00:00Counting us down to the closing bells. We're just about a minute away from that. Romain Bostic
00:04alongside Katie Greifeld. Joining us around the desk here in Studio 2 is Bloomberg News reporter
00:09Bailey Lipschultz and Bloomberg market strategist Michael Ball to help break down some of the
00:13action on the day. And Michael, I do want to start with you pretty much on the technical side here.
00:17You had a big gap lower in the S&P once again today. You had a drop about 2.4
00:21percent. I think
00:22at one point on an intraday basis, we were at the lowest level of the year. We're well off those
00:27lows right now. What's going on? Yeah, we moved back into the November levels. We've been in a
00:30tight range, about 200 points, between 7,000 and 6,800 for three months now and been actually quite
00:36contained despite all the turmoil underneath with all the sector and factor rotations often being
00:40violent on certain days. But then lo and behold, as the morning opened, cash hit below the 6750 level,
00:46which had been the line in the sand that traders had been looking at. Now, luckily, oil steadied.
00:51Effectively, we had some more dovish Fed comments from Williams saying that he was going to wait and
00:56see what the impact was on this sort of Italy's shock. And risk sentiment got a little bit of
01:01a bounce. Now, it wasn't what it was Monday, where you saw a lot of short covering and you saw
01:05a
01:05broader breadth of participation. This time, it was a little bit more, you know, a few sectors got
01:10ended up in the green. And basically, we're still seeing an unwind. And then one thing just really
01:14quick, this dispersion trade, which has been a very popular trade, where you're short certain stocks
01:19and you're long the index came undone a lot. And that's what a lot of trader chats talked about today.
01:23For the S&P, the low of the day was right around 1030. And I was looking at the terminal.
01:27There
01:27were only about 15 or 16 stocks in the S&P that were in the green. It looks like we're
01:31going to
01:31close with more than 100 names in the green, but still red across the board. The S&P down 65
01:36points
01:37or nine tenths of one percent. The Dow down eight tenths of one percent. The Nasdaq down about a percent
01:41even. And the Russell 2000, Katie, losing about 1.8 percent. Yeah, underperforming today when it comes to the
01:47small caps, which is interesting because that was your outperformer yesterday. A totally different
01:52script today, especially when you take a look at that circle. Don't love to see it. You have all
01:5711 sectors in the red there. A perfect score, but to the downside in terms of what your biggest
02:03loser was. It's like the angle of the circle. Yeah, exactly. Leading the losses. Materials down about
02:092.7 percent. Industrials also down about 2 percent there. Healthcare, meanwhile, also down 1 percent.
02:15Your relative outperformer, if you're looking for a little bit of a silver lining. Financials only down
02:20about two tenths of a percent. And, you know, Bailey, another big outperformer that we saw today,
02:24at least on an individual stock basis, are some of the retailers. Retailers meeting expectations
02:28are at least better than feared. And as we see investors maybe rotating away from the MAG7 names,
02:32you did see Target and Best Buy, two of your best performers in the S&P 500 on the day.
02:36Target,
02:37better than expected profit, quicker turnaround at the big box retailer. Stock did close at the highest
02:42level in more than a year or so. A big rally at Target. If you look at that chart, a
02:46pretty
02:47breathtaking rebound from where it was, call it late November, when we saw really momentum
02:51completely unwinding towards the end of last year. It's a turnaround story, Bailey. It's a
02:55turnaround story. I love Target, though. Are you a Target guy? Target? My wife is there pretty much
03:00every day. Okay. I haven't set foot in the Target in years. You don't do your own shopping is what
03:04I
03:04heard, though. Yeah. Well, you know, I'm spoiled. And then Best Buy was a bit of a short covering. I
03:11think
03:11it was short interest, like 11 percent afloat, which is not what you normally want to see in an S
03:15&P 500
03:15component. And then looking at the downside, when Finley messaged me asking what we wanted to talk
03:20about, I kind of said the whole market. But I want to call out some of the underperformers in those
03:24larger cap names. Tesla closing. And the reason I want to call out Tesla, stock closed at the lowest
03:30level since late November, down more than two and a half percent, really seeing investors maybe dumping
03:34the stock. Also because that gives me a reason to call out our latest scoop as SpaceX continues to march
03:39towards its IPO. So maybe investors getting a bit of dry powder to potentially deploy into SpaceX if
03:45and when it goes public later this year. And then Micron, the entire memory chip space under pressure.
03:50That's a big, big loser, big drag. Yeah, it's interesting. I mean, great scoop when it comes
03:55to SpaceX. Really sort of a sign of normalcy that, you know, IPO planning, it still continues. Of course,
04:01if your name is SpaceX, I imagine you have a little bit more bandwidth than some other names
04:05in the pipeline. But I mean, it is the final frontier, the final frontier space. That is.
