Welcome, everyone. We are live from the headquarters of T. Rowe Price in Baltimore, Maryland, a show we chose to take on the road. Few companies represent better the evolution of the demand side of U.S. capital markets for how ordinary Americans gain stocks. That story started about a mile and a half from here when Thomas Rowe Price, Jr. came up with two unique ideas: start an investment firm that charges clients a fee on the assets managed rather than commissions, and focus on growth stocks—well-managed companies and fertile industries for decades.
Those ideas proved to be brilliant, and in 1950, he opened the strategy to ordinary Americans with the T. Rowe Price Growth Stock Fund, one of the oldest continuously operated, along with the small-cap focused New Horizons Fund introduced in the '60s that would help entrench T. Rowe Price as one of the great retirement machines, allowing U.S. households to participate in the stock market without all of the fuss to pick the individual stocks themselves. The rest of the financial world has gone with that business model, turning Price's mutual fund craft, paying skilled humans to pick stocks, into one of the most constructive franchises in finance.
The past five years or so have been the most consequential since the company's founding, and the changes have been dramatic: the acquisition of private credit powerhouse Oak Hill Advisors, the 2025 landmark alliance with Goldman Sachs to bring alternative assets interval funds to Main Street, and less than two weeks ago, a deal to buy fixed income ETFs, and there is even a crypto fund. 90 years in and over $2 trillion under management, T. Rowe Price is letting them play again: find where the growth is going and get there early.
For the next two hours, Bloomberg broadcasts live from inside that story. We hear from the CIO, chief economist, ETF portfolio manager, head of global distribution, and the man in Thomas Rowe Price's chair on the future of this firm and the future of an industry that this firm helped invent. This is The Close.
The countdown is on. Everything you need to get the edge at the end of a market day. This is The Close.
Here on the last trading day of August, two straight months of losses, but still some questions about the concentration of gains: Nvidia, Microsoft making up close to 60% of the move on the S&P this month. We kick it off from T. Rowe Price headquarters in Baltimore with the CIO and co-head, Sébastien Page, who helps lead investments across the $1.9 trillion firm. He also co-chairs the committee that sets the foundation. That committee you came into 2026 on the broadening of the market. As we learned, let's find out if he still believes it. Thanks for having us on your home turf.
This is so exciting. You know what I like the most about this? Right before we went on the air, your cameraman turned to me and said, "I'm a T. Rowe Price investor." I can't wait to start the discussion.
You are responsible for a lot of money now at a pivotal time for markets. You see the outperformance over the last few years with a lot of these AI names and tech-related names. We saw a breakdown in July. It's bounced back in August, but there are questions about where leadership comes in.
I think markets continue to broaden. Let's highlight how strong momentum has been. If you had simply bought the top 10 performing stocks in the S&P every month just looking at the prior year, for the three years leading up to June—this is just returns ranked by the top 10 performing—you would have outperformed the S&P by 40% a year. This is how strong momentum was going into June. In July, that trade reversed and went down 28%.
But momentum here has been a major factor across investment platforms. We have 500 investment professionals. We publish 10,000 research notes a year. Thousands and thousands—we are all obsessed with the models. And this is part of a broadening of the AI trade itself.
When we talk about the performance of momentum, it's been meaningful. It wasn't just July; we saw that in August as well when you look at some of the main factors, whether on a long-short basis or a long basis. Have people given up on that momentum? Are people still chasing?
I think we have momentum in the economy and in the AI trade. We are looking at $3 trillion of spending over the next years. Momentum is rotating on the bottlenecks. Think about this for fundamental research: our equity team looking at where the bottlenecks are, going from compute to memory, to cooling, to the electrical grid, to the components. Small-cap companies that own a little component—we call it the golden component—that becomes a huge opportunity for the stock to outperform. It is broadening because the economy in general is doing quite well—6% growth. It's also the AI trade itself.
