that is the energy subsidiary exxon enterprise, nvidia. extra space, invesco and thank you for watching power lunch. >> power lunch starts right now. >> welcome to closing bell. i am scott wapner. this make or break our begins at the selloff after the cpi and whether it is time for investors to rethink the road ahead. we will ask our experts that very question over this final stretch including goldmans, jan hatzius. stocks down yields of, that is immediate reaction today that happened this morning. major averages under significant

pressure all day long. as we begin this final stretch we are just about at the lows. tao down seven in the past eight days and we're tracking it all for you including rates that move even higher midday after a auction. we have to watch this into that final stretch. all it takes to our talk of the tape is a record second rally is ricketts get pushed further and further out with some wondering if we will get any at all. let's ask josh brown. he is with me as you can see. good to see you. blackrock tweeting earlier this was a setback, this was the word he used. is it change your view on the market does it change the game? >> i'm not one of these i told you so people, but i told you we were going to play this game . today's it is side of the cut off day. is exactly what you would expect to see if you think that we are set back from three down to two from june down july that

is exactly what is playing there on your screen. this is what i would tell you. you have being hurt the worst. the iw them is down 3% and the s&p down one. value underperforming growth. nvidia not a value stock. using about why. it is very obvious we've had this huge rally in industrial companies, financials, that is what tends to dominate the value indices. on the small-cap side consider 40% of that held by russell companies is floating versus just 21% of the s&p. something is happening on your screen right now is exactly what you are predicting if i would've giving you this yesterday. why is that relevant to tomorrow? here's why. none of these have been a lasting hurtle for the s&p 500. we tend to process these things

over 48 to 36 hours and we will be back to the original game we were playing and i think what you're seeing today is countertrend the number 1 debate now as silly as it sounds is june versus july the number 2 debate is to versus three in 2024. so let's say they go and they can't go in june. one of the next opportunity. that can go into december so you get july and december and those are your two cuts for 2024. if that is a reason not to buy any of the stocks you want to buy i can't figure out that connection so i for the allocator who is watching this action, i think you're looking at an opportunity to get long. not panic and you are getting slightly the last relief. >> so you don't think that today marks some kind of game changer for a rally that has started at the end of october. setting new records and even though we've had to rethink the direction of the fed along the

way the greater trend is still up? >> it is a game changer if you are one of these who were forgetting it was cyclical. every single component of the smh is down today except nvidia so if you chase the momentum train because you thought rate hikes working to continue to fuel it maybe it is a game changer for you. i think most people have not been playing that game. i think for most people there in a good position looking at the rest of their portfolio and some of it is rate sensitive and some of it isn't. they're just fine on a day like today and i don't think materially anybody would really say my whole investing outlook for the next year is now changed. >> if you're investing outlook for the next few months was i'm going to ride the broadening trade because that has been working, you have a number of big-name stock do i

need to rethink that and if i do which of the sectors now are most susceptible because of increased interest rate risk let's put it this way. it's going to be your small caps and small value. >> russell as you said down the most. why because rates are down. what about industrials. a lot of those have been doing incredibly well. we start talking about those because they start reporting earnings. what about other areas that have done well. >> that is a thing is going to remind people this was not predicated on the fed eating easier. this was predicated on the fact that last quarter finally we returned to nominal earnings growth after three straight quarters of earnings declined. this quarter we are in right now is supposed to be the second quarter continuing that trend that is why i am long. i want to be in the market for

the fundamentals how insane is it think of this mentality. you are upset today because the economy is too good for the fed to rescue it. what are we doing what we've been talking about so i give your mentality is i want to make a quick 5% on a fed rate cut i don't speak that language. that is not what i do. >> does increase that they have to stay higher for longer and we get even fewer rate cut and some are now talking about it does increase the risk does it not of a fed mistake? and that is legit and serious. >> which would be was the big arrest of a fed mistake? what if they cut too early in the next cpi is 3.8 that is a bit of a bigger risk. the bigger risk i got the fed could make right now is to undo a lot of what they've accomplished which frankly is not that much but whatever. if they were to see inflation

