this is the yield of the price so the yield is rising, so even though the -- people are buying stocks, i mean, selling stocks, got -- >> ugly day in the market, michelle. ugly day for this dog. this is wally, the winner of the ugliest dog contest. it was on the "today" show today, a mixed beagle, boxer, bassett, one ugly bassett. see you tomorrow, folks. >> a scary situation filled with slow, careful steps. all kinds of things to navigate. a real high wire act with the potential for a big drop at any time. no, not nick willenda's incredible walk across the grand canyon. that is your market setoff as it's in the redmund, but we've got the skill and the balance to help you get through this mess, mandy. >> a really rapid fire run

through all the vital stats as we stand right now. the dow is coming off its lows. was down as much as 248 points. pretty much halved those losses now. nonetheless still down 6%. intradie dey highs back on may 22 nd the s&p meantime is down about 7% from those highs. the vix hitting its highest level this year today. gold is only about 10 bucks above three-year lows and the treasury yield at its heist since august 2011. investors in place. josh lipton and rick santelli and seema modi at the nasdaq in just a movement josh lipton, what are traders telling you at the start of the trading week? >> seeing red on the screen, but listen, you're well off the session lows. the dow had been down 248, now down 122. on the s&p 500, had been down 32 on the benchmark gauge and now down 17. really two issues, two headlines we all woke up to this morning.

the worries about the fed tapering, signalling and could roll back the still lines. more about china, chinese policy-makers trying to squeeze owl out some of the speculative lending and off the session lows. if you dig down into the s&p 500, in terms of the sectors leading to the downside, it's the cyclical sector the economically sensitive sentor, materials, financial, energy and industrials. a couple of trading back to china. some of the chinese etfs we want to trade today. the xfi, the lowest in a year and a half. the gxe touches its lowest level in 11 months. talking about china and always talking about commodities, watching copper. seen as kind of a bellwether given its many industrial applications, hitting its lowest level in three years. commodity stocks, names like cfx and xcf, all names on our radar today. guys, back to you. >> thanks a lot for that, josh.

here's a question for you, rick, in light of what josh was just saying. in terms of a catalyst, the interest rate moves today, how much is the fed, how much is china? like 60/40, 80/20, what are you thinking? >> i think 60/40 is a good way to put it. i think short-term funding issues are a big deal and when china is sending that smoke signal it's a very big deal so i would say a little bit in favor of china and a couple of charts i find fascinating is i walk by the euro dollar options pit, not the currency, 1 the 90-day forward rate, many more millions trading in the interest rate futures, cme stock doing pretty well here today, and as you look at the ten-year rates hovering close to unchanged, dollar index making new lows of the day while stocks recoup. we could see that the relationships really do make sense to others though they are

many different than the relationships we had just several weeks ago. >> indeed it is, thanks for putting it all in perspective. now to the nasdaq and joining seema modi where i believe it's the first four-day losing streak of 2013. >> absolutely. the nasdaq on pace for its worst juniper formance in three years. some traders that i spoke to saying the market volatility we've witnessed over the past couple of days will continue and take a look at shares of a. that's the big story in tech land. did break $400 a share. a key support level earlier today, global equities research says apple employees are viewing the drop in apple's price as an indication of a bleak future for apple and that recruiters are seeing more and more employees of apple applying for jobs at other tech firms including google, linkedin and even hp. a lot of old school tech names underperforming the markets, cisco near 20 bucks a share and intel down 2% to 3% last time i checked. mandy? >> thanks very much, seema.

forget about the summer swoon, let's talk about the june swoon. we current numbers. june traditionally the worst month of the year for the dow. in fact, over the past 20 years, dow stocks have fallen on average 7.6%, more than august, more than september. joining us now to dig into this and everything else going on, david lutz and jack ablin and herb greenberg is here. jack, i have to begin with you because you called our attention to some data that you and your excellent team at bmo crunched which is absolutely mind-boggling. you hear the sell in may may go away and we're thinking it's some old wife's tale and your data proves that it's not only accurate but stunningly accurate. >> may through october, november through april, and we ran two parallel portfolios back to

