Stocks After the Sell-Off, Ford’s Massive Miss, ServiceNow & Southwest CEOs 7/25/24

Jim Cramer (0:00)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

Carl Quintanilla (0:07)

Good Thursday morning, welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Stocks do look for some stability after Wednesday's long absent 2% decline.

Q2 GDP solid thanks to inventories, but these disappointing earnings of Ford, American, Whirlpool, Nestle and others briefly take the 10 year below 4-2. Our roadmap begins with after the sell-off, futures turn green, investors weigh GDP after stocks saw the biggest one day drop since 22 with MegaCap Tech hit very hard, MAG 7 now in correction.

David Faber (0:39)

Plus we have an auto's alert, so to speak. Ford shares are pointing to what could be the worst day those have seen in more than a decade, this after what was a massive miss on earnings.

And this hour we are joined by the CEOs of ServiceNow and Southwest. A lot of changes there at Southwest. Of course, both reported quarterly results.

Carl Quintanilla (0:59)

Let's get to the markets the day after the S&P and NASDAQ saw their worst day since 2022 Jim, sounds like you still think we might be overbought here.

Jim Cramer (1:07)

Yeah, we are. And look, the small cap trade with the mega cap trade is I think still going to be on. Look, they're going to try to make a stand here. And I think you have to watch NVIDIA.

Why? Because that's been behind everything. Meaning that every company seems to be paying too much for NVIDIA. That's the new narrative.

And if they're paying too much for NVIDIA, that means that you don't get the bang for the buck for AI. We do have Bill McDermott, who was very positive on AI, David. But I would say that there is a revulsion to the idea that AI is the savior. And it really, I think, can be laid to the horrible Tesla call that I actually thought was okay, but the reaction has been...

David Faber (1:48)

But why would that translate into AI? I mean, don't you feel as though...

Jim Cramer (1:51)

Because he spent the most visibly. Because he talked about the...

David Faber (1:54)

He did, he talked about everything.

Jim Cramer (1:55)

He talked about Nvidia chips.

David Faber (1:56)

Everything except automobiles, basically.

Jim Cramer (1:59)

No, they're all spinning. I mean, like we could say, but look at Micron's down 50 straight points, Dell's down 60 straight points. I mean, when I say straight, I don't mean like, you know, casual. I mean like, wow.

David Faber (2:08)

You had a number of things happen at the same time. You had obviously, well, you had rate start down, and that sparked this huge rally in the small caps and medium caps, so the Russell, the IWM, as we've discussed.

And then you also had this thesis that sort of gaining some momentum that, will they ever see a return on this enormous amount that is being invested in CapEx by the big four, really, let's call it.

Jim Cramer (2:32)

We should get rid of the seven.

David Faber (2:33)

Can those numbers, those enormous numbers, and we talked about it yesterday with Alphabet, ever really generate a return? Now, they say yes, of course. At Alphabet, they say yes. I don't think that's true.

Jim Cramer (2:43)

I think they said they can't afford to not spend because it might be yes. But that's the answer. The street hates that. The street says, I mean, you're buying stuff because Amazon's buying stuff? Is that like the rap?

Now, I thought before there's gonna be so much, I still think there's gonna be great money. I just think the narrative has changed to the point that you're guilty about spending until proven innocent, and we don't have anything to prove your innocence yet.

David Faber (3:05)

But they're not gonna stop their spending.

Jim Cramer (3:07)

No, they won't. Well, because we know, Carl, a lot of this is at the feet of Jensen Weiss at Nvidia. And what Nvidia said was, you can't afford to not do the spend because you'll never catch up. I believe that. But that may mean that I am an S-U-C-K-E-R.

You have that ratio? That's the key ratio.

Carl Quintanilla (3:35)

Meanwhile, Jim, all the results today imply price cuts in cars, price cuts at airlines, price cuts at restaurants, price cuts at consumer products.

Jim Cramer (3:45)

It's unbelievable.

But remember, this is in reaction to the customer going on strike.

They're not gonna pay for the high-end pet food at Nestle. They're really rejecting French fries at restaurants. This customer at the supermarket is just- Isn't that what we wanted? It's exactly what we wanted. It's what Jay wanted, Jay Powell, what he wanted. So this is what happens when you finally get your cut. Like, did my thing just go off? Oh, I don't even care. Can you hear me?