04:11Yeah. Let's put some data centers up there. But Michael, it's interesting. I mean, you were talking
04:15a little bit about the technicals here. And it feels like when you're in a market like this one,
04:19you think about that angry circle that we saw. It's the type of time period where you really start
04:25to pay a little bit more attention to the technicals. Yeah. Again, we have recaptured this key
04:30area we've been in, which is a positive. But the volatility tends to echo. We have reports. And again,
04:35we have to be careful, because it depends what desk you talk to, that the CTA and systematic
04:38community is pretty neutral. And they're not yet really big sellers. And they can exacerbate this.
04:43But overall, again, we're not in a positive area as far as what dealers are doing. They're chasing
04:47downside moves here based on sort of where the option positioning is. So yeah, the technicals are
04:52still negative. And we're below moving averages, too, to add that kind of an angle in.
04:55Well, I do want to talk to both you, Bailey and Michael, just about the moves that we saw
05:00in yields. We had a big spike yesterday. Today's moves were a little bit more subdued,
05:04basically about two to three basis points, almost a complete parallel shift in the curve
05:09on this day. But when I was looking at the 10-year, I was like, we're still actually below where
05:13we
05:13were a few weeks ago, despite all of the volatility there. And I am curious as to sort of how
05:18that
05:18factors into market valuations, if people even care, at least in the equity space.
05:22Well, yeah, I think people do care. And I think, funny enough, everything took a cue off oil today.
05:25And you saw that also in yields. And that really helps angst, because financial conditions
05:30tightening is the last thing we need, given the rest of the macro backdrop, right? We're going
05:33to get the jobs report Friday. We have this reacceleration rotation story, which has seen
05:37cyclicals and values outperform. All that's predicated on the big, beautiful bill and the
05:41easing of financial conditions for monetary policy continuing. And if that comes into question,
05:45because all of a sudden the consumer is feeling the angst of higher gas prices,
05:48then we have to question small caps. We have to question valuations across the board of all the
05:52things I've been winning.
05:52And we should point out to Neil Kashkari, Katie, was at the Bloomberg Invest, kind of adding to
05:57this drumbeat from a lot of Fed members that don't expect any rate cuts anytime soon.
06:02Let's quickly talk about some earnings that we're getting crossing the wire right now.
06:05Coming from Ross Stores, an interesting read on the consumer here. First quarter SEPs,
06:10they see that $1.60 to $1.70 or $0.67. The estimate had been for $1.63. So the
06:20midpoint
06:20of that range around near consensus there. When it comes to full year EPS, that is seen between
06:26$7.02 to $7.36. The estimate had been for $7.21. You take a look at the reaction and
06:34shares
06:34after hours remain right now higher by about 5%. Yeah. And that's now, we actually have a four
06:40big retailers report today, Contour Brands as well, all sort of beating on several key metrics.
06:44We're now getting results out of CrowdStrike, the cybersecurity company revenue in the most recent
06:48quarter, up about 23%, in line with estimates at about $1.3 billion. Subscription revenue pretty
06:55much on the nose here. Not seeing any guidance at the moment here. The shares kind of oscillating
06:59between gains and losses. Here's your forecast. For the fiscal first quarter, the company says
07:04look for revenue of about $1.36 billion. That's on the nose, Katie, of what the street was looking
07:10for. Yeah, there you go. And I do want to add this other headline that just crossed when it comes
07:14to Ross Storrs. Fourth quarter comp sales, of course, a very important metric there,
07:19rising by about 9%. The estimate had been for 4.92%. Might help explain why you are seeing that big
07:27pop in shares, Romain. Are you a Ross Storrs guy, Bailey? I'm a discount guy. I love a good deal.
07:32I will say, though, I was at Bloomingdale's over the weekend, and I got some sweatshirts that are
07:36pretty nice. Like across the street, Bloomingdale's? No, no, in New Jersey. You got to go to the
07:40seminars for the real deals. Oh, wow. Is that where they are? No sales tax. But I guess to this
07:46idea, too, though, about the kind of the resiliency of consumer spending, I mean, we've had a lot of
07:50guests come on and talk about how the economy is still good. I mean, we came into this disruption
07:54in the Middle East with a relatively stable economy. Yeah, there were some cracks, if you
07:58will. But overall, none of the data seemed to suggest that we were going to fall off a cliff anytime
08:03soon. No, it's been interesting because it feels like that whole K-shaped recovery has been such a
08:07big focus. You're looking at credit card defaults or at least the leverage that are being taken is
08:11being taken on by the bottom quartile of U.S. consumers. Whether you want to buy into the
08:15argument that really the top decile is what drives the U.S. economy is up for debate. But it's
08:19certainly when you look at some of the reactions that we've seen with the targets, the best buys
08:23now Ross, people are still spending money or at least the street is on board with what they're
08:27spending. Though it is interesting, Ross and Walmart, I mean, fit into this bucket. When you see
08:31some of those stores do well, particularly Walmart, I feel like you can make the case that
08:36you're seeing more of a trade down. And even though it's translating into strong results for
08:41some of these names, maybe that's actually not a fantastic signal when it comes to the overall
08:46health of the consumer.
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