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Closing Bell Overtime: Stocks Battered as Geopolitics, Rising Energy Prices Hit Investors 3/6/26
00:42:57
Markets react to fast moving developments in Washington and across asset classes: Adam Crisafulli of Vital Knowledge and Kevin Gordon of Charles Schwab assess the broader market backdrop and debate how investors should position amid policy uncertainty and macro crosscurrents. More tremors in private credit with Mark Pinto of Moody’s Ratings. Jim Paulsen outlines what the Federal Reserve’s next steps could be as geopolitical volatility and higher energy prices complicate the equation. Jackson Ader of KeyBanc analyzes bellwether Oracle ahead of its earnings next week. Our Sharon Epperson reports on rising 401(k) withdrawals and what increasing retirement stress may signal about the health of the consumer and the broader economy.
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- [00:00]
Melissa Lee
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Mike Santoli
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- [01:07]
Melissa Lee
The bells ring bringing an end to the trading day at the nyse. The next seat ringing the closing bell at the Nasdaq. Plug power doing the honors. Welcome to closing Bell Overtime. We're live from Studio B at the NASDAQ Marketsite. I'm Melissa Lee along with Mike Santoli. Stocks moving lower once again today following a big spike in oil prices and the president saying he wants an unconditional surrender from Iran. The Dow about 500 points down had been down near 2% in earlier trading. The S&P up 1.3%. The Nasdaq down percent and a half. The Russell 2000 the worst performer, its worst week since August.
- [01:39]
Mike Santoli
Let's dive into all the action. PIPA has the numbers on the big moves in oil. Rick is watching the volatility in the bond market and even Jabbers has the latest headlines out of Washington. But let's start with Christina Parts and evil is here with today's movers. Christina?
- [01:52]
Melissa Lee
Yeah, more specifically, the Dow posting the worst week in nearly a year last April though it clawed back from a nearly 100 or 1000 point loss. Earlier today you talked about the 2% drop small caps as you mentioned, the biggest laggards, worst week since August. And despite an escalating conflict with Iran and crude breaking $90 a barrel, the S&P 500 is still almost 4% from a record high. On the tech side, investors we know rotated out of chips and into software this week. In fact, the biggest weekly gap between the IGV and the SMH on record. You can really see that divergence just over the last week or so. Memory names Like Sandisk Micron among the hardest hit. But Microsoft actually caught a bid as investors treated the recent sell off within software as a buying opportunity. Palantir the standout up about 15% on the week. On the view that the Iranian conflict would be a tailwind for its government business. Marvell, a chip name that makes custom chips for Amazon, also hired today on a strong earnings guide and a potential S&P 500 inclusion. Traders trying to get ahead of the index, rebalancing demand. And then you've got Robinhood launching its first publicly traded venture fund ticker rvi. You can see we'll bring that up in just a second. Giving retail investors access to private companies like databricks, for example. And then hard pivot from tech to retail. Gap shares closing down 14% after an earnings miss. The company pointing to that historic winter storm which forced roughly 800 temporary store closures back in January. You can see week to date down about 17%. Guys. All right, Christina. Thanks Christina. Parts neveless. Mike, I don't know if you started the day and you said okay, we're going to have WTI and brent crude above 90 and we're going to have a jobs report. That wasn't great.
- [03:31]
Mike Santoli
That's right.
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Melissa Lee
Would you think the market would end here or lower?
- [03:33]
Mike Santoli
Most likely not. And even the semiconductors actually had a late day sell off and that did weigh on the indexes. So market continues to kind of pull the rabbit out of the hat. Down 2% for the week. It's definitely relying on trying to localize the damage in the direct sites of where oil matters. So you have airlines down 15% on the week, retail down four and a half percent. Not a joke. Equal weight S and P also down a lot more. So wherever there was air underneath an index or stock price, it got taken out. Non US stocks down 7%. So in other words, the stuff that had been performing and where people felt there was more profits to be taken. That said, I agree that the market continues to kind of stay in position for upside risk.
- [04:16]
Melissa Lee
Exactly.
- [04:16]
Mike Santoli
For this idea that you could get lucky or get a quick de escalation, I think people are coalescing around two to three weeks is when you have to get something resolved and have oil prices kind of revert lower before you really have to think about a swing in the macro environment.
- [04:31]
Melissa Lee
Yeah, I was surprised given over the weekend. Yes, you could have that off ramp. President Trump say okay, we've, we've achieved what we want to achieve and we're out. Which is unlikely. But it could happen. But then you could also have a strike on infrastructure. Yeah, sure, one strike on infrastructure. And I think the game changes on Monday.
- [04:46]
Mike Santoli
No doubt. And look, people are getting hedged up to the volatility index went out at 28 plus. That's pretty much the highs for this move. So it's clearly we have to sort of tense up ahead of what we don't know.
- [04:58]
Melissa Lee
Let's turn to the oil market. WTI posting its best week on record up more than 35%. Pippa Stevens has more on this PIPA.
