SOTS 2nd Hour: Earnings Season Heats Up, and A Deep-Dive With Bank of America's Chairman & CEO 10/15/24

Sara Eisen (0:07)

Good Tuesday 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, mixed picture, because the Dow is down 293 points, but a big part of that story is the 10% drop in United Healthcare weighing on the Dow. The S&P 500 is actually little changed. If you look, just going inside the Dow, UNH dragging 380 points off the Dow, Caterpillar another 30, and then Chevron 18

So, some of the weaker spots there, and that's why you see a mixed picture. In the S&P, what's leading? Real estate, financials, having another good day after better bank earnings, consumer staples, discretionary, and technology all higher. NASDAQ is up about a little more than a 10th of a percent. Energy, healthcare, and industrials are the losing sectors right now. You've got some strength in Apple, for instance, on the tech side. Tesla's higher today. That's all helping the NASDAQ. Take a look at Treasuries. We reopened after yesterday's closing for Columbus Day holiday, the 10-year yield, a little bit lower, under 4.1 percent. Remember, we've been worried about higher yields creeping higher on the back of better data and less expectations of Fed cutting. The 2-year yield a little firmer at 3.9. And then energy as well. In focus, of course, as always with geopolitics, tapping a sharp move lower, down 4.5 percent. On WTI Crude, Brent Crude, down 4 percent. We'll talk about all of that. 30 minutes here into this training session. Here are 3 big movers we're watching. A number of health care names on the move on the back of earnings. So Dow members, United Health, as I mentioned, and also J&J among them. United Health, the worst stock in the Dow and the S&P 500 right now, while Walgreens is the biggest gainer on the S&P. And then CoverGirl parent Cody under pressure after a disappointing forecast there. And more results out of the financials. Goldman Sachs, Citi, Charles Schwab, and Bank of America all reporting this morning. We're going to break down the numbers, the stock reactions. We're also going to talk to Bank of America Chairman and CEO Brian Moynihan a little bit later this hour. As far as what's top of mind though, in the macro setup today, we did get a Fed speaker that I always pay attention to, which is Fed Governor Waller because he tends to be sort of one of the leading thinkers on the Fed. And it particularly surprised me that he backed the double jumbo cut that we got at the last meeting. So here's what Waller is saying right now. And it's a little more Waller to me than a double cut. He says, while we do not want to overreact to this data or look through it, I view the totality of the data as saying monetary policy should proceed with more caution on the pace of rate cuts than was needed at the September meeting. What is this data he's referring to? Well, it's good data. It's the data we've gotten since the last Fed meeting, which on balance has been better. Upward revisions to growth, more job openings, better wage growth, lower unemployment rate. The chart today that I decided to highlight, guys, is the Citigroup Economic Surprise Index. This shows where the data is coming in relative to where the economist expected it to come in. You can see when we're below that zero line, that was when we had the growth scare and when the data was getting worse, and the Fed was gearing up to cut rates.

But lately, it's really been on the upswing, and it's climbed. And we'll watch it, because there's a little bit of a tick down in New York manufacturing today. Empire activity was weak, but still, the data, Carl, has looked better. And now, Waller, I would say he didn't use the pause word like Bostic did, and saying we could pause or we need patience or anything like that, but does not sound overly exuberant when it comes to more rate cuts. So definitely don't expect the 50 again. We'll see if we get a 25 at each meeting.

Carl Quintanilla (3:52)

We mentioned some of the B of A numbers yesterday, looking at things like mentions of weak demand on earnings calls, rail car loads, the so-called corporate misery index, all of those things getting better today. I don't know if you saw the fund manager survey this morning or if you built anything, but largest jump in investor sentiment since June of 2020

Sara Eisen (4:14)

I know. Things are looking up. It wasn't supposed to be this way just after one little rate cut in this period of the cycle. What I pulled out was the spending number from Bank of America because we get a retail sales report next week.