1900, and can you see essentially the entire return of the market can be explained, especially since 1958 when these two portfolios diverge in value, can be explained in the november to april period. >> mm-hmm. >> so better off then selling and getting back into the market november. if you hold whole time, you are actually costing yourself in a fairly sizable way. >> well, if your holding period is long enough, it probably doesn't make a difference because you're just going to be holding through those soft periods and then riding again the november through april period for the most part. you know, it's going to cost you some taxes, too, if it's not trading in the right account so each this month, even this year going into this period where we fought, things were a little expensive, knowing that we were entering a soft period, know, it's probably not worth selling and then trying to get cute and

getting back in, because we think fair value, getting pretty close, we think fair value is 1,750, somewhere around there, maybe a little bit less. north worth selling and trying to pay taxes and get back there. >> so taking advantage of what jack just said, what would you do? >> right now we're seeing so much global de-researching began on right now and a lot of focus on the gold markets and why? because gold is used to satisfy collateral markets. in the cme on friday they raised gold margin requirements, so all of a sudden we've got the metal taking out its lows and what that is doing is putting pressure on the global hedge funds. volatility is picking up in all asset classes, another feeder for these guys to de-lever the books. that's why we were saying for a period of time, thursday, friday and today, all asset classes in the red and most of this is going on in the futures and etf markets, mandy. last friday 40% of the dollar value traded on the u.s. market

came from etfs and the year-to-date average is 24%. a tremendous amount of de-leveraging going on. >> that's the back story, that's what's going on. >> that's the back story. >> what would you do, david? >> i'll tell you, we tend to think that the rates have moved too far too fast over this period of time, and the fed is going to have to do some level of backtracking just because what they didn't want to happen seems to be occurring right now. i would be looking at sectors like utilities. i'd be looking at sectors like reits that have pummeled over us the last week envelope and we were talking about the summer swoon, utilities the best performing utility over the summer and reits have just been absolutely slammed over the last couple of weeks. more and more people are putting on a long reit financial trade, financials one of the worst performers over the summer months. >> hey, jack, this is herb. if you're sitting here with a portfolio like an average guy and not a trader but you have

cash to put aside and here you have a 7% decrease in the s&p from the peak, is this when you start taking vac of it or like most us do sit on your hands in paralysis. >> i actually think if we can get a little bit more of a pullback, i think, herb, that the market diverged from fundamental reality probably back in march. in fact, when we started the year we had a 1520 year-end target and we blew through that in ferks and i think, that you know, when we all started trading on liquidity, when you take the liquidity element out and the market gets back to around 1520, 1550, certainly not a bad place to get in the unless you think that the higher rates could start impacting earnings, and that's a wild card >> you mentioned higher rates and mentioned earnings and that's a key thing here because when we head into the earnings season, negative pre-announcement at 7-1. you start thinking are we at that point where companies can no longer cut their way to prosperity and now have sales

growth which has been flat, earnings going to be florida. what does the market do when that if indeed is the issue? >> yeah, so, you know, how do d we get to our 15, 20, more or less said look, price-to-sales ratio of the market one to four times and figured they could grow top line by 2%, 3% this year, so that gets us up to about 3% price growth and add another 2% dividend yield, that gets us to around the 1020 mark. that's probably not a bad entry point, and even with the higher rates i think companies can probably eco-out a 2% to 3% revenue increase. >> just got off the phone with yahoo! finance for our talking numbers segment, and in that interview it was said that the market real, all financial assets were being subject to what he called forced liquidation and actually noted that treasuries, as much as

we're beating them up like rented mules, they have actually done very well compared to gold and stocks in the last couple of days. do you believe that we're in a forced liquidation? >> absolutely, for a lot of reasons i was talking about, global books de-leveraging or what we've seen with the hedge fund unwind. brian, the first two weeks of june we saw almost $12 billion come owl out of emerging market equities. 1 billion was from emerging market funds and a bulk of that coming from the etf unwind. this pullback certainly starts smelling like a buying opportunity is amg data saw inflows of $1.5 billion last week, 24 weeks of straight inflows and net -- hedge funds have been sellers of the market the last two weeks and mutual funds and individual investors are bike. that's the opposite of what we saw specifically in april and may when the hedgies were buying a new high and retail investors selling strength.

the thing we have to start wondering is retail the dumb money or real starting to be the smart money of the market? >> that's a good question and thank you very much, david, for joining us. jack, you'll be joining us in just a second and herb as well. on deck, could china's pain be america's gain? we'll give you three reasons why investors should not fear the chinese headlines. >> and apple below earlier today. shares are dropping and so is morale inside the company and the aforementioned jeff gunlock telling us what he's done with a. we'll bring you those comments so stick around. (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me.