You've been pretty prescient on a lot of this, particularly the capex spend. I see numbers thrown out for $1 trillion in capex for this year, which is materially higher. But then you heard from some of these companies they are already out to 2028 and don't see a letup.
Earnings last week—Jensen was talking about 7% growth from here for the next 12 months, and something that could be even higher. This is tremendous revenue growth. A year or two ago, people were asking, "What is the monetization of AI?"
They are still asking that.
OpenAI was adding users the fastest, probably to close to a billion users of anything ever built in technology. You started to see it. You see it in the demand—we know it's real and transformational. But you also see it in OpenAI growing their revenues in about a year from $20 billion to $50 billion; Anthropic from $5 billion to $70 billion. And by the way, that is still growing. Nike and Coke, they're $50 billion in revenues, just to put that in perspective.
I do have to ask about the history. Everyone wants to draw comparisons to dot-com or the telecom boom and bust. People are still talking about tulips. You don't see any parallels at all? Not saying this is an exact one-for-one, but particularly as someone who has to allocate, are you keeping that in the back of your mind?
There's always a risk of overinvestment and speculation. The price-earnings ratio was 30 a year ago; it's down to 21. This is how strong earnings have been. The valuations for the S&P 500—if you look at the momentum trade, momentum over long times, if you chase past-performing stocks after the fact, it doesn't make money. The last time it was as strong as over the last three years was the tech bubble, so there is a comparison there. You look at the momentum stocks and the fundamentals: their margins are eight times higher than the momentum stocks at the peak. Their return on equity is nine times higher, and their cash flow is a third. So it's not the same kind of momentum, the same kind of speculation. This is an industrial revolution based on technology.
I realize I sound really bullish. Markets are expensive by many traditional measures. We're modestly overweight stocks. When I look across the platform and I use AI to read the 10,000 research notes, I see enthusiasm.
Let me ask from a different angle rather than being invested in the space. It seems like everybody is on different levels of bullishness, but there has been a concern no one was really hedging for the downside. We have a big wake-up call for the downside last week from Kevin Warsh's speech: a hawkish Fed, inflation still persistent, the cost of capital that's already materially higher than a year ago and likely potentially even higher heading into next year. Does that worry you?
I think Kevin Warsh did well. He defined inflation much more precisely talking about PCE. He said it's high, he took accountability and says it's our job to address it, and then he hinted the employment market is in balance and looks quite fine, and consumption is pretty good. So take the whole message: it comes out pretty hawkish. The long rates rising is a concern. I'm sure you talk about it on your show. Everybody who comes has a different explanation of why long rates are rising: including because of growth in productivity or inflation; it could be because rates outside the U.S. are rising as well.
There are people who come on and say it's just an inflation concern, saying this is more term premium and the fiscal deficit. What is your explanation for why we saw that in the 30-year yield and even today, if you want to look at the benchmark, the highest in a year and a half?
The dominant narrative is it's deficits and term premium. You can send to strategists a request to define the term premium, and if you send 10 letters, you will get 10 different definitions back. It's a technical term. I noticed something: I think the markets underestimate term inflation on the long rates. The breakevens haven't moved by a lot, so they're not pricing out inflation at all. I look at the correlation between oil prices and the 10-year yield or the 30-year yield: around 80% on the 30-day moving average, and that's the 90th percentile. This could be the war will go on for longer trade that creates more deficits, but it also smells of inflation concerns.
We have seen a bit of a breakout in yields. I'm curious what that says.
I think we are in a regime where you could see higher productivity due to AI, and higher nominal GDP growth and higher real GDP growth. I think that's what you're seeing on that part of the equation. Yes, protection portfolios—if someone sees me and says, "What are you thinking of markets?" I would say the same thing: invest, but hedge inflation risk.
I do have to ask you: you're running the multi-asset business to co-head of all investments here. That's a pretty big task. I'm curious about your background. You are here in what most people would describe as a kick-the-tires fundamental shop. Is that in conflict with each other?
