Halftime Report: Is a Bigger Selloff Coming? (Released March 10, 2025)

Host: Scott Wapner
Guests:

• Joe Terranova
• Stephanie Link
• Jim Leventhal
• Surat Sethi
• Contessa Brewer
• Mike Santoli

1. Introduction

In this episode of Halftime Report, host Scott Wapner delves into the current tumultuous state of the stock market, questioning whether a more significant selloff is imminent. Joined by top investors Joe Terranova, Stephanie Link, Jim Leventhal, and Surat Sethi, the discussion navigates through market dynamics, recession fears, sector performances, and strategic investment moves amidst the prevailing uncertainty.

2. Market Overview

Scott Wapner opens the episode by highlighting the stark decline in major indices:

• Dow Jones Industrial Average: Down nearly 500 points.
• Nasdaq: Down over 600 points, marking a drop of more than 3%.

This widespread selloff has fueled debates about the extent of potential further declines and the underlying causes behind the sudden market downturn.

3. Recession Fears and Market Sentiment

The conversation pivots to the pervasive anxiety surrounding a possible recession:

• Joe Terranova points out that the S&P 500 is 8% off its February 19th high, citing factors like reduced government spending and moderating revenue growth. He remains cautiously optimistic, suggesting a "tactical bounce" could occur in the near term.

  "I do believe that positioning and sentiment is reaching a point where you are set up for a tactical bounce." (02:15)

• Stephanie Link counters the recession narrative, emphasizing robust consumer resilience and stronger-than-expected job numbers. She maintains that earnings growth remains solid, even if GDP growth slows:

  "I still think that to be the case, you're looking at 7 to 10% in earnings growth right now." (04:14)

• Jim Leventhal expresses skepticism about the necessity of downgrading U.S. equities, arguing that international markets, particularly Europe, are becoming comparatively more attractive due to their valuation:

  "If the thesis on European stocks, international stocks, is that they're cheaper, then I would submit to you... you can look at the average stock and see it's trading at 17 times." (06:20)

4. Sector and Stock Analysis

4.1. Technology Sector

The tech sector is under intense scrutiny, with major players like Tesla, Nvidia, and Alphabet experiencing significant downturns:

• Tesla: Noted for a steep 50% drawdown from its high, termed by Terranova as the "Tesla Chainsaw Massacre."

  "It could be worse before it gets better." (14:50)

• Nvidia & Alphabet: Despite recent declines, Surat Sethi and Jim Leventhal advocate for continued investment in these firms, highlighting their fundamental strengths and long-term growth prospects.

  "If you just look back from a year from now, you're going to probably feel these were very good buys." (19:28)
  "Microsoft is a great company... you're getting these stocks now at really good prices." (18:27)

• Apple: Facing criticism for its high valuation amidst slowing growth.

  "The knock on it was it was getting... trading on premium fundamentals that weren't even premium." (21:43)

4.2. Financial Sector

Financial stocks have endured significant losses, reflecting broader market sell-offs:

• Wells Fargo & Bank of America: Despite recent declines, guests like Stephanie Link view these as value buys given their current valuations and strong business models.

  "The stock trades at 10 times forward estimates... I like the capital markets business." (29:22)

• Joe Terranova emphasizes the resilience of financial services, noting that sectors like net interest income remain robust.

  "These companies are cheap. They've got strong balance sheets and dividends." (30:49)

4.3. Industrials and Other Sectors

• Quanta Services: Stephanie Link highlights its strong data center and grid upgrade prospects, maintaining faith in its long-term growth despite current stock discounts.

  "EBITDA grew 40% year over year, backlog up 14% year over year." (25:07)

• Consumer Discretionary: Companies like Chipotle and United Airlines are experiencing significant pressure, though some, like Chipotle, are viewed as bargains based on fundamental strengths.

