SOTS 2nd Hour: Prepping For The Fed, Google’s Biggest Acquisition EVER, and Time To Look Overseas? 3/18/25

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Sara Eisen (1:09)

Good Tuesday morning, welcome to Squawk on the Street. I'm Sara Eisen with David Faber and Mike Santoli, live as always from Post 9 of the New York Stock Exchange. Stocks are under pressure. We're looking at a decline right now of more than 1%.

Only sector higher, energy, oil prices, moving on heightened geopolitical risk, the big headline overnight, of course, in Gaza. But you are seeing pressure, even though we did manage to gain yesterday, saw the first back-to-back gain for the S&P 500 in about a month since the last time the S&P was at a record high. The worst hit areas of the market continue to be around technology, like Meta, for instance, down 4%. Alphabet, down 3.5%. We'll talk about the deal. Netflix, down as well. Of course, high anticipation for the Nvidia keynote with that stock under pressure as well. Qualcomm, getting a little bit of a boost, but most of the other chips are under pressure right now. Take a look at Treasuries. Day one of a two-day Fed meeting, and we are seeing yields move south again. The 10-year yield now below 4.3, two-year yield just above 4 percent. We'll hear from Fed Chair Jay Powell tomorrow at the news conference and the decision. No change expected, but what will he say about some of the recent softness in the economy? We're 30 minutes here into the trading session. Here are three big movers we're watching. Big declines in shares of surreptatherapeutics after news that a patient who had undergone gene therapy treatment for Duchenne muscular dystrophy has died. The first known death linked to that treatment. The stock is down sharply. Shares of Tesla rival and Chinese EV giant BYD gaining after unveiling a new technology that it claims can charge electric vehicles almost as quickly as it takes to fill a gas tank. The details later this hour. And then Google Paranalfabet has agreed to buy cybersecurity firm Wiz for about $30 billion. Google's largest deal ever by far. Wiz provides cybersecurity software for cloud computing companies, including Google. We're going to dive into that deal in detail with some extra reporting. But guys, on the macro front, I think the biggest question for the market seems to be, and Mike, you alluded to this yesterday, is how bad is the economy right now? We know there's a little bit of softness, a little bit of cooling off from where we were toward the end of last year, but recession or are we just going to talk ourselves into it? The signals are kind of mixed, and I prepared two charts that I think indicate what investors are wondering about, maybe when it comes to the direction of the market or when it comes to the direction of the economy. So the first from Katie Huberti of Morgan Stanley, credit market tends to be a leader. If you're worried about the economy, you usually see cracks in the credit market, but guess what? Not happening. I mean, there's the US high-yield total return in blue, and it's been very stable, and it hasn't flashed any warning signs, unlike, for instance, oil prices, which signal weaker growth. Cyclical versus defensive equities. Again, collapse shows the weakness and growth that's anticipated. So if you're looking for forward signals in the market, not seeing it in the credit market, does that mean things are better than we think, or does it mean that they have to catch down? That's a question. The other one, and it's kind of a similar idea, which is the uncertainty, this one from Goldman Sachs, in the market is so high, policy uncertainty, that's the blue spike we're seeing, versus the US unemployment rate. If there's so much uncertainty in the market and from corporates, are they going to stop the ferocious hiring that we've seen throughout this cycle and see the unemployment rate go up? Those two could join, and that's a big uncertainty factor, but so far so good on the actual data.