Bearish Sentiment Weighs on Stocks; Ukraine Launches Drone Attack on Russia
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Good morning. I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we are seeing stabilization in the markets this morning, but it follows another sell-off on Wall Street. The numbers are not pretty. Tech stocks experienced their biggest one-day plunge since 2022, erasing $1.1 trillion in market value. Let's get the very latest with Bloomberg's John Tucker. John.

And Nathan, Monday's market plunge came as the Trump administration warns of a period of transition and detox for the economy. Economist Dennis Gartman sees it this way. I think that the economy, no question, is going into recession. The Nasdaq 100 index plunged 3.8%. Amy Wu Silverman at RBC is waiting for the other shoe to drop.

Are we going to get to that second tier of fear? The Nasdaq 100 down 12.4% from its market high. That's a correction. The S&P 500 flirting with correction, down 8.6% from its record, said only last month. Max Wasserman at Miramar Capital says investors are still trying to gauge the impact of the Trump trade war.

In the meantime, an uncertainty. Who wants to pay 30, 40 times for these tech earnings right now? The Bloomberg Magnificent 7 Index, an equal weighted gauge of the biggest U.S. tech stocks, tumbled 5.4% to bring its round from a December record to more than 20%. Tesla alone tumbled 15%, widening its loss this year to 45%.

While NVIDIA lost 5.1%, that has erased more than $1 trillion in market value in just two months. The unpredictable terror policies also spurring risk aversion. Government bonds globally, they're rallying as bets on U.S. exceptionalism start to fade. In New York, I'm John Tucker, Bloomberg Radio.

All right, John, thank you. While we are seeing the fallout from the recent U.S. stock sell-off, Citigroup is downgrading its view on U.S. equities while upgrading China to overweight, citing attractive valuations, government support for the tech sector, and a technology breakthrough. The divergence in outlook between the U.S. and China is growing, with Chinese equities performing well this year, while U.S. equities have lost 4.5% so far this year.

Well, Nathan, when Donald Trump took office on January 20th, he was flanked by some of the wealthiest people. Now new figures from Bloomberg's Billionaires Index show five of those billionaires have lost a combined $209 billion in wealth since Inauguration Day. Elon Musk has been hit the hardest, losing some $148 billion.

Amazon founder Jeff Bezos is down $29 billion. Google co-founder Sergey Brin is worse off by $22 billion. While Mark Zuckerberg and LVMH boss Bernard Arnault are both down $5 billion. And those losses, Karen, come as President Trump gets ready to meet today with the country's top business leaders. Mary Nichols is a Bloomberg Markets Live strategist.

He needs to highlight his pro-growth policies heading into the Trump administration. And after he won, businesses were actually quite optimistic about the future, given deregulation and what some of his policies would be that would be favorable to businesses.

Businesses are now worried. They're now worried about the outlook of the economy. They're worried about tariffs. So he'll need to address these recession concerns and that his plans will be more limited. And it really is a short-lived adjustment period because otherwise you could see this spiral.

into something even bigger and deeper losses for the markets. Bloomberg's Mary Nicola notes that President Trump will meet today with the Washington-based Business Roundtable. Cisco CEO Chuck Robbins chairs the organization. JPMorgan Chase's Jamie Dimon and Citigroup's Jane Frazier among the bank leaders on the Roundtable's board of directors.

Nathan, now let's get to the latest on the war in Ukraine. Russia says it shot down 337 Ukrainian drones overnight, including 74 aimed at the capital, Moscow. It appears to be the largest attack on Russian territory in the three-year war. And it comes as Ukrainian officials meet with the U.S. and Saudi Arabia to discuss ways to end the conflict. Again, those talks are underway right now. But Bloomberg's Greg Sullivan reports the U.S. is downplaying anything major coming out of this meeting.

We saw Secretary of State Marco Rubio come out and say, look, look, we're not looking for a major breakthrough here. The U.S. is basically in a position where it's listening, trying to see what's possible, especially in terms of concessions. He did say that he expects concessions from both sides, and that could include territorial concessions from Ukraine, which will be quite a bit of a deal.

quite hard for them to swallow. And as President Trump pushes for a ceasefire, Bloomberg's Greg Sullivan reports he's sending Middle East envoy Steve Witkoff to Moscow this week to meet with Russian President Vladimir Putin. Karen talks between the U.S. and China on trade may be getting stuck. Sources tell Bloomberg News the discussions are bogged down at lower levels with both sides talking past each other on how to proceed.

Officials in Beijing say the U.S. has not given detailed steps on what it needs to do about fentanyl to have tariffs lifted. President Trump's team says it has been clear that it wants China to stop sending precursor chemicals to Mexico to give smugglers the death penalty and to run a front-page article in the People's Daily newspaper condemning the fentanyl trade.

