transcript

Speaker 1:
[00:00] This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com/marketupdatepodcast or find Schwab Market Update wherever you get your podcasts.

Speaker 2:
[00:29] What made you confident that you could do something that hadn't been done before? I have no fear of failure.

Speaker 3:
[00:35] Trailblazing women changing the game.

Speaker 4:
[00:37] One of my favorite pieces of advice, think about what your boss's boss needs.

Speaker 5:
[00:42] Leadership can look in many, many different forms.

Speaker 6:
[00:45] It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things.

Speaker 3:
[00:51] Julia Boorstin hosts CNBC Changemakers and Powerplayers.

Speaker 2:
[00:55] New episodes every Tuesday wherever you get your podcasts.

Speaker 7:
[00:59] The bell is bringing an end to the trading day at the NYSC Newburger Berman, ringing the bell. And at the NASDAQ, it's Wing Venture Capital. Welcome to Closing Bell Overtime live from Studio B at the NASDAQ market site. I'm Mike Santoli. Melissa Lee has the day off. Stocks lower across the board, modestly so. The Dow down about 200 points. S&P 500 down around half a percent and a loss of about one percent for the NASDAQ. Actually, those losses were narrowed near the close. We'll have much more on the markets coming up. Also on our radar at the close, earnings from Intel due out any minute. Will they be strong enough to keep the stocks run going up 50 percent in April? We also got earnings today from Huntington Bank. We'll talk to that CEO. And a flood of huge IPOs is coming. We'll look at how all that money moving into new issues could impact the broader markets. Let's start with tech. As we're once again seeing a big split between chips and software. Seema Modi joining us now with this divergence Seema.

Speaker 5:
[01:56] Yeah, Mike, that's exactly right. The divergence between chips in software, that was really the big story. In fact, it was the biggest daily outperformance of chips over software since April 8th. Semiconductors getting a lit from Texas Instruments, its upbeat guide due to high demand for its analog chips that are becoming increasingly crucial to the AI data center build out. But the earning story in software failing to really lift confidence today, both ServiceNow and IBM citing the negative impact of the war. ServiceNow seeing a 75 basis point hit to subscription revenue growth, while IBM didn't deliver the upward revision to sales guidance that some analysts were hoping for. It was still a strong quarter, but the stock ending down by 8% on the day. Those results weighing on other names across software, names like Workday, Salesforce, CitiAnalyst calling it really a cautious start to large cap software earning season. And the street will be looking for further proof points when Microsoft reports next Wednesday, Twilio and Atlassian on Thursday. Elsewhere, United Rentals rising sharply after posting better than expected quarterly numbers boosted by the commercial property sector that stock up over 22%, its biggest intraday gain in six years, Mike.

Speaker 7:
[03:07] Yes, so many excitable erratic moves up and down. Stephen, thank you very much. Intel earnings are out. That stock moving, Christina Parchman, has the numbers. Christina.

Speaker 8:
[03:16] Yeah, moving quite dramatically. This first quarter results came in well ahead of expectations just across the board. Adjusted EPS earnings per share came in at 29 cents. That's against a street estimate of just a penny. That's the highest estimate on the street was actually 7 cents, so this just blew past even the most optimistic calls. Revenue, and that's why stock is surging 12%. I'll get to that guy in a second, but revenue $13.5 billion, that's 9% above consensus. The biggest revenue beat in over five years, that topped every single analyst's estimate. Gross margins coming in at 41% for the quarter. All three segments beat with Foundry and Data Center really leading the upside. I just spoke with the CFO, Dave Zissner, who said part of the beat came from inventory they had previously written off, product that they thought was end of life, but customers needed it, and they were able to move it forward, and also because of pricing. He admitted across the board, they have increased prices, and they will continue to do so. The guidance, very strong. Intel sees Q2 revenue of $13.8 to $14.8 billion. That's above consensus even at the low end. EPS and margins guide also beating as well. The CFO, Dave Zissner, said both pricing and improving output will be meaningful contributors going forward, so expect prices to go higher. On the client side, he acknowledged that memory costs have been going higher, and it's likely going to weigh on PCs in the back half of the year, but said that actually works in their favor because data center demand is so strong, they need to shift capacity over anyway. And then two last things. Zissner also said he now expects advanced packaging to be a multi-billion dollar per customer business, up from hundreds of millions of dollars. And on TerraFab with Elon Musk, he said that he's confident there's a win-win situation though the details are still being worked out between Elon Musk and the CEO of Intel, Lip Booth 10. So we didn't actually get any numbers, and I doubt there'll be any numbers provided on the earnings call regarding that TerraFab deal.

Speaker 7:
[05:10] Yeah, just another thing, I guess, to dangle ahead of investors at this point. So Christina, with the data center and AI revenue amounting to about 40% of product revenue in the latest quarter, I guess that really does speak to how this company's character is changing, at least in the minds of investors.

