SOTS 2nd Hour: Netflix Earnings, A CVS C-Suite Shake-up & Bullish Signs For Apple In China 10/18/24

Sara Eisen (0:07)

Good Friday morning, and welcome to another hour of Squawk on the Street. I'm Sara Eisen with Carl Quintanilla. We are live for you, as always, from Post 9 of the New York Stock Exchange. David's on assignment. Take a look at stocks. We've got the S&P up two-tenths of 1%. Communication services, best performing sector. Netflix is surging. It's up 9.7%.

But also the media names, Paramount's up, Meta, Alphabet, Match, News Corp. You've got the S&P now tracking for a six-week in a row of gains, up more than six-tenths of a percent now, week to date, Nasdaq up almost a full percent. And it is leading right now. The Dow is a little bit weaker. Energy, financials, consumer staples, and industrials are your weaker sectors right now, weighing on the Dow. We're 30 minutes here into the trading session. Here are some movers we're watching. C-suite changes at CVS Health this morning. The company naming longtime executive David Joiner as its new CEO, effective immediately, issuing disappointing earnings guidance as well. More on CVS and what's going on there ahead on the show. Procter and Gamble shares are lower. Earnings beat estimates, but weaker demand in China hurt overall sales. Then American express is falling after mixed results. We're stock right now in the Dow. Revenue coming in just shy of estimates, but total card member spending did increase 6 percent in the quarter. The company also raised guidance. Then keeping an eye on Apple too, some fresh headlines here on China iPhone sales. We're going to break down for you later this hour, but Apple is up a little more than one and a half percent. It's really Apple, Netflix and NVIDIA, as well as a little bit of Meta powering the NASDAQ right now. We got some China news overnight. Just wanted to hit, Carl, because we've been so obsessed with China lately. Is it or is it not recovering? Will it or will it not hit the 5 percent growth target? So, mixed bag, China third quarter GDP, 4.6 percent, that was on the weaker side of things. But retail sales were okay for September. They grew 3.2 percent, and that was a step up. From the 2.1 percent or so that we had in the month of August, that's some signs that the subsidies that chinese authorities have been giving for things like auto sales for trade-ins have been working. We saw that in the number. Then industrial production up 5.4 percent. It was enough to get a rally out of China. It also came at the same time where we got more measures out of China. Every day there's measures to boost capital markets. So this one was focused on the stock market in particular. And the People's Bank of China, the Central Bank, their governor, said that the two main challenges that need policy support are the stock market and the real estate market. And there's more evidence that they're doing stuff to try to boost that. Is it just going to paper over some of the bigger structural problems and be sort of a short-term band-aid? We'll see about that. That's what the market's trying to figure out.

Carl Quintanilla (2:52)

JP Morgan, no doubt today. China's slowdown no longer has a material impact on US growth, as the US is less reliant on China for trade, while US businesses continue to reassess investment in China. They say it's the rest of the world that's more reliant on China right now, not us.

Sara Eisen (3:08)

And we've seen that in our resilience in our economy, and they haven't really even exported the deflation that they've been having and the weakening growth. We don't have a huge trading relationship with China and a huge interconnected economy, although it's enough that decoupling would be disastrous.

By the way, on China, the IMF Managing Director kicks off the World Bank IMF Meetings next week, and she did make a point in an interview of talking about China and lecturing about what they need to do. She said China's at the fork in the road. If they continue with their current model, which is export-led growth, then it would be in trouble. Why? Because the chinese economy has grown to a point where China's exports are no more a minor factor in global trade. She says they need to stimulate the consumer part of their economy, echoing what we've heard before from other major economists, like Treasury Secretary Janet Yellen. Will they do so? That remains one of the bigger questions that investors have. So you're right, it's a market story, now more than an economic spillover story, at least to the United states, but globally, much more so in places like Germany.