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let's get you up to date on what the market is up to. near the highs of the day right now on the dow. still down 79 points on the dow, but we were down by 248 earlier on today. that means we are definitely improving. we'll see whether or not we can keep that towards that the close of the day. a very common narrative is that beijing and the pboc, the central bank there, have unlimited firepower to bail the country out. not so fast, sois guardon chang, a guest on "squawk box" this morning when asked about a lehman brothers-like scenario gave this time line. >> talking somewhere between three weeks from now and since months out, but somewhere in

that time frame china will fail because what you're seeing is the crises becoming bigger and bigger as time goes on. eventually they won't be able to deal with it. >> here owns signs we figure there's enough fear regarding china out there so we won't add to the fear. we'll try to alleviate it for you. here's three reasons why china's pain may be our gape. number one, first of all, this currently scramble to get money of china especially since there's not many regular vehicles for chinese people to manage their risk. so where does that money go? it could come to u.s. equities, same for global money managers who think china is a bit too tenuous right now to invest there. number two, remember that china is the largest foreign holder of u.s. treasuries in a downturn in china's fortunes may mean it will be less aggressive buying in u.s. auctions going forward. three auctions this week, and all this could end up hurting us by pushing up yields. where's the good in that? it's probably going to be,

therefore, a positive for the u.s. dollar. number three. real estate. well, already you probably noticed a lot of chinese money is coming into u.s. real estate, a lot of just cold, hard cash and one can hope that the current capital flight will spare even more. chinese property investors themselves are feel the opportunity to seek profits overseas and let's hope that means a real estate boom here in the united states. >> a lot of hopium there, mandy, and let's look at the data because the katea does seem to back up the thesis of china's pain being our gain. you're heard so much the last few years, folks, of how we're coupled, where goes one, so goes the other. that's our chart and the domestic shares, they have been doing nothing but going down for the last two years, all while the u.s. market has gone up the last two years. only have they both fallen in

the last few days. let's dig into this idea a little bit more and bring in michelle caruso-cabrera, jack ablin of bmo capital markets still with us as well and what do you make of that, looks like the u.s. and chinese markets have largely decoupled. agree or disagree? >> well, you're talking about very short term. i would say that this is good news all around. what the chinese policy-makers are trying to do by breaking the credit growth is that they are seeing something fishy going on in china where there's such a huge demand for money and yet it's not translating into equal gdp growth, and so they want to investigate that. i feel that this is great that we know the leaders are ahead of the curve. they don't want to create a financial crisis like what the u.s. did in 2008, so they want to put brakes on it before it

becomes out of control. and this way the chinese economy can slow down a bit in the short term but then continue to grow, and that would also benefit americans because american expors porters can export to a growing middle class and a healthy chinese economy. >> a lot of people would say that the chinese authorities would like to be in control, would like to be out in front of the curve but they may not be able to do it. let's say it's good news all around. peel that apart. where do you see the good news? where do you z the bad news? >> i think she's right that the intent is to clean up what i've referred to as the sneaky, sharky lending, the shadow banking institution because the consumer is trying to find a product that will protect them against inflation so they pour money into junk, right? if they put a stop to that, where are those people going to put their money? they will to do a lot of things

in china at the same time. have to allow interest rates to flow and that way they can play depositors a real interest rate and those people don't seek other junk out in the market themselves. so many things to get right, mandy, absolutely right. >> the intention is difficult and the unintended consequences of that are unknown. >> it could get messy. >> to the point where there's a lehman-esque move, jack? >> i think -- i don't think they will go that far. chinese home buyers are putting a substantial amount of equity in. a downturn in prices could lead to a turn turn in the economy. i think bigger picture the

comments economy cents 50% of gdp on infrastructure and investment whereas only 30% on domestic demand so what chinese leaders want to do is have that domestic demand increase, and there are a few impediments standing in the way, most notably income inequality. they need to take some reforms to start, you know, moving this inequality to more of a middle ground, and i think the other thing they could pull out and surprise us maybe this year is end that one-child policy. i think that would be a nice boon for growth. they need the demographic shift anyway and perhaps announcing something like that in the latter half of this year could allow them -- >> when i look at china, what i see is a country that is 122nd in worker output per gdp 1, 22nd, below james camp they are

a low-margin, high-volume economy. they have a questionable real estate and banking system, 23% jump in public equities and right now it's got a lot of problems. >> of course there's a lot of growing pains and of course it's not going to be perfect growth, but i would say that when you are look at other things that would president growth. a higher mid call clats so support some of the -- if china bears say they have over 2 hurn%, you know, debt to gp if you add up everything else. just to put things in perspective you've got $720 million of hot money that the ten banks have creed and that's ten times the entire size of the war gdp.

