Closing Bell - Closing Bell: The AI Unwind 11/6/25

Episode Date: November 6, 2025

Is the recent AI unwind the start of something bigger? We discuss with Partners Group’s Anastasia Amoroso, Neuberger Berman’s Shannon Saccocia and Wilmington Trust’s Meghan Shue. Plus, shares of Qualcomm fell despite better-than-expected Q4 results and a strong forecast. We discuss that move with star analyst Stacy Rasgon. And, Morgan Stanley’s Lisa Shalett tells what she is expecting from stocks – amid an ugly day for the broad market.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to closing bell. I'm Courtney Reagan, and today for Scott Wapner. This maker break hour starts with another pullback in that AI trade. Key AI players like Nvidia, Palantir, and AMD, all under pressure in today's session, and that's weighing on the broader market, just as it's propped us up when it's higher. Here's the scorecard with 60 minutes left in the trading session. You can see the Dow Jones Industrial average down by a half percent. The NASDAQ bill, of course, is going to be the lowest when we're talking about those AI names down by more than 1.2% S&P 500 off two-thirds above.

percent. And all of this leads us to the talk of the tape. So is that recent AI unwind, actually the start of something bigger? Let's ask our panel. Joining me now, Partners Groups, Anastasia Ambarossa, Newberger Berman's Shannon Sacocha and Wilmington Trust Megan, Shannon and Megan also CNBC contributors. Anastasia, I'll start with you just because you're right immediately here to my side. I mean, what do you make about all of this talk? So many people ask, are we in an AI bubble? It doesn't seem like we are, but I don't know. Today, it's another day. or we're moving down. What does it mean? I will tell you, having been on the road for seems like the last month or so, and the question that I get the most is, are we in the AI bubble? But then you turn around and you ask that question to the audience and say, do you think we're in the bubble? And nobody raises their hands.

So I think a lot of people are wondering, but nobody actually thinks in one. We are in one. And I will take that view as well. I share that view. I don't think we're in a bubble because we haven't built overcapacity just yet. And we don't have demand for AI that is turning down. It is quite the opposite. It is actually heating up.

And, Courtney, you know, the big thing that I took away from last week's hyperscalor earnings is that, yes, they're upsizing their CAPEX, but at the same time, they're also upsizing their cloud revenues. And, for example, for 2026, hypers cloud revenue is likely to grow 23%, which is an acceleration from what we saw in 2025, which is about 19%. So you've got CAPX. It is matched with the growing cloud revenue. And then the extension of that, who's actually buying that cloud capacity?

And it's the likes of Open AI and XAI, et cetera. And if you look at their revenues, their private companies, they're not profitable yet, but they do have revenues that are growing at something like 260% this year versus last year. So that cycle of monetizations, those proof points to me for now are plentiful. So I think today the sell-off is related to the layoffs. It's related to the jobs cuts. I don't think it's really related to the AI trade losing steam. Shannon, you're nodding along here with Anastasia.

I think you're probably in the same camp, right? Maybe we're losing steam for other reasons, but not because this bubble is bursting. Well, I think it's really interesting if you actually look at underlying the Challenger survey, which Anastasia just mentioned, you see AI being cited as the rationale, AI adoption being cited as the rationale for some of these job cuts. It's something that we've already anticipated given the fact that we've had such low hiring. Some of that has been attributed to the fact that companies are potentially waiting for, that AI adoption and perhaps being a bit more hesitant or reticent on their hiring as a result.

I think the other thing to really think about is that if you're looking at sort of the next phase of the AI trade, that's really where our focus is going into 2026. The justification of the spend by the hyperscalers by these AI enablers is going to come when you start to see more traditional businesses in areas like financials, industrials, health care, implementing these innovations in their businesses. And perhaps that's really what the market is looking for right now. If you look for, you know, potentially that scenario where we see a little bit of pressure on those AI enablers, that first tip of the spear for the AI trade, you'd be looking for

potentially some broadening out in the spend in these underlying companies, that monetization. And so I think that there's a lot happening here in sort of cross currents of investors, not only perhaps looking at positioning for this next phase, but also looking to position their portfolios appropriately as we move into the end of the year. So I'm not as concerned that this is indicative of perhaps a broader contagion, if you will, around concerns about AI being an appropriate trend to drive growth next year. I think more it's about the positioning in these underlying stocks and where you potentially want to be to capture that sort of next phase in 2026.

Okay, got it. Megan, I know that you think that we are at risk potentially of a pullback because there's so much discussion about valuations being stretched and we look at a name like a palanteer. I mean, it's very obvious how far that one has run. Is that what you think some of this is? Maybe it's portfolio positioning. Maybe this is something a little healthy. We haven't had a recession in a long time and maybe we won't get there, but a little bit of trimming here and there might do us some good? Yeah, Courtney, you make a very good point.

