Closing Bell Overtime: Tech Stocks Plunge Markets Search for A Bottom 11/5/26

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0:39Value, safety, timing. You decide what matters most. Stop overthinking what to buy and sell. Go to VectorVest.com slash closing bell. Get 30 days for just 99 cents. VectorVest provides stock analysis tools, not personalized investment advice. Terms at VectorVest.com. The Bell's bringing in to the trading day at the NYSE. A Kushnet doing the honors net, the Nasdaq Alpha Governance ending the trading day. Welcome to Closing Bell Overtime. We are live from Studio B at the Nasdaq Market Site. I'm Melissa Lee along with Mike Santoli. A huge sell-off in the markets today with the major averages posting their worst day since April 2025.

1:14The Dow off 1 ,800 points. S &P 500 down more than 4%. Nasdaq down about 5.5%. Russell down 4.5%. Tech, the biggest drag across sectors as nearly every area got hit. The Semi-ETF down 11 percent. Its worst day since March 2020, now down 22 percent in just a week. The laggards included AMD, Micron, Lamb, Marvell, which all fell 13 percent or more. Wreckage in the neocloud and memory names as well. CoreWeave off 10 percent. That's been cut in half in just the past month. Sandisk off 20 percent. The AI infrastructure and energy stocks also with big losses, including GE Vernova, Vertiv, Eaton and Caterpillar.

1:52Cat is now negative for the year. The Mag 7 losing more than$800 billion in market cap altogether. NVIDIA and Tesla, the big decliners. NVIDIA is now negative for the year to date. The sell-off not contained to tech, though. Consumer discretionary, giving back all of yesterday's 4-plus percent gains. Some of that was Amazon and Tesla, not all of it. Retail and travel-related stocks, also big losers. Similar story in the financials. Everything from crypto-based names like Circle to Visa and the big money center banks in the red. Blue Owl, a lender to the AI, build out down nearly 8%. And take a look at SpaceX, off another 7%, now down 26 % in a month,$10 below its IPO price.

2:31We start off with the first take on the close. And maybe the silver lining to this, and it doesn't seem like a silver lining at first blush, is that health care was down 2.5%. That's right. And we had staples down as well. I mean, these sort of safety trades, they are falling victim also to the sell-off. Yeah, finally, we had a highly correlated, comprehensive sell-off. more than 80 % of the volume to the downside. It's been the thing that's elusive for a while. And, you know, I'm big on the broader markets are not safer markets. And everybody celebrates, oh, it's broader. We can rotate into safety.

2:59Now, the weird thing is, because those other areas outside of tech have done so well, like they have room to come in more. Like they need to cool off. And so if AI, semis, all the rest of it are not going to finally bottom after their corrections and come out of it, then you get a day like today. You do, you know, you actually accomplish some things when you start to clear out this kind of merchandise. Absolutely massive volumes to the downside in things like Micron. So who knows if that means we're getting cleaned out or not. I do think that you finally got a little bit closer to that. You know, we're a little bit panicky here.

3:33The problem is this looks like, you know, a little bit of a nasty correction. You do have, you know, the Nasdaq 100 and all the rest of it below the uptrend lines. It wouldn't look very different if June was the ultimate top. Like if June was the big top, it's hard to say if it would look that different to this point. And so you have to make your bet that the fundamentals are intact, the macro is holding together, and maybe it's a buying opportunity at some point. Right. You know, the other thing to keep in mind is that we're just about 5 percent off from all-time highs on the S &P. For the S &P, right.

4:02Yeah. So we're not really that far. Not at all. We've never really done a lot of damage in terms of to the broader market average. And so you wonder, can you sort of form that bottom and move on into what is seasonally a good period of time for the markets? It is. And climb higher. I don't know. I think the jury might not be out on that one. For sure. I mean, seasonally, yeah, in theory, it should work. I keep bringing up 2018 midterm election year. You had a two percent rally the day after the election. Then you fell apart until the Fed said they were no longer going to be tightening and you had some other things come together and people got more confidence in the earnings picture.

4:34What do you make of we've heard so many people come on our air today and say this is like, you know, tariffs. Oh, yeah. This is like, you know, this is the same as the great financial crisis. The precursors to the last market sell-offs are sort of the same. So, you know. In terms of Liberation Day, first of all, the S &P went down almost 20 % in like six weeks. It wasn't a 5 % pullback after months of range-bound trading. And there was a genuine panic. And I also think, in retrospect, it looks like it was no big deal. You just needed the president to kind of back off a little bit and the market ripped.

5:09But at the time, it seemed like they wanted the economy to buckle to a degree. They were talking about how you had to take pain before gain. So I would say that was a bit of a scarier macro period. The problem right now is you have a highly concentrated market that's acting as if we've just seen peak capex, peak earnings growth, peak concentration. And we're trying to work through all those things. Right. Has the AI trade, as we knew it, has it changed? Is it over? And I think that's sort of the question. It is the question. And I do think it's a good debate. Yeah. Let's dig deeper into this tech sell-off now.

5:40With us now is Dan Niles of Niles Investment Management. Dan, great to have you with us. You've heard our conversation. Where do you think we are in terms of the pendulum swing on this AI trade? Well, I mean, I had a podcast that dropped on Tuesday where I said I was terrified of midterms. And this is exactly what I was terrified of, which is you had a hard swing during the midterms. You had Texas, Georgia, Ohio, Pennsylvania all flip, and that's 50 percent of all data center incremental capacity coming on is from those states. So when you have senators coming out right after the midterms and saying we need to stop all new data center construction, this is what you're going to get.