>> do they have a growing middle class? we always hear that. people just say it. the average income is 3,900 u.s. 11 million people live on $1,000 a year. >> china had over 1 billion people that were poorer than the folks in africa just 20 years ago, and now they have been able to grow their income by over ten times, so, yes, they are much pier than the average american per capita standpoint but it's had a huge trajectory up in terms of the number of people that have gotten more money to spend on all sorts of things, whether it's the morning that we were talking about with smithfield and other things, so, yes, the middle class is growing. that is definite. >> they have come a long way in a short period of time.

>> the chinese government is away of all those data points and even print materials that say even when they are the largest economy in the world, if and when that happens, when it comes to income to gdp, still going to be way bloat united states because you still have 800 million farmers out in the countryside that live pretty much in deep poverty. they are aware of all these challenges. it's precisely why they want to do these banking reforms that we see happening right now that have scared everyone. they want to liberalize interest rates. let them float. they want more free flow within the financial system and they have to fight vested interests and lots of other issues that they have to deal with. they know that there will be a heck of a lot of short-term pain, but they got to get through this in order to get to a better economy. >> michelle, ann and jack, great debate. thanks very much for joining us. >> some breaking news coming out of washington. we'll get that right after the break with eamon javers. he's getting into position. we'll certainly look forward that. breaking news coming out of d.c.

in just a moment. >> meantime, a really huge week for housing. kicking it off with a big home builder bull and guess what he's actually suddenly turning very bearish. >> but first, apple falling below 400. does the stock slide have people running for the exits or is now a good time to get in? the bond king who made a good call on apple has some comments for you coming up in just a movement ise and shine. with centurylink as your trusted technology partner, you can do just that. with our visionary cloud infrastructure, global broadband network and custom communications solutions, your business is more reliable - secure - agile. and with responsive, dedicated support, we help you shine every day of the week. tdd#: 1-800-345-2550 markets on the rise. tdd#: 1-800-345-2550 companies breaking through.

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. apple dropping below $400 a share earlier today, back above that with the market bounce a little bit, but still way down off its highs of 700 bucks to 403 and change right now. let's bring in piper jaffrey, welcome in our own jon fortt and herb greenberg back with us as well. made a lot of great calls over the years, especially on apple. 6755 is a world away from $400 a share. do you bring your price target down, or how does it get to 650? >> it's all about products. hard to see and imagine that right now just because there's still another september quarter ahead of this where we won't see much of an impact into the products but to answer your question it all comes down to new products. starts in earnest in q4 and

rolls through 2014. if they come out with new products, feel great about the price target, if they disappoint us, i'm in trouble. >> new products like what? >> the obvious one is this cheaper phone. we've talked a lot about it. 340% of the total dollars spent on smartphones are phones below $400 which apple doesn't participate in that market and we have a high conviction that there's a 90% chance that we see the phone and price point by the end of the year and 201 we see the tv and possibility watch so i think big picture, prettilet jim on the product over the last six quarters and should see a measurable uptick which ultimately gets us to a positive earnings revision which i think the stock desperately needs. >> john, bring us in here. there's been reports out there about apple losing people and looking to go to google. who is left? i don't really see that. don't see about high-profile deflections and getting canned for perhaps product rollouts that didn't go well.

after all the years of booming, are apple employees that fickle? >> no, you know, take a look at a couple of things. the glass door ratings on apple, tim cook's leadership, the last i checked, still at 93%. the executive team is actually still largely in place. bob mansfield, johnny ive and the rest so i wouldn't put too much on that. interestingly lately over the past week or so we've seen negative headlines on samsung. as gene pointed out a lot has to do with how apple positions, new products, particularly a lower priced iphone. i also look to ios 7 actually comes out, will people see this as an entirely new experience and something to get them excited about on a new level? think that's a big question? john, this is herb. i want to go back to the thing that possibly, the defebruary,s of employees, and one thing i had heard, and this was originally actually coming out