Speaker 8:
[05:27] Exactly, because the CFO also pointed to that they're not too concerned about PC prices going up anyways in the second half of this year, because they're going to be shifting their focus to data centers anyway. So that is telling you where their business is focused. And you can see the share price really just soaring right now, almost 17% higher solely because of the guidance, because the pricing increased, because they were able to find a home for chips that they were thought previously dead, which by the way, the CFO said they're probably not going to be able to do that next quarter, nonetheless, this is all helping the narrative that things are turning around at Intel.

Speaker 7:
[06:01] No doubt. I'm really just giving encouragement to the people who are chasing it into today, Christina. Thank you very much. Joining us now is DA. Davidson, Managing Director, Gil Luria. So Gil, I mean, look, the stock was up 50% going into today's close, this month alone. Here we are adding to it. Is it enough to really change the story in your mind?

Speaker 9:
[06:21] It is because this is the quarter where Intel joins the party, right? Nvidia, then Broadcom, then AMD, then Micron, all had these massive inflection points due to the demand for AI and Intel has not really participated up until now. Now we're actually seeing them participate in this. The reason why is the bottlenecks that have been created in the great AI compute build out are CPUs and advanced packaging. If before the constraints, the bottlenecks were around the GPU and the TPU and the Broadcom, AMD, NVIDIA chips and memory chips, now we also need CPUs and let's not forget Intel is still the leading provider of CPU chips and this is the quarter where this is going to start showing up for them. It showed up in the upside to numbers and it showed up in much higher gross margins as they're able to charge more for these CPUs. As Christina was reporting, even take some out of the trash and sell those, that tells you how desperate hyperscalers are now for CPUs.

Speaker 7:
[07:30] So what is the key question with the stock having done what it's done from here on out? In other words, is it about the duration of this type of scarcity, this logjam, is it about them just winning market shares, the whole pie getting bigger?

Speaker 9:
[07:46] Yeah, there's still a lot of execution ahead. So let's start with the CPUs. The CPU market again, we said they're in the lead, but they've been losing their lead. They've been losing share for a while to AMD and to Arm technology. NVIDIA has said they're going to start selling CPU only solutions, which they never did before. Arm said they're going to start actually making the CPUs, not just the intellectual property behind that. So Intel has to continue to execute. The great data center build out has to continue. So all those things have to happen. Then Intel still has a lot of execution catching up on the foundry side. And Christina has been talking about that a lot today, which is they still lose a lot of money actually making the chips. And unless they have big customers for the next node, the 14A node, there's very little reason to think that they'll stop losing money there. Just to put it in context, TSMC, the company that makes most of the chips, has 50% operating margins. Intel in its foundry business has 50% negative margins. So Intel has a long way to catch up, has to make sure TeraFab ramps up quickly, has to make sure that other customers come to that node. There's still a lot of execution ahead, but they're just at the right place at the right time with CPUs, with advanced packaging. And let's not forget the only major fab based in the US, which makes them much more valuable to all of their potential customers.

Speaker 7:
[09:11] I mean, I know you're not going to pivot on this on the fly, Gil, but were you still carrying a $45 price target? How are we supposed to value this business right now? Because as much as the guidance is a massive beat, and it still remains a relatively small piece if you look at revenue compared to the biggest competitor. So maybe that means people are willing to believe there's that much more runway.

Speaker 9:
[09:34] Well, without taking away the credit from the very positive result they just reported, I do want to go back to all those risks and say that there's a lot of other chip companies with not nearly as many risks that are trading a much lower multiple, right? Intel as of after market is probably trading at 30 times the product sales, which is to say even if you eliminate all the losses on the fab business, they're still very expensive compared to Nvidia and Broadcom and certainly the memory companies who have been executing well, who are already benefiting from the buildup. So there's a lot of ifs on the Intel story, a lot less ifs on other semi-companies.

Speaker 7:
[10:14] And in terms of the capital intensity of the business at this point, how does it compare to those others that you think more attractively valued?

Speaker 9:
[10:23] So let's not forget Nvidia, Broadcom, AMD, Fabless. They don't have to make their own chips. They have a lot less capex that they need. Intel has to invest a lot. Their balance sheet has gotten stronger, but they also just bought a facility in Ireland. So they don't have that much room and they still need to invest a lot in order to ramp up this capacity. And the good news is there seems to be a market for everything they're making. So as long as they line up customers for their next node, they'll be fine. But they are a much more capital intensive businesses than most of the chip companies. And TSMC, by far the main competitor on the manufacturing side, on the fab side, is a fantastically efficient company with 75% gross margins and a long track record of executing. So again, Intel has to invest a lot just to try to get better, to try to eliminate those losses on the fab side. And as long as that's the case, there's a decent amount of risk.

Speaker 7:
[11:21] Yeah. All right. Still something to prove. The share is up almost 14% in response to those numbers after hours. Gil Luria, thank you very much.

Speaker 9:
[11:29] Thank you.