6:25So I think this is very different than tariffs or the war. Those could get reversed by one person making a decision. You're not having midterms again tomorrow to see if we come up with a different result. So this is going to take some time, I think, to sort itself out. It doesn't mean that there won't be a near-term rally. I came into this morning and I saw NextDC in Australia, which you may remember a few weeks ago. they came out and said, hey, we have a push out in data center build out because we've got pushback from the community. The stock went down 40 percent. If you look at that chart today, and I don't know if you can bring it up, but the stocks recovered all of it because you had two other firms decide they wanted to invest in.

7:13So it's a very tricky time. I feel like there's still too much positivity in the market. You know, Mike, I think you brought up S &P is only down 6 percent. Who cares? right? So there's still a lot of froth that you could say needs to get worked off. The good news is when you hear about funds, multi-strap funds with, you know,$16 billion in assets like we saw today, winding down, returning capital, et cetera, that's a good start to at least hopefully get to where we need to be. So Dan, what happened to the logic that was all the way back 24 hours ago, which said, yeah, these neoclouds are in a tough spot.

7:52Anybody that's reliant on, you know, very rapid completion and approval of new data centers is going to be under pressure. However, the hyperscalers, they have the funding. They already have the existing capacity. Maybe we have some enforced discipline in the build out and they can be net beneficiaries. That didn't last into today, that logic. Well, you should have those people on who are giving you that logic. That wasn't me. The market itself was telling you that something or trying to say that yesterday. Yeah, I know. But but here's the thing, Mike. Who are the big customers of those neoclouds?

8:27It's Microsoft. It's Google. It's those guys. Well, that shows up in their. Cloud results. Right. So if they can't use the neoclouds because the neoclouds can't get access to capital or build because all new permitting is off, then how is Azure going to make their numbers or Google Cloud going to make their numbers when they have to report the December quarters? Now, there's an answer to that, and then you can say, well, that was excess capacity. Your pricing can go up where you are. But that's why I hate the NeoClouds. And I think I said this when I was on CNBC last week or early this week, which is they're the excess overflow.

9:10And so if Microsoft or Google say, wow, demand's not quite what we thought. Well, we're not going to use those neoclouds, make sure our capacity utilization is fully full. And on a relative basis, those are still the best places to be relative to a neocloud where a neocloud doesn't have another business, right? Microsoft, obviously, big software business. Google has search and Amazon has e-commerce and all these other big hyperscalers meta has obviously social they have other cash generative businesses to let them get through this without a problem the neoclouds have leveraged balance sheet massive negative cash flows no other businesses you know and when this ultimately breaks i don't think this is actually the top we'll find out but they're going to go to zero on most of them, right?

10:03Because you are definitely overbuilding today. That's what happens in every great industrial revolution, right? Internet, railroads, canals, you name it, you always end up with an overbuild and you end up with a bust. The ones that will survive will be the Microsofts, Amazons, Googles, you know, Metas, et cetera, because they do have the base businesses with cash flows underneath it. Sure. But then there's still going to be a rough period because nothing is going to go bust in the funding markets and not have a ripple effect on the debt that the hyperscalers are going to try and issue in the market either.

10:35Their costs are going to go up, certainly, if there is a bust, even if it's, you know, in the high yield area. But at this point, Dan, seeing where the markets, what the markets have done to the hyperscalers, to the tech trade, what do you think has been priced in at this point? Have we priced in that worst case scenario? Because we're not talking about stopping data center buildouts this year or in 2027, maybe even in 2028. We're thinking about beyond that. So how do we think about valuations? Well, I mean, valuations, they're nowhere near where they need to be if you think we've reached the top, right?

11:10I mean, it's always amusing to me to hear people come on and talk about the memory trade and say, oh, my God, these stocks are so cheap. And I go, they're trading at over five times book value. In a down cycle, they bought them at one. They're over-earning. So, and the end-demand picture can change very, very quickly, very rapidly. I mean, this got lost in all the other noise. But don't forget, Microsoft, when they reported their quarter, they said that one of their hyperscalers was, sorry, one of the neoclouds was late delivering capacity to them. And I'm guessing it's because of these pushbacks that we saw.

11:45So unfortunately, valuations, when you look at it on a normalized earnings basis, which means not 80 % operating, right? That's not normalized. It's hard to say any of these things are cheap. I want to be clear on this. I don't think we've seen the top. I think we've seen a 1997-1998 type of funding crisis, which back then you could say Asian currency crisis, 97, long-term capital management in 1998. Semis went down, if you go back and you look, they went down 40 % from peak to trough. Both years, semis finished the year up. And then, of course, in 1999, they absolutely ripped higher. I think this is like that, but we'll have to see because the other side of this is revenue growth is massively slowing down, which we've talked about before.

12:37OpenAI growing 140 % sequentially in Q2. Then it's like 45 % in Q3. Q4, it might be like 20%, 25%. But what multiple do you want to put on that? Sorry, that was Anthropica I was talking about. What's OpenAI doing? and is Anthropic going to be able to get public at the valuation people thought and how much can they raise, right? Because those figures are going down. So that's stuff that everybody's got to think through. But the world's very different than it was two days ago. And this is not something you can, you know, repeal with the tweet and have everything go back to being normal. Yeah. No, obviously, look, the market's trying to find a new equilibrium of price and rational expectations and what these assets are going to be worth.