- [05:04]
Pippa Stevens
Hey, Melissa. WTI is first settled above 90 in two and a half years and best week going back to 1983 when the contract started trading. This after Qatar's energy minister told the FTSE that all Gulf exporters could shut in production within days, sending oil to $150 per barrel. There's now 76 million barrels of oil in the Gulf with nowhere to go. That's according to JP Morgan, which said the market is quote, shifting from pricing pure geopolitical risk to grappling with tangible operational disruption. The Brent WTI spread narrowing today with again Capital's John Kildoff attributing it to Brent getting a stranded asset discount while WTI gets an availability premium and European natural gas jumping more than 60%. On the weekend we started to see LNG tankers headed for Europe u turn and instead sail to Asia. The spread between the two prices is increasing in order to attract more cargo to the Pacific. Finally, gas oil, which is European diesel hitting the highest level since 2022 and seeing its best week back to 1981 up here, 53%, guys, in terms of
- [06:07]
Melissa Lee
offsetting the pain of higher oil prices around the world, Pippa, I mean India is now allowed to buy some more Russian oil which had been previously sanctioned. So those sanctions lifted a little bit. How much more sort of cushion is there out there in terms of allowing some more supply, getting to where it needs to go?
- [06:23]
Pippa Stevens
Well, clearly the administration is watching this very closely. We also had a couple of hours ago the announcement of that 20 billion reinsurance program to try and get traffic moving through the strait once again. Then of course there is the option to tap the spro, although thus far officials have said that that is not on the table. We've also seen moves from Japan suggesting they might top some of their reserves. China also now putting a limit on exports of petroleum products. So it seems like every country is now trying to see what they can do in order to stem some of the upward price pressure. But I think what's going to be really key next week is we're going to see whether this moves from a logistical issue to more of a structural one. Right now given where Brent is trading six months from now. It's clear that the market is saying this is a short term issue but the clock is really ticking. And so next week will really be key for whether or not there can this can be a short term blip or a longer term issue that becomes more structural.
- [07:14]
Mike Santoli
Yeah. And with those forward prices much lower than the spot price, I guess it means not a lot of restart of production is going to be incentivized in the US Any time very soon, most likely. Piper, thank you. Let's turn to the bond market where the 10 year yield saw a significant move higher this week. Rick Santelli is in Chicago with more although Rick, we've been here pretty recently, haven't we? Yes, we absolutely have. Listen, I'm not diminishing the fact that we had some major U turn in the treasury complex because we had such significantly low yield closes one week ago today. Matter of fact we had the low close for this move on both pretty much every maturity on the curve. But of course that all changed. And for the week you see twos and tens there right now as it sits, two year is up about 17 basis points on the week. A 10 year is up about 19 basis points on the week. But here's what's interesting. Look at the right side of that chart. A two year has taken a little bit of a reprieve here. It's actually down in yield, up in price and the 10 year is hovering darn close to unchanged which means the yield curve steepened. Let's look at the week of the yield curve. 2's 10 spread and the reason I bring it up because we had a weak jobs report that kind of shook the market and shook it out of its funk here. And what it caused us to do is steepen because two year note rate slid because it potentially brings the Fed easing back a bit. And that did show up in the probabilities. Not huge but the probabilities of an ease are a little higher today than they were yesterday. And finally the dollar index week to date had a great week. That charts from Monday. If you look from Friday it's up about 1.6%. Mike. Melissa, back to you Rick.
- [08:53]
Melissa Lee
Thank you. Rick Santelli. Breaking news out of Washington as the president makes some comments on his meeting with the major defense companies this afternoon. Eamon Javors has got the details on this one.
- [09:02]
Mike Santoli
Eamon yeah, the president giving us a readout on that meeting on social media. He says he just wrapped up the meeting with CEOs of a bunch of defense contractors. He says the CEOs of BAE Systems, Boeing, Honeywell Aerospace, L3Harris Missile Solutions, Lockheed Martin, Northrop Grumman and Raytheon were all in the meeting. And the president says that it went well and that they've agreed to increase production. He says they have agreed to quadruple production of the exquisite class weaponry in that we want to reach as rapidly as possible the highest levels of quantity. Expansion began three months prior to the meeting and plants and production of many of these weapons are already underway. We have virtually unlimited supply of medium and upper grade munitions which we are using as an example in Iran and recently used in Venezuela. Regardless. However, we have also increased orders at these levels. The president going on to say that the meeting concluded with another meeting scheduled in two months. States all over the country are bidding for these new plants. So the message here, Melissa, twofold from the President. One is there's no concern about munitions shortage in Iran, but also that he's spoken to these defense CEOs and they've agreed to increase production and build new plants here in the United States that he said focused on high end or what he calls exquisite class munitions. Melissa, back over to you.
- [10:24]
Melissa Lee
You got to wonder if this lines up with the capacity that is available to actually quadruple production. You know, according to a lot of the defense analysts we've spoken to on this show, they say that we're pretty much at capacity right now.
