Closing Bell - Closing Bell Overtime: Wild Market Swings Send Stocks Lower; Broadcom Soars On Earnings 3/6/25

Episode Date: March 6, 2025

Rockefeller International's Ruchir Sharma on U.S. market weakness vs. international strength. Economist Claudia Sahm on jobless claims and the labor market, and analyst Dana Telsey on Costco and Gap earnings. Top analyst Stacy Rasgon breaks down Broadcom's strong quarter. 

Well that's the end of regulation and dimensional fund advisors ringing the closing bell the New York Stock Exchange girls who invest doing the honors at the Nasdaq. Another nosedive for stocks today with the Nasdaq seeing the most pain dragged down by mega caps like Nvidia and Amazon. As Sara Fears grip investors, layoffs data jumps, a lot of uncertainty in this market. That's the scorecard on Wall Street, but the action is just getting started. Welcome to Closing Bell Overtime.

I'm Morgan Brennan with John Ford. And chip stocks taking on the chin today after Marvell's results, and we'll get more clarity on the space in a few minutes. When Broadcom results, that stock was down about 6% ahead of earnings. We're gonna bring you those numbers as soon as they cross. And we'll also get earnings from Costco, Gap, HPE, and Samsara.

Plus, SOM rule creator Claudia SOM reacts to today's challenger layoffs number as the highest since 2020 ahead of tomorrow's jobs report. And Rockefeller's Ruchir Sharma, why he says President Trump's policies are, quote, making the rest of the world great again, at least from an investment perspective. Well, let's get straight to the market action and another ugly day on Wall Street. Joining us right now is BD capital partners, CEO Barbara Duran and CFRA research chief investment strategist Sam Stovall. It's good to have you both here and Sam I'm gonna start with you. We've got an S&P

it's still settling out here but it looks like down about 1.7 percent 57 38 perhaps is where we where we land here. Every sector in the red except energy and as we just mentioned, Big Cap Tech and the NASDAQ really taking the worst of it today. Where does this leave us with the market and where should investors be focusing when there are so many bricks in the wall of worry? Well, I think it confirms that there is still a defensive shift that is going on. And just before the close consumer staples was in the green.

So that sort of gives me the feeling that investors continue to rotate rather than totally retreat. So we're continuing to see some of the defensive areas, consumer staples, health care that are doing well on a year-to-date basis, whereas the worst performers, the only negative ones, are technology and consumer discretionary on a year-to-date basis. So it says to me that, yes, investors are unnerved by the tax, the tariff situation. the longer the tariffs remain in place, the deeper this market is likely to go.

But I still think investors are expecting to see a rotation rather than a true route and retreat. Barbara, do you see it the same way? And if so, what would you be buying right now amid the sell-off? Well, not quite. I mean, what I think we're seeing is a real old-fashioned growth scare.

And I think a lot of it stems from policy uncertainty. You know, whether it's about Doge, we're not hearing much about the deportations, but that's also a concern, but also the tariffs. And I think you've seen that show up in a number of ways. For instance, in February, we actually had an increase in consumer income about double what was expected and yet consumer spending was half what was expected. I think that reflects on two weeks ago we had two different consumer confidence surveys, big jump on inflation expectations, so I think it's causing a hesitation in consumers. And then we had the manufacturing data which showed prices going up but employment going down. And I think that and also new orders. So I think that's companies showing they are hesitating. I think that when there's so much uncertainty, both

corporations, companies and consumers pull back. And it doesn't mean because they don't have the money. And the problem is this could get deeper, you know, if this uncertainty goes on. And as we know, it looks like at least another month and probably more before we get clarity in the tariffs. So I think you're seeing classic throw out the momentum trade, the momentum trade is over, the MAG-7 as a group is down 15%. What their earnings haven't changed, maybe Tesla.

There's some fundamental issues there, I think, but I think that this is an opportunity to get the shopping list ready. I don't know where the market bottoms, probably somewhere in here, but I think you just get your list ready and you start to buy if you have some cash, knowing that things could go a little bit lower.

Sam, if this is about a growth scare and not just about tariffs themselves, we're about to get a lot of valuable data points in tomorrow's jobs report. What are the chances that one or more of those numbers shifts the narratives here? What should investors be looking for? Well, I think certainly you look for the overall number.

