Bank of America Slides on $1.21 Billion Fine as Chip Stocks Tumble | Closing Bell

Comprehensive cross-platform coverage of the U.S. market close on Bloomberg Television, Bloomberg Radio, and YouTube with Romaine Bostick, Carol Massar and Tim Stenovec.

And right now we are two minutes away from the end of the trading day. Romaine Bostick, taking you through to that closing bell. It's a global simulcast. We're joined now by Carol Massar and Tim Stenovec. Welcome to our audiences across all of our Bloomberg platforms, television, radio, our partnership with YouTube. On a day when investors from stocks to bonds and everything in between, a bit rattled for a wide variety of reasons, Carol.

Yeah, a bit of a risk off trade. No doubt about it. A hot inflation print, uh, I think concerns too about higher energy prices. What's the Fed going to do? I got to say though, you go inside the S&P 500 Romaine, it's still kind of an even split here.

Okay, not so much for the Nasdaq 100, which is taking the brunt of this. I think I can call it a sell off Romaine. At one point today, actually right now, this is the worst day for the Nasdaq 100. It's down more than 2% going back to June of this year.

Yeah, and we should point out the Russell 2000 down 2% uh firmly in correction territory. Remember that last record high was back in uh mid uh August down I believe about 11% or more uh since then.

And have you taken a look at bank stocks?

We're going to talk about that.

I have to say, the trade in bank But the trade in bank stocks over the last couple of days, you've seen rallies, you've seen them pull back, but overall, not doing well.

Yeah, not doing well. And I mean a lot of it is. I mean, and we should point out, this started long before this earning season. We had seen a lot of pressure there primarily because of the rate environment, concerns about credit. and I guess it was kind of prescient because it started to show up in the earnings statements and more importantly in some of the commentary that we heard out of Jamie Diamond and Jane Fraser and everyone else in between.

Yeah, absolutely. And you're seeing it play out when you look at that group and and the trade that we've seen. Investors definitely pulling back Romain.

Well, we get the closing bells here in New York, a third straight day of softness and really a lot more than softness here uh on this Wednesday afternoon with the S&P 500 lower by more than 80 points. That's going to be a decline of about 1% on the day as we wait for these numbers to settle. Uh, the least dirty shirt in the drawer right now is the Dow Jones Industrial average. It's down about 48 points or about a 10th of a percent. But let's go to the big decliners here.

Obviously, the tech space really taking it on the chin. The Philadelphia semiconductor index down about 4% on the day, the Nasdaq composite and the Nasdaq 100 each down about 2% on the day. And the Russell 2000, very rate sensitive, a Russell 2000 small caps that have been under pressure for weeks now, closing down about 2% and now down more than 11% from its last all-time high set, hit back in mid- August.

Wow. All right, that sounds and feels kind of significant there. So, um, let me just go go back to though the S&P 500. I mentioned uh remain kind of an even split, but you had 242 names in the S&P gaining ground today, 260 declining, two unchanged.

Absolutely. You take a look at the sectors uh on the screen here, uh the pie chart here. And I want to focus actually in on the the two little pieces of green here because this is where all the activity was, in healthcare and in consumer staples. Energy did get in on the action. Uh some of this has to do with some positive comments that we got out of a couple of the healthcare companies, but this just reads defensive and I know Carol you say, oh well, you know, half the stocks in the S&P were in the green, but you know, it's dollar tree, dollar general and Kroger, Walmart and these types of names and a lot of the healthcare names, you know, read into that what you will.

Right. It does feel kind of telling in terms of the trade and who did actually gain. Uh I'm going to talk healthcare in just a moment, but I got to start with Bending Spoons. Uh BSP is the ticker, soaring 41%, but at its high, it was up 55% today after Berkshire Hathaway agreed to invest an additional 330 million in the Italian technology conglomerate. The investment bringing Berkshire's stake and bending spoons to 4% and that investment giving bending spoons more capital to pursue acquisition. So

You know, I was always told that you don't try to bend the spoon, Carol. That it's impossible. You just focus on the truth.

It is. Thank you. There is no spoon.

We send you to Beverly Hills and this is what happens? It's like you get kind of thoughtful and sensitive?

I was in Century City actually.

Okay, wait, hold on. How much did Berkshire How much did Berkshire invest in this?

Uh, so they did um, 303 uh an additional 330 million in the company. 4% in total. But keep in mind that they previously invested 600 million uh at their July IPO.

Still, this is just such peanuts for Berkshire, right? Their cash pile is $360 billion. But that they're interested I think is pretty significant. Yes, I agree.

All right. I'm glad that you agree. Uh you mentioned Romaine, healthcare and I noticed healthcare and biotech names really outperforming today. I'm just going to call your attention to a couple of them and that includes Mek, which is up about 3.8% and Moderna, a gain of about 4.6%. This was top uh in some of the major indices.

Maybe because Mek CEO telling CNBC that he expects the company's breakthrough cancer vaccine with Moderna to get faster to make over time. He acknowledged that manufacturing the vaccine is a complex system that said Merk and Moderna have the process down to a very tight science. Keep in mind, investors very excited about the prospect for cancer vaccines. So, uh and it could also be just kind of a safe play when you look at the rest of the healthcare sector because a lot of names, biotech and other uh were higher in today's session.

And then we talked about the tough going for those big banks. A lot of them under pressure over the last couple of days. We did see JP Morgan lower yesterday, but we saw investors moving back in. Stock up about 1.2% in today's session. So I just thought that was interesting, a little bit of a standout uh especially when it comes to the largest US bank here. All right, that's my gainers.

All right, I got to start for decliners with Bank of America. This shares of Bank of America down 4.8% today. They were down as much as 7% earlier in the session. At one point, erasing $30 billion in market cap before bouncing off those lows a little bit. The headline, we got it late yesterday after the market closed, $1.21 billion of fines received for issues with its money laundering and sanctions control. It's biggest regulatory fine in the past decade.

Uh, Herman Chan, we just had him on the program, Romaine and he said, I asked how much of today's decline in in Bank of America is about this fine versus the numbers. He said it's mostly about this fine rather than the numbers. Uh, earnings though crimped by the charge, traders missed estimates, a bond portfolio which past $100 billion in paper losses. Also, I want to draw everyone's attention over to the socks, the Philadelphia semiconductor stock Exchange index. Carol got this one on my radar today, down 4.3%.

Over the last six days, the Sox has erased over $1 trillion in market cap. That's just wild. Um It's a lot. Yeah, pressure on global chips, uh increased due to factors including increased competition with AI, rising financing requirements and higher rates. This is according to uh the chief investment office over at UBS. And finally, Coreweave, let's get on over to Coreweave just to related to what's happening. Down 15% today, fell as much as 17%. AI related stocks fell. The company provider, the company um bonds plunged to levels typically indicating distress.

The company's CEO said the drop in the firm's stock and bond prices is due to the market acting, quote, irrationally. It's down about 8% this year. Romaine down 64% from those all-time highs.

The old story was a big story today on the back of that 8:30 a.m. CPI report. We saw a 16 basis point spike in the two-year yield, 11 basis point spike in the 10-year yield. But for those of you watching us on television, you can see that those numbers got retraced in a big way. Your two-year yield ends the day up by about two basis points and the rest of the curve is actually lower, but we should point out some of that appeared to be a bit of a haven bid because of the concerns about what was going on in equity.