13:25And I think you're right to point to the Anthropic deal and whether that comes out and see how the market digests it all. Dan, really appreciate you jumping on with us today. Thank you so much, Dan Niles. Well, while a large part of the sell-off was driven by tech, it was not contained to just AI. Discretionary materials, financial and health care sectors all saw steep declines. So is this a healthy washout that was needed in order to bring in a real rally? With us now to share her take on what to make of all this action is Lori Calvacina, head of U.S. Equity Strategy at RBC Capital Markets. Lori, good to see you.

13:57Thanks for having me. You know, we've had a little bit of fun here last week or two about the concept of a clearing event, whether it was going to be hyperscaler earnings or Election Day. Now, in fairness, I thought that the election, maybe because you had taken some pressure off and positioning had reset, it could have led way to relief. It didn't. Now, you didn't think it was coming that way either in terms of a clearing event. Why and where does that leave us now? Well, look, I think, you know, we sort of agreed with the idea. You have a sigh of relief after the event passes. Right. But the fervor with with which people were talking about, we're going to rip into year end and getting so excited about this idea.

14:34You know, it's funny. I feel like that was being pushed by a lot of sell side strategists and trading desks. And I started being very diligent the last week or two, talking to my clients and saying directly to them, I'm hearing this argument a lot. I could throw something out the window the next time I hear the word clearing event. And, you know, what do you think? And as I came, you know, and I talk more to the long onlys than the hedge funds, to be honest. And as the, you know, they were replying to me and what they thought it was like, well, why would it be? You know, what policy one client told me, are we really going to get excited about that's going to drive that rip?

15:09In the past, you know, 2024, right, people got excited that stimulus was coming and you did melt up into your end. I had another client who said, well, what are we looking for? We're anticipating investigations and hearings. How is that going to drive earnings upside in the market? So that's where I would say a decent amount of investors were. And if it's been somewhat quiet today on these tech stocks, which is what I'm sort of picking up, I think back to those conversations that there were some skeptics of that idea. What I was putting out in meetings, and I said, look, again, I agree, we get a benefit from the removal of uncertainty, but don't you have to dip to rip?

15:40Yeah, and we went back and we had this one table in our midterm analysis where we looked all the way back to 1970 and most years in 3Q or 4Q Sometimes both you get a down quarter. Well, guess what? We didn't get a down 3Q and if you go and you look at the following year and this may be a longer term argument But if you don't dip in 3Q or 4Q You tend to only have like a 6 % return in the next year if you do then you get like a 16 18 % type move And people had their heads in the 16-18, and we said, we just don't think the setup is the same here. Let's say that we do have a dip. Why do you think it should be followed by a rip?

16:15I mean, if we are going to sort of say maybe the data center build-out won't be as strong, at what point do you say, you know what, I have to translate that into the impact on economic growth, the impact on the consumer, and therefore on all of these other sectors in the markets in addition to technology? So, you know, our forecast is on a rolling 12-month forward basis. And what we've been baking in, we started to sort of sense over the summer, clients were getting concerned about the CapEx cycle. We had previously been baking in sort of 5 % cut to year ahead earnings. And then we basically took that to a 10%.

16:44The 5 % had been, you know, kind of lingering war impacts that weren't baked in. But that other 5 % we added, we said, we're just going to throw a little bit more in here in case people are right that the CapEx cycle is starting to slow. And those AI related earnings are a little too optimistic. You know, we had admittedly 5 % 10-year yields, 2.75 inflation, three hikes from the Fed. We're obviously way below that now on 10-year yields. But we were coming up with 81.50 when we were adjusting all the numbers, which at the time was like, you know, like a 5, 6 % type return. So higher but not heroic.

17:15You know, I think interest rates coming down does remove a pressure on the P.E. multiple. But I was listening to your conversation with Dan earlier on the semis. And if you think about P.E. multiples, this is not a semi-specific comment. But we threw a new chart in the deck recently that shows when you're a downward decelerating revision cycle, not necessarily downward revisions, but fewer upward revisions, PEs compress, right? You move your PEs up when you're accelerating the rate of upward revisions. You pay less for the market when you're starting to kind of worry about a downward revision cycle.

17:45Right. So all that kind of thrown into the mix, what would you be looking for to suggest that we've, you know, the risk reward has shifted based on where prices have gone relative to rates and plausible earnings growth? So I think one thing we've got to keep an eye on in the tech space is the rate of upward revisions and semis. And we downgraded tech back on October 14th. We have been overweight since midsummer. It was kind of an uncomfortable overweight when we got to the end of that. But one of the reasons we pulled back was valuations were looking pricey in the broader tech sector. And the other reason was that the rate of upward revisions on the semi and semi-equipment group for the broader Russell 3000 industry was starting to decelerate.

18:23That seems very early days in terms of that deceleration. We're probably going to need to see some additional pain there. I would just say, Mike, on the broader market, you know, you guys were talking earlier about how far down we've come. I don't know what the exact percentage was, but when I was checking my screen earlier this afternoon, we were down 5.6 % from the all-time high. In my framework, tears of fear, 5 % to 10 % is where you really start to have a true drawdown. People were complaining about the pain we had the last few weeks. I'm sorry, but down 3 % from an all-time high is not a pullback.

