Closing Bell: Cybersecurity Stocks Surge, AI Safety Fears Loom 9/14/26

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Melissa Lee (1:00)

Welcome to Closing Bell.

Leslie Picker (1:01)

I'm Leslie Picker. In for Scott Wapner today. This make or break hour starts with a run in rates and a slide in stocks as new AI fears hit the street. We'll have the latest on the AI fallout coming up. But first, here is your scorecard with 60 minutes to go in the trading session. Well off the lows of the session, the NASDAQ now down only a quarter of a percent, the S&P down 0.3% and the Dow down about 0.2%. And that leads us to our talk of the tape with the 10-year yield topping 5%.

It's backed off a little bit from that level, but what is at play for the Fed and Wednesday's highly anticipated rate decision? Big questions here. CNBC Senior Economics reporter Steve Leesman kicking us off today with whether Fed Chairman Warsh has the votes to hike.

Steve Liesman (1:45)

Steve.

Hey, Leslie. Yeah, an analysis by Deutsche Bank of FedSpeak, it uses a large language model. It finds that 12 voting members of the Federal Mark Committee are the most hawkish they have been in the five years they've been doing this study. On a scale of one to 10, with 10 being the most hawkish or inclined to hike, the analysis of Fed communication gauges the 2026 voters as the most hawkish is 2021 A 7.2 score on a scale of one to 10 Deutsche found nearly all voters have become more likely to hike since the last meeting and that notable rise in hawkishness is the beginning of the Iran War. The three dissenters for a quarter point hike at the last meeting, Hammett, Koshkary and Logan, they're seen as among the most hawkish, but importantly, Deutsche puts Fed Chair Kevin Warsh right up there with them. Governor's Cook and Barr took sharp turns towards that hawkish wing. There aren't really doves so much as centrist that could go either way, like Governor Waller, New York Fed President Williams, Paulson from Philadelphia and Vice Chair Jefferson.

Now, the probabilities, futures prices show 93% probability of a rate hike this week, 80% for a second hike in December, and even 68% for a third hike in March 27 These probabilities are volatile. They change quickly with data or Fed speak, but they reflect where the market is thinking, what the market is thinking right now. The 10-year near 5% along with the 2-year more than 100 base points over Fed funds, it's a signal to the Fed that the market thinks rates should be higher. And Warsh has already said, Lesley, as you know, he's looking for those signals from the market.

Leslie Picker (3:20)

He has indeed, and the market is giving him pretty volatile signals, so we'll see how he digests those along with the committee. Steve, thank you. Let's bring in our panel, MetLife's Drew Mattis, Ned Davis, Research's Ed Klessold, and Northwestern Mutual's Matt Stuckey. Thank you all so much for being here. Drew, why don't we start with you?

What's your expectation for this week with the Fed? Do you think we see a hike?

Drew Mattis (3:45)

I do think we see a hike.

Do we think one's necessary? No, but it seems like the chairman walked himself into a corner and he's going to be stuck delivering. I don't think he's as hawkish as actually that last graphic showed, but I do think that he's committed to kind of moving rates higher, and I think he's going to follow through with that. I think you'll also see former chairman Powell join him in that.

Leslie Picker (4:09)

Ed, what do you make of the dynamic right now with regard to the 5% yield? I mean, is the market doing anything with regard to tightening the financial conditions that may relieve some of the pressure on the Fed to do so?