SOTS 2nd Hour: Apple’s Surprise Sales, Amazon’s Cloud Dreams, and Boeing’s Light At The End Of The Tunnel 11/1/24

Carl Quintanilla (0:00)

Good Friday morning, welcome to another hour of Squawk on the Street. I'm Carl Quintanilla with Leslie Picker here at Post 9 of the New York Stock Exchange. Sarah and David both have the morning off. Coming off the worst day for the NASDAQ since September, got some opening gains. Dow's up 300, S&P up about 43 Amazon definitely helping out as we wrap up this busy week of MAG-7 earnings. The jobs number, a little squirrely, a lot of noise. 12K is a miss from the 100 estimate. We'll talk about why in a bit.

Leslie Picker (0:27)

Yeah, feels like market is more focused on the idiosyncratic gains here. We're 30 minutes into the trading session. Here are three big movers. We are watching Apple and Amazon, the latest big tech names to report. Headed in opposite directions though, despite top and bottom line beats from both names. You've got Amazon up nearly 7 percent, Apple down about a percent there. We're on those moves in just a moment. Chevron and Exxon both in the green after their report card. Chevron announcing huge cost cuts as much as $2 to $3 billion worth by the end of 2026, while Exxon increased their dividend. And watch Intel, shares still cut in half on the year, but gaining this morning after better than feared numbers. Those shares up more than 6 percent.

Carl Quintanilla (1:13)

Got some economic data crossing the tape. Busy morning for that, of course. Let's get back to Rick Santelli. Hey Rick.

Rick Santelli (1:19)

Absolutely we do. Construction spending for the month of September, expected to be unchanged, comes in a bit better at up 1 10th. And last month's minus sign at minus 1 10th becomes positive 1 10th. So that's pretty good. Reversing the stretch of negative numbers since June. If we look at the ISM manufacturing complex, well the headline number 46.5 is definitely a miss. Sequentially lower than the 47.2. 46.5, well that is the weakest going back to June of last year. June of last year when it was 46.4. If we look at prices paid, this is the number we want to see going down, but it remains above 50 54.8, well above the estimate, which was exactly at 50 Last month it was 48.3. 54.8 takes you to the highest levels since May of this year. But last month, last month at 48.3 was the weakest of the year. So a big reversal on prices paid on new orders, 47.1, that's a whole point above the 46.1.

In our last look, that is good news, but it remains in contraction territory under 50 And finally, we just had the employment report. This number is expected to be at 45 on the employment index, comes in light at 44.4. That's sequentially following 43.9. And I would like to point out, even though all yields are down for the day, except for a 30 year bond, 10s are almost unchanged. Short maturities are down a handful, but on the week, everything is up on the week, and I consider that important considering how big of a move we've had in yields upward since the September jobs report, which really does underscore what you pointed out, Carl. There's a lot of nuance to today's jobs number. Leslie, back to you.

Leslie Picker (3:06)

Yes, there certainly has been a big move in the last few weeks in the treasury complex. Rick, thank you. At least 10 firms raising their price targets on Amazon this morning and shares, well, they're very high, much higher this morning, up more than 6.5% or Kate Rooney has been tracking the action for us. Hey, Kate.

Kate Rooney (3:26)

Hey, Leslie, good morning. Yeah, so Amazon really delivered exactly what investors wanted to see for the quarter, better profitability while still investing in growth. The Street was really focused on margin expansion and better operating profits, especially in that retail business, 5.9% margins expanding from 5.6. That segment had contracted in Q2 and then overall margins coming in at 11%. That beat expectations. Operating income grew 129% from a year ago, really highlighting Amazon's cost cutting efforts and that focus on efficiency paying off. The ad business, another bright spot. It's been emerging as another high margin growth area for Amazon and then the all important cloud business, Amazon Web Services, still has 38% margins growing 19% year over year, which was right in line with what the Street was looking for. Plus a lot of bullish commentary on the call when it came to artificial intelligence within AWS, despite all of that spending around it. Andy Jassy, the CEO, saying AI is a multi-billion dollar run rate business growing triple digit percentages year over year.