seriously spike, look, a lot of incontinence are bending themselves into pretzels to explain why this is not that hot. they're saying if you think about this, it is not that bad, the reality is it's not great. to me the bigger risk is not the fed staying where it is the bigger thing is it moving too early and starting to climb. i don't see it the same way. >> i hear you. if there was an umbrella line to say keep your eye on the ball saying that the economy is good earnings will be decent and the feds will still cut. it may not be on your timeline but cuts are still coming in just keep your eye on the ball because you're going to want to be a player rather than throw your ball on the field and go sit in the dugout. >> i think that's exactly right, scott. i would say 7080% of the audience listening are people

that are making ongoing investments. they are contributing to 401(k)s, adding to i.r.a.s and putting money into the market. if the reason you get to buy the stuff you been wanting to buy down 10% or 15% of the high is because the labor market is too good. if that is the reason you get to make that next investment that is a great reason. that is an unbelievable reason to get a discount. it is way better than the alternative. >> you mentioned the shift, let's take nvidia out of the conversation. i worry about some of these other names? >> is a lot of expectations already built-in and people have been treating them as though it is some sort of an ending secular growth story as far as the eye can see just this endless data center buildout. it is unrealistic. unrealistic that all of those dreams will become a reality this year. so you can be bullish on ai and

gpu and cpu and equipment. you can be bullish but accept the fact that these stocks have run ahead of what the reality will be. not a reason to pull your portfolio out because semi conductors want read today. they are up so much they can do what they are doing now for the next six weeks and you would will be far ahead of the game if you allocated them. >> let's bring in christina. even though you have the ricks of the world say this the setback you heard what josh had to say. using the market is overreacting? >> i absolutely do. josh i pulled a few muscles spinning myself into a pretzel today but truly if you look at this first of all we have to look at it in the context of what other data we received. we have the crisis paid summit index of the most recent ism services showing the lowest

reading since march of 2020. we have the most recent job support very strong in terms of payroll creation and not as hot when we look at wage growth. even if we were to dive down into this report we see very significant increase, not only in auto insurance but auto repair. that contributed to what was hotter than expect it. those are areas i would argue are the caboose of inflation. they are reflecting higher auto prices which are moderated. so my argument is that disinflation is an ugly process. it is far from perfect. we should expect to get him data that contradict the overall narrative, but a narrative can still hold. >> will the pce bail us out? >> it doesn't have to. it doesn't have to in my mind based on the other data. i

still believe in the disinflation narrative but it should and it needs to for markets to feel better. right now there is a risk off vibe to the market with good reason. i get the overreaction it will take pce probably to turn this around. >> let me ask you this. we can come to an agreement that the economy is strong so therefore we don't need any rate cut and you don't really need one in june as long as you still think you will get one perhaps in july as josh suggested and maybe another into the winter. how long is the market going to be patient enough to wait around. what happens of july is off the table? is that the point of no return for the rally. at some point you have to believe that the market will throw its hands up in the air and say maybe we won't get any and that'll be a problem. >> historically what we see is a lot of the rally and stock market occurs after the last break. it's not predicated on

the first rate cut. certainly that helps, but i think there can be a significant amount of distance between the last rate hike in the first. so long as markets believe that is the direction we're going in. but having said that, i do believe that the fed needs to cut by july because we have to worry about the long legged effects of monetary policy. it can be to 24 months before we can see it. we have to worry about the damage that has already been done. >> that is buys out asking josh about the idea that if you stay high for too long you risk a policy area that may be too hard to reverse. >> the odds of a june cut, i mean rates are trending like ai stocks right now. the odds of a june cut are now 22%. yesterday they are 50-50. that is a pretty big move by year-end they are pushing

