tomorrow. that's tonight on "fast." >> a little tesla action and maybe a smidge of apple. >> maybe a little bit. >> thank you. >> thanks for watching. get your "power lunch" to go. "closing bell" starts right now. hi and welcome to the "closing bell." i'm kelly evans. >> i'm simon hobbs in for bill griffith. dow, s&p and nasdaq all in the red, substantially cutting earlier losses with the nasdaq the hardest hit. the move lower in apple not helping. again, the stock is coming back right now. we'll take you live to the worldwide developer's conference coming up. transports weighing on the nasdaq and broader market. airlines again, the hardest hit. look at these declines. jetblue down almost 7%.

dealted united. american all down more than 4%. we'll debate whether now is the time to jump in and buy transport names or if you should be looking outside the u.s. for opportunity. >> a netflix stock split could be on the cards. is it worth buying now ahead of tomorrow's shareholder meeting? one netflix bear will weigh in. >> you might know who he is. >> the family behind the triple crown winner justin zayat. john fortt covering all the action live in san francisco. what's the headline today? >> drake just showed up on stage. that is the big musical artist we've got on stage. eddie q. trying to explain why this time is going to be different for apple and music and streaming. this is the one more thing, the final thing they are going to

talk about at wwdc today. they said apple music is a music service. it's global radio and connecting fans with artists all in one app. i scratch my head and say, wasn't that itunes when they added ping? it had radio to the side your music. it didn't have streaming. apple has some explaining to do to explain how this is different, how it's going to blunt spotify's momentum. they went over changes to os-10. it's not just yosemite it's el captain with tweaks and updates. ios has updates that relate to home kit, new features there. ios 9 will be smaller than ios 8. it will be compatible with the same number of phones which is good news for people with the

big update to deal with at the end of last year. they talked about new features and software with the watch. watch os2 will be available in the fall. it's got new photo faces that you can stream in from apple or set up from your photo albums. developers will get access to the microphone and speaker as well as other elements of it. a number of dig announcements for developers showing how apple hopes to stay on top in mobile. tim cook mentioned apple now has wracked up $100 billion app loads. paid out $30 billion to developers. if you want to make money in mobile apple's ecosystem is the prime place to do it.

>> sure 100 billion served. john fortt on the west coast. let's bring in timothy lesko. you had some sense of what we might here. what are some of the most important things you heard today? >> everybody expected you would see the music feature which was widely reported on. what john noted was most important, apple continues to expand the ecosphere. used to be digital life was e-mails and photos. now it's how they control their home whether it be thermostats or garage door opener. what apple is doing is creating a user base to continue to buy their products for years. regardless how great the next phone or computer is they are developing the year base. the way to to that is to continue to have developers develop great software.

>> time and again, apple launches something and people don't understand how important it's going to be moving forward. obviously, some have fallen by the wayside. let's run with the idea of the music servers. to what extent can it revolutionize the way everybody consumes music, if it becomes widely advertised if it becomes something people talk about more than spotify, perhaps different generations, where could it take us, in your view? >> where it could take us is anywhere you go your digital content travels with you. whether you are wearing the watch, carrying your phone, you have access to the music you want when you want it. the key drawing people into the apple music sphere is to continue to make sure artists get paid. developers are able to make money developing software and artists make money making music. in the end, apple and the

consume irwin. >> we focused on the entertainment piece today. we'll talk to the ferdinand developer. did you hear anything with regard to health kit or research kit or medical focused areas from apple? >> what apple sees is down the road it will be a measured life. if you're wearing a watch or have a phone, you'll measure your heart rate and your blood glucose. there is a lot of r&d in order to make the research kit and phone really kind of a window into your health and using big data create better health outcomes. it's a massive world we are only in the beginning innings of. you had mark cuban talk about it. a lot of investment is toward the sensors. we haven't scratched the surface on that yet. >> bear with us. we have breaking news again from john fortt outside that apple developer's conference.

take it away. >> details on apple music. the first thing i want to say is it's going to be available on android as beats music was before it. that is significant for apple. this isn't called beats. this isn't a legacy product. apple is saying apple music is going to be available on android, $9.99 a month is the price as expected. it will be available june 30th. family plan will be available up to six family members at $14.99 per month. this will be available in 100 countries on june 30th. apple explaining how they hope for this to revolutionize music, including ways for artists to connect with fans. a platform for streaming and radio in general. there's the pricing and availability. not just on ios or the mac, but android. >> thank you for that breaking news. timothy lesko is still with us.

why to the point if this is about expanding your own ecosystem would you make apple mike available on android? >> i think what apple recognizes is in the music world they always sold music. itunes was available on windows and to sync your ipod. there are some things apple does that they are delivering content for their consumers wherever they may be and whatever device they might have. in a world where you are starting to see operating systems develop for televisions, seeing them develop for cars if you want to capture people give them the availability of their content wherever they are. ideally, they'll use that on an apple device. it's nice that it will be cross platform. >> with apple trading slightly lower, around $128 how much value do you think there is in these shares? >> it's continued to trade over 15 times earnings in a market trading over 17 times earnings.

you have a company that continues to be involved in every cutting edge area of mobile. you would think it would deserve a higher multiple than being discount at the market for a better of the time we've had these discussions. >> we'll leave it there. back to the markets, down 27 points on the dow. transportation sector in the broader market getting hit hard especially the airlines. let's bring in our closing bell exchange sam stovall from s&p capital iq jeff and ken. why should i care about transports? >> airlines are down because of the question about yield and whether they are adding too much capacity. real question about transports in general. the implication is if you don't get confirmation in the industrials by the transports

it negates the move made by industrials. i'm not a big believer in that. i found over the last 20 years, twice as many divergences occurred relative to declines. it's logic 101. all trout or fish but not all fish are trout. while transports are important, we still need planes ships and railroads. >> in terms of where this market goes next, there are a couple of factors out. which way do you think you are headed next? >> what are the dow transports? those are the companies that move the products. those creators are representative in the dow jones industrial average. a lot of folks are thinking this will lead to a lower supply due

to the fact demand is weakening. i don't put that much weight in it. look at fall 2012. we've seen this lag before. then it was up up and away. it is important to realize, and why these names are down a lot of big analysts cut the ratings. airlines are getting updated. look at union pacific down from $120 to $101. there is value presented today. >> interesting. ken, what is your take? the dow has lost its gains for the year as a result of today's action. >> the transports are obviously something you want to look at because stuff gets transported and usually do you inkling as to the health of the economy. in this case, i think it's a reflection of people's insecurity about the health of the economy. also right now, it seems like the market is totally fixated on what the medicine is going to do.