It has been a very long cycle. And sometimes it doesn't feel like that. It feels like we were just in COVID and we were just in a recession. But in fact, this is amounting to one of the longest expansions that we've seen. And I think it's also worth remembering that the momentum that we've seen in the market has been pretty remarkable. The past six months ranks as one of the strongest periods that we've ever seen for the S&P 500. That ranks up there with bouncing off the bottom of the global financial crisis of COVID. And so to see some profit taking, to see some churn or even a modest five to 10 percent pullback, I would see as a healthy development. It's not something I would try to position around, but it could give us legs into the next part of the cycle. And we are getting good earnings. We are hearing pretty good commentary from companies. I think the big question mark and the big weakness that we're worried about is the labor market. And really with any of the economic data that we're getting today, the analogy that we've been using is it's almost like a Rorschach test. You show one ink

blot to two different people and you might get two different interpretations of what that data says. And I think the ADP data was evidence of that better than expected, but some job cuts in small and medium-sized businesses again. So there is weakness there. We think the Fed will be cutting rates to help support that on the margin. But I think a little bit of a pause into the next part of this full market would be a healthy development. Yeah, there's so much discussion, obviously, about the bifurcation maybe or the difference between what's happening in the equity market and then what's happening in the economy and bigger worries about the job market in particular. I know you mentioned ADP, but also the Challenger. I think Anastasia brought that up. Everyone stick with me for a second. We do have more Fed speak today, speaking of the economy on the back of that bombshell report on job cuts, that Challenger report we're talking about.

So I'm going to send it over to our senior economics reporter, Steve Leesman. He's been tracking all of it. You've got a lot of folks from the Fed out there sort of giving us their takes today. Can you wrap it up for us? Yeah, a bunch of fence sitters, I'm going to call them, Courtney. Well, announced corporate job cuts in the U.S. surging past $1 million so far this year, but several Fed officials still saying they see more of a cooling than a crash in the job market. Here's the Challenger data.

$153,000 announced layoffs in October. That's the worst October since 2003, up from $54,000 in September and $56,000 a year ago. So you can see the increase. Challenger commenting. Some industries, quote, are correcting after the hiring with the pandemic, but this comes as AI adoption, softening consumer and corporate spending and rising cost drive belt tightening and hiring freezes. But the Fed speak from those officials that are leaning a little more costly on rate cuts. They are showing concern with this jobs data, but they're not concerned or persuaded that the situation will worsen.

Chicago for President Austin Goolsby telling us this morning on CNBC, the labor market indicators are showing stability in his mind in the market. You can't count on inflation being transitory, and a recession would be unusual because we are getting jobless claims and there's a low rate of job layoff so far. Beth Hammock from Cleveland, she's been one of the more hawkish members of the Fed. She says she expects the unemployment rate to move back down after ticking up this year. She does acknowledge the job market may be more fragile than the data indicate, but she's not putting high odds on the labor market downturn.

It might take a sharp decline in official data, for example, the jobless claims numbers that are still being published or the ADP data to convince those fence-sitting Fed officials that they have to cut rates in December, Courtney. It's all very interesting, Steve. Thank you so much. You've had a very busy day tracking at all. Megan, I'd love to sort of pick it up with you from what Austin Goulsby said there. And Steve is saying he doesn't really see a risk of recession.

I wouldn't say that you necessarily see a high risk, but some at 45%. Yeah, I would call that an uncomfortably high probability of recession, especially given where the market is trading today. And that's largely on some of that softening that we're seeing in the labor market, as well as an overhang from tariffs. You know, I don't really think that tariffs are stagflationary, but they're certainly starting to show some of that, moving in that direction with weakness in the labor market, as well as, I mean, the services PMI for prices paid at 70 was not encouraging. We ultimately think inflation will be continuing to move lower as consumers pull back from the services portion of their spending to fund

some of the higher costs from tariffs. But I was just on the road this week talking to business owners. And what they're telling me is that there is still more to come with tariffs moving through the supply chain and moving through inventories. So I think we need to be patient here. And we're just a little bit on watch, I would say, for further slowing in the economy. I do take that, you know, what you're saying there about. further to come from tariffs and maybe potential deterioration.

