Nasdaq sinks, Home Depot & Roblox drop, Cathie Wood counters new 'Big Short' short

Yahoo Finance’s Jared Blikre reports on the day's trending tickers.

Video Transcript

BRIAN CHEUNG: But let's bring in Yahoo Finance's Jared Blikre for some more detail on the market action. Again, busy market action on this Tuesday. Tell us a little bit more about the NASDAQ, and specifically what's going on with the tech stocks today.

JARED BLIKRE: Yeah, tech stocks really taking a hit. And things kind of started out rocky at the 8:30 AM retail sales report, which missed expectations by a fairly wide margin. And if we take a look at the YFi Interactive here, we can see a lot of red across not only the US, but the entire world. Small caps really taking it on the chin here, down over 1 and 1/2%. Other markets off of their lows.

Well, looking inside the market, can see a lot of red in the NASDAQ 100. Some of the worst-performing stocks are in China. We have JD.com down over 3%, Alibaba down about 4%. We're talking about the new regulatory measures there. I think some new antitrust rules were introduced overnight, in addition to that bad miss by Tencent Music with an uncertain regulatory outlook.

So not a lot of contributing factors to the green space. But I will say health care is the exception. XLV is up 65 basis points, or about just over half a percent, nearly 2/3 of a percent. To the downside, it's really the value in cyclical sectors that are getting hit the most. Consumer discretionary, that reflects retail sales, that's down over 2 and 1/2%, followed by materials, industrials, energy, and then tech and then financials. But you can see a lot of broad-base weakness here.

We do need to check out the travel space. Reopening trade, as you could imagine, not faring very well today. Let's see. Southwest down 3%, so is Delta, Royal Caribbean. You get the picture there.

And let's round this out with a little bit of green here. We do have these vaccine stocks that got hit over the last few days. They are bouncing back. Moderna up over 5%, BioNTech over 5% as well. And it looks like Regeneron up 2.8%. Guys.

JULIA LA ROCHE: And Jared, speaking of retail, Home Depot off quite a bit after that mixed earnings report. What can you tell us about that one?

JARED BLIKRE: Yeah, the comp sales miss-- the comp sales number missed expectations. As you can see, retail really getting a double whammy today from some disappointments out of the Home Depot earnings and the retail sales report that we were talking about. But let's take a look at Home Depot stock, and it's down 4 and 1/2% today, but still holding onto gains of 20% for the year, just largely haven't gone sideways since April.

It looks like we're heading towards the bottom end of the range here, this area right here. So if that's the case, we might have a little bit farther to go and see what happens down here. Otherwise, all I can say about the stock is it's in a sideways trading range. I do have some analyst commentary. This is Wells Fargo, looks like they are rating it an overweight with a price target of $360, saying gross margins, those contracted 77 basis points versus an expansion of 25 basis points expected.

Attributing the worse-than-expected performance to increasing supply chain costs and the impact of a 27% sequential decline in lumber prices. Still, EBIT margins expanded 20 basis points to a record 16.1%. So when we're talking about gross margins there, we're talking about input costs getting higher, and that's kind of disrupting the forecast for the third quarter. And that's one of the factors weighing on the stock today.

Also, lumber prices going down. They actually make higher margins when lumber prices are going up, because they are the biggest lumber distributor sales, I guess, retailer in the United States, so they try to get those lumber prices down first. So you put it all together, the economy's still humming. But when you dig inside some of these reports like Home Depot, you just find a little bit more weakness than what was expected. Guys.

BRIAN CHEUNG: Jared, the online game maker Roblox feeling the heat of the Street today after they reported earnings. Tell us a little bit more about why they're experiencing this. I mean, they've only been public for-- they haven't even been public for over six months yet. So I guess this is kind of them feeling the capital markets, if you will?

JARED BLIKRE: Yeah, and I just learned the name Roblox exactly six months ago in the [? year-up ?] and the lead-up for the IPO. I am not the demographic, so I'll just throw that out there. But I do have some remarks from the Street, and let me see if I can find our ticker here. Here's a benchmark. They have it with a sell price target has been lowered to $70 from $75.

And here's Roblox. Now I can show a chart on the YFi Interactive. Benchmark saying the results show June bookings deaccelerated, and we are cautious over player engagement, retention, and monetization trends from key geography. They expect revenue growth of 50% this year, down from a prior view of 60%.

But I just want to share something from the report. I dug this out yesterday. Roblox bookings growth is down to 35% in the second quarter. One year ago, it was 229%. So this is the quarterly gross bookings. And you can see they just flattened out over the last three quarters. So if you're growing 35%, might be great for Walmart, might be not so great for Roblox here.

JULIA LA ROCHE: And finally, Jared, Cathie Wood hitting back at Michael Burry of "The Big Short" fame over a bet against her ARK fund. What can you tell us about this trade and her response?

JARED BLIKRE: Well, as you know, Julia, you follow the 13Fs, we learned that this was a trade that existed in the prior quarter, so it might not even be on. And this is done through the options market. So Michael Burry bought 2,355 puts, which would control 235,500 shares, so not a small sum, not the biggest sum.

But Cathie Wood responded, and I have some of these responses here, really fascinating, gives you an insight into her mindset. "To his credit, Michael Burry made a great call based on fundamentals, recognized the calamity brewing in the housing/mortgage market. I do not believe that he understands the fundamentals that are creating explosive growth and investment opportunities in the innovation space."

And then continuing here, this is only three tweets long of about 20, "In our view, the seeds for innovation explosion at ARK Invest is dedicated to researching. These seeds were planted during the 20 years ending with the tech and telecom bust." So that was 20 years ago. "Having gestated for more than 20 years, these technologies should transform the world during the next 10 years," so into 2030.

"If we are correct"-- and I think this is very important-- "GDP and revenue growth will diminish until the opportunities in nascent technologies begin to move macro needles. In this environment, innovation-based strategies should distinguish themselves." So I think she's setting up the expectation for a bifurcated market where you have haves and have-nots. And we're not going to really see the valuations come down to Earth until we see the growth in the economy, until we move those macro needles, until we see robotaxis, a million robotaxis [? couriering ?] around people here in New York City. Guys.

BRIAN CHEUNG: Yahoo Finance's Jared Blikre, thanks again for breaking that down.