get out of consol energy and they're getting the 11% upside today which you're finding in the stock. mln, martin marietta, a strong name, material space, i like it, performed well. i think it's moving higher. >> terrific, guys. great fun today. that does it for us. "power lunch" begins right now. "halftime" is over. the second half of your trading day begins now. the bulls are making their way back today. the dow and the s&p are up more than 2%. the nasdaq is up more than 3%. the russell, however, is up -- it is up but under 2% to the upside. the big question, though, is fear keeping you out of the market? or is greed pulling you in? we have several bull/bear debates coming your way and everyone has a good point. that's just ahead. also, this recent stock drop presents a great opportunity for your retirement portfolio. now, this is bigger than just a buying opportunity, especially if your retirement date is still decades away. tyler is out again today but

sara eisen is joining me once again. hi there, sara. >> good to see you, mandy. triple digit rally for the dow be up with over 300 points at this hour. still have a long way to go to make up for yesterday's losses. bob pisani jones me here on the floor. you've been looking at historical rebounds. >> we're due for a rebound, getting it right in line with a historical pattern. let me show you the s&p. we flat lined at the open, up 300 points on the dow, 37 points on the s&p and we sort of have been right there throughout the day. a little bit of rise after europe closed once again. sara's right, once we had a correction, 3% down with the s&p 500 two days in a row, that has been a rare occurrence. this only happened eight times since 1980, five in 2008 and each time, two sessions in a row, one day later, the s&p has been up 75% of the time, averaging 2.3%. sara, guess what, we're up 2.2% on the s&p.

that's today. >> not bad. >> it's happening exactly in line with expectations. one week later, it's up 86%. the median return, 1.3%. the biggest gains happened in the first day after the two down days which is what we're another right now. we've seen strange things. stuff is up today. look at the emerging markets, eef, down six days in a row. boy, it was down 12% in six days. what a debacle. up 4.6%, getting back a third of the losses. a lot of the high beta etfs are up today. this is to be expected. 53 on the vix yesterday. down to 28 today. you see. sara, we used to make a big thing about going from 12 to 14 on the vix. 53 to 28. >> it doubled. >> in one day. essentially. in half again today. >> all right. huge moves in volatility. gives you a sense of that. the nasdaq is also having its best one-day gain since back in

november. courtney reagan following the big movers over there. netflix up 10%. >> looks very green here today, strong turnaround in the composite. best day since november 2011. we got a number of big momentum players posting big increases, helping to push higher remember the nasdaq in general on pace for its worst month since november of 2008. the tech sector up more than 3.3% today. its best day since december. snapping a five-day losing streak, the chip sector, the semiconductor stocks tracking for the best day since the end of may. there are more numbers here to add to our record books. netflix gaining more than 9.5%. but it's still off about 14% for the week. apple up nearly 6%. down 6% in the week. we still have gains to make up, apple, though, the biggest point impact on the nasdaq 100 right now. back to you guys. >> thank you very much for that. courtney reagan, let's switch gears and take a look at what's happening with oil, which is

also in rally mode today. let's go to bertha coombs at the nymex. >> yes, oil is following along with stocks, notwithstanding the fact that we do see the dollar stronger today. but one could argue that some stocks are very much oversold. it's still not clear when it comes to the oil patch. francisco blanch at b of a says he thinks it will be another two to four weeks before we find a bottom here. right now we're in sort of an air pock net terms of demand for oil. he sees it coming back, seasonally towards the end of the year. as refiners come back, speaking of refiners, gasoline today continues to be under pressure because that bp refinery in whiting, indiana, is back and that is good news, actually for folks in the midwest. they could get a little relief at the pump. back to you. >> always like relief at the pump. thank you very much, bertha. a news alert in the bond market happening right now.

two-year note, rick santelli, what's the demand like? >> charlie minus, c minus. 26 billion of two-year notes starting what will be 90 billion in supply when you add in fives and sevens. the yield at auction, 0.663. the bid side of the one issue market was the high yield. that was 0.665. and the offer was 0.66. so it figured in pretty nicely. there wasn't an issue there on the dutch auction pushing it to move all the supply. here's where the weakness is and what really gives it the grade a little below average. 3.16 bid to cover, $3.16, chasing every dollar, securities available. that's light at 3.41 being the average. that's the weakest since halloween of 2014. 47.1, a little above average. 10.3, indirects on the light side. 42.6% to dealers.

