerns we talked about. i think one of the things that people haven't focussed in on, if you look at the fixed income market, we have a situation where the aggregate bond index is actually now negative. bonds are down 3% for the year. look across bonds, you're in a situation where the only thing that is positive are short-term rates. and if you look at corporates,

september is a busy month for corporates with regards to issuance and this has been a quiet month which helped corporate indices do pretty well. the flip side is if corporations aren't issuing debt because the cost of capital is so much higher. one of the other drivers has been buybacks, right? a lot easier to buyback stock when you can issue debt at low prices and go buy back stock. this is a different situation now because of what is going on in the bond market. >> i don't know what your current level of cash is relative to history or how you're advising that at the moment, but are you individually thinking about i want to get a part of this chase too. maybe i've been a little too cautious, and you're thinking about deploying some of your cash now for whatever kind of run might exist between now and

the end of the year? >> yeah. i think we have a plan with regards to putting money to work. we do have more cash than we would like to. 75% of the time the s&p 500 is positive. being in this much cash, this defensive for this long is something we're not comfortable with. we're also recognizing that there is going to be a great opportunity to buy some of these companies at better prices. and it is coming back, right? if you look at corporate spreads, they're starting to go out a little bit more. instead of being on treasuries, we're adding in more corporates and other areas of the fixed income market that looks good. in the same sense we're adding to select names that have better balance sheets and are growing dividends so we're getting that cash flow for reinvestment. we are slowly but surely as the market is coming down getting more comfortable with adding more exposure to the market. >> all right. appreciate your insights. stay dry.

stay dry. it has been tough today. chris toomey, we'll see you soon. doubling down on the bull case. john maori brakes out his playbook here at post nine as we look towards the year end. some serious strength right now. he'll tell us next.

we're back. stocks losing steam heading into the close. the s&p 500 set to turn in its worst month of the year. our next guest, though, he's staying bullish. finding opportunity, he says, in some of the sectors hardest hit by the recent spikes in yield. joining me at post nine, john mowery. it has been a rough month obviously. you're still bullish. >> i'm still bullish. >> how? >> well -- >> yields are up, stocks are down. >> i know. there is a lot of negativity. if you remember a year ago it was also very negative around this time, happened to be

raining out the last time i was on and it was very gloomy. what i would say is the rise in interest rates has created some big dislocations. if you look at utilities, reits and banks, all nthose areas are tied to rates and big time on sale. the russell 2000 value, the small cap names are looking more attractive. i'll give you an interesting stat statistic. there has been two times in history where the nasdaq was up 30% or more in the first three quarters of the year and the ruj was negative? those two periods were 2000 and 2020. in both those periods over the next 24 months significant outperformance in the small arena relative to the nasdaq. the nasdaq looks less interesting here, relative to some other areas. >> what about what tepper told me, to him, it is just not that complicated. it is no more qe, it is all about qt, rates are elevated,

the multiples might be too rich in that environment, especially if earnings don't live up to the hype of where they're expected to be. that's a very, very easy to understand thought. >> the multiples are very cheap with the banks. i'll sit on the banks for a second. so, you know, every sector is negative this quarter except for energy. i will tell you the banks are positive. they're beating the s&p this quarter by 400 basis points. what is interesting is that is coincided with the yield curve starting to unwind. so that inversion that we have been looking at, that peaked in the second quarter, the end of the quarter. that is beginning to unwind. financials is an area people are missing out on, they're worried about the banks, real estate, credit. if you look at the valuation, you're getting dislocations not seen since '08 and '09. these yields are very attractive and growing. >> you're going to put your bullish bets on the banks? that's not going to get many people on your side of the boat.

