SOTS 2nd Hour: Big Banks Sue The Fed, American Air Grounds Flights, Live: Fmr. Nissan CEO Carlos Ghosn 12/24/24

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Sara Eisen (0:58)

Good Tuesday morning, happy holidays. Welcome to another hour of Squawk on the Street. I'm Sara Eisen with Scott Wapner live at Post 9 of the New York Stock Exchange. Carl and David have the morning off. Stocks are rallying. The S&P 500 is up almost a half a percent right now. NASDAQ is leading again up almost three quarters of one percent, adding to gains month to date up three and a half percent, year to date up 32.5 percent, besting the S&P is almost 26 percent rise. What's working today? Consumer discretionary. That's largely Tesla, which is up another four and a quarter percent. Amazon's in there too. Technology, which has been big winner for the month of December for the year. Palantir surging another four and a half percent, the S&P's best performer. So winners adding to gains, which is not always what we see toward the end of the year. Sometimes we see the losers playing catch up or taking profit in some of the big winners. But nope, not today. Treasuries selling off again with yields elevated. This is something we've been watching very carefully. The market has thrown a little bit of a fit over higher yields lately. Today it looks like it is tolerating 10-year yield 4.625 percent. Not much in the way of data for the rest of the week. Got durable goods yesterday and some of the housing numbers. But it'll gear up in the coming weeks. 30 minutes here into the trading session. Here are some big movers we're watching, starting with American Airlines because it grounded all of its flights earlier this morning for about an hour due to a technical issue. We've got more details on what happened later this hour. The approval of Nippon Steel's deal to buy US. Steel now in President Biden's hands after our CFIUS committee from the Treasury sent its long-awaited report to the White House failing to reach a consensus on whether to reject or approve the deal on national security grounds. President Biden has 15 days to make a final decision. And the CFPB is going after Rocket Homes, one of the largest mortgage lenders in the US., accusing the company of an illegal kickback scheme to steer mortgage applications back to Rocket. This comes a day after the group also sued Walmart. First up though, let's start on the big banks. Financials are higher. This is a story that we first broke here on CNBC and is now official. The big banks are suing the Federal Reserve over the stress tests. They're doing this via the BPI, the Bank Policy Institute, US. Chamber of Commerce, and a number of other business groups representing big banks like JPMorgan, Goldman Sachs, Citigroup and others.

They are questioning the legality of the Federal Reserve's stress tests. These are the tests that they have to go through to prove that they can be resilient in very tough economic scenarios. It came out of Dodd-Frank post-financial crisis. And the big banks have had problems for years with what they call the opacity, lack of transparency, secretive process and methodology that the Fed uses to conduct the stress tests. They've objected to that. And the fact, they say that the Fed did not require public comment, for instance, before implementing the stress test, something they have said is not legal. Now, interestingly, the Federal Reserve was onto this yesterday, they put out a statement saying that they do intend to make changes to the stress test to increase transparency and open for public comment. However, for the banks, I'm told too little, too late. Also, the banks want to ensure that these changes actually go through, so they are filing suit.

The 6th district to try to ensure that the process of the stress test changes. It's unusual for many reasons. One, it's the banks suing their own regulator. Usually, these things get discussed. They get they get hammered out between the regulators who have an open dialogue with the banks, but it was just so many years of frustration and issues on this. And it was running up against the statute of limitations. And so they made their move and they're suing.