  "Down 25% trades expensively at 25 times EBITDA." (31:45)

5. International Markets

Stephanie Link and Jim Leventhal discuss opportunities in international markets, particularly India:

• India (INDA): Currently down 7% year-to-date, but viewed as a long-term growth opportunity due to favorable demographics and significant infrastructure spending plans.

  "Prime Minister Modi is very pro-growth, pro-business, and he's going to spend $1.7 trillion on infrastructure." (37:43)

• Jim Leventhal notes that while Europe and China have lagged, valuations are becoming more attractive, presenting buying opportunities as their growth remains strong.

6. Strategic Investment Moves

The panelists share their strategies amidst the selloff:

• Joe Terranova: Advocates for avoiding "falling knives" and focusing on long-term fundamentals rather than reacting to short-term price movements.

  "The best trade is sitting on your hands and doing nothing." (14:50)

• Stephanie Link: Continues to buy undervalued stocks with strong growth prospects, such as Eaton, Quanta Services, and Boeing, based on their execution capabilities and solid earnings.

  "The pullback is overdone and it's an opportunity." (25:00)

• Surat Sethi: Highlights investments in companies like Nvidia and QuickBooks, emphasizing their strong market positions and growth potential.

  "You're getting great return out of this one. It's out of favor and I like it." (38:29)

7. Future Outlook and Conclusions

As the discussion wraps up, the panel assesses the future trajectory of the market:

• Mike Santoli underscores the market's indiscriminate selloff and suggests that while there's room for a bounce, it faces "a high burden of proof."

  "The market is going to do that job for you when it ultimately gets a bounce." (45:38)

• Jim Leventhal maintains a cautious optimism, asserting that while recession fears persist, sectors like defense remain strong due to international demand.

  "The US Air Force really wants the F35... European countries are filling those production slots." (40:02)

• Scott Wapner concludes by highlighting the continued selloff and the importance of strategic positioning, indicating that the first half of the year will remain "more messy" than anticipated.

  "First half is just going to be more messy, I think, than people thought." (16:30)

Overall, the episode conveys a market caught between recession fears and tactical buying opportunities, urging investors to remain focused on fundamentals and long-term growth prospects amidst short-term volatility.

Notable Quotes

• Joe Terranova (02:15):

  "I do believe that positioning and sentiment is reaching a point where you are set up for a tactical bounce."

• Stephanie Link (04:14):

  "I still think that to be the case, you're looking at 7 to 10% in earnings growth right now."

• Jim Leventhal (06:20):

  "If the thesis on European stocks, international stocks, is that they're cheaper, then I would submit to you... you can look at the average stock and see it's trading at 17 times."

• Surat Sethi (11:58):

  "We're not talking about a Powell put yet."

• Scott Wapner (14:50):

  "Tesla is a perfect example... the longest losing streak ever."

• Stephanie Link (25:00):

  "It's overdone and it's an opportunity."

• Mike Santoli (45:38):

  "The market is going to do that job for you when it ultimately gets a bounce."

Key Takeaways

1. Market Sentiment: The current market downturn is steep, with significant declines across major indices, raising concerns about a deeper selloff.

2. Recession Debate: While some experts fear an impending recession, others believe in strong earnings growth and consumer resilience, suggesting a tactical bounce rather than a full-blown recession.

3. Sector Performance: Technology and financial sectors are under heavy pressure, but opportunities exist in undervalued and fundamentally strong stocks within these sectors.

4. Investment Strategy: Emphasis is placed on long-term fundamentals, selective buying of strong companies at discounted prices, and avoiding reactionary moves based on short-term market fluctuations.

5. International Opportunities: Markets like India and Europe present attractive valuations and growth prospects, offering diversification benefits amidst U.S. market volatility.

6. Future Outlook: The first half of the year is expected to remain volatile and challenging, with potential for selective rallies but overall uncertainty prevailing.

Disclaimer: The opinions expressed by the participants are their own and do not necessarily reflect those of CNBC or its affiliates. Investors should perform their own due diligence before making any investment decisions.