hi, everybody. happy friday to you. welcome to the "closing bell." i'm maria bartiromo at the new york stock exchange. we're looking at a beating in the new york stock exchange. nearing the lows of the session as we approach this final stretch on wall street. hi, scott. >> hi. i'm scott walker in for bill griffeth. setting the stage for the huge selloff, the s&p 500 and nasdaq hitting correction territory with both indices off about 10% from their 2012 intraday highs. russell 2000 there as well. stocks are having their worst day since november. dow jones industrial average is negative for 2012 at 12,1306789 technology is getting beaten up

today as well. touching correction territory earlier today for the s&p. a loss of 2 and a third percent. >> the dow closed at the end of last year at 12,217.56. as you can see, we are currently very close to that. we are lower -- we are below that level right here and we if we finish below that day, the dow wiped out all of the gains for the year and would be negative for the year. we will monitor that level for you. we had such a good couple of months in the beginning of the year. >> first quarter was so good. may is not getting off to the start that we thought it would.

>> nasdaq was around mampl, april. >> financials and technology, which led the first quarter. they were dismal in may and really reversing. >> for sure. reallocation. >> absolutely. meantime, given that june has been a bad month on average for stocks in the past decade, is today the start of a monthly swoon on wall street? we have david from morgan stanley, tom and our own ron insana and mary thompson. how do you set yourself up for next week? europe is a mess. china pmis were a disaster. our own jobs report was exceptionally weak. >> bad news flow. we said in the first quarter, scott, as you recall, when the market was up 12% and everybody was off to the races, take it easy, drive slowly, be cautious. we remain cautious, defensive, extra cash, two-year bonds, had some tips in there, have some

real estate investment diversified. go for a yield. buy these coca-colas, buy these pepsis and use this as an opportunity to buy some growth. what i'm talking about there is microsoft, oracle, apple. buy some growth that sold off here. for a 147 on the treasury to be a buy, 2.2% yield, three things have to happen. a bad greek breakup. no policy action. 80% now the fed will do something on june 19th, june 20th and, thirdly, profits collapse and we don't see those. so you have to watch those three things. the fed, june 20th, the profits, and the greek breakup. >> tom, do you really want to buy now given the fact that this take feels terrible? if we decelerate even further? the last three months in terms of employment gains, you're seeing a downward revision.

d re>> that's correct. >> when you look at the macro picture, things have gotten worse. >> if you look past all of this, this could set up a huge opportunity come fall before the election. everyone is focusing on the numbers. let's look over the last 60 years. we've had 11 recoveries and recessions. we've had the ninth worst recovery for job growth. gdp growth is the worst out of all recoveries. if you look beyond this, this could be a huge level for people to buy stocks at some point in time. >> at some point. but does it get worse before it gets better? should i wait around here for better prices, is my question? >> you don't want to step in now. you want to wait and see what happens. if it bottoms out, you can get great companies at these levels. >> ron insana, people have looked to you for voices of

comfort. >> the sage. the sage ron insana. >> they've looked at you in times of comfort and now it's pouring hard on the markets. what should people be doing today? >> i think not much. here's a point where this morning i got up and there was a nervous feeling on my stomach which was associated with the bottoms and the middle of a sell off. even though i'm feeling like i can ka pit late here. i think the fed is going to do something, whether it's extend operation twist by announcing another round of quantitative easing, that's in the offering. i think another 5% down triggers that. there's a chart that i want to show that i think is quite interesting. last year when we were in the midst of that selloff and in the depths of november and december, it went down to 1.7% and s&p at 1100. now we're at 1.47% and s&p above