Speaker 7:
[11:30] All right. Despite today's pullback, the market's been remarkably resilient, repeatedly shaking off Iran war headlines, and continuing to hit fresh highs, all as earnings season kicks into high gear. So what's driving this tape? What matters most from here? With us now to share their thoughts, Steve Sosnick, Chief Strategist at Interactive Brokers and Cameron Dawson, NewEdge Wealth Chief Investment Officer. Welcome to you both. Thanks for coming by. Cameron, it felt like today was a slight microcosm of the last few weeks. You did get this intraday pullback, 1.2% drop in a flash in the S&P 500, and then pretty much narrowed, semis leading, the conviction in the growth parts of this market are saving it at the moment.

Speaker 10:
[12:09] Yeah. I think that the key word there is narrow is that this market continues to get narrower and narrower. Once it was a story of all Mag-7 doing well, now it's really just a story of semiconductors doing well. To your earlier questions, it is a question about how long these last. We are having the most cyclical sector in the world being semiconductors experiencing super normal growth. The Sox will deliver 100% earnings growth this year. The question is, how do you value that? We are now trading at about a 22 times valuation for the semiconductor sector. The peak was 28 times back a few months ago. And so the real question is how the market digests this super normal growth and if it thinks it can actually continue.

Speaker 7:
[12:50] And I guess, Steve, the dynamics of a correction and a comeback from a correction are somewhat familiar, but there's been some extremes in this instance. You guys have isolated those in terms of the speed and persistence of the rally and the fact that it came right back to all-time highs.

Speaker 11:
[13:06] Well, we didn't even have a correction really, Mike. You know, NASDAQ barely made it 10 percent. S&P made about 9 percent from its highs. So this wasn't the interesting thing is when we've had moves of this nature, they've almost always come at the emerging end of a bear market. And it's because of some change in monetary and or fiscal policy. So I went back, I found the three instances. This is the third time we've had three weeks in a row of three percent runs in the S&P 500. 1982 when Volcker stopped fighting inflation and 2020 when there was massive QE and massive fiscal stimulus. This was just basically on hopes that the war was ending. And then, you know, SOX, 17 straight updates today. This is 42 percent, at least when I looked at noon, so it may be a little higher, 42 percent rally in basically like less than a month. And there is no precedent for this. The longest before ever was like nine that I could find. And these didn't even occur in the internet bubble, at least the internet bubble. You had three percent rallies, three weeks in a row, more than once in NASDAQ, in the NDX. SOX, this is completely off the chart, literally off the charts.

Speaker 7:
[14:12] I guess the question, Cameron, is whether we read that as sort of everybody overplaying the hand that they're confident in right here in terms of the AI trade and that it makes the market more fragile, or if it just shows you that, look, momentum is a real phenomenon, and you do have this quote re-risking process going on where a lot of investors felt underexposed near the lows.

Speaker 10:
[14:34] Well, we have had a re-risking. If you look at Goldman Sachs non-profitable tech up 30% over the course of the last few weeks, you saw the same thing with the most shorted names being up 30%. So that suggests not just a ravenous risk appetite, but some kind of positioning snapback. But the strength and concentrated nature of the market for semiconductors raises questions about 2027 earnings. Because it's likely that you slow down from here. We do know that hyperscalar capex will be likely cut in half in its growth rate in 27. And so as we get into the back half of this year, the market will be pricing in the 27 growth rate for EPS. And what's fascinating is that though we'll lose that massive tailwind from semiconductors, you still have an expectation of high teens growth for the overall S&P 500 for 27. So that would suggest that maybe markets have to kind of recalibrate to a lower earnings number as we look out into next year.

Speaker 7:
[15:28] And the earnings, as much as people are taking comfort in the estimates going up on an index level, it is still kind of lumpy within it.

Speaker 10:
[15:35] It's super lumpy because if you look at the full year of 26, a third of the growth rate is coming from two names, Micron and NVIDIA. So when NVIDIA is 7.5% of the S&P 500, it's growing at 96% growth rate this year. That likely slows into next year. And so you lose that as a big contributor.

Speaker 7:
[15:55] So much for the broadening, at least on a fundamental basis. Hang on one second. We do want to point out at the CBO, the staff and CBO families are ringing the Closing Bell at CBO in Chicago. It ends the regular trading day for options, of course, on take your children to work day. So Steve, one thing I've been mentioning is that you have a lot of the noise around the war. Everyone knows of geopolitical shocks are supposed to be buying opportunities. Wall Street likes nothing more than a narrative that says pain before gain. We're going to have to get through this period. It's going to be a little noisy, it can be a little messy, the macro environment is uncertain, but don't worry, the underlying fundamentals are okay.