It is complementary. I love you're asking that question. Portfolio construction, risk management, plus deep fundamental insights. In a world of AI, a lot of the basic math is getting done automatically. The fundamental research, reading reports, and so on is being done automatically. What are you left with? You are left with insights: thousands of meetings our analysts have with CEOs around the world and very deep discussions with CFOs on insightful research. That's where you build an edge in active management.
Really appreciate you having us here. Sébastien Page, CIO and Co-Head of Global Investments at T. Rowe Price, kicking off our special coverage from their headquarters live in Baltimore, Maryland. We will catch up with their chief economist to talk a little bit more about where she sees rates going. We'll hear from Jodi Love and the head of global distribution, and of course we will hear from the CEO himself. All that and more coming up on The Close. This is Bloomberg.
Welcome back from T. Rowe Price headquarters in Baltimore, Maryland.
We have a big interview on deck, and I enjoyed your chat with the CIO. He talked about the broadening of the AI trade and how momentum is keeping this market going. He sounded pretty bullish overall, and they are overweight stocks.
He's been very clear about this. In fact, the whole team here. I don't think it's really a surprise, but it's also the idea of: do you start to hedge now or lean deeper into this? He is the guy who has to make these decisions as to the best way to allocate money. It's hard to understand—it's a firm that touches so many people in terms of their retirement program. It is not just playing with house money. This is about really managing and being the proper fiduciary for everyone else's money.
And we have a fantastic lineup ahead. More to come; we will check in with you shortly. A quick market check, and we're looking at the S&P and Nasdaq lower. Bonds are also lower. There are inflationary pressures, so investors are concerned because it could make the Federal Reserve raise interest rates. Crude is above $90 a barrel, and Treasury 10-year yields at the highest since January 2025. Lots of cross-market volatility here. We will be back after this break.
Nvidia deepening its ties with MediaTek today, announcing the new $3.5 billion investment to help communicate more seamlessly. Ed Ludlow spoke with Jensen Huang earlier today, and here is part of that great conversation.
Today we are announcing a big partnership. We already have a big partnership, but today we're going to make it a lot bigger. It started with us working on recognizing that MediaTek makes the world's best SOCs, and we integrated the chip-to-chip interface to MediaTek so whenever there is an SOC from MediaTek, we can connect the two. What came out of that first endeavor is this project: these little incredible computers allow you to run advanced agentic AI right on your desk instead of having to run it in the cloud.
Today we are going to expand our partnership so that we do multiple generations of this. This processor will also be the foundation of the revolutionary new computer that is coming from Microsoft and ourselves, a reinvention of the Windows PC for the age of agents. The second thing we're doing is that MediaTek is incredibly successful building XPUs. We're going to connect our fusion—so the scaled-up NVLink system, which has revolutionized AI, and our entire networking franchise system chassis—to MediaTek. So when they win projects, it brings along Nvidia networking.
However, you also know that Nvidia is already in every cloud and every data center. So whenever there is that MediaTek XPU, we will be able to connect it right into that data center in a really seamless way. And of course, we are partnering in robotics systems like autonomous vehicles. So you know that AI has revolutionized how we do computing, and we are going to work with MediaTek in all of these different areas. When they win, we have an opportunity to sell a lot more. When we win, they have an opportunity to sell a lot more.
That was Jensen Huang sitting down with Ed Ludlow. That was a great interview, and it made me think: is Nvidia investing in a competitor, or is it making sure the competitor still needs Nvidia?
We are in a world where custom chips are here. Later in the conversation, Jensen Huang said, "We're not anticipating that what he calls an XPU is coming; they are already in the market." What he tried to do with MediaTek is, if they are working with the hyperscalers or fronts or labs and they want to develop their own chips, they now have an avenue to take those chips and just plug them straight into everything else in data center infrastructure that Nvidia underpins. To this point, the story has been Nvidia provides a GPU, but it owns so much more proportionately of the content of a server design. So now they can have it both ways: they will be largely inference-focused accelerators, but they will go into data centers where Nvidia is providing the networking, the memory, and other connection functions within that architecture.
