CNBC's Halftime Report: Stocks Surge on Rate Relief – January 15, 2025

Host: Scott Wapner
Guests: Joe Terranova, Liz Young, Thomas, Jenny Harrington, Steve Weiss
Release Date: January 15, 2025

Market Overview: Surge Driven by CPI Rate Relief

The episode kicks off with Scott Wapner highlighting a significant uptick in the stock market, attributing the surge to a favorable Consumer Price Index (CPI) report that brings much-needed rate relief. The major indices saw robust gains:

• S&P 500, Dow Jones, and Nasdaq: All three major indices rose by at least 1.3%, with the Nasdaq outperforming the others.
• VIX Index: Dropped back to around 17, indicating reduced market volatility.

Scott Wapner [00:26]:
"Today's stock surge, that CPI print bringing some much needed rate relief today... we have all three of the majors up at least one and a third percent. The NASDAQ up better than that."

Core CPI and Rate Relief Analysis

Liz Young provides a cautious yet optimistic take on the latest CPI data, emphasizing that while the rate relief is welcome, it's premature to declare a market victory based on a single data point.

Liz Young [01:25]:
"We can't declare victory. I would never declare victory with just one print, but this was definitely some sweet relief..."

She warns of seasonal inflation surprises typical in the early months of the year and underscores the importance of not overreacting to short-term data.

Federal Reserve's Position and Market Reactions

Scott Wapner discusses Goldman Sachs Asset Management's stance, suggesting that while the recent CPI release may not reopen the door to a rate cut in January, it reinforces the notion that the Federal Reserve's rate-cutting cycle isn't over.

Scott Wapner [02:29]:
"Goldman's cutting cycle has not yet run its course. And maybe we needed to be reminded of that."

Frank Holland adds that the CPI data has alleviated excessive short positions in the Treasury market, which had been a driving force behind the equity correction since December.

Frank Holland [02:53]:
"The market got exactly what it needed today to begin to do a little bit of that rotation... I think that's exactly what it needed."

Sector Spotlights: Financials and Energy

The discussion shifts to specific sectors benefiting from the current market dynamics.

Financial Sector:

• Steve Weiss emphasizes the robust performance of banks, noting strong earnings and optimistic guidance.

  Steve Weiss [05:05]:
  "I think we're out of the woods for now. You'll still see the snapback rally, but it's too early to declare that we will see a cut in March or we won't see any more cuts."

• Frank Holland highlights the optimism in financial earnings, pointing out that this sector is poised for continued growth in 2025.

  Frank Holland [15:10]:
  "The financial sector has been remarkably strong over the last four quarters. I think the momentum continues as you move forward."

Energy Sector:

• Jenny Harrington discusses her strategic adjustments within the energy sector, maintaining an overweight position despite trimming certain holdings for better portfolio management.

  Jenny Harrington [24:04]:
  "I still have a huge overweight energy position overall, but those positions have gotten really rich and I can repurpose those proceeds elsewhere."

• Frank Holland adds that the increasing demand for natural gas, driven by data center growth and power generation needs, positions energy equities favorably.

  Frank Holland [34:15]:
  "Natural gas goes to four and a quarter, you don't switch to coal anymore if you're a utility."

Breaking News: Ceasefire in Middle East Conflict

A significant portion of the episode is dedicated to breaking news about a historic ceasefire agreement between Israel and Hamas, brokered with the involvement of Qatar and facilitated by political figures from both the Biden and Trump administrations.

Eamon Javers [11:08]:
"Israel and Hamas have agreed to a cease fire deal that will bring to an end more than a year of fighting in the war-torn area."

The deal includes a hostages' release, with specifics yet to be detailed. The political implications of the ceasefire are also discussed, highlighting President-elect Trump's remarks and Senator Marco Rubio's praise for the negotiating teams from both administrations.

Eamon Javers [11:08]:
"President-Elect Trump... says this epic ceasefire agreement could only have happened as a result of our historic victory in November."

Scott Wapner underscores the emotional and political significance of the ceasefire, noting its potential impact on global sentiment and market stability.

