U.S. indices plunged as the Nasdaq entered correction territory, with Jim Cramer declaring a “bear market” and highlighting a shift away from data center-centric tech. While Big Tech faces steep declines and rising credit default swap prices, Chinese ETFs demonstrated unexpected resilience. Investors are also watching earnings from Moderna, Under Armour, and Bloomin’ Brands, while consumer staples show stability.
Stocks @ Night, a daily newsletter providing insights into market movements, observed significant shifts as the Nasdaq Composite officially entered correction territory. Thursday saw a sharp decline across major U.S. indices, with the Nasdaq-100 plummeting 6.36%, now 15% off its October 6 peak. The S&P tech sector followed suit, dropping 7% and standing 17% down from its October high. The Dow Industrials fell 3.44%, while the S&P 500 lost 4.36%.
Renowned market commentator Jim Cramer declared a "bear market," emphasizing that the long-dominant "data center theme is falling apart." Cramer highlighted a growing divergence between the artificial intelligence/data center-driven market and everything else, noting a "torrent" of money moving out of big tech. He suggested that once the dust settles, opportunities might emerge for stocks outside the technology sector.
Interestingly, Chinese ETFs showed resilience amidst the broader market downturn. CNBC senior executive producer Sandy Cannold speculated that this could be attributed to tech investors exploring AI potential within China. The KraneShares CSI China Internet ETF (KWEB) was up 1.8%, though still 38% from its November high. The iShares China Large-Cap ETF (FXI) gained 1%, while the iShares MSCI China ETF (MCHI) advanced nearly 1%, despite both remaining significantly below their November peaks.
Several companies are set to report and discuss their earnings on CNBC's "Squawk Box." Moderna CEO Stephane Bancel will provide updates, with the stock having surged an impressive 330% in three months and 925% over the past year. Under Armour, on the other hand, has seen its shares drop 19% in three months and 32% from its February high. Bloomin' Brands, parent company of Outback Steakhouse, also faces headwinds, down 11.6% in three months and 17% from its August high.
In times of market turbulence, consumer staples often attract investor interest. CNBC's Brandon Gomez noted the sector, home to giants like Walmart, Hershey, JM Smucker, Clorox, Coca-Cola, and Altria, fell a modest 0.7% on Thursday and is down just 2.3% from its high. Some companies within this sector are thriving, with Constellation Brands up almost 28% in a month, and Clorox and Walmart both gaining 21%.
A deeper dive into Big Tech reveals specific areas under pressure. CNBC's Seema Mody reported on "neocloud" stocks, which took a significant hit. CoreWeave plunged almost 10%, now 70% off its May high. Nebius fell about 15%, 60% down from its June high, and IREN dropped about 17%, trading 75% below its peak. Meanwhile, MacKenzie Sigalos is monitoring Apple's performance in light of potential new Congressional legislation. Apple briefly touched a new high on Thursday before retreating 3%. Julia Boorstin is covering Meta Platforms, anticipating changes with the new Congress in January, as the stock is down 22% from its September high.
Rising credit default swap (CDS) prices also signal increasing concern. Over the last month, the CDS price for CoreWeave jumped 50%, for Oracle 23%, for Amazon 42%, and for Meta 15%.