Speaker 11:
[16:37] Yeah. I think that makes a lot of sense. Although when I talk to people, the questions I get are based on the person's generation. If you've been around a few cycles like I have, I've had dinner last night with a bunch of friends my age, who've been through the internet bubble, who've been through the global financial crisis, their first question is, what's going on? Why is everybody so incredibly bullish? When I'm with younger investors who came to light, certainly after the global financial crisis, but even in the post-COVID environment, every dip is a buying opportunity. Every nail, if you're a hammer, everything looks like a nail. And so they race to do this and nobody wants to miss out. And so I think that there is a lot of that disconnect, but I think the missing link here is you have a lot of, call them older folks, having to hold their nose and buy. You know, yeah, as Cameron was mentioning, the non-viable stuff that rallied, let's call it like Avis budget, you know, off of 7-Eleven. That's kind of the flight to crap that you get in a very frothy market. But I do think you have to have institutional managers of all ages holding their nose, because FOMO is very real if you're an institutional portfolio manager. If you're not performing, you've got career risk and I think the fact that this happened literally a year after a lot of people were caught wrong-footed in that environment is why we had sort of the lack of a reaction in the first place and this immense push afterwards.

Speaker 7:
[18:01] I get that and I certainly think you can see it in the rhythms of the market and the behavior. But Cameron, one thing that's interesting is, for as much as we're talking about this market kind of didn't look back and it's raised ahead, it's only up like 3% since late October. You look at the trailing returns over a number of periods and it's not like at the index level, things have been so good for so long. We had a bear market in 22. We had an almost 20% drop last year. So I just wonder if what we're seeing as a market that is heedless of risk actually is just kind of doing its thing.

Speaker 10:
[18:29] I think that it is digesting a very fulsome multiple. After all, at the end of October, we got to training at 23 times forward earnings, which was the peak valuation we got to back in 2020 when earnings were depressed. So you had record earnings with a record near record multiple. And I think the fact that the market has been effectively flat is us just digesting the fact that we were trading at an unsustainably high multiple and raises the question, can you get back there in order to meet some of these bigger price targets like $7,800 and $8,000 for the S&P?

Speaker 7:
[19:00] Yes, that's right. One of the bull lines right now is, well, we're not even back to the peak valuations. Who knows if we get there? Cameron Dawson, Steve Sosnick, thanks very much. Good to see you. All right, our oil closing up 4%, but off its highs of the day, oil and stocks, closely watching any headlines on Peace Talks with Iran. We'll get the latest on today's moves next on Closing Bell Overtime, live from the NASDAQ Market Center.

Speaker 3:
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Speaker 6:
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Speaker 2:
[20:58] What made you confident that you could do something that hadn't been done before? I have no fear of failure.

Speaker 3:
[21:04] Trailblazing women changing the game.

Speaker 4:
[21:07] One of my favorite pieces of advice, think about what your boss's boss needs.

Speaker 5:
[21:12] Leadership can look in many, many different forms.

Speaker 8:
[21:15] It really does come down to just trusting yourself.

Speaker 6:
[21:17] Life is short and you just gotta think big to accomplish big things.

Speaker 3:
[21:20] Julia Boorstin hosts CNBC Changemakers and Powerplayers.

Speaker 2:
[21:24] New episodes every Tuesday wherever you get your podcasts.

Speaker 7:
[21:29] Shares of Aramark moving higher today. This is a company you may be familiar with as they run concessions at sports stadiums and other commercial venues. But now even the hot dog vendor is trying to get a piece of AI. It's launching a new platform to enter the AI data business, saying it will provide housing, food and transportation services during data center construction. The company is saying it already has one top global hyperscaler. As a client, the stock up 2%. I guess the old coffee truck is not enough for these big construction sites. Now let's turn to oil, which was slightly higher today as the situation in the Strait of Hormuz remains unsettled. Pippa Stevens has the details for us. Pippa.

Speaker 12:
[22:08] Hey Mike, blanketing as high as 107.40 today after Israel's Channel 12 News reported that Iran's top negotiator has resigned from his role in the talks with the US. This is stoking some fears around the potential for ongoing negotiations. Meantime, US. Central Command saying it's now redirected 33 vessels since the start of the blockade. But Kepler's saying it's important to distinguish between redirection and seizing. Only a few ships have been seized, with the firm saying at this point, it's a deterrence story rather than an enforcement story. And President Trump saying today on Truth Social that he has ordered the US. Navy to, quote, shoot and kill any boat that is putting mines in the Strait of Hormuz. Axios reporting this afternoon that Iran has deployed more mines in the Strait, although it is unclear if that was prior to the president's post. Now Brent is now 22 percent above its Friday low. Gasoline futures hitting their highest level since July 2022, with diesel futures getting back towards the $4 level. Mike?

Speaker 7:
[23:07] A percent above the Friday low in Brent. Interesting. Pippa, we're also expecting pricing tonight for a nuclear IPO set to begin trading tomorrow. It will be the first advanced nuclear company going the traditional IPO path. So what do we know about that?