And you ask him about whether this is circular financing. He said not really, because they're independent and profitable. What could prove him wrong?
It's interesting: they are buying $3.5 billion worth of convertible bonds. That is the mechanism. And very simply, the pushback on circular financing is that MediaTek is running their own business and very profitably, and Nvidia is running their own business very profitably, and they expect to have a great payoff. MediaTek has its history in a smartphone, but it has found some footing. In the AI world, it is getting some momentum. If you look at the terms of the bond deal announced this morning, Alphabet is participating, too.
You also highlighted that this is a decade-long partnership. It's not just a one-off financial investment. What is the important thing that will get from MediaTek over the next decade? It just can't build itself, with tapping the debt market and all the money it raised from investors.
It just comes back to acceptance of custom silicon—TPUs, XPUs. If MediaTek has success in that and there is growth and demand for those platforms, A, MediaTek would argue that by partnering with Nvidia they are deployed more quickly because Nvidia has handled the rest of the design of the data center. And Nvidia benefits from growth in that market. It still grows even if the growth is away from its own GPU-based systems. They are having it both ways, having their cake and eating it in this context. There's a lot of concern with Nvidia's future growth projections and seeing how it will moderate over a multi-year horizon. If part of the deceleration is because there are other types of chips on the market, Jensen Huang is robustly standing firm that he is not worried about that—that Nvidia GPU-based systems have better economics and are more pervasive. So it was an interesting and spirited conversation.
It definitely was. Thank you for educating us when it comes to that. Coming up, Romaine Bostick sits down with the chief U.S. economist and CEO. This is The Close on Bloomberg.
Welcome back to The Close here on the final day of August. Interest rate puzzle for investors: inflation is decelerating, wage growth at post-pandemic lows, and the labor market is balanced but not hot. A lot of economists would be looking for a cut in interest rates. Instead, Wall Street is prepping for a hike. Kevin Warsh's speech trades in that direction as the Fed Chair seemed unconvinced financial conditions are restrictive and a bit more concerned that more than half the PCE components are still running above 3%.
Before that speech, the U.S. economist was expecting the Fed to remain on hold; now even she puts the odds for a rate hike at 50-50 and says Kevin Warsh may deliver more than one this year. Joining us now, great to have you.
Thank you, and welcome to our headquarters in Baltimore.
I feel like if we had this conversation a few weeks ago, it would be a little bit different about where the rates are going. Right now, if you look at the Bloomberg Terminal, a 50% chance right now of a hike in September is what traders are betting on. Now you have a lot of economists saying even if we get that hike in September...
I think it's an interesting question, and some of it has to do with the data and the volatility and the fact we haven't had that much progress on inflation over the last five years. A lot of it has to do with some misunderstanding or lack of clarity when it comes to the Fed reaction function under the new Fed Chair. What has happened since the weekend is now we have a bit more—we don't have forward guidance, and I think it's clear he's not going to go down that path, if we have some guidance with regards to the reaction function. The market is reading a lot into his statement that financial conditions are not that tight. The 2% inflation is still the goal, and we haven't seen sufficient progress in bringing inflation down even for the last two reports that have trended lower and show some progress. He indicated on Friday that is not enough yet.
When you look at the market reaction to what he said, do you think the market got the right message?
I feel that they did. The thing is his reaction function, he did not communicate that well between the June and July Fed meeting. I think he made a mistake to say financial conditions have tightened and therefore the market is doing the work for us. So the market needed to see this reassessment and this recommitment to price stability and to the 2% inflation target, and now I feel they have the right signal. What is important between now and the September FOMC meeting: we have CPI data. The decision in September remains data-dependent, but the hurdle has become quite different from what it has been Friday.