>> well -- >> you're stating your bull case? >> if you think about reits, utilities, financials that's 50% of the opportunity set in the value arena. the significant portion. i would argue industrials look pretty rich here. there are pockets of consumer discretionary that looks very attractive. also materials, scott, some of the fertilizer companies have been trashed. there are opportunities outside in materials, there are opportunities in discretionary as well. but those areas look much more interesting to tech. >> why would i go for reits or utilities when i can -- i'm already getting yields. what am i doing in those things or doing what tepper did? i got 6% on a cd? >> this is why the opportunity exists because the prevailing wisdom right now is own technology because that's going to give you the growth, and then own fixed income. >> you have the best balanced sheets. you have the balance sheets, you're sitting on mountains of cash. >> correct. but you're paying a lot in terms of a multiple. why were people selling tech a

year ago. they were selling it because of interest rates. they have forgotten this. now they're owning technology. it is up 35% off of the lows. >> because of a.i. >> a.i., yes, but did rates not matter? that is almost like a fairy tale now. is that really the reason people were selling these? the reason you stated because of fixed income, that's creating the opportunity. utilities underperformed by 20% year to date. >> rates have gone up a lot. >> and therein lies the opportunity. the reason utilities is underperforming, people were overpaying for defense. a year ago i sat on the desk and was bullish. they were priced very richly. we joked about hershey's chocolate chips and semi chips. now those areas are being dumped because people are chasing performance, chasing the underallocation of tech, and every reason you stated is why these are big time on sale. >> earnings, you are assuming they're going to live up to the

so-called hype that we get back to growth here in the fourth quarter and then overall earning projections for growth are expected to grow positive and the early part of '24 supposed to be better than that. >> yes. >> as a full group. >> i'm going to be choosy here. i'm not going to broad brush everything. if you look at reits, many of these reits, in the multifamily space, they are raising their guidance, scott. they're growing their ffo. home builders are expensive and the multifamily reits are cheap. the banks, we need to see positive revisions out of that. that's when you want to step in. in 2000 -- >> ahead of a possible recession? >> i think the recession is priced. they're underperforming by so much, in the banks. if you look at the valuations, it is back to march of 20 and '08. >> you don't think soft landing is priced?

>> that's an interesting question. i'm not really -- is it a soft landing for the banks? they have been blasted. is it a soft landing for the bond proxies? they have been blasted. we're seeing very interesting dislocations. think everyone is focused on the top group. let's not forget the magnificent seven were the measly seven not that long ago. nvidia was down 65% last year. now everyone can't get enough of it. >> because their growth projections have gone way up relative to a.i. >> they have. >> we're talking about a.i. in 2022. >> we weren't. but we're paying a lot for that now. >> the valuation on nvidia has come down over the last two quarters. >> the pe has come down. the price of sales is near an all time high. >> maybe. >> 33 times. >> guidance has gone up, the mu multiples come down. >> correct.

a lot of people are pulling demand forward and it is challenging for them to stay. it is an amazing company. they can do very well. i would argue on price to sales, some other metric, you're paying a lot. paying may for nvidia than intel in 2000. ten times price to sales for intel in 2000. it is a lot. a lot to pay. >> we'll leave it there. john, thank you. happy birthday too. birthday boy. >> thank you. up next, tracking the biggest movers as we head to the close. >> we're watching one sector that has gone from best to worst. we have the details up next. ry . all running on countless invisible networks, making it a prime target for cyberattacks. but the same ai-powered security that protects all of google also defends the systems running america's infrastructure. for these services. for the 336 million of us living here. ♪

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we're less than 15 from the closing bell on this friday. back to pippa stevens for a look at the key stocks that she is watching. pippa? >> energy stocks are losing

steam today, down 2% and the worst sector in the s&p 500. every component is in the red. led to the downside by the services names with halliburton, slb and baker hughes, all losing more than 3%. refiners, valero and philips 66 also under pressure. energy is still the only group in the green for september. and it is also the best sector for the quarter, up 11%. moving to walgreens, adding more than 5%, following a report from bloomberg that the company is considering tim wentworth former cigna exec as the next ceo. ross brewer stepped down from the post at the end of august. shares up 6%. >> pippa, appreciate it very much. pippa stevens. last chance to weigh in on our question of the day. we asked will the fourth quarter be positive or negative for stocks? the results are just after this break.

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we asked will the fourth quarter be positive or negative for stocks? majority of you said positive. two-thirds. an optimistic group, which we like. up next, carnival shares are dropping in today's session. that name down 5%. we'll tell you wt'has behind it, how it is impacting the rest of the stocks when we take you unside t inside the market zone. we must expand as well. we need to rethink... next level moments, need the next level network. [speaker continues in the background] the network with 24/7 built-in security. chip?

