SOTS 2nd Hour: Tariffs Impact – From Stocks to States to Your Wallet 2/3/25

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Sara Eisen (1:29)

Good Monday 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 night of the New York Stock Exchange. Take a look at stock sell-off mode on Wall Street, after those tariffs are imposed on Canada, Mexico and China. The S&P is down one and three quarters percent. NASDAQ is taking it harder, down two percent. And the Dow is down 640 points right now. Take a look at Treasury's interesting reaction here, because there's a lot of worries about inflation, but we're actually seeing, after the short end, the five-year, ten-year, 30-year yields all lower right now. Ten-year yield is 45, two-year yield a little elevated, 4.25. We'll talk about all of it. We're 30 minutes here into the trading session. Here's some movers we're watching this hour, many related to tariffs. A big leg lower in the autos, for instance. GM, the biggest loser here. Nearly 40 percent of all vehicles that the company made last year in North America came from plants in Canada and Mexico alone. You can see the earnings hit that's being factored in. Food and alcohol names also taking a hit. Piper Sandler downgrading Constellation this morning on tariff headwinds and fast casual chains with big exposure to produce like tomatoes and avocados, namely Chipotle and Cava, also seeing pressure. And then we're watching the transports. Loop Capital downgrading the entire sector as they write, quote, don't buy transports into a trade war. There's no shortage of losers on this.

Carl Quintanilla (2:50)

Let's get some ISMs this morning on a busy week. Let's get to Rick Santelli once again. Hey, Rick.

Rick Santelli (2:56)

Yes, ISMs, these are our January reads. These are, of course, ISM PMIs versus S&P Global. On the manufacturing headline, expecting 50, we end up with 50.9, 50.9. What's interesting here is that we reverse 26 consecutive months under 50 Yes, now we are back over 50 50.9 would be the best read going back to September of 22

September of 22, impressive. New orders also well above what we were expecting. If 55.1, that would be the best since May of 22 And if we look at the employment side, employment, 47.8 expected, leaps over 50, 50.3. That would be the best read since, well, May, May of 24 And finally, on the prices paid side, we'd rather have these go down, but it is a bit higher than expected, 54.9. We're looking for a number closer to 54 54.9, how would that measure up? Well, 57 was where we were in May of 24 In between then, the lowest read we had was 48 in September. So still a bit elevated. Now we also had construction spending come out, Carl. That was a December number. It's multiples of what we were looking for, up half a 1% and a positive revision in the rear view mirror from unchanged to up two-tenths. Up half a 1% equals May, excuse me, equals October of last year. To find a better number, well, you're going all the way back to April of 24 Now let's look at something real quickly here. 424, as Sara was pointing out, two years short maturity, more aligned with the Fed. That's up four basis points. If you look at a 10-year, at 450, right now that would be down two basis points. That actually has moved. It was down more. And if you look at a 30-year bond of 473, it's down six. A major curve flattening. Now, maybe this will change, but it certainly seems though investors are worried about the effects of a slowing economy on a long maturity and the inflationary effects on a short maturity. David, back to you.