SOTS 2nd Hour: A Meta Disappointment, (Micro)Soft Results and Comcast Spins-off? 10/31/24

Scott Wapner (0:00)

Good Thursday morning. Welcome to another hour of Squawk on the Street. I'm Scott Wapner alongside Leslie Picker and Mike Santoli. We are live at Post 9 from the New York Stock Exchange today. Sarah and David are on assignment. Carl's off this morning. Take a look at markets, which are lower across the board. We do have those earnings from Microsoft and Meta, certainly weighing on the NASDAQ, which is down about 2%. That is the big weight there, but we're in the red all the way across the board, Les, this morning, as we react to, gosh, a ton of earnings.

Leslie Picker (0:28)

A ton of idiosyncratic news today, and we're just 30 minutes into the trading session. Here are some of those big movers we are watching. More results out of Big Tech, Meta and Microsoft, as Scott mentioned, under pressure, we'll break down the latest numbers and guidance in just a moment. Shares of our parent company, Comcast, in the green on earnings and news. It's considering spinning out the cable networks business as a separate company, but the stock is off at session highs, currently up about 3.5%. Much more on this coming up. And Uber in the red, a top and bottom line beat there, but Gross Booking is disappointing this street.

Scott Wapner (1:02)

All right, Mike, last trading day of the month. S&P on pace for its sixth straight positive month would be the longest monthly win streak since August of 2021 Plus NASDAQ hovering near all time highs on pace for gains in October as well. All told, the markets really haven't done all that much this month, but coming in, there was, I think, a lot of fear that what you maybe got away with in September, you were going to pay back in October, and it really hasn't happened.

Michael Santoli (1:26)

It hasn't happened in a comprehensive way, although both those things being tested, actually at the moment, today's week open gets you negative month to date for the S&P 500 by a hair. The NASDAQ obviously is the locus of all the selling because of probably somewhat a combination of elevated expectations for the likes of Meta and just not absolute blowout, beat and raise type quarters from the likes of Microsoft. All that being said, we are just, I think we've been kind of digesting and correcting below the surface. Breath has been pretty lousy for a couple of weeks, but the index has hung in there.

Bonneel depressing the, you know, pressing the matter here a little bit. 432 on the 10s. PCE was okay, but CORE is a little warm. This general sense out there that the economy is really strong and maybe re-accelerating relative to expectations at least, and inflation is not really descending at a rapid rate means a sort of higher than we thought before, for maybe a little longer than we thought before from the Fed, and that's, I think, just filtering in. You want to throw in some election hesitation along with that, fine, because, I mean, who knows how much that filters into things like expectations of expansionary policies next year. So, you know, it's a test. The S&P back to levels we first got to a month ago, we're still at 20% for the year. The fundamentals are still all lining up pretty positively, but I do think you get a little bit of a wobble at month end.

Leslie Picker (2:49)

How does that factor into a potential unwind regardless of what we see next week if people are trading in a certain way? Can we expect to see a little bit more volatility in the weeks to come?

Michael Santoli (3:01)

I mean, it wouldn't be weird to see it. I do think you are seeing a little bit of a tension build up right now. What's interesting at the end of the month, I mean, add this chart, if you look at the aggregate bond ETF relative to the S&P in October, you know, stocks have actually way outperformed bonds. In theory, that should create a bid into reallocation into fixed income, at least on a marginal basis, and that's not really happening. So, you know, I think we're at a point in yields where you have to wonder if the story is changing beyond just the expectations that the economy is going to be good.

Leslie Picker (3:32)

Yeah, I guess unless the deficit becomes a greater issue, in which case.

Michael Santoli (3:37)

And you just don't know how much that's on traders' minds. It's definitely to some degree it is.

Leslie Picker (3:41)

Yeah, absolutely. Microsoft and Meta weighing on the S&P and NASDAQ under pressure despite top and bottom line beats from both names. That said, our next guest calls Meta a buy here and just raised his price target to 700 from 600, but lowering his price target on Microsoft to 425 from 475 with a neutral rating there. Gil Luria, DA Davidson Managing Director, joins us now. Welcome Gil. First, if you could just kind of explain your rationale behind those two moves.