Stock Highlights and Investment Strategies

The panel delves into specific stock recommendations and portfolio strategies:

Jenny Harrington on Dividend Investing:

• Timestamp [39:12]
  "It's a strategy that works well for the right people... it's not for everyone, but if you need income, it works really, really well."

Jenny elaborates on the benefits of dividend investing, emphasizing its suitability for income-focused investors and its ability to provide consistent returns that can outpace inflation.

Key Stock Picks:

• Wells Fargo and Citigroup: Both banks showed impressive earnings and guidance, making them attractive investments.

  Rob Sechin on Wells Fargo [20:10]:
  "Their Core businesses are killing it... when you marry that all together, this is a place that you can deploy capital."

  Jim Lebenthal on Citigroup [22:10]:
  "It's hard to find a blemish in this report. Revenue is better than expected, expenses lower than expected."

• Technological Stocks:
  Jenny Harrington [26:19]:
  "UPS trading at 14 times earnings... with mid-teens earnings growth ahead, that is a setup of valuation and earnings growth that I like best."

• Energy Stocks:
  Jenny Harrington [31:36]:
  "A US gas supercycle is coming... the super accretive acquisition."

Steve Weiss on Netflix:

• Timestamp [29:28]:
  "Netflix has tremendous pricing power with consolidation... foreign language programs mean they're reaching much more outside the US."

Steve advocates for Netflix’s growth potential despite recent price corrections, citing its strong content strategy and market expansion.

Dividend Investing: A Strategic Approach

A dedicated segment explores the merits of dividend investing, featuring insights from Jenny Harrington.

Jenny Harrington [40:02]:
"It's a strategy that works really well for the right people... At least in my case, most of my clients don't have 100% of their portfolio in the dividend income statement strategy."

Key Points:

• Income Generation: Ideal for retirees or those needing steady income streams.
• Tax Advantages: Qualified dividends are taxed at favorable rates compared to ordinary income.
• Behavioral Benefits: Provides emotional comfort and encourages disciplined investing, reducing the likelihood of panic selling during market downturns.

Jenny also differentiates between dividend growth and dividend income strategies, advising investors to select based on their financial goals and risk tolerance.

Earnings Season and Future Projections

Looking ahead, the panel discusses upcoming earnings reports and their potential impact on the market.

Steve Weiss on Taiwan Semiconductor:

• Timestamp [46:13]:
  "We expect a really good quarter. They released preliminary results a few weeks ago, no reason to believe that they have any excess capacity."

Frank Holland on Walmart:

• Timestamp [31:01]:
  "Several different tailwinds for this company... earnings growth at around 12% revenue growth, maybe 8 or 9% in 2025."

Mike Santoli comments on the sustainability of the current market rally, suggesting that ongoing earnings growth will be crucial in maintaining momentum.

Mike Santoli [44:39]:
"The rally this morning in the S&P 500, it stopped exactly at the 50-day moving average... we'll see if that takes hold."

Closing Remarks: Navigating the Market's Final Stretch

As the episode wraps up, Scott Wapner previews the "Closing Bell" segment, which will focus on final trades and market movements for the day. The panel emphasizes the importance of strategic stock selections and disciplined portfolio management in navigating the current market environment.

Steve Weiss [47:58]:
"Brad Jacobs... you have to bet on and he's going to be disciplined."

Jenny Harrington [48:22]:
"Stanley Black and Decker, 4% dividend yield trading at 20 times... should grow at 20 to 30% earnings growth."

The episode concludes with a reminder for listeners to stay tuned for the final market analysis and trade recommendations.

Key Takeaways

• Positive Market Momentum: Driven by favorable CPI data and rate relief, boosting major indices.
• Cautious Optimism: While current data is encouraging, experts advise vigilance against seasonal inflation surprises.
• Sector Strength: Financials and energy sectors stand out as key growth areas amid current economic conditions.
• Strategic Investing: Emphasis on dividend investing for income-focused portfolios and disciplined stock selection for growth.
• Global Impact: Recent Middle East ceasefire has significant political and market implications, fostering a more stable investment environment.

This comprehensive summary encapsulates the critical discussions and insights shared during CNBC's Halftime Report on January 15, 2025. Whether you're an avid investor or someone seeking to understand the day's market dynamics, this episode provides valuable perspectives on navigating the current financial landscape.