- [10:36]
Mike Santoli
Yeah, I mean, that's a question for the CEOs who come out of the meeting. The president says they agreed to that. Do they say they've agreed to that and do they say that it was plausible to do?
- [10:46]
Pippa Stevens
Yeah.
- [10:46]
Melissa Lee
Eamon, thank you. Amy Jabbers, what was a Friday for the Bears with spiking oil prices, a negative February jobs report and more investor jitters around private credit. But markets holding up better than what many might expect. So are stocks poised to shake off the recent volatility or is there more trouble ahead? Joining us now here on set is Adam Crystal Fouli, Vital Knowledge founder, and Kevin Gordon, head of macro research and strategy at Charles Schwab. Great to see you both here on set. Adam, I'll start it off with you because you got to wonder if the markets are all thinking that it's going to be a limited conflict that will last two or three weeks and oil prices will go back down, I mean, very little has to change, deviate from that assumption for the markets to be completely offsides at this point.
- [11:27]
Adam Crystal Fouli
Yeah, there's definitely a little bit of complacency in the market. You know, I think like you said, it was very impressive throughout the week that we saw relatively resilient price action. Obviously you saw stocks decline, but you know, even today gets is given the volume of negative headlines. But I feel like the range that we've been in now for the last several weeks is going to hold in place and that's kind of where we're going to be for the next several weeks as we see this geopolitical tension resolve itself.
- [11:49]
Mike Santoli
Kevin, one of the things I always go back to is this idea that the last thing that made smart investors feel stupid is the thing they swear they're never going to do again. Is that last April, believing that we were in for a prolonged downturn and all of a sudden you had this V bottom and what if you missed it?
- [12:06]
Kevin Gordon
Well, yeah, I think that, you know, this really gets to the distinction that I've sort of used as a framework for this period over the past year which what's front page risk versus bottom line risk? At the end of the day, the s and P500 as an index is going to care if this flows into earnings and actually hits the growth estimate for the index and for corporate America. So not to say that that's not the case right now. Of course you can have the knock on effects from not just the rise in oil prices, but when you get a spike in gasoline prices that we've already seen. Does that affect consumption at a time when the labor market is in a weaker spot than it was in 2022 when we last went through this. But you have to have all of those sort of fall into place. I think right now the market treating this as sort of a bit of a non event in terms of the magnitude of the decline, which hasn't been that bad. I think it's right in that sense because it hasn't proven yet to be that much of a hit to growth. But of course if this extends into several weeks, then I think you have to really change that assumption.
- [12:55]
Melissa Lee
I like the line that you had, I think in your note redistributing opportunity over the past week. Is that the kind of market that you think we're still going to be in next week where we see some of the year's biggest sector winners pull back the most because it's an opportunity to to take some gains off the table?
- [13:08]
Kevin Gordon
Oh yeah, it's been, I mean the character I think of the market just year to date really in a good chunk of the past couple of years. And I think for the note about volatility and a lot of the churn that we haven't seen sort of at the index level even this this week, if you back it up to just year to date, prior to the beginning of this week, you'd already seen an amazing amount of churn under the surface. We've sort of been calling it the smoke on the water, you know, fire under the surface market because the average drawdown for a member in the s and P500 this year is already 13%. So you've had a lot of corrective activity. It's just happening in certain pockets and it's been isolated at times.
- [13:41]
Mike Santoli
Adam, in order for this range to hold, do we have to see more of what we did this week which is some of the laggard mega cap stocks did actually find their footing. I was just looking at the, the net contributors to the S and P on a week to date basis and it's Microsoft, it's Amazon, it's the stuff that hadn't performed. It seems a delicate dance to try and make sure that something big is, is rallying at all times while we wait for the, for the smoke to
- [14:06]
Adam Crystal Fouli
definitely, like you said, you know, dispersion is at multi year highs. You know, to your point, you're seeing this aggressive rotation beneath the surface and there definitely are some risks in counting on tech to act as a leadership group again. We just saw that right before the market closed. Another kind of a tape bomb, you know, concerning the Stargate data center. And we have another big earnings report coming up. So there definitely are some risks around tech, but I think, I think that you're going to see kind of some of the groups that have led year to date stabilize and still contribute to the market, which is why I feel like the range that the S and P has been in will be able to hold.
- [14:38]
Melissa Lee
It's interesting that you mentioned that Oracle headline regarding the surrogate because Oracle stock went down sharply but then it bounced right back up and that feels like the kind of market that we're in right now in terms of wanting to see past the worst of it.
- [14:49]
Adam Crystal Fouli
Yeah, and well you did see some, you know, some selling in some of the chip names associated with it. So there's definitely still a lot of anxiety when it comes to AI just from a few months ago where there was kind of uniform optics optimism. There's, there's a lot More, I think, consternation about pockets of that industry.
- [15:03]
Mike Santoli
You know, Kevin, by one way of reading the market, October was kind of the peak in risk appetite. It was when everybody thought it was nothing is it was nothing but tailwinds. Right. And you had the big peak in the air, names and all the rest of it. Since then, we first got to today's S and P level like five months ago, early October, because earnings estimates have kept going up. The PE multiple has gone from 23 to 21.
