The Cisco Skid, McDonald's "Value" Beat, Trump Tariff Setback in the House 2/12/26

SPEAKER_1 (0:00)

Oh, could this vintage store be any cuter?

SPEAKER_2 (0:03)

Right, and the best part, they accept Discover.

SPEAKER_1 (0:06)

Accept Discover?

SPEAKER_3 (0:07)

In a little place like this?

SPEAKER_1 (0:08)

I don't think so, Jennifer.

SPEAKER_2 (0:10)

Oh, yeah, huh. Discover is accepted where I like to shop. Come on, baby, get with the times.

SPEAKER_1 (0:16)

Right, so we shouldn't get the parachute pets?

SPEAKER_2 (0:19)

These are making a comeback.

Chris Kempczinski (0:22)

I think.

Robert Frank (0:23)

Discover is accepted at 99% of places that take credit cards nationwide.

Chris Kempczinski (0:27)

Based on the February 2025 Nielsen Report.

SPEAKER_6 (0:30)

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com/marketupdatepodcast, or find Schwab Market Update wherever you get your podcasts.

David Faber (0:58)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (1:04)

Good Thursday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with David Faber, Mike Santolio, Post 9 of the New York Stock Exchange. Cramer has the morning off. S&P once again gonna flirt with levels just south of 7K. Yields are lower across the curve. Got some good earnings to chew on this morning, from Cisco to AppLovin to McDonald's.

Jobless claims still a little elevated. 227 is the highest since early December. Roadmap begins with the state of stocks. A number of sectors continue to hit new highs, while software and now commercial real estate takes a hit on these AI fears.

David Faber (1:36)

Plus Dow components Cisco and McDonald's moving in different directions on the back of their latest earnings. The House voting to override President Trump's tariffs on Canada and reports the US and China may extend their trade truce. This is when President Trump and she meet in person.

Carl Quintanilla (1:55)

Let's begin with the markets poised for a higher open. After yesterday's slight pullback, Mike, we continue to see the AI fears kind of migrate around different sectors over the past few days.

Michael Santoli (2:05)

Yeah, and the challenge for the market almost every day is what's going to take up the slack. The market is just absolutely kind of hunting for perceived vulnerabilities. Any kind of middleman business that has some kind of an information lock between customer and product or service, it feels as if they're losing the benefit of the doubt. What's fascinating, I mean, this is basically the most interesting flat index performance I probably ever seen. Meaning the dramatic moves inside the index and what it's taken to keep the S&P right in place have been fascinating. So you had a one-month move average on the S&P 500, individual stocks of more than 10%, 11% Nemours says, which is in the 99th percentile in terms of the average move of a stock versus the index. So what you see is violent, almost desperate rotation of people trying to escape tech where there was too much capital, and obviously it's now seen as less of a sure thing, and it's rushing into the smallest sectors of the market, which is energy and materials and consumer staples.

And it's had those things go vertical. So far, it's been incredibly elegant, I guess you could say, but to me, it always raises the possibility that something's going to get knocked loose in the process, and that some of this buying is really just, you know, kind of mechanical, or for lack of a better word.

David Faber (3:23)

What does that mean? It's been elegant, but something could get knocked loose.

Michael Santoli (3:26)

It's elegant, meaning that, wow, it's amazing that we haven't had a broader pullback when you see Microsoft completely making new lows. When you see all of these once-important stocks not participate. And so the fact that you've actually been able to make up on the other side of it, and sort of have this dispersion kind of dissipate the risk across the market. And so you have the S&P 500 still up more than 1% for a year now. We're still at levels we first got to in late October in the S&P just about. And so far it has worked. Now the question is, is it allowing the big stuff to rest? Are we in this new mode? I mean, Peter Oppenheimer, Goldman Sachs is saying, is echoing that whole thing of like, it's going to be the age of physical assets. It's no longer the age of digital and light and asset like companies. Well, that's kind of predicting the present in my view. In other words, we've seen this mean reversion move. Does that mean that's going to be the mode for the next 10 months?