Introducing CNBC Plus, the new streaming... Watch live or on demand. Access any market, anytime, anywhere. Start streaming. Go to CNBC. Live from the Nasdaq market site on a day where the major indices hit their lowest levels in nearly six months. This is Fast Money. Here's what's on tap tonight. Stocks sinking to start the week. The Nasdaq now solidly in correction territory. The S&P 500 closing below its 200-day moving average.
time in 16 months. The Dow is shedding nearly 2,000 points so far this month. How much furthers are left to fall and how do you protect yourself against the drop? Plus, Delta's disappointing guidance, what's got the stock on the move after hours and how it's playing out for the rest of the travel trade.
We're watching Oracle shares after its latest earnings report. Crypto crashing as Bitcoin's drop below 80K takes the rest of the digital asset space down with it. And the chart master lays out a couple stocks that might be buying opportunities after this sell-off. I'm Melissa Lee. Coming to you live from Studio B at the Nasdaq.
On the desk tonight, Carter Braxtonworth, Dan Nathan, Guy Adami, and Julie Beal. We start off with a sea of red on Wall Street. The Dow dropping nearly 900 points for its worst day since December. The S&P 500 down nearly 3%, hitting levels not seen.
Since back in September in the Nasdaq, the worst performing index today, down nearly 5 percent at lows. The worst day for tech since the fall of 2022. Continued fears about a potential recession and the uncertainty around tariffs weighing on the market.
It was a day filled with massive moves in the mega caps. Apple losing $175 billion in market cap today. Tesla giving back all of its post-election gains on its worst day since 2020. It is now worth less than half of what it was at its mid-December peak. Nvidia hitting its lowest levels since September, losing a trillion dollars from its high. And Meta giving up all of its gains and then some from that 20-day winning streak.
Every single MAG7 stock is now in correction territory. Collectively, they have lost three quarters of a trillion dollars in value in just the last two trading sessions. Superlatives are continuing. I mean, it's fascinating. What we've said for a while now, at least for me, incorrectly has been that.
There are a lot of headwinds out there, but the market was looking past them for whatever reasons. But despite the fact that the market seemingly made new highs every day, those headwinds weren't going away. As a matter of fact, some of the concerns were actually getting worse. And what we said was. the market will have less and less room for error, and volatility is going to be a story. Well, you're seeing that now. I don't know if it was tariffs.
I don't know, it's a fear of a slowdown, but it just goes to show you when you're trading at the valuations that we're trading at, everything has to continue to go right. And it's not. In terms of the downside, it feels to me like we didn't have capitulation today. People say it was panicked. I didn't see anything panicky about it. Yes, the VIX is elevated. It will stay elevated.
Panic will come in the form of a huge volume day where we may be flush early and spend the rest of the day rallying. That did not happen today. What do you think? Well, I mean, maybe just put it all in context rather than my opinion or anyone's. We know that the market has drawdowns, sell-offs, drops, declines, corrections. You choose your nomenclature. As of now, we are down 9.5% from the peak, and it's lasted 13 sessions.
going back to 1927, where the S&P has had a 5%-plus decline. The average decline is about 11.25. The median is about 8.75, and it takes place over 30 sessions on average. So this is sort of normative. Now, at the index level, we know the market's down, what, 4.5% for the year? But the average stock is still up.
And more stocks in the S&P are up than down, which would get around to say, is this nothing and nothing's happened, or there's that much more to come? I would go with the latter. There's more. Yeah, I would just say that, you know, the Trump trades, they started to reverse a while ago and it started in around the time that we started dialing up the, you know, the rhetoric in and around.
The trade war. And one of the things that kind of strikes me, and we talked about this a lot, that the first Trump administration seemed to be very focused on the stock market. how they went about some of the economic agenda that they wanted in the first one. They went after tax cuts first, and they got tax cuts, and it juiced the stock market, it juiced the economy. Then they got into the trade war, which really didn't cause too much trepidation.
markets not until we got to the end of 2018 when we had a growth scare when we also had rates going higher so if you think about what they did now It's a bit of an own goal for all intents and purposes. No one knew how this was going to play out. I don't think they thought it was going to play out. I hear a lot of people talking about.
Well, they wanted to tank the economy. They wanted to tank the stock market to get things going higher. There's no way that is true. I keep hearing that. And it's probably what you just put it to yourself. No, I didn't. I was raising his hand. So I was just curious. Hi, guys. I'm waiting for the camera person to show me. He said own goal, and you just didn't even...
You don't know what that is. And until earlier today, I didn't know what it is. You didn't know what that was? But apparently in like the Premier League in football, if a defender would have... kick the ball into his or her own net. That's an own goal. It's something like you've made a mistake.
and it hurts your own team. Is that accurate? Correct. And it could be a header also. But I guess my point is when you think about what's going on here, you know, we've been talking about this for a couple weeks. They're playing chicken.
with the U.S. economy, which means that they're playing chicken with the global economy. And when you think about the potential for, you know, I guess the idea of weakening your northern neighbor or weakening the economy of your southern neighbor or weakening the economy of...