1200. i do think this record low yield on the ten-year note is going to send a message to the fed to do more in the absence of stimulus out of washington. it's an interesting divergence at the s&p while touching the 200-day moving average. it may be telling us that the u.s. is still the best game in town. >> mary thompson, what is the chatting on the floor? i'm sure there is some view of what is happening and certainly people will have to wonder what the weekend has in store. >> people will be listening to what ben bernanke has to say. naturally the jobs report raises questions about qe 3. the question about that is, yes , it would provide some support for the markets. a number of decisions have to be made both in the u.s. and europe. the traders say for businesses to go ahead and hire and make

the investments that they need to do in order to get this economy going again. >> all right. we'll leave it there. appreciate it. certainly we'll be watching next week. another good week in terms of economic data to set the tone. we've had a tough week. down 270 on the dow industrials. that's about at the lows. >> yep. stick around on this big market day. we're all over it. >> announcer: for a miserable may jobs report, cnbc heavyweights. stay the course, steve liesman and rick santelli battles it out over whether the government needs to step in and force stimulus spending. >> we're fully expecting that there is some downgrade and we have the liquidity. that's why we built the liquidity and took into all potential outcomes. >> is morgan stanley in danger of a downgrade? and how much worst would that be for a firm? [ creaking ]

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we have 15 minutes left and time for a quick market stat. selloff on wall street. check out the s&p 500 earlier at 12,081. it's trading below the 200 moving average on standard & poor's. right now the dow is down 251 points. pretty close to the lows, decline better than 2%. on pace for the worst loss since november. the european crisis adding to the upset of the jobs number. the horrible jobs number has many clamoring for more government intervention. earlier right here carl

quintanilla asked mitt romney if that was a good idea. >> should the fed provide additional policy? if so, what kind? >> well, the fed stimulative effects have run their course. qe 2 was not able to yield the economic benefit which they hoped it would be able to field. >> i have a feeling rick santelli join us with mr. romney. and also bff, steve liesman. rick, i'll begin with you. the crux of your argument would be this. not only is more qe 3 not prudent, but what would it do any way if rates are already at the levels that they are? >> well, yeah, i probably would say that. i don't know that i agree with mitt romney. i think he agrees with me. i've been screaming this for 3 1/2 years now. i would take it from a different vantage point. i live in chicago. the cubs haven't won a world

series since 1908. the famous saying is wait until next year. i don't like hearing it from the president or certainly anybody in the federal reserve. if something is working, it needs to work. okay? we are now many years into this. the big stimulus was in the early part of 2009. at that point when it was presented, three-quarters of a trillion dollars, the notion of time or qualifiers was never put on it. this will fix the problem. today the president said, i let people know that we needed time. not true. not a factual statement and there doesn't seem to be any reason to think that federal interest rates are going to cure the jobs problem because i think we have a pretty good record of dropping the job creation. >> my question really is in all of this, how come it's always on the fed? how come the responsibility to stimulate this economy and get us out of this funk is always on

the fed? how about some changes in tax policy from the federal government? >> yes. >> and how about not having such a did i vice divisive attitude. >> exactly, maria. >> i agree with that. it's all on the fed. how come the federal government isn't doing their share? >> the fact that he's a cubs fan, i think enough has been said right there and i think he's undermining his credibility right there. i think the fed believes that as well. what we know for sure is that the european bank believes that. i think they played their hand, perhaps to the detriment of europe, where the former president would not do it because he persisted on actions from the fiscal side. i think the fed is getting to that place. a, i think it has declining

returns from what it did do. i think it disagrees with rick on the value of what it has done and certainly wanting to see more clarity from the fiscal side and things like -- and i know that bernanke has said that stuff, not as forcefully as you might in the political atmosphere. >> we have this fiscal cliff coming, all of the tax cuts coming, spending expiring. where is the leadership? when are we going to acknowledge the issues that the market may buy into that and we'll have a handle on thing? >> the great thing is that they force -- >> europe is either going to force the fed's hand, steve, by getting so bad that they have to do something or is it even possible that europe bails out the fed? and what i mean by that, europe gets bad enough that european policy makers actually do something. the markets react positively and in all of this crud that the fed needs to do something dissipates at least somewhat because the market goes higher, perhaps the economy comes to a realization that maybe it's not that bad

despite the jobs report. >> what is europe going to do? >> they are going to issue more debt, guarantee more debt? anybody that still believes at this point in the game that there is a magic solution for any type of fix that doesn't take three to five years in europe, they are delusional. >> well, one thing that they could do is use an economic power and collectively. >> we could be humming along, steve. we could create three million jobs in energy alone. this administration thinks that they want jobs but do everything to ignore the areas where there's low hanging job fruit. come on. >> we'll leave it there. that's the final word. thank you. we'll see you later, guys, thanks. 45 minutes before we close up the week. dow industrials near the low, near 266 points. again, negative for 2012. >> it wasn't good at the beginning of the year. it happened quickly.