tomorrow's five year, c minus. back to you. >> thank you very much. charlie minus there. we check out what's happening with the others with sara. >> let's look at the ten-year note yield and the 30-year yield as well after that demand which rick gave a c minus. the ten-year note yield is 10.25%. it dropped below 2% yesterday. buying of safe haven treasuries, pushing the yields down, now they're going back up. the 30-year yield, 2.84. we got better economic data helping treasuries as well. the precious medal, gold, it's been under pressure even in a flight to quality kind of mode. the big sell-off didn't help gold. it's not getting a boost today either. it is down 17 bucks or 1.5%. what's also not helping gold is a stronger u.s. dollar. stronger, even after we saw a better u.s. economic data, that was a good sign, housing has somewhat been a safe haven in this recent sell-off. new home sales were solid.

check out the s&p 500, spdr home builder etf. we have the i-shares home etp to show you, still up more than 5% so far this year. 6%. the i-shares. new data on the housing market. diana olick live in washington with some of the numbers. >> sales of newly built homes came in july right along expectations, up 5.4%, up nearly 26% from a year ago. new home sales are way up year to date compared to the same time a year ago. here's a little perspective, though, the ratio of existing home sales to new home sales, it's normally 6-1. we're still up at 11-1, just not enough new home sales. builders are still putting up house at a very slow pace. i want to focus on prices. the median new home price sold in july was up 2% from a year ago. builders continue to say they have pricing power, toll brothers ceo echoed that on the company's earnings call today. this is toll's average sale

price soared to its highest ever. builders are shying away from the entry level product as first-time buyer demand just isn't there. been a lot of talk about what all this market volatility will do to consumer confidence in housi housing. an index of overall buyer demand by redfin slipped in july by the fourth straight month. economists from s&p, zillow and redfin have noted that buyers are getting price fatigue at best and sticker shock at worst. as we talk about the rising yield on the ten-year, mortgage rates follow those up as well. >> they sure do. thank you, diana olick. do you keep buying the sector? our guests, welcome to "power lunch," both of you. chad chad, look, let's be honest. if you bought a property in the states five, six years ago, you are laughing pricewide. >> the general thematic is that

the great deleveraging is starting to subside. that will give power to home builders. mortgage debt typically grows around 6% over the last 40 years. recession grows around 2%. it's now flat. it's starting to improve. the growth of mortgage debt. that will give the fuel to these home builders over a period of time. >> if we see the fed holding off rates this year, do you think we'll see another rate of refis and purchases? >> even if the federal reserve raises rates by a quarter of a basis point or 50 basis points over the next 12 months, we believe that great deleveraging will give a little bit a get up and go to the housing market. let's take a look at historical numbers. the average of the last 40 years is initial home starts of 1.4 million per month. we're at 1.2 million. it's improving ever steadily. you just have to have patience. have a three-to-five-year time horizon.

>> how does this translate to how you invest in the sector. >> what we would say is we're positive but we think you should continue to be selective here. while we agree the market -- new home sales mark set growing slowly and steadily, we're not a point where rising tide is floating all boats here. you've seen the bigger market cap builders outperform. we think that will continue to be the case going forward. it's a cautious optimism here in the market. and we agree with it generally speaking. we could continue to rather buy the larger cap names, toll included, who reported this morning. they're one -- >> is there anything you do not like? >> yes. again, we would stay away from the smaller cap builders. we don't have sell ratings on the shares. we wouldn't short anything at this point, especially in front of the fed's potentially not raising rates in september. but we would generally speaking stay away from most small cap builders at this point. >> got to prefer the large caps over the small. thank you very much to both of you for joining us today.

sara, down to you at the stock exchange. >> bank of america up 5%. a number of financials are getting upgraded today following the recent stock market sell-off. the names you may want to pick up now. plus, the stocks that are among the biggest gainers right now in this rally. that's all coming up next as we head out. the most active stocks on the new york stock exchange at this hour. you're watching "power lunch" on cnbc, first in business worldwide. nt's ever been the kig of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop, and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great.