Europe, it just doesn't make a whole heck of a lot of sense. So the market has gone down in front of that. Yields had gone down initially. Look at the way the dollar traded. So what's going on in the stock market, I would argue with Guy a little bit. I see a lot of panic in a lot of stocks that possibly overshot. to the upside that we're trading at valuations that nobody could really justify except. folks were willing to justify because of the expected growth or so.
To me, I think the S&P probably has a little more room to catch up. They tried to rally it at the end of the day. It wasn't particularly that impressive if you're looking at some of the names. that led to the downside, they didn't really bounce much. All right, and you want to go to Julie. I get it, but I'm going to push back on Dan's pushback. In terms of no panic. Oh, there is panic. When stocks go up in levels that we've seen stocks go up the way they go.
Nobody talks about panic then. They say how the fundamentals are in place and the market is behaving properly and everything is fine. So we can see panic to the upside the same way you can see it to the downside. So I would submit, I've seen panic to the upside where people feel like, oh my God, I'm going to miss it. This didn't feel like, not yet at least to the downside. They call it something else. They call it FOMO.
And that's exactly what fueled the AI trade. Listen, we saw this in Palantir. We saw it in Apple. We saw it in Broadcast. And there was a fundamental case for every single one there, which was supposed to be sort of defensive, right? Correct. The AI spend was going to be intact. Julie, because it was going to bring massive efficiencies and cost savings and nobody wanted to be left out on. Here we are now with the with the air coming out of this trade or gone, maybe.
There's a very clear reason why no one likes a very narrow market, right? And it's exactly what's happening right now. You suddenly have a strong correction and it makes everyone start to look around and say, Can this work without the strength of the AI companies that have been driving so much of the growth? And I think the real challenge is it could if the economy were in good shape. And to me, that's a really debatable question because not only do we have just
the little whisperings of challenges in the labor market. Not only is manufacturing been really difficult, but now you have a lot of boardrooms, lots of CEOs that are feeling very uncertain and very unwilling to make. bold CapEx plans, bold hiring plans, bold investment plans, that really constrains what's going to happen in the economy, right? It's not the loss of jobs that really, really paralyzes demand.
people's fear of losing jobs. It's a much broader impact, and I think that's kind of what we're starting to see early on. Yeah, and it starts at the federal government level. I mean, imagine all the contractors and government employees who are concerned that their job is not going to be there tomorrow, and that's just... the tip of the iceberg. I mean, Steve Leeson was making an interesting point today about the economy, and that is usually in a slowdown you have.
the ballast of government spending to help the economy along. And this time they are doing just the opposite. They want to slash government spending. You know, yes, that is correct. I didn't see that, but he's spot on. And I'll say this as well. You know, the health of the consumer, and we hear it over and over again if you watch. and it becomes sort of monotonous, and it just becomes
background noise at a certain point, because everybody's convinced the consumer's in great shape. I am not convinced of that. And I'll say this, you know, when the consumer gets scared, it's typically they're scared because something happens in the market. Not to suggest that everybody owns stocks. That's not it. But when they leave tonight on the six o'clock evening news with big salt in the stock market, people take notice and they start having the conversation.
Should I buy that coffee? Should I go on that trip? And that's when spending. stops on a dime. Yeah, the other thing about the policy stuff, if this is really what caused the acceleration of the downside over the last couple weeks or so, it's like we saw this last...
Well, I guess over the last month or so, threats of tariffs. You put the tariffs in, then you pull them back. Then you get the stock market down. Let's say it's down 15 percent a week, week and a half. Then you basically say, you know what? Just kidding. It's just not a good way to message about an economy, to Guy's point, that's kind of already on the brink of slowdown. And, you know, this also brings me back to 2019.
You know, we had this big snapback after the big Q4 drop. I think it was about 20 percent or so. The Fed had to pivot. Right. And I keep hearing if the tools in their toolbox don't work in a stagflationary environment, at least that's what a lot of economists or strategists saying is like.
this is the exact wrong time to mess around with an economy that's already starting to weaken, which is what happened in 2019, which is probably why when we actually had a black swan event, we've never had a black swan event, at least as long as I've been in the market. why we dropped so quickly, because again, the Fed did lower interest rates at zero. We did have fiscal spending, but it didn't matter until people came to their senses a little bit after about a month or so.
Well, Sid, he's out with a new note telling investors to stay hedged and be patient. Stuart Kaiser is behind the call. He's the firm's head of equity trading strategy. You must have been busy today. What were the incoming calls like?
