of course, the market degegs of the fed minutes going all the way through to the end of trade at 4:00 p.m. today. in the meantime, we'll sign out from us here on cnbc "street signs." "closing bell" is next. hi, everybody. we enter the final stretch. welcome to the "closing bell." i'm maria bartiromo, and the stock market coming back. >> it was down 122 at the low. now we've come back. trying to snap a five-day losing streak and avoid closing below 15,000 for the first time since july 3rd. so we've got a lot to cover. i will point out the 10-year note -- yield has remained at lofty levels. it got up to 2.88. it climbed by six basis points just like that after the minutes came out, and we're still just off that high of the day. >> a lot of the headlines coming out of the minutes, basically said they were in agreement that

the tapering should start sooner rather than later. that's -- >> as long as the economy can withstand it. >> so really, it was no new information. >> exactly. >> and yet the market was all over the map. we want to get reaction about the market, the fed, the state of the economy, from our special co-host, ken langone will join me, and now attorney general eric holder promising significant reaction related to the financial crisis. we'll get his take on eliot spitzer, his once nemesis, leading the polls in new york, the comptroller race. there's a lot of talk about that with the outspoken ken langone. >> ken is such a quiet man. such a quiet man. the market will look for a lifeline from hewlett-packard. yeah, we're not finished yet. we have earnings tonight after the bell from hpq. the stock has been under pressure today but it is still the top dow stock for the year by a mile. it's up about 80% year to date.

we'll have the important numbers for you when they hit the tape at 4:00 eastern. all right. first, let's check where we stand now as we approach the final hour. the dow is lower by about 17 points. you heard the scoop, down 122 points at its worst after the fed minutes came out. 14,985. now, that is below 15,000. if we close below 15,000, that would be the first time since july 3rd, i believe. >> yes. >> nasdaq is higher here, bouncing off of the lows, as you can see, 9.66, at 3,623. the standard & poor's has a similar chart pattern, up a fraction here. >> bob, the markets seemed to push the panic button right away when the minutes came out and then they rethought that. as art said to me, they realized these were conversations that took place three weeks ago. >> reporter: yeah, there's a way to look at this somewhat bullishly, though they seem split on things. put up the full screen. i'll summarize what's going on.

they're trying to keep the options open. the fed said they were split over the taper timing. read that carefully. not that they were split over tapering. but split over the timing of the tapering. and now, what a lot of guys are saying on the trading floors is they expect this to mean some taper light is coming likely in september. what's that? instead of going from 85 billion in bond purchases to 60 billion, the way some people thought, you go from 85 billion to 75 billion, a sort of taper light. you can get a consensus for that kind of modest tapering. that is not necessarily bearish in this environment. and i think some people, it's part of the reason why we saw the markets move up right here. one of the things that helped the markets, interest rate-sensitive groups here, the banks had a nice move to the upside. there's bank of america, helped the overall averages. the dow jones industrials in particular moving up here. guys, i think it would be a bullish signal if we could end in anywhere near positive territory. it's a signal the market is getting more comfortable with tapering, and whether the timing

is dramatic in september or december, i'm not sure it makes an awful lot of difference. i go with the tapering-light idea. that makes sense to me. back to you. >> all right, bob, thank you so much. joining us now in our "closing bell exchange" is mark, david, doug from ing, and ben willis from albert freed & company. good to see everybody. thank you for joining us. let's talk the markets. first off, what a wild -- what a wild reaction, ben. talk to us about what went on down here when the minutes first came out, about an hour ago. >> i think you saw a reaction with the algorithms that might have been left on during the fed minutes, just the term the few may have been an indication there was a collegial consensus from ben bernanke's fed. it's old news. it's three weeks old. we know tapering is coming. and what bob pisani said, it's the timing of the tapering and tightening, or tapering light.

