P&G's Earnings Beat, Morgan Stanley and United Slump, Nvidia on the Curbs 10/18/23

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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 Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Sara Eisen, Mike Santoli at Post 9 of the New York Stock Exchange. Cramer and David Faber have the morning off. Futures under some pressure this morning with bond yields still flirting with these cycle highs. Oil near 90, the president in Israel and the market very sensitive to headlines. Plenty of earnings to get to as well. Our road map is going to begin with a big day for corporate results. United with soft guidance. P&G beats higher prices there. Morgan Stanley topping estimates. Netflix and Tesla after the bell.

Sara Eisen (1:09)

Plus China's outlook. Q3 economic growth coming in better than expected. JP Morgan City and Nomura all boosting their forecasts on the data.

And the Nvidia headwinds. Morgan Stanley and Citigroup lowering price targets on the stock after new US restrictions on chip sales to China. Shares down nearly 2% ahead of the open.

Carl Quintanilla (1:27)

Let's get to the markets in this busy morning on the earnings front. We're sort of graduating, Sara, from the big banks, although we got Morgan Stanley today into some of the regionals and obviously some of the more consumer names today as well.

Sara Eisen (1:37)

Yeah, kind of a mixed picture across the board. I think front and center is still this move in bond yields that we've been seeing, especially on the back of yesterday's move higher. I mean, the two-year yield got to 5.2%.

So these are very high levels. And it also makes you wonder with everything going on in the world and with investors so focused, I think, on the geopolitics and figuring out does Iran enter the fray? There's more saber rattling overnight. We see that in the price of oil. Are treasuries acting like a safe haven?

They're not. They were last week a little bit, but they really haven't been. And does that say something about treasuries and the relative safety because we are seeing things like gold and the Swiss franc and the Japanese yen all move up? Or is it just that investors are sort of hoping that this doesn't escalate any further and that we have a more diplomatic solution? I'm not sure. It doesn't look like that from this side.

Mike Santoli (2:27)

There is one school of thought that says, well, you don't know how high yields would be without a safe haven bid, but there's no way to prove or disprove that. The way I would look at it is if you look also through history, when you do have these sort of shocks, geopolitical or otherwise, the bid in treasuries historically is not a particularly durable one. So you get this kind of reflex buying of bonds, yields go down, maybe it's over a couple, three weeks. It's not usually a new trend. That said, whatever is happening, if there is a flow through to markets, it seems like it's on the oil supply front or generally inflationary, reflationary around the world as opposed to the opposite.

But I think the market is also trying to do its best to look through what it can look through.

So it's this really indecisive range. The S&P 500 for the last month has been trapped in. It's about a 5% range, 4200 to 4400 Four times in the last week or so, it's gotten up to the upper end of that range and stalled out exactly at the resistance level. Everyone has been watching, but it's been volatile within that range because the earnings have been on balance OK. The economy is strong. One of the reasons for yields going up seemingly is we're taking recession risk out of the curve. So it's a tough mix to try to figure out the way out of this range.

Sara Eisen (3:44)

We are taking recession. I'm sure you saw Atlanta.

You say to me, Atlanta Fed GDP goes up to 5.4% on the back of the strong retail sales, with the control group also stoning strength.

Carl Quintanilla (3:54)

Yeah, it's been funny to watch the desks chase Atlanta Fed. I know JP Morgan, their estimate for Q3 GDP back in July was 0.5. Then it went to 3.5. Now it's 4.3. So closing the gap with what Atlanta has long been seeing.