Yeah, you know, I think it's a lot of what you all discussed. You know, the positive, I guess, where people are trying to ask is, is it time to buy the dip? So I think that means, you know, to Carter's point, you've pulled back enough where people are kind of answering that question. Our view is no, it is not time to buy that dip, mostly because...
This has been has been about the economy. It has been about Trump policy. But in the end, what's really impacted the market is just position destruction. And the stocks that are under pressure are the popular longs, the winners from the last 12 to 18 to 24 months. Those stocks were down more than 5% today in our measure. They're down over 20% in the last month. And until you see some stability in that part of the market, I wouldn't confidently want to step in and buy this here.
You know, when you think about, again, the safety trades, as you were talking about, a lot of folks felt really comfortable in the mag seven. They felt really comfortable in the banks. You know, some of the flows that you're seeing, going back to what Mel just asked you, what seems a lit. I don't know. I was going to say scary. I don't mean that.
If you think there's lower lows that happen, what do you think leads to the downside here? Is it like financials? Because to me, I'd be more worried about that. At some point, this. MAG 7, you know, secular shift as far as, you know, that'll get back on its horse. It needed some froth to come out of it. But the banks kind of worry me here.
Yeah, I think I think the banks and then the power generation story or two that we've got like a close eye on because those are not retail trades. You know, to your point, eventually retail is going to want to own Apple or Meta or Tesla at levels that are 20 in Tesla's case, 50 percent, you know, below peak. But the banks and PowerGen, those utilities, I think those are clear institutional trade.
So I think one day last week, we saw the banks down about 3%. Definitely got our attention. A couple of the popular utilities were down double digits. last week as well. So I agree. Banks and PowerGender, too, from an institutional perspective, I keep an eye on it. Again, they have not shown the stability in our view that you need to be confident to put capital at risk right now.
So, Stuart, at the institutional level, of course, the individual has choice, free will, you can sell, you can buy, long, short can do that. But the big long only, fully invested all the time, not allowed to hold cash, that's the game. And they're playing from the same pipe as always, the S&P. Pure Value Index, since the market's peak on the 19th, is down 1.2, whereas the pure growth is down almost 12. You're talking about 1,100 basis points of spread.
For those who have to play, what are you saying or recommending in this environment? Look, I think the growth value also has a lot to do about positioning, also about what's going on in interest rates. I think long-longists have two concerns. Number one is if you look at late January, early February, you got that really bad University of Michigan sentiment print. That kicked off three out of four weeks with net outflows from ETFs and passive mutual funds.
to your point long only has to hold but they've also seen some money being pulled out which means they've had to contribute as well. Generally speaking, I'd rather be in growth than value here. Logic being that you have three broad outcomes. You have a hard landing. I think growth outperforms value in a hard landing. Higher for longer, I think growth probably outperforms in a higher for longer environment.
You really need this immaculate sort of reacceleration in the economy to get small cap and value working. So just in our view, like probability adjusted, you're more likely to be happy in growth and value. But to your point, it has not worked here to date. And I wouldn't blame people for being skeptical. Stuart, I'm sure there are people sitting around saying, you know what, the market sells off enough, the Fed is going to bail us out like they have over the last 20 or so years.
which maybe they will. I don't have a view. But what I will say is we have CPI on Wednesday. And if that were to come in hotter than expected,
it backs them into a corner that they're already in. So maybe speak to the importance of the number this Wednesday. Yeah, I agree with you 100%. I mean, we talked about earlier in the year, the risk for the Fed is that if you are cutting government spending at the same time you're introducing tariffs, you create pressure for the Fed on both sides of the dual mandate.
So the number is very important. If you remember back to early February, you would had you miss inflation expectations and ticked up. Average hourly earnings had ticked up. And that made that inflation print really, really powerful. We got past that. OK, so the Fed will be watching this. They've been very. methodical, I think, about communicating that inflation risk is not a near-term concern. So I think you need a pretty hot print, especially after average hourly earnings got revised down.
That said, options markets pricing, you know, 1.4% move on CPI. Markets telling you it's important. To your point for the Fed, it's important. So it matters. Oddly, and I may never say this again in my career, I think you, Mish, might be more important than the CPI this week. Are there any levels on the S&P 500 that are sort of witching levels in your view, whether it be levels that you're watching, levels that hedge funds are watching, levels that CTAs are exposed to?
Look, I mean, CTAs are max short across all the U.S. benchmarks right now, which actually, to some degree, you might read as a positive sign that systematic supplies come in. Again, I wouldn't put a number on the level at this point. Show me those core long positions that are just getting eviscerated. Show me that those have stabilized. And regardless of the level, I think I'd be more positive about kind of reentering the market.
I'm sure the big round numbers will matter. I'm sure there's a technical support level. We're already through the 200-day. That was obviously a big level, which we defeated already. So not a level in particular, but more it's what is going on internal to the market. Do these momentum trades, these tech trades, these sort of hedge fund favorites find their foot? Stuart, great to see you. Thank you. Stuart Kaiser of Citi.