>> but, you know, the 10-year is holding at the higher levels, ben. >> it held there. we took our queue from that. we didn't have an overreaction on the 10-year, as well. the 10-year has been trending higher. once again, just a reminder of, i guess, economics 101, is that rising interest rates are an indication of something good going on. it's a symptom of a healthy economy. we may not think it's as healthy as we'd like it to be, but the fed is telling us, in fact, we're going to take the training wheels off here, ready to go. >> steven, you agree. the markets are trying to make sense of a higher interest rate world right now. >> that's right. we're in a transitionary period now. we're trying to adjust to higher interest rates. looking at better growth ahead. one of the interesting things we've seen is that even as stocks have sold off, rates have gone up, it's the cyclical sectors, industrials, technology, energy, materials that have outperformed. and what that tells us is that investors are getting more comfortable with the growth outlook for the year ahead, and that's a positive thing. >> so how do you invest in a

rising-rate environment? david, what are the strategies as rates move higher? >> well, i think i would add to the last statement, industrials, cyclicals, technology. we like the banks, because of the steepening yield curve. you know, all those sectors that have held up pretty well that we think will continue to do well for the remainder of the year. and the market has to digest the onset of tapering. that's the process we're going through. we're only down a little over 3% from our level earlier this month. >> right. >> and, you know, we move to that period and those sectors will do quite well. >> doug, what are you doing? are you ready to buy the dips? we are down about 3% -- 3% in the last six trading sessions here. would you buy this? >> certainly. i would be fully allocated at this point. but what the minutes couldn't have seen, or missed, was the action in the foreign kourcurre markets. i'm concerned what's going on in

indonesia, india, asia, and there are signs that quantitative easing is actually creating a credit bubble, and i think that's -- i think the markets are going to really have to watch that closely. if you look at the indonesian bond yield, that's skyrocketed over the past month. a little concerned about that, though. >> bill, if i could add -- if i -- bill, if i could add to that. >> go ahead. >> yeah, we've heard a lot of people talking about the valuations in emerging markets being so compelling, and, you know, for this year, 2013, that's essentially been a value trap. the valuations could continue to be low, because of the concern over capital inflows into those countries. qe 1, qe 2, qe 3, sent a lot of money to the emerging market countries and tapering will take it out. >> is it -- is it the fact, also, that those areas have slowed down quite a bit? i mean, i remember when brazil was churning out 7% growth levels, and then, you know, a couple quarters ago, it was .5%.

how much of it is just the story of slowdown? >> there is -- yeah, there's a slowdown. the recession in europe. those developed countries that they export to. but i think that there's an underestimation of the impact of tapering -- or i think people said there's been an overreaction, someone said there's been an overreaction. i think it's been an appropriate reaction. those people that have allocated to emerging markets this year, that's been a misallocation. the sector's done very poorly this year. and we don't think that turns yet. >> steven parker, the other asset class we haven't talked about would be commodities. you know, plenty of people feel the dollar is destined to go higher if interest rates go higher. does that mean you avoid materials and commodities, even though material stocks have been very well performing here. >> i think commodities is another market that's been closely tied to what's going on in emerging markets. so the slowdown in growth, particularly in places like china, have weighed on the performance of metals and ene y energy. you know, we're being very cautious and thoughtful in terms

of where we're taking our exposure in the commodity market. we think there's better opportunities in places like energy, not as much like metal, because we think china is slowing. that being said, there are other places in the world where growth is getting better. europe being one of those. >> in fact, i'm told materials are one of the worst performers today. >> right. >> the dollar has rebounded to some degree. the dollar index is higher, unusual lately. >> that's right. the growth will be better, but a gradual reacceleration. without china returning to levels we'd seen previously, it will weigh on prices. >> what about oil? it's sitting here for sometime. is there a way to make money, or is it overvalued? >> no, we think that -- we like energy. we like energy stocks, in fact. even more so than the commodity. when you look at energy stocks, valuations sentiment around them, you know, we're at a place right now where fund managers, assets have moved away from energy stocks and we actually added to that tactically when oil dipped below 100. >> ben willis, what are you

watching? >> i was buying protection, looking for more downside move. as you just mentioned, we saw about a 3% drop in the broad markets over the last few days. and i would love to see us break below that. the last time -- the biggest correction we had was 3.5%. >> right. >> however, if i'm going to be investing, i like the energy sector, i like the partnerships as an area of interest. now, they've been sold off as a group, because of their interest rate sensitivity, but that's not why i'm looking at them. i'm looking at them, the toll takers, regardless of the cost of the product going through their pipeline. technology. if you believe, again, the economies around the world are improving, the trade is already happening in some of the earliers, and now looking at the industrials as a place. and particularly, i should -- i put the technology industrials, some of the bigger names in that group, so to speak. the whole thing, you remember the central banks were taking interest rates and their currencies to the bottom, a and we call it the race to the bottom. we're now seeing a reversal of

that, and it will be how well managed reversal of the currency move is managed by the central banks, starting with ben bernanke and the dollar. and that impact on the commodity. >> got it. >> thanks, everybody. >> thanks, guys. >> abreerkt it. in the final stretch of trading. about 50 minutes before the closing bell is down. when we come back, fast and furious reaction to the fed's latest hints on when it may start easing up on stimulus. we'll have live reactions, steve liesman out in jackson hole, wyoming, getting ready for the big meetings there. rick santelli in chicago. do not miss that conversation coming up. and after the bell, home depot co-founder, kenneth langone, hosting the 4:00, as we know from the last time he was here, anything can happen. wait until you hear what he says about elliott spitzer leading the comptroller race. (announcer) scottrade knows our clients trade

