SOTS 2nd Hour: The Nvidia Way, 2025 S&P Targets, and A Crypto Christmas 12/9/24

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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 9 of the New York Stock Exchange. Take a look ahead. Stocks are starting off the week, coming off of highs again. We're down just a little bit, tenth of a percent in the S&P 500 NASDAQ little changed as well. Nvidia has been a big focal point, of course, with some concerns around China, weighing on that stock this morning. The Dow Jones Industrial Average up two points. So we're kind of marching in place here. As we get into trading here in December. We're 30 minutes into the session right now. Here are some movers we're watching. Shares of Nvidia I mentioned under pressure. So the story is China's market regulator said it has opened an investigation into the chip giant over a suspected violation of the country's anti-monopoly law, what it means for the stock, in just a moment. It's down almost 2%.

Big M&A news in the advertising world. Omnicom striking a $13 billion all stock deal to buy rival Interpublic Group, creating the world's largest advertising agency. Those stocks heading in opposite directions on the news. And then shares of Reddit rallying, getting its price target raised to $200 from 70 at Morgan Stanley. Reddit also making its biggest push into AI, unveiling a new product that uses AI to answer user questions. Reddit shares, by the way, are up almost 400% since its IPO and up more than 190% just in the past three months. It's kind of been a sleeping big winner. As far as the overall market and what's ahead, the big event of the week as far as the economy is going to be CPI, because we're going to get our first read on November consumer prices. And remember, it comes as the Federal Reserve is quiet ahead of its meeting next week, where it is widely expected to cut rates. Thursday, we'll get the wholesale inflation numbers, which fees more into PCE, which the Fed targets, and then Friday, import-export prices, which will also just be another layer to add into the inflation story. Some earnings will want to watch Oracle, Adobe, always big, big movers. But on the backdrop for the markets, as far as what's expected from the Fed, I mean, there's like a 90% chance now in the market that the Fed is going to cut rates next week at its December meeting. The market took Friday's payrolls report as a sign that a confirmation in the market's belief that it is going to cut rates in December, which I just found a little bit curious because, I mean, here is the payrolls report, 227,000 jobs added in November. Yes, we expected a rebound from the prior month, which was weak because of the storms, the hurricanes impact, the labor strikes impact. So we got that rebound. Things looking good. But if you put it, Carl, next to some of the other data points we've received lately for October and into November, pretty strong picture. How about ISM, manufacturing, right? That's been one of the weaker spots of the economy since the feds been raising interest rates, but it actually has been showing a little bit of signs of life lately, a little resurgence in the manufacturing index. If you look at the unemployment rate, and if you go back, I just did it for the sake of my lifetime to 1984, since how long I've been alive. And the unemployment rate is at 4.2%.

If you look at the gray bars, that's when it's a recession. And you can see the unemployment rate spikes. So the Fed is so worried about unemployment, and is targeting a labor market to not see the unemployment rate spike, but we're not anywhere close to seeing a spike. Now, they want to get ahead of it, and they want to do some risk management, and they don't want to see the unemployment situation get worse. But you could easily also make the case for why they should be pausing in December, even though the market is fully convinced that they're cutting.