Santa Claus Rally, Nygren on Markets and WBD, Holiday Retail Homestretch 12/24/25

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Jim Cramer (0:45)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

Carl Quintanilla (0:53)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Melissa Lee here at Post 9 of the New York Stock Exchange. Cramer and Faber have the morning off. Coming off Tuesday's record close, it's Christmas Eve, of course. Shortened session for stocks. Market closes at 1 Eastern. Bonds an hour later. Plenty to work with, though, if you haven't checked out already. News on Novo, Nike, Tesla, Costco. Jobless claims do come in light. $214K. Our roadmap begins with the state of stocks. Today marks the official start of the so-called Santa Claus rally.

SPEAKER_5 (1:21)

Ho, ho, ho.

Melissa Lee (1:23)

A strong growth, but a weak labor market. We will discuss what is going on with the American economy, what it means for Fed rate cuts and Intel shares, as Carla mentioned, sliding on a report. Nvidia halted testing of Intel's chip manufacturing process. We'll get into a little bit more, but sort of a question mark about that Intel story, the turnaround story.

Carl Quintanilla (1:42)

Meantime this morning, covering the state of stocks, as we said, as we await to see whether Santa does in fact arrive. Hopes for a Santa Claus rally. The tendency for markets to rise in the last trading week of December and the first two trading days of the new year. We haven't really had one in the last couple of years. Generally, it portends good outperformance for the entire following year. But we're certainly going out these last few sessions with the VIX, no longer able, old enough to drive, low volatility, spreads near record lows.

Melissa Lee (2:11)

Yeah. The macro backdrop has been good as we've seen in the data. So far, we also have Marvell did a lot to affirm the AI trade, which has really been having trouble since the fall or so. So with that, the wind at our backs in terms of the AI trade, that really enables a bull narrative to continue to hold on to the hopes for that Santa Claus rally because we will have the biggest component in the markets participating in theory thanks to those reports that we saw earlier this month.

Carl Quintanilla (2:40)

You guys do a great job of establishing the landscape of consensus among strategists, right? They're pretty bullish.

Melissa Lee (2:46)

They're very bullish.

Carl Quintanilla (2:47)

There's some, there's an 8K in there. What's the low end? Maybe B of A at 7,100, something like that?

Melissa Lee (2:52)

Yeah, there's some question marks as to how much Fed is priced in, how much Fed will actually hit the consumer. But if you take a look at next year, we've got fiscal stimulus at the beginning of the year with tax refunds and changes in tax policy really helping corporations. And we have that sort of baton to be passed on to a dovish Fed in the back half of the year when the regime changes. And so the set up for 2026 is fairly bullish from that standpoint. The question is, do we have too much Fed price in? If it is an entirely back half of the year story, that's sort of the question.

How much can the Fed actually develop consensus given sort of divisions in the Fed surrounding rate cuts at this point?

Carl Quintanilla (3:29)

Right. Actually pretty, I would argue, very constructive house view out of Goldman today, looking at not just income growth, but job growth, maybe rebounding to 70K by the summer. Real wage growth, they think, stays positive through 26 Tax cuts, in their words, a major tailwind, to your point. Mostly, obviously, a front half of the year story. Then a lot has been chewed on over GDP yesterday, which kind of implies labor productivity somewhere north of four, which might, Ren Mac today out today saying, maybe unit labor costs actually decline, which would be an amazing sign for inflation.