What are levels you're watching, Carter, Mr. Technician? Yeah, well, I mean, the truth is, there are no levels of support to speak of. There are no levels of support to speak of? No, no. Support is where a lot of transactions took place. Then you move well above it and you come back to it. We've just been ascending, and so as you roll, in principle there's no great level to identify.
But on a day-to-day basis, and you see that intraday, there's always this desire to, hey, maybe it's overdone, and we rally off the low. The net effect is, again, remember, the average stock, the performance of all S&P 500 stocks is still up on the year, and so is the median. And the aggregate itself is down only 4.5. Not much has happened. Right. How are you feeling? I mean... For him to say, just wait. Yeah.
We're going to talk about later, like signs that maybe you've seen capitulation. So I don't want to get ahead of that, but I'll say. You know, it doesn't feel like it's happened yet. And people say, what are you talking about? The market has been selling off. People aren't used to it. The complacency that's been around the investing and the trading community is such that it's made a lot of sense. You've been rewarded to be complacent.
But I've said for a while now it's seemingly starting to be corrected. volatility is going to be a thing this year that people have not experienced. It's been a one-day event until recently. Now we're two weeks into this, and I still think it goes higher from here. Yeah, so if we look at the NASDAQ 100, which is interesting to me because headed into the bear market of 2022, no one knew it was going to be a bear market. Let's be really clear. But once we were really in.
a very systematic sort of sell-off period. You know, to me... I kept on hearing that the prior leaders of the bull market weren't going to be the leaders on the way out. The way that the indices are constructed, there's really no other way to do that. So I'm in the same mindset right now. And if you look at the QQQ. You know, to me, we had it down 38% at its lows in 2022.
Right now it's down, what, 11%, 12% or something like that. But a lot of the major components are down a lot more, which speaks to what Carter just said. There's plenty of stocks that are acting okay, but you're taking the froth out of the market. I think the QQQ is the way to play on a sustained sell-off. You just keep dollar cost averaging it in. In two years, you'll be pretty happy about that because we haven't had a projected bear market.
25 years ago. And I just don't see it likely to happen when you consider the names that have been leading the economy as far as CapEx and investment and the ones who are basically concentrated in the major industry. Also, if you put in the context, of course, nothing's happened to the downside around the world. The stock 600 is up on the air. The DAX is up. And so if you saw true panic, you'll start to see it.
happening in things that have held out. I mean, the correlation between the MSI All Country World Index and the all-country world index the U.S. is about 85 percent. So you're not going to have a situation where the S&P stop is dropping 15, 20, and the rest of it's just going up. At some point, they succumb, too. That would be something to watch.
Meantime, shares of Delta sinking after the airline slashed its Q1 guidance. Our Phil LeBeau just spoke with CEO Ed Bastian in the last hour. He joins us with more on this. Phil. Melissa, this is guidance for the first quarter where Delta has brought down its expectations and brought them down substantially, but they are not changing their full year earnings guidance. So for the first quarter, here's the new guidance, earning 30 to 50 cents a share.
previously expected to earn between $70 and $1. So they've cut it basically in half. Revenue up 3% to 4%. Previously expected it to grow 7% to 9%. Operating margin 4% to 5% versus the previous guidance of 6% to 8%. Essentially, they're seeing softness in domestic demand. Here is CEO Ed Bastian. We saw companies start to pull back in terms of corporate spending started to stall, consumer spending started to stall, largely domestic, largely in the close end.
But it was also exacerbated as the uncertainty that's out there. And consumers in a discretionary business do not like uncertainty. And while we do believe this will be a period of time that we pass through. It is also something that we need to understand and get to calmer waters. We asked Ed Bastian if there are industries where they're noticing particular weakness. He's pointed out aerospace and defense, automotive.
They have a big hub out in Southern California, so clearly they've had a lot of pressure out there, not just because of that, but they also had wildfires out there. Bottom line is this. They are seeing weakness in the first quarter. But, Melissa, what's interesting is that we're also noticing all of the airline stocks under pressure today down anywhere between essentially four and a half.
to more than almost 11% for United Airlines. And tomorrow, the CEOs of American Southwest United, they will all be giving presentations in New York City at the J.P. Morgan Industrials Conference. You can bet the number one question that the analysts are going to have is, what are you seeing in terms of the economy right now? And what do you expect to see for the remainder of this year? Phil, thank you. Phil LeBeau.
