SOTS 2nd Hour: The September Set-up, Healthcare & Energy Playbooks, Plus: Pepsico/Kraft Heinz - Exclusive Comments 9/2/25

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Sara Eisen (1:08)

Good Tuesday morning. Welcome back to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla. We are live as always from Post 9 of the New York Stock Exchange. David Faber has the morning off. It's the first trading day of September, and markets are starting under pressure here. The S&P down almost a full percent. Every sector except for energy is red. Technology is at the bottom of the barrel today. You've got information technology, industrials and financials, as well as communication services all down about a percent. As far as industry performance, again, energy is holding up a little bit better. We're less than 2 percent, though, away from record highs on the S&P 500 NASDAQ pulls back a little bit harder. Some exceptions today, like a Pepsico, which we'll talk about, getting an activist stake from Elliott. As far as Treasury is kicking off the week, take a look. We have some selling with yields a little bit higher across the board. The two-year 3.645, the 10-year yield 4.269 percent. Today, former Fed Governor Alan Blinder will join us ahead of this week's key jobs report, what's at stake for the Fed's interest rate decision, and his first comments on the future of Lisa Cook. The market still awaits a ruling there. And then the future of President Trump's tariffs, after an appeals court rules against him. We are live at the White House with the latest developments. Plus, as mentioned, Pepsi shares bucking the sell-off, rallying on news of a new activist stake from Elliott. What could happen next for the company?

Carl Quintanilla (2:30)

Let's get some ISMs and construction spending with Rick Santelli. Hi again, Rick.

Rick Santelli (2:35)

Hi, yes, these are the ISM Manufacturing. We hit S&P about 15 minutes ago. This is an August read. There was no mid-month read for the headline number, 48.7, which means we have six consecutive readings now below 50, which is contraction territory. But 48.7 is actually the best number since June when it was 49, still below 50 If we look at prices paid, there's some good news here.

63.7. 63.7 would be the smallest prices paid number since Feb of this year. That's a good thing. Prices paid going down takes some of the inflationary pressures off of many products. If we look at new orders, 51.4, this is the only number above 50 51.4 takes us back to where we were in January. That's the comp 55.1. And by the way, that was the last time. It was over 50 So, we've reached once again on new orders back above that expansion mode. On the employment front, on this very important week, we're going to get two employment reports. Comes in at 43.8. 43.8 would be comping to the weakest level since 43.4 just last month. So, we see that we are not doing very well. This is 7 consecutive employment component that is in contraction territory, meaning under 50 Construction spending, always two months in arrears, this July number comes in at minus 110, pretty much exactly as expected. And how does that comp? That actually would be the best number since April when it was positive at positive one-tenth of a percent. Interest rates from twos to thirties are all higher, but well off their highest levels of the session as global longer term rates continue to be sticky to the upside. Sara, back to you.

Sara Eisen (4:26)

Thank you, Rick Santelli, especially highlighting that lower prices paid, important as we wonder whether to worry about inflation. There's going to be a lot, it's a holiday shortened trading week, but there's going to be a lot of economic reports to watch. As Rick mentioned, we'll get jolts tomorrow, always important job openings data, the beige book, which we know the Fed pays attention to, anecdotes from around the country on the economy, ADP is private sector jobs Thursday, and then Friday is the big August jobs report. We know since the Fed chair gave that speech in Jackson Hole, they're leaning, at least, toward September rate cut. Will the jobs number really strong change that narrative or that viewpoint? I think that's going to be a key question. We're also getting more color around the consumer. We heard, for instance, from the McDonald CEO this morning on Squawk Box. Listen to what he said.