Our expectation is for 155,000 jobs versus the street's 160. We do think that unemployment will tick up to 4.1% from 4.0. But I think you also have just to look at each of the other leaves within this artichoke to get to the heart of the matter. And our belief is that while there is a possibility of a slowdown in growth in the economy, I mean, we had been anticipating a 2.5% real GDP growth in 2025. Now that's down to 2.2 percent. We're still looking for an economy that's growing above 2 percent through 2026. So the narrative has not shifted, in our opinion,

to recession yet, but certainly it is a shift in momentum going from the tech stocks into the more defensive areas. Okay, hold on. Hewlett Packard Enterprise earnings are out. Christina Parts-Nevelis has the numbers. Christina. It is a mixed quarter with more job cuts coming for HPE, which operates in server storage, networking and software. The company is set to cut a further 2,500 positions, and that'll be over the next 12

to 18 months. As for earnings, the company posting in line earnings per share with revenues of 7.85 billion, which was a slight beat. The Q1 server revenue coming in a touch higher too at 4.29 billion. But margins are slipping. Big part of the way the stock is dropping now. Margins are coming in at about 29.4% for Q1. Down from last year, down from last quarter. I spoke with HPE CEO, Antonio Neri, and he told me the drop came from three factors. One, pricing pressure in both AI

and traditional server markets. Number two, the inventory re-evaluation that they had, specifically adjustments to their inventory. And number three, higher than normal AI inventory due to the rapid transition from Hopper to Blackwell GPU chips, something we heard from other players like Supermicro and Dell, and these are found in HPE servers as well. So looking ahead though,

the outlook is also weak. Both Q2 revenue and earnings per share are below estimates. Neary pointing to tariffs, especially in Mexico, is a major headwind stock down almost 12%. All right, Christina, thank you. Barb, I'm particularly curious about how Samsara is going to fare with its results given what Marvell and MongoDB did. MongoDB really bad trade post earnings here. And Samsara had been doing a lot of beating and raising that ticker IoT, really doing a lot of sensors on trucks, cost-saving use of data and eventually AI. What are these dramatic moves that we saw yesterday telling us about how the market

is priced and what investors are willing to do with growth and smaller technology stocks? Well, what I think you're seeing in general is a squeezing out of the AI premium and a lot of these names and people trying to really gauge you know when do things kick in like HPE that just reported I mean the AI service we I think a lot of investors understood you know there's transition issues the GPU there are competition issues you know they're waiting for the Juniper merger to happen and that will probably bring it in the second half be a much better story for them. But in the case of some Sarah, they really are best in class in a very fragmented vertical industry. And eventually, I mean, the competition is coming for them,

you know, you've got bigger players, you know, who can do things more cheaply. And you've also got some OEMs that will probably build in some of the tech capabilities that they're now offering through third party software. But their numbers should be good and it should be a good outlook because it's really been an industry that has been so fragmented and clients need this. And so they've grown really quickly and probably the highest growth software company right now. So I would be surprised if they're already seeing a growth slowdown, but we'll soon know soon Barbara Durand Sam Stovall Thanks to you both. Let's get now to Mike Santoli for more on the sell-off Mike

Yeah, John S&P 500 really unable to get much kind of oomph on these rally attempts but also kind of bottoming in a similar area around the 5,700 mark, the past few days, it has crossed below, it's scissoring back and forth around this 200 day moving average. I always say, there's nothing sort of magic about crossing it. It doesn't totally change the character of the market,

but there is a lot of convergence of people who, one, think it's a buying opportunity, or on the other side side feel like that's when you kind of take a jump out of the market if it really breaches it. I would point out too that at the lows today around 2700 that's a little bit of a slant but we were just less than one percent above this July peak that was the real crescendo higher in mag-7 and this was that pullback we got about eight nine percent and that was associated with the yen carry trade scare so global capital market stress or at least fast moving indicators like the dollar

getting uh kind of slammed today also german yields flying is something to keep an eye on because we were also oversold as we are right now after two weeks of of selling and you had a rally attempt and then it took that flush lower for the yen carry trade to get us moving again. Anyway, here is a little bit of a capsule of the market-based sentiment. So fear and greed index, this is something maintained by CNN, it's really matching that sort of late July,

early August low, which coincided with that buying opportunity, the market low. It does get lower this is just low on a one year scale so at the bottom of real crashes and bear markets it's in the single digits it's right now like seventeen but key it's just

something to keep in mind that things sometimes get wound pretty tight it looks like there's no relief and it can spring higher without a lot of warning or at least you tend to be in the zone of time and price when maybe the market's going to try to find its foot

It guys like S&Ps right back to where we were before Election day, but at the same time that the VIX is a lot higher. What does that tell us? Well, it tells you the path and you know, essentially the the fact that we went down You know seven percent in almost two weeks as opposed to ascending to this same level a while back. So it's all about, you know, the cadence and whether we've been kind of had sellers or buyers in control. One thing to keep in mind, a VIX in the mid 20s right now 24, 25, what that says quantitatively

is that the market is bracing for about a one and a half percent daily move in the S&P 500. That's kind of how it translates into an implied move. So it doesn't mean that it's going to move that much. It doesn't mean that this can't go higher. And it's really, really intense. Sell-offs are well above 30. So at this point, it just means we're on edge, we're on alert.