And, of course, this after-hour slide is a continuation of the slide that we've already seen with the markets going down overall. Julie, there are real questions about whether or not people take cruises, book hotels and airplane tickets, et cetera. Yeah, I think it's really an indication that when you have this level of uncertainty, kinds of future planning like trips and things suddenly gets really put on hold and
You know, we all learn that we can do a lot of our business online via Zoom. And I think there's a real recognition by a lot of companies. Hey, let's just let's just pump the brakes because we're really not sure what the world looks like. And let's conserve a little bit of cash. And that's fine for that company that really preserves its earnings power. The problem is, is that just ripples through the rest of the economy and it has long-term impact.
on business confidence and just the willingness to put capital out and i just i worry a lot because that becomes a little bit of its own self-fulfilling prophecy and that's the real risk that i think we have in front of us It's interesting to think that consumer confidence has turned that dramatically.
in, you know, since the last earnings report that Delta gave. Right. And what's even more interesting, it did that with the market basically being at an all time high and only starting to roll over over the last couple of weeks. So now let's see where it is. You know, this guidance, I mean, basically it cut first quarter guidance in terms of revenue and EPS. in half. And if Tim was here, he's not the ambassador.
would talk about correctly how airlines are the greatest trading names out there. And if you think about it, this was a $70 stock a few weeks ago. It's going to trade right now at 43. I think the August 5th low is 38. Tomorrow could be a capitulation day in Delta Airlines. If it trades 10 times, you know, 75, 80 million shares.
You take a shot on the long side. Yeah, I'll just say this. And, you know, this is a business that we've chosen, Guy. And, you know, I've been doing this for decades now. You obviously multiple more decades than me. This is just stupid. Like the fact that a stock or a group like this could go up at least 100 percent. OK, United went up 200 percent from the summer low.
And these companies were giving guidance. There's no way this guidance turned on a dime over the last couple of weeks, okay? And to have a cut like that, that warranted a pre-announcement. Now, I'm not telling you that that makes it any less.
likely to have the sorts of gaps that it did but you know investors have to bear some of the responsibility for a market like this, because if you're willing to bid up a stock like this because you think it's growing to the sky or RCL, put the cruise lines in there because of some narrative about a consumer and an economy that's inflecting.
Well, then shame on you, because and I don't mean to sound like so nasty about it, but like to have this stock down like this, it's retraced the entire move or so. And I just think it's a bit goofy. I mean, if you look at those that have been hurt the most, this is certainly in that category, down 30%, 31%, they all have a common precondition. They were the biggest performers, right? So what does Colbert Kravis have to do with Delta, have to do with CalMain, CalMain A?
The ones that have been hurt the most are the ones that were the most loved, most believed in, and now are the most sort of run away from. And there are plenty of others that haven't had real selling. The presumption is that there's more.
More on today's market sell-off, including a top tech analyst thought on the mega cap meltdown, where the chart master sees support and where traders are looking for signs of relief. All that ahead. But first, some after-hours action. Shares of Oracle recouping the day's losses after earnings. The details and the numbers from the quarter next. that when Fast Money returns. Introducing CNBC+.
on source and business news. Watch live or on demand. Access any market, anytime, anywhere. Start streaming. Go to CNBC. Welcome back to Fast Money. Earnings alert here on Oracle. Shares moving higher despite a miss on the top and the bottom lines. A conference call kicked off at the top of the hour. Seema Modi's got the details. Hey, Seema. Melissa, on the call, executives from Oracle providing reassuring comments on the trajectory of its cloud business, CEO Safra Katz.
saying Oracle's huge $130 billion sales backlog will help drive a 15% increase in Oracle's total revenue in the next fiscal year. Analysts were expecting about 13% growth. That coincides with comments from Larry Ellison, who put concerns of a slowdown to bed. adding that Oracle is seeing enormous demand for AI inferencing, with plans to double its data center capacity in the calendar year. Now, that is significant because Oracle did get caught up.
in the most latest DeepSeq-induced sell-off last month on concerns that cheaper AI models would result in less demand for cloud storage. And data center is a business that Oracle has been rapidly growing into. In the quarter, Oracle's cloud services business, a slight miss there. But we're still seeing shares move higher here on the bullish commentary provided by Oracle on the call. Shares still down about 20% from its most recent high. Melissa. Any mention yet of Stargate, Seema?
You know, no mention of Stargate just yet. I'll keep you updated on what Ellison and Katz have to say about the return on investment of that massive project they unveiled late. January alongside SoftBank and OpenAI, plus what the company has to say about its agreement with TikTok with that deadline approaching. All right. Seema, thank you. Seema Modi on Oracle. Higher bucking the trend here, Guy?
