Global stocks rattled by $2.5T US sell-off. Trump lays blame

[00:00:00] Speaker 1: You can see U.S. stock market futures, a little bit of a rebound over here, but not so much with the Dow. There were huge sell-offs yesterday, which had wiped out Wednesday's historic post-midterm rally. So a little bit of a back and forth here. There are big concerns now about AI investments. Investors were worried that maybe with Democrats in power in Congress and in some states, there will be a push for new guardrails. There were also concerns within AI investment, the AI investment community, about some funds being overleveraged. Now, President Trump was pointing the fingers kind of at voters. He said the stock market crashed today because the Democrats had a big Tuesday. So sad to see. You only have yourselves to blame, he says. With us now, CNN's Matt Egan. So tell us what we're looking at right now, Matt. [00:00:46] Matt Egan: Well, John, look, this has just been an absolute train wreck in the tech world, right? One of the worst tech sell-offs that I've ever seen. And there's some big economic implications here as well. Now, the Dow yesterday lost, at the end of the day, it finished down 1,800 points, down 3.4%. Worst day for the Dow since April of 2025, giving back all of Wednesday's historic gains. And it's not just the Dow, right? The S&P, also worst day since April 2025. The NASDAQ 100, worst day since March 2020, during the COVID meltdown. NASDAQ composite, $2.5 trillion of market value just completely vanished. And the VIX fear gauge, it's been around since 1990. Yesterday, it's by the third most ever, more than in 2008, more than in COVID. So this was a historic wipeout. And the big concern, as you mentioned, is on the AI front, right? A lot of people on Wall Street, they expected a blue wave. But this was a tsunami without a warning. And the fear is that some Democrats are going to crack down on data centers. It seems like investors kind of underappreciated the AI backlash. So you see that some of the companies that are building the picks and shovels for this modern-day Gold Rush completely wiped out. Look at this. NVIDIA, 9%. SpaceX, 9%. 17% each for two of the big chip makers, Micron and AMD. Sandesk, 22%. John, this is in one day. When you look at the NASDAQ, this shows the NASDAQ so far this year. Now, it is worth noting that the NASDAQ is still up on the year, but not by much. This is correction territory, right? So it's a correction from here. Yeah, so it's actually a correction from here. Just a few weeks ago, John, the NASDAQ hit all-time highs, now down by more than 10%, finishing in the first correction for the NASDAQ since March of this year. But I should note, there's also been a number of corrections since ChatGPT launched back in 2022. Now, some of the AI bulls out there are trying to say that this is overdone. Tech analyst Dan Ives, he just put out a note a few minutes ago where he said that this sell-off is completely overdone. He said that investors are basically trading right now like the blue wave means that the AI boom is over. And he said it's not. And he also pointed out that there were historic tech sell-offs in 2020 and also in 2015 after the Liberation Day sell-offs. And he said those were golden buying opportunities. And he's arguing that this one will be as well. Just to point out fear and greed, this is a CNN index of market sentiment. Yesterday, it moved into extreme fear territory. When you look at some of the internals on this, they're all negative here. Well, it's OK. They're all of these negatives. They're pointing to just a lot of concern right now. And just one other point for you, John, is this is not just a problem for a corner of the stock market, right? The AI boom is propping up really the entire stock market. It's propping up the entire U.S. economy. And it's also helping consumers try to combat high inflation because a lot of people have gains in their investment portfolio and their 401ks. But those gains, some of them have just gotten wiped out. When we look at stock futures, you pointed out at the top, the Dow pointing to a 1% lost 500 points. Even more. But the Nasdaq is up by 1.3% after a steep, steep sell-off. Yes, sir. So look, bottom line, this is not just a Wall Street problem. This is a Main Street problem, too. [00:04:17] Speaker 1: And it may take some time for investors to find their footing here, it seems, because we're going to have some wild swings, perhaps even today. Maddie, thank you. Thank you very much for this. [00:04:25] Speaker 3: Joining us in Group Chat, Ashley Gold, senior tech correspondent for Semaphore. So just to be clear, people have been talking about an AI bubble for a long time. But what was notable about the post-election dip? [00:04:38] Ashley Gold: It was notable that these companies sort of panicked so quickly because they could see the writing on the wall that all these new governors elect. And this newly Democratic Congress, they weren't going to give them a free ride anymore on the crazy AI growth and data center explosion we've seen. What do you mean, anymore? What was the environment for them before? Just almost totally permissionless. Certain states started putting up regulations and entering into these agreements with the hyperscalers, the open AIs, meta companies like that, and saying, hey, when you're going to come to our town and build a data center, we have to come to an agreement on electricity, on water, make sure the community has input. That had started, but it was state by state. It was company by company. There was no sort of broader political power in slowing down data centers until now. [00:05:24] Speaker 3: One of the things that's intriguing to me is that as much as we're saying Democrats are running the states and therefore, it's the ballot measures. Something like 40 ballot voters being asked directly. Totally. How do you want to regulate AI and them saying a lot, right? Almost all of them passed. And did that spook Wall Street? [00:05:44] Ashley Gold: Absolutely. I actually think