SOTS 2nd Hour: Consumer “Election Uncertainty”, Tesla’s Electric Boogaloo and A Deep-Dive With ServiceNow’s CEO 10/24/24

Sara Eisen (0:06)

Good Thursday 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 coming back a little after that tech-led sell-off yesterday. The S&P's up a quarter of 1%.

Consumer discretionary is in the lead. Thank you, tesla, which is up 16.5%, biggest component in that group. But tech is rebounding a little bit. That's why the NASDAQ Comp is up a little more than half a percent. besides tesla, it's NVIDIA, T-Mobile, Meta and Amazon. Treasury yields are stabilizing as well a little after we've seen this recent backup. The 10-year yield, 4.22%. So we are seeing some buying today with yields kind of hanging around these 4.2 levels on the 10-year, Carl.

Carl Quintanilla (0:50)

Got some new home sales data a couple of moments ago on a busy day for Mackerel. Let's get to Rick Santelli. Hey, Rick.

Rick Santelli (0:56)

yes, like all the other data points this morning, a little bit better. We've seen yields moving up, testing yesterday's highs. New home sales for September, better than expected. It's 738,000 seasonally adjusted annualized units. And that, well, it puts it very close to the highest levels just since July, when we were slightly over 750,000. What is interesting here is last month was downgraded from 716,000 to 709,000, which makes it, of course, the weakest level going back to June. Now, what's important here is remember this is September data. Mid-September, we saw the Fed cut 50 We saw a little bit of optimism with rates. It didn't last long. We know that following these data points, rates have gone up. Most likely, new home sales is going to take a bit of a ding next time we look at it, especially considering interest rate movements that are associated with lending on 30-year fixed. For more color on new home sales, let's go to Diana Olick. Diana?

Diana Olick (1:57)

Well, Rick, I want to dig deeper into the mortgage numbers that you were just alluding to.

The 30-year fixed started September at 6.4% and then dropped really sharply to 6.11% in the first couple of weeks of the month. But then in the anticipation of that Fed cut, they started to move higher. So you have this kind of mixed months of rates coming down at the beginning and expectation for buyers that they're going to come down even further and then them shooting back the other direction unexpectedly. Now remember, this number on new home sales is based on signed contracts. So it's people out shopping during the month of September and their expectation again is that they're going to be looking at lower rates. That may be part of the bump. On existing homes, we're also seeing reports from Redfin that they saw pending home sales coming up in September as well. Now I want to note price. The price was basically flat, up just 0.05% to $426,300. That's a median price of a new home sold in September. The builders though, they've said Pulte reported this week their margins were difficult, they said, because they had to offer more incentives. So those are the incentives that are cutting in to builder margins. But again, keeping that cost down, home's more affordable to get more buyers in the door. Sara?

Sara Eisen (3:09)

Okay, Diana, thank you very much for the deep dive on housing. As mentioned, stocks are stabilizing a little bit here after that big drop, more than 1.5% for the NASDAQ field by worries about higher rates, maybe election angst, some earnings misses or corrections.

jobless claims today, again, come in benign. The four-week moving average of jobless claims is now 238,000 for the week. That was up from the previous average of 236,000. But claims are still low and they're not suggesting any kind of deterioration in the job market or layoffs across the board. It's also, they might have even been lower if we didn't have the hurricane impact. We've had four big hurricanes since August, which is maybe distorted. But if you're looking for a signal of pain in the labor market or increasing weakness, you're just not really seeing that in the week-to-week layoff numbers reflected in the initial jobless claims. What are we getting from the beige book? We know this is important. It's the anecdotal data that comes from all the different districts around the Fed. I think maybe it had played a role in the last rate cut, which was 50 basis points because it has been more pessimistic and downbeat than some of the other macro data. What we got from the beige book this time is a lot of election impact, David.