Well, in Washington, Nathan, a stopgap funding bill or Clean CR looks likely to pass Congress today and avert a government shutdown on Friday. Bloomberg's Amy Morris has the details from Washington. The Republican spending bill is designed to keep government agencies open through September 30th. Representative Don Beyer, a Democrat from Virginia, talked about the options and the worries that the president will unilaterally delay or cancel appropriations called impoundment. Unless there are...

meaningful guardrails to keep Trump from impounding it. We should vote no in the Democrats in the Senate and hopefully some Republicans in the Senate. Virginia Democratic Representative Don Beyer on Bloomberg's balance of power. House Republicans could pass this on their own if they get enough votes from their own caucus, but even after it passes the House, it still has to get through the Senate.

In Washington, Amy Morris, Bloomberg Radio. Amy, thank you. A federal judge has ruled Elon Musk's government efficiency project must comply with records demands from a public interest group. The ruling rejects the Trump administration's position that the office created by the president is exempt from U.S. transparency law. The decision would mean the Department of Government Efficiency is required to disclose emails, memos, notes, and other internal records about its operations, staff, and structure.

Well, speaking of Musk, as mentioned earlier, Nathan, his personal wealth has taken a big hit recently. In fact, with yesterday's 15% decline, Tesla shares have lost more than half of their value since mid-December. This morning, Musk is getting some support from Donald Trump. The president says that he will buy a new Tesla as a show of confidence and support for the CEO. Musk, who is now the face of the president's efforts to cut the size of the U.S. government, responded with a simple thank you on X.

And shares of Tesla, they're higher this morning, up more than 4.5%. As for some other stocks on the move this morning, Karen, we're watching shares of Oracle. They are down almost 2%. The company reported disappointing quarterly results and gave a sales and profit forecast for the current quarter that fell short of analyst estimates.

Shares of Delta are down almost 10 percent. The airline cut its profit expectations for the first quarter roughly by half on weakening travel demand. The carrier also said economic volatility and concerns over flight safety have weighed on the U.S. industry in recent weeks.

But it's time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. A federal judge has temporarily blocked the deportation of Mahmoud Khalil. The pro-Palestinian activist and Columbia University graduate was arrested by ICE agents over the weekend.

He helped organize last year's pro-Palestinian protests on the Columbia campus. Meanwhile, hundreds demonstrated in Lower Manhattan Monday to protest Khalil's arrest. Demonstrators say the arrest violates free speech rights and is unconstitutional. At a press conference, Professor Yunan Cohen of Columbia Center's Jewish and Israel Studies compared Khalil's arrest to tactics used to detain Palestinians in Gaza.

As an Israeli-American, I'm extremely troubled that such practices have been important to the United States and manifest themselves on our campus. Meanwhile, President Trump said the arrest was in furtherance of his policies against anti-Semitism. Israeli negotiators are in Qatar and restarting talks with Hamas on what phase two of the ceasefire agreement will look like.

AD Alexander says his son, Eden, is still being held in Gaza and hopes the negotiators will come to a consensus soon. AD Alexander: We have to be back into this bargaining table and keep talking and get everybody out as soon as possible. It comes as Israel has cut off electricity to Gaza.

Police in Montvale, New Jersey, are investigating a bus crash on the Garden State Parkway that left several children injured, including one in critical condition. Officials say 31 people were on board. The bus was heading to New York State when it flipped last evening. Global News 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg. Karen. All right, Michael Barr, thank you.

When you have bars in the sky, onboard showers and award-winning in-flight entertainment, it's no surprise that Emirates was recently named the best airline in the world. We fly you to over 140 destinations and with partners across the globe, we connect you to another 1,700 cities across six continents. So when we say we're also the largest international airline, what we really mean is...

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It's time now for the Bloomberg Sports Update, brought to you by Tri-State Audi. Here's John Stachauer. John, good morning. Good morning, Karen. The Yankees hopes for a second straight American League pennant. Delta severe blow. Garrett Cole will spend today having season-ending Tommy John elbow surgery. He was on the mound last week in Tampa. It didn't go well. He gave up two home runs. He had an MRI.

Then got a second opinion. Now we won't see Cole in a Yankee uniform until sometime in the summer of 2026. The Jets have a new quarterback. It's 26-year-old Justin Fields. Spent three years in Chicago this past season with Pittsburgh. Steelers wanted him back. He chose instead to throw passes to his former Ohio State teammate, Garrett Wilson. It may end up being a swap.

quarterbacks with the Jets fields is replacing Aaron Rodgers word is Rodgers could be close to signing with the Steelers Sam Darnold cashed in on his breakout season in Minnesota three-year 100 million dollar deal to play QB in Seattle the Giants still need a quarterback they did add three free agents and they resigned wide out Darius Slayton the Knicks with a quick start in Sacramento

Fire extinguisher, Deuce now with 15. - Here comes Deuce McBride, still has not missed a shot out here tonight.

