Meta Slides 7% as AI Spending Fuels Credit Fears | Closing Bell

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Original language: English

Original video: Meta Slides 7% as AI Spending Fuels Credit Fears | Closing Bell · Channel: Bloomberg Television · 09:33 · Watch on YouTube

Topics: Markets and economy

Summary

Bloomberg anchors discuss a sharp, tech-led decline in the broader market, with the Nasdaq 100 down 2.9% and semiconductor stocks falling 6.7%, even as equal-weight and smaller-stock indexes gained. Meta shares fell about 7% amid concerns that its more aggressive AI investment plans could increase borrowing and credit risk. The program reviews earnings and share moves from Western Digital, airlines, Allegiant, Fannie Mae and Freddie Mac, Deckers, and Bloom Energy. Treasury yields also dropped sharply, while the hosts look ahead to the upcoming Federal Reserve meeting.

Key points

The S&P 500 fell 1.2%, the Nasdaq Composite lost 2.6%, and the Nasdaq 100 declined 2.9%; the Philadelphia Semiconductor Index dropped about 6.7%.
Market weakness was concentrated in technology, communication services, and consumer discretionary, while the S&P 500 equal-weight index rose 0.8% and the Dow transports gained 1.9%.
Consumer staples were the best-performing sector of the day and had risen more than 10% over the previous 15 trading sessions.
Western Digital reported fiscal first-quarter revenue of $4.3 billion and adjusted EPS of $4.64, exceeding estimates; its shares rose in after-hours trading.
Southwest and American Airlines shares rose despite both companies cutting their full-year outlooks amid higher fuel costs.
Allegion raised its full-year adjusted earnings-per-share guidance, while Fannie Mae and Freddie Mac shares jumped after Bill Ackman commented on releasing them from conservatorship.
Meta fell about 7% after Mark Zuckerberg said the company would invest more aggressively; a measure of its credit risk reached a record high amid concerns about capital spending and borrowing.
Deckers shares dropped after sales came in slightly below expectations, while Bloom Energy reported better-than-expected third-quarter earnings and revenue.
The 10-year Treasury yield fell 15 basis points, with similar declines in the two-year yield and a roughly 12-basis-point drop in the 30-year yield.
The hosts noted that a Federal Reserve meeting was scheduled for the following week.

Chapters

Start	Chapter	Summary
00:00	Closing bell and market overview	The hosts debate the breadth of the market decline and recap losses in major indexes alongside gains in equal-weight and smaller-stock measures.
03:10	Western Digital and airline earnings	Western Digital beats quarterly estimates, and the hosts discuss gains in Southwest and American Airlines despite reduced full-year outlooks.
05:16	Stock movers and Meta’s AI spending	The discussion covers Allegion, Fannie Mae, and Freddie Mac before turning to Meta’s decline and rising credit concerns tied to AI investment.
06:51	After-hours results	Deckers falls after a sales miss, while Bloom Energy posts better-than-expected results.
09:01	Treasury yields and the Fed	The hosts discuss a sharp drop in Treasury yields and look ahead to the upcoming Federal Reserve meeting.

Quotes

The Nasdaq Composite down 2.6%, Nasdaq 100 down 2.9. — 02:04

shares of meta were among the biggest decliners, down 7% — 06:51

We saw that in a big way, uh, 15 basis point drop — 09:01

We have a fed meeting. — 09:33

Concepts and entities

Meta, Western Digital, Deckers, Southwest Airlines, American Airlines, Bill Ackman, Fannie Mae, Freddie Mac, capital spending, credit risk, Treasury yields

Full transcript (original language)

00:00 And right now we are two minutes away from the end of the trading day. Romaine Bostick here with Jasmine and taking you through to that closing bell. It’s a global simulcast. We’re joined now by Carol Massar and Tom. Welcome to our audiences across all of our Bloomberg platforms television, radio, and our partnership with YouTube here on a decidedly down day for the broader market, a broad market decline, though that is very narrow. And what’s dragging it down? Well. Yes. And that’s why I’m glad you went there, because if you could give us to disagree with you. What are you coming up? Data doesn’t lie. Okay.

00:31 Okay. We bring Romaine Bostick back up, please. We’re just talking numbers and names. I mean, more than 330 names. The S&P are actually gaining ground today. Go to the Nasdaq 100, which is down more on a percentage basis. You got 49 names higher about 52 lower. So I’m I get what you’re saying. And we can talk market weight and all that good stuff. But remember buy number talk market weight and all that good stuff. Yeah that’s that’s the index. I’m just saying okay. So you know a legion. That’s your. I’m just saying.