Well, you go back to July of last year, I think it was July 3rd, the stock made an all-time high about 145-ish and then cascaded lower into August like everything else did. Look at where we just traded down to and stopped, basically 145. You know, 11.5% earnings growth, 20 times, 21 times next year's numbers. I think actually it's a reasonable name and it has sold off from this prior high we saw.
a month and a half, two months ago. So if you're looking for value, I think Oracle provides it. I mean, IGV overall has gotten crushed, and this one really stands out. I'm in here, too. This stock doubled in the preceding year. It's now just dropped 25%, obviously indicated up a bit. Yeah. And just if they can pull the chart up and, you know, in January when they made that Stargate announcement, you remember the big gap and then it actually filled in the gap and came.
all the way back in. Obviously, it's much lower than that. I think you fade this thing because if you are worried about these other MAG7 stocks that are being punished right now because of a deceleration in growth but actually upside to their capex numbers this stock fits right in there and don't forget The moment that they made this announcement, when Sam Altman and Larry Ellison and a missing, who was the third one? Yeah, Masa Sun from SoftBank was sitting there. You know, Elon Musk, Dogeboy.
Tweet it out right away. They don't have the money So even the administration, somebody in the administration is questioning. So Stargate is a big fugazi. All right. Well, we'll see what they have to say about that. Coming up, more on today's tech wreck. The Nasdaq now nearly 14% off its highs as the flight from risk assets continues, where our next guest sees a tech trade heading from here. You're watching Fast Money Live from the Nasdaq market site in Times Square. Back right after this.
Introducing CNBC Plus, the new streaming platform from the number one source in business news. Watch live or on demand. Access any market, anytime, anywhere. Start streaming. Go to CNBC.com. Welcome back to Fast Money. Another check in today's market drop. The Dow tumbling nearly 900 points. The S&P down almost 3%.
The tech-heavy Nasdaq leading the losses down about 4%. Just a few minutes ago, a White House official commenting on the sell-off, saying we, quote, want to emphasize that we are seeing a strong divergence between animal spirits of the stock market. and what we are actually seeing unfold from businesses and business leaders. And the latter is obviously more meaningful than the former on what is in store for the economy in the medium to long term.
The energy stocks meantime bucking today's big downturn. The XLE up almost a percent, even as crude oil pulls back slightly. Nat gas hitting its highest level since December of 2022. And crypto taking on the chin. Bitcoin dropping below $78,000. to its lowest since early November, Ether and Solana down about 10 percent apiece. But the comments from the White House really underscore the fact that if there was a belief that there was a Trump put out there...
It doesn't work for much lower. I mean, it's not going to be activated. I mean, listen, we just heard from Delta. 100% refutes what they're just saying, right? And so, again, I suspect we're going to hear it from the banks in the not so distant future, especially the longer this goes. So, you know, that announcement or statement or whatever, I mean, it's, you know, it's not worth a whole lot.
Coming up, much more on today's market sell-off. The MAG-7 getting trounced today. What is next for the big tech trade? And how do you know when to get back in? We'll talk to a veteran tech analyst, Mark Mahaney, right after this. Fast Money is back in two. Welcome back to Fast Money. Big tech among the biggest losers in today's sell-off. Every name in the so-called Mag 7 now down 10% or more from their highs. Together, the group has lost.
Nearly two and a half trillion dollars in market capitalization this year. For more on the tech rack, let's bring in Mark Mahaney, head of Internet research at Evercore ISI. Mark, great to have you with us. What do you tell clients and how receptive are they to, I think it's a buy rating. The long-term fundamentals are great. I don't make calls for the next six months. I make calls for the next 12 months because if you had said that a couple months ago.
they'd be down now and it'd be pretty painful. Well, you stick with your discipline. You always look for what I love to look for is DHQs, Dislocated High Quality Companies. We didn't have any at the beginning of this year except for Uber.
Pick. I thought at 60, it was way dislocated. I think you now may have another one, which is Amazon. I particularly like Amazon with the sell-off here. We just bumped it up to be our number one pick. You want to be disciplined about where the stocks are. Look, we had a two-and-a-half-year rally, super rally. in S&P 500, more so in Nasdaq, even more so in the internet.
large cap names that left very few kind of compelling valuation startups at the beginning of the year. But, you know, you continue with a correction like this, you're going to find really interesting, aggressive price points. So I stick with my two most interesting price points right here.
our, you know, our Uber and Amazon. What is the worst case scenario in your view in terms of valuation or any other metric for that matter for Amazon in the case where AI cap gets tailed curtailed or spend on a gets curtailed and there's a severe drop in consumer sentiment consumer confidence such that you know the retail portion of its business gets hit too Well, I guess I would look at two things.
Where the multiple is versus where it's traded in the past, and 25 times earnings is the cheapest you've ever had a shot at Amazon. Doesn't mean it couldn't be cheaper than that. Look, if we can get overbought, you can get oversold. I'd be very surprised to see a name like Amazon trade down to 20 times earnings, but it's possible. That would have to be that the real...
that this consumer softness is going to cause negative revisions to Amazon numbers for the year. I don't think that's the case, not from everything that we've checked so far. Look, most consumers... almost all consumer demand trends. When we looked at the most discretionary of the sectors I look at, like travel,
I looked at retail. I look at advertising, mobility, delivery. Those results were stronger going into 25 than they were going into 24. Maybe all this is inflected down in the last two weeks. I'd be a little surprised. But barring major evidence that we're really going to have negative earnings revisions, I guess that's what, Melissa, I'm trying to listen to the stocks a little bit. If Amazon trades below 25, then that's the market telling you.