A little give and go. The Kings have given up 37 here in the first quarter. On NBA TV, the Knicks coasted all night. They beat Sacramento 133-104. Three Knicks scored more than 20. McBride, Carl Anthony Towns, and O.G. Onanove. In Brooklyn, the Nets ended a seven-game losing streak. Beat the Lakers 111-108. The Celtics beat the Jazz 114-108. John Stasch, Bloomberg Sports, Karen Nathan.

Coast to coast on Bloomberg Radio. Nationwide on Sirius XM. And around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. We are seeing futures bounce back this morning for one of the biggest multi-day sell-offs on Wall Street in years. The S&P 500 just yesterday fell 2.7%, nearing a correction. The tech-heavy Nasdaq is already there, and many analysts are readjusting their bullish views.

with tariffs and government spending cuts adding to fears that the U.S. could be headed for an economic slowdown. Joining us this morning is Baird investment strategist Ross Mayfield. Ross, good morning. Are you changing your view on this economy? Yeah, I think you have to a little bit, right? You come in with priors and then you take a look at what's actually occurring and you have to readjust a bit. I wouldn't say that we're in the recession camp yet.

But I think an economic slowdown is likely, if only because, you know, we're at the middle of the late point of the cycle. And the Trump administration is clearly more bite than bark when it comes to the tariffs so far. So you kind of have to readjust your priors for what growth could be. What do you make of the sell off that we've seen over the last few days, this 8.6 percent plunge in the S&P 500 in just the last few days?

Yeah, I mean, I think the first obvious thing is to look at the economic growth scare, the potential for tariffs and broader and wider tariffs than previously were expected. And then also look at, well, you know, the Fed has the dry powder to come to the rescue, but are they going to be willing to if they think tariffs are inflationary? So all that makes sense. But then you have to look at the driver of the sell-off and look to the MAG-7 and kind of wonder how big tech is caught up in any of that. I mean, they're largely economic growth companies.

agnostic. They're not particularly tariff sensitive. So what's driving that? I mean, you could say valuation. You could take a look at the Japanese yen and see the rise there and look at the carry trade sell-off we saw last August. But the reality is it's probably just a combination of all the above, a bad moment for markets, but a healthy correction that's going to reset sentiment a bit as well. Does that point to a buying opportunity for the tech stocks that had been fueling the rally for so long? I think so.

I think it totally depends on time frame. I mean, technically they look pretty broken, or at least most of them do. But over a one plus year time horizon, yeah, I would still be adding the secular growth themes like AI. I think if we're hitting a period where US economic growth is coming back to trend and we're still in this higher for longer rate environment, I want to be buying the high quality companies that are still bringing their own kind of growth themes to the table. I still...

very much think AI is one of those over the next, you know, half decade, decade plus, you just have to have the time horizon to ride out what could be more weakness in the near term. Talking about timing, we heard from Kevin Hassett over at the White House saying that he expected a negative first quarter with tariffs and President Biden's policies, but he says the second quarter is going to take off with tax cuts. Should investors be pricing that in?

You know, I do think that the potential for tax cuts has been pushed to the back burner. You know, the first Trump administration, this calculus was reversed. We got the tax cuts in 2017. Markets had one of the best and kind of calmest years in recent memory. And then 2018 was very volatile on the back of the trade war. I mean, look, if we got to the second quarter and a lot of the

trade and tariff policy was at the very least settled, right? I do even think that most companies would be fine with tariffs or some level of import duty if they just knew the rules of the game and then could move on to focus on the things about the Trump administration that they liked so much in the

you know, immediate post-election euphoria, which was deregulation, the potential for tax cuts, lower energy prices. So if we could just get some tariff certainty and move on to the second quarter, I think the market would welcome that for sure. In our last 30 seconds, really interesting call from Citigroup, downgrading U.S. stocks, raising China to overweight. Is that the right call?

I mean, that's certainly the momentum trade right now. You've got a lot of momentum behind Europe and China and you're losing momentum in the U.S. But I still think over a one plus year time horizon, if you're thinking strategically, U.S. is where the economic growth is. And so far, most of them move up across the seas and at home.

down is about valuation and not relative earnings growth. So I'd still stay with them. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify, or anywhere else you listen.

You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121. Plus, listen coast-to-coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces.

And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

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