Speaker 12:
[23:20] So this is X Energy. They're looking to raise as much as $814 million. They did price in the 16 to 19 per share range, giving an evaluation of about $7.5 billion. I spoke to some sources earlier today who say that the book was vastly oversubscribed, multiple times oversubscribed. And one source said that they expect the IPO to price high or significantly above the high end of its range. And this is really the first time that a sizable advanced nuclear company has come to the market. And the company has a lot of heavyweight backers, including partnerships with Amazon, Northwest Energy and Dow Chemical. It also has received funding, more than 1.5 billion from the likes of Jane Street, Ken Griffin from Citadel, Aries Management. And so a lot of the blue chip investors and the more generalist investors who might not be nuclear experts have indicated that they're interested in this because of that very strong management team, as well as that list of backers. But of course, you know, anything can happen with an IPO, Mike. So we'll see what happens here, but there's been a lot of retail interest propelling these names. And so we'll see how they do when they price later tonight.

Speaker 7:
[24:27] Yeah, no doubt. I'm sure it's definitely a little bit of a of a stampede. We'll see how it goes. Pippa, thank you. Coming up, the saga of Avis Budget taking a big turn today. We'll have the latest details and the impact of the oil price spike is starting to hit areas of the economy. Up next, we'll look at one sector already feeling the pinch. Overtime will be right back.

Speaker 2:
[24:49] What made you confident that you could do something that hadn't been done before? I have no fear of failure.

Speaker 3:
[24:55] Trailblazing women changing the game.

Speaker 4:
[24:58] One of my favorite pieces of advice, think about what your boss's boss needs.

Speaker 5:
[25:03] Leadership can look in many, many different forms.

Speaker 6:
[25:06] It really does come down to just trusting yourself. Life is short and you just got to think big to accomplish big things.

Speaker 3:
[25:11] Julia Boorstin hosts CNBC Changemakers and Powerplayers.

Speaker 2:
[25:15] New episodes every Tuesday wherever you get your podcasts.

Speaker 7:
[25:21] The bottom dropping out of Avis budget again today as the short squeeze which sent the stock soaring is now coming apart. Stock hit an intraday high of 847 yesterday, closed at 229 today. Back to back 35% plus losses that leaves it 73% below yesterday's midday high. JP Morgan downgrading the stock to underweight but raising its price target to 165. Now let's turn to oil's impact on the economy. The surging cost of energy is starting to create a problem for home builders. Diana Olick has that story for us in this week's property play. Diana.

Speaker 13:
[25:56] Well Mike, the cost of both manufacturing building products and transporting them has increased quickly. In its latest builder sentiment survey, the NAHB reported 62% of builders saying suppliers had increased building material costs due to higher fuel prices including gas and diesel. Energy costs make up about 4% of residential construction material input and service costs. 70% of builders in the survey reported challenges pricing homes given uncertainty about material costs. And just about every product is getting hit. It's flooring from mohawk, windows and doors from cornerstone, paint from Sherwin-Williams and gypsum or drywall from certainty. Pulte Homes reported quarterly earnings this morning. And while CEO Ryan Marshall downplayed the effects of the war now, he did say if it continues, there will be real cost increases. But he added that they will not overreact to what he called the whipsawing of markets. For much, much more on oil and the builders as well as a look at the recovery in biotech real estate, it is all in this week's free property play newsletter. Go to it, cnbc.com/propertyplay. Mike.

Speaker 7:
[27:04] Diana, where do the builders stand in their ability to potentially try to recapture some of these cost increases through their own pricing? It would seem like maybe they can't necessarily share all those expenses.

Speaker 13:
[27:16] Well, but they're coming up against that affordability wall, right? We keep talking about how home prices are too high. The builders are trying to get the prices down. We did see prices come down in Pulti's earning statement for homes. But, you know, they also mentioned that they don't have the tariff issues as much now before. But does that offset the increase in the costs of building materials from the war? They've yet to see that come in. They're just expecting that going forward. In the last quarter, they didn't really mention much about it. But all the builders reporting this week said they could see what they called pressure if this continues. So they're not going to be able to lower prices anymore if they continue to have these higher costs.

Speaker 7:
[27:52] Yeah, if this continues is the huge swing factor with everything coming to a job site burning diesel fuels. So we'll see how it goes. Dan Olek, thank you. Time now for CNBC News Update with Pippa Stevens. Hi Pippa.

Speaker 12:
[28:05] Hi Mike. The National Transportation Safety Board today released a preliminary report in the deadly crash on a LaGuardia runway in March killing two pilots and injuring dozens in a collision with a fire truck. According to investigators, air traffic controller recordings captured the controller telling the firefighting vehicle to stop moments after it was given permission to cross the runway. But the firefighters did not know who the warning was for. The Department of Agriculture today said it's relocating about 2,600 employees on the Research and Food Safety staff from Washington as part of a broad reorganization. Most USDA employees already live outside the DC area, and the agency plans to move the current employees to five regional hubs in an effort to bring the workforce closer to farmers. And Italy today dismissed a proposal from a Trump official for the country to replace Iran in the upcoming World Cup. Iran has not withdrawn, and says its team is preparing to play. Italy's finance minister called the proposal shameful, that you need to deserve to go to the World Cup. Mike, back to you.