And so many people have said, well, maybe it's a one-time thing. Okay, well, when's that one-time coming? You know, Shannon, you're kind of smiling, and you still think that December is on the table for a rate cut, even though Jerome Powell said, look, we're kind of driving through fog right now. We don't know, and it's not necessarily a foregone conclusion that we're cutting in December. I think that he had to be careful in the messaging around the narrative

because I think that, frankly, we were pricing in not only December, but another one or two cuts in the first quarter of 26. I think he had to temper some of the concerns about inflation. I think there's also, you know, in terms of the implementation has been, you know, rather inelegant as it relates to tariffs. It has been sort of this rolling, sort of to your point about one time, it's been a lot of one times. And so, you know, that price level, the other thing that's happened is that retailers have

really managed to spread some of this inflation. So it's not as obvious on a good by good basis. It's really more obvious in your basket when you go to checkout. And so I think the challenge is that our view is that we do see them go in December. And we think that they're really in this, similar to last year, this risk management mode, put a couple of cuts in, see how they transmit through the economy. Inflation is more pronounced on the good side, which we would expect from tariffs. It's not as pronounced on services side.

And that's the structural, the sticky inflation that they're so fearful of. And so that's why we put some credence in December. I would say, Courtney, what we're thinking about, though, is that, next year is much less of a public policy year in terms of effect on the market, it's really going to be more about what's happening in the private sector. Is this AI spend? Does that start to broaden out? Where are we getting growth from? Much more than what's happening from a policy perspective. Yeah. I mean, I agree with Shannon that certainly watching the AI trade is important,

but I also do think delivering that rate cut in December is really important. I'll go back to the Challenger job layoff survey, and look, it is concerning. They're up 44. percent year over year. And then if you look at the composition of why workers are actually getting laid off, of course, there's a Doge impact, which explains the greatest bulk of the layoffs. But then there's this catch-all category called economic and market conditions. It's interesting that tariffs are being cited for a sliver of the job cuts. AI is being cited for maybe a little bit more than that. But what else is in this economic conditions category? So I think we need to pay attention to that. Also, when you look at it by sector, you see that warehousing and retail,

Those are some of the sectors that are leading the layoffs. So that suggests that either companies are struggling with tariffs and how to price for those and how to pass those through the consumer, which is pushing back. So all of that to me suggests that the rate cuts should be on the table for December. I'm hopeful that the Fed will deliver. And if they do, Courtney, we will have had 75 basis points of rate cuts for the economy, for the labor market that needs it. And I'm encouraged by that because going into next year, look, we have over $5 trillion. dollars of floating rate debt across of leverage loans, some consumer loans, private credit.

So if all of that resets lower by those 75 basis points, that's money back to the economy. That's money back to the corporate and consumer wallets. And then on top of that, we have a trillion dollars of corporate maturities that are also coming due in 2026. So if you can refinance those at a lower interest point across the curve, which companies have been doing, that too helps support the economy. So I do think the AI trade momentum is absolutely important and kind of, you know, is a contingency for the market moving higher, but I also think the Fed stepping up and providing support to the labor market is important. This has been wonderful. Ladies, what a great panel, huh? This was an awesome one today to have you all here with me.

Anastasia, Shannon and Megan from afar, thank you as well. Well, shares of Qualcomm following, despite better than expected Q4 results in a strong forecast. Joining me now to discuss as Bernstein researchers, Stacey Razgon. Stacey, thank you so much for joining us. You know, in your notes, you've noted that Qualcomm's had a history of actually putting up some pretty good quarters, but then not being rewarded for it. What's going on here? Yeah, you know, I refer to it at one point, a quarter to ago is the Rodney Dangerfield of semiconductor stocks. And I hope the audience knows who that is. I get it.

It really has been. They get no respect. And you're right, this is, I think, the ninth quarter in a row that they've actually guided, guided above. I don't really think that expectations are terribly high. I get the complaints, right? You know, they have a fairly sizable Apple business, which is going away. And it optically limits EPS growth because I understand all of that. But it's entirely known, 100% understood.

And I think there's some really good stuff going on under the surface. Like the adjacency story is very real. The auto and industrial markets are businesses of them are growing a ton. Ex-Apple, they're growing double digits. They laid that out pretty clearly. There's even a data center story there now. And they're going to have an event probably in the first half of next year. will give us some more color on like what the shape of that looks like.

But they suggested it was probably a multi-billion dollar opportunity that I think is zero in the numbers and zero in the multiple. It may be a bit of a waiting game still. I still think we're waiting for Apple to kind of roll off so you can kind of see everything that's going on. That's probably more 27. But we're getting to the point where we're almost there. And in the meantime, they're executing about as well as I've ever seen them execute.