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it's been a volatile day in terms of stocks trading. the dow down about 6 points. as soon as the fed minutes were released about 2:10 eastern, the market tanked, down 1 2 points.

came all the way back, and now has now been back and forth. >> lots of volatility. we're not finished yet. joining us to talk about all of this is our own steve liesman, out in jackson hole, getting ready for the fed meetings there. rick santelli in chicago, hoping to get a word in edgewise with these two is lindsay from stearns. lindsey, i'll start with you, before the whole thing starts here. what did you make of what the fed -- >> hold on a second! bill, bill! bill, hold on a second! [ laughter ] go ahead. she can go. >> don't be shy. >> you're so bad. >> this will happen a lot. >> it's very much what we've been hearing from fed officials over the past several weeks. they are comfortable with the idea of tapering sooner than later. but they also want to make sure the data supports that change in policy that we're seeing the increase momentum in the second half of the year. now, what was different in the july minutes, compared to june, is that there seems to be an increased downside risk assessment for the second half of the year, particularly in the labor markets.

we see a pointing out of the decline in the participation rate, underutilization of labor. so the fed is keeping their options open. we have four more weeks of data and another employment report. >> steve, did you learn anything new? >> you know i -- >> from the fed. >> -- i thought the split was a little more than i had thought. it was a very symmetrical in the language, maria, when they said the members shouldn't do something now, and a few members think we should. it tells me there are questions about what to do in september, and it makes me think september is less likely than i had thought and maybe less than 50% possibility, unless the data improves. one of the things i learned is the fed is more concerned about low inflation than i thought they had quite an interesting and robust discussion about it. no particular conclusion. but a substantial part of the committee is concerned about low inflation here. >> yes. gee, they may be backing away from september, maria. >> yeah, we've been saying that. >> yes, we have. >> rick, we've been watching the

10-year, as i am sure you are, it popped, and it's holding unlike the stock market which came back from its lows. >> absolutely. and not only that. you know, let's just put some real tight numbers on it. the current high yield closes for 10s and 30s are all within the last week. and it's 2.88 in 10s, at 2.86. it's 3.90 for 30s, at 2.89. but we're at 1.61 in 5s. that's the high-yield close. but not from last week. that's from july 5th. and the yield curve movements made that in many regards, according to traders, the true canary in the coal mine. if rates are going to go higher, maybe the green light for that will be how we close today with regard to that 1.61 benchmark high-yield close for 5s, and the treasuries haven't backed down. so i'm not sure that the minutes are changing the notion that a managed interest rate may overshoot the old metrics of 2% above nominal gdp.

>> lindsey, go ahead. >> i think the overall tone from the minutes was patience. a wait-and-see. we have four weeks of data and an unemployment report that will be the key, deciding factor in whether or not they of taper in september. as steve pointed out, there's that increased risk now that we're not going to see any change in purchases in september. >> well, what about this eye de -- >> lindsey, i wonder if you could make -- >> go ahead. >> i was just saying, i wonder, lindsey, even if you have the data in hand, is it enough to provide the kind of confidence and comfort level that the fed would want to begin the tapering process, and before you answer that, i think it's interesting to think about how the fed views the first taper movement. does it move -- view it as an isolated movement or something that's part of a process? if it's part of a process, i think the fed is going to be really sure about the outlook for the economy before it does it. if it's a one-off, then it can adjust as it goes forward. >> i think it would provide more

volatility to the market if it was a one-off. i think they're going to want to keep this concurrent, smooth process. >> i agree. >> i don't suspect they'll do a one-off. if they're ready to go, they'll start to go. >> what about the idea that's being floated on the floor here that maybe they start with what they're calling here affectionately tapering light, maybe they start with a reduction of $10 billion per month to begin with, just to kind of get everybody accustomed to the idea here, steve. >> look, here's the problem with that, is if the fed is well aware of -- it watches cnbc, it sees how the market reacts, it understands that the market will not take a single incident as an isolated incident. it will begin the price in what they call the terminal point, where does the thin end up? as dennis lockhart from atlanta said a week or so ago, they better be ready for the market to put the pricing in if it's going to do something now at the beginning, even a taper light, without the right language on the backside, would cause the market to bring forward future tightening.