Speaker 7:
[29:07] All right, Pippa, thank you. Well, we've got a news alert on Nike, the company announcing it's cutting approximately 1,400 jobs in global operations, with the majority coming in technology. In a letter to employees, Nike says, this is part of its own WinNow action plan, saying it's not a new direction, it's part of the existing efforts that are already underway. Nike shares about flat, under 45 in after hours trading. Up next, we'll get a check on some of the stocks making big moves after hours, following their earnings. We're going to talk to the CEO of Huntington Bank, as that stock moves lower following its results. Closing Bell Overtime will be right back. Welcome back to Closing Bell Overtime, live from the NASDAQ market site. Stocks closing lower, down 179 points for the Dow, four tenths of a percent loss for the S&P 500, still holding above the 7100 level, the NASDAQ lower by nearly 1%. Intel soaring after reporting results, the stock up some 17% after hours, adding to what was already a big gain this month. Earnings were 29 cents a share on an operating basis. Analysts were expecting only a penny. Revenue also better than expected. Intel also raising revenue guidance for the current quarter well above the current consensus. Now let's get to the bond market as yields move higher today. Rick Santoli joining us from Chicago. Hi, Rick.

Speaker 14:
[30:33] Hi, Mike. Indeed. You know, once again, we continue to shadow box the oil market. And if you look at a 12-hour chart, it mean it was exact. If you look at when the high yield was in the treasury complex and the high pricing in the crude oil, it all happened right around 145 Eastern. And the reason that's so important is because as oil continues now to move up and get closer to 100, we see that 10-year yields right now, if you look at a two-week chart, had the highest intraday level reached since the 13th of April. The yield today, 4.36. And the reason that's so important is, if you look at the next chart, the market has been mostly sideways, but the ranges are getting bigger now. And most of the move really occurred right before the end of March. That 4.43 area close, that was the high close since conflict began. But that sideways activity, you can see the ranges are starting to get bigger, and the right side of that chart is starting to move up a bit. Should that get above 4.35 tomorrow, I would look for some more selling, push yields towards that high yield close that we had right towards the end of March. And do remember that with the Fed meeting next week, many traders are starting to get a bit nervous. Look for tomorrow's close to potentially be very aggressive should we start to get above that 4.35 area. Mike, back to you.

Speaker 7:
[31:56] Interesting trigger point there. Rick, thank you very much. While shares of Huntington Bank shares are reversing earlier losses after reporting first quarter results, while the company did beat help by higher fees, lower expenses and deposit growth, its Net Interest Income Guidance came in at the lower end of the range. Joining me now for an exclusive interview is Huntington Bank's CEO, Steve Steinour. Steve, it's good to see you. Thanks for coming on.

Speaker 15:
[32:19] You too, Mike. Thank you.

Speaker 7:
[32:21] So the story of course is about the business, what you're seeing in the quarter, this and next. But also, of course, you've been digesting a couple of sizable acquisitions. Where does all that stand in terms of integrating everything and having it all working together for the remainder of the year?

Speaker 15:
[32:39] Well, we had two sizable bank acquisitions and then some business lines last year from Jani and TM Capital at exactly year end. The business line, Jani and Capital, off to a phenomenal start. We had a record capital markets income. They contributed to that. In terms of the bank, we refer to these as partnerships. Veritex has gone very, very well. Malcolm Holland set the tone right from the start. That has been converted as of January. So they're all in the same system. We're moving forward now with a great team of colleagues who've joined us from Veritex. And with Cadence, which closed February 1st, Cadence is about $52 billion. Again, Dan Rollins, the CEO, set a remarkable tone right from the start. We've got highly engaged colleagues. We're moving forward rapidly. In both cases, we're going to get the expense synergies. Cadence will convert and go live on June 22nd. And then we'll have everything on one system. And our colleagues aligned. And we'll be able to start executing. We have a lot of product and other capabilities that we're offering to them, digital, et cetera, that will, I think, open up a great new revenue set of growth dynamics within the company.

Speaker 7:
[33:51] What are you looking for in terms of loan growth looking ahead? I mean, there's been some chatter among some of the analysts that obviously, you know, organically speaking, not due to these acquisitions, that you guys were running pretty hot in terms of loan growth and wondering if that can continue.

Speaker 15:
[34:08] Well, we're peer leading and we have been for several years and we expect that to continue. We do see some beginnings of concern about what's going on in the Middle East and the larger impact. Your prior guest, Mike Santoli, was referencing that in his comments about the 10-year, for example. So we hope this gets resolved quickly and if it does, we'll be back at or near the mid, if not high end of the range that we gave for the year. If it goes longer than that, then some customers may start deferring or even postponing indefinitely decisions to invest. So economic activity looks good. The consumer generally, other than the low income, in reasonably good shape. You saw that in the retail sales number. But things are a little tenuous right now. And hopefully, it's going to get to a good conclusion this quarter.