18:55We're sort of in the early stages of feeling some pain. If you get down to close, say, 7 ,000 on the S &P, that'll be closer to that 10 % number. The question people have to ask is, do we fear a recession or not? If you don't fear a recession, this was the conversation we were having with people around the Iran war when that bottom was put in at 9.1 percent, then you're probably near the end of it. I'm not saying we absolutely have to go there, but that's really the question that you have to start to ask as we get a little bit deeper. We're six and a quarter percent off the high from today. Right, right, right.

19:25But after the midterms, I'm just curious, do you rethink what the economic backdrop looks like for stocks at all? Is there anything? I mean, of course, we know about all that. But it's funny because we always say, you know, politicians are politicians. They promise all sorts of things and they never deliver. And then all of a sudden here we're assuming they're going to deliver every single thing that they promised, which is sort of ironic. Right. Well, here's the thing about the A.I. data center trade. Like if I go back to September, I was talking to a lot of investors who were expecting a split, not expecting both houses to go blue.

19:53And what I kept hearing was, well, it's a split Congress. Trump has a veto. And, you know, there's not that much going to change. And by the way, all the AI data center stuff, that's in the hands of state and local. Well, guess what? We had a massive surprise in Texas. I was listening to a Cook Political Report analysis earlier today, and they were saying that was the one thing that they kind of missed, right, was that state flipping. And I think, you know, it's taken the street a few, you know, a minute here to kind of digest all the results. But that is what I think a lot of people were counting on, was that, you know, you weren't necessarily going to see kind of this massive, you know, sort of shift in the states.

20:27Lori, thank you for joining us. Good to see you. Lori Calvacina, RBC. Airbnb and Lyft earnings are out. Mackenzie Cigalos has got the numbers. Mac? Hey, Mel. So Airbnb shares 12 percent higher in extended trading after a top and bottom line beat. You have earnings coming in at three dollars and 16 cents a share versus the two dollar 85 cent estimate. That's on revenue of four point eight seven billion, which is ahead of the four point seven five billion dollars that was expected. It's 19 percent growth. It's fastest in more than three years. Now, nights and seats booked grew 16 percent. That is more than double the room night growth at Booking Holdings and Expedia, which both reported this week.

21:03Gross bookings of twenty seven point seven billion dollars also topping the street and its adjusted EBITDA margin hit 52 percent versus the forty nine point eight percent estimate. Looking ahead, Airbnb guided to Q4 revenue of three point two two billion, three point two eight billion, which is above the streets, three point one six billion dollar estimate. Airbnb also raising its full year growth forecast to the high teens. Now with Lyft, it's a messier print. Those share is down around 7.5 % now. A$118 million charge for legal and regulatory settlements cut into revenue, and it pushed it to a loss, so we're not at this point comparing EPS or Q3 revenue to estimates.

21:43Adjusted EBITDA of$204 million topped the$193 million street estimate, and gross bookings of$5.62 billion were in line. But active riders and rides both came in light. One bright spot here was driver hours. It hit an all-time high in the same week that Uber said driver shortages held back its rides business. Lyft guiding to Q4 gross bookings of$5.74 billion to$5.94 billion, and then adjusted EBITDA of$188 million to$213 million. The midpoints of both of those right in line with the street. Those shares still down around 7.5%, but off the 14 % loss we saw right after the print came out. Guys? Mack, thank you.

22:24Well, Wynn Resorts earnings also out. Contessa Brewer has those numbers. Contessa? Mike, Wynn misses on top and bottom line here. Earnings per share adjusted of 33 cents. The street had been expecting 68 cents. Revenues came in at$1.69 billion versus the consensus expectation of$1.75 billion. Adjusted EBITDA, that key earnings metric in gambling, missed. It missed in Macau. It missed in Boston. It missed in Vegas. I want to zoom in a little bit on Vegas here. The big element of bad luck hold was unexpectedly low. That's how much the casino holds from the gamblers. And in Las Vegas, it accounted for about 24 million dollars.

23:04Unlike the gambler, of course, the house has no option to walk away. On the call, analysts are likely to press on whether there's a turnaround coming with F1 in Vegas and the holiday season, what's happening with group business. And certainly we want a picture of Macau as well. The stock is down almost 3 % now. Melissa. Contessa, thank you. Contessa Brewer. The stocks are racing their post-midterm election gains and it's a worst day since April 2025. We got much more on this market sell-off still to come. Plus, the president of the Nasdaq on this tech rack and his exchanges move to go to nearly around the clock trading next month.

23:38Closing Bell over time. Be right back. With the Discover Cashback card, it's payback time when you earn cash back on everyday purchases. Activate and earn 5 % cash back at different categories each quarter on up to$1 ,500 in purchases. That's 5 % cash back at different places each quarter, like grocery stores, on gas, and at restaurants. It pays to Discover. Terms apply. See See discovery.com slash five for details.

24:10Oh, look, you just got added to a meeting about coordinating another meeting to prepare for the pre-meeting ahead of the follow-up meeting, which will, of course, require a recap meeting and then another meeting. It's your booking point. Book with Southwest and enter airplane mode.