- [15:26]
Kevin Gordon
Yeah.
- [15:26]
Mike Santoli
So I guess there's a way to say, okay, the market's just kind of, kind of rebalancing here as the fundamentals catch up. And I guess though, that requires that. All we've been really worried about here is the war and energy and not financial stocks, you know, slipping and all.
- [15:43]
Kevin Gordon
I think this is where the index math just works against you if you're a cap weighted oriented investor. I mean, comp services, tech and consumer discretionary make up 55% of the S&P 500 market cap. So if you don't have those in a leadership position, you're not going to have an index that's rallying. That's you're going to get the result that you've had over the past five to six months, which is just this really aggressive chop under the surface. I mean, it has been a lot better. And I actually think it hasn't been sort of this coincidence that the rest of the market has done relatively well, of course, up until this week. But even if you look at some of the economic data, some of the turning points in the PMIs, you know, so far this year, the fact that we have started to see a stabilization in labor, I know February was a big, big miss, but average that over the past four to five months and it's still relatively stable, especially in the private workforce. So to me, it's not a coincidence that a lot of those components of the market have been working well. But the index math just works against you in that sense, especially if you're more exposed to a cap weighted index versus something that's equal weighted in nature
- [16:40]
Melissa Lee
in terms of what we've seen really bounce. I'm wondering, Adam, do you think once this war is, let's just say, magic wand wars over next week, do we still see IGV go higher? Do we still see what was left for dead? And maybe the trends had started prior to any sort of attack on, on Saturday, but do we see that action continue or do we go back to the playbook from before?
- [17:04]
Adam Crystal Fouli
I think some of the software names that have been completely washed out have a little bit further upside to go. You had a decent earnings season from that group. The January earnings were definitely, I think better than feared. You have some very aggressive buybacks in place. Some of the companies are buying back a pretty healthy chunk of their stock. And I think you've seen some of the announcements from the startups have been a little bit more kind of conciliatory, cooperative versus disruptive and displacing. And I think that's helping sentiment as well. So there still is some technical tailwinds for that group.
- [17:29]
Mike Santoli
I don't know, it sounds like you also just described the big banks great earnings. They have buybacks and they haven't been able to get out of their own way. So we'll have to see if you know if that's predictive of anything.
- [17:38]
Adam Crystal Fouli
But software doesn't have the private credit over.
- [17:40]
Mike Santoli
No, without a doubt, luckily.
- [17:42]
Melissa Lee
Adam, Kevin, thank you for coming. Nice to see see you. Coming up, we'll discuss whether investor fears from the conflict with Iran are exceeding the reality and if so, does that mean the market could soon spring back into rally mode and a perfect storm for private credit? That's what our next guest calls this current environment. Find out if he thinks we're on the verge of a full blown credit crisis. You're watching Closing Bell Overtime live for the NASDAQ markets.
- [18:11]
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- [20:12]
Melissa Lee
Welcome back. Financials among the worst performers today, down a little more than 1 1/2 percent. All the sector ETFs were lower, with the KB moving below its 200 day moving average for the first time since November. For the week, Interactive Brokers, State Street Truist and Goldman Sachs were among the worst performers.
- [20:27]
Mike Santoli
Well, sticking with financials, private credit exposed names also with big losses. BlackRock and Jefferies seeing the biggest drops. BlackRock falling after it limited redemptions in a private credit fund due to a surge in outflows. So how concerned should investors be about the credit market? Joining us now is Mark Pinto. He is the global head of private credit at Moody's. Mark, it's great to have you. So you say it's a perfect storm in the sense of what is driving this instinct for investors to pull money out of private credit. But it's not a credit crisis. So explain exactly where this friction is coming from.
- [21:00]
T Mobile/US Cellular Announcer
Yeah, not at this stage. It's not a credit crisis. It's really more of a liquidity crisis. And the perfect storm is in effect related to sector concentrations, dividend cuts, additional or elevated redemptions, and then against some of the macroeconomic backdrop you've just been talking about.
- [21:20]
Mike Santoli
So because the private credit funds have loved lending to software, because a lot of investors rushed into this asset class maybe thinking that the funds were a little bit more liquid on a real time basis than they were. So that's what we're, we're dealing with now. But you don't think that the underlying credit worthiness, the default profile is, is getting worse at a rapid Rate?
- [21:44]
T Mobile/US Cellular Announcer
Yeah, no, at the current time, we're seeing this really more as a liquidity issue issue and less as, as a credit issue. Over time, if a liquidity issue is extended, it can turn into a credit issue. What you're seeing today is a relatively new type of vehicle that private credit lenders began to sell and attract retail investors into. And these vehicles though are illiquid, are filled with illiquid assets. And I think they were sold as semi liquid funds. And semi liquid is a very fuzzy definition, I would say, and not completely accurate for how these types of vehicles work.