Speaker 7:
[35:02] And what are you seeing in terms of the tone in the commercial lending marketing in the corporate side? Naturally, a ton of attention there in terms of some of the non-bank lending happening. But is that filtering through in any respect to your business?

Speaker 15:
[35:15] Well, I think that we're not a big non-bank lender. So the private credit is not a big part of our portfolio of activity. Actually, I think it's going to provide opportunity for us on the margin. And so as we look forward, we've got great organic growth. We've had peer leading levels of growth now for a couple of years for the regional bank space. We had a good first quarter. We've got great momentum going into the second quarter, a nice pipeline. And I think that could strengthen if things settle down in the Middle East and get to a resolution.

Speaker 7:
[35:50] Yeah, I guess we all hope for something like that. Steve, thanks very much. Appreciate the time, Steve.

Speaker 15:
[35:55] Thanks Mike.

Speaker 7:
[35:56] Of Huntington Bank. Intel shares surging after a blowout earnings report. Stock came into the print on pace for its best month, more than 50 years. Up next, Fast Money's Dan Nathan tells us how he's playing stock, Closing Bell Overtime. We'll be right back. Welcome back to Overtime. Let's get another look at Intel. Those shares still moving much higher after its biggest revenue beat in over five years and a strong second quarter guidance, too, up 15.7%. Joining me now is Fast Money Trader, Dan Nathan. So among other things, what this report seems to say is the scarcity in certain parts of the semi-food chain has reached extreme proportions. They talked about taking old chips that they were gonna junk and actually getting able to sell them. How do you think about this business right now? It's transforming pretty quickly.

Speaker 16:
[36:50] Well, I think a lot's on the come here, right? So you just had this announcement that they're gonna be participating in the TeraFab, that is Tesla's Gigafactory down in Austin. And I think the expectation's there that this is gonna help broaden out their manufacturing. And this is a company, Intel, that has not have a great track record in manufacturing, despite the fact they wanna do it here, which is great. You know, you think about the scarcity of chips that you just mentioned, you know, Nvidia took a stake in this company. Think about that. Nvidia took a stake in this company.

Speaker 7:
[37:14] As did the US government.

Speaker 16:
[37:16] Which has been a great trade, by the way. I think it was like 20 and 24 bucks respectively, that sort of thing. So, you know, the fact that Nvidia was looking to help broaden out, you know, like, I guess access to chips that could help run these servers that go into the data centers that train the models, right? It just shows you that this has been a multi-year thing. You know, Intel is still very dependent on PC chips. I think they get more than 60% of their sales from there. So if you look at these CPUs, not the GPUs, they're gonna be used for inference, right? You go to your LLM, you type something in, you want to answer, it takes much less power, computing power, to do that. And then the other thing is if you think out, I think one of the reasons why the stock is up 100% a month is that we're hearing more and more about agents that are coming out from these models, right? And an agent is also kind of using inference for all intents and purposes. So, you know, CPU clusters, which is what Intel is providing, all of a sudden they're sending tens, if not hundreds of thousands of these things. So there's a lot of moving parts here. This is not something I was optimistic going into the print. I just thought there was a lot discounted into the number. That's clearly not the case. But the guidance beat up 10% revenues, the stocks up 15, 16%. That doesn't make a whole heck of a lot of sense. So to me, I suspect the stock probably fails tomorrow, gives a lot of this back.

Speaker 7:
[38:28] I was going to get to that because you also saw Texas Instruments up over 19% today on an earnings beat, granted. But it's almost like the market is kind of grabbing for any of the semis that haven't moved a ton. Yeah.

Speaker 16:
[38:40] And that's not like I was looking at this morning. I mean, 10% of their sales go into data center. This is Texas Instruments. And the stock's up 20%. Like that just in breaking out to all time highs. If you look at the SMH, that is obviously heavily concentrated in Nvidia, Taiwan Semi, Broadcom. This thing is up 60% in a month. I mean, Mike, you were around in the markets in 1999. We saw this sort of irrational sort of behavior. You can't take the guidance that Intel just gave or Texan just gave and make an intelligent argument why these stocks need to be trading at all time highs with this sort of furor.

Speaker 7:
[39:17] You're trying to rewrite the rules in terms of how much you pay for peak earnings or high earnings, if not peak. We'll see. Nvidia was down today, actually. It slipped back below 200 bucks down 1.4%. Dan, good to see you. Thanks, Michael. All right, SpaceX, OpenAI and Anthropic are just three of this year's highly anticipated IPOs. Up next, we're going to discuss how those massive companies that are going public could impact the broader market.

Speaker 1:
[39:48] As America celebrates its 250th anniversary, CNBC spotlights the companies that rose with the nation and continue to shape its future.