today from global equities which was a research firm, but hi something going on a way back, and it was talking about, you know, one-year post jobs' death you would see defections and when i talk to my sources in silicon valley, they talk about the mid-level guys, the engineers, those people who really make a lot happening are walking out the door. took some of their profits in the stock and are gone. what are you hearing about that? >> that's -- my neighbor actually used to work for apple and now works for google as an engineer. this are some of those types, but those have been happening all along, i mean, the engineer culture in silicon valley, largely mercenary, it's the top level of management, one level below that, that i think you also want to watch. you haven't seen a lot of movement there, but i think a key question is are the older guard people at apple, many of whom have been there ten-plus years, the right people to address emerging markets and the services challenge that apple is

facing so even if people aren't moving around it's a legitimate question whether apple has all the right people who they need for the next era. >> gene, i spoke to jeff gunlock and made a call on apple at 700 bucks saying short apple, go long natural gas, people laughed at him and turns out it was a brilliant trade. i asked him about apple, and here's what he had to say. >> don't want to try to gach a falling knife so it's a short-term kind of situation and i like it more fundamentally around these levels but we want to buy as low as possible. >> all right. he likes it. he owns apple. short a while back. told us before he owns a small portion of apple around the 4 to 425 range, not adding yet but it's cheap relative to the rest of the market. why doesn't apple get more love from a valuation perspective? >> i think investors have a hard time imagining that this is going to be a sustainable growth

story, so if you look at the cheaper phone, for example, some investors who believe that's coming think there will be a near-term boost to the numbers but the mattingly is the smartphone a great market to be in, is that a growing market so i think that's why it's important that apple have other products like tv and watch and even a broader phone line so i think that that's the core issue is investors need to have some confidence that they can continue to grow top line and not at the expense of margin, and it's going to take i think for some investors the reality of actually seeing these products before the light turns on. >> i would really like to ask as well, gene, what you made of the fact that apple's board has changed the package of tim cook such that it puts a big chunk of his future payouts pegged to performance? >> i think cook is very committed to apple for the long term and i'm not surprised to see him take concessions like that performance. i like ten to an athlete who real wants to be paid by performance. i think that's always a good sign so in -- >> what message does that send

though to employees going back to the morale issue though? ? >> well, ultimately the morale will be tied to the stock, and i think that's why it keeps coming back to these products and the reality is i think if these products are what we expect them to be, that should get the stock going and ultimately good for morale so i think they are very closely tied. >> gene, thank you so much for your comments on a. john, stay right there. another big story. steve ballmer planning a big restructuring, talking a lot about that and where there's smoke there's often fire. what's the latest on that? mandy, i think there's a big picture question here which i haven't answered yet which is if there's a reorg, what's the scale of it? a major reorganization would end the division structure that microsoft set up 11 years ago that basically created these fifedoms which made a lot of sense back when windows and office were these kind of inassailable castles within

microsoft. a big reorg would do that and make microsoft a lot more i guess top down for casting a division. a more minor org would be keeping the divisions and shuffling the products within those, maybe giving a division head who is now over crowd and over mobile a little bit more heft to kind of push the change that microsoft might be looking for. what's that i'm wondering. maybe we'll see more detail on that at the build conference and throughout next few days if we see a reannouncement. >> and didn't steve ballmer make the list as one of the worst ceos on the year. >> number two. >> number two, okay. >> i have to tell you, i don't know what took him so long to do this. had he done this sooner he wouldn't have been on this list. all people want to do is see him take action, see him lead and move this thing forward. >> the stock has done well. that's the best performing stock or one of in the dow the last year, meaningfully above 30 for the first time in a decade. >> oh, please, this was before -- >> their enterprise has been growing all week.

talking about the phones and done very well in the cloud. >> hey, brian. >> hey, herb. >> this was before all this happened and since then there's been a lot of shareholder chatter to have him either do something or get out. he's doing something. that's a good thing for microsoft share holders. >> maybe he heard he was on your list and therefore he felt the pressure was on. >> i'm sure that's what it was, absolutely, 100%. >> every ceo quakes or quivers in their boots when they make your list. >> if they were boots. >> continue to be all over this market. a stock in the selloff edition of "street talk" and a must delicious dose of good news. >> hopium on vintage "street signs." the cnbc realtime, change market snapshot is sponsored by interactive brokers. [ kitt ] you know what's impressive?