And it's also reflecting just how volatile the market has been in the last couple of weeks. We're seeing volatility in the FX markets, too Which I know we're gonna talk about a little later this hour Mike Santoli. We'll see you a little bit later. Thanks for being with us We're just moments away from Broadcom's earnings results after a brutal day for chip stocks including Broadcom We'll bring those to you as soon as they cross and after the break Rockefeller internationals Rishir Sharma weighs in on another big sell-off on Wall Street and why he says President Trump is making the rest of the world great again from an investment perspective over times back in two.

Welcome back. We have a news alert on intuitive machines. This is the space exploration company that sank 20% in the regular session after attempting to soft land its commercial lunar lander on the moon. There's a press conference going on right now via NASA because the company was contracting with NASA through the clips program on this mission. And here are some of the headlines we're getting right now. Intuitive machine CEO, Steve Ultimus saying, quote, we don't believe that this Athena lander is in the correct position on the moon

and that they don't believe it's in the correct attitude on the surface of the moon yet again. And saying that the mission will be quote, off nominal, which means the data that they do get back from this mission will be uncertain because of power generation issues from this incorrect landing position. Now the lander is returning data despite this faulty landing that's according to a NASA official and the attempt had challenges to land had challenges with the lander's laser range finders. Now if you take a look right now the stock's down

30 percent here in after hours but if we were to show you a chart of the activity that we saw in intuitive machines during the regular trading session this attempted landing happened right around 12 30 eastern. The stock was briefly halted as that was playing out once it became realized through the commentary from Mission Control in the live stream that there were some complications and this landing was not playing out as had been expected. So this is the detail and the information we have now. This Athena lander did land on the moon.

It did not land the way it was intended to and it sounds like the mission has been compromised. How much remains to be seen, but the stock is down about 29% right now. And meantime, earnings continue to roll in. Costco and Broadcom results have crossed the tape. We're going through them now, but Samsara results are ready. Sima Modi has them.

Sima? Samsara delivering a 4 cent beat on its bottom line, John. Revenue coming in ahead of consensus at $346 million. The estimate was for $335. I would point out that deferred revenue is a bit lighter than expected. This is, of course, the company that specializes in fleet operations, real-time GPS, AI-powered dash cams. Let's talk about guidance.

It's first quarter earnings per share guidance of five to six cents versus the estimate of five. So generally in line with estimates, but as we've seen over the past couple of weeks, John, companies that haven't been able to raise, in some cases have been punished, and we're looking at the stock down about 10%, and excluding today's price action, I would point out,

shares are down about 33% from its most recent high. I'll send it back to you. All right, Seema, thank you, and Sam Sarr, CEO, is gonna break down these results with us tomorrow right here on Overtime in an exclusive interview. Meantime, Broadcom results already. Christina Partzanevalis, how do they look?

Beat on the top and bottom line so far for this quarter. We're seeing EPS adjusted of $1.60 on revenues of $14.92 billion. You can see shares jumping about seven percent if we just look at Q2 revenue guide that too is coming higher at fourteen point nine billion. I will continue to go through the report and come right back to you guys. All right, Christina parts and evilles. Thank you. Well, back to today's wild market action. All three major averages now in track for the first weeks or the worst weeks, excuse me, of the year after piling on heavy losses today. But it's a different story overseas

where European and Asian markets are on a hot streak. They have been. Joining us now is Roshir Sharma, Rockefeller International Chairman. Roshir, it's good to have you on, on a day like today, where we did see in general this week, we've seen the dollar weaken significantly against other major currencies.

We've seen stocks here sell off, but as we just mentioned, we've seen rallies in other parts of the world. What's driving that and how much of that is based on the policies of President Trump here that are actually pushing policy pivots in other parts of the world? Right. To put this in context, as I sort of spoken with you and written back in December that we had this concept in American economy that we were going to be able to put this in context, as I had sort of spoken with you and written back in December, that we had this concept in American exceptionalism reach bubble-like proportions, which is that the performance of the American stock market had really gone parabolic. In fact, in my 30 years of looking at markets, I had never seen an instance when a country was this over owned, over hyped and overvalued relative to the rest of the world. So that's what was the context of coming into this year.