best buy up sharply after quarterly profit and revenue beat forecast, same-store sales also rose 2.7%. toyota testing air bags. and bhp billiton saying despite profit dropping to a ten-year low, it still plans to keep its pledge not to cut its dividend. that's helping shares up more than 5%. thank you. stocks rebounding today on the move i about the chinese authorities to cut rates. whether or not it does anything is a completely different question. nonetheless, while major averages are having their best rally of the year so far, they have yet to recoup all of yesterday's steep losses. so where are the biggest stock winners right now in dominic chu is a man who hopefully knows. >> we took that question.

we looked at the s&p 500 stocks out there. take a look at some of the stocks. the s&p 500 stocks, we look for which ones had some of the biggest drops yesterday. 5% or more. that 500 became 105. we then said of the 105, how many of those stocks which fell by 5% yesterday are up by 5% or more today? that list then became seven. and then only three of those actually have positive year-to-date returns so far. let's take a look at the three names, three names out the of the s&p 500 under armour shares up by 5% today. you can see the chart over the past couple of days staging a bit of a comeback from the lows we saw on monday. again, big drops, yesterday for under armour but better valuations, one of the biggest advancers in the s&p 500 today. then you have another one here, amazon.com. another momentum stock. one of the stocks that have been getting a lot of attention for powering the moves higher over the past year.

steep drops here but then getting momentum. it's up about 4% today. and the single best stock performer today of those criteria we mentioned, online streaming media company netflix, those shares up by 8% today. remember, netflix has been one of the biggest losers in this recent market sell-off. so also interesting, sara, each of those three stocks we mentioned under armour, amazon and netflix all part of one sector, consumer discretionary and they are three of the top performing stocks within that sector so far. back over to you, sara. >> consumer discretionary and tech, very strong today. dom, thanks. you could call it a valuation reset. bank stocks rallying as well on a number of upgrades today. kayla tausche with me here. >> they've been calling it evaluation reset, saying it's been oversold, circling bank of america in particular as the best bet. that stock has gotten four

upgrades just today. five this week. they all say b of a has an improving franchise with good fundamentals and it has just sold off too much. ubs up moments ago. bernstein raised it to outperform, mcquarry up to neutral and $16 a share. that's why you're seeing beating the kbw banken devil even though it is still down 10% so far this year. jpmorgan may have gotten the biggest compliment of the sector. he called jpmorgan the lebron james of banking. he says it's playing offense with cost cuts in market share, playing defense with earnings and capital levels and that, he says, will continue to help jpmorgan through times of global volatility. >> if you look at jpmorgan, they are resilient. you look at 2011, 2012, the european sovereign crisis, 2013, the taper tantrum, 2014, you had russia, this year you had greece

part three. and now you have the chinese situation. they've been resilient not only through all of that but through the financial crisis. jpmorgan is the lebron james of the global universal banks. >> that's good company to have. no bank is totally immuned to china. here's where each of the big bank's exposure stood at the end of the second quarter. you can see how the big banks stand, in some cases they may look like big sticker numbers but they're small portions of the overall company's assets, citigroup, $21 billion, jpmorgan, 18, bank of america, 11. wells fargo even $3 billion. these are lagging indicator because they are recent as of june. but some people are surprised that even wells, which is often haileds is a domestic bastion of banking. goldman sachs doesn't break out

china specifically but there are volcano estimates out there as well. >> it's interesting the upgrades are coming despite the fact that the fed interest rate hike is being pushed out even farther. that was seen as the big catalyst. >> it will still be a catalyst but maybe doesn't come this current quarter or next quarter. >> still coming. >> as long as the consumer is improving, as long as they're going to be borrowing more, taking out more loans and spending more on credit cards, that could also be a boone for the banks so long as the economy here is strong. >> it's the domestic story. thank you very much. on the banks, mandy. >> stocks are rebounding but the dow is still near correction territory, almost 10% from recent highs. the s&p 500 and nasdaq still in the red for the year after what was yesterday the worst day on wall street in four years. we're out there and we're searching for opportunities in the global market sell-off. there's a silver lining as well that's coming your way for your retirement fund. as we head out, these are the most widely held stocks in

america. apple up almost 5%, google and microsoft also putting 0 on nice begans. don't go away. a powerful new dell 2-in-1 laptop, and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great. behold, these are two can you spot the difference? the wind farm on the right was created using digital models and real world location-based specs that taught it how to follow the wind. so while the ones on the left are waiting, the ones on the right are pulling power out of thin air. pretty impressive, huh? now, two things that are exactly the same have have never been more different. ge software.