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very quickly. talk about a comeback. if we can quickly show what's happening with the dow right now. only down by 38 points, okay, so

not great that we're in the red but we consider we were down 248 points, there's quite a comeback and you know what, brian, it's not impossible that we're going to be green. >> what did your able -- what did your able cohost tell the team in the morning before the market began tradeing? >> that we could be in the green by the end of trade? >> that we're going toned the day higher. >> lower or higher by the end of the day. >> let's get to "street talk. >> this is not a stock but a volatility play and we've got volatility in spades right now. >> just trying to find new instruments that maybe people don't know about. vxs, a few products like this, the one-year move, very, very solid. it's up 2.8% today so as the vix goes up, options spreads go up, the vxs will benefit. >> deere with the downgrade from

jpm. >> underweight is basically a sell weight. cut their target to 76 from 91 bucks. they say that basically lower pharma profit per acre and the exploration of tax credits to hurt farmers. look at that, jpmorgan's price target is six bucks below where the stock is right now. >> merger monday and vanguard health systems is absolutely booming. 67% to the upside. i will take that, sir. >> you'll take it and i'll tell you why in a second. the stock is up 68%. a big deal and not sure if bathea max and you love that because your stupid draft team, the mavericks is kicking my butt. >> didn't amd get an upgrade. >> thc is hot. >> i'll be fair. i'll be kind and i'll be a good co-host. >> i'm at the hospital chain. >> take the tally and

nonetheless. go mavericks. >> gotcha on that one. >> okay. they weren't watching anyway. prologis upgraded. >> target goes from 44 to 38. the stock was at 44 bucks. recently still, prologis getting upgraded 1.5%. is that owned by the mauling mavericks, mandy? >> i'm going to mall your ballers. walgreens getting downgraded to a hold. >> leave the target at 49 bucks, customer traffic remains a concern. keeping it together here. cantor doesn't see walgreens gaining market show. tomorrow is also apparently a tuesday. up next, an uber home builder bull turns bearish, a bit. we're going to tell you what he does like though. >> kind of like a cub, a mini bear. that's go straight to bill griffith with a preview of what's coming up, sir.

>> kind of like a red panda bear. >> yeah, i know, all over the market comeback, mandy, an all start lineup of money managers and strategists weigh in on whether you should be buying back into this market. also from your mart to your car payment and credit card bills, we'll show you how rising interest rates could affect your wallet, and don't miss our exclusive interview with our house majority leader from eric cantor to everything including the ongoing scandals in washington. al that and more. this could be a craze last hour of trade this monday. see you on "closing bell" after "street signs," after this. (announcer) scottrade knows our clients trade and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me.

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begin your legacy, get an auto insurance quote. usaa. we know what it means to serve. . well, it was a sharply lower on the dow. we dropped as low at 248 points from the lows of the day. look at the comeback though. actually only down by 58 points right now which is only down by 0.3%, brian. >> want to add there's a little bit ah technical move. 1451 was hit twice. boom, went up a little bit, and came down a bit. 1451 looks like it held a bit and right off that second 1451

it's been up and away. hard to know. >> very good point. meantime, let's send it out to tyler to break down some of the sectors that we're watching. tyler, what's on your chart? >> sort of like hitting the cycle earlier in the day. all ten of the s&p 500 sectors were negative for much of the day, but just as the broader market has turned positive, at least three of the sectors now are in the green. let's talk about where most of the carnage is today, and it's been way over here in the right-hand corner, material stocks down today by more than 1%, more than the market. basically double what the market s.cliff's natural resources, biggest drag on the materials, it's a big iron/ore company, coal companies getting whacked as well. peabody, consol energy. supreme court saying that they may let an epa emissions regulation and weak sentiment about china, iron ore, u.s. steel and oh, having trouble as

president obama tries to move ahead there with the carbon emissions issue, so that's why some of the coal stocks are getting hit. other laggards in the materials, freeport mcmoran, u.s. steel, archcoals as well and here the biggest droppers are money managers, genworth and invesco, e-trade with a good week last week along with schwab group as well. see them moving a little bit lower. on the plus side, utilities in and out of green all afternoon. nrg, public service, pse & g, our provider in much of northern energy and modest gains there. >> folks. >> very interesting on the point about the utilities. dave lutz earlier on, the last ten summers have been dominated by utilities and technology as well which is kind of a weird pairing and nonetheless, thank you. >> next up, a housing bull turns

bearish. kind of, and that red panda by the way, he was found rusty is okay. it's monday.