>> you really have to wonder the motivation for a $5 billion, $10 billion cutback. either the economy is strong enough, or it's not. >> 2/20. >> and the earnings have decelerated. profit growth lower. so add that to the overall economic story of an anemic pace that's stuck in neutral. >> before we go, rick, we just had an analyst on, maybe you heard him, talking about his concerns about yields, you know, in asia and elsewhere, and how they've been going in a direction that he feels there's a bubble building over there that could be bufr burst by the fed beginning to taper. what do you think? >> i think that bubble's already in the process of bursting. i think those comments are about three weeks late. >> ha. so. much like the minutes, as they were released today. >> much like the minutes. >> thank you, guys. >> thank you. >> thanks, everybody. >> well done, lindsey. oh, it's mine. here we go. it's 40 minutes left in the trading session here.

what we're watching, also, is whether the fed -- the dow closes below 15,000 for the first time since july 3rd, and whether that has any meaning or not. i know the traders watched the s&p more than they watch the fed. but it could mean something here. >> round numbers. it creates upset in sentiment sometimes. meanwhile, u.p.s. delivering bad news, informing worker it is will not provide health insurance to working spouses that can get insurance on their own. and marcus lemonis is back with us, and he thinks u s u.p.s making a mistake. more after the break. stay tuned. in today's markets, a lot can happen in a second. with fidelity's guaranteed one-second trade execution,

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i'm kind of confused. you didn't mine to throw up all over the bottle. >> the pry mere bottles scream mass market to extreme. >> you mean it's because it's not your idea? i don't give a crap what it looks like. what i care about is it sells, and that isn't selling. no company is about one person. my business would be better without me on some days, because i get in the way or i micromanage or control things. sound familiar? your feedback isn't any more important than anybody else's. we're a team, we'll function together, but we are going to make a change. >> that was last night's episode of "the profit." was marcus lemonis able to turn around the all-natural cleaning supply company. marcus joins us now. >> hi there.

the company turned around, i made $500,000 investment. the business, it did $500,000 last year is already at $1 million year to date. so things are looking up, but change definitely happened. >> you know, i know it's tough love on your part, but you ask the kinds of questions that the owners themselves should be asking themselves. why don't more entrepreneurs do that? i mean, why don't you ask yourselves those tough questions, really do the soul searching necessary to answer why a product's not selling? >> you know, in fairness, bill, these owners are so deep in the weeds trying to survive, trying to make a buck, that they really lose sight of the bigger picture. and it takes someone like myself to come in and ask those questions. it's hard for them. and they're really doing a lot of jobs in one day, five different jobs in one day. >> so did you make a profit? >> we will make a profit, maria. i'm confident this business will end up being a four to five-time return for me. already out of the gates, the business has doubled. so i'm feeling really good about it. >> good stuff.

>> what about healthcare? let's shift gears for a moment, because we just reported that u.p.s., of course, a huge employer, is set to remove thousands of working spouses from its medical plan. if they are eligible for coverage elsewhere. this would be for nonunion, white collar workers. university of virginia doing the same thing. both blaming rising expense of the president's healthcare legislation. what's your take on this? >> well, i'm doing some of the same thing in my own business. i only have 6,000 employees. but, you know, i want to be clear, i think in u.p.s.'s plan and uva's plan, it doesn't affect the children and it only applies to the spouses who have the ability to get healthcare somewhere else. >> right. if they don't, they will remain covered. >> exactly. in the case of my business, i'll be doing the same thing, but, you know, the real question for me is how do they audit whether they have coverage or not, how do they audit the process? that's more cumbersome than not. it's a big deal. we don't want people on our plan that have the ability to get insurance somewhere else. we just don't want it. >> you're talking the talk,

because can you blame them, they want to find ways to cut costs. i mean, that is a huge cost if they have to keep them on their books. >> well, bill, i see it more as a way to put the burden of expense where it belongs. if your spouse or domestic partner has a job somewhere else, where healthcare is provided, we really want to rest that burden in the business that it belongs on, not all on my business or u.p.s.'s business. we want to put it where it belongs. i think taking care of the kids and taking care of the unemployed spouses is probably getting, i don't want to say overshadowed, but i want to make sure we make that clear. >> doesn't it raise the cost of healthcare for a family? you have two different plans now. >> it does raise the cost for the family. you know, in the case of my business, i actually do healthcare a little differently, maria. the amount that the employee pays is based on how much they make in my business. so it's a little different for me. if somebody makes $30,000 a year, and they have two kids, i'll subsidize 90% of those healthcare costs.