They think there's material negative revisions coming up. If you have belief that that's going to happen, then you stay away from the stock. Right now, I don't believe that we're going to have negative revisions. So I'd be waiting in here, buying some of these names, but I'd be very selective about it. Start off with the ones that are most dislocated. In my book, that's Amazon, then Uber.
Mark, Dan brings this up, so I'll bring it up as well. You know, everybody talks about CapEx. CapEx has been sort of the backbone of this. Now, if you see a slowdown, I mean, CapEx isn't etched in stone. So if you see people starting to pull back, how impactful could that be? Yeah, it'll be kind of an amplifier impact. So wait a second. Your business is slowing.
You're accelerating your spend in CapEx. I think most of these companies, particularly the big three, I'll just stick with those, Meta, Amazon, and Google. have good ROAI data points, data points that prove that their investments, there's at least some payoff.
Google being able to say, I love these two 25% data points. Google is telling you that 25% of their code now is being written by AI. That has some real interesting implications in terms of keeping headcount flat going forwards. Amazon telling you that. in its most advanced distribution centers uh they're seeing a 25 reduction in cost to serve that has dramatic implications for margins at
at Amazon going forward. So as long as you get those kind of data points, we're fine. But yeah, I would imagine if there's a dramatic downturn in end market demand, not just for a quarter or two, but really would have to be substantial, then maybe you'd see these companies take down CapEx. I'd be very surprised to see that this year. How much more dislocation does Alphabet need in order to put it on that list of yours along with Uber?
as well as Amazon, Mark. And I'm wondering, you know, we just heard from the Delta CEO taking down guidance. We're going to hear from a raft of the other airline CEOs over the coming days of this J.P. Morgan conference. And you got to wonder, you know, Google has traditionally been a beneficiary of travel. in travel advertising, et cetera. So how about the other side of that?
Yeah, I mean, these stocks are cyclical. There's no question about it. Amazon, Meta, Google, they're all cyclical. So if we're really starting to see a downtick in consumer demand, these companies would see that too. Google would see it in travel. retail, financial services. Those are Google's three big categories. Actually, it's my third favorite stock. We just bumped it up to that.
I think there's so many overhangs on Google here. This is the one where the narrative could most change to the upside. I think 16 times earnings on market discount for Google. I mean, unless the DOJ really gets more aggressive than we think. And I think. I think the DOJ risk is less now than it was six months ago. It just is.
fundamentally different. I think there's a much greater chance of a settlement now. Unless you really believe that ChatGPT is going to upend Google, the survey work we do doesn't suggest that at all. unless you believe they've just got no cost discipline, which they may not, but I hope they do. I think there's a lot of upset. So it's my third favorite stock here. All right. Mark, always great to speak with you. Thanks for your time.
Mark Mahaney, Evercore ISI. Julie Beal, what's on your shopping list of the MAG-7, if any? I kind of agree. I think Google for sure, the biggest challenge was the regulatory overhang. And I do think that at these levels, a market multiple really discounts what they have and the ability they have. To me, you have to resolve the question of whether
AI and that kind of search is going to be an existential threat to their business or they can figure out how to replace a lot of that revenue. And I think that's probably a larger, more difficult question. But the one thing that I think I have for all of these Mach 7 tech companies that are dependent on an AI kind of revenue stream is that I don't think it's going to be enough.
for the only thing that comes out of this AI benefit to just be efficiencies, right? I don't think that companies are going to spend really, enterprise is going to spend really aggressively just for efficiencies. And so in order to really make these large capex budgets that they have been you know expanding in order to justify that that you really have to have more than just you're going to be more efficient and that needs to be seen soon
Coming up, stocks dropping sharply as recession fears take hold on Wall Street. What the chart master sees in the technicals and the names that could shrug off the worries and potentially bounce higher from here. That is next when Fast Money returns.
Welcome back to Fast Money. Today's sell-off pushing the S&P 500 to close below its 200-day moving average for the first time since November of 2023. The Nasdaq is now in correction territory, down over 10 percent from its recent high. So what's next for the market? Are there any opportunities to buy? Let's see what Carter is watching. Carter. All right, let's get to it. We'll move quickly here. We'll right to the S&P, and we have three identical charts.
The first depicts of course this well-defined channel that we've been ascending since the bear market low of 2022. Now, to get to the midpoint of the channel, second chart, that would be a draw on about 12.5%. We're down 9.5% now. That's not. To get to the bottom next chart, that would be around 19%, 20%. I think one has to sort of model for that. And that is sort of garden variety, the nonsense of 20% of bear market versus 19% not.