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it's a pretty week for housing, and investors, i guess,

are crossing their fingers for good news, huh? >> that's right, mandy. i think we can guess the lead -- rising mortgage rates and interest rates trending through the housing week of data. we're getting reports of local lenders on the rates of the 30-year fixed heading to 4.75% with no points. that's a huge spike in less than a week, and not what the housing recovery needs in the face of homing rise prices. tomorrow, we get the much-watched price index. the expectation is up 10.6% annually, a bit less than the 10.9% gain we saw in march. we will also find out tomorrow how many buyers signed contracts to buy newly built homes in may. the builders have been raising prices dramatically lately to account for the higher costs of land and labor. mortgage rates started to rise in may, so we could see the first hints of their effect in these numbers. wednesday, we will all be watching weekly mortgage applications. mortgage rates affect not just home buyers, but borrowers who want to refinance. 40% of borrowers have rates of

more than 5% according to lender processing services, so they could lower through a refinance. many are, however, still under water and don't have loans that qualify for the government's underwater loan program. thursday, finally, back to existing homes. we find out from the realtors how many buyers signed contracts in may, again in a rising rate environment. one thing to remember, though, is that one-third of home sales in may were all cash. that's a little bit of good news, right, guys? >> that's actually incredible. you always wonder who these people are, diana, coming out of the woodwork, all cash. i hope to be that person some day. diana, thank you so much. the next guest has been a classic bull on the homebuilder stocks, and he's been right for a very long time. bob is here. i understand you are changing some positions? >> yes. so i've been very bullish -- >> and very right. >> -- thank you. and we still like the long-term fundamentals. we see housing starts growing

from a million or 950,000 this year to 1.4 million. we like the group for long-term investors. we're still comfortable owning pulte and lennar. but the spike in the interest rates, it means equities are facing very strong near-term headwinds. so between now and the end of the year, we're not looking for the same kind of performance. we expect big numbers, strong fundamentals, sharp improvement in kay schiller, healthy price gains, but a lot's priced into the stocks and we're swimming upstream with the increase in interest rates. >> so are there any homebuilders you would actively take money off the table on? >> we like now, in comparison with the homebuilders, is building products which can benefit from strong housing starts and a modest improvement in repair and remodel spending. so we're much more bullish after the sell-off -- >> the second derivative play a little bit? >> right. they're extremely well positioned at this point in the cycle for incremental capital

appreciation. so we like names like fortune brands home and security. we like mohawk carpet. we also like names of massco. if you're thinking about putting fresh money to work, those are the three stocks we would feature prominently. >> many of the companies -- i won't pick on them -- many of the companies had terrible losses during the housing bust. i don't blame them entirely for that. the world changed. should we believe they're fundamentally smarter companies now and they won't make the same mistakes again? >> a lot of belt tightening in the last five years. cost control is now a priority. what's been missing? volume. these are manufacturing businesses which need through-put. so if our forecast on housing fundamentals, which shows 20% growth between single family and multifamily in the next two years, proves correct, these companies are extremely well positioned to leverage that with the leaner, meaner cost base. >> so let's put residential aside for two seconds. why are you more cautious on the stocks d leveraged to

the commercial side of things? >> right now, we're seeing commercial and industrial markets reengage since the downturn. so it's tougher to get earnings growth -- >> why not? >> we just don't see the demand. corpse corporations aren't spending in that area. further down the chain, maybe in a year from now, we could see some acceleration in commercial construction, which is necessary for us to get more excited about names like owens corning and armstrong, find the companies that will benefit later on in the cycle when the environment's recovered. at this point, we're watching the housing market continue its upward move. the concern from the homebuilders, what you want to highlight, the first time in a year and a half, we feel this is a significant headwind that has to be factored in that will negatively impact the valuati valuations. the risk to the downside with the entire sector is valuations being stretched. >> thank you so much for joining

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over 200 points, and it was, right, down at 248 at the low, and then closed higher, was back on october 4th, 2011. it's always feasible. an hour in the markets to go. we could still close higher if we continue the comeback. >> thanks for watching, everybody. >> "closing bell" is next. hi, everybody. we enter the final stretch. welcome to "closing bell." i'm maria bart rome mae at the new york stock exchange where we're seeing another wild day of trading. a major comeback, bill. >> the dow was down 248 points -- 248 points -- at the low of the day. maybe within the last half hour, we were down just 25 points. big, big comeback. the same thing for the bond market, which we'll get into as well. is it possible, although we're starting to move lower again, that we could finish positive for this day? what do you think? >> 71 points -- >> that would be asking a lot. >> it's a lot to go up. th m