With the balance between the labor market and the days ahead after that, I mean, there's a lot of people that came out of that speech at Jackson Hole and said this is a Fed that sounds like it's following a dual mandate. It looks like for the short term there is one mandate, and that is bring inflation back down to the 2% target.
I think that's a great question, and I do agree with you. What we heard on Friday is: let's look at what's happened with wages and the labor market. The labor market is in full employment and wage growth is decelerating, but Warsh very clearly said, "I'm not taking signals from that. Wages are not a good predictor for forward inflation. What I'm looking at is the breadth of inflation. We have 54% of the PCE basket that's been above 3% for quite some time." That's the kind of breadth that he seems to be uncomfortable with. So I think the reaction function is biased towards inflation right now, and the Fed is acting like a single mandate central bank.
As an economist, do you believe that with regards to the idea that wages aren't necessarily the best gauge to follow?
I would not agree with that assessment. I would say wages are not a risk to the inflation outlook because productivity growth has been quite resilient, so that explains part of the wage growth we've seen in recent quarters. As long as the economy is becoming more productive, even higher rates of wage inflation are not necessarily inflationary. I don't agree with his statement that wages are the outlook for inflation, but I do think wages are not an upside risk.
Does the U.S. unemployment rate matter as much as a proper signal?
The labor market in the U.S. has been buffeted by many structural forces in recent years, and I think those structural forces are driving the employment rate. That's why it's been very important to look at the labor market in its entirety and to look at hiring rates as well as the unemployment rate. When we look at the unemployment rate now, it is true that it's lower, but a lot of it is being driven by labor supply and demographics: aging population, slower migrant flows. It is not necessarily a sign of a tight labor market. You go to wages and they are moderate; then you go to the vacancy rate, which is low, going to pre-pandemic levels; you look at hiring rates, they are not very elevated. We don't have a hot labor market right now.
I am curious how productivity gains address the inflation situation, and I assume those productivity gains are coming partly from some of this AI adoption, if you will, and implementation.
We need to look at productivity over a long time. In the near term, we will have easy productivity gains. The way we measure it is GDP per worker. So when you're not hiring a lot and the output or GDP is increasing because you are investing a lot in capex, that's high. Then you have a mechanical and capex-driven productivity growth. In the medium to long-term run, the interaction of this new technology AI with labor—I think those days are still ahead of us. So I am quite optimistic about the outlook for U.S. productivity. Stronger productivity growth also means we can look forward to higher GDP growth, both real and nominal, without it necessarily being inflationary. When I am looking at the outlook for next year and beyond, I am quite positive we will be able to bring inflation down to 2% even without interest rates being too restrictive, because of these productivity gains.
Some are saying AI itself is inflationary, maybe disinflationary at some point.
I think this kind of debate doesn't fully take into account all the effects of AI in the economy. The argument that in the short term AI will be inflationary is looking at specific CPI components like software and computers, and it is true those are increasing, but they are a small part of the basket. This debate is ignoring completely the effect of AI on the labor market: the fact we have this labor-enhancing technology, but workers maybe don't feel so confident to switch jobs right now or to ask for higher wage increases. I think that has an effect on inflation on the other side. Now, it's much harder to quantify it. If I had to bet on one outcome, I would say the disinflationary effect of AI would be much higher in the near and medium term.
With regards to structural issues, there's been a lot of focus on the U.S. deficit, its debt load, and more importantly, the Treasury. Does that sort of work in conflict with maybe what we think Kevin Warsh wants to do with regards to the communication and his desire to get inflation back down to the 2% target?
Even the reaction of the long end of the Treasury curve over the last two to three months—all three are very close. What we notice every time Kevin Warsh comes out with a message that is tough on inflation, that emphasizes Fed credibility, we see the long-end yields coming down, term premium compressing. So I think those three things are very closely linked together, and trying to achieve lower yields by cutting interest rates can in fact be counterproductive, as we've seen many times with the long end moving higher.