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if you've looked at your 401(k) recently you may not be feeling as confident about your retirement future as you were. but there may be a silver lining for many of you investors. sharon epperson is here to explain. put us at ease. >> i will put you at ease. but a lot of people are worried.

your 401(k)s and your iras may have lost value but this may be the perfect time to convert a traditional ira to a roth ira. it allows you to withdraw earnings tax-free after 59 1/2. when you convert a tax deferred traditional ira to a roth ira you have to pay income tax on the money you convert. a dip in the value of your retirement portfolio mean you could save big on taxes you pay up front. if you have an old 401(k) from an employer, you could convert that to a roth ira. some financial investors may depend more on your tax situation rather than the current market situation. converting to an ira is most

beneficial to someone who is in a lower tax bracket. talk to an accountant and financial adviser to see if this silver lining strategy makes sense for you. >> what if you only want to convert some of your money, not all of it? >> you can do that. you could do one ira or a portion of an ira. you can also undo the conversion. you have until october 15th of next year to recharacterize your conversion and change it back. you can then take the roth ira, make it a traditional ira. it's really important to talk to someone who knows your tax strategy, knows your investment strategy to help you make the decision whether this is the right strategy for you. >> the best thing for you. thank you very much as always. >> sure. >> shara epperson? >> let's check on the bond market. rick santelli at the cme group.

>> if you look at the intraday of a two-year note, you don't pick out the 1:00 eastern auction. we are up five basis points on a two-year, up ten basis points on 10s and 30s. it's having a bigger effect on downiels. let's look outside of that quickly. big day in the dollar index, that's a two-day chart. hasn't quite got it all back from yesterday. a big chunk. the last two charts are five-year charts from barclays. the spreads on investment grade and high yield. boy, this volatility sure widened those spreads. if we'ree iing risk, this is what you should be paying attention to. >> thank you very much, rick santelli. a group of stocks rallying right now. is this a buying opportunity? we speak with one five star midcap money manager who is still up 5% this year despite the recent plunge. the stocks that he's buying on the dip, coming your way next.

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hi, everybody. i'm sue herera and here is your "cnbc news update." the defense ministry releasing cockpit video of warplanes bombing buildings and vehicles. and iraqi ground troops pounding isis positions with rockets. the public service commission of the district of columbia rejecting exelon's bid for pepco holdings. bp says it has restarted a portion of a large indiana refinery who's unplanned shutdown for repairs caused gas prices in the midwest to spike earlier this month. as a result, gas buddy.com says gas prices could fall between 20 cents and 50 cents a gallon in that region. and a large study from the national institutes of health finds omega 3 dietary supplements do something to protect older americans from

memory loss. that's going to be disappointing for a lot of people. i think they have other health benefits. >> i think so. i think most people, though, are doing it for the memory. that's kind of disappointing. i'm sure it has other benefits. you're right. >> sue herera, thank you. we want to check out gold prices. they're closing right now. pressure on gold today. >> pressure on gold. george gear over at rbc sort of saying we have the anti-inflationary pressures in effect today with that china rate cut. now today we have the dollar stronger as well. gold is giving back and you're seeing that in the precious metals overall. rbc in fact is cutting its price outlook for gold in the second half of the year. had seen it at around 12.88 on

average, now they're lowering it to 11.25 an ounce. copper the only metal bucking the trend on the prospect of more stimulus in china. back to you. >> stocks well off the highs right now. the dow is up 200 points. the nasdaq and s&p still well above 1% gains but they were a lot stronger earlier. the nasdaq over 2% gains, the s&p over 1.3. let's check back in with bob pisani at the nyse floor. why are we losing momentum? >> we're getting close to 2:00. there may be margin calls. overall, it's been pretty much steady as she goes. take a look at the major markets middle of the day here. we had 4-1 advancers to decliners. heavy volume but not quite as heavy as yesterday. the volatility is droing fast, 53 to 28 or so. take a look at the s&p. we were higher just a while ago.