- [22:26]
Melissa Lee
At what point does this become a concern, Mark? At what point do you think it smells like a crisis? I mean, one thing can, you know, a liquidity crisis can be get the credit crisis to your point. So what point do you say, you know what, here we are?
- [22:40]
T Mobile/US Cellular Announcer
Well, we're going through this redemption phase right now. And so you've heard about some of the private credit lenders for these perpetual non traded BDCs raising gates effectively. They're not really raising gates. The way investors should be thinking about this is when they invest into these vehicles, they're integrated community. On a quarterly basis, the board of directors, at their discretion can lower gates and allow up to. There's a soft promise of about 5, 5% of the fund's assets can be redeemed by investors. What we've seen is investors seeking to redeem money that was higher than the 5%. And as a result, many of the private credit lenders have said, okay, if there's 7% redemptions, we'll honor those. If there are 17% redemptions, will honor those. So it's created a little bit of confusion. I would say we're at a watershed moment here. Let's call it a test. And I think the private credit lenders have passed this test, not with flying colors, but they've passed. And they've been able to pass it because asset quality has remained quite stable. And the evidence of that is, for example, when Blue Owl sold $1.4 billion of 1 of their of assets within 1 of their funds and the investments were sold at par. In one quarter's time from now, we'll go through this again where people will line up, they will seek to potentially look for new redemptions, more liquidity. And at that point in time, the question is whether, if needed, can these private credit lenders sell again at par?
- [24:23]
Mike Santoli
You know, Mark, one of the issues that some have brought up is not so much that let's say the software borrowers are in immediate distress. But they do require refinancing not too far out into the future on average. And so maybe we're not going to be able to get off this treadmill where people have concerns about the software business and then, you know, it creates a little bit more of an issue in some of these portfolios.
- [24:48]
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- [24:58]
Melissa Lee
Very well, Mark, we got to leave it there. We're having trouble with your audio. We apologize. Mark Pinto talking about private credit and how it's not a credit crisis but a liquidity crisis. Still the stocks tell, well, I mean a different story. The long term downtrend that we've seen, the sharper downtrend we've seen recently, although we've seen them bounce back.
- [25:21]
Mike Santoli
I think part of what the publicly traded stocks tell you is that people are concerned about any asset raising down the road.
- [25:27]
Melissa Lee
Exactly.
- [25:27]
Mike Santoli
So I mean as an asset class, what we thought was a real growth story maybe isn't any.
- [25:31]
Melissa Lee
And the growth was in the retail investor. And that's what Mark was talking about in terms of the misconceptions wanting the liquidity back. And what is semi liquid. Well, Oracle is the big name on next week's earnings calendar. Coming up we'll discuss that the stock is too cheap to ignore after its nearly 20% slide this year. And check out shares of day one biopharmaceutical skyrocketing today after Green to be acquired by French drug maker Servier for two and a half billion dollars to expand its oncology portfolio. That is a 68% premium to yesterday's closing price. Day one makes the only drug approved by the FDA to treat the most common pediatric brain tumor.
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500,000 new listings every month. You can find the one today. Download the realtor.com app cause you're nearly home.
- [27:22]
Mike Santoli
Make it real with realtor.com Pro's number one most trusted app based on August 2025 proprietary survey. Over 500,000 new listings every month based on average new for sale and rental listings July 2024 to June 2025 welcome back to Overtime. One area getting a boost today. Fertilizer stocks, Mosaic, CF Industries, Nutrien all outperforming today. Analysts pointing out those companies are likely going to benefit from tight supplies and and higher prices due to the war with Iran. More than a third of the raw materials used in fertilizer travel through the Strait of Hormuz. CF Industries posting its best week in nearly six years and hitting an all time high today.
- [27:57]
Melissa Lee
And you got to want I mean farmers are paying more without a doubt of food prices, farmers paying more plant
- [28:02]
Mike Santoli
less acreage, commodity prices go up. And also commodity chemicals had a big run this week as well for the
- [28:08]
Melissa Lee
same a lot of upgrades for Dow Chemical, for instance. Apparently between 11 to 15% of the global ethylene and polyethylene market are impacted by the war in Iran. Stuck over yeah. Time now for a CNBC news update with Angelica Peoples. Angelica
- [28:23]
Pippa Stevens
and Melissa Thousands are gathering in Chicago today to celebrate the life of civil rights activist Jesse Jackson, who passed away last month at the age of 84. Former Presidents Joe Biden, Barack Obama and Bill Clinton were among the speakers at the service. Obama praised Jackson's presidential campaigns, saying they helped people take his 2008 run seriously. A judge dismissed several charges against former Michigan football coach Sharon Moore after he agreed to plead no contest to new, lesser allegations. Moore was charged with felony home invasion, misdemeanor stalking and breaking and entering following his firing from the University of Michigan. His sentencing is scheduled for April 14, and residents of British Columbia will change their clocks on Sunday for one final time. The Canadian province is moving permanently to Daylight savings time, lining it up with the Yukon Territory, which stopped changing clocks in 2020. Most states in the US will also spring forward in the early hours of Sunday, so don't forget to set your clocks. Back to you.