As someone with fixed income as part of their umbrella, are you anticipating you see more volatility on rates in the secondary market given the presumed less guidance we will have from Kevin Warsh?
I think this is a period of huge uncertainty: no forward guidance, the data has been more volatile, we have crosscurrents in the labor market and inflation. So all of these things will lead to more volatility. That's why it's exciting to be in an actively managed fund.
Thank you for having us here. Blerina Uruçi, Chief U.S. Economist here at T. Rowe Price. We will have a conversation with the Chairman and CEO Rob Sharps. This is Bloomberg.
Today's stock of the hour is PG&E. The California utility is on pace for the worst day since March 2020 after lawmakers decided to revoke liability protections. It could open them up to wildfire claims. Joining us, the stock is down some double digits whether we look at it from a year-to-date basis or one month. How much of the wildfire risk is priced into the PG&E stock?
A lot of this risk is not priced in. Analysts and investors had largely expected the California legislature was going to back legislation that would have shielded the utility companies from some of this liability, and that's where we are seeing such pressure on shares today. Even Gavin Newsom had endorsed these protections being in the final text. So there was a lot of concern that this would open them up to a lot more liability, adding risk as a result of this. We saw at least three different analysts downgrade PG&E today because they weren't expecting this result.
So could this push PG&E toward a capital crunch or even toward bankruptcy?
PG&E did warn there is potential risk of a capital crunch if they did not get this type of liability protection. The company in 2019 declared Chapter 11 bankruptcy because of wildfire liabilities that they were facing, so this is a real threat for these companies. They've gone through this before, and investors are afraid this could happen again, just one of the reasons we're seeing so many of them pull out of the stock today.
Thank you for that update. Coming up, we are looking at how ETFs could fit into the fabric of a multimillion-dollar operation, with a portfolio manager and the CEO Rob Sharps still ahead. Stocks and bonds still down as oil prices climb again because of the results of a flare-up in geopolitical risk, raising concerns about inflationary pressures that could make the Fed possibly raise rates. And U.S. crude is above $90 a barrel, 2% higher. Higher energy costs pushing Treasury yields to the highest level since January 2025. All that and more ahead. This is The Close on Bloomberg.
10 minutes to the close, and 10 minutes until we close the book on the strange month of August: a phenomenal earnings season to be sure, and a phenomenal rebound from the price loss we saw in July. The S&P set to close this month up about 3%, Nasdaq up 4%, leaders among the major benchmarks. But despite a rebound back to those record highs, relative outperformance is masking a sharp breakdown in this year's leadership. The momentum trade as a factor deep in the red this month, amid rotation into better signs of value.
Blink and you miss it, but the Russell 2000 small-cap only up about 1% this month, up 20% through the first eight months of the year. That outpaces the Nasdaq 100 by three percentage points. The S&P 400 mid-caps up about 14%. The outperformance started in January. Whether the small and mid-cap revolution can go wire-to-wire in December is about to be put to the test. Can rotations survive the tightening?
Our next guest, Jodi Love, is lead portfolio manager on four of the active ETFs that just crossed a three-year benchmark. Great to see you. Let's start with the small and mid-caps under your umbrella. They're having a pretty good year, the Russell 2000 a record a couple of weeks ago. Does this rally and outperformance we've seen in the small-cap space still have legs?
Despite what Warsh said on Friday, our more hawkish view, which historically has been negative for small caps—people have always thought if rates are rising, all small caps will go down. It gives us the advantage as active managers at T. Rowe Price that there's a lot of differentiation and a lot of different stocks. The MSL follows the Russell 2500 benchmark, so we have thousands of names where we can look to lean into for an investment opportunity.
The crucial screen for that is financial self-sufficiency. A company that has strong balance sheets, prime revenues, and pricing power should still be able to be in a fundamentally very different position than one that is highly levered, that would obviously be much more problematic if rates started going up again, and a company who is really dependent potentially on refinancing at higher rates or even a multiple derating. While we are, of course, always watching the Fed, we are a bottom-up driven portfolio. And driven by the names that are given to us and sourced by our research platform, we feel there are still a lot of legs to this rally, even if rates may start to rise with the decision in September.