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welcome back. there is at least a little bit of sunshine. phil lebeau has information about may auto sales. >> the sunshine might be diminishing a little bit. it's been calculated at a pace of 13.8 million vehicles. that's about half a million vehicles shy of the estimate which was 13.3 to 13.4. 13.8 is the lowest pace of the year and the pace we last saw in december and has some people saying, do we have to bring down estimates for the full year sales now? some were talking 15 million and others are saying it may be a little optimistic. maria? >> we're talking technicals right now. three major indices that we're looking at and two of the major indices are in direction territory. with the nasdaq each down rich

ross is with me. on the fundamental side of things, we have patty in seattle. good to see you. >> hello. >> let's do it. s&p down, nasdaq, do you think further losses this summer? >> actually, what we're seeing, we think this is exactly what bottoms are made of. we're right back where we started. we're testing the key 200-day moving average. we've reached that critical level. if it was just as easy to come in and sell a market, we'd all be retired. that's simply not the case. we think it's more likely we see a false breakdown, perhaps a test of 1260 on the s&p 500. we have panic driven selling and that's what panics are made of and that's where we are right now. >> you think we're at a bottom

in terms of the bottom. >> what are you looking at fundamental side? >> if you want to be in this market, the market does look like it needs to bounce. and short-term bonds and i will have no problem at these levels. you're going to get paid while you wait. if you really get scared. >> does any of that go away if we see dividend taxes go much higher year end? >> let's put it in perspective. even if you're in the highest tax bracket and you're still making a lot more than you are making in the ten-year treasury.

there is still protection there. >> when you look at the dow and nasdaq, where is the best opportunity if i believe that this is a bottom? >> it's going to accomplish everything that you've wanted when we start to move higher, we're going to drive us back significantly higher s&p is a great place to be. >> thank you so much. good to see you both. scott, over to you. >> the dow is at the lows of the day, down almost 280 points. it's negative for the year as well. we have about 35 minutes to go here. s&p 500 is below the 200-day moving average. it touched correction earlier as well. >> we fully expect there to be some downgrade. we had the liquidity and take

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the dow jones is at the fun of 2637 points. we are below where the dow closed at the end of the last year, meaning that we have seen the gains of 2012 be wiped out for the dow jones industrial average for 2012 given today's

weakness,. let's get to mary thompson. she's at the big board. mary? >> not only has the dow erased the gains for 2012, also the nasdaq entering correction territory, dropping below the 2820 level. keep in mind, despite today's decline, the nasdaq off 10% or more, it still remains positive for the year. nevertheless, as was the s&p 500, 1280 was the correction level, 10% below its last high for the s&p, dropping below the 200-day moving average. the ten sectors that we follow, five of them are in correction territory as well. some of them tech, materials, and industrials. these are the groups that have been pacing the market's recent

slide. >> scottie? >> financials are feeling the pain. shares of morgan stanley down 5%. if a disappointing jobs report and global economic fears were not enough, the big banks fed potential downgrades by moody's. >> we spoke exclusively with the ceo of morgan stanley, james gorman, about that. >> the industry will be downgraded. the question is, to what degree. what we have done and the kind of company that we are now from a few years ago, it's very, very different. we've raised the liquidity, sold assets, long before moody's came along. >> so as gorman said, the key may be the degree to which is t is downgraded. the key here is, two notches or three notches? he's expecting two notches. joining us is deborah for the street and fred. let me kick it over to you.