I like it. I like it. You do. You like it here. I mean, it is, it is interesting to me that you're talking about the, the Apple roll off entirely understood, but also noting that it's a pretty big business while at the same time saying the Samsung flagship share is also falling this cycle, you know, I don't, sort of square that for me, square that circle. You bet so Apple first, look, it's big. Apple does, you know, there are $8 billion, give or take, of chip revenues. It's probably, you know, $2.15 earnings, and that rolls off in stages over the next several years. And again, the company's been 100% transparent on what that looks like. understood. Samsung, you know, their market share, they have the flagships, the high-end stuff

at Samsung. Over the years, their shares gone up. They went from 40% to 75% and they've been in 100% share the last couple years, which is probably unsustainable. They've got a long-term agreement with them, and they've talked about 75% share is probably a baseline. And I think with this cycle, we knew that Samsung was going to start, like, reusing their own chips. We knew that share was going to come down. I think there was some investor worry that it would actually be a lot lower than 75. It doesn't look like it is. It's 75%, which, again, is their baseline. I think it's fine. I think it's fine. Okay. All right. Before we let you go, why do you think fears over margins are unfounded? Oh, so there was a competitor of theirs

that reported before they did, and their gross margins came down quite a bit. And so there was worry about like competition. And you can look at Qualcomm's gross margins. They don't report a chip gross margin, but you can back it out pretty easily. It's fine. It's, it's, they have a range, 48 to 50% it's it's right in the middle of that range it's fine there's there's no evidence of significant competition driven margin compression like that's all okay that's sort of reminds me one of my favorite shirts i have it says it's fine i'm fine everything's fine i thought it was fine i thought it was good you know no respect though it is what it is stacey thank you for joining us to talk about well software under pressure today let's send it over to sima modi for a look at the names moving into

the close hi sima hey cina hey corin The software as the sector continues to underperform chip stocks this year, not helping open AI disclosing one million business customers, a sign that Enterprise is quickly adopting its AI models. Bank of America says that's what's behind. The move that we're seeing in Salesforce today down nearly 5%. Earnings from HubSpot weighing on sentiment as well. Guidance for the fourth quarter, not enough to instill confidence in investors, Stiefel analysts calling out artificial intelligence concerns on how that could challenge the company's business going forward. in multiple price target cuts from Barclays to City. Cybersecurity firm Fortinet, also falling on weak revenue guidance amid intensifying competition in the cyber security space. Cantor Fritz J.L. says investors will want more details on its AI data center solution. For now, it's keeping a neutral rating on the stock.

You'll see shares down about 5.5% right now, Court. Thank you for the software sweep. Nice to have you back, Seema. We are just getting started here on closing bell up next. The government shutdown impacting air travel in a major way. the details behind that developing story coming up. We are live from New York Stock Exchange. You're watching Closing Bell on CNBC.

Welcome back. Welcome back. The government shut down hitting air travel with big flight cuts. at least they're coming. Phil Lebo is following that developing story for us. Phil, this has a lot of people's attention and maybe will finally be what gets D.C.'s attention to. Yeah, I'll be curious if that happens, Courtney, because it's going to be a gradual ramp up. It's not like 10% of the flights to the 40 largest airports are being cut.

Boom, tomorrow. No, it's going to be gradual. It's going to start about 4% of the flights tomorrow, 4% on Saturday, maybe 5% on Sunday, and then gradually ramp up from there, partially because the airlines have said, to the DOT, look, give us some time to adjust our crews and our airplanes and our flight schedules. Here are the 40 largest airports where you will see flight reductions. Now, let's be clear here. Flights between major cities or between hubs, you're probably going to see the same frequency as before. What you may not see as much of are flights to secondary cities. So instead

of three flights a day between Mobile and Atlanta, maybe there are only two or one for a particular airline. Lower frequency of flights to smaller airports. That means fewer regional jets going into the large cities. That will reduce the flow of traffic for the air traffic controllers. And remember, that's the point of what the DOT is doing here. They want their air traffic controllers because of staffing issues to have fewer flights that they will have to manage. What's been the impact on the airline stocks? Under a little bit of pressure today, but not a huge amount. The real question for investors is, how long does this go? And at what point, Does it impact bookings for the holiday season?