- [29:21]
Melissa Lee
Thanks for the reminder, Angelica. Thank you, Angelica Peoples. Up next, we'll discuss whether spiking oil prices in a weakening job market could force the Fed's hand on interest rates.
- [29:40]
Mike Santoli
Welcome back to Closing Bell Overtime live from the Nasdaq Marketsite stocks end of the day in the red, but off their lows. The Russell 2000 was the worst performer off more than 2% for the week. The Dow off 2%. The S&P also down 2%. And the Nasdaq was down about 1.2%. It was its worst week since February 12th. I assume Staples and Energy eking out some gains today. While discretionary and Materials were the laggards. The software ETF, IGV seeing some buying this week, up nearly 8%. Sam, Sarah, Intuit, C3, I AppLovin and CrowdStrike all up more than 15%. Actually probably was the worst day since February 12th.
- [30:20]
Melissa Lee
The worst day. Yeah.
- [30:21]
Mike Santoli
Oh, I said that. Yeah.
- [30:23]
Melissa Lee
The attack on Iran triggered a big rally in oil, raising concerns about the possible resurgence of inflation. Crude surpassing 90 bucks a barrel for the first time since October 2023, prompting some Fed officials to shift their tone on rate cuts. If the conflict or the war settles quickly and the oil disruption that people are worrying about doesn't transpire and doesn't live for a long time, well, then we just see those things come back and we'd be back to a normal place. You don't want to act aggressively when you don't actually know that part. I'm hesitant to react to what's going
- [30:56]
Mike Santoli
on in oil until we know more,
- [30:58]
Kevin Gordon
but if anything it biases me toward
- [31:00]
Adam Crystal Fouli
even more dovish pulse.
- [31:01]
Mike Santoli
I think that's the standard Federal Reserve reaction function.
- [31:05]
Melissa Lee
With a new leader, Kevin Warsh, likely to take over the central bank if confirmed by the Senate in May, could rising oil prices complicate his eagerness to cut rates? Joining us now is Paulson Perspectives author Jim Paulson. Jim, great to have you with us. We see what the bond market is thinking about the prospects of inflation. How do you see this playing out and the impact on on the Fed's path?
- [31:27]
Jim Paulson
You know, Melissa, I just put out a piece earlier this week that looked at real private sector GDP growth and angularly it's 3 or it's 2.3%, which looks okay on the surface. But if you back out, the 11% comprised by new era spending, investment spending, the remaining 89% of the private sector, the economy is growing at 1% in the last four quarters. That is historically recession like growth for 90% of the economy essentially. And when you put that together, with virtually no job creation for the last 12 months and an average duration of unemployment now, as reported this morning, reaching almost 26 weeks a half a year. I'm kind of hard pressed to see how the Fed could stand pat and say that there's stability in the job market when it's flatlined and when 90% of the economy is growing basically barely 1%. I do think, you know, that the rise in energy prices could add a little to inflation, but it's also going to be another tax on the 90% of the economy that's not doing very well. And if we're concerned about inflation, the one part of the economy that is doing well, new era part of the economy, although it's small, it's growing so rapidly and it is a major disinflationary force. I think, I think the Fed's going to have a lot more pressure, particularly if we get any more bad job numbers, to ease interest rates again and to bring a greater policy accommodation.
- [33:06]
Melissa Lee
So do you see that the potential inflation risks brought on by the conflict in Iran either to be short lived and, or offset by what you call the new era disinflationary impacts?
- [33:19]
Jim Paulson
I do, mostly. I, you know, first off, you know, I think energy for the consumer budgets on average is now 2% or 2 and a half percent is all it is. And, and we'll see how long this lasts. It could, it could certainly pick up the cpi, but it's probably not going to last that long. And quite frankly, you know, when 90% of the real private real GDP is growing at 1% and no one's hiring, it's hard to see how we have a runaway inflation problem. I think the bigger problem in the room is let's try to get the big 90% of the old area economy going again. And I do think that's where the Fed's going to fall by default.
- [33:59]
Mike Santoli
Yeah. And I guess, Jim, for as much as the bond market has moved in terms of expectations, we're still talking about most likely a cut or two at some point later this year. I guess from the Fed's perspective they might say, sure, it looks like the tech capital spending is dominating the net job economic growth statistics. However, if that weren't happening, maybe the economy would be drawing that investment somewhere else. And besides that 4.4% unemployment rate doesn't seem like an emergency. Even if you haven't had very much job growth, prime age labor force participation pretty much near the recent highs. So I just wonder if, if from their perspective they don't have a whole lot to react to on the growth side yet.