any news that seems to tell us that interest rates are going to go up is not good for the market and vice versa. if you look at history, the market should want rising interest rates. if interest rates are going to rise it's because the economy is doing well enough the fed feels it's okay to raise rates. it's good news. if you look at the last two times we saw the fed raise interest rates in '94, 2004 in both instances there was a knee-jerk reaction. the market went down dramatically. it soon recovered and ran two years after that. i anticipate the same volatility through the rest of this year. as we are worried about the fed. i think it will be a buying opportunity. >> if it's not transports that will lead this market higher what sector can do it? >> i still think health care is going to move us higher. the's interesting. it's done very very well over the last several years but it's done exceptionally well in terms of earnings.

earnings growth is expected to exceed that this year and next. pe levels trading at a discount to the market. the biggest group biotech that is in terms of earnings growth is trading at a discount. >> i would like to disagree. >> real quick. >> health care is overpriced. dow is stagnant here. we are trying to figure out something. you need to focus on financials. health care had its run. dollar is stagnant here. be smart of what sector you are getting into today. >> we've got obamacare ruling looming. thank you for your time. appreciate it. we have 45 minutes to go to the close. dow is down 39 points. we've come off the lows after reports that perhaps greece will delay payments it owes to its creditors. the s&p 500 down about eight points. nasdaq down 38. >> coming up on the program, netflix shares hitting all-time highs ahead of tomorrow's key shareholder meeting.

there is talk the stock could be split. >> also ahead, what's next for financial markets in turkey now that the president's party lost a a parliament majority the first time. >> big move in the euro on news greece's bailout could be extended until march. ♪ ♪ ♪ (charge music) you wouldn't hire an organist without hearing them first.

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stocks in turkey stumbling on the heels that the president's party lost. >> new headlines on greece in just the last hour. our chief international correspondent michelle caruso

cabrera joins with us details on both. >> according to "wall street journal," greece's creditors made a big offer last week 10.9 billion euros from a different pile of money that would tide greece over to 2016. that is supposed to be reserved to recapitalize greece's banks, not the functioning of the government. this plan has been floated before. the big hold up as always the greeks must commit to certain reforms, something they haven't done yet. we'll wait for the next chapter on that. on to tour kill. the reason turkey stock market and its currency took punishing hits today the ruling party lost its majority there wasn't enough party that won enough seats to take over. the turkish government could become unstable. istanbul market dropping 8% and ended the day down 5%. friday one u.s. dollar

would .3.66 turkish lira today it would buy 2.8. that is a huge move. the election outcome is a big negative because important economic reforms will not get done as a result. both parties will turn more populist because they think they have to go back to the polls soon. there you see the. casting his vote which didn't work out the way he wanted. back to you. >> cheap to go to istanbul for the summer. >> that's the up side. >> i have family doing that. stocks in china closing in another seven-year high. this on bets mainland equities will be included in the indices tomorrow. >> bob pisani as more on that. >> the world's largest index will rule whether shares in mainland china will be cl included in the global indexing scheme. it's used by etf providers the world over. why is this a big deal?

indexers rule the world. many are increasing investing through indexes used in 1600 etfs that trade every day. it could mean billions of dollars come out of other emerging markets and go into mainland china. what is important? the total stock market value is $9.7 trillion the biggest in the world after the u.s. it's weighting the index. it has roughly 2% weighting in all countries world index even though it's more than 10% of the world stock market valuation. why is china under weight? because authorities there have restricted ownership of mainland china stocks to chinese citizens. all that is changing. the question is whether it's changing enough to satisfy msci and other indexes. big change will come in the emerging market index. there is about $1.5 trillion pegged to that index. china is 23% of that index.

this is all the stocks listed in hong kong. adding mainland china could increase the weighting significantly. this is the index used in the em you are seeing here. my bet right now, they are just going to do a small amount at a time adding mainland china to what's in hong kong right now. either way get ready to own more china stocks. back to you. >> comforting given the bubble discussions we are having. thank you, sir. turkey and china not the only hot spots. it's the german dax slipping into correction territory. uncertainty in greece. does this add up to a buying opportunity overseas? >> joining us jim lowell. welcome to the program. what is the central message to investors from your point of view? >> we continue to think the stimulus measures applied in europe and japan create a nice

safety net for investors to walk across the near-term volatility which we fully expect based on fear than fundamentals, maybe due to greece but due to other issues. we think especially compared to other areas in the world, europe and japan provides very attractive valuations. we think for investors would be the time to take advantage of any significant selling in the markets based on fear and not fundamentals. >> you make the point about fundamentals. i should buy japan and europe on fundamentals, you say. not least because the central banks there are inflating. is the inflation of a central bank fundamental, in your view? is that a main reason fundamentally to buy a stock? >> no. it definitely creates a safety net. sooner or later, that piper will have to be paid. we think that is years down the road. in our own economy, slow growth not no growth thanks to massive

stimulus efforts by our fed created five years of some of the most remarkable gains we've been able to wring out of our marketplace. we don't think we'll see a mirror image, but the likelihood and probability for attractive returns in europe and japan are certainly at least in part based upon having that stimulus safety net underneath those marketplaces. >> nonetheless, if you listen to what's likely to happen here the fed will tell you that yes, there may be a rate hike. maybe there will be two. they are going to raise rates very slowly in this country. once we've got past the first rate rise isn't it possible with the super low interest rates that this market again could rise substantially? >> no question about it. look, there are ways you could play europe and japan without having to leave the u.s. effectively. you could buy a good diversified health care fund given that many pharmaceutical companies are global in nature and domiciled in europe. you could buy u.s. mega caps.

not the s&p 500 names but truly biggest company names here whose revenue is obviously dependent upon what is going on in the european and japanese marketplaces. we also think that in the hands of a good manager with a proven track record being able to manage both risk and return europe and japan certainly need to be present in i would argue, any investor's portfolio, and increasingly more measurably than they likely have been over the last few years. >> thank you for your time. >> thank you. 36 minutes until the close of the market here. dow down 50. just beginning to extend those losses from earlier. >> coming up a stock split could be in the works for netflix. one analyst tells us what he is expecting ahead of tomorrow's shareholder meeting.

