Oil Rally Rolls On Amid Mideast Tensions, OpenAI's $157B Valuation, Nvidia CEO on AI's New Wave 10/3/24

Scott Wapner (0:00)

Market insight and analysis.

Carl Quintanilla (0:01)

You're listening to the opening bell of CNBC's Squawk on the Street. Good Thursday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Mike Santoli, Scott Wapner here at Post Night of the New York Stock Exchange. Cramer and Faber are off. Lashana Tova to our friends who are observing Rosh Hashanah. Futures are lower as the markets continue to monitor Israel, Iran, the port strike day three and today more macro PMIs, ISM and claims pretty steady at 225 Roadmap begins with that China rally on pause, the Hang Seng index snapping a six day win streak.

Scott Wapner (0:33)

Plus OpenAI wrapping up a massive funding round, getting more investments from names like Microsoft, Nvidia and SoftBank valuing the startup at $157 billion. And shares of Levi set to drop double digits at the open today. The retailer trimming its guidance and weighing the sale of its Dockers business.

Carl Quintanilla (0:51)

Let's get to the markets this morning. As we said, a bunch of different pots are boiling. Of course, jobs tomorrow is going to lead to somewhat hesitancy today.

Michael Santoli (0:58)

I think for the past couple of days, that's what we've seen is essentially knowing that the big catalyst of the week is at the end of the week, also coming in to a new quarter, to a new month at a record high with valuations back toward their highs. And a lot of that erratic action overseas, even though it's been to the upside in China and to a lesser degree elsewhere, it has been kind of these quick silver moves overnight. You have to figure out if there's something that's going to get knocked loose along there. And it hasn't really happened. You did see another drop in the yen, which has been this kind of wild ride within a range. But I think in general, what we have is a market that confirmed its bull market status over and over again, but is very sensitive to any turns of the dial on just how strong the job market is right now and what it means for the Fed. Yields have lifted off those lows. The two-year yield, even after you got a slightly weaker than expected weekly jobless claims this morning, is kind of back to a couple of week high. It's really nothing on the charts, but it shows you the direction of what we're really paying more attention to and what we would prefer to see, which is, I think, stronger than ever. I think it's a good news is a good news market.

Scott Wapner (2:03)

Yeah. Market is obviously getting thrown around by some geopolitical headlines and other things, but it still shows its remarkable resiliency. I think when you look at, okay, so oil is up this week, obviously, not by a tremendous amount and not by as much as maybe it would have been in the past, which would have been a real warning sign. You talk about jobless claims, 225 today versus 221 Even that's just a snapshot ahead of the big read tomorrow. It shows a labor market that is still strong, right? Rick Santelli gives the number, says the labor market's slowing, but it's not slow. What?

Michael Santoli (2:39)

We saw that with the jolts, right? There's not a big uptick in layoffs at all. What is happening is it's kind of operating at a lower metabolism, so there's less people quitting and there's less hiring going on. But it's kind of this, I don't know, maybe unsteady equilibrium that we've gotten to it. And everything you say, Scott. So yeah, yields are up, but from really benign levels. Oil is trying to pop, but was already at like a two year low. And so the absolute level is of no concern to us. It's $70 WTI.

Carl Quintanilla (3:06)

I like Scott's point about the labor market. Year to date, challenger layoffs are up eight tenths of 1%. That's a cumulative challenger layoff.

Michael Santoli (3:15)

And by the way, the challenger numbers, I think, err on the high side. They're all announced layoffs.

Carl Quintanilla (3:20)

Then take claims. Four week averages are lower since June.

Michael Santoli (3:23)

They err on the high side and yet they're benign.

Scott Wapner (3:25)

This is a 25 BIPs number today, at least in claims, correct? I mean, that's how the read should be ahead of tomorrow, as you get more Fed commentary. And you've had a lot of it, obviously, but it was the Fed chair this week who really sort of put everybody on notice, like, look, it's gonna be smaller than maybe the market had been expecting. There's just no reason they would suggest, Carl, to go 50 basis points. And the news that's come out for most of the week wouldn't suggest it either.