what kind of downgrade are you expecting. gorman was pretty specific. he said it's coming. >> yeah, it's coming. it's going to be three, we're almost sure. this has been out there since february but after the jpmorgan disclosures, things really got hit and it looks like they are going to get the full degree of the three. >> what's the difference in terms of impact to the firm? three notches versus two notches? because he said as long as it's two notches, they are ready for it. but you're saying it's going to be three notches? >> we think it will be three. >> what's the difference in terms of the impact on morgan? i mean, the fear is that this is going to trigger a 5 to $9 billion collateral call for morgan stanley. what's the difference if it's 2 or 3? >> number one, more collateral. morgan stanley has a lot of collateral. the other two issues that are really out there are structured derivatives. some of the counterparties want to slow that down. number three is clients. that all said, i think it's

important to recognize that these are earnings issues, not balance sheet issues for the company. >> deborah, fred is right. what is it it for the stock? is there more to come? >> you have seen this stock get beaten up. it's been slapped down. it's lost about 50% of its value. if it does get that downgrade, you're going to see it get spanked again so it could drop down to some of the financial crisis lows, 10.05. >> what about the other financials? if morgan declines that much, does it drag the others with it? >> the whole group will probably get downgraded so they are all in it together. i think he's right, morgan has made a lot of changes and they are certainly not taking the risk that some of their other friends are taking but they are all going to get thrown out together. unfortunately, they are probably going to get that downgrade and they've already said in their filings with the s.e.c. that their collateral would have to

go from 160 million to almost as much as 2.4 billion. >> you know what, though? broadly speaking, though, what's the business model here in terms of these businesses? most people will tell you that the equity businesses that most of these banks are losing money. so what's the catalyst to turn this around? volume is deadly. volatility is deadly. retail investor, dead in the water. how is this going to reverse? >> i don't think that there's much good going on. obviously they got careened on that facebook deal. the only group that i hear are the financials gearing up and, who knows, they may be dropping those pretty soon. >> fred, do you find it at all troubling that gorman himself says it's going to be a two notch but yet the way you speak,

it's going to be a foregone con cushion that it's going to be three. >> after the moody's reports, all of the large banks will get the maximum downgrade. he made good points about the liquidity. at the end of the day, it's tough to look inside of the companies. >> add to that, the regulatory environment is about to get tougher. spreads deadly. thank you both. we'll be watching. appreciate your time tonight and have a nice weekend. >> thanks. 25 minutes before the "closing bell" sounds. we've got a market under presh, down 282. >> it's the other f word. best play right now simply reserving your money. >> as bad of a day for equities, it's been a good day for gold.

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>> announcer: just before the break as part of "the dividend" we asked which money center bank's stock is this year's outperformer? now the payoff. bank of america, which has fined more than 26% year to date. facebook stock doing worse than the overall market today. a lot worse. seema mody is at the nasdaq today. >> that's right. shares trading lower by around 6.5%. if it closes in negative territory, which it looks like it will, it will be the ipo with the biggest loss posting since 1995. that's looking at ipos with a deal size of a billion or larger. other media social stocks

falling to a new record low it appears that investors are taking the opportunity to get out of the stock. it's been a rocky day to say the least. trading more than 50% below the ipo price of 20 bucks a share. maria, back to you. >> you know, i think it was maybe eight months ago i came on this program and i said to you, one senior technology executive said to me, i said to him, are we in the bubble? he said, we are in a bubble and it will bust when facebook goes public. that's what he said. >> i guess you -- >> i don't know -- i don't know that it -- >> who would think two fridays ago that we would be saying that. >> >> we haven't seen a deal like that this hyped up, do this

badly. >> it seems like there was so much positive going on, everybody was for it and now everybody is against it. >> yeah, and a lot of people were turning for the amended s-1 that came out and we didn't see it. >> i thought gorman said they played 100% by the rules. >> yes, he did. should investors preserving the money that they have? >> nice way of changing the subject. >> we have both sides of the subject covered. calling for investors to keep a big chunk of money in their cash since february and steve sees buying opportunities in this market. so, jeff, you've wanted people to keep big portions of cash since february and the runup that we saw in the market, why do you think they should be all in cash now? >> well, i didn't say the great

