SOTS 2nd Hour: Stocks Rebound, Tesla’s Electric Slide - Plus Eli Lilly & Workday CEOs 2/26/25

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Sara Eisen (0:32)

Good Wednesday 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. Stocks pushing higher so far in today's trade, up a half a percent, a little more than that in the S&P 500 Who's in the lead? Financials and industrials. Those are best performing sectors. Actually, you've got information technology also gaining, and that's helping the overall averages. Look at the Nasdaq up a full almost percent. We have some ground to make up for this week, but looking strong early this morning. Take a look at treasuries. The trend has been buying bonds, pushing yields lower. That reverses a little bit today with the 10-year sitting at 4.3 and the two-year yield at 4.125. We're 30 minutes here into the trading session. Here are some of the big movers we're watching. A lot of news from the automakers. Tesla shares trying to rebound after its market cap actually fell below a trillion dollars. GM raising its dividend and buying back stock, and then Stellantis car sales dropping. Retailers also on the move after results from Lowe's, TJX and more. TJX higher despite guidance coming in a little bit light. And then check out the move in Super Micro surging after reporting delayed financial results just in time to avoid a possible delisting by the Nasdaq exchange. The stock had been under pressure after the company lost its auditor over governance and board independence issue. It's been a roller coaster ride now up 16%.

Carl Quintanilla (1:56)

Got some new home sales out a few moments ago. Let's get to Rick Santelli. Morning, Rick.

Rick Santelli (2:00)

Good morning, Carl and Dee. These are January new home sales. Remember, there may be a weather effect. People are trying to decide if the California fires will have a future effect. But one thing I could tell you is it's a weak number.

657,000 seasonally adjusted annualized units are expecting a number about 30,000 higher. And last month had a huge revision from under 700,000 over to 734,000, which would have made it the strongest level since May of 23 Which means we're now down what, 74,000? That's basically a 10% move lower. And do remember, if you look at bank rate 30 year fix for the month of January, its average was around 7.3%. So that's an issue as well. Existing home sales keep inventory generally tight, but there is a pipeline, a new construction we need to keep an eye on. And to dig even further into this number, let's go to Diana Olick. Diana?

Diana Olick (2:59)

Well, Rick, you said it. This is all about mortgage rates. We saw rates go into the 7% range in January and keep moving higher. They started at 7.07% on the 30 year fix in January 1st, moved to 7.26% by mid-month and stayed there all month. Of course, they've come down now, but these numbers are based on signed contracts, that is people out shopping during the month of January, signing those contracts on newly built homes. And by the way, the price of a newly built home, $446,300 was the median in January. That is up 3.7% year over year. It's interesting because the builder sentiment numbers that we got last week, which showed a big drop in sentiment, also noted that builders were not doing as many incentives. Not because they thought they would help them or they wouldn't help them. It's because they felt that there was such a great divide between those who could afford a new home and those who couldn't that incentives really weren't going to move the needle on those who simply couldn't afford the home. Because again, that is a high median price. Supply has moved up to a nine-month supply. Sixth is usually balanced between buyer and seller. So this drop again is largely due to what I think is mortgage rates moving well over 7% and concern in the economy.

Rates again are down into the 6% range now, 6.8% as of yesterday. But I would note that consumer sentiment noted specifically that people were concerned about buying big ticket items, especially homes, because they were concerned about the future of the economy, costs, inflation, etc. So the builders, they're not going to love this. Back to you, Sara.