JD Durkin: Market strategist here at the New York Stock Exchange. Okay, so I don’t mean to laugh. You and I were standing here exactly 24 hours ago, saying, wow, what a reaction after the midterms. I’m going to say the same thing: wow, what a reaction after the midterms. What did you make of what we saw, not just today, but on the back of yesterday?
Eric Criscuolo: Yesterday was interesting, right? Because all week this was concentrated in tech, the AI trade. Anything associated with the AI trade just got hammered. It was tech, but it was also the industrials that were building out the data centers, the energy equipment providers. All of that trade got hit hard, but the rest of the market was solid. The S&P 500 was actually up. The equal weight was up. So the rest of the market kind of just carried everything. Today that completely reversed, or dissipated, I should say. It got blown away. Tech again very weak. It even got weaker as the day progressed. But then everything else collapsed underneath it as well, so there was nothing to catch the fall like we saw yesterday. Everything sold off.
JD Durkin: You mentioned all 11 sectors were lower. Even the staples were lower. Even the most defensive names were lower. Coca-Cola turning negative.
Eric Criscuolo: Yeah, at the end of the day, it was just basically sell everything, get out. The bid in Treasuries, right? Treasury yields, the two-year, came down about 10 to 12 basis points. So there was a flight to safety, and that was basically the only thing in the green.
JD Durkin: I was going to ask where you saw money go to work ultimately, because a lot of people are going to say, listen, did investors just basically, at the institutional level, say, let’s go to cash for the time being, at least, maybe going into fixed income? Were there any other things? You’ve been looking at the screens all day. I came over to your desk today to be like, please help me understand what we’re looking at here. Did you see any parts of the market where people are saying, at least we’ll bid up this little bit?
Eric Criscuolo: You saw the very, very defensive sectors. We’re talking consumer staples, utilities. Those had some pockets of strength. Overall, some of the names were higher, or at least flat, so we’ll take that as a big victory on a day like this. There was kind of a flight to equity safety in those names and those areas. And again, Treasuries saw a short move lower in yields, which meant Treasuries were bid. But it wasn’t anything historic. A ten basis point move on the two-year is big, but it’s not historic. So I think it was just basically get into Treasuries, get into things defensive, [unclear: “cut your wrist”; likely “risk”], get out of the tech names.
JD Durkin: Absolutely. And just live to fight another day. Worst day for the markets, of course, since the Liberation Day lows, that’s April of 2025. So it’s been quite some time since we’ve had this much red on the board. This is also very high volume, 1.7 billion on the close, so you really saw institutional smart money go to work, just not necessarily on the buy side. [unclear: “This was a very it was a high conviction. And getting out of this market today as you just saw.”] Though we do have October jobs tomorrow, so investors can’t really afford to sit on their hands too long. If you’re looking for the next big catalyst to trade, we’re going to get a really important piece of [unclear: “government lead data”] about the state of the labor market in just a few hours.
Eric Criscuolo: No, absolutely. That’s going to be the final piece of the market story this week. But the labor market data has been solid for so long now. We’ve just got weekly claims today, less than 200,000 initial jobless claims, and continuing claims at 1.7 million. It’s been at that level for, I don’t know how long. So the labor market looks to be continuing where it’s been over the past one, two, three, five years. Solid, low hire, low fire. That’s not where the Fed is worried at all. You’ve heard the comments. They are strictly worried about inflation. They have not said anything about worrying about the labor market.
JD Durkin: Eric, still really grateful for your time today, as I was yesterday, helping all of us make sense of what all of this means. [unclear: “Nobody knows what you’re like.”]
Eric Criscuolo: Yeah, when in doubt, no one really knows.
JD Durkin: No, no, no, we’re kidding here. But enjoy the jobs report tomorrow. Thank you for being with us, as always.
Eric Criscuolo: Always a pleasure, man. Thank you. Take care. Enjoy your weekend.