When we talk about an actively managed ETF, I would think the small and mid-cap space provides more opportunity to show that alpha relative to what these days we are seeing in the large-cap space. But you have large caps under your umbrella, too. I'm curious about the concentration risk when you have Nvidia making up 60% of your growth fund: does that make your job harder or easier because you can ride the momentum?
I'd say it actually allows us to lean in as active managers to find the stocks that we think will outperform. So the top five names in our large-cap growth ETF, which is TGRT, are not the top five names you find in the benchmark. One is a biotech company that we've owned for the last several years; another is Mastercard. Because we believe we have a unique thesis in all of those names and in the names that we hold, and those stocks will outperform some of the Mag Seven or some of the names that are highly concentrated at the top of the benchmark.
That's really how we think about that differentiation between passive and active. There's definitely places in portfolios for passive, but we believe that when the concentration gets as deep as it has been over the last few years, particularly in the large-cap space, that's where we really have the opportunity to lean in and let active management shine because we can go just beyond the benchmark. We look at valuations, earnings, and free cash flow and the durability of that growth in trying to find names that others may miss, so that we can generate alpha above and beyond what just a passive index may be offering their clients.
How did it change your allocation in a meaningful way?
This year was the largest Russell reconstitution in history across a majority of our portfolios. A lot of the names we had held in our large-cap value strategy went into large-cap growth, and several of the names in our large-cap growth strategy went into the large-cap value benchmarks. So a lot of shifts between the R1V and R1G. We were very aware of that. The memory trade really helped the value, went into the large-cap growth which was at peak valuations. Those stocks have had incredible runs and that helped performance in large-cap value. So we did make some decisions as those names shifted into our large-cap growth portfolio to be underweight some of them and wait for better entry points and better opportunities where we could lean in.
That reconstitution was massive, and I wonder if it created to some degree mispricing out there. I know they had to do it, but still.
We believe it did. A lot of names got repriced, and we looked at our portfolios for several months. A lot of different firms come out with Russell projections, and we spent a significant amount of time leading into the reconstitution remodeling our portfolios. If we had done nothing, we would have been even more overweight momentum and even more overweight technology, especially semis, because of the way the reconstitution went. Software went up a significant amount; healthcare went up a significant amount. So we did make some changes, all driven by stock selection, leaning into the highest-rated names across our platform that were recommended, and did make some changes based on that because momentum had reached such an extreme that it seemed unlikely was going to continue. So it did create that dislocation of opportunities where now we just had a month, as you mentioned, where momentum crashed, for lack of a better word—software and some others.
You are managing growth and value, small caps. I wonder whether these traditional style boxes in this day and age are maybe a little bit less useful.
We try to lean into understanding what stocks are going to win. To your point, high, meaningful dispersion in valuations and earnings and business quality, so we always lead with stock selection and we are active managers. So if we don't have a favorable thesis on a certain security, but it is a big part of the benchmark, we as active managers have that flexibility, to your point, in order to lean in or say this doesn't fit here. Sometimes you have fallen angels that aren't necessarily in the Russell 1000 Value Index; they started in growth, but it's a very high-quality company, we've done a lot of work on it, and met with the management team. We can make as many out-of-benchmark bets as we want, so it's not all based on just the benchmark, which is what passive funds do.
You just crossed the three-year mark. That's kind of the magic number for a lot more of the top platforms and models out there. Are you anticipating any meaningful uptick in flows as a result of it? The ETF space is broad, but once you cross the milestones, people notice.