Speaker 17:
[40:04] I'm Craigy Zildjian, owner and president of the Avidis Zildjian Company, a manufacturer of musical instruments. The company was originally started in 1623 in Istanbul by Avidis Zildjian I. Avidis was an alchemist, and what he created was a unique alloy that produced beautiful, clear sounding cymbals. Then in 1929, my grandfather, Avidis III, relocated the company here in America. We've been proudly made in America ever since. America is the largest market for musical instruments, and the birth of jazz in America provided an opportunity. Being in America gave us access to these artists. They could come into the factory and we could make new sounds together. My grandfather was unstoppable. His resilience and deep passion led us through the Depression and World War II, where we had the war production board putting metal on allocation. When Ringo Starr from the Beatles performed on the Ed Sullivan show in the 1960s, overnight everyone wanted to be a drummer. That created a backorder of about 90,000 cymbals. It made Zildjian the symbol of choice for rock and roll drummers. Being a multi-generational company, we're focused on stewardship and the legacy of the brand. What makes a family business overall so successful is the long-term perspective that is unique to private companies. I think it's exciting to see that next generation of Zildjian family members learning the business and carrying on the core family values that have been passed down for generations. We're excited to see where the music takes us.

Speaker 7:
[42:02] Vortex reportedly in the middle of hosting analysts this week as it prepares to go public later this year in what could be the world's largest ever public offering. Given unprecedented size and open AI and anthropic likely following suit quickly after, are markets prepared to digest these monster IPOs? Joining us now is Rodney Comegys, Vanguard Capital Management and head of global equity there. And it's really great to get your perspective on this, Rodney. I mean, obviously, these are deep markets. We can absorb a lot of supply, but we're talking about at least $3 trillion, at least notional face value market cap. That's going to want to get into our indexes onto our markets. How are you thinking about that as somebody who has to kind of manage the way that some of the biggest index funds are handled?

Speaker 18:
[42:50] Well, Mike, first of all, thank you for having us. It's an exciting time for the market with three of the biggest IPOs in US history lined up to come to the market. But I think we have to keep in mind that as these IPOs come to the market, they're going to have a relatively small amount of free float. I mean, what we've heard, the talk is SpaceX only bring about 5% of the company to the IPO market. If it's a trillion dollar company, that's only $50 billion. That's actually not that much capacity. Now what usually happens with IPOs over time is they'll release more shares. So it'll take a number of years until the entire company free floats, if ever, depending on whether the insiders continue to hold it or not. So again, I think we have to think about it as a $50 billion index inclusion, not a trillion dollar index inclusion for market absorption purposes.

Speaker 7:
[43:41] Yes, of course. That is a good reminder. And just to be clear for folks out there, things like the S&P 500 only weights companies based on the amount of free floating shares that they have out there. Obviously, privately held shares are not counted in the weight. That being said, there's been a lot of talk and maybe some preliminary work done by SpaceX and others trying to perhaps speed their inclusion into some indexes, whether that means they don't have to be seasoned and trade on the market for a certain amount of time. Who knows what it means for the profitability standard. So is that something that you think makes sense? Because I do know if you own an index fund or run an index fund, you do want it to be representative of the corporate sector in general.

Speaker 18:
[44:22] Yeah, Mike, our Vanguard's best practices in this space are IPOs should be included in the index almost immediately within a few days after they list. And it's true that legacy index rules really thought about small free float as a reason to exclude them. There was enough shares available, but that was when we were talking $100 million IPOs, not $1 trillion. And a $50 billion available traded set, these stocks should be brought into the index as soon as possible. And you're seeing index providers change the rules, update them to match the modern stocks that are coming to the market. And we think that's a really good thing. Vanguard's best practice in this space for index providers is get them in. They're part of the market. Be a part of the investor's return.

Speaker 7:
[45:07] Makes sense. And again, just for folks to benchmark it, I mean, the S&P 500 is, I guess, pushing like $60 trillion in market cap or so at the moment. What about the notion of allowing index funds to sort of buy directly once the lockup expirations occur? In other words, to make it a more efficient way of these companies increasing their float into the index funds.

Speaker 18:
[45:32] Again, we're very much in favor of that. We would like, as people bring their shares to the market, the shares available in the available shares of the free float increase, and therefore the index funds buy them right away. In fact, most of the index providers today, when secondary offerings are brought to the market, now typically they were done by the company, we include them right away. The longest we really wait is a quarter to bring them into the index. So again, you'll see maybe a little bit of lag between lockup periods and index inclusion, but in some cases, if the blocks are large enough, they'll be brought right into the index. Back in the day when Facebook was unlocking shares and Mark Zuckerberg was selling some of his shares, we saw those included right at the quarter end. At the same time, they were bringing those shares to the market, we think that's a real good practice for index funds and really for investors.

Speaker 7:
[46:23] Yeah, it does reduce the friction, no doubt about it. Rodney Comegys of Vanguard, we got to leave it there. Really appreciate your perspective today. Thank you. That's going to do it for Overtime. Fast Money with Joe Kernan begins right after this quick break.

Speaker 2:
[46:37] What made you confident that you could do something that hadn't been done before? I have no fear of failure.

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[46:55] Life is short and you just got to think big to accomplish big things.

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[46:59] Julia Boorstin hosts CNBC Changemakers and Power Players.

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