SOTS 2nd Hour: Alphabet’s Revenue Miss, Musk’s Role in Government, Live: Shell CEO 02/05/25

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Carl Quintanilla (0:44)

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.

Sara Eisen (0:59)

Good Wednesday morning. Welcome to another hour of Squawk on the Street. I'm Sara Eisen with Carl Quintanilla, David Faber, live as always from Post 9 of the New York Stock Exchange. Stocks are under a little bit of pressure here. You do have some sectors that are green, like healthcare, catch up, financials, utilities, technology, real estate, but overall index down. Communication services at the bottom of the list, that's because of the sell-off in Alphabet, which right now is down about 8%.

Match Group also taking it hard. Some of the media names are a little bit weaker, so it's kind of a mixed bag, earnings front and center. Take a look at Treasuries. We have had some data, ADP private sector will go over that, but there's continuing to be a bid here in bonds, the 10-year yield now at 4.42. We were at 4.5 yesterday, so moving south, the two-year yield just below 4.2. We are 30 minutes here into the trading session. Here's some movers we're watching. Alphabet and Apple weighing on the markets for different reasons. Reports that China may be targeting Apple's App Store practices. That's hurting Apple. And Alphabet down on fears about its capex guidance, how much it's spending. More on those stock movers coming up. We're also keeping our close eye on Semi's. AMD's data center revenue missing estimates. Qualcomm and Arm reporting after the bell later, but NVIDIA is higher and so is Broadcom. Mattel shares are soaring after beating estimates. The Toymaker saying it expects Barbie's performance to improve this year. Big reaction there, up 17%.

Carl Quintanilla (2:24)

Got some data today. A little bit more headed our way right now. Let's get to Rick Santelli. Hi again, Rick.

Rick Santelli (2:30)

Hi, Carl and Dee. These are the second set of service PMIs. These are from ISM and they're not final reads. They are the January read. Expecting the headline number on the service index of 54 comes in light. 52.8 lighted since Nova of 24 Last month, a subtle revision on its final read from 54.1 to 54 even. Now let's look at new orders. 51.3, much lower than expected, sequentially lower than slightly revised 54.4. That would be the weakest level since June of 24 If we look at the service employment, a very important number. We had ADP today. It was positive with a positive revision. Friday is the big job, job, jobs report. Comes in at 52.3. It is sequentially higher than our last look, which was 51.3. 52.3, well, 52.3 would be the best read since November of 24 And finally, finally, if we look at the prices paid, and this, of course, we have to look at it backwards, we don't want this one going up, but nonetheless, it is sequentially lower, 60.4.

Sequentially lower, much lower than the 65-ish we were sort of looking for. How does that fit in? Well, 64.4 was our last look. If we look at the NOV number, it was 58.5. You could see how it slips in, moving in the right direction. These numbers are pushing yields to fresh lows, fresh lows. Haven't seen these on a closing basis in long maturities since mid-December. Sara, back to you.

Sara Eisen (4:04)

Okay, Rick, thank you very much. I'll just add to the data dump today, the ADP private sector jobs report, which came out, again, not very correlated lately to the government jobs report that we're going to get on Friday, but worth mentioning because I think it shows still we're having a healthy spot in terms of jobs. So total private payroll is up 183,000. That was better than expected. And if you look at the breakdown, it's not hard to see where those jobs are coming from. They're coming from the services part of the economy. So as Rick just mentioned, services number coming in a little bit light, bonds reacting to that, but still in expansion mode compared to the manufacturing portion of the economy. So that, you know, overall, there's the breakdown. It shows you where the jobs are and not. Manufacturing subtracts and some of the services parts of the economy still like leisure, hospitality do well. Also, you know, pretty solid wage growth as well. They break down how much people get in terms of wage increase. If you stay in your job, if you change your job, still pretty solid numbers there. So let's see what Friday shows. You know, the market has been a little bit expecting some moderation and got job growth. We'll see what that non-farm payrolls look like on Friday. And then the only other economic data point to mention today, just because it's so top of mind, we got the trade deficit for December. So that final monthly figure, and it showed a much wider trade deficit, 98.4 billion. That was the biggest we have seen in terms of the negative number since March 2022