if they make $100,000 a year, i'm going to subsidize 10% of the costs. with the new plan, it will raise costs a little bit. i don't know how companies will be able to compete by having all of the expenses on their own books. >> yeah. so we were just talking about during the commercial, an avalanche of companies making the same announcement, don't you think? >> i do. it will be whoever pulls the trigger first. because i think you're going to see companies start to fall in line. earlier today, my cfo called me, he had read an article and said, you know, is it time for us to go? and the reality is, everybody's going to pull the trigger at the same time. for me, it's important to make sure that the spouse has the time to get on somebody else's plan. you can't just move on to your plan tomorrow. there's kind of an enrollment period and things of that nature. we want to do it in a systematic way where the employee is caught with nothing. >> it occurred to me you may be employing somebody whose spouse works for u.p.s. and you'll be paying their healthcare soon. >> that's right.

>> right? >> that's right. we don't want to do that. no company wants to do that. >> exactly. marcus, good to see you. good luck with next week's program, as well. >> thanks, guys. >> you bet. >> tune in every tuesday for a new episode of "the profit." 10:00 p.m. eastern and pacific time right here on cnbc. all right. let's keep talking about u.p.s. shares up about 40% in the last two years. and while that may sound good, it's actually lagged the dow transportation average by a considerable margin. so will u.p.s. deliver profits to your portfolio going forward as it does work to cut costs in areas like employee healthcare? let's talk numbers on u.p.s. on the technical side, with ennis, with risk reversal, and on the fundamental side, mark with the oxford club. good to see you both. ennis, what's the chart look like to you? >> when we look at really long-term chart, we see a reason for concern. we leave the 10-year weekly, the end of 2004, u.p.s. made an

all-time high around $89. this year, we actually breached that level to the upside in july, made a new high around 91. but since then, it's failed. it's a failed long-term breakout, which has added significant since it was an important long-term level. i think that failed breakout is reason for resistance going forward. i'm a selling of the stock. >> you wouldn't be buying it. okay. all right. mark, what about you? if you would go with a stock of the transmorts, do you go with one of the leaders or the laggards like u.p.s. here? >> no, i would not go with u.p.s. i mean, what can brown do for you? i don't think very much in your portfolio. the stock is expensive. trades at 22 times book value. 16 times cash flow. and if you compare it to its main rival, fedex, it's very expensive across every valuation metric. and it has way more debt and debt-to-equity. it's got much worse operating margins than fedex. it's about half the operating margins of fedex. fedex is a stronger performer from earnings growth expectations standpoint. fedex is cheaper and has much better expectations.

i would not own u.p.s. here. >> i would just add that fedex chart looks better, making the all-time high and hold it for the last six months. >> don't you get nervous when you say the same thing, neither one would buy u.p.s.? >> sometimes great minds think alike, right? >> okay. we'll go with that. thanks, guys. u.p.s., talking numbers today. we're in the final stretch of trading. about 30 minutes before the closing bell sounds. we have a market lower, down 38 points on the dow. mean while, homebuilder toll brothers should could not be happy with the rates moving higher with all of the talk of tapering right now. up next, ceo doug yearly will react in a first-on cnbc interview. and ken langone will be my entire guest for the 4:00 hour. we'll get his take on everything from the fed to the government's actions to wall street to eliot spitzer. back in a moment on "closing bell." i've been doing a few things for a while that i really love-- tdd#: 1-800-345-2550

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a little whiplash for investors today, following the sharp sell-off, and then a rally. what's going on, josh lipton? >> reporter: well, bill, let's

start with today's laggards in today's trade. target, the retail giant, warned its annual earnings will likely be near the low end of its previous forecast. the company anticipating cautious consumer spending. staples, the office supplies retailer, posting earnings and revenue that missed estimates. weakness in its retail stores and international operations. american eagle outfitters issued disappointing guidance for the crucial back-to-school quarter. also said same-store sales will drop by a mid to high-single digit percentage in the current quarter. lowe's beat expectations, boosted its full-year outlook. google also making headlines today. holding meetings with the nfl, raising the possibility that it could launch a bid for the rights to the nfl's sunday ticket package, which is currently owned by directv. and we'll end here on toll brothers, matched on the bottom line, revenue below consensus, but new orders up 26%.