hundred percent chance and obviously 60 to 70% chance and that's fine. but to scott's point, i think that is probably the floor of what the market can withstand. looking at the tenure option today. looking at the two-year absolutely slammed. from my perspective you can have that happen one time i don't think you will have that twice without material damage in some areas of the stock market that dart to scream, hey , this is actually the real risk , not undoing the progress, but taking us over the cliff. where do you stand on that? >> i really do believe we have seen an enormous amount of volatility and expectations around rates and will continue to see that. that's okay because i really markets have really been driven largely by expectations around

the fed. not so much whether or not we will actually see some kind of dramatic selloff but movements on a day-to-day basis change because of expectations around when the first rate cut will occur. i think that can continue in markets have learned to tolerate that and we can come back from big sellouts. >> i can't work both ways. if part of the reason why the market rally from october was on the expectation of cuts coming reasonably soon, if now cuts are pushed off to further than we thought how can we not have some sort of market reaction to that? unless the stronger economy and good enough earnings trump everything. for the moment. >> we can have a reaction to but i think it'll be short-term in nature as we have seen in the past. that the is the situation where we can see a selloff for a week or two.

we can have the bounce back occur because of pce. i think this will be an environment of higher volatility and we may feel like the end of us by the time fedex actually cuts rates we might feel like ping-pong balls. >> we have ppi tomorrow what you want to see their to confirm your right . >> i don't have high hopes for ppi don't think it's important for data point but i would like to get in point with the data representation. figuring out tomorrow won't be a great one, what about the idea that if we need to rethink the level of where things will be for a little while because we won't get the cuts when we stop. in this kind of environment where the navy those stocks would work and i thought the rates would come down to me to rethink that? >> depends on what your time horizon is. recall there was a time this

winter when we actually saw longer duration asset classes. which relatively have had poor performance compared to high- yield bonds because they have shorter durations and there were expectation that the fed was not going to move as quickly. that can happen in a relatively short period of time it just depends on what your time rises. if he can tolerate weakness for a couple of months then i don't think it's an issue. >> i want to address that same point. >> i want to ask a question building on that because you hear a lot about there being this market wide vote that the soft landing is away this year and then there is a lot of complacency in the market and right now you have evaluations for stocks and certainly on the high-end historically. you have credit spreads at near record types which is extraordinary given how many rate hikes we had, plus the shrinking of the fed balance sheet at a rate we've never

seen before. you couple that with the idea of there being structural forces. structural reasons for higher for longer. ongoing fiscal spending. the re-militarization of countries around the world. lack of investment and each of these feeds into longer-term structurally higher inflation or rates or both. so what would you say to the person that says let me get this straight peak valuations you want me to buy and we think one or two rate cuts will matter relative to these huge forces out there that the fed can't do anything about. >> make a great point about what i would argue because we have a lot of cash sitting on the sideline. a tremendous amount. that can easily start to move in once yields start to come down. we do have some counterbalance

forces against the idea that rates will be higher over the long term and i would argue ai. we haven't seen all these ai stocks go up or nothing. i think it's too much to say that that all the forces are pushing against each other. there are some powerful forces. >> a stock that jumps out to you do you want to address it? i don't think you own it. >> it hit my list and coincided with the earnings and delta is arguably going through the best few quarters in the company's history right now. as are most companies involved in consumer and or business travel. basically what this speaks to is basically more than the strength of the travel market. this is an economy wide phenomenon around the consumer. we're not saying resilience we're saying something that i

can't remember a time that was comparable other than the late 1990s. you see it that way? and does it concern you? anybody to go from here but down. >> i think we can stay relatively static. the consumer has been i would argue, there he was doing it. i don't want to say maybe over- the-top, but there has been a strength that has been driven by low unemployment and i think that strength continues because of seeing relatively low employment and hinder wage growth. that tells me we're going to see consumers spend and certainly they're going to be some component of households that are coming underwater pressure but in general this is a much

better picture. >> how reading rate cuts if what you say continues. >> we seen progress on just inflation. you may not need to see economic weakness to get rate cuts. we are in very district involuntary policy territory. >> we will leave it there. christina, thank you. >> josh, thank you as well. send it to christina for look at the biggest names. >> let's look at roadblocks . according to the wall street journal the gaming platform offered adds the report says adds will be bought through an online bidding process users 13 years or older. all this is just about monetizing the platform. deckers. the worst s&p for former right now. almost 7% al is concerned about

demand following specifically calling out weakness >> we are just getting started. up next goldman sachs, is with us . he will tell us what it means for him and the economy. join me after the break.