majority. we think it ended on january 26th and have been advising our clients to raise cash into the april/may time frame. regrettably we put some of that cash back to work last week. unregrettably, we haven't put much of it back to work. >> so what are you waiting for to get more aggressive on stocks here? >> i thought we were going to get a selling climb makes type bottom provided they don't provide a liquidity event over in europe. next week looks like a good timing point for downsize capitulation. >> steve, where do you want to be if you want to be somewhat invested in the market and where do you want to be in a sea of red today? >> they focus on allocating a portion of their investments. many breek rage firms around the country have been increasing their exposure to alternative

investments and investors have to be looking for ways to hedge the market to reduce volatility. it's not always cash. >> i know that. give me some ideas where. i get that argument. tell me where these alternative opportunities lie. >> well, right now there are over 300 alternative mutual funds, hedge funds, looking at funds that are tactical in terms of certain areas. our alternative strategies fund is long and short in cash to be able to protect this market like we're doing today. >> >> i do think hedge funds are expensive. there's a lot of mutual funds that get the return a different way compared to different stocks and and a handful of technology

names and green on my screen. for the most part, and for the first time in equities. >> i really don't see any way to hide in terms of equities. if you have long exposure, the equity market, this is a risky environment. things are falling apart. they really started falling apart this summer but a lot of market price and potential increase in the economy has flared out now and there's nowhere to hide and investors need to find a way to hedge that downside risk. we're at shorting stocks, buying alternative investments and mutual funds. that's what investors need to look at. >> jeff, the risk, of course, is that you get some sort of substantial policy move out of europe and the markets respond well to it. that would be at the risk of your strategy.

>> well, as i said, we started recommitting some of the capital next week. unfortunately we didn't commit a lot of it just yet. it feels to me the markets are on the down side than the start of a whole new leg to the down side. >> gentlemen, we'll leave it there. we'll keep checking back with you. we're approaching the close. we've got about 15 minutes before the "closing bell" sounds. we have markets at the lows of the day, down 275 points on the dow jones industrial average. big hold on to equity. tough day for the bulls. >> with stocks having the worst day of the year, our own kayla tausche looks at who is getting hit the hardest. here's the twitter question of the day. is the disappointing may jobs report a sign that america is heading to another recession? tweet us and we'll share your responses. responses. i was on maternity leave.

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soft day for the bulls today.

we're in the final stretch of wall street. 15 minutes left on a dismal day, no shortage of losers. stocks posted the worst day in 2012. let's go to kayla tausche with the leading decliners. over to you, kayla. >> s&p 500 down 10% from the 2012 high. no sector singled out from that drop today. financials and consumer discretionary leading the declines spurred by the dismal jobs report. and pulte getting hit extremely hard as well. let's take a look at groupon. the ipo has 600 million shares. you can finally sell those.

the bulls said there wouldn't be a lot of selling since it's down better than 50% since the ipo price and a quick look at quest software. reuters saying that dell walked away. quest is down better than 5% as well. scott? >> thanks so much. kayla tausche for us. >> do we have any time here for -- you learn something new every day. did you know that there was a national donut day? today is national doughnut day. >> i was wondering why crispy cream was all over the place around here. >> and mayor bloomberg backed it. he said no to 16-ounce sodas. we'll come right back. do you industrials down 264. >> and after the break, after the bell, we've got an all-star panel of stop strategists

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all right. welcome back to the floor of the new york stock exchange for the closing countdown and a difficult day it has been. an ugly start to june. dow jones industrial down for the year. s&p 500 below the 200-day moving average. that's more significant from a technical standpoint for these markets, that if you close below that level, 1284 is the level to watch, it could set up awfully difficult for next week. >> i want to know where the expectations for these job numbers came from. we had 169,000 jobs set up for the month of may. check this out. look at these banks, citigroup down 4%. bank of america down 4.5%. wells fargo, almost 6% decline today. across the board declines. financials taking it on the chin. hardware, software also very,

very weak today. 6% movers on the downside for the major tech names as well. that's what is driving this market lower. >> you have the jobs number which was incredibly weak. china data was weak. you're going to have days like this. >> that remands me of the quote that people were talking about, sell in may, go away. it makes you wonder if you should get away from the damage. so far obviously june is not starting off so great and what are the catalysts ahead of an election that has washington so dead locked. >> i tell you where people are going, they are going into treasuries. 145 was the low yield on the ten year today.

