SOTS 2nd Hour: Elon Musk’s Attorney, Street Reacts to Alphabet Earnings, Hershey CEO on Results 2/5/26

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Sara Eisen (1:00)

Good Thursday morning. Welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber. We are live as always from Post 9 of the New York Stock Exchange. Coming up on today's show, Treasury Secretary Scott Besson is back on Capitol Hill after fiery exchanges yesterday with the House of Representatives. Today, he's testifying before the Senate Banking Committee. We'll take you there live for Q&A. Plus, Alphabet is pulling back this morning despite topping estimates as the volatility and tech builds. We'll talk about whether it's wise to buy the dip, and we'll look at what's going on with Bitcoin as prices spiral below $70,000, lowest level now since 2024 But guys, we got a lot of data on the jobs front as we await the Joltz report which was delayed from the government shutdown. A few notable data points that show you there's something going on in the jobs market which is a little bit weaker, and they all tell that story. Let's start with Challenger. So this is Challenger, Gray and Crispus.

They're an employment firm and they track layoffs, and it was a high number in January. So it wasn't just a figment of your imagination that we've been hearing from a lot of companies that have been laying off workers. In fact, the number was the highest to start a year since 2009 in terms of layoffs, 108,435 layoffs announced in January. That was a really big increase, 117% increase from January of last year. In terms of what was said in that report, high number of job cuts in the first quarter, yes, but this is a high total for January, according to Challenger. It means most of these plans were set at the end of 2025, signalling employers are less than optimistic about the outlook in 2026 So that's not a great sign to start the year. Claims also kind of backed it up. We get the initial jobless claims every Thursday, and well, that's been a very sort of benign number showing not high layoffs. We did see a tick up. Highest level now since December 2025 So we got the highest number of claims of the year, higher than consensus, 231,000 versus the 209,000 prior. Expectations were around 212 So it's not alarming levels of layoffs yet, but we watch the trend, right? And when it goes up, it signals that more Americans are filing for unemployment claims. Carl, how many times have we talked about all the companies that have announced layoffs from Amazon to UPS? And UPS had maybe a bigger skew in some of these reports, but I'm not sure that this even necessarily impacts the January jobs number that we will get next week. But, there's something going on to start the year, and now it's consistent and confirmed in a number of reports. ADP claims Challenger, the Reveilleo numbers also out this morning, which also showed weakness.

Carl Quintanilla (3:41)

That's a decline of 133K.

That'd be the biggest drop in five years on Reveilleo. We'll see what Wednesday brings. Interestingly, within Challenger, the reasons that are being given for the layoffs, only a slight, only a small slice of it is AI. It's mostly about economic conditions, restructuring, closing, loss of contract. Renmac did a nice dive into that today. So it's not like they're saying, this is all about technology.

Sara Eisen (4:08)

Yeah, I mean, they did put a nod to AI, but basically said it's not necessarily, it doesn't seem like it's swaying the numbers and we're still sort of monitoring what the effect is of that. But, you know, it's hard to know, because companies aren't going to say, we're laying off workers because we're using more AI. I mean, how many times have we talked to companies and they say, oh no, it lets our employees do more with less and they're more empowered with tools. So it's out there, the sort of AI story, no question about it. But yeah, there were plenty of other reasons. Leisure and hospitality was one of the sectors, for instance. I don't see that as like the most AI using sector.