SOTS 2nd Hour: Alaska Flies Higher, The Playbook For 2025, and Odds of a Pause or Pivot 12/10/24

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Sara Eisen (1:00)

Good Tuesday morning. Welcome to another hour of Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber, live as always from Post 9 of the New York Stock Exchange. Stocks are mixed. S&P is higher by a tenth of a percent, thanks in part to technology, which is really what's driving the market. That's why the Nasdaq's up a half a percent, and the Dow is down 80 points. It's those three sectors powering the market right now. Communication services on top, thanks to Alphabet, which is up 5 percent. Warner Brothers, T-Mobile, Metta, Charter Fox, all higher right now. And you've got consumer discretionary also up in the market. Thanks to Tesla, 3 percent higher. Some of the cruise lines and the restaurant's doing well. And the technology sector also higher. NVIDIA's back up one and a half percent. Palantir up another 3 percent. That's been a huge mover. But all the other sectors are down. Materials, real estate and utilities at the bottom of the pack today. Take a look at Treasuries. It's kind of a light day for economic data. We'll talk about a few releases, but the big report comes Wednesday tomorrow with CPI. The 10-year little firmer 4.2 percent, 2-year just below 4.1 percent, we'll call it. 30 minutes here into the trading session. Here are three big movers we are watching. Shares of Oracle on pace for their worst day in about a year. Earnings and revenue falling short of estimates and the company's current quarter forecast coming in lighter than expected. More on what to do with that stock, which has been a big winner in just a moment. Toll Brothers also in the red, the home builder beating expectations for orders in the most recent quarter, but guidance for 2025 gross margins, a key sticking point for Wall Street. Then shares of Alaska Airlines flying high on track for their best day, in fact, in more than four years. The carrier raising its outlook, buying back shares, unveiling a plan to boost profit, and the CEO will join us exclusively here at Post9 as the company's investor day kicks off to talk about some of the growth plans. But guys, I mentioned the data today, more evidence of a really good economy, and an economy that does not scream of a Fed rate cut next week. How about small business optimism? Look at that spike we got. Again, it's a survey data. Take it with a grain of salt, take it with a grain of politics after the election. But how about that? Highest level in the early three and a half years. You've got some post-election euphoria in that chart, and if you look across some of the, what they break down, some of the sentiment surveys here, plans to expand the business also grew very fast. Uncertainty factors comes down. It's a good sign because obviously small businesses are a key driver of this economy for hiring. They've been really burdened by high inflation rates lately. So when we get into the animal spirits portion of the commentary right now, which is a real thing, you can point to that small business optimism, which is really just quite nice. The other data point I'll throw at you, which we got this morning, Carly, I know you always pay attention, is productivity. Non-farm productivity growth, unrevised at 2.2 percent. There's the long-term chart of productivity, and it's been a really great story. We're above post-COVID highs. Year-over-year, we're up 2 percent versus the 2.4 percent in the second quarter. It's a good news story, and also for the hawks at the Fed and for the hawks out there, who say the neutral rate or the rate that the economy needs not to expand or to contract is moving higher, they can point to productivity. Because productivity growth, which of course just measures efficiency of workers, how much people can produce per hour is a good story and a good sign for growth. Look at what Chris Rupke said, who I follow. He's a chief economist at Forward Bonds.