we are watching shares of pandora, the online radio company on a steady decline, but did trade lower in the past half hour. down by about 4% after apple officially's nounsed its own music streaming service. other services have been part of the mix before. nobody has been able to dethrone

pandora or spotify. we want to call your attention there interestingly enough to the social media side of things. spotify's ceo has just tweeted out right when apple was announcing its streaming music service, and this is interesting here. he just tweeted out a simply oh okay. the ceo of spotify tweeting out " "oh, okay." we'll keep an eye on shares as we head to closing bell. about 4 million shares traded so far. >> was there a space between the oh and okay. >> it is oh space okay period. >> could mean many different things. thanks a lot. netflix getting ready for shareholder meeting tomorrow. so far this year the stock has seen a gain of more than 80%. netflix currently has 60 million shares outstanding.

google has nearly 300 million. apple has almost 6 billion shares outstanding. >> joining to look at whether a stock split makes sense, michael packter. >> i think it will be a love fest. netflix has done a phenomenal job for shareholders. i think everybody will be very happy. the only thing i think management has left to do to reward shareholders is take the share price down to an affordable level. 6-1 or 10-1 stock split makes sense. it makes the average investor able to afford 100 shares. is really hard to buy 100 shares of a $600 stock. >> your price target is spot on after all this. where do you have your target at

the moment? >> i'm at $270. i think it's because i'm old and stubborn. i think this stock is overvalued. i still value companies on a free cash flow basis. they have none. i still value companies on earnings multiple and it's trading way north of 100 times. it's probably pushing 200 times earnings. i just think that is too expensive. i don't see the earnings growth it gets. >> you must come under a huge amount of pressure. being a professional, doing what you are doing, holding that view, when it hasn't come to fruition. how do you resist that pressure? why continue to take that stand? >> only because i think i'm right. i think principle matters more. no one needs to pay me to tell them what the stock has been

doing. most investors, most analysts are momentum players. just because the stock has gone up a lot doesn't mean it's going to keep going up. i think it's overvalued. you just did a feature on pandora facing competition from apple. what happens when amazon launches a stand-alone streaming service of its own? i think that amazon stand-alone service is coming and coming soon. when it happens, i think i'll be proven right and i will address my price target for whatever perspective split. >> real quick. the actual split for netflix shares do you see that as an event that moves your view on them one way or the other? if this gets more people involved but doesn't change the underlying argument doesn't that make those shares more of a risk? >> obviously, if you split shares demand goes up. not much. sure i could take my target up i'll round it up to the nearest

$5, i promise. >> thank you for joining us. high time we got a cnbc news update with sue herera. the supreme court agreeing to weigh new limits on the ability of workers to ban together to dispute pay and work place issues. the justices will review a $5.8 million class action judgment against tyson foods over the pay for 3,000 workers at its iowa pork processing plant. >> officials working to determine the cause of a fire that raged for hours at a pennsylvania chemical plant no injuries have been reported. >> dozens of people were injured when two trains collided in argentina late sunday night. the crash occurred on the outskirts of town. in order to prepare his teammates for the nba finals

lebron james rented out a lounge at a swanky hotel in san francisco, hosting a bonding party and presented each teammate with a gift which was an apple watch. lebron even brought in a barber so everybody could get fresh haircuts for the series. looking spiffy indeed. back to you guys. after the performance so far in this series he could do anything he wants. >> i think that's very true. good point. >> thank you. i stayed up too late to watch that game. feeling it now. s&p off about nine. nass dash under pressure. apple contributing to the red we are seeing. >> up next top trader tells us what he is watching in the most important half hour of the trading day. here at td ameritrade, they love innovating. and apparently, they also love stickers. what's up with these things, victor? we decided to give ourselves stickers for each feature we release. we read

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less than a half hour to go before which wrap up the day and inevitably there could be big spikes in volume. what are you watching?

>> looking for pepdnding emotional capitulation. there will be a big volume. what are we looking at specifically? you can look at what it the market's soft today. less than two weeks we have expiration. people will be evaluating the closing trade. there's a lot of stock that will change hands. how is the closing trade affected as we move forward? very important. big trade coming. >> okay. thank you very much. back to you. >> apple's worldwide developers conference wrapping up out in san francisco. let's send it out to josh lipton live at the conference with one of those developer lindsey irvine for sales force.com.

>> most people when they think of this conference, they might think of what is tim cook going to deliver for consumers. you are here representing sales force. why is sales force here today? >> we are so excited to be here. sales force was the first enterprise for wearable initiative with 100% focus on accelerating wearables in the enterprise. we are one of the only companies to be part of the apple watch launch. >> the sales force app on that watch, walk us through what some of the functions for your customers are. >> three key components. the first key component is really analytics, business insights. data we can resonate with without having to call up an analyst. pull of that data from my wrist watch. second ability to get business

notifications, be it from a sales perspective, service community or marketing. the ability to get those notifications directly from your wrist. we enabled our ecosystem, empowered them to create applications for the apple watch. innovation can go beyond just the sales force experience and really expand to drive new business valuable. >> that wearable only launched late april. can you give as sense what traction you are seeing with that? >> we launched sales force wear a year ago in june. the focus was about accelerating wearable enhancements and accelerating adoption in the enterprise. what is exciting about the apple watch launches for many of us consumers, businesses have been waiting for that cohesive experience between the phone and wearable device. since the apple watch is launched, we have a lot of enterprise customers excited to create applications or leverage

applications take advantage of that functionality. 63% executives cited wearables as top improvement for their business. we expect that to accelerate with apple watch. >> lindsey irvine, thank you for your time. >> back to you. >> thank you, josh lipton and lindsey irvine. we wrap up the developers day for apple. we have 20 minutes to trading to the close. dow down 60 extending losses and going negative on the session. for the year down about 33 points. >> we'll see whether stocks can make a comeback into the close. american pharoah co-oenter justin zayat is here.