01:02 Gainer the S&P 500. Roche are you. Glass is half full. Hey, don’t turn full. Hey, baby. Don’t don’t don’t take my gainers right down to my gainers right now she’s Accenture consulting while Carol’s Carol’s glass on this I’m going to take the other position which is that, you know the Nasdaq 100 being down close to 3%. And this is a single day. It’s the worst day in months. At one point today, it was the lowest going back to the beginning of August. I mean, I think there are questions and jitters about this. I think there are implications to potentially for the IPO market and some of these huge IPOs that you guys have been.

01:32 I saw you broadcasting yesterday. Where are you like in a mall somewhere? Uh, we were at a we were in a chateau. We were chateau. We had a chateau. To answer your question, there were vineyards, of course. Yeah. Well, I, I was under shine. The wine was like a bloodhound. But there’s one out there. She will sniff it out. All right, uh, we got some serious business here. We are going to get a couple of earnings of consequence after the bell, including Deckers and Western Digital, the Dow Jones Industrial Average recovering a bit to basically close flat on the day. It’s going to add about 11 points, closing out right around 50, 28, 66 and

02:04 change the S&P 500 decidedly down 93 points lower 1.2% lower. The Nasdaq Composite down 2.6%, Nasdaq 100 down 2.9. The Philadelphia Semiconductor Index, which we’re going to talk about in detail, that’s closing lower on the day by about 6.7%. But the bright spot on the day, believe it or not S&P equal weight up 8/10 of a percent. Dow transports up 1.9%. The Russell 2000 up a 10th of a percent. Oh interesting. All right. Love that you went there. I’m going to go back to the S&P 500. As I mentioned just 337 names.

02:38 Uh actually higher today 165 to the downside one unchanged. Looking over at the iMap function. Consumer staples best performing group up 3% today but also the best performing group this month, up more than 10% in the last 15 trading sessions. Uh, the rate of change on that would be the best that we’ve seen since April 2020 during the height of Covid. But then on the flip side, the three worst performing sectors discretionary technology, communication services. Those all housed the Mag seven stocks. Carol. Well, speaking of some of those tech stocks, Western Digital, of course, the memory chip company, uh, now uh, memory

03:10 storage company. Excuse me. Now out with its earnings and knee jerk reaction to the upside as its fiscal first quarter net revenue comes in slightly above estimates, $4.3 billion. The street was looking for roughly about $4.2 billion, adjusted EPs, $4.64 a share. The street was looking for 410, so it beat on both the top and bottom line inventory right now. As of the end of the last quarter, at about 1.8 billion. And the company says they’re looking ahead, uh, to the next quarter or the basically the current quarter that we’re in right now, they expect revenue of 5.1

03:43 billion, non-GAAP gross margin of 61%, and non-GAAP EPs of 580. Yeah. WWDC is the ticker. I’m looking at, um, movement in the aftermarket guys, uh, up about 3.8%. We’re seeing, uh, investors pushing up shares of Western digital stock, uh, for the year. Tim is up about 105%. Okay. Shares of Western Digital up is about 3.8%. First quarter adjusted EPs coming in at 464. The estimate is for $4.10. Look, this is a good view. On what the memory chip, uh, the memory

04:14 chip market is doing. The stock is Carol mentioned, has absolutely been on a tear. Uh, but, you know, look what happened in Korea. That’s where I’ll point our attention, because there has been have been some challenges with memory chip makers there. All right, guys, we’re waiting for some more earnings. In the meantime, let’s go to some of the gainers. Let’s go to a couple of airlines that, uh, definitely moved in today’s session. We’re talking about Southwest and American Airlines. Uh, southwest. Uh, that stock up about 5.4% that despite the company cutting its guidance for the full year due to soaring jet fuel costs, despite that gloomier

04:44 outlook, uh, the airline posted better than expected quarterly adjusted earnings and operating revenue. The results are offering an early indication that Wall Street sees Southwest’s transformation as positioning the carrier for stronger returns, as the industry contends with one of its biggest cost challenges in years. We know that things have been challenging, but investors liking what they got today. American two up almost 3% there it to uh cutting its for your outlook again issuing a wide range for fourth quarter loss uh target due to persistently higher fuel prices.