Now what we're seeing is that bubble is being pricked, which is that after having outperformed global markets for 15 years, the American stock market is beginning to give up some of that outperformance. The dollar too began this year as being the most overvalued on some measures since its floating rate history, which goes back to the early 1970s. So that's the context. Now what's causing this bubble to prick? I think it's a combination of the fact that the American economy had been artificially juiced up

by a lot of government spending, and also the fact that the rest of the world is beginning to get its act together partly because of Trump. They are facing a sort of existential crisis because of the policies out of the US, and so they're finally carrying out the kind of reforms that they should have done anyway from Germany to China.

And that's what's lifting their market. So this is a big reversal that's going on here. It's interesting because when you frame it like that, and I'll use Germany as an example with the fact that it's now positioning itself to spend more on defense, it sounds like you're going to start to see or you're already starting to see more fiscal defense, it sounds like you're going to start to see or you're already starting to see

more fiscal spending from other countries while the US is actually pulling back on that very thing. Exactly, but it's also carrying out the kind of reforms. I mean, Germany would have not carried out these kinds of reforms, which goes beyond defense. It's got to do with infrastructure and hopefully it extends to the supply side as well of deregulation.

They would have not done that had it not been for the urgency because of what the Trump administration has been doing with Europe. Similarly, in China, there's been a sea change in Xi Jinping's attitude towards the private sector. And that's also happening because he realizes that he needs the private sector to be firing because the export economy is going to be under threat under a Trump era. In countries like India, too, they have the highest tariffs, as Trump has pointed out. So now India is rushing to lower its tariff rates and do a deal with the U.S. that it should have done anyway to make itself more competitive.

So I think that there are all these policy changes that are happening around the world. So, Ruchir, what then are the implications for US markets, even as they include a lot of companies that operate globally? I mean, if Germany indeed does crank up spending at the same time, Europe is relying less on America perhaps and even American products if this China decoupling continues partly driven perhaps by the US limiting the technology that's available to China to buy. If those reforms do indeed happen in other parts of the world, does the US benefit as much or less than it would have previously?

Yeah, because so much capital got sucked into the US. If you just look at this decade, about $1.2 trillion flew into US dedicated mutual funds, whereas hardly any money has gone into any global funds. So I think that there's ample scope for reallocation. So I think that the US markets don't do well in this environment and it's the international markets that outperform meaningfully. Remember, this is a 15-year record level of outperformance that we're coming into this. So I suspect that for the next few years, these other markets are going to do much better, and this gross overvaluation of the US market, where the US equity market came to be nearly 70% of the global stock market indices

compared to its economic weight of nearly 30%, I think that gap begins to close. So this is a seismic shift, it's just begun, and I suspect for the next few years, this is the story that we're gonna be talking talking about and it'll only become apparent with time. All right. Everybody watch your 401k's. Ruchir Sharma, thank you.

Also cue the QR code because that leads in nicely to the latest installment of my on-the-other-hand newsletter this week's debate. Will President Trump's rift with Europe hurt the U.S. markets? You can scan that code on your screen now to join the conversation. Well now let's get back to Christina Partsanevales. She's got more on Broadcom's results. That stock even higher than it was before, Christina.

Yeah, much of this has to do with just AI driving a lot of the demand in the first half of this year when a lot of analysts in sell-side were expecting that to happen in the second half. And I say that because you had semiconductor revenue come in at $8.2 billion, which was higher than the street anticipated. Infrastructure revenue also higher. But more specifically, their AI revenue actually climbed 77% year over year in Q1. So it came out to about $4.1 billion. But what they're anticipating for Q2 is that number to climb even higher to $4.4 billion with the CEO saying in a statement quote that as hyperscalers partner our partners

continue to invest in AI XPU so there's the individual chips and connectivity solutions for AI data centers so in other words he's telling us he's still bullish going into the following quarter because of these hyperscalers spending money and so all that strength as well as the revenue guide, coming in higher than anticipated, helping shares. All right, Christina Parts-Nevelis, thank you. Thanks. Gap and Costco earnings are out.

Courtney Reagan is doing double duty and has the numbers. Hi there, yeah, let's start with Gap. Share is actually surging here on this of about 14%. So Gap earnings per share, beating the street by a decent margin at 54 cents. The street was looking for 37 cents. Revenue is also stronger than expected at 4.15 billion. The street was looking for 4.07 billion. Total comp sales up 3%. The street was looking for those to grow just 1%.

