SOTS 2nd Hour: Broadcom Surges, Bank Regulators in Crosshairs, Crypto Hesitancy 12/13/24

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Sara Eisen (0:59)

Good Friday morning. Welcome to another hour of Squawk on the Street. I'm Sara Eisen with Carl Quintanilla live at Post 9 at the New York Stock Exchange. David Faber has the morning off. Take a look at stocks. Kind of a mixed picture for the week. The S&P is higher this morning up a third of 1 percent, but it's all just technology and consumer discretionary. Those are the only sectors that are higher. On the week as a whole, we're down a little bit on the S&P, a third of a percent, but the NASDAQ is up almost a full percent. So this has been a week of out performance from Big Cap Tech. Today, it's Broadcom leading the charge, which we'll talk about in a moment, lifting some of the semiconductors. Micron is up today. Palantir is doing well. NVIDIA higher. That's helping the overall tape. Of course, these stocks are bigger than most. Tesla is also having another good day up a few percent, up another 1.6 percent. Banner week. Take a look at Treasuries. This was a week where we got a little bit firmer CPI and PPI, wholesale and consumer inflation ahead of the Fed. Next week, which is widely expected to cut interest rates, 10-year note yield, a little elevated, 4.36 percent. Now, the narrative is cut and pause. Maybe that's what the market is telling you now with the sell-off in Treasuries. We're 30 minutes here into the trading session. Here are three big movers we're watching. Mention Broadcom. Look at shares rallying after the company posted better than expected earnings, and said it is seeing strong demand as it develops custom AI chips. More on the street reaction, what to do with that stock in a bit.

RH also posting big gains despite missing earnings estimates. The company raising its Q4 guidance says it expects revenue growth between 18 and 20 percent, which is well above expectations. And we're also keeping our close eye on the latest IPO to hit the market, Service Titan, dropping about 6 percent, a little less than that, a day after the stock surged 40 percent in its debut, was thought to be a very good sign overall for the IPO market into next year. But Carl, the story this week continues to be one of optimism. Around the stock market, around the economy, very appropriate that the president-elect visited the New York Stock Exchange this week. This chart stood out to me most from Goldman Sachs, the inflows into US equity ETFs and mutual funds, and look at the tick-up that we've seen there. I mean, that is the highest level, one of the highest levels we've seen ever. And it just speaks to the enthusiasm we're seeing for the US equity market and for the US economy relative to the rest of the world and also just relative to where we thought we would be at this point.

Carl Quintanilla (3:23)

Yeah, I mean, the only pushback is that breath has been negative for nine straight days. Only a third of the S&P is beating the index and the 10-year yield has been higher every day this week.

Sara Eisen (3:31)

So there are warning signs, right? It might not go straight up, but I think overall the optimism is there. The sentiment is high and the flows are into US stocks, whether that's in MegaCap Tech, which has been taking the lead this week, or Small Caps, which has been the outperformer in the last few weeks, the broadening effect. We don't know where that's going to end up, but we do know that there's a lot of optimism. And I mentioned the Small Business Optimism Index that it spiked this week. Just wanted to pull apart some of the components that we didn't get to, that I think shows the mood change in America, particularly among small business. So they looked at plans to add employment. And again, big tick up from the previous month. Plans for capital outlays are spending a lot higher. Look at the expect economy to improve at 36% was the highest that they have seen in years from small business and a huge surge after the election. So just highlighting some of what small business is feeling, real sales higher, a big increase. Now a good time to expand. These numbers were negative, like as recently as a month ago. So yes, it is tinged by politics, sure, and how they feel about the current election and the climate. But also just the economic outlook, I think, is certainly raised. You heard Bill Ackman on this show yesterday. He was here for all the Trump fanfare, has been a big supporter. Listen to what he said about the kind of environment we're in right now.