Because at some point, there may be people who are saying, yeah, we were thinking about taking this trip. I'm not doing it anymore. I have no way of locking in certainty of when I'm going to be able to fly. We're going to be talking about all of this tomorrow morning exclusively on Squackbox with American Airlines CEO, Robert Isam. We're going to be in the American Airlines Operations Center. I've talked to the folks at American. They've been working on this, like all the airlines, for several days because they want it to be as, less disruptive as possible, the least disruptive for passengers, because there will be some people

who have to be rebooked. And the question is, can you gradually filter this in, bring down the amount of airplanes, Courtney, and in the process, not disrupt as many travel plans as, you know, you would think when you're getting rid of up to 10% of the flights going into the 40 largest airports? Yeah, I mean, you did sort of answer this when you were describing some of it, but I was going to ask how are they deciding which flights to cut? And if it's an airplane, just a plane as opposed to passengers, you're probably like you mentioned, the secondary cities and the secondary cities. You're cutting down the smaller jets, so maybe disrupting a smaller number of people,

but still knocking off one less flight that an air traffic controller has to manage. That's the whole goal here. You want to take out the number of aircraft that are going into these cities, not the number of people. Got it. Okay. Phil, thank you so much. I know you're going to be busy for as long as this goes on. Busier than normal, if that's even possible for you.

Thank you. Well, up next, retail stocks feeling some serious pain today. We'll hear from retail analyst Oliver Chen on the weakness. Closing Bell, we'll be right back. We're back on Closing Bell. A few key retail stocks taking a beating today, the likes of Elf, Canada, goose, tapestry, all under pressure. My next guest just lowered. his price target on Elf. He's joining me now to discuss TD Cowan's senior retail analyst Oliver

Oliver, it's great to have you here. And this is an interesting one because this stock had been on fire for a long time. It sold in a number of retailers and a number of retailers are having to go through some price adjustments. So can you explain to those that may not understand the particulars how that really did have an impact on the quarter? Yeah, basically, Courtney, Elf is raising the cost of their product by about a dollar. There was a slight disruption in terms of retailers taking a little more time to raise the price, and the company stopped deliveries to those retailers until they did raise the price. So that was an issue in terms of core ELF brand growth. And that is overall an issue, too, as core ELF brand is growing around

2 to 5 percent in the second half. This is a brand Courtney that grew around 20 percent previously. So it's a very good company, and we are recommending the stock on a long-term basis, but expectations were high. And we thought expectations were high coming into this quarter, and growth has decelerated. And so even though they're going to have to take these price increases, you don't believe that it's going to deter demand for this product. Obviously, this is a lower price product than some other makeup brands out there. This is more mass, less prestige. Yeah, we see consumption trends as being quite attractive in terms of 7 to 10% in the market, but retailers are de-stocking and they're facing tough comparisons. So the reality,

of ELF core brand growth is moderating relative to the past, but it's still growing, and it's a very innovative company that reacts with speed. The stock is down a lot because expectations were very high, and this had grown a lot faster in the past. But the backdrop remains pretty good for beauty in the long term, given that it's a resilient industry. I'd love to move on to tapestry. Again, not everyone knows the parent company name, but they know the brands of them, certainly, Coach Kate Spade. I mean, Coach really is seeming to be quite on fire with the younger, with the younger customer, that Gen Z customer. What do you see here? What do you make then, of course, of the stock reaction and potential opportunity? Yeah, Courtney, we're recommending

tapestry and the numbers were great at Coach, growing at 21%. What they're doing well here is capturing Generation Z customer. They're also offering a really good value. We cover luxury like Louis Vuitton and Cartier. And those handbags are $2,000 to $3,000 plus. The coach, coach bags around 3 to 500, and it's globally working, working in conjunction with great product, as well as a very good store experience, and Gen Z relevant products. So the business is hitting on many cylinders. Kate Spade is still a work in progress. That's something we're watching. But overall, it was great results. Again, this one was a case of very high expectations coming into the quarter. Otherwise, the print was solid and margins were very good, too.

Yeah, I think that's really interesting, obviously, to know the context, because if you just look at the stock reaction, you may think that these quarters that were put up were not impressive. And it sounds like by your read, you feel like things look pretty good. I'd love to broaden this out just a little bit to talk about the state of consumer as we're sitting at a really interesting point. We're in the beginning of November. We're still in a government shutdown. We're starting potentially to see some cracks in the labor market or some worries. And this continual consumer bifurcation where the lower income seems even more stretch. the higher income seems even more protected.

How do you think all of this is going to play out as we move into Holiday? Yeah, Courtney, that continues to be a big theme in terms of the higher income spenders being more and more important to companies. What that really means for holiday is you don't want to be stuck in the middle. So unfortunately, department stores

and others that have a middle income positioning are in a much tougher place. What we really like here is Costco. We like Revolve. We like Tapestry. They're pretty unique stories. We like the digital story and the AI story at Walmart, but of course, we're watching the government shutdowns as well,

and AI is a big hot topic, too. Overall, though, you really shouldn't bet against the U.S. consumer. The U.S. consumer has been resilient, unemployment is low. Consumer confidence in the volatility we're seeing there is something to watch. Consumers will always look for value and value more than anything else is so important. So retailers executing to low price points, planning for low price points, planning promotions, that will be important too. And before we let you go, I'd be remiss if I didn't get your take on Canada Goose.