25:01taxes and fees extra. New customer offer for initial plan term only greater than 50 gigabytes may slow when network is busy. See terms. Starting on December 6th, the NYSEE and Nasdaq are set to extend their trading hours to 23 hours, five days a week. The move coming is non-traditional trading like perpetual futures and tokenization have grown in popularity as investors try to get ahead of repositioning. Joining us now to discuss this, Tal Cohen. He's the Nasdaq president. Tal, great to have you with us. It's wonderful to be here. Thanks for having me. Who wants to do this? Who you know, 23 hours into the day.

25:32So let's level set about where the demand's coming from. Over the past five years, we've seen the trading volumes and what we described as the global trading hours, which is after 4 p.m. and before 9.30 p.m. It's doubled. And now it's over 10 % of our market. And we're trading about a trillion dollars of notional a day. So that means$100 billion is trading during those global hours. The second thing is over the last 20 plus years, we've seen foreign investment in U.S. equities triple. And then finally, retail, which is a big driver behind this, accounts now for 40 percent of the holdings in U.S.

26:06public equities directly. And indirectly, they account for 60 percent of it. So that's the demand. That's the momentum we're driving into. And I think over time, institutions and other parts of the market, other segments of the market, will embrace it and have an opportunity to take advantage of those global hours. Just to be clear on what it applies to already, of course, there are index futures that trade, you know, through the night. We're talking about individual securities and ETFs at this point. That's exactly right. And just to level set again, our markets today are open 16 hours a day.

26:37We open up at 4 a.m. We close at 8 p.m. And what we're doing is extending it by seven hours. And we're going to do that on our flagship Nasdaq market, the one that lists and trade securities. And trading already occurs, as we were discussing, already occurs during the overnight session. Most of that or all of that is not on exchange today. So what we're trying to bring to the table is what exchanges are known for, operational excellence, transparency, resiliency, the kind of investor protections that you would expect. And that level of trust should engender adoption and adoption should engender greater, deeper liquidity in our markets.

27:13There's an argument that you and other exchanges are doing this because of the rise of perpetuals and other options for traders to trade individual stocks and ETFs 24 hours a day on other places offshore. Is that correct anyway? Are you feeling the competition? Is there a competitive threat there? This is probably the fourth iteration of markets like ours thinking about 23.5. What's really happened is that the demand side of the equation has come into effect. And that's what I was sharing in the beginning in terms of the demand from retail investors, foreign investors. That's really what's changed.

27:47And so that engagement and their participation in the markets, we need to be there for investors and also for our issuers as they see their stocks trading overnight and have questions about where does it trade? How does it trade? What is the integrity of the overnight trading? What kind of transparency are we getting from the overnight session? So that's really what's driven us. We're always thinking about how to innovate. We're always thinking about how to modernize. And, of course, the investor engagement that's occurred through some of the asset classes you described is really just another factor in helping us decide whether we want to go forward or not.

28:20The conventional wisdom is that larger institutional investors always want to be trading when there's maximum participation, the deepest, most liquid markets. And so what does that leave for other parts of the calendar or other parts of the day when it's more sparsely traded? In other words, is it going to be mostly retail and non-U.S. and people just kind of taking a shot? Well, the two most important parts of the day are going to continue to be the two most important parts of the day, which is the open and the close. That's right. So we'll preserve the sanctity of the open and the close. Those are massive liquidity events for institutions.

28:53And throughout our trading day, we have ebbs and flows in liquidity already. Now, you mentioned earlier perpetual futures and other asset classes and other complexes that are already trading overnight futures. And so the ability to have a full complex trade overnight actually presents institutions with opportunity for liquidity and greater transparency about how to price that liquidity. So I think over time, I think institutions have to do some work to embrace that. But over time, and we don't underestimate the operating model shift that needs to occur for institutions, but over time, we think they'll benefit just like retail will.

29:27We had recently Bill Ackman come out saying the stock market is like a casino. We had Elliott make sort of the same argument because of these sort of other products on the market, zero-day options, as well as perpetual futures. Is there concern on your part that on a day like today when we see a huge downdraft in the markets that we're going to hear about the carnage amongst the retail investor set because of these newfangled products? Yeah, and today is a difficult day in the market for everybody, including ourselves. But our mission and our mandate is to make sure that markets are well-functioning and price discovery is happening.

30:00And we're always thinking about the long term in terms of making sure that we design our markets and we design the futures in our markets to ensure that investors are getting what they expect in terms of the level of transparency, resiliency and protections in the market themselves. And we're building these markets for all types of market conditions. Today is just a great example of a high volatility day, high message day. We did 165 billion messages, by the way, processed in our options market, 10 billion in our equity markets. If we fall down just an inch, then the confidence in our markets really takes a hit.

30:35And that's what we care most about is the confidence that we engender in the markets we operate. Are you worried, though, about those products and the impact of those products on confidence in the markets overall? We are. Anytime we launch a new product on our own exchange, I can't speak for others. We engage the industry and the SEC in that conversation. We want to promote responsible innovation. So you talked about zero-day options, which really are two weeks out the way they work. But we are in constant contact with the SEC around the leverage we see in these products, around the activity we see in these products, and making sure that the products that we accept and we put into our markets are there for investors and they're able to benefit over the long term.