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>> we are back goldman sachs pushing back its rate cut forecast after this morning's cpi print. here with the take on that data is jan hatzius. good to see you. >> we thought it was going to be .3 and it ended up being

point for. there's also some readthrough into the core pca numbers which will matter more and we will learn more about that tomorrow morning with the ppi numbers but was also lifted that. since that was already i think a little bit questionable it seems ess likely. >> okay. so you were at three cuts now your to cut. what make she's -- makes you so sure you are at the right number right now? >> it is possible you could get three cuts. that certainly could happen. but likewise, it is also possible that it moves back further. as always, it is very dependent on how the data comes in. i think it tells you a lot more about the fed then it tells you

necessarily about the underlying adjustment of the economy. the disinflation. i still think a lot of the trends are improving and i see that in the labor market as well. but are you in attaining that possibility? >> i that is less likely because not just looking at the cpi but pce numbers but looking at for example the adjustment in the labor market. job openings have been trending down and the fact that wage growth continues to come down. all that to me says we are just inflating but it is taking longer but i think the reason why is because some of these lagging categories and service inflation in particular. things like, for example, auto insurance and healthcare costs.

they have a longer tail than we anticipated. >> july seems to now be your base case , is that fair to say? >> that's right. july is our new focus. >> so the pce now becomes ever more important. what is your readthrough for today. before you answer that question, does it make you worried about what will happen tomorrow or is a foregone conclusion at this point that ppi won't be great either. >> it is not a four hour conclusion. these inks aren't closely that related. ppi will be another import into the pce number. what they really care about is pce but most of the information >> if that is the fed's most preferred measure than i get more data from today's cpr than the cpe then i guess that

is the principal reason why june would be pushed off. >> exactly. that is why we do that because now we have a higher expectation for pce and probably to i for others. >> what about commons at the market just got over it skis on the idea that all we will pull this off and have a soft landing. 7080% voting and that is just way too optimistic. what you think? >> i am still optimistic about a soft landing. i am optimist that the economy remains zillionth. maybe even more than pretty good whereas close to 3% gdp growth for this year. i also am optimistic that we are rebounds in the labor market for me none of those things have changed, how or what has changed is the timing

of the fed adjusting capital depend a lot more on the month end of month inflation which has been disappointing. >> is much as the idea of cut gets pushed out, does the idea of a possible fed mistake go up? how would you address that? >> there's always the possibility of a fatimid take and of course they change their views and review of different information. i don't think they will make a mistake necessarily higher now than they would have in the past but if you look at what has been happening over the last four months, they have been moving anymore orchestrated direction and been laying the cut. but that is in response to data. that is what you are supposed to do. >> do you feel like we are at the point that we are within the fed itself have a fracture as it relates to where you get the first cut. how it relates to the idea and

now we may have a changing road. some diverging paths. what you think? >> there has been a reasonable range of views and we saw that the march meeting where you have basically 10 people with three cut or more and nine with two cuts are less enough to not by there is a range of views and it is clearly greater than it was a couple of years ago then we thought inflation was worse. then we had to hike aggressively. >> do you think there is a chance also last day of proactive if you want to call it move from the fed to give the market a nod in some respects. like cut 25. maybe they do that in june.

saying were not going to do too much too soon to risk a mistake. >> again i wouldn't rule it out but i think the data would have just read it and there is now less time for the data to support it sufficiently to get there in june. if you wanted to see a couple of good inflation reports outweigh the three. >> jan hatzius , thank you. coming up, cities research lucy baldwin is with us next. and whether the birdcage is starting to look tired. we will do that when closing bell comes back. react to fasr s with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity. e*trade from morgan stanley.