the company says sales volumes and pricing power both increased this quarter from a year ago. bill, back to you. >> all right, josh, thanks very much. let's talk about a luxury homebuilder, toll brothers, reporting a decline in profit of 24%, at 26 cents a share. that did match expectations. the stock, like the rest of the market, has been volatile today. right now, it's up 22 cents to $31.86. >> yeah, with us now is toll brothers' ceo douglas yearley. welco welcome, sir. >> thanks for having me. >> how concerned are rates moving higher for the housing market from your standpoint? >> we're okay. i'll take a 4 5/8, 30-year fixed, any day of the week. sheer, it's up from the 3 1/2. >> yeah, but it will stay there, or -- i mean, we're in a rising rate. >> the fed hasn't started tapering yet. >> yeah.

i don't know if it will stay there. it has levelled. in fact, it came back down an eighth of a point just today. our sales teams are not hearing it from the client. it doesn't seem to be affecting our business. our buyers are lal different. 20% are all cash. those that get a mortgage only mortgage about 70% of the house. you know, we're in a different price point. so so far we're okay, and i think we'll continue to be okay. we're in the early stages of this recovery, and i just don't see mortgage rate movement derailing what's going to happen for us. >> so what is your biggest headwind right now, doug? ? for us, it's the ability to deliver the house, because the backlogs have grown so much through great sales, and we're managing that through price increases. but we have a number of locations where the next home sold may take as much as one year to deliver, because our backlogs are so big at individual communities. that's when we raise price.

that's when we manage our business. through pricing power. so that's an issue for us. we have to get more labor back into the industry. it's coming back. it's easing. and then, of course, the other issue, which is always an issue, is finding great land. we're out there hunting for land nationwide. we're seeing some really exciting deals. but it's -- as the market improves, there's more and more capital chasing deals, land is going up in price, and we have to work harder at that. >> so the backlog that you referred to is really the backlog in demand, not necessarily a backlog in supply, which was the issue a couple of years ago. we just had an overabundance of properties on the market, right? >> that's changed. yeah, the inventory levels are down in almost all of our markets. prices going up. when i refer to backlog, it's the number of homes we sold and our ability to get those homes built and delivered. >> so when we saw the housing starts report last week that showed a 2% decline in housing

starts for single-family homes, but yet we saw the 26% increase for apartment dwellings, i mean, we all talked about the trend that we're becoming a nation of renters and fewer people are either unable to afford or choosing not to buy a home right now and instead deciding to rent because the uncertainty about the economy. none of that affects you, is that what you're saying, because you're a luxury homebuilder? >> yeah, it's very rare that we sell a home to a renter. it does happen in new york city. but outside of new york, it's extremely rare. i think those stats suggest that the renters may be bypassing the first home that they own, and they may be moving to the first moveup home, so they're delaying their decision to become an owner. but that's not our business. our average house is in the mid-600s, and it's several steps above that. >> what's your expectation for 2014? how does this play out?

>> i feel really good about 2014. we're going to be opening a whole bunch of new communities. we've a lot of exciting things happening with the company. you know, we're still producing as a country just a fraction of the homes that we produced in the good times. a million-five, a million-eight new homes per year is the norm for decades. we're still significantly below 1 million, and we have a long way to go. i think this is the early stage of a recovery, and we're very optimistic about '14. >> but is there an interest rate at which you would start to be concerned? if it got high enough? >> oh, sure, particularly if it moved rapidly. but i don't think we're going to get to the rate i have in my head, and i don't think it's going to happen quickly. and i think the buyers are able to digest the rate. i think the buyers now realize that 4.7% for a 30-year no-point low is a tremendous rate historically, and i think we're

fine. if that rate creeps a little bit, i don't see any problem. >> all right. we'll leave it there. sir, good to have you on the program. thank you so much. >> thanks, doug. >> thank you. >> we'll see you soon. coming up, kay schiller index robert schiller will be with us, telling us what he thinks the increase in mortgage rates will have, an impact he's seeing. you won't want to miss that. we're heading toward the close. 20 minutes left in the trading session. the selling has intensified here and it's entirely possible we'll close below 15,000 for the first time since july 3rd, and it will be the sixth straight down day for the dow, and we've had this 3% desclien. so the selling is picking up here. >> what a string of losers, huh? meanwhile, comeback stocks are on the horizon. citigroup qualifies. once nearly left for dead, it's now up 400% since then. up next, find out what the financial giant could be on the verge of finally raising its dividend. speaking of financials, barclays america's ceo skip