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>> you see the degree to which the vast majority are in negative territory. >> everyone down here talking about this weekend's triple crown victory. it was a huge weekend for american pharoah. winning the belmont stakes and becoming the first horse in 37 years to claim that triple crown. joining me is justin zayat. it's a thrill to have you down here. what does this mean for you and your family? >> it's unbelievable. it's about the horse racing industry. what this horse means for the industry and what happens after this? the way he does things. everything. it takes me breath away. >> it's amazing your family has only been at this ten years. other people have been at it generations not achieving this.

what is next for american pharoah? >> my dad says the sport needs stars. we need to keep our stars in the game. we are committed to running him till the end of the year. there are a couple of race options we are weighing. there is the haskell in new jersey and monmouth. >> will he run the breeders' cup? that's in october in kentucky. he is a kentucky horse. he is going to like it. that's over 2 million if he wins that race. >> $5 million purse. this could be the ultimate of ultimate to end his career. we'll see. we'll weigh our options, see how the horse is doing. i would love to win the breeders' cup. >> people are wondering, how did you find american pharoah? how much did you pay for him? >> we bred him. we owned his mom and dad.

we were lucky enough to breed this horse. >> those stud fees for his dad are up to $100,000. it's the pairing, the stamina and speed with the mare that created this course. where do you go as a business beyond american pharoah? >> we are going to have to see where the future takes us. see how the markets are acting. >> you're not done yet? >> we've got big plans. you are making me give away my secrets already. >> he's just out of college. will american pharoah have a long life? >> yes. hopefully this year or after next he will retire to stud and be a proud dad of hopfully many champion race horses. >> beyond the u.s. horse racing in the u.s. has had a tough time do you think american pharoah can ignite audiences, bring in

sponsors? you had a great three-day run. can it extend beyond that? >> the way i saw the crowd saturday? for sure. the place was rumbling. we are hoping this is only bigger and better things. >> we'll leave it there. thank you for being here this afternoon. congratulations again. >> thank you. >> justin zaytat and robert frank, thank you. >> check out super rich american pharoah. that is tonight at 10:00 p.m. eastern. 13 minutes to trade. let's have a quick check as we reach the end of the session down 53 on the dow. it's technology that's the worst performing sector. next we'll take you through the close. after the bell earnings from h&r block, david and busters and pep boys.

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good afternoon. we are down 32 points for the year now on the dow. to a lot of people that, will

seem like a struggle. how do you view what's going on at the moment? >> we've been rangebound. if you look at particularly the s&p 500, we are at the low end of the range. we've been between 2080 and 2131 since may 7th. it has been like we moved anywhere too spectacularly. we had great interday moves of volatility, but volatility is in the bond market. not much in the stock market. one thing we are seeing from our retail clients is they are turning over in anticipation of a rate move some of the dividend payers. sort of turning to things that have been beaten up lately like twitter and some of the more solid stocks like apple and disney. twitter and linkedin were two of the stocks they bought last month and became engaged in the market overall. this is our highest reading in terms of imx. >> is there anything this week you think could help us break out of this range? >> everybody is excited that the

employment report was strong friday. this week we get to find out whether it's going to have an influence on the economy. we'll see whether the consumers are coming back. you'll see retail sales will be up 1% and you'll see consumers more confident than in prior months. all that will translate into much faster economic activity. that relationship between the labor force participation rate and average hourly earnings is getting stronger. we'll see more wages and more money for consumers. >> on what basis do you argue that they continued to save more and more in the face of lower gas prices in. >> the first calendar quarter there was a lot of turbulence. we've seen consumer spending weaker in the first quarter historically for the last couple of years. keep in mind consumer spending was up 1.8% first quarter. that is not a bad number when

the economy contracted 0.7%. even if i think that number will be slightly revised higher. that is a respectable number. >> i love your point where people are rotating now. interested about sectors. earlier was suggested health care could lead the way or more traditional cyclical spaces. what do you see here? >> financials. you have to think when interest rates are anticipating going up. many clients sold bank of america, citigroup. one reason is they bought it earlier in the year. they are cycling into some other financials. have to figure the more banking stocks get to do traditional banking. they found other ways to make money. now they can actually lend at a higher rate and pay out a lower rate the first time since 2008. >> let's not get ahead of ourselves. there are many months. thank you, being guys. >> up next right back with the closing countdown.

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the dow on this session is negative for the year overall. some might say not bad giving you had this huge move in interest rates. this strong employment report on friday indicating that there will be rate rises from the fed. let's bring in bob pisani for more action and detail. >> a lot was made transports are down 10% from recent highs. we did see weakness in railroads today. there are other sectors weak today. social media stocks. like yelp facebook yahoo. yelp was down about 5%. all those. you can see down almost 5.25%. in addition to that we see other groups more than 10% off their recent highs.

interest rate sensitive stocks. utilities almost 14% off recent highs. we've seen reits. almost seeing a low for utility. the reit index down about 11% from its highs. it's not just transports. we are seeing a number of sectors under pressure as well as some of the tech stocks. >> a lot of the headlines will be with the airplane stocks within transports. jetblue has got a lot of attention today attention today. jetblue almost doubled in value over the last 12 months. that's the context which we are seeing these moves. >> airlines were big movers last year. there's a lot of changes in capacity. they finally became profitable last year. the valuations were very high right now. i see the numbers overall,

bookings very good for the airlines. if they are going to expand capacity, that's an issue for a lot of momentum people. once they see some break in any of the numbers, momentum people will get out. airlines had momentum for quite some time. >> tomorrow we get potentially big news on china. do you want to run people through that? >> biggest index is msci. they announced a change in the weightings of china. mainland china has no real weighting in indexes now. hong kong list the stocks. they may put mainland china in. that would mean a lot of these indexes, including many etfs would have to add mainland china stocks. more people would have to own china at that point, own chinese stocks. if we change the weightings you have less south korea, less brazil, less india, more china. we'll cover that tomorrow. >> "closing bell" continues now.