31:14If we see something that insinuates something other than that in terms of market abuse and manipulation, we're going to be the first ones to raise our hands and have that conversation with the SEC. see. Tal, great to see you. Thank you very much. Thank you. Good luck with the launch. Appreciate it. All right. DraftKings earnings are out. Contessa Brewer is back with those numbers. Contessa. Mike, we have a loss per share here of 94 cents, and that's worse than the street was expecting. They were expecting a loss of 39 cents per share adjusted. Revenues here came in at 1.33 billion. The street was expecting 1.39 billion.

31:48And the company has lowered its full year revenue guidance. The guidance here is a little bit convoluted, in part because DraftKings is saying it's prepared to invest a lot of money in prediction markets, that it's investing in iGaming, and that it has seen some customer-friendly outcomes. That's the word they use when games go the fans' way instead of the sportsbooks' way. Again, right now they've got monthly unique payers that beat the street expectations, coming in at$4.1 million against the street's expectation of$3.84 million. The shares, though, are plummeting right now, down 18%. DraftKings had had a good week.

32:28It was shares went into the close today, up 16%, but there you're seeing a real reversal. Guys? Yeah, part of that post-election trade in part. Kadesa, thank you very much. Tesla and SpaceX, among the worst performers during today's sell-off. We'll dig in deeper into the decline of the Elon Musk trade when closing bell overtime returns. Tesla was the worst consumer discretionary stock today, but it wasn't the only name that got hit hard in the sector. Amazon, Nike, General Motors, Carvana, and Royal Caribbean also with big moves lower. Closing bell overtime. We'll be right back. AI is here, transforming how we work, live, and lead.

33:07And the women I talk to aren't waiting for the future. They're shaping it. I'm Julia Boorstin, Senior Media and Tech Correspondent at CNBC. This is CNBC Changemakers, where I talk with the female leaders transforming business as AI reshapes the world. Follow and listen to CNBC Changemakers, Women Leading in the Age of AI, wherever you get your podcasts.

33:32Today's sell-off hitting the Elon Musk empire. Tesla and SpaceX falling for a second day as investors shift away from the AI trade. Both stocks losing about 400 billion dollars in market cap over the past two days. Also weighing on those stocks is the possibility of heightened scrutiny after the midterms as some Democrats push for investigations on Musk's role in this administration. Worth noting that Musk spent more than 400 million dollars in the midterms to support Republicans. I mean, there's no doubt that these stocks had built up, you know, a bit of a premium because of Musk's closeness with the administration, the access to to contracts and really just general kind of vibes of being in tune.

34:11We talked about the Texas connection yesterday as well, the possibility of a merger. And then, you know, I think there's some folks who want to investigate Doge, which Musk was involved in. So if nothing else, big distraction. And of course, Starlink and whether or not services shut off in Ukraine. So I think there's a lot of overhang there. And, I mean, take a look at Tesla. Take a look at the decline, 11 percent in just today's session. If that merger does not go through, then it's a rethink for people who are in Tesla. Absolutely. Because that was the assumption. Right. The assumption that this deal would happen.

34:42Exactly, yeah. And by the way, I mean, SpaceX is really now a data center play. Exactly. So, I mean, it's not helping that it's also the real business is under pressure. Yep. Time now for a CNBC News update with Brandon Gomez. Brandon. Criminal investigation into who leaked the Supreme Court's 2022 decision overturning the right to abortion. Politico published the Dobbs draft decision two months before the court formally released it. According to The New York Times, prosecutors have sent grand jury subpoenas for testimony in its investigation and are seeking information from people who worked at the Supreme Court when the leak happened.

35:18Meantime, outgoing California Governor Gavin Newsom spared the lives of all 548 prisoners on the state's death row today. He says the sentences will be commuted to life without the possibility of parole. Newsom said he made the decision because he firmly believes that, quote, state-sanctioned killing is incompatible with California's values. And Democratic Socialist Nithya Raman will be the next mayor of Los Angeles. She defeated incumbent Karen Bass, who conceded to Raman earlier today. Raman is now the second Democratic Socialist to lead a major U.S. city following the election of New York City Mayor Zoramudani last November.

35:53Guys, send things back to you. Thanks, Brandon. Brandon Gomez. The tech sector falling nearly 20 % over the past month compared to just a 5 % loss for the S &P 500. Up next, we'll discuss whether this tech is now starting to look cheap. And here are some names that buck the downtrend today. Costco, CVS Health, Kroger, Wendy's, and Consolidated Edison. Welcome back to Closing Bell. Over time, we're live from the Nasdaq market site. Stocks sink as an AI washout rattles investors. The major averages posting their worst day since April 2025. The Nasdaq off 5.5%. The Dow down 1 ,800 points. The S &P and Russell both down 4.5%.

36:30The tech ETF XLK down more than 8%. Its worst day since March 2020, closing below its 200-day moving average. Chips taking the brunt of the pain as the Sox ETF sinks 12%. Its worst day since March 2020. NVIDIA with a big swing lower off 9%, now negative for 2026. downturn in neoclouds and memory stocks continuing core weave nebbia sandisk micron all deep in the red core weave now down 40 percent year to date industrials materials and financials also lagging industrials weighed down by the ai infrastructure trade like ge vernova and vertive investors heading to safety with treasuries firmer across the curve 10 year down five basis points two year down 12 basis points do we do have some moves after hours want to tell you about shares of akamai falling EPS and revenue matching estimates, but fourth quarter revenue outlook missed there.

