10-Year Yield Pressures Stocks, DELL & PANW Earnings Show AI Acceleration

**Diane** (0:00)
Let's bring in Tom White, co-host of FastMarket, to help set up the action today.
Tom, okay, we started out September week, and, you know, initially futures were under pressure. Yields have pulled back from their highs. What's your big picture take?

**Tom White** (0:15)
Yeah, that's going to be the whole story, and that's going to be the narrative. And I've been talking about this for weeks, Diane, is the fact that, hey, you have to watch treasury yields for direction for the equity market, and that's playing out in synchrony at this point. You know, you hit, you saw the 10-year yield benchmark in the US hit above 4.81%. That's the highest level since November of 2023 And that put pressure on equities once again after the rise in yields yesterday, where we hit 4.8% at the top end. So, we've seen that pullback today, and now you've got the S&P 500 futures relatively flat to slightly positive now. So, you're going to have to watch this correlation or reverse correlation trade play out here at this point. Now, the big culprit behind that rise in interest rates, besides the global yield perspective continuing to expand, is the price of crude oil. Now, crude oil was up this morning above 90 bucks a barrel. Now, we're pulled back. We're down over 1% now in crude oil. So, that's alleviating some of the pressure of yields rising and pushing back against the narrative of rising equities at this point. So, just continue to watch that correlation or anti-correlation trade at this point, because that's going to be the narrative. Now, as we get through earning season, geopolitical tensions are on the rise, right?
Rising oil prices, denting what we're seeing as far as maybe growth expectations, inflationary pressures rising, the expectations for a rate hike in September continuing to rise, after Fed Chair Warsh's comments out of Jackson Hole last Friday. So, there's a lot of variables that are impacting the equity market right now. Now, we saw that pullback yesterday. If we can see some consolidation in yields, maybe a continuation of a pullback from these basically year and a half of highs and more now in yields, that would definitely help the outlook for equities here moving forward. But remember, September is historically a volatile month.
So, with all these different variables impacting the equity market, I expect this volatility continue even though the VIX was up 9.5% yesterday, back above the 16 level, it's still historically low, especially in this type of environment with all these different things that are impacting markets.

**Diane** (2:46)
And we're seeing the shifting sands play out real time, as you mentioned already, and we're just in day two. So, we've barely kicked off September. Oil continues to be in focus. We've pulled back now.
Quick thought on where we sit now with oil prices.

**Tom White** (3:02)
Yeah, you know, if this continuation of the battle back and forth that started a couple days ago with the US bombing some sites in Iran, picking it up yesterday afternoon, that kind of sent markets to the lows of the day.
If we get some stabilization there, there's going to be an announcement down in Venezuela today, some partnerships between the US and the Venezuelan government and some of the companies that are involved in the extraction of oil down there. That might appease the oil markets at this point. But if these, you know, this tit-for-tat back and forth on, you know, whether it's us bombing Iran, Iran reciprocating there, that's going to be the tail of the tape, I think. Now, if this economic pressure that we're putting on Iran at this point continues to ramp up, will that allow that, allow discussions between the mediators, whether it's Qatar, whether it's Pakistan and others to try to get Iran and the US back to the table? I think that's going to be the key moving forward here, as we sit near the $90 a barrel level.

**Diane** (4:12)
Okay, let's talk Dell. As we went into its earnings, expectations were high, especially given the run that it's had. But look, it knocked the ball out the park. Walk us through some of your takeaways here.

**Tom White** (4:24)
Yeah, I mean, the bar was high, but they beat every metric. They raised guidance. You look at revenue overall, grew 58% year over year. That beat by over $2 billion as far as revenue expectations. Just EPS was up 203% year over year to $7.04.
That was above the expected about $4.90.
You look at the infrastructure solutions group, that was $31.8 billion. That was up 89% year over year. Their AI optimized servers, $16.4 billion. I kind of hit on this yesterday on our show. That was up 100% year over year. A new record for AI orders of $60.9 billion, $95 billion in AI backlog that continues to surge to the upside. Then you look at some of their legacy parts of their business, traditional servers and networking, that was up 122% year over year to $10.5 billion, and storage was up 26% year over year. So yeah, this was just a blowout earnings. They raised guidance.