the ballot measures are sort of the sleeper issue here. Like, that is really what spooked Wall Street because it's a sign that communities across the country don't just want rampant data center growth in their backyard. And also, the ballot measures are not something where these AI super PACs were spending money. The AI super PACs were spending for candidates that they thought would be friendlier to AI development. They weren't involved in the ballot measures. These were local community-driven things that, you know, people voted on without, you know, big national PACs coming to town. And what I'm hearing is that that took those super PACs by surprise. It wasn't on their radar. [00:06:20] Speaker 3: Yeah. It's interesting when a topic goes from the kind of theoretical to the voter being like, oh, no, I know what it is now. Something, something, flat camera. Something, something, I don't like you. And now you have Elon Musk who spent so much money, half a billion dollars. I have to assume that his business interests around AI are also worth digging into here a little bit. He was joking online about having to, you know, maybe do some building in outer space. [00:06:46] Ashley Gold: Absolutely. I mean, he had a good thing going in Texas. He was building out a lot of infrastructure for his companies. But now he's going to have to think twice about that. He's not the only one. A lot of tech billionaires sort of decamped from California to Texas thinking it was this business friendly state where they could sort of do whatever they wanted. And now some of the companies are going to have to look overseas. Meta President Dina McCormick said yesterday that they would maybe have to look in other countries to start building out data centers because of the new environment coming in in the U.S. [00:07:19] Speaker 3: What do you think of the backlash and Noel, I want to put this to you. These CEOs were also very visible to the public, right? Yes. The average person knows and can probably name some of the CEOs of AI. And so and they hug the administration very tightly. They were sitting there now starting to be like, well, what if we're targeted? What if we have to come in for oversight? Yes. [00:07:46] Speaker 5: And is that a thing? Exactly zero percent of anybody is going to feel bad about that. I think there is something very interesting here underlying this week's sort of crash, if we can call it. It's not a crash. It's a correction. We should say they still have a lot of money in this market. But one of the questions all along has been, are they overvalued? Because what is AI actually being used for? And there's all these hilarious stories about, you know, AI. I was talking to a Johns Hopkins professor recently. He was telling me like, AI has transformed his job. He's the only person that I've talked to is like, AI has transformed my job in a positive way. Most people are like, I don't really use it. I don't really need it. And so questions of what is it really worth emerged in the last year. And they are very, very valid questions. Just in time for their IPOs. Just in time for their, thank you. And then the other thing is, you know, the money that is changing hands here on AI is changing hands among a handful of companies. I'm buying this from you. You're buying this from me. You're buying this from me. And it's just, the money's just going around and around in a handful of companies. So that's not a great sign of a functioning, like healthy ecosystem. Microsoft buying from NVIDIA, NVIDIA buying from, you know, the, there is stuff going on here beyond just Americans are ticked off. And we elected a bunch of Democrats who are skeptical about AI. There are real questions about what is AI for and how does it make people money? [00:09:05] Speaker 6: Thursday's stock market wipeout left few corners of the tech sector unscathed. The NASDAQ suffered its worst day since April 25, which is when Trump unveiled the global tariff regime. A big part of this is what you're getting at is the uncertain future for data centers after this election. And in key locations, Texas, Ohio, Georgia, what are you hearing? What is going to happen here? What are, it seems there's a debate on how, how threatened the data center build out is, or you see it a different way. It's like how, you know, the growth of it is going to be controlled by the people now in power. What are you hearing? [00:09:48] Speaker 7: I'm hearing delayed, not stopped. A couple of different things. Some investors are telling me, look, this legislation to slow down data centers, it's not going to pass immediately. So data center projects are potentially in the clear for 2027. But to your point, Kate, Texas, the number one state in the United States for data center construction, now electing a governor that has said, we got to pause, we have to slow things down. But you all interviewed that governor, and she talked about how it is also a pro-business state. So when I talk to data center developers, they are still optimistic that they will be able to find areas of the country that are, you know, really low population, finding corners of Texas that are in cities with under 100 people where they can still have these data centers built in these rural areas. But we're also hearing data center developers sort of drop this mild threat that they're just going to take that construction globally, which if you believe that data centers are good for the economy, adding jobs, things like that, you are not happy to hear that. But I'm also hearing that's potentially a threat to these incoming members of Congress and that these data center developers are ultimately going to just find a way to continue to do this in the United States, but in those areas where it will impact less members of the population. [00:11:10] Speaker 6: I just think the takeaway is, is this is going to become more and more of a conversation rather than less. Like things, it seems like the election decided things and also then raised some real new questions and urgency around especially this.