live from the new york stock exchange. >> a rowdy group ringing the closing bell at the stock exchange. welcome to "closing bell." i'm kelly evans. it was a rough close there for wall street. dow going out with a decline of about 81 points. s&p about 13. nasdaq 46. for the dow, decline almost 0.5%. for the dow, that puts us in the red for the year. our panel to discuss this with us, dan greenhouse and steve

liesman. tim seymour. for people saying wait a minute it's the second week of june and you are telling me we are where we started this year does that mean this is a great opportunity to get in? >> forget we are back to where we started at the year. we are back to early december levels. it's been six months for the s&p 500 having traded flat. does that make this a great buying opportunity? periods of time which the market trade sideways or unchanged over a five or six month period is not totally unusual. it happened in 2013 2012 and it will probably happen in 2016. >> why do you think so? this was unusual. you had numbers to this the other day. we've been at a narrow trading range. >> goldman sachs is making a similar point about the boringness of the market.

the spread between the markets high and low over the last 70 sessions or some arbitrary number was as tight as the four tightest periods over the last 50 years. it has been a boring market. if it feels that way, because it is. >> if you look at the individual stories, there are phenomenal ones. whether you are talking about netflix up 80% or consumer staples names down double digits, this has been about picking the right place in this market to be. where is that place right now? s s. >> i don't know. the implied volatility outside the equity market. in the bond and currency markets is roiling the stock markets. i do believe financials continue to look good. if you think friday's payroll number does a couple of things it tells you gdp first quarter remains this series of

aberrations in the recovery and things are better the fed could be in play net interest margins increasing. banks look good. capital markets business was decent. if you look at momentum plays, a lot are running out of momentum. you see investors start to get cautious. if i look where markets are positioned, i tend to agree with dan. this is something we've been digesting almost nine months. if you look at europe you saw a break down in germany. you broke through the may lows. people questioning things are worse over there than here. >> we are back to a show-me market. >> what about the jobs report friday? >> show me the feds raising rates without a clamitous impact on markets.

it weighs over the market. we showed you 280 and you're not willing to bet this market. >> seeing decent earnings growth? >> you are not willing to met the market until earnings prove it to be true. >> to make a larger point and for viewers, you see us on tv droning on about the first rate hike and whether it's going to cause a market calamity. we talk about how the market the stock market has been going sideways. the issue isn't we need to digest the federal reserve, it's ultimately you are digesting the impact of a federate hike in an environment which stocks are no longer fairly valued dare i say expensive. taking a look at this situation, isn't it understandable 0 -- or is it understandable the market would have trouble making meaningful new highs in light of the fact valuations are where they are and the fed might raise

rates? >> yeah. people don't know what to do with the dollar. we heard a lot of talk. did obama say this or what about the dollar? people are concerned about the dollar and multinationals are concerned about the dollar. people drone on about the strength of earnings quality. it's being supported by buybacks that are making stocks look more attractive than they are. i don't have an issue with that. people should be very supportive. we are in an environment where the next three to six months will be crucial for macro. seems the market is taking stocks and underlying markets ahead of where central banks want to be. the volatility we've seen in currency and bond markets is more indicative of sell in may and june when we have equity markets hemorrhaging. >> we'll leave it there for a moment and bring dominic chou.

>> we are watching talking fun and games. batching dave and bust terse up. the stock is up after an earnings beat. company reports earnings per share of 46 cents. that beats estimate of 37 cents a share. revenues coming in better. $223 million, $216 was the average analyst estimate for revenues. they raised comparable sales guidance to 4% to 5%. a beat on earnings a beat on revenue, boost in guidance as well as for comparable store sales. right now shares up 2.5%. relatively light trading. only about 35,000 shares have changed hands so far. back to you. >> thank you. there is your consumer spending.

dave & buster's? have you been to a dave & buster's? it's a discretionary visit. >> i exercised my discretion. >> skee-ball. >> it's chuckee cheese for adults. >> there is talk about weakness in consumer. fourth quarter was strongest of personal consumption. what is going on between what we are seeing at the national level and narrative? >> you can take that fourth quarter number to chuckee cheese and you wouldn't get a sandwich there. it doesn't amount to a hill of beans, so to speak. people are looking for the now. the now is that the first quarter has been lame. the second quarter suggests -- that makes thursday in my mind the big day of the week. not only do i have a gig

wednesday, but thursday is the big day for retail. all the ingredients are in place. 3 million over the course of a year and they are earning more. it's too early to count the consumer out. >> this is my point. what more does the market need to be shown as evidence this recovery is intact and progressing in a relatively normal way? >> my glass is half fall. a strong retail number is expected off a strong friday payroll. what happened to the dollar? the dollar was down major today. i think the consumer spending clearly is very cautious. we can go on and on about wage growth or lack thereof. back to the stock market. if you take dave & buster's

this stock doubled in the last year. all this growth is largely priced into a lot of these names. it gets back to where you started with this. a lot of equities don't look that cheap. >> before we run out of time do you think that's going on with the airlines? they got priced to perfection? everybody was piling in and now it's, well maybe we'll take our profits here? is there something deeper and more troubling going on? >> in airlines it's more deeper and troubling. are they going back to their old ways. >> that's not the same as telling people this is a sell sign for the macroeconomy. it's not something everybody should sell their shares on. >> fedex is near all-time highs. it's the airline industry that

is under pressure. valuations in the airline sector look very interesting to me. >> we'll leave it there. thank you so much. stick around with more of tim on "fast at five." >> he is always thinking ahead. he is a drummer. he's got to know where the next beat is. >> have you played together? >> we have not. >> will apple's new music service strike a beat with investors? we'll hear from one analyst next. why is the man behind the popular fruit ninja game not developing an app for the watch? >> why elon musk says utility companies shouldn't fear tesla's home battery system. ah! aflac? aflac! i thought you said this guy was the best? oh, he's a horrible stylist.

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you. josh lipton has been inside the event all day and joins us with the latest.