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>> welcome back. we are's bill deep in the red as he had toward close. raising doubts about when the feds might cut reach -- rates. joining me now, lucy baldwin. thank you for joining us. how did at all did this morning shocker for many impact your outlook? >> it was in a game changer from our perspective. it was slightly hotter than we expected but as we look into how that translates into core

fed measure for us, it is not actually so material that a number of categories were hotter this time. for us we are still sticking with our core that we will get a cut in june and we are still expecting hundred and 25 cuts this year in total. >> does that mean you are bullish stocks? >> it does mean that . the not super bullish. i would say it is constructive but with some caveat. a goldilocks scenario we've been talking about is 5700 but really for that to come through you will need to see more of a soft landing. the aggregate for the s&p is 5100 which is kind of where we are?

>> are you not super bullish in large part because the party has such a large run? is it difficult to be super bullish note given the run? directionally it sounds like you're positive because you have expectations of rate cuts but those expectations started months ago and that is why we are here. >> for us evaluation if you look at a verse of history we are at the 90th percentile level. it doesn't mean it is a trigger. it is a seller market and we will brought at in terms of the stocks that'll perform. we don't expect last year to repeat in terms of 60 to 70% driven by the magnificent seven and to some degree we've seen that already. you started to see some of the secular things obviously. >> of your outlook for the fed and number of cut you are expecting to have are wrong

which your outlook be wrong? >> evercore view here is you will see growth softer and aggregate this year than you have before. we think really tightening will start to bite and services start to sort of underline that segment and also you will really start to see less physical than we saw last year in terms of the delta. is that going to be enough to trigger a recession? for us it is really the labor market starting to wink and in the u.s. obviously what we saw recently in terms of that confidence level people not really feeling confident all of those things, when you project forward you can get a payroll number that can really surprise

people. something like 50,000 would be a big shock to the market. >> do you think it would be a negative shock? we are in this back-and-forth debate based on what we are doing at this moment. a softening of the labor market may actually at this particular time you look at as good news because we figure it would be this inflationary. >> for the equity market the perfect scenario, the 5700 goldilocks scenario we got is kind of now to where we are getting to but where is that not so much driven more because growth is really good. that is the best scenario from the market. i don't think that is quite what you are saying but this last mile is much stickier and i think structurally when you look at it to to supplychain

configuration and all of that. >> what that impact returns for the next couple of years or not? >> certainly you will get much more volatile inflation for sure and i think structurally it'll be higher than that time. as well but i think also within that you have some tremendously positive secular things coming through the equity markets which i think is in the very near term if now we are pushing rate cuts back things that we thought would work within the stock market that might not. we had some recommendations this week and i've had others

suggest we can't buy those until we get rate cut it is not a shock that the russell is down today underperforming everything else. what do i want to stay away from now that i thought maybe was okay yesterday? >> as you said the natural sect is will struggle and discussing many times the rate cuts will possibly trigger some risk and as you pointed out sectors like software. if you think about what has happened this year software has really seen a shift in sentiment and that'll be a relatively exposed place as you think about the impact of rate cuts. i would say in contracts areas like internet and despite some rate sensitivity i think there is so many secular things there that you need to stay invested in.

now all that said, we are definitely being much more cautious as you pointed to and being much more selective in terms of looking for growth and quality. >> appreciate your time. up next we are tracking the biggest movers and back to christina who is standing by with that. >> standing by with good news. two stocks bucking today's downward trend and why they are moving higher when closing bell returns after the break.