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mike santoli here to break down the crucial moments of this trading day. courtney reagan reacting to nike's post earnings rally. and much needed one, by the way. seema mody on carnival's quarter to sell off cruise stocks. mike, bad month, get out of here. >> a rough month. it felt worse than the actual headline loss on the index, like 4.5. for the third quarter, we're looking at basically 3.5% down on the s&p. you had down, up, down was the pattern. i do think that you paid a certain price here after a very exuberant july. i think the big question is it enough pain before you can essentially give way to a little bit more relief. i don't think you necessarily have to make too big a leap to say we aren't far away from that. everybody knows the market did get a little bit washed out.

i just worry a little bit too much that everyone is looking at the same indicators that say we have -- we come to the end of september, seasonality turns better, like it is a free lunch and automatic. the seasonal stuff worked perfectly to date. may be too neat and tidy for it to pick up. >> the prevailing thought is that earnings are going to be pretty good for this quarter. >> the way i think about it is the ability for investors to turn their focus to earnings is probably a welcome sign. they talk about how 116 s&p 500 companies have basically preannounced, given updated guidance on the third quarter. almost a quarter of the s&p 500 you have taken the suspense out of it. 64% is negative guidance. the rest positive. that's about the norm in terms of preannouncing ratios, negative versus positive. i think there is a benefit to segueing into corporate earnings season, maybe we get some confirmation, the disinflationary trend which we got today in the pocore pce.

what has been scary is the fixed income markets and to a lesser degree oil reacting to things that weren't just about the macro. >> courtney reagan, you look up relief rally in the dictionary, a picture of the swoosh. it was so much needed, right? >> you took the words out of my mouth, scott. that's what i was going to say. the stock was down something like more than 20% since it last reported. up 10% for nike. it was better than feared overall. i think that was the main read. the athletic giant did reiterate its guidance. nike's direct to consumer business, that's what it is focused on, it grew 6%. interestingly, store sales growth, much stronger than dig digital. the wholesale business, that was flat over last year. on the call, executives said the company is expecting its basketball and running businesses as well as air business to grow.

and it is forecasting it will do so. nike points to the fiscal 2024 as the turning point for more profitable growth and in the quarter they just reported, margins fell slightly. we're stronger than expected. some analysts are forecasting that this is going to mark the beginning of a longer term upward trajectory for those margins. the quarter cleared relatively low bar. not a lot of analysts moved on the stock recommendations, but a sigh of relief for what we're seeing there. >> appreciate that. seema mody, we might need boats to get home today. i don't know. what is happening with the stocks? >> carnival is warning of higher than expected fuel costs overriding what is a strong demand story for the cruise line. the ceo telling cnbc earlier today that the consumer has shown absolutely no signs of slowing down with record revenue. but if the higher costs, high to energy, that resulted in a softer guide for the fourth quarter, management adding that carnival is finding ways to make their fleet more efficient. shares have been volatile, down

5%. still up 70%. this makes it one of the top leaders in the s&p 500 for the year. stifel says those fuel costs are embedded in current valuations. >> seema, thank you. enjoy the weekend. mike, we got about 90 seconds, less than that now. about a minute. government shutdown over the weekend. >> look, you've cleaned up least some of the positioning issues, the flow stuff, people are worried about the end of the quarter, we didn't really see a big kind of selling crescendo into it. we're closing above the week's lows. we're closing right around the august. the point being, it is trying to bump along and say we have discounted a fair bit. but we're going to have a little bit of headline sensitivity going into next week. and, yeah, people should remember if they care to play the seasonal dynamics, it doesn't usually flip over with the calendar. couple of weeks before you can

start to say that we ought to be firming up, maybe around earnings season. >> you put it well, though, a moment ago, saying it feels a little worse than the reality. the average stock is down a lot more than the s&p. all of you at home, i'll see you on the other side. that does it for us. the bell is ringing. i'll send it to "overtime" now with morgan and jon. >> there you have it. ugly month and ugly third quarter. that is now in the books. that is the score card on wall street. the action is just getting started. welcome to "closing bell: overtime." i'm morgan brennan with jon fortt. the shutdown and your money. we'll talk about the potential impact on defense stocks with a top analyst along with former army secretary eric fanning.