Are you still sitting at a buy? Yeah, we have a buy rating, and we like what's happening here. What happened was we had mismodeled the marketing expense, and marketing expense came out higher than the Wall Street expected. However, the product story, direct-to-cons are up 10%, a new creative director, and a lot of the non-Parka product and global attractiveness, it's working. That being said, the EBIT was lower than we expected on the SG&A line. Very interesting.

Obviously, you always read between the details and some of the names that you like the most are under the most pressure here today. Oliver, thank you so much for joining us. Thanks for having me. Well, stocks read across the board as well as we head towards the bells up next. We've got Morgan Stanley's Lisa Shallott. She maps out her volatility playbook on how she's navigating. navigating today's weakness. Closing bell, we'll be right back.

We're getting a news alert on Roblox. Steve Kovac has that for us. Steve, what do you got? Hey, there, Korn. Yeah, Ken Paxson, he's the Attorney General in Texas. He is suing Roblox over child safety concerns. Nothing new here that we haven't heard before. Obviously, this has always been a huge overhang on the company

and the stock of these concerns. I would also note the Florida Attorney General has filed a similar lawsuit earlier this year. We reached out to Roblox for comment on this. We see shares. They took a dip down, but they are off their lows of the day here, down about eight-tenths of a percent court. Thank you, Steve. Yes, you're right. We just spoke with the CEO about these issues and others when he was on. I believe it was last week. Thank you. Well, more weakness in the market today, discretionary and tech sectors under pressure sending the NASDAQ to a two-week low. Here to share her market sell-off playbook is Morgan Stanley wealth management. C.I. Lisa, thank you so much for

being with us today. So we talk so much about the opportunity in AI. Today, AI is the trade that's sort of taking us all down. What do you make of today's action or the last several days action? The beginning of something new is this profit taking? Are we finally going to see some other sort of jump in and steal some of the air out of the room that's been taken up by AI? Yeah, I think that there's a couple of things going on. I think the first thing that's going on is we have gotten some provocative jobs number. a little bit of weakness. And so folks are asking the question,

you know, hey, gosh, as good as generative AI may be, are we really going to lose jobs over this, right? And what does that mean for the consumer side of the economy? I think that there's a second piece here, and that is that there's a growing realization that is great and as powerful as this generative AI CAPEX spending boom is, there's a cost to it.

And these companies are starting to become more capital intensive. They're starting to use debt, right, to finance all this capital spending. And the question is, are we going to take a little bit of a pause in the margin expansion story for these Mag 7 names that have been so extraordinarily powerful in driving the overall headlines for the market? Well, I mean, so many things that you said there that I want to pull on. But what you're talking about AI, obviously helping us, but then potentially taking away when it comes to some jobs or some tasks or skills. I mean, are we there yet, though, or is that several years down the road?

Do you think that's really the worry the market's expressing today? So I personally think it's going to take a while, but I think that when you see these jobs numbers, you know, jump, it just provokes the question. It provokes the hand-wringing. And in a market that has been pretty fully valued for a while, it becomes the excuse du jour to take some profits. It also might be coming, the excuse for companies when they're announcing layoffs.

I mean, we don't know for sure exactly what's going on with these, and maybe they're pointing to AI because it's a convenient excuse. Absolutely. We know the narrative game here, and whatever the narrative de jour is, is very easy to fall back on. And so obviously we don't have government data right now as we sit in this shutdown. We did get the Challenger report today, and that was much. much higher than what we had seen a year ago and the highest level also since the pandemic. That's what I'm referring to. I think that got people's attention this morning.

And people were like, whoa, is there something going on? Right. And then your discussion about the K-shaped economy, and there's been so much focus, we talked about this a bit in the last segment about the dispersion and the low end versus the high end. And the high end has really been carrying consumption for some time. But when there's job losses, it often hurts the low end more so. So what's going on now? Is that just becoming further exaggerated with these job losses, you think? How is that impacting consumption?