05:16 We have a theme everybody. Uh bright side premium revenue increased by 23%. Main cabin revenue up 20% from a year earlier. So airlines a stand out. And you’re right ticker elite remain your right. Uh, mark the state down. Allegiant top in the S&P 500 up 11%. Um, this after the, uh, residential and commercial door lock makers full year adjusted earnings per share guidance boost surpassed Wall Street’s expectations. I mean, I don’t even know the last lock maker. I know, uh, it’s an interesting day in

05:48 the bull market. Like a lot. Uh, the by analyst here, Mustafa of course, saying Allegiant guidance left cautious despite high quality beat. So uh, stocks up about 10% here today. A lot of it is because of what happened today. Hey. And then I just want to quickly mention Fannie Mae and Freddie Mac. Uh, yep. Both just trade for a few dollars a share, so keep that in mind when we talk percentages. Um, but you did see Fannie Mae up about 12.5%, Freddie Mac up almost 15%. This after Pershing Square’s Bill Ackman

06:20 made some comments on CNBC saying it’s, quote, absolutely politically critical for Fannie and Freddie to be released from conservatorship before the end of the Trump administration. Surprise, right. Yeah. We’ve, uh, put forth a very straightforward plan that will get it done more efficiently. Hey, send your comments to Romaine Bostick because I know people have strong feelings on that one. I think people had strong feelings on shares of meta today. I mean, shares of meta were among the biggest decliners, down 7% at what point it was down more than 8% today. Uh, this after Mark Zuckerberg told investors the company would bet even

06:51 more aggressively on. I, uh, also, we saw today a measure of metas credit risk hit a record high as plans to ramp up capital spending reignited fears that tech giants will issue more debt for the I build out romaine, I know you’re watching some other stocks that are reporting in the after hours. What do you got for. Yeah, let’s just do a quick check on Decker is of course a make her up. Hoka and UGG shoes. The knee jerk reaction 9% lower in the after hours trade, after the company said net sales came in at about $1.48 billion. That’s a little bit light. The street on average was looking for about 1.51 billion EPs, though I did

07:25 come in at about $2.31 a share, accelerating on a year over year basis, though, and operating income in the quarter also beating at about 389, well rounded up to $390 million here. Uh, it does look like the sales number, though, is what everyone is focused on right now. A slight miss on that number here. We’ll dive a little bit deeper and uh, trying to figure out why. Yeah, we’ll add it all up. And investors don’t like it. Remain the stock down about 5.5% here in the aftermarket. Keep in mind the stock has been under some pressure here in uh 2026 down about 18% year to date 9%.

07:59 Almost 9% of the float though guys, is short. Yeah. Another stock I do just want to check in on is a Bloom Energy. It got caught up in the I selloff downdraft on their earnings. Now coming out here a beat pretty much on all of the key metrics here. Uh adjusted EPs at $0.94. The street was looking for $0.68 revenue at about 1.24 billion. The street was looking for about 1.1. Again, this is for the third quarter. Not seen any guidance here, but obviously a critical player uh, in the I, uh, infrastructure buildout basically provides a lot of these sort of singular

08:30 hydrogen powered, uh, power generation devices. Yeah. If you look at how the company has done so far this year, shares are actually up 150% despite today’s decline. And then the after hours decline. So going into this print, uh, investors have been optimistic to repeat some of these headlines. Energy. Uh, bloom energy a third quarter adjusted earnings per share coming in above estimates at $0.94. Third quarter revenue beating estimates at $1.24. Third quarter adjusted Ebit coming in above estimates at $299.5 million. Um, did you guys take a look at Treasury yields?

09:01 I was going to say it feels like you buried one of the leads. Yeah. I mean, this was an incredible day because we talk about this idea of this sort of flight to safety and whether a Treasury still sort of provided that sort of, uh, you know, safety hedge that a lot of people look forward today. We saw that in a big way, uh, 15 basis point drop, uh, that we saw today in the ten year yield. That’s the least that certainly the biggest one day drop we’ve seen all year long. I got to go back in time to see exactly where it stacks up. But similar moves across the curve, 15 basis points lower on the two year yield and your 30 year yield down about 12

09:33 basis. So you do wonder, right, 5% on that. Like is that where we’re bumping up against or is it just today’s trade. I don’t know. So I guess we’ll have to wait and see. Hey you know what we have next week? What do we have? I don’t know if you check your calendars. We have a fed meeting. Jeff knows. I knew there’s a lot going on next week. You just waved me earnings. Didn’t. Come on. How long do you think the press conference will go this time? Uh, these are shorter press conference. Kevin’s over it. I’ll. I’ll check the prediction markets. Yeah. It’s fine.