- [34:42]
Jim Paulson
Well, I think we're in unprecedented territory though, Mike. You know, we have the unemployment rates risen by one full percentage point over the last couple of years during a so called expansion? When in the history of the unemployment rate going back to 1948, it's never risen during an official expansion at all, let alone by a full percentage point over that period of time. And I just don't know how long can we go in this country when someone looking for a job can't get one because there is no job creation going on. I think it's just sort of an unacceptable situation. Even if the aggregate numbers GDP are okay, if there's no hope for a job, I think it's just going to be something that's unacceptable even for the Fed to stand pat on that. And so I just, I don't know, of course, but I think the odds are that they're going to err on the side of trying to revive a big part of the economy that isn't doing well. You know, consumer confidence have been telling us for the last several years that things aren't that great out here. I know tech's doing well, but it's still a relatively small piece of the overall economy and most, most consumers are not feeling like it's that, doing that well out there. Here we have a President raising taxes with, with energy prices or with tariffs and we have a Fed that says that they could be patient. I just don't think it adds up.
- [36:05]
Mike Santoli
Yeah, that's, that's all very fair. Of course housing is, is certainly contributing to that poor consumer confidence as well. Jim, always great to catch up with you. Thank you, Jim. Paul?
- [36:15]
Jackson Ader
You bet.
- [36:15]
Jim Paulson
Thanks for having me.
- [36:16]
Mike Santoli
All right, up next, Oracle shares are down 21% this year ahead of its earnings report next week. So has the stock gotten cheap enough to buy? We'll discuss that. And as we head to a break, here's a check on some notable names hitting 52 week lows. They include Blue Owl, ADT Universal Display, Perrigo and Cody, which hit the lowest level since it went public in 2013. Welcome back to Overtime. Probably the most closely watched relationship in the market has been semiconductors versus software. You've had a somewhat of a reconvergence of these two sectors after the widest ever divergence. This is a five year chart of the SOX ETF along with the igv. And you see just incredibly how much semiconductors had outperformed software. This was the latest software panic when obviously the reports about AI disruption really got to the market. So we've had a comeback, but it doesn't look like a Whole lot. I would focus more on the absolute performance perhaps of semiconductors compared to the S&P 500 which is this next chart that's usually considered to be a pretty important bellwether group to remain somewhat in an uptrend in a leadership position. So far we're hanging in there. So this is the SOX relative to the S and P and if you just wanted to say okay, are we on trend or not? Still are. So you probably have a little more downside before you'd have to worry that we lost semiconductors the way we've kind of lost financials to some degree as well as consumer discretionary. But on to the software point and also the overall investment story. Oracle reports its Q3 earnings on Tuesday after the bell the stock has been a laggard. It's still more than 50% off its September peak and trading at a forward PE of around 21. So what can we expect next week and is this a buying opportunity? Let's bring in Jackson Ader, KeyBanc Capital Markets analyst to break down what is at stake for earnings. So Jackson, this is like, it's like a one stock wall of worry in a way. People worried about the credit, about the balance sheet, about capex. What are we looking for in these numbers to potentially calm some nerves?
- [38:24]
Jackson Ader
Mike, thanks for having me again. It's good to be here. I think next week what we are looking for is to see some execution from Oracle on the ever important Oracle cloud infrastructure revenue line. Oracle has remaining performance obligations sitting off of its balance sheet waiting to come into revenue. We would like to start seeing some of that revenue be recognized and show upside in that key metric.
- [38:51]
Melissa Lee
There is a report, Jackson, in just the past hour or so that Oracle and Open Air are going to halt plans to expand their Abilene Texas data center. What was your. We saw the stock immediately take a hit. It bounced back. But what's your take on. On that and how does that impact those RPOs that you're mentioning? And just the notion that that that was contracted and will not get built.
- [39:14]
Jackson Ader
Yeah, Melissa was timely, wasn't it? So yeah, about an hour ago there was a report that said the expansion plans that were originally reported last summer are now on hold or I should say, I mean they're, they're canceling to expand the Abilene Texas footprint for Oracle and Open Air. The existing contract between the two, the four and a half gigawatts, the $300 billion over many, many years. Absolutely still in place. It's just that this particular Expansion in Texas is not going to be a part of that contract. So if you're thinking, oh my goodness, you know, is the Oracle remaining performance obligation number at risk? No, this is, this would have been an expansion of their footprint. The contract is still in place, so it won't impact the RPO number that you mentioned, Melissa.
- [40:13]
Mike Santoli
So we're looking at for a company like Oracle, I mean, just burning cash for a couple of years out and who knows for how long in order for them to get scale in this area. You mentioned the remaining performance obligations, that is in a sense cost in the short term for them. Right. They have to build the capacity in order to execute on that. What does this company ultimately look like if this all goes well in terms of its operating dynamics? Is it kind of just a landlord? Is it just a massive cloud player like, like Amazon? What's, what's the destination here?