37:19On the flip side, you've got Cloudflare shares. Those are soaring after a big EPS and revenue beat. The company's revenue and EPS outlook better than expected. Cloudflare sees EPS at 43 cents a share versus estimates of 38. And take a look at Mattel moving lower as revenue missed, and the company slashed its full-year EPS guidance by nearly 20 cents. Mattel saw strength in K-pop Demon Hunters and Hot Wheels, but weakness in Barbie stocks down almost 5%. Well, today's carnage in the tech sector has pushed its P.E. ratio below the broader S &P 500s for the first time since 2017. And in the past month, tech has lagged the S &P at its most extreme degree since May of 2002.

37:58So was today's action the flush the market needed or were the sellers remaining in control? Joining us now is Keith Lerner, Truist Wealth Chief Investment Officer. Keith, good to see you. Yeah, great to be with you, even though pretty, pretty ugly day out there today. Yeah, I mean, we have the biggest sector of the market essentially, you know, in a bear market. The rest of the market's now, you know, been forced to kind of notice and reckon with it. I guess those stats suggest that some of the valuation risk has been taken out. Then again, you know, tech was cheaper than the S &P for like four years going into 2017.

38:32So where does that leave you? Yeah, no, it's fair. But I think the first thing is right now we have a buyer strike, right? Selling is beginning selling. And I think the one thing for the market to move up is just to see stabilization. And then I think people will start looking around and say there are some places that look relatively cheap. And the open question is what's the catalyst for that? But from our perspective, Mike, I mean, as you pull back, not trying to call some type of bottom, but the risk reward is improving. You mentioned some of the stats. I'll use the 17 number. You already said it.

39:01So a 17 PE, I know earnings are at risk, but that 17 PE is down from 32 a year ago. So that's about a 45%, almost 50 % contraction in the PE. That's the deepest contraction in PEs we've seen this decade. So we went from euphoria to fear. You mentioned the discount is the first discount we've seen since 2017. I would still say there's concerns about the earnings, but the earnings momentum so far is still the strongest in the market outside of energy. And then on this kind of this one-month rolling basis, we went back over the last 20 years. This is actually back to 2002. This is the most extreme underperformance.

39:40So, you know, from our perspective, when you have historic selling pressure, you have valuations that have been reset tremendously and you have a lot of fear priced and you're getting to a point where a little bit of good news can go a long way. And I think as you look at six to 12 months, I think the risk reward has actually improved quite a bit because we have seen how quickly fear can turn the greed and vice versa. Is there a subsector, Keith, that you want to see turn before you believe the markets are on firmer ground? I mean, a lot of people say semiconductors. You need to see that turn.

40:13You need to see that leadership as a very cyclical group in order to believe that the markets have found some ground. Yeah, I do think semis are ground zero. They led the way down. And then, you know, yesterday a lot of folks were saying, well, we had a good tech day. But underneath the surface, it wasn't a big tech day. Besides some of these hyperscales, semiconductors were down. So, you know, normally as I've gone through these cycles over the last 25 years, I mean, there's signs you look for. I mean, today I had the most calls from the media that I've had, you know, in years. So I think that's one thing that this is front page news.

40:44The other thing from a market perspective, instead of just indicators, what I tend to look for is do you start to see a little bit of green in some unexpected areas? Maybe it's a semiconductor. Maybe most of the board is down, but you're seeing a little bit of nibbling. That's showing that someone's starting to see some relative value and willing to step in. And I also think today, Mike, you discussed this earlier, you did see some of the selling now move to staples. You had big down volume. Those are all things I think that are needed as you try to have some corrective type of move. So I think those are all healthy.

41:13You know, how much further this goes is an open question. I will say during this bull market for the tech sector, we have basically doubled the returns of the S &P. But along with that overall doubling, we've seen now, I believe it's six pullbacks of more than 10%. The average pullback has been 17%. Where do we close? Where do we land today? We're down 17%. So it may not feel that way, especially how sharply we've gotten there. But so far, the correction we've seen is actually the average of this full market. Yeah. Well, Keith, I appreciate you taking our call, first of all. And you can ignore the rest.

41:48But it's fascinating, though. We talk about just exactly the degree of downside work that's been done in tech and in semis. And it's remarkable to me. I did cite this earlier. The semiconductor group is still up 20 to 25 percent year to date. It's just every every one of these extremes. It feels like the mirror image of how extreme we got to the upside when semis were 20 percent of the S &P 500 and they had gone parabolic. So I just wonder how that works into the picture. Yeah, I think that's a fair counter argument. And we all know the second quarter of this year, we saw semiconductors up 80%.

42:25And the other reality, just to be frank, I mean, I look at a lot of these studies and, you know, even on the sport market, once you've had these corrections, the average rebound is over 40%. But when you go back further, the question is, is this the bubble or not? Because normally you get to these extremes, you can have a really sharp rebound unless you're back into 2000. So you have to make a judgment call whether you think we're back in a bubble. Our base case is that even on the data center side that this will likely slow things down, but the demand is still there over time, that we reset valuations.