while we were standing here, i just want to check around and make some phone calls. again, we're approaching that time of day when you get margin calls. in terms of the sectors, we had a great day in tech. tech stocks moved around, so discretionary was big, health care and financials as well. everything up 1.5% to 2%. >> is the come back not as strong as the sell-off. >> it tells you there was a lot of panic selling. pell got stuff they needed to sell out of the way and the people whoen watted to buy back are not as enthusiastic. maybe that's the right thing in this circumstance. i'm very encouraged we are moving differently than china now. particularly overnight, we saw us up and china down. were we up before that. >> even with a 7% decline. >> we're moving independent of china. >> bob pisani, thank you. over to courtney reagan at the nasdaq. >> i'm watching the nasdaq still

bearing the crown for the biggest index rally. we're off of highs of the session. still on pace for the worst month since november of 2008. we have ground to make up. momentum names making the biggest moves, not quite reversing losses for the week but still making nice strides. apple's point impact adding more than 20 points to the nasdaq 100, the biggest gainer there not surprising. the s&p biotech sector really on a tear today, up more than 3.3%. that's pulled back just a bit in the last hour. the chip sector tracking its last day since the end of may. you can see nxp up more than 4%. sara, back to you. >> i'll pick it up from there. courtney reagan, thank you very much for that. what are managers telling their clients today? joining us, neil hennessy, chief investment officer of hennessy funds.

gentlemen, always good to have you on the show. robert, i am sure clients have called you. what's their biggest question and what have you told them? >> yes, you know, mandy, this is a pretty scary time for clients. we haven't experienced this type of volatility in a long time. it's unnerving a lot of people, especially those near retirement. what we're telling them and what we're doing for our clients are focusing on the things we can control. what's going to happen in the market the next two to three months no matter how much conviction say it with, nobody has really any clue. there are things to look at it right now. the s&p 500 prior to this decline was trading pretty much at fair valuations. the banking system that we're looking at today is much healthier than it was back in 2008 and 2009. when you put those two things together, very rarely have we spurned a correction of 10% to 12% where it's made sense to be a net seller. it's usually a time to start looking at the portfolio, looking at stocks you didn't own

like aprilin iappling with disnd hold in long-term investing, buy low and sell high is easy to say but it's hard to do in practice. this is the time you have to step up and do that. >> can you argue that the recent correction has made this bull market healthier, more sustainable? >> oh, very much so, mandy. if you really look at it and you look at the numbers, there's $4.5 trillion in bond funds. what do we talk about every day on cnbc? the feds are going to raise interest rates. here's the perfect storm, the opposite than normal which means that yields are coming down. you have a ten-year at 2, 2.1, the dow jones industrial average is yielding 2.6, 2.7. here's an opportunity for these people to get out of fixed income and get into the stock

market. >> what kind of stocks, neil? give us specific names. >> well, i like consumer discretionary stocks. you can look at a foot locker and look at their price-to-sales ratio of 1.3. you can go to the chicken industry. price-to-sales ratio is 1.6. masco in the home remodel business. there are a lot of companies that are undervalued. it's a lot of value in there. if you back back to '87 where the market dropped 25% in 2 1/2 days, it rebounded 34% in the ensuing 12 months which would put this market at 20,000 in the next year and a half to two years. >> 20,000 is your target in the next couple of years. you mentioned apple and disney. are there any other specific names you'd be looking to buy

after they've had a recent dip? >> yes, i think really the good thing, mandy, there's a lot of names. we were telling clients as much as two, three months ago there wasn't a lot to get excited about in the s&p 500. you look at jpmorgan chase, that got an upgrade today. that stock at one point was down almost 20% yesterday, mandy. that's the time to step in and buy a best of breed company like jpmorgan. to neil's point with the ten-year now back below 2, this is a 3% yielder that if you do see interest rates rise, net interest margins will help that company out. we like jpmorgan chase. a company like amazon, a great growth name after it's pulled back 15%, 16%, here's the time to step in and add a name like that to your portfolio. >> you are talking to your clients about maybe taking advantage of refinancing. go to powerlunch.cnbc.com to see