>> the main event as expected was this new music service. it's called apple music. ceo tim cook brought legendary music producer jimmy ivy on stage who talked about how revolutionary this service was going to be. >> a revolutionary music service curated by leading music experts we handpicked. these people are going to help you with the most difficult question in music. when listening to a play list what song comes next? the only song that is as important as the one you are listening to at this moment is the one that follows it. >> it's going to be three components to this service. a streaming component that will be curated, not just by algorithms, but as you heard by these hand-picked experts. 24/7 global radio station with its own deejays and channels. you'll have what apple calls this connect feature.

artists will be able to have direct uploads. it's $9.99 a month or $14.99 for a family package. cook talked about and highlighted the strength of that app economy. >> the app store has passed 100 billion apps download. the rate of growth and the momentum is absolutely staggering. the industry has never seen anything like this before. the app store has forever changed software and software distribution. >> all this news coming as apple stock has been on a tear since that last developer's conference about 12 months ago. that stock now up some 40%. back to you. >> thank you. you might not know him by face

but you know his apps. joining us now is app developer luke musket creator of fruit ninja. welcome to the program. >> pleasure to be here. >> fruit ninja has huge success. you're there with an eye towards what games may follow it. what did you hear at apple's conference today and what more can we expect out of your creative brain? >> there were interesting announcements. a lot was how the phone would replace functionality we have. slowly integrating apis that will take over what's been previously handled by third party applications. what we are seeing is the phone and environment of apple growing and becoming more inclusive. for us it's exciting.

it gives us a lot more opportunity. it allows us to have much smoother integration and produce much richer feature sets for our players. and create more compelling experiences that integrate more timely with the hardware device itself. >> could you give us any examples? i'd love to know what things are now possible that weren't before. >> sure. one of the big trends in gaming at the moment is youtubers and streaming of people playing games. we are seeing a massive growth in that area. previously in order to do that functionality on mobile devices such as iphone, you had to go to competitors and other third party applications. that was often difficult. it would create instability when trying to release the games. it meant you were dealing with a lot more people when trying to produce that functionality. now moving forward, games that

have done a good job integrate ing can use the new replay kit apple announced today that will make it more smoothly to integrate. >> when you go to a conference like this with a big game are you someone they move away when you walk down the aisle? >> it's funny. unlike a musician like drake, no one really knows my face. no one recognizes me until i introduce myself and what my previous work has been. it's nice that way. i can be a bit more low key since i'm not going after that attention. i get to take it all in. >> you don't get in the vip room for apple, anything like that? >> no. i think it's good that way. it means everyone gets an

opportunity to get the most out of the conference not just the people who already had success. a lot of times it's the up-and-coming apps. >> before we let you go have out what makes a successful game? besides the obvious, the game is good and engaging is there any indication right now when you create a game where you see another game that this has the "it" factor that will make it successful? >> that is a difficult one. what the exact magic sauce that makes a game wildly successful is something we are still figuring out. if i knew that exact answer i probably would have driven here in my ferrari. it's definitely unpredictable. with anything creative it's hard to know what is going to resonate. there are things to help boost those odds but it's still challenging. that makes it exciting and interesting. >> anything you guys are doing with the apple watch now?

is that still too far off? >> apple watch had been too far off. with the announcement of the support today gives us more access to the features apple watch has which makes it more compelling and interesting to develop for us. we are going to be keeping a close eye on that market and looking at what we can do in the future. >> luke, we'll follow along. thank you for joining us this afternoon. >> great. >> luke muscat. we'll send it out to dominic chou. >> tax preparation giant h&r block unchanged after posting their fiscal full year results. h&r block, they don't break out the quarter specifically. h&r block reports its full year. earnings come in $3.08 billion,

narrowly missing analyst estimates. it may be fair to say they were in line. these are full year results. some analysts trying to break down the numbers. a lot of the bulk of the activity for h&r block comes around and leading up to that tax season deadline april 15th. light trading in the after hours. about 10,000 shares transacted. united natural foods, down about 7%. 83 cents a share versus estimates of 85 cents a share. $2.11 billion revenue. expectations were for $2.41 billion. 2014 earnings were below wall street estimates. we've been talking about the possible death of the mall for a long time. why malls may be thriving now is

just ahead. >> could looming medicare rate hikes spark consolidation across the health insurance space? we'll talk about that.

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experience. it doesn't seem like retailers and developers have gotten the message. courtney reagan has details now. good to see you down here. >> the death of a mall is a catchy headline. there are several truths to understand about the state of retail. online sales are growing at a faster rate than in store sales. around 90% of all purchases are made in stores. retailers, including radioshack wet seal filed for bankruptcy this year. sears and aeropostale are closing stores. occupancy rate 92%. that's steady over the last year. mall rents have been rising for 16 straight quarters. yes, not all malls will survive just like not all businesses will survive. vaicy rates at dominant malls are microscopically low. they expect rents to be robust. the smart malls are concentrating on what amazon can't offer, experience rather

than shopping centers. restaurants, spas fitness and entertainment. this morning i spoke with the ceo of related urban on site at his hudson yards development in new york city. one million feet of retail and restaurant space, including the first neiman marcus is being built with a park, event space, residential and commercial offices. ten days ago san francisco mall opened 35,000 square feet of space plus pop-up shops and event space, just outside bloomingdale's on the fourth floor mall entrance. retailers that are smart are making good use of their space. winners keep winning, losers keep losing. >> to some extent we are seeing the urban space with a roof over it and nicer floors right? we are talking about mixed work space, retail space. there are data centers out

there. it's almost as if it's the shopping mall and what we experience on the streets here are colliding. >> exactly. think about towns that don't have what we have here in new york city. they don't have the ability to walk around and do things in one square block. mall can offer that. spa, fitness center and shopping. all these things you can do in an experiencial way you can't do with amazon. millennials like the malls. they like to be together. they may be on their phones and like to browse, but they like shopping. >> do you have concern about valuations? is this being driven down by investor interest than actual functionality? >> i'm amazed that we are amazed that kids like to go shopping together at the mall. when i was a kid, that was the standard thing you did. >> what is the new abercrombie and fitch? part of the draw to the mall was that space where you could see abercrombie and fitch. >> time-out no no.