42:57But it's going to be a bumpy path forward. And as we think about even in comparisons to, say, the late 90s, when we started to see this volatile action, back then the PE expansion during that bull market over the four years into the top was over 300%. I mean, the PE for this bull market is actually below where the chat CPT bull market began. And obviously, questions around earnings. I guess at this point, the market's expecting a pretty big discount or reset in earnings. And I would expect maybe you do get some slowing down, but not to the degree that the market is slowing the price in. Yeah, that's obviously the next place to look in terms of whether you start to see the earnings downside risk recognized.

43:38And then maybe we realize the stocks had already, you know, kind of discounted it. We'll see. Keith, good to talk to you as always. Keith Lerner from Chorist. Yeah, thank you. Our next guest sees a lot of similarities between now and 2018 when we flirted with a bear market. We'll break down the charts to see how much of a risk that could be when closing bill overtime returns. Welcome back to Overtime. After today's sell-off, have we seen a meaningful bottom or do markets remain exposed to a larger correction? Joining us now, John Kolovas. He's the head of technical strategy at Macro Risk Advisors.

44:09John, such a good day to have you here. First chart, you're looking at S &P 500. How are we looking? Did we do any damage here? Oh, we sure did put a lot of damage in here today. We're testing the 200-day moving average here right now. My sense is we're probably going to have to continue to work a bit lower here. Once we break, I would say the June lows, the next level of support after that is around 7 ,000, which is the highs from January of this year. So it's been a lot of damage. And at a minimum, though, I would expect the tape is going to struggle and be capped underneath 77.25 for the foreseeable future.

44:44Yeah. I mean, we were there, what, last week or two weeks ago or something like that. It's happened in a hurry. I mean, semis, obviously the epicenter. They were the case on the upside and on the downside. How far along is that process? Oh, boy. We just broke an important support level today. We did what is known as a breakaway gap underneath support, which is the July and June lows. That completed what is commonly known as a double top formation. It's a silly name, but what it tells us is that there's a longer term trend change that's underway within the group. When you look at the SMH, the downside implication of that is down to around 375, which is approximately where it was trading around the March lows of this year.

45:23Now, that's the risk. This is what we that's the base case at this point. We ultimately need to to see the market reverse itself. But this was a significant breakdown on on the on the SMH and even the DRAM. The DRAM ETF looks like that needs to put in another leg lower and even break break a little bit more onto the downside. side. So what do you want to see to I mean, I'm sure there are a lot of people out there thinking we want to buy. What do you want to see signals that it is time to start lagging in? Yeah, I don't think we've had that proper capitulation. A little bit of panic today. You have the VIX spike a bit.

45:56But again, I don't think this is a run of the mill pullback. I think what's going on here right now, I think the market is forcing the Fed's hand and maybe even the administration's hand here. I think the tape is in a lot of trouble. I would say crash risk is quite elevated at this point. So what do I want to see for a bottom? Well, I would love to see a proper puke in the market, like VIX somewhere closer to 30 or 40, see new lows really spike. Actually, we had more highs and lows today, believe it or not. So we need to see that as well. Pull call ratios go, but implied correlations haven't moved that much higher.

46:33They've improved a bit. And a few times I've been on with you guys, we've talked about how correlations have been low. They're creeping up, but they're not at those levels where you would say, OK, we put in a proper capitulative low. Yeah. I mean, obviously, correlations have been so compressed that it's going to take a while to kind of rebuild, I suppose, from there. You point to the possibility of macro risk or the market is picking up on the possibility of this elevated macro risk. How does that fit with the idea that, you know, as the CapEx trade has come under pressure, we've also seen inflation expectations go down, Fed rate hike expectations come in, you know, bond yields are well off the highs, oil is even starting to go down.

47:14So what are the macro risks you think are kind of forcing the issue here? I think the biggest macro risk here, at least according to my work, is that financial conditions are still very, very tight. And when that happens, the chance of a market crash are very elevated. So we're in that condition right now. But the biggest macro worry that I have is that we're following the 2018 analog very, very closely. Very simple would be that was a midterm election year that failed. We had a new Fed chair that had to be tested at that time. We got a new one right now. But also semiconductors peaked in June of that year and declined steadily while the S &P was making higher highs.

47:50So very, very similar to that. And I'm not saying 2018 was nothing to do with AI. But the point is that that's a cyclical commodity, right? And the cyclicals are just not behaving the right way. So I think the market, like I said earlier, I think is really going to be forcing the Fed's hand here to not hike. If they hike, it'll be a disaster. John, great to get your take. Thank you, John Klovos. Well, tomorrow is a new day. It'll be all about the October jobs report. Economists expecting non-farm payrolls to rise by 59 ,000. Unemployment rate holding steady at 4.2%. Average hourly wage is increasing by 2.9 percent from a year ago.

48:27So interesting setup to sell off pretty sharply today going into the jobs report. Absolutely. And we'll see if those, you know, real economy indicators actually catch the market's attention or if it's going to be kind of about, you know, which hedge funds might be trapped. And is there still some more sell down to happen? Micron traded three times normal volume today. Wild one. That does it for overtime. Fast Money starts right after this quick break. AI is here, transforming how we work, live, and lead. And the women I talk to aren't waiting for the future, they're shaping it. I'm Julia Boorstin, Senior Media and Tech Correspondent at CNBC.

49:01This is CNBC Changemakers, where I talk with the female leaders transforming business as AI reshapes the world. Follow and listen to CNBC Changemakers, Women Leading in the Age of AI, wherever you get your podcasts.