Big Tech and the AI Trade, Adobe Tumbles, TikTok Update 3/15/24

Carl Quintanilla (0:00)

Market Moving Insight and Analysis join Jim Cramer, David Faber and me, Carl Quintanilla, on the opening bell hour of CNBC Squawk on the Street.

David Faber (0:08)

Good morning and welcome to Squawk on the Street. I'm David Faber with Sara Eisen and Mike Santoli. We are at post nine of the New York Stock Exchange. Jim and Carl have the morning off. Let's give you a look at futures as we get ready to wrap up the trading week 30 minutes from now when we begin.

I don't know what that says. I guess the NASDAQ might be down a little bit, Mike. Is that what that says?

Mike Santoli (0:27)

That's exactly what it says.

David Faber (0:28)

All right, I got it right.

SPEAKER_4 (0:30)

How many years have you been at CNBC?

David Faber (0:32)

Yes, a few. Back when they barely had a ticker, I go back so far.

Our roadmap does begin with tech stock volatility. Adobe shares are tumbling. Microsoft though, record highs. Tesla and Nvidia, those stocks, at least recently for Nvidia, saying it's a struggle may be an overstatement, but they certainly have not been going up. The NASDAQ 100 though, pointing to its first back-to-back weekly loss since last October.

Sara Eisen (0:57)

Plus, TikTok's owner, ByteDance, on track to surpass Meta's Facebook as the world's largest social media company by sales. And the Chamber of Commerce, suing the SEC over new climate disclosure rules, a lot to unpack there.

David Faber (1:10)

And we're gonna begin with the road ahead, in particular for what has been driving this market for quite some time, and that is namely what we call the MegaCap Technology Company's AI, particularly generative AI. And Mike, I'll turn to you, you know, we just mentioned, of course, Nvidia shares, which yesterday we discussed. I mean, Jim and I years ago developed this thing called the key to this market, and it does feel like most days, in some ways, it could be considered that.

Mike Santoli (1:36)

It's certainly the key to what kind of market day we're gonna have.

Nvidia's in a 10% correction. It doesn't look like anything on the chart. It's down 9.7% from its high. It's obviously just had this wild run. We have the whole, you know, CONFAB next week. I don't know that anybody wants to get too negative into it. Others are saying, you know, there are parts of this market mostly exemplified by Nvidia, Broadcom, AMD, that just needed to cool down, no matter what else was going on, no matter how great the story was. And that's been the case for a couple of weeks. And honestly, it's sort of happened on some level. The S&P 500 is down six of the last nine days, but is up over that period. So there's been just a little more chop yesterday. The market was barely down. The S&P was like down two thirds of a percent or something like that, maybe even less.

And the equal weight was down 1%, right? So you had, when yields up, the broader mass of stocks goes down lately and you can have this defensive move in some of the big tech stocks. Yesterday, Microsoft made an all time high.

And it's because that's what people want when things are a little bit less certain about the outlook.

Sara Eisen (2:39)

So up days are bigger than down days. I mean, we're up this week on the NASDAQ composite. We're up on the S&P a half a percent. NASDAQ 100 is flat. Your key to the market, I made a chart for it actually without talking to you before.

David Faber (2:52)

Thanks, Sara, for the top of the nine.

Sara Eisen (2:54)

Goldman Sachs in a trading note this morning, I thought really visualized just how important and how much these stocks have outperformed. If you look at, and they did the six, right? Excluding Tesla and they go from January of 2023 until now. That's the blue line. And it just shows you what's been the key and how much they've outperformed. The middle line is the S&P and the 494 remaining S&P 500 companies are below, which are still up, I will say, from that period.

Mike Santoli (3:24)

And that is part of the bigger story is that even though you've had this massive outperformance and added trillions of dollars in market value in six stocks, you haven't been to the complete disadvantage of the rest of the market. Actually though, the big six there was also flattened out over the last few weeks. So there's just been a little more churn in this market. Today is a big rebalancing of all these index products.