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hardest-hit bank stocks following the innings collapse, but citigroup has made a comeback, up 230% from that time. >> a reverse split, right. >> yeah, it had something to do with it. >> kayla breaks down how far citi has come. >> yeah, it has come a long way. it does make it hard to calculate. everyone is saying from a qualitative standpoint, this is citi's year. shareholders feel the sting of preferred stock conversion that diluted them in 2009. and the financial crisis that loaded up citi's balance sheet with bad assets, it's not a d distant memory. -- trimming legacy assets, the bank's quietly making strides elsewhere, streamlining head count, and the shares are up 42%. jeff hart says having him at the helm puts somebody at the top focused on getting returns today. pandit was focused on building for tomorrow. tomorrow doesn't look bad either. hart knows citi is trading at

8 1/2 times next year's earnings while the top 100 u.s. banks are at 11 1/2. it's also trading at a lower multiple to tangible book value, so the stock could rise from here. a slowdown in the emerging markets, though, where citi has a large presence, that would appear to be its achilles heel, but jason goldberg of credit suisse say it could be a positive, since even sluggish growth in the emerging markets is still much better than the anemic growth here. so it does look like citi's still undervalued relative to its peers, and people like mike. they think it's a good story. >> it seems to me the reason to own citi is you want to own the global story. you want to own banking growing all over the world. that's one reason to own citi, and they still have the international strength. >> they do. and the consumer, whereas it's deleveraging here in the u.s. still, outside the u.s., they're borrowing a little bit more, doing more business with banks. whether that's a good thing or not, who can really know at this point. the one other then about the housing market, morgan stanley's

betsy grace says, as housing continues to improve, citigroup will be able to sell even more of the bad mortgage assets from its bad bank. that will give it another lift, too. >> okay. >> kayla, thank you. citi may be one of the great comeback stories of the year for sure, but seema has a list of stocks that may be beaten-down bargains. over to you. >> reporter: -- say it's a good thing, because it makes stocks cheaper, relative to what they earn. now, over the last five days, energy stocks have been hit the hardest. cliff natural resources, marathon petroleum, among others, have lost more than 5% and are trading at what analysts say is now an attractive valuation. other big losers are in the technology space, but that, too, has allowed valuations of the stocks to come down. micron tech, cisco, apache. those are some of the biggest losers over the past week. keep in mind the dow has lost

700 points since its record high on august 2nd. back to you. >> all right, thank you. 12 minutes before the closing bell sounds. we have a market worsening. art telling us the bias is definitely to the sell side, even though it is small in terms of the volume amount. 86 points lower on the dow. we've seen the selling materialize here. >> and that puts us in negative territory for the month, as well. the dow is now down about 4.5% from the record high. steven wood, he thinks that that's creating a great buying opportunity for investors and he'll lay out his investment strategy next. also, home depot co-founder ken langone will join me to host the 4:00 hour. find out if he thinks the market sell-off is getting started and where he is putting money to work in this environment. back in a moment.

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all right. welcome back. our next guest says he's a buyerest recent pullback. he's joining us now to talk more about it. steven wood, from russell investments. hello, steven. >>ly. >> you buy here? >> down 82. >> i think so. kind of add selectively to the portfolio. i think this will be more of an active management environment. a 4%, 5% pullback in the markets may not be terribly noteworthy.

>> so you're taking the long-term view. >> certainly. >> even if we get a 10% correction, so another 7% from here, you'd be okay? >> the things we would like, sure, if they're more on sale. i think the volatility we've been looking for in the market, we're beginning to see. it hasn't been as intense as it has been. i remember standing next to you when t.a.r.p. didn't pass. that was an interesting day. >> a scary day. >> very scary day. we were watching that monitor. compared to what we've been through, it's very normal market volatili volatility. i think the u.s. will continue to benefit in equity and even fixed income. looking at europe, still seeing a four handle on interest rates in spain and italy. you're not seeing a lot of systemic stressors in the market. fixed income and equities are repressing around what will happen in the next couple of weeks with the fed. >> anything happened out of the fed today that educated you, changed your mind on something? i know it was a lot more of the same. >> yeah. >> but look the at market reaction. >> it looks tepid in terms of reaction. we've gotten the reaction running up into this.

