Retail Sales Miss, Markets' Record Run, Tech Rally: Apple vs. Microsoft 6/18/24

Carl Quintanilla (0:00)

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 Tuesday 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 Faber have the morning off.

30 record highs for the S&P so far this year. Future's pretty steady as retail sales come in soft with some negative revisions. 10 year drops to 424 Markets, of course, are closed tomorrow for Juneteenth holiday. Our recap begins with the markets record run. The S&P and the Nasdaq aiming to set some fresh all time highs.

Sara Eisen (0:34)

On that note, Apple and Microsoft helping to fuel the tech rally as they continue to battle for the title of most valuable company in the US.

And the consumers also in focus. Retail sales for May coming in below forecast, including a surprise drop when you strip out autos. We'll discuss it.

Carl Quintanilla (0:50)

Let's begin with the markets and this morning's a retail sales data. Interesting ex-auto down to 10th and some of these revisions took us lower.

I think AP frames it as consumers barely spent during the month.

Sara Eisen (1:01)

We knew the consumer was under pressure and we got confirmation in today's retail sales report. Interestingly, there was some more optimism going into today because of the dip that we had in April. And it turns out April got revised lower to a negative 0.2 from 0% growth in retail sales. The headline number today, 0.1% retail sales. So it was disappointing. The key control series, which goes into GDP, takes out autos and gas and building materials and food services. It was 0.4% month over month, which also came in a bit light.

So Mike, I'm not sure it necessarily changes the narrative, but it fuels the idea that it's been a mixed picture for consumer spending. If you go beneath the headline, there was still strength in places like online sales, which have been performing really well.

Restaurant sales as well. Food services have been doing okay. Still got growth in grocery year over year, but month over month, it was declining. And then weak spots like furniture, for instance, which we had confirmation from Lazy Boy, which we'll talk about, but those areas of peril, not doing a whole lot in terms of growth. It shows you where the consumer's spending.

Michael Santoli (2:10)

Yeah, we knew that goods spending was not really where the strength of the economy was. And I don't know that it really comes as a surprise to the broader markets, because there has been so much of enhanced attention on the idea that the economy is wobbling a little bit. Not that it's really falling apart, but that this deceleration we're seeing is more important and probably feeds into further disinflation, which in theory should mean that the Fed should come around and maybe make a couple of cuts more likely. Probably why, as we discussed yesterday, the cosmetically hawkish tone of the results of last week's Fed meeting did not really take hold and get reflected in market pricing. So here we are with the broader market still making new highs, but pleasing nobody in the way that it's doing it, mostly because it remains these sort of high-momentum handful of names that really are getting stretched and looking overheated right now. The Nasdaq 100 in particular had this real acceleration hire yesterday on zero news. So it, I think, is not really trading off the macro numbers, but the macro numbers have to come in and provide support for the idea that the rest of the market can hang in there and that we can get interest rates to a level where it seems like it more appropriate for the state of spending and hiring.

Sara Eisen (3:25)

The breath is really stark. And I know we've been talking about this, but there are just so many ways you can look at this.

Everybody's talking about the fact that the number of S&P 500 companies that are trading above their 200 day moving average, which is key technical strong level, it's the lowest of the year. And if you look at some of the divergences, you can look at small caps versus the S&P 500, which is large caps. The small caps are getting hurt. The bigger caps, and I know it's a lot to do with big tech and just how much concentration there is, doing much better. If you look at value versus growth, you see it too, because the growth stocks are the big cap tech stocks.

Value stocks are getting hurt. I mean, this really is a tale of two markets.