the draw to the mall was my mom could drop me off and i could hang out two hours and go to different stores. >> i want to know if the mall figured out a way not to give me a headache. >> abercrombie is lowering the music. >> here is the valuation based on the trajectory. five years what is that 90%? is it still going to be 90%? >> it will take a long time to bring that down substantially because of how -- it's easy for a small number to grow quickly. >> are you saying we reached a stalemate where 90% is good? >> blue nile the online retailer opening its first store on long island. >> the biggest draw is they have to offer a little bit of everything. they have to have an instore experience and online experience. >> you can overdo it one way in terms of valuation, but i don't

think the trend -- i think the trend is inexorable. there will be more online sales coming. >> sure. >> the malls my find their feet and what happens next online retailers find another way to get more back. >> i think we are seeing that change right in front of our eyes. courtney reagan, thank you so much. greece's international creditors late last week proposed extending the bailout till march 2016 in return for pension cuts and tax increases according to "wall street journal." greece declared a new willingness to compromise. no deal reached. >> the first time since his son beau died vice president joe biden posted a message on social media he sent a tweet expressing his gratitude for the outpouring of support he and his family received. beau biden was laid to rest saturday. the 57th annual big rock

blue marilyn tournament got off to a roaring start off the north carolina coast. one boat brought in a marilyn weighing 680 pounds and won $365,000. 149 boats are competing for the grand prize up to $923,000 in the tournament which runs through saturday. american pharoah's win in the belmont may be worth more money later than it is now for those who bet on her. more than 95% of those who spent $2 on a winning ticket have yet to cash them in. seems they want to hold on to a piece of history rather than cash in the ticket for $3.80. can't blame them i don't think that. it's cnbc news update this hour. back to you. >> a major inflection point for health care cost is coming. technology and medicare can play a role. we'll explain. >> will tesla's home battery system be a real threat to your home power company? e. t-mobile agrees.

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it was right across the board for the markets. dow losing 82 points on the close. nasdaq giving up nearly 1%.

s&p down 13. taking a look at interest rates and crude oil. 10-year was about 2.384% after the big move friday. crude headed lower. the story heating up cnbc.com near and dear to my heart. >> out for a breath of fresh air. why? because the site has a breath of fresh air. it's your spark. we are launching your spark column. today it features what you say is an inflection point in health care cost. and now -- how that might mean big things for fed policy. >> i see what you are doing there. the sparkler and the spark. i like it very much. >> thank you. welcome. find it on "the closing bell" show page and we'll float it on the home page periodically.

we are sparking. >> i am honored. be careful with those. let's bring in joseph cantor from cantor fitzgerald. major inflection point looming for health care costs. thank you for your help and being here. >> thank you. >> a big part of health care costs is economy. what is about to happen in this space? >> coming up in fiscal 2016 which starts october 1st there will be a rate increase over 1%. this comes after five years of significant decreases in total, maybe 15%. >> 15% decreases in one of the biggest parts of the u.s. economy has a huge impact. we are now, even if we see a small increase what ramification is that going to have for a lot of health insurers? >> 15% decrease was to bring medicare advantage rates in line

with service. >> the biggest companies in this space, unitedhealth have about 3.5 million medicare advantage members. humana "wall street journal" reported, has been looking at selling itself. does this medicare advantage business which is 65% of their revenue make them an even more attractive target because of this inflection point? >> because of fiscal pressures you highlight and demographics rapid growth in population over 65, which consumes about three to four times as much health care as people under 65. >> we are talking about the federate hikes. >> i want to ask you a quick question. the big debate about this topic is whether obamacare, whether the affordable care act is the

primary reason medicaid health care costs have been held down. in a recent "wall street journal" op-ed, jason furman talked medicare penalizes too many hospitals. too many patients need to be readmitted. speaking of the managed care names, are you seeing those types of changes take effect at the managed care level, the hospital level? are you seeing maybe not specifically attributing it to obamacare necessarily? there is a ways to go there. that has had an impact. >> all that contributes to the slow down and economy. >> do you know how much of this 15% decline showed up in cpi and

pce? medical care costs rose. they rose at a slower clip. >> i think one way for people to think about this and you can't comment specifically if you look at core pce services inflation, it's running about 2%, 2.5% annually. which is a better reflection of underlying inflation pressures? maybe we are already at or above the fed's preferred rate? >> there is something the federal reserve has been worrying about some time now. broader changes services in general distributed throughout the economy.

my question is are you seeing things at the hospital level specifically that they are doing -- forget the fee versus value. are you seeing steps hospitals in general are taking themselves to try to hold down costs? >> sure. if you look at providers, more care is provided and more cost effective alternative settings to hospital. reimbursement system is being changed in ways that will penalize hospitals for inappropriate admissions or unanticipated admissions within 30 days. it is fostering a change in the way care is provided. >> people over 65 spend more money. 15% cut was in medicare reimbursement. >> right. they helped offset. thank you for cominge ging down.

>> joseph cantor from cantor fitzgerald. sears reporting a smaller first quarter loss. the retailer anticipating a cash influx. expecting approval later this week of a plan to spin off 235 stores into a real estate investment trust. up next the benefits of these types of moves for investors and businesses. apple asking people to listen to the music via its new streaming music service. be prepared to pay for it.

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welcome back. reits are income producing real estate properties. they provide revenue, including long term capital appreciation. with looming rights of interest rates on the horizon, is that bad news for investors? >> it is reit week 2015. >> who is the shark in this case? >> we've got 2,000 people here all getting together to spend a couple of days talking about all the good things real estate can deliver. >> we know people have piled into this income class in recent years. >> we are a trillion dollar equity cap industry today. more and more people are looking

at reits seeing them as an important part of their portfolio. >> one of the things we know lately, retailers are starting to join the fray. sears, a company looking at transforming itself into a reit. do you expect that we could see more household names turning themselves into this kind of structure? >> they are turning portions of their business into that structure. taking the real estate and trying to monetize it in a different way. that's a small part of what reits are today. large businesses with terrific management teams with great growth prospects that have been delivering for shareholders quite some time. >> the reit business benefits from two things low interest rates is one and the second is a lack of building and capacity. isn't it right to say both of those are most likely to reverse at once?

