SOTS 2nd Hour: Consumer Strength, “Insane” AI Chip Demand and Campbell’s Soup Meets Hoops 10/17/24

Sara Eisen (0:07)

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. Take a look at stocks here in the Early Action. We're a bit higher across the board. SMB is up a third of 1%.

Nasdaq's up four-tenths of a percent, so we've got tech back in the lead today. And treasuries, the trend has been higher treasury yields, and we've really seen that post the last Fed meeting when the Fed cut 50 basis points. Looks like it continues again, just below 4.1 on the 10-year, on the 2-year, just below that 4%. So we haven't really broken out of the range, but we are seeing firmer yields again after better numbers, especially on retail sales. 30 minutes here into the trading session. Here are some movers we're watching this hour. Shares of Taiwan Semiconductor rallying. The world's largest contracts chipmaker easily beating earnings estimates. Guidance also topping expectations. We're going to go deeper into the semis this hour. Shares of Elevens Health, though, getting crushed. The worst performer in the S&P right now down almost 14%. The insurer cutting its profit forecast in what it calls quote unprecedented challenges in the Medicaid business. And then Uber and Expedia are both on the move. Reports that Uber has explored a possible bid for Expedia in what would be by far Uber's biggest acquisition ever. More on that to come as well.

Carl Quintanilla (1:25)

Very busy day for EcoData. Let's get some more with Rick Santelli crossing the tape.

Rick Santelli (1:32)

Yes, Carl, indeed. We're looking at business inventories for August, the Q3 number. If it builds, of course, we may add a bit to GDP. Although I will point out that we get our first look at third quarter GDP on Wednesday, October 30th. For Halloween, up three-tenths of a percent. As expected in Rearview Mirror, up four-tenths becomes up three-tenths. All you Fibonacci guys out there, that means five out of eight readings in business inventories this year have been up three-tenths. Retail sales, yes, Sara, rates are up today. Retail sales was strong, but there's a battle going on, the seasonality battle, whether it was the jobs report or retail sales. If you look at all three, they were negative. Retail sales non-ceasily adjusted was down 7.5 percent. Many economists are trying to debate how to interpret that number and to interpret National Association of Home Builders Market Index. For that, we go to Diana Olick. Diana?

Diana Olick (2:31)

Well, Rick, builder sentiment in the market for single-family homes rose two points in October to 43 on the National Association of Home Builders Index. Anything below 50 is considered negative, but this is the second straight month of gains, though despite the builder citing affordability conditions. That's because mortgage rates have moved higher in the last two months. But the builders say they are feeling more optimistic about the market next year expecting rates to lower, though they are forecasting uneven declines, they said. Now, if the index is three components, current sales conditions rose two points to 47 Sales expectations in the next six months increased four points to 57 That's the only one in the positive territory, and buyer traffic rose two points, so still only at 29 Regionally, sentiment was strongest in the Northeast at 51, every other region came in at 41 Finally, the share of builders cutting prices held steady at 32 percent in October, while the average price reduction moved back to the long-term trend of 6 percent after falling to 5 percent in September. Sara?

Sara Eisen (3:33)

Okay. Good to see a little bit better confidence though. Diana, thank you very much. Diana Olek. Well, we've just heard from the ECB President Christine Lagarde. That decision, they cut interest rates as expected. She does a good job of not really hinting or really pointing the market in any direction about whether they're going to cut necessarily at the next meeting. Here's what ECB President just said about the outlook for the economy though in Europe.

Christine Lagarde (3:59)

The risks to economic growth remain tilted to the downside. Lower confidence could prevent consumption and investment from recovering as fast as expected. This could be amplified by sources of geopolitical risk such as Russia's unjustified war against Ukraine and the tragic conflict in the Middle East which could also disrupt energy supplies and global trade.

Sara Eisen (4:27)

She also said that Europe is in a disinflationary process which continues and the euro is weaker so market expectations that they'll get continue to cut rates. On the other side of that trade, the strong dollar, better data and I think we should dig into retail sales a little bit because the value, the headline, unadjusted for inflation, remember, so it does include a little bit of the price increases though, increased 0.4% on the month and that is a step up in retail sales from the 0.1% gain that we saw back in August. If you take out, strip out some stuff, right, the more volatile stuff, autos and gas stations or then you get 0.7%. The control group, which is really important because it feeds into GDP, that 0.7%, it was a surge in the strongest in three months. So you know that Atlanta Fed GDP tracker that we look at all the time that gets updated with all the inputs, that should go higher off the back of retail sales. The last reading was what, 3.3?