- [40:46]
Jackson Ader
Yeah, it's a good point. So remaining performance obligation for traditional software companies doesn't really pose much of a risk. It's not like you sign a contract and then you promise to go build a bunch of software on behalf of the customer. The software is already built. It's really just the passage of time that moves remaining performance obligation onto the income statement into revenue. But in this case, you know, with Oracle and with Microsoft and others, we are in the data center business. We are in the business of we sign a contract and now have to go build something. So it does introduce a different dynamic for remaining performance obligation for Oracle relative to its old just software business. So if I think about where we're headed in the future, Oracle will really be, I think a, you know, if all goes well, it'll be a two headed monster. It will still have its rock solid software base of enterprise resource planning applications and database software and a bunch of back office functionality software in applications. And then it will also, again, if we assume all goes well, it will also be, call it the fourth or fifth hyperscaler, whoever you want to include in that in that cohort. But they will absolutely be one of the hyperscalers and in a big way in GPU hyperscalers.
- [42:17]
Mike Santoli
And just real quickly, you're running with a $300 price target. So it's a double from here.
- [42:23]
Jackson Ader
We do have a $300 price target. That's right. Yeah, it surpassed 300 not that long ago, but it's been rocky, but yes.
- [42:32]
Mike Santoli
Gotcha.
- [42:34]
Melissa Lee
All right, Jackson. Thank you, Jackson Nader. Up next, the troubling rate that Americans are rating their 401ks to help pay for day to day expenses amid rising debt levels. Could that pose a risk to the economy? We'll dive into that one quick closing bell. Overtime live from the NASDAQ Marketsite returns.
- [42:59]
Mike Santoli
Welcome back to overtime. 401ks are supposed to be used to fund retirement, but more and more Americans are tapping them to pay for expenses now. Sharon Epperson has the details. Sharon?
- [43:10]
Sharon Epperson
Well, Mike, a growing number of Americans are Now tapping their 401k using hardship withdrawals. These 401k hardship withdrawals, according to the IRS, are for immediate financial needs. Now what we're seeing is an increasing in debt loads as well as ongoing affordability pressures that are driving these withdrawals, experts say, and as well as regulatory changes under the Secure 2.0 tax law which makes it easier to qualify. Vanguard data shows that the share of 401k participants taking out hardship withdrawals reached a record high in 2025 at 6%. At retirement provider Elite Solutions, the percentage of these withdrawals nearly doubled to 3.7% in the 12 months ending January 31, 2026. Fidelity has also seen a small uptake in hardship withdrawals at 2.7% in the fourth quarter of 2025. Now, while slightly more savers have been taking money out of their accounts. At fidelity, the average 401k account balance saw double digit gains last year and the number of 401k millionaires rose nearly 24% in 12 months. You can check out my Money 101 newsletter for alternatives to tapping your 401k, including the best places to stash cash to get stable returns. You can use the QR code right there on the screen or go to cnbc.com money101. Back to you at the Nasdaq.
- [44:37]
Mike Santoli
Sharon, what what are the kind of pros and cons do you think or what would an advisor say about trying to get one of these hardship withdrawals or simply borrowing against the 401k balance where there's kind of a structured repayment plan?
- [44:53]
Sharon Epperson
Well, definitely they say that it's better to take the 401k loan. It's again, that loan is not taxable and you are paying yourself back. But again, you could be paying a significant amount of of interest there, but at least it's going back into your 401k. The key is to not stop contributions. And when people take money out either with a loan or for 1k withdrawal, it's because they need to free up cash. So they're likely not making contributions at that time either. And so that they're not getting the dollar costs averaging. They're not getting that long term growth. So the key is to really figure out what your goals are so that you know if you need money in the short term, if you need money for emergencies, it should not be in the stock market and it should not be in your 401k. There are better places to put cash. A lot of advisors saying they are now telling their clients for the part of their investment portfolio that is in cash, maybe put that in short term treasury bills or Treasury ETFs or a high yield savings account for some is probably the best place to put an emergency fund somewhere that where you can have the liquidity that you need, the access that you need to get to that money when you do have that immediate and heavy financial need, which is what a hardship withdrawal is for.
- [46:05]
Melissa Lee
Yeah. No penalty. CD also fits the bill. Sharon, great to see you. Thank you, Sharon.
- [46:09]
Sharon Epperson
Yes it does. Yes it does.
- [46:12]
Melissa Lee
Let's get you set up with next week's trade on the earnings calendar. Hewlett Packard Enterprise will report Monday, Oracle and Kohl's the highlights Tuesday, Campbell's out on Wednesday and Adobe, Ulta Beauty, Dollar General, Dick's Sporting Goods and Lennar will report on Thursday. And on the economic front, we'll get exactly existing home sales. That's on Tuesday. Consumer price index the big thing on the watch for Wednesday. Thursday brings a producer price index and jobless claims. And the week closes out with the latest GDP report, personal income, consumer sentiment and the Jolts survey. But of course oil prices are going to be a key determinant.
- [46:43]
Mike Santoli
I was going to say, yeah, we are in kind of crisis mode trading and obviously that's going to be sort of the one variable that drives everything. So you know, two days of news to get get behind the open on Monday been sort of impressive. We were down 2% s and P this week given everything going on. Well, that does it for overtime.
- [47:03]
Melissa Lee
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Melissa Lee
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Pippa Stevens
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Melissa Lee
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Pippa Stevens
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Melissa Lee
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