Yeah, so I think it's going to be really interesting. Because I think we're going to have to stop and step back and see where these job losses really are. Yep. Because if, in fact, they're coming from generative AI, they may actually come from more knowledge workers. They may come a little bit more from the middle and upper income. And that may change a little bit of this equation. The second piece is, you know, one of the things about the case-shaped economy is that the wealthier households have been made confident by these gains in the stock market. And so if the stock market stalls out here into year end a little bit, maybe a little bit of that confidence, a little bit of that enthusiasm that has powered that high-end consumer, maybe that too comes out.

out. So we're in this very interesting, I think, phase where the cross currents are pretty profound. Do you think that's going to happen that the stock market is going to stall out into year end? What's your advice? So our best guess is we're going to continue to grind higher. And our view is that 2026 is going to be a decent extended year of this bull market. But it's going to be a tougher year. It's probably going to be a year where gains are more like five to 10% as opposed to double digits that we've had for the last three years. So what we're telling folks is now is a really good time to rebalance your portfolios, to focus on tax management. So if you've got huge gains sitting alongside some things that have gotten a little bit weaker in

here, tax manage, harvest some of those losses against the gains, and rebalance. We want to be in this market, but we want to be selective. So would you take a day like today? to do that 100% got it Lisa thank you so much for joining us really absolutely well coming up next we are tracking the biggest movers as we head into the close sima modi is standing by with that hi sima hey court yet another sobering read on the state of the u.s consumer this time from a car rental company a spirit maker will get those two stories for you after this short break at the key stocks to watch. Hey, Seema.

Court, let's start with shares of CarMax falling 23% on news that CEO Bill Nash will unexpectedly step down as of December 1st. The used car retailer also announced a weak preliminary outlook for its current fiscal quarter. The stock has struggled lately

with shares down about 50% on the year. Next up is Duolingo. Shares down 26% despite a revenue quarterly beat. The language learning platforms daily and monthly active users came in short. CEO hinting at a change in strategic direction. The stock currently on pace for its worst day on record. And finally, shares of Diageo trailing by as much as 7%.

The owner of labels like Guinness, Smirnoff, and Don Julio slashing its sales and its profit outlook after reporting a week quarter. That stock now trading at its lowest level in a decade. Court? Wow, a lot of big movers in that one. Thank you, CEMM. Up next, we will get you set up for earnings from a firm, block and take two. That and much more, when you take you inside the market zone. Stick with us.

We'll be right back. We're now on the closing bell market zone. Phila Bow is here ahead of Tesla shareholder meeting kicking off at the top of the hour. McKenzie Seagal is on what to watch from a firm and block when they report in overtime. And Steve Kovac has a rundown with take two. BTIG's Jonathan Krinsky, standing by. He's going to break down the crucial final minutes of the training day. Phil.

I'm going to start with you on Tesla. We've got a whole 51, almost 52 minutes without saying the word Tesla. And we'll find out. relatively soon after the meeting officially kicks off at 4 p.m. Eastern time, we expect that the vote results will be announced fairly quickly. Look, shareholders have been voting for some time, and the question is whether or not they are going to approve the pay package that has been offered by the board to Elon Musk totals $878 billion. If he hits all the metrics, it's spread out over 10 years. There's 12 different metrics he would have to hit to get all $878 billion. It would

raise his stake in the company. Now, this is very important, above 25%. He has said he wants greater influence than his 15% stake at this point. And again, the performance metrics must be met. You know, we've seen this before, Courtney. Go back to 2018. And I'm showing you this chart because back in January of 2018, when the previous pay package was announced, there were more than a few people who said, well, this is outrageous. He'll never be able to get Tesla to grow to this degree. He hit all of them. Now, we know what's happened with that, and that's in court in Delaware. He's never fully gotten his pay from that package. This is Tesla coming back to him now and saying, while that works out in litigation, this is what we want for you to stay

as CEO. We'll find out the results in a few minutes. Courtney? Everyone's going to be watching this so closely. Thank you so much, Phil. We're going to move on to McKenzie. What do we expect from Affirm and Block, both reporting after the bell today? Yeah, hey, Corp, two big fintechs. Let's start with Jack Dorsey's Block. Investors are expecting acceleration across both Square and Cash app. The big driver behind that is borrow its buy now, pay later product. Block's been leveraging its bank charter to double the number of users eligible for short-term loans. The street also looking for continued traction from the cash card and steady payment volume

growth across merchants of all sizes, a sign that Square usage remains strong throughout the ecosystem. The risk, though, is that expectations may already. be too high. And the bigger test is whether cash app can sustain gross profit growth by expanding credit to lower income users. Now, over a firm, the street's been worried about a discretionary spending pullback and credit cracks. But Morgan Stanley calls those concerns largely misplaced. They are expecting GMV growth near 40%, strong margins and a holiday lift from those 0% APR promos. Both stocks, though, Courtney, lower going into the close. We'll see what happens when we actually get those numbers.

That good set up for us. Steve, take us for Take 2. What are we going to see there? Courtney, we can keep this one really easy. Grand Theft Auto 6. That is what everyone's looking at, and perhaps it's the only thing everyone's looking at. That launch date is May 26 of next year. If that date slips, watch out. They have already delayed it once, but it looks like it's on track, the fact that they do have a solid date for it. By the way, this is going to be the biggest gaming property ever in the history of mankind. Not just that. just in the history of entertainment. This is going to be a multi, multi-billion dollar property.