>> interest rates reversing is a good thing for real estate. rising interest rates, if they rise for the right reason can be a good thick for real estate. >> i talked to a bunch of reit guys last year. >> i was there. i was at that dinner. >> i said the problem is guys in the real estate business aren't building anything. they looked at me like i was crazy. what do you mean the problem in the real estate business? that's the best thing, nobody is building anything. last thing you want is capacity. >> unlike many of the prior recessions, we did not have a situation with real estate industry. we were not overbuilt. we did not have an abundance of supply that needed to be worked through. at the beginning stages of this economic recovery real estate performed very well. >> and you're here to say all my forecasts came true? >> right on the money. >> we had the ceo of wells fargo

on the show recently. he told us there are cranes in every major american city. the amount of construction because of the discretion last time around is phenomenal. how much square footage are we looking at through this real estate cycle? where are we in this cycle? >> there has been an increase in construction. construction costs are up. most sectors were undersupplied. the multifamily space, i'm the ceo of a large apartment company. we are undersupplied with house 0ing. very little built in '08 and '09. >> that is a huge trend is this preference for renting rather than owning.

supply is being absorbed by incremental demand. you get the millennials out of mom and dad. >> the thing is it was the lack of housing for single family single parent families that's been a huge trend. >> a lack of housing for single parent families? >> two bedroom apartments nobody could find. is that still an issue? >> no. i don't think so. there are new apartments being built in many markets. they are being absorbed. occupancies are nearly at all-time highs. >> we'll let the conversation continue later. it is reit week. we appreciate you being with us. utility companies might have been worried about elon musk taking market share with his new battery. musk told them there is nothing to worry about. why after the break. >> apple announcing a new music streaming service.

improvements to its existing apps at the worldwide developer's conference today. the stock closed lower. will these announcements be game changers?

elon musk reassuring electric utility owners his batteries won't put them out of business. morgan brennan has the details on this story for us. hi morgan. >> hey, kelly. tesla famous for making cars with batteries but they've been using their technology to make stationary batteries for commercial and residential use. elon musk telling electric utilities execs that they shouldn't fear their batteries. he believes most u.s. customers will use the home battery system not as replacement to the grid but in addition to it. >> we think most customers in the u.s. are going to be using it as kind of a u.p.s. as a backup power. that essentially protects them in the case that there's a big storm or some kind of natural disaster. whatever the case may be, that has -- where there's an occasional power outage.

>> musk also saying tesla's largest commercial use power pack system could enable utilities to store power during peak times, even shut down their more expensive plants, and this tha this is the area that could account for 80% to 90% of stationary battery sales for the company and that the company's already working with utilities, for example, edison international, on projects such as this. musk also noting that wider adoption of electric vehicles will help boost demand for power, which he actually sees tripling overt long term. shares of tesla were up nearly 3% in the trading session today, and of course that's ahead of the company's annual stockholder meeting tomorrow. kelly, back over to you. >> morgan thank you so much. nearly 3% gain there, guys. not too shabby. but what do you think about the impact? is he potentially going to disrupt the solar -- or the grid as we know it or no? >> i think, listen when elon musk sets out to do something it's really hard to -- i will say whenever i hear someone say guys don't worry about it i'm

on your side, i'm reminded of every science fiction movie where an alien comes to earth and says we come in peace. >> a boon to the auto insurers perhaps? to the travel sites? >> there is an opportunity here just an opportunity for destruction that has systemic implications. >> oh, sure. >> and the reason is because these utilities, they do business with these long contracts. these 20 and 30-year contracts. to have something come in, and this is not immediate, and disrupt that process creates long-run systemic questions about some utilities. now, he says no and it may be that if this -- the battery thing is offset by the cars then there's no net impact. but right now the utilities are having a very hard time understanding the long-run trend of electricity demand in the country that seems to be doing more with silicon than it is with hydrocarbons. and net net that means we're more efficient but it creates a huge question as to how to

supply the amount of supply we need for electricity in the future. >> fair point and a great top toik think through on that level. elon musk talking there about the power grid. meantime it's a wrap for apple's worldwide developers conference. up next highlights. "closing bell" is back in two.

i know her. the apple worldwide developers conference just wrapping up. let's bring in lance ulanoff from mashable for his key takeaways. lance, give us your top three. >> so obviously we've got el capitan, the new osx. we've got an apple watch update. and of course we've got the big one, music. apple music. nothing was a huge surprise but we're glad it actually happened. >> why are we so glad lance, about the music, and what about this prospect of it being available for android? >> well i think if you're talking about surprises i think the fact that music service is coming to android so quickly is one. the other is having women on the stage at the keynote, which was a big deal for apple since we've never seen that before. but the music service is pretty much what we expected.

$9.99 a month. but they also have and this is very interesting, $14.99 a month for a family plan. six members of the family all you can eat music. and of course there's also beats radio, or it's called i'm sorry, beats 1. and that's really kind of how the beats name lives on in software in this 24/7 radio station. >> you know lance, that $14.99 family plan is a good point. i think a lot of people will find value there. just real quick on the el capitan and the watch update. first the software, the el capitan update. how significant is this for the rest of us paying attention for apple? >> how significant is the software update? >> yeah. >> neither one of these updates, neither el capitan which is osx's next update or os9 are big updates. this is the talk to the tick. you know tick-tock development. this is the sort of smaller update. but it's got performance benefits which are great and

some feature improvements like gestures. ios 9, by the way, some big stuff like multitasking like you've never seen before on the ipad. even picture in picture video. >> okay. that so 1995. it's very exciting, lance. lance ulanoff from mashable. i'm joking guys. we did a picture in picture on televisions at one point. it seemed to go away. now it's coming back. are you buying apple, dan, as a result of this? >> our firm has a buy rating on apple. they're still -- i don't want to speak on who follows the company for us but they keep hitting and firing on all cylinders and it's hard to argue with their strategy at this point, although i can't figure out how they're going to make money in mobile streaming. nobody else seems to be able to. >> steve, we've got to go. >> there's so much apple in my house it's like an orchard. it's unbelievable. you could pick them from the tree. >> it's a family program. >> the whole family has multiple -- >> you this guys for being here. steve liesman, dan greenhouse. that's it for us on "closing bell." "fast money" begins in moments. what's on tap? >> i know you noticed the

airlines today got crushed p if you take a look at the individual components american airlines jetblue, they actually declined even more. we've got the trade technically as well as fundamentally here on the desk. >> that was another head scratcher. they've really been under pressure. so eager to hear more melissa. straight over to you guys. >> thank you kelly. "fast money" starts right now. live from the nasdaq marketsite overlooking new york city's times square i'm melissa lee. your traders on the decemberric tim seymour, pete najarian karen finerman and guy adami. musk's next big car. tesla finishing the day up 3% as elon musk revealed details about the tesla model 3. we'll hear from the man himself and an analyst who thinks tesla could rally another 30%. american pharoah breaking a 30-year streak. but an incredible statistic tie the triple crown winners could spell pain for your portfolio. we'll explain why. but first we start with the news of the day and that would be apple. the company announcing a slew of updates and services at today's worldwide dev