Old Navy very strong up 3%. Gap the namesake brand that was up 7%. Banana Republic comp store sales those were up 4%. The street account actually consensus looking for that to fall about one and a half percent. Gross margin pretty strong 38.9%. Operating margin also much stronger than expected at 6.2. The street was looking for 4.7%. When you look at the guidance, this might be looked at as a little conservative. They're looking for net sales growth between one and 2%. The street was looking for that more on the high end at 1.7 percent. And I spoke briefly with CEO Richard Dixon and CFO Katrina O'Connell. Like other retailers, the CFO O'Connell said, look, the unseasonably cold February did cause

the quarter to get off to a bit of a slow start. But as weather normalized, Gap was, quote, pleased with what we've started to see in the business. And the quarter to date, all of these trends are embedded in the outlook. And Dixon said that Gap sources 10% of its product from China and less than 1% from Mexico and Canada combined. So the impact of this 20% tariff on China and 25% on Mexico and Canada is also embedded in the guidance that we just got.

Now, he didn't really detail exactly if prices were going to increase as a result, but he did say quote, our goal ultimately is to minimize the impact to the consumer, no matter what the cost inputs are across the business. So we'll hear more from them when that call starts and then very quickly we'll go through the Costco numbers. Those actually sort of looked like the opposite

of what we saw from Gap though, shares down just about 1% here. They did miss on the top and the bottom line for the results. They came in with $4.02 for the earnings per share. The street was looking for 411. Revenue is also lighter at 62.53. The street was looking for more than 63 billion there.

The same store sales we should though note, up 6.8% that does include gas and foreign exchange impact. They released a little light on detail, so we'll have to listen for more on that call too. Back over to you. Mild reaction despite those misses. Courtney, thank you. Thanks, John.

Well, coming up, more reaction to Broadcom's print and the serious pain we've seen recently in the ship chase with that stock up almost 9%. And later, former Fed economist Claudia Somm on just how important tomorrow's jobs report could be after layoff announcements jumped to their highest level since 2020. Overtime, we'll be right back.

Welcome back to Overtime. Broadcom shares popping here in Overtime. AI revenue up 77% year over year. The stocks up 9.5% so far after being down just over six in the regular session. Joining us now is Bernstein Senior Analyst, Stacy Rasgun. Got an outperform rating, $250 price target on the stock. Stacy, this pop, if it holds tomorrow,

would take us back to where we were a week ago when things were perhaps a little kinder out there for semiconductor stocks. How different is this from Marvell, which I know you don't cover? Yeah, no, you bet. So I think the set up here's a little different. Both companies had good results.

You had Marvell relative to consensus was decent, but I just think buy side expectations were much higher for Marvell. Especially into the first half, people were looking for their AI revenue ramp more. It's different drivers though. Marvell on the custom chip side is more Amazon. Broadcom is more Google, and whereas I think with Marvell it was more expected in the first

half, for Broadcom it's expected in the second half. So I think expectations were lower. Now on top of that, Marvell was just sort of inline-ish. Broadcom had a pretty decent beaten raise. Gross margins are really good. And importantly, the AI revenues both in the quarter as well as on the guide are quite a bit above the street. So I guess you could argue that the non-AI semis are weaker,

but maybe that's not a shock. And people certainly care much more about the AI. They did, what did they do? They did 4.2 or something in the quarter. The street was at 37 or 38. The guide is for 44, again, quite a bit above the street for AI semis. So the parts of the story that people care about,

I think, are really coming through here. And given where, I think especially after the pummeling that the stocks had over the last several weeks, expectations were lower going into this. And so you got a bit of a relief rally going on right now. And I should say even though, even at the 180 that the stock was at, it was almost dead in line with where it was three months ago

right before their last earnings. So we got it, we gave it back, maybe we'll get some of it back again. So, I mean, you talk about AI and non-AI, but I guess the worry for investors might be that even the AI semis have healthy valuations already in an environment where people are worried about tariffs, people worried about export controls

and just sentiment might be taking a beating. What do you have to say about that? Yeah, and look, so the AI names in general have been weak as we all know, and some of it I think is concerns over sustainability and all this other stuff. Oh, I'd say investors are worried about peak AI. The companies and the customers don't really seem to be worried about it right now, but

