Closing Bell: 10/16/26

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Leslie Picker (0:57)

Welcome to Closing Bell. I'm Leslie Picker in for Scott Wapner. Today, we begin this make or break hour with a notable turn for stocks today and the rotation out of tech as Wall Street reassesses that trade that's been driving the market higher. Let's get straight to the scorecard with 60 to go in regulation. You can see the NASDAQ currently down 2.4 percent, the S&P down 1.3 percent.

The AI buildout names really getting hammered today. CoreWeave is down once again, down double digits for the week. The chip names also getting hit today as well. The SMH down nearly 10 percent this week, 3 percent right now for SMH lower. Tesla shares also moving lower after unveiling its highly anticipated Roadster. We'll have more on that story in a moment, but it takes us to our talk of the tape, the market's biggest trade facing perhaps its biggest test yet, and the selling is spreading. That's where we begin with our Seema Modi. Seema, you've been following this very closely. What's the latest?

Seema Modi (2:00)

Well, Leslie, it seems like Core Weed is still in the eye of the storm, with the stock now down about 26 percent just this week, while yields on its bonds remain elevated above 15, which is considered distressed. Analysts at BNP writing that the traditional debt financing for Core Weed now becomes basically uneconomic, so they need to resort to other financing measures. Core Weed's story, certainly pressuring the Neo Clouds. Even companies like Oracle that has a diversified business, right, it's got software plus cloud and data centers. We've seen that stock underperform. UBS writing that this week has been marked by a clear unwind in AI-related names and that the AI financing for the build out remains the key worry. Now attention turns to Meta, which reports next week. Leslie, that will be the next big read we get from CEO Mark Zuckerberg on financing the GPU-backed loans. That of course will be topical. Both CoreWeave and Nebius, by the way, have deals with Meta. This as chip stocks remain under pressure. Cerebris among the worst performing names on the week. And then Memory, where we saw SK Hynix and Micron continuing to face renewed questions about pricing power and whether this new rival from China could dramatically change the landscape less.

Leslie Picker (3:09)

Yeah, so many headlines this week, Seema. We appreciate it. Let's bring in CNBC contributor, Fundstratz, Tom Lee. Solace's Dan Greenhouse and Ed Klessold of Ned Davis Research. Thank you all for being here.

So Tom, let's start with you. The market today kind of has the contours of an unwind here. You've got the VIX significantly higher as well. What do you make of the market as we've seen it today?

Tom Lee (3:36)

Well, thanks for having me. You know, the market has been kind of climbing a while of worry. AI fears escalated this week. And I think because it's Friday, and there's, I think, concerns that, you know, with oil rising, you know, tensions or the war escalate over the weekend. So I think it makes, doesn't surprise me that markets are unwinding today. But I think before viewers think that this is, you know, the start of a bigger downturn. I mean, markets are at support.

Our technical strategist, Mark Newton, thinks we actually probably could rally. We either bought them today or on Monday. And I think from a fundamental perspective, I mean, as much as we should, you know, respect the idea that, like, AI debt markets may not be that confident, you know, the fundamental story and the drivers of AI are intact. So to me, when you have the fundamentals holding in and markets getting fearful, it's actually a pretty good risk reward set up for investors.

Leslie Picker (4:34)

So you'd be, Tom, buying this pullback everywhere, or are there specific pockets that you feel like are kind of reaching that technical area that makes them attractive for a bounce?