so what we saw out of the fed minutes today i think was disagreement of very smart people looking at cost benefit analysis of a certain policy. i would be more interested in jackson hole and janet yellen will be there, i think larry summers will not be. what will be the conferences between dr. yellen, you know, mario dragi, the chairman of other central banks around the world, consequences of the taper that will be felt globally. that will be a very interesting conversation they'll be having there, as well. >> apparently, by the way, bill, the central banker in brazil just cancelled. >> huh-oh. >> he's not going. don't know why. i know the central bankers in brazil are upset with the central bankers in the u.s. -- >> and the currency statements -- >> we know they're going to taper at some point. >> yes. >> is there an aggressive rate that would bother you? i mean, that could trouble the stock market? could send it lower here. >> the discount rate, 3%, kind of on the underside of that, 3% would be noteworthy. if we're south of 3.5%, we're

still in a region that won't impact the equity markets overly much. when we start getting to 3.5%, we'd have to reassess the longer-term outlooks, but for now, that's the directional that -- >> we have a vested interest in this question. do you think they'll start tapering in september? >> i think they want to taper in september. it's very interesting, they say they're data-dependent, but it seems like they've made up their mind. what kind of data would get them to not taper in september or december? >> unemployment still at 7.4% or something. >> that would appear not to be the case. yes. i think they want to look -- because the equity market -- or the bond market right now, even if they were to buy at 82% or 85%, given that the treasury's going to issue less bonds, they have to taper down, and just not be 100% of the treasury market. so they might look at the mix between mortgage backed as well as treasury notes. but i think they'll taper. i think they'd like to taper. i think they want to have the plumbing in place before chairman bernanke leaves, or at least set up the taper.

>> we're not thinking they'll do it. >> not in september. too soon. >> looking at inflation. >> but also we need to separate what will be an interest rate rise from quantitative easing, and those are two very distinct things. so depressing the accelerator -- >> but you know the rates are going to go up if they start the process. everybody will head for the exit at the same time. don't you? >> i think it could -- the move is priced in the market. >> at 1.68. >> yeah, 120 basis points in a handful of weeks on the 10-year. a lot of the movement is already there. >> thank you, steven. >> good to see you. >> we'll take a break and get the closing countdown. also, hewlett-packard's earnings out in a few minuting. will it be the lifeline for the market that they're looking for for tomorrow? we'll have instant analysis of the results coming up. and friday, don't miss my exclusive interview with the chairman and ceo of walmart, a big interview coming your way, mike duke on everything from the health of the consumer to the world's largest retailer and how it's dealing with the costs of healthcare. you're watching the "closing bell" on cnbc, first in business worldwide. go ahead of you?

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also, the 10-year yield, that just shot up when the announcement came out about the fed minutes. there it was. we got to 2.88 at that point. and we're back to that level again. now, steven wood says this is the market pricing in tapering at this point. he feels it's already in the market. that remains to be seen. allen valdez, how significant is it to go below 1,650 on the s&p and 15,000 on the dow? >> psychologically big numbers, especially the dow. the 15,000, that's been the benchmark for a while now. so that's pretty significant. but again, the fed doing a lot of talking, nothing coming out of their mouths new. just more uncertainty. the market hates the uncertainty, bill. >> what about the yields going higher here? you're at two-year plus yield -- two-year highs now. >> that tells you, yeah, the tapering is coming probably in september. but again, no certainty on that. again, the yield popping up there. >> you're less likely to buy stocks here? >> right now, we are less likely to jump in. we were buying on dips, and now we're holding back, watching

what goes on. >> all right. remember he was raising cash there. we'll keep an eye on that. thank you. thank you. [ bell sounding ] some members of the td ameritrade scholarship winning group ringing the bell here. stand by. hewlett-packard's numbers coming up, and it could set the tone tomorrow. ken langone coming up, co-hosting the second hour of "closing bell." see you tomorrow. and it is 4:00 on wall street. do you know where your money is? hi, everybody. welcome back to the "closing bell." i'm maria bartiromo on the floor of the new york stock exchange. the dow closing lower for the sixth straight session, ending below 15,000. the first time that's happened since july 3rd. look at how we're settling out. the dow giving up about 105 points. the selling accelerated into the close, 14,897. the nasdaq, also weaker by 14 points. technology rolling over a bit today. a third of a percent lower. the volume very light. typical for an august wednesday.