By the way, I was talking to CEO of Take 2, Strauss Zelnik. He was at our tech executive council event last week. And I asked him, are you on track now, guys, to release this on time? And he said, Steve, you're asking the wrong question. You need to be asking if the game is good. So, yes, being good is important, but also people want to know that it's going to launch when they say it's going to launch. So stay tuned for that in just about five minutes, your court. Okay, absolutely. I love that. You can boil it down to sort of one key thing to watch from a company that clearly probably has a lot else going on. Steve, thanks so much. As we head toward the close, we do want to bring in BTIG's Jonathan Krenzki. Jonathan, thank you so much for joining us here today. Obviously, we've had a lot of discussion about how AI is driving things lower today. You're looking at the 50-day moving average. What's so important about what you're seeing right now?

Hey, Corny. So, yeah, it's been a remarkable streak. We have not touched the 50-day moving average in 140. trading days. That's the third longest streak since 1990. The second longest streak ended in 2007 at 147 days. So we're quickly coming up on the second longest streak in the modern era. And so that's the backdrop. Now, you know, there's kind of two competing forces here. On the one hand, trend and momentum of the index of the S&P and the NASDAQ are quite strong. And we're in a seasonally bullish period when, you know, when the market's in an uptrend, November, December, tend to be even that much stronger. The issue is that under the surface, as many are aware, the internals are anything but robust. Last week, for instance, we had

9% of the S&P hit a 52-week low. And the issue, you can have a market when there are a number of stocks underperforming on a relative basis. But when you start seeing absolute price weakness to the extent where, you know, they hit a 52-week low, and let's be clear, 25% of the market is within 10% of a 52-week low. So there's really this bifurcation going on. And so that setup leads us to you know, at least at a very minimum test the 50-day moving average, but we think more likely you actually see something closer to 64, 6,500 in the S&P before you see more fully washed-out conditions. Okay, what about the put-call ratio?

I know you watch this one, too. Yeah, I mean, so, looks, the other issue, aside from breath being, you know, much weaker than the index, so I have you to believe, is sentiment is quite complacent. So put-call ratios are a good transactional indicator. You know, you have survey data where you ask people. are you bullish and bearish, but the poll call ratios are really, you know, what are they actually doing? And they're bumping along year-to-day lows on a five-and-20-day basis, meaning there's very little interest in hedging. And that's another concern. You can also see it in something like

the National Association of Active Investment Managers. Their exposure last week hit 100, which was the highest since July of last year. So there's just a lot of indications that people are, you know, certainly, if not euphoric or optimistic, at least complacent. And that's another market risk. I really am very always interested in consumer and market psychology. And Bitcoin has sort of been hovering around this $100,000 mark, which is a psychological level for people that watch this. What does it tell you when you look at it on the technicals?

Yeah, I mean, so two things. From a purely priced standpoint, 110,000 was kind of our initial support, and that certainly broke. Obviously, 100,000, as you mentioned, is psychological. That is a level that people will be watching. But, you know, the reality is it just doesn't act well, given what gold's been doing, given what the NASDAQ's been doing. And if you look over the last couple years, there's a very tight correlation where it has been

between Bitcoin and the NASDAQ. And, you know, all correlations do break eventually. But I think, you know, the relative weakness of Bitcoin was another red flag for us when coming into November looking at the NASDAQ. And then very quickly, before you go, I want to dig into gold just a little bit more. It is down just a touch here today, but what a run gold has been on. Can you sort of tie it all together for us between what you're seeing with markets, Bitcoin, gold, and all those technicals? What does it mean?

Is it really breaking from how we've typically watched gold trade? You know, I think you can get, you know, you can look at a lot of different ways to ask what gold means, but as far as what is the chart telling us, I mean, look, it got about 30% above its 200 day a few weeks ago. That's about the widest spread it's been in the last 20 years. So some consolidation was needed. It's had a little bit of it, but on a monthly basis, it's still very extended. So we think probably setting up for another leg lower, also likely testing its 50-day, as many of the markets are as well. And gold's still up about 51% here to date. Jonathan Krinsky, thank you very much for joining us from BTIG.

We really appreciate it. As we get ready here to hear that closing bell sound, you're seeing markets under pressure across the board. The NASAC is definitely. the weakest of the crew. But the Russell 2000 also taking a leg lower here in the final couple minutes of trade. That does it for closing bell. Let's send it over to overtime with Morgan Brennan and John Ford.