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>> less than 15 minutes from the close. back to christina for a look at the stocks she is watching. >> a 5% drop today, the analyst saying investors should buy the dip no pun intended. because cava topped the list. good rx also getting some love. a price target of nine dollars shares trading just about seven dollars right now.

they like the subscriber growth and the increase in downloads which they say is a positive sign for future growth. shares are up about 3 1/2%. >> still ahead a homebuilder housing stocks under pressure. facing one of its worst days of the year. we will break down what is driving up rates obviously having an attack to there. we are backs after this break. with tailored education. get an expanding library filled with new online videos, webcasts, articles, courses, and more - all crafted just for traders. and with guided learning paths stacked with content curated to fit your unique goals, you can spend less time searching and more time learning. trade brilliantly with schwab.

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crucial moments, mike all began with you. you do have some in the billing and some of these meta-caps. >> it did not get all that disorderly. the good news is, and it has been the case for a while. this is not an acutely fed independent market. the market is showing you that there are other things going on. what i do think has changed to a degree with the inflation number is a month ago we were living in a world without trade- offs. there were no trade-offs between a good economy and what the fed was going to be able to do. easing into record highs stock market and a 3% gdp and it was going to be great because inflation is going to be taking care of it all. now you might need a new theory and you might need to revise your theory. the risk is, not in the here and now. not that the economy will buckle under 4.5% the risk is

that the fed has to say we thought we could get lucky. we didn't think we could choke off girls in the service sector to get inflation to where it wants to be. maybe we were wrong about that. that'll take a while for them to come to that conclusion but it is a more complicated story and it does involve trade-offs in a market and i have been on pullback patrol since we were under 5100. so we are still above that right now so needed to grab onto some excuse to let out some of the pressure and we have done it. for weeks we have gone sideways. >> all come back to you in a moment. >> as much as we got over the last couple years investors taking this as a positive know. the charismatic founder is no longer a persona, and may even come back to help in this turnaround. the stock really tells the entire story.

november 2020, that is when they all but disappeared and regulators began going after their group first and then affiliate, alibaba, billions of dollars wiped out since then. babas loss has been others gain. by the way managed to doing what alibaba could not. break into the u.s. market with temu. look at what has happened this year. more turnaround about alibaba story and part of that has to do with jagma remember the ceo step down so alibaba coming in at just the right moment . it could be positive, but i will say that we haven't heard a whole lot yet so that could be premature. >> appreciate that. now today and on what is helping -- happening with the homebuilder. this inflation this morning.

>> you said at scott. the average rate jumped nearly a quarter of a percentage rate following this morning's higher- than-expected cpr. we are now at the highest level since the end of november. the homebuilders are obviously taking on the -- still up about 6% year to date. it includes not just homebuilders but home remodeling names like lowe's, home depot and sherwin- williams. of course mortgage names like rocket and united wholesale mortgage. rocket down 10% on the day and not forgetting boston properties, avalon bay and digital realty to name a few. rates are particularly rate sensitive. giving dealmaking are not dealmaking giving these rates.

>> diana, thank you. mike, less than 90 seconds to go. the market will be patient. the question is for how long can it last? >> yes. we will get a little bit of a clue. the key pointing to the ppi numbers tomorrow. i think there is a sense that the market recognizes the narrative shifts at least in subtle ways. less than 24 hours. if you start to draw the line with the pce inflation number and also keep in mind how the fed may want to talk about exactly what is going on. i do think that we are going to have to be more patient. the consumer sector is telling you this is not without hazards.the idea the economy could just plug along effortless the. you know, as far as the eye could see. with rates going up or inflation still impinging upon people spending power. it is not a foregone conclusion. we don't really sound any loud alarms.

it is not just is free and clear as we thought it might be in the ideal case six weeks ago. >> we shall see. we will go out right obviously today, but certainly looks like will be off the levels creating most of the day. dow will have her around or so and i'll send it over -- >> that is a scorecard on wall street but the action just getting started. welcome to closing bell over time i am brian sullivan. john is off and morgan will join us shortly. stocks down. he saw that a lot of red on the screen as inflation goes back up. a lot of ready. red-hot inflation day. we will say we will and well off the lows of the day. that is a bright spot but the billion dollar question, does the hot inflation mean