Dow tumbles 800 points with Nasdaq, S&P 500 hammered as investors pare rate cut bets

Wedbush Securities managing director Dan Ives acknowledged that being a Tesla (TSLA) bull takes a lot of patience.

“Robotics, Optimus, that’s what you’re playing for,” Ives said at Yahoo Finance’s Invest. He noted the Tesla play isn’t about the electric cars the company is known for, but about CEO Elon Musk’s pitch to build a robot army, using its Optimus humanoid robot and artificial intelligence technology.

“This, in my opinion, is the most important chapter ever from Musk and Tesla, the AI chapter, autonomous and robotics. I think we’re talking $2 [trillion], $3 trillion in terms of market cap — best physical AI play besides Nvidia.”

For more coverage of Invest, check out our liveblog.

A retreat in US stocks picked up pace on Thursday, with odds of interest rate cuts in the balance amid post-shutdown uncertainty about the economy.

The Nasdaq Composite (^IXIC) led losses with a nearly 1.8% dive, while the S&P 500 (^GSPC) slid 1.1% as markets once again saw a likely rotation out of high-valuation tech leaders into less hyped sectors.

Shares of Tesla (TSLA) moved almost 6% lower as most “Magnificent Seven” megacaps struggled and chipmakers Arm (ARM) and Broadcom (AVGO) both dropped about 5%.

Meanwhile, Nvidia’s (NVDA) stock fell almost 4% as questions about the AI trade continued to swirl, even as analysts hiked their price targets for the chip giant ahead of its earnings report next week.

That loss helped drag the Dow Jones Industrial Average (^DJI) down about 0.8%, moving it away from Wednesday’s record-high close. Losses for Disney (DIS) — down 9% after disappointing earnings — also weighed on the blue-chip benchmark.

Strategy (MSTR) executive chairman Michael Saylor said he thinks bitcoin (BTC-USD) will be a larger asset class than gold (GC=F) by 2035.

“We’re in the digital gold rush,” Saylor said in response to a viewer question at Invest. “And 2035 is the .99 year. That means that 99% of all the bitcoin will have been mined in the year 2035. If you want bitcoin, you need to get it between now and then, because the last 1% of bitcoin comes out over 100 years.”

“There’s no doubt in my mind, bitcoin will be a larger asset class than gold by the year 2035,” Saylor stated.

Bitcoin has a market cap of just over $2 trillion, according to Yahoo Finance data. It’s significantly below the estimated market cap of gold, valued at approximately $29 trillion.

Gold has rallied over the past five days to trade around its three-week high. Year to date, the precious metal is up 62% versus a 10% gain for bitcoin.

Catch up here on the latest moments from Yahoo Finance Invest.

The October jobs report will arrive without one key reading — the unemployment rate, White House economic adviser Kevin Hassett flagged on Thursday.

President Trump’s top economic adviser suggested the data may never be released, after its collection was hit by the record-long US federal shutdown.

“The household survey wasn’t conducted in October, so we’re going to get half the employment report. “We’ll get the jobs part, but we won’t get the unemployment rate, and that’ll just be for one month,” the National Economic Council Director said on Fox News.

“We probably … will never actually know for sure what the unemployment rate was in October,” he added, per Reuters.

Stocks opened lower Thursday as the longest government shutdown in history ended.

The S&P 500 (^GSPC), Dow Jones Industrial Average (^DJI), and the Nasdaq Composite (^IXIC) fell less than 1% after the opening bell. The Dow posted a fresh record a day earlier as investors rotated out of tech stocks, with concerns of an AI bubble growing.

In individual names, Disney (DIS) shares tumbled more than 7% after the entertainment giant reported mixed Q4 earnings.

According to economist and former PIMCO CEO Mohamed El-Erian, “we are in a rational bubble” that could end painfully for some investors.

“So yes, there are elements of a bubble,” El-Erian explained, “and there are three elements in particular of this bubble. First, the frontier, those working on foundational models — not all of them are going to succeed. And yet all of them are attracting significant investment. Second, diffusion isn’t being talked about enough. Diffusion means getting AI into the workplace in an orderly fashion, in a comprehensive fashion.”

The third aspect, like the dot-com bubble, is “companies simply putting a label on what they do and attracting investment. Well, that label today is AI. So there are elements of a bubble, which means that people will end up with losses, but the aggregate value of what’s being created is significant. And therefore the rationality part comes in.”

El-Erian added in an interview at Yahoo Finance’s Invest event that while some investors may get burned, “the aggregate value of what’s being created is significant” and therefore, rational.

Watch the full interview here.

Catch up on the latest moments from Yahoo Finance Invest

The enormous computing cost of training and running models has forced a new generation of AI companies to reorient their sales strategy, writes Yahoo Finance’s Hamza Shaban.

He reports:

If the defining adage of the social media era was that you are the product, what new economic metaphors will the AI transition inspire?

A key difference between the new crop of AI startups and the mobile-era cohort of software companies is how they view the work and value of acquiring new users.

User growth was the coin of the realm for the past several decades, as sharply portrayed in a definitive scene from “Silicon Valley.”

Why should app developers seek out revenue streams when they can simply run companies that are “pre-revenue?” After all, once you show revenue, investors will start judging your company’s financial performance. Better to chase the dream of a big payday in the future than worry about making modest money now.

The AI infrastructure investment train is running this playbook, in a way. Spending is the new growth. But something’s changed.

“AI-driven startups are building businesses that differ widely from the highly successful but now outdated ‘software as a service’ (SaaS) business model,” wrote DataTrek co-founder Nicholas Colas in a note to clients earlier this week.

In other words, this isn’t your grandfather’s SaaS.

Read more here in the takeaway from today’s Morning Brief.

Yahoo Finance’s Invest event kicks off live at 8 a.m. ET on Thursday, Nov. 13, from our New York City studio.

Setting the tone for the event will be the unusual state of the economy. It’s been a rough year for layoffs. Consumers are sick of inflation. Yet investors continue to see huge opportunities in artificial intelligence, which has bolstered the stock market this year.

As my colleague Brian Sozzi asked on Sunday, why isn’t the wealth effect of higher stock prices lifting all economic and corporate ships?

These questions and more will be addressed at Invest. Here’s a sampling of what to expect from the all-day streaming event:

You can watch the event on these streaming services, desktop, and the Yahoo Finance app.

Yahoo Finance’s Jennifer Schonberger reports:

Boston Fed president Susan Collins said Wednesday that while she supported cutting interest rates at the last policy meeting, the bar for cutting rates further is “relatively high” and she sees holding rates at current levels for “some time.” …

In her first comments since the Fed’s policy meeting on Oct. 29, Collins cautioned that providing additional support to the economy through lower rates runs the risk of slowing — or possibly even stalling — inflation coming back down to the Fed’s 2% target.

She further stressed that demand in the economy is “resilient demand,” and while unemployment risks moving higher, she doesn’t think the job market has deteriorated further since the summer.

Collins joins the growing chorus of Fed officials who have become more cautious on whether to cut rates at the next meeting in December.

Atlanta Fed president Raphael Bostic said Wednesday that while it’s an “extremely close call,” he believes inflation is a more “urgent risk” than the job market right now.

Read more here.

Cisco Systems (CSCO) raised its annual profit and revenue forecasts on Wednesday as data center expansions drive demand for its networking equipment.

Shares of the San Jose technology company stock jumped almost 7% in premarket trading.

Bloomberg reports:

Read more here.

Bloomberg reports:

Read more here.