Dispense with all that. But let's talk about some stocks that are acting well, as the old-time technical expression goes. Here's Bristol-Myers, obviously very defensive, up on the year, up over the past. 18, 20 sessions when the market is down. One way to annotate it, a second way, same chart, same company, but this annotation. You can see what one wants to see, but it's bullish. Let's look at Verizon. This is also very defensive, and we're seeing that, of course,
in areas throughout the market, low beta, cash rich, if you will, high yield stocks with no growth. One way, second way to draw the charts for Verizon. And then let's go to two comparative charts just to make a point. So these are five-year comparative charts. And what you see here, of course, there's the S&P way up there, up at 175%. And there's actually identical performance.
The two of them are both actually down a little bit over the past five years. If you take the same comparative chart, last chart, and freeze the S&P and hold it as a constant, that then depicts a relative performance a different way. They're so bombed out. on a relative basis to the market, having gone nowhere in five years, markets up 175%. This is the kind of thing I think one wants to look for if one's trying to put money to work.
Guy, do you like either of these two? Bristol Myers, we've talked about it for a while. Now, obviously, it's getting sort of the tailwind of rotation into Big Cap Pharma, which I get. But this started long ago. And if you go back and look. I mean, this move we're seeing now is a 50% retracement of the prior all-time high. I think a little north of, I want to say, 80 bucks in this recent low that we just saw, down below 40. So it makes sense, this move.
Just on valuation alone, if you're looking for compelling cases, I mean, Bristol-Myers is about as good as it gets. Yeah, I know Novo Nordis was down a lot today, down nearly 10% on some trials. And, you know, again, this pipeline as it relates to these diabetes and weight loss drugs.
You know, it's important. They've got to keep up. And, you know, that's where they have a lot of competition. But this stock is really cheap on a PE to growth level. And estimates have not come down meaningfully for this year. So this one looks really interesting. It looks a little washed out. Coming up a red day on Wall Street, but will the carnage continue? What the traders need to see to believe the sell-off is coming to an end. Don't go anywhere. Fast Money is back in two.
Welcome back to Fast Money. Major averages all closing deep in the red today with the Dow down more than 1,200 points at its lows. The VIX, meantime, hitting its highest level since August 5th today. So, Guy, you mentioned earlier that that was a level of fear that could indicate that selling me.
Yeah, a bait. Yeah, and you can start. Listen, first of all, you should see counter trend rallies with the VIX at these levels. So don't expect to see that. But if you're looking for capitulation from emails, it'll come in the form of the VIX. trading up above 32, 33, and then closing lower on the day. I think we're setting up for that type of day, but clearly we haven't seen it yet. Julie, how about you?
Yeah, I always look for the contrary indication, right? And so for me, that actually happened in November, December, when the last economists who were really bearish started to capitulate to the upside. And so you need kind of a reversal. just like that, where you're starting to see some economists taking down their forecast because of the uncertainty. I'd like to see a little bit more of that before I get really enthusiastic.
Yeah, and Carter, I don't know if this is what you're going to say, but I thought it was really interesting when you mentioned before that The other pockets in the world that we're doing that are doing well, they need to roll over as well. Right, because surely if the United States is really going to have a further equity route that gathers pace and energy and really draws in the fear.
you cannot have, in principle, big bourses like the DAX just going higher and higher. So it would be the joining in to the downside of those that have held out. So when somebody says, oh, well, the U.S. is doing so poorly because we had high valuations, et cetera, and Europe is spending, you know, Germany is spending a lot of money now.
and it's time to get into Europe, you say no. Sure, and that's worked, but that's worked quite well for the past three or four months. But if you look at any major routing equities globally at any given time, correlations are high and you don't have real holdouts.
Dan, how about you? What are you looking for? You know, I think financial stocks. So money centers and really what they have to say about the consumer. We just talked about what the White House said. We've talked about what Delta is saying. So if there is any weakening in the consumer the way they see it. And then the flip side of that, more on an institutional basis, if I look at like a Apollo or a Blackstone or a KKR, these styles...
really went up quickly after the election, but they started giving it up. They never confirmed the highs in the S&P, which they were making, you know, right up until February. So these stocks getting washed out, they're all down about 30%. That'll be something interesting to me. Up next, Final Trades. Final trade time, Julie Beal. You know, in turbulent times, I look for earning stability in Berisk as a good example of that. Carter. A two for Bristol-Myers and Verizon.
Am I in trouble? A two for... Apollo and Blackstone very soon at an interesting price level. Guy. No twofer from me, Melms. What is that? Do you have a trade? Why are you looking behind you? General Motors was up today, GM. Thank you for watching Fast Money. See you back here tomorrow. Mad Money with Tim Kramer starts right now.
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