Final Trading Day of 1H, Markets Jump on Inflation Data, Apple Hits $3T Valuation 6/30/23

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Carl Quintanilla (0:31)

Market moving insight and analysis. Join Jim Cramer, David Faber, and me, Carl Quintanilla on the opening bell hour of CNBC Squawk on the Street.

Good Friday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with David Faber, Sara Eisen at the New York Stock Exchange. Cramer has the morning off. We are wrapping up the month quarter and first half with a strong batch of news. Headline, PCE is in line, lowest annual rate in two years.

Future's strong as yields are down, Apple, Nike, banks, semis, and travel today on what could be a messy holiday weekend. A roadmap begins though with stocks at the end of the month quarter and half. The Nasdaq eyeing its best first half since 83, and Apple is looking to hit three trillion at the open.

David Faber (1:10)

Plus, of course, deal scrutiny of the FTC and Microsoft now awaiting a judge's decision, which could help decide the fate of one of technology's largest ever acquisitions.

Sara Eisen (1:21)

And Nike shares are falling ahead of the open, delivering what some say is a gloomy forecast as US consumers cut back, overshadowing a strong recovery in China. We'll discuss it.

Carl Quintanilla (1:30)

Let's begin, though, with the market. So, so far this year, all three major indices are in the green, led by the NAS, up almost 30%, as we said, best first half since 83 S&P closing in on 15%, which would be the best first half since 2018, confounding a lot of people who were eyeing more nefarious scenarios, say, at the beginning of the year.

Sara Eisen (1:51)

It jives with the biggest surprise of the year, not just that the stock market is up, but that the economy has remained so resilient and so much better than everyone thought, and that inflation remained a little bit stickier. Now, having said that, today's news, what we got, the PCE, that's the Fed's preferred gauge, comes in better. Better if you're Jay Powell, better if you're Treasury Secretary Yellen, better if you're an investor who's hoping for the end of rate hikes. The main number, 3.8%, matches expectations.

That's on the headline, but it's the lowest level we've seen in two years. So that's good news, better than the 4.3% prior, if you look year over year. The core, and if there's one thing I learned from all the central bankers this week, we only should be looking at the core, because they are very focused on the core. It's stripping out more volatile food and energy and that sort of thing. And it shows you why they're concerned about it, because it's higher than the headline, 4.6%. Now, it's a little bit moderated from 4.7%, so that's good, but it is still stubbornly high and higher than their forecast. And then there's the super core, which we always look at because we know Powell's looking at it.

That is services, inflation, ex-housing, and it did fall to the lowest level since July 2023 Good news, about a quarter of a percent higher than it was last month. So overall, softer inflation is good news, but it comes in the context of better economy and higher than where they want it.

David Faber (3:12)

And conclusions that you have from the time that you spent bringing us that fascinating panel?

Sara Eisen (3:19)

Thanks. Well, the biggest takeaway, and I think this is the market takeaway as well, is that the central bankers feel that they have more work to do and they're not satisfied with the moderation of inflation and they're not worried about recession.

So for investors that are worried about recession, they've really pushed back. The European Central Bank doesn't have it in the forecast, Fedsher Powell doesn't have it in his forecast as its potential. Here, we have this Delivering Alpha survey of CIOs and strategists and investors that we just released for CNBC.

And the recession gets pushed back. I mean, 32% say it's more than 12 months away, 26% first half of 20 Remember coming into this year, Carl, to your point, everyone thought this was the year of recession. Guess what? Those odds have changed a lot.