Yeah. We are currently at approximately $34 billion in ETFs at T. Rowe Price. We have 34 ETFs in market: 20 are equity, and the remainder are fixed income. For us, these four just crossed $7.5 billion in AUM and had their three-year track record, so that has been a great accomplishment because a lot of our clients don't want to look at funds that don't have a long track record, that don't have experience through different types of markets. So yes, we believe this will open more doors for models and being able to lean into marketing the suite as a whole. All of the ETFs are well over $1 billion, SMID being the most attractive because it is the most unique. That has been where we have had the most opportunity to differentiate our alpha.
All right, we have to leave it there. Great to have you. The closing bells in New York. Jodi Love here at T. Rowe Price. Back to you in New York for the closing bells.
Thank you. Let's get a quick markets check. You are seeing stocks lower as oil prices are rising again, seeing a flare-up in geopolitical risks sending these cross-asset moves and raising concerns about inflationary pressures that could make the Fed raise rates. I think we are on track for the S&P to see the best month in two months, and also for the Nasdaq. You are seeing Treasury moves: the 10-year topped 4.75% for the first time since January 2025. Oil is above $95 a barrel. For some individual movers, let's bring in Emily Graffeo to get us some of the action under the hood. What do you have?
I want to start with Tesla, one of the best performers of the S&P 500 today. It was one of the two Mag Seven members up on the day; Nvidia was the other one. Not a lot of fundamental news on the day, but investors are preparing for Tesla's invite-only Cybercab launch in Austin, Texas. This is coming on Thursday. This is an autonomous vehicle that they have been marketing for quite some time now. It will not have a steering wheel or pedals.
I don't know if I want that.
Some people like it. Shareholders are excited about it.
The stock is still down 19% year to date, but in the last month, it is up 18% today and hit the highest intraday level since July. So looking forward to the Thursday event and what comes out of that. Also, CrowdStrike Holdings. This was another stock outperforming the broader indexes today. The share is up 6% on the close, closing at a record. It is a cyber firm today announcing it is partnering with the airport security line, CLEAR. They are forming a strategic partnership. The CLEAR1 identity platform will be integrating with CrowdStrike's Falcon risk detection. Earnings last week, they blew it out of the water. The stock has been on a tear ever since.
Highest in over two years, I think.
Yeah, all on the idea there is more artificial intelligence, more enterprise demand for cybersecurity and protection. Finally, shifting from cyber and AI to agriculture and farming machinery. Deere was another one of the best performers in the S&P 500 today. They got an upgrade at Baird. The analyst bullish on the stock saying corn and soy futures are reaching levels that will lead to higher agricultural machine demands. That stock up about 4% to finish the day.
We always need more corn and soy futures. Onto the decliners. What do you have?
Staying in the commodities, looking at PG&E. We have legislation moving from California that is all about wildfire response. What was expected is some measures to shield utility companies from liability would be included in the legislation. This is something we did not see, and we are seeing massive moves in the stock. PG&E fell as much as 21%, the biggest move since 2020. Similar moves for Edison, the biggest drop since 2001. Really massive moves. It is a very interesting case and there are a lot of people involved from fire survivors to insurers. People are figuring out who carries the cost of this. Very bad news for utility companies who had a pretty big jump going into it. Obviously, energy prices. But nonetheless, we are seeing very different results today.
For Pinterest, very different story. You know how people are like, "We use social media and Pinterest is like your friend and you do mood boards and it is aspirational." It is having not such a great time as a stock. The stock is down 7% today, a big move. Julie Bornstein will step down a few weeks after the company gave a revenue outlook for the current quarter that disappointed investors. The stock is down 17% year to date. We are seeing some good results, some revenue growth. We are seeing that trend that this is an alternative app for social media, but nonetheless, the stock is down. Today's news is not great. We are seeing another stock falling 11%, Herbalife. The CEO stepping down not long after the CFO stepped down. A lot of pressure for the company. It has been interesting in the year of Ozempic and weight loss drugs. A lot of the Herbalife products have been doing well. They have actually been profitable.
It is a protein thing, not necessarily about losing weight but keeping consistency, getting protein. It is helping, but not today. Today, the stock is down.