where neil says this market is different from the financial crisis or 1987. watching the s&p 500, we mentioned it was off the highs, losing some of the earlier begans, slipping back into correction territory. that's on an intraday basis and that technically means 10% off the most recent highs. let's talk to traders. it's been an extraordinary two daz here on the new york stock exchange. we have steven golfoil. doesn't feel like there's a whole lot of conviction on this comeback. >> there's not. it was a buying opportunity to buy the corrections so to speak. right now you'll have to depend on the fundamentals of the american economy. i believe what we're seeing in the sell-off right now is the result of chatter coming out of china. the pboc just said the correction was the fault of the fed and demanding to raise rates in september. and another analyst out of sogen said the movement was an attempt to devalue the currency, which

is why we broke some level. >> i saw that headline out of shiniwa. >> going back to what ben just said, i kind of thought today was a chance to sell them if you missed them. you looked at it as a buying opportunity. i thought it was a selling opportunity. >> i think the correction was in. i think it was a huge overreaction by the foreign markets in passive investment vehicles that sold stock not on fundamentals. the world has to realize as we've pointed out, the united states gdp is only dependent on exports for less than 15%. >> 13%. >> the markets itself is telling you, particularly the housing numbers and the great driver of our economy, the consumer, is telling you things are okay in the united states and that's where you should be investing. >> steven, are you a seller on the news? very quickly. >> i don't know if we're as okay as you think. the consumer has a perceived loss of wealth here.

>> their loss of wealth in future buying power and 401(k). >> a little taste of the debate here. mandy, back over to you. >> thank you very much for that. >> oil is bouncing back today. it is down 58% in the last year and oil is also off its highs of the day. we are much higher in the morning and right now we're still up by over 2%. again, we're off the highs. as for this year, oil is down 27%, the ripple effect of that prolonged drop is being felt in places like andrews, texas. morgan brennan is there live with the full story. >> that's right. by some estimates, a rig like this can generate up to 1,000 indirect and direct jobs. as we've seen rigs come down throughout the permian basin and across the u.s., that's men the fewer workers which has meant less spending in local communities. that story when "power lunch" returns.

oil is bouncing back today as well today. wti crude in the u.s., $38.98, just below the $39 a barrel. yesterday it got to $37.75. that was the low, a new low, back to march 2009. the brent, the international bench mark below 4$45 a barrel, 49. the ripping effect of that drop has been felt in many places, including in texas. morgan brennan is there. >> with crude oil still under $40 a barrel and down more than 58% from year-ago levels, that prolonged slump is taking a toll on local oil towns, such as midland, a short distance away from here. the unemployment rate for july is extremely low. it's 3.3%. but that represents an increase

from the 2.1% we saw at the end of 2014. so fewer workers in the energy sector, that means we've seen less spending in local communities like midland. the mayor, jerry morales says the city which revolves almost exclusively around oil is re-assessing its budget amid slowing tax revenue. >> for all of 2014 we saw double digit increases from the previous year, from 2013. >> wow. >> that's unheard of. we're seeing our sales get back into the single digits. >> things certainly aren't dire but morales has seen his business soften, not seeing the long lines out the door. home prices have come off 15% to 20%. the thing to remember, midland and the whole area, the permian basin has been through a number of oil booms and busts over the

years. many folks tend to prepare for the worst. it really affects everyone, including the university of texas. which actually has extensive mineral rights including to the land i'm standing on right now, the university of texas pulled in more than a billion dollars in oil and gas revenue last year. this year it's expected to drop by half. we really are seeing the ripple effects. back over to you. >> we are indeed, not just a ripple but a hurricane in some situations. thank you very much. back to the markets. the dow, the s&p and the nasdaq well off their highs today. still in rally mode trying to get back some of what was lost yesterday and days before. rob morgan is a chief investment officer with a private bank. good to see you. >> hi, mandy. >> how closely correlated is the future of our stock market to the price of oil? >> i don't think it's closely correlated at all. i think from the stand -- i think we'll see a stronger dwlar here which is going to more than likely, you know, put pressure

on oil to go down. i'm far more opt miimistic at t stock market here. >> even if oil decleans from here, you think the stock market can recover? >> i do. is it a supply or demand problem? i think right in you don't with oil it's a supply problem. a lot of people want to say it's down because world demand is down and that's going to be -- that's going to carry over into everything else. i disagree with that. >> for the stock market specifically, are we out much t -- off the woods yet? >> on the negative side, we have