you've had those issues. I'd say also, just in terms of the general volatility that is out there with some of the policy changes and everything, I think you've just got a broader derisking going on. And some of these AI names, the valuations were richer. And so I guess I'm not surprised in that context to see some of that de-risking. And my guess is not all of the sell-off

that we've seen in these names is necessarily entirely related just to the fact that they're AI names. The policy piece of this to me is really fascinating. And I keep having conversations with C-suite folks and policy folks, former policy folks. And it's like everybody keeps using this word, uncertainty. And I get that, but when you look at something

like Chipsack, for example, which President Trump made comments about in the joint session the other night, and I found myself having conversations with folks who seem to think that you might see some layoffs of some of the folks that are involved in that program under the previous administration. Do you buy into any of these names right now? Are some of these companies that are making investments

into things like foundries here in the US, like do you go anywhere near that right now, or do you sit on your hands and you wait and you see what happens here and more policy certainty to actually materialize? Remember, there's not a lot of companies that are making massive fab investments. In fact, if you look at the Chips Act awards, I think more than 80% are to four companies. It's Samsung is the biggest.

Samsung, TSMC, Intel, and Micron are 80% of the awards that have actually been officially given. So it's not that many names within the space that are doing this. And certainly you have fabless names like Abroadcom within the space that are doing this. And certainly you have fabulous names like a Broadcom or like an Nvidia that are not investing in fabs. They don't build fabs. In fact, they would benefit to the extent

that capacity, extra capacity gets built. So no, I don't think that, I think the Chips Act issues are another, maybe they're a little more orthogonal to this another issue entirely. I don't know that you can just cancel the Chips Act by the way. Like I know Trump seems to hate it.

It is, it require an act of Congress. It's a fairly popular act of Congress. So we'll see if they would go along or not. To your point on layoffs though, I guess that's one way to slow lock it. If you fire everybody that can, you know, sign a check, maybe you slow down some of the efforts of the CHIPS Act maybe.

Yeah, I think a lot of the money's already gone out the door to your point. Well, no, it really hasn't. No, no, no, most of it hasn't because the grants are milestone based, right? So some of it's gone out. And then the tax credit, I mean, it goes in conjunction with spending.

You spend the money, you file your taxes, and then you get the credit back a year later. So no, I don't think most of the money's actually gone out. It's been awarded, but it hasn't gone out yet. Okay, Stacey Raskin, thanks. Yeah, you bet. We have a news alert on Mobileye. Leslie Picker has the details, Leslie.

Hey Morgan, take a look at shares of Mobileye higher in after hours trading on a 13G filing. This is a passive investment by Steve Cohen of.72. The investment is around 5.05 million shares here representing about 5% of Mobileye. This company does technology for self-driving cars, driverless cars. You can see shares up about 3.4% right now, guys.

I'll send it back to you. All right, Leslie Picker, thank you. Time now for a CNBC News Update with Pippa Stevens. Hi, Pippa. Hey Morgan, Ukrainian President Volodymyr Zelensky is headed to Saudi Arabia on Monday in a post on messaging app Telegram. Zelensky wrote that he'll meet with Crown Prince Mohammed bin Salman ahead of talks with U.S. officials later in the week.

The announcement comes on the heels of his attendance at the EU summit in Brussels Thursday, where leaders, with the exception of Hungary, vowed to continue to stand by Ukraine. Meanwhile, at the summit, EU leaders backed new defence spending plans, which would free billions of euros to fortify its defences amid fears of Russian threats and President Trump's reversal on US foreign policy. It includes a loan package worth $162 billion to lend to EU governments for military spending. And the EPA filed a motion today in federal court that would roll back safety regulations

introduced by the Biden administration last year to prevent climate-related disasters at chemical facilities. The chemical industry and a group of Republican attorneys in general originally filed suit, arguing the rules imposed undue burdens with little benefit to safety. Guys? All right, Pippa Stevens, thank you.

Up next, MAG-7 on sale. We're going to look at the valuation slide for the biggest tech stocks after another plunge today for the NASDAQ 100. And more ahead on today's earnings action. Analyst Dana Telsey joins us to break down GAAP and Costco and how to trade the retailers ahead of this tariff uncertainty. We'll be right back. Welcome back.