it's probably above that now. still these are at historic lows and the swiftness that we've come down in yields is startling to even the most seasoned of bond market watchers that i've been talking to. >> getting no yield whatsoever with the rock bottom rates. actually you're losing money when you take into effect inflation. but that is the name of the game. protect your assets remember than take any risk out. >> which is why at the end of the day if people are trying to pick stocks in this market, you insist of putting your money together somewhere, the u.s. centric ones because there are a number of stocks across the s&p 500, some of the restaurants, for example, regional banks where you have no exposure internationally to revenues at all. it's all u.s. centric and assuming that the economy holds up enough, those are the ones that the pros, at least some of them, say can do okay. >> my question constantly is, though, does this change once the dividend tax goes away or goes much higher? by the way, that's also the reason to buy corporate bonds

because you're seeing a good move into corporate bonds as well. >> how about gold? gold has been a big story. >> and the gold companies. gold company stocks today also on the upside. >> gold miners across the board ripping higher. gold was up $50 today and then it's going to reignite that question, is gold a safe haven or not? and that debate has really raged of late, even as this uncertainty has been in the market and gold has fallen. it's put that whole thing into question. central banks buying gold. i'm going to head back to the set because 4:00, opening the show. i know you've got guests to bring in. scott, have a good weekend. >> save me a krispy kreme. >> yeah, right. >> what's the feeling about what next week could bring? >> after seeing what happened this week, i think a lot of people are -- you know, i think

they are a little withdrawn and it's pretty good give whean we've seen the last few weeks. and everyone is worried about it or anticipating some sort of action on the fed's part i think the fed is going to have some cautionary remarks. i think a lot of people are looking for that. >> david, peter is looking for activity from the fed. are you going to be looking at what happens in europe? a lot of conversation on where the euro has gone. below 124 versus the u.s. dollar. it's sitting thereabouts right now. as that has come down, there's been a direct correlation to our market as well. >> you have four big dates to watch for. june 17th is the election in

greece. june 20th is the second day of the fed meeting. june 20th, watch for that one. the supreme court is going to give a ruling. that could be big. and then you have the big summit of the european leaders, june 28th, 29th. all four of those days could be big market movers if you get some good move to the upside. also, scott, want to wish queen elizabeth, ii, all the best on sunday. they rode down the tents. 1,000 barges. may she live happily ever after. >> i knew we weren't going to get out of here without you laying that on us. you have millions of investors on the couch here. they are wondering where they should be and there is fear. >> scott, you've got 28 sla/2.

there is a lot of bears right now. you have stressed repeatedly for months now, good dividend payers, health care companies, this is your abbott, johnson, pfizer. all three of those things yield above 3% with the treasury yielding below 1.5%. >> peter, you have 97% of the s&p down. we're heading down to the lows. dow is negative for 2012. s&p 500 below the 200-day moving average. how significant is that? >> it is significant but to me this is a buying opportunity. i love the big dips in the market. if you look at u.s. equities, they are probably the best

equities to be anywhere in the world. i still think that they are even with a growth rate, you're going to have a better return here than anywhere else it's still a major factor and it's not a risk-free investment but let me tell you something, that mitigates some of the risk when you know you've got answer dividend play out of it. >> you have oil prices dramatically lower than where they were. a performer for a stock that hasn't performed all that well over the last decade. places like that, maybe you should look. where do you like? >> i still love health care stocks. i still think going forward long term we're going to be in a better position long term investing in health care stocks because we're aging. you know the whole story. we're aging. well managed health care companies are going to do very