Tech stocks getting slammed again today. The Nasdaq is now down more than 10% from its highs. Let's get back to Mike Santoli for a look at the valuation reset for the biggest tech companies. Mike. Yeah, Morgan, and the NASDAQ 100 likewise also touched a 10% pullbacks trying to hang in there at this, what seems like round number level of 20,000. So the question is whether it might soon find

some valuation support. It's pretty tough to make that case in an outright absolute sense. Here's the forward PE of the NAS of the nasdaq one hundred it's dipped just below twenty six as you can see that still well above any time from before the pandemic a surge in tech stocks

and relative to the S. and P. five hundred looks a bit more moderate although because the nasdaq one hundred type stocks also make up in a ever bigger part of the S. and P. it's actually not as cheap relative to everything else is it has been in the past so

certainly not- you know as egregiously expensive as it might have been at one point maybe it's more realistic at these levels. The one outlier to the downside in terms of valuation in that mega cap group the magnificent seven is

alphabet has been this way intermittently for a while it's- below nineteen times earnings Google is and also on a relative basis to the S. and P. five hundred has literally never been this inexpensive it's at a discount to the S. and P. about

you know ten percent discount- maybe that's justified I think that's the thing you have to make the call in terms of long term prospects and how defensible their profit streams are where they are in terms of this. A. I. investment but in

general you know maybe it's time to to buy the Mag 7 for defensive properties. Not clear to me that it's because they're getting very cheap. All right. Mike Santoli, thank you. Now let's get back to Courtney Reagan on Costco results. Courtney. Hi, John. Yeah, we just want to clarify something.

We had brought you a number saying that it was the full revenue number, but it was actually the net sales number, not inclusive of membership fees. So the full number for revenues inclusive of membership fees is $63.72 billion, and that is stronger than what the street had been looking for at $63.13 billion. Shares of Costco, though, still down about 1%, John. All right. That explains why just 1%. Courtney, thanks.

Up next former Fed economist Claudia Somm on whether spike in layoff announcements in President Trump's tariffs could be a double whammy for the economy. Be right back. Welcome back to overtime stocks sinking today as tariff uncertainty and more soft data weighed on investors including a report from challenger gray and christmas showing the highest level of layoffs since july 2020 joining us now is claudia som chief economist at new century advisors former economist at the federal reserve claudia welcome. So two thirds of the reported layoffs in this were in the private sector.

We've got Doge that's been working on more public sector layoffs. At what point do we know if this is creating an environment where not only are jobs being lost, but they're harder to get? Right, well, it's a very disconcerting report coming out of Challenger. I think we should think about it, that data can be very good at getting the direction. So we're getting

information layoffs both private sector and in the federal government are on the rise. Maybe that number, that may be a little, it can be kind of noisy and it may not show up fully in the official statistics, but it is a warning flag about where the direction of layoffs. And we've known for some time that we've had this very divided labor market in that layoffs have been near historic lows for years now. And yet hiring rates have not been as high as we would have liked.

We've had this risk going for a while that if layoffs were to pick up, we are in an environment where it does not appear that hiring is happening as rapidly. So unfortunately, there are some signs that, like this is going from a risk to being the environment that we're in, and that could be a real problem

for the labor market as a whole. So Claudia, how much of this is government related? Do we know yet? I mean, there's a lot of talk about, you know, Doge cuts and Doge impact and that that's going to ripple out from Washington. On the flip side of that, there's also a lot of misreporting out there about job cuts coming to fruition in certain agencies in the federal government that hasn't actually happened. Yeah, the amount of uncertainty that DOJ has created

with its move fast and break things process is really, it makes it hard to even get a sense of what layoffs have happened at this point. And then on top of that, you have legal cases that are putting in question whether some of those probationary workers that were laid off, whether they could have been laid off.

So we're gonna see probably the numbers around the federal government layoffs fluctuate a lot, a lot of headlines, potentially misreporting. It's going to take time for this to show up in our official government statistics. We are not on Friday, when we get the employment report for February, it's going to come the timeframe for it,

the week of the 12th. This is before a lot of the big layoffs started with the probationary workers. So it's, we really have a fragmented picture of what's happening in terms of federal government layoffs. And then there's a big question in the spillover, the canceling of contracts that would go into, you know, hospitals, nonprofits, state and local governments. That's another big question. And frankly, that's a much bigger pool of workers that could be put at risk from the Doge actions. And what does history tell us about the influence of federal budget and job cuts on the private sector,

including, as you just referenced, contractors and businesses that are closely connected to the federal government and geographic areas where the federal government is a big employer. Right. So unfortunately, history may not be a great guide here. The federal government employment, it's less than 2% of overall employment. Even if you take the federal contractors, people who are employed on federal grants, that you're still well under 10% of the labor force.

So we're talking about a small group, and yet the thing that DOJ has done, because they're moving so quickly with these layoffs, is they're really concentrating at a moment in time the amount of people who are then out looking for new work. There have been times, President Clinton was also decades ago, put in place a long period of reducing the federal workforce. It happened over multiple years. Right now, what Doge is doing

is trying to really front load that, and it puts so much pressure on the private sector to be able to absorb that work. If Doge would slow things down, actually the disruptions from this probably would be much more focused on the government sector and you can have, I mean, but that's a choice they're making. Indeed. Claudia Somm, thank you for putting that in perspective. Well, still ahead, retail analyst Dana Telsey on Gaps Big Overtime Earnings Pop and how tariffs could hit consumers. We'll be ahead, retail analyst Dana Telsey on gaps, big overtime earnings pop and how

tariffs could hit consumers. We'll be right back. Welcome back. Let's check on today's overtime movers. Broadcom shares getting a lift after earnings and revenue came in ahead of expectations with solid revenue guidance as well. The AI piece that getting a lot of attention stocks up 9 percent HP Enterprise is sinking though after earnings guidance fell short of estimates that stocks down 16 percent.

They also announced more layoffs. It's a one to watch. Yeah. Up next to top retail analyst on what she'll be listening for when the calls from Gap and Costco begin in just a few minutes. And don't miss the CEO of Gap tonight on Mad Money, 6 p.m. Eastern, be right back. ["Dreams of a New World"]

Shares of Gap are surging here in overtime after reporting fourth quarter earnings results just moments ago. They're up about 16% right now. Let's bring in Telsey Advisory Group CEO, Dana Telsey. Dana, I wanna get your thoughts on this because this has been a turnaround story and it seems to be gaining momentum here when you look at the top line, the bottom line,

the breakdowns across the different brands and even the margins which came in much better than expected. Yes, across the board it was a very good quarter. I would say that look how the same store sales has accelerated for each of the divisions. Who would have ever thought that the Gap brand had a 7% comp. That 7% is one of the best numbers in retail that came out this quarter so far. And with 54 cents in EPS, that was better than the consensus. More importantly, when you look at the guidance, given that the theme of retail has been fourth quarter beats the first quarter essentially misses consensus, and then you have to build up to the year for 2025. It seems like the first quarter for Gap is coming up pretty much in line with consensus and their guidance for

the year seems doable. The improvement at Old Navy, the improvement at Gap and even a positive comp at Banana Republic is encouraging. With the margins better like you mentioned tariffs are definitely top of mind. What they baked in with the operating income for the year expected to grow 8 to 10 percent in 2025, that's better than what consensus called for. So the sales flow through is encouraging. Not to find the cloud in the silver lining, but if this overtime pop holds around you know twenty three uh... or so bucks a share to take us back to where this was last week before drop so is there a tariff exposure or other uncertainty exposure maybe just

consumer in general that investors need to be concerned about here of course in every consumer in every retail business look at the unseasonable whether you've had look at the the fact that we have tariffs. What's that going to do to pricing? And almost all the retailers have had inventory increases a little bit greater than sales, given that some brought in goods earlier. The one thing with GAAP that certainly will be the question on the call, the smaller brand Athleta seem to go back with a negative comp that had had a positive comp so we're gonna want to see how they improve that but the other three brands were all encouraging. So given the fact that we just got these results we also just got

Costco we're showing a board right now with all the earnings we've already gotten for the season we're mostly through it what do you buy here what do you like the most? Oh I think of the names overall and what's encouraging you take a look at off price. Look at Burlington and TJX. That was encouraging. You want to take a look at other names like Birkenstock, who's driving full price sales, and Ralph Lauren in Tapestry.

Brand leaders in value is what's making the difference. We still have some more to come. We got to see Lulu. We got to see Ulta. We have to see American Eagle, what they're going to say too. All right. Thank you. Dana Telsy, thank you.

Before we go, check out shares of MongoDB, the biggest loser in the NASDAQ 100 today, losing roughly a quarter of its value after issuing disappointing full-year revenue guidance. We're going to hear exclusively from the company's CEO, David Acharya, about that outlook and an interview tomorrow right here on Overtime. Morgan, hard to figure out how much of the investor reaction to some of these results is about the fundamentals and how much is about the sentiment, what's going on overall with uncertainty.

Yeah, and certainly we're seeing a lot of uncertainty and it's in the sentiment. You've got the Nasdaq down 10% from all time highs, S&P worst day since 2025 and the worst week for the major averages as well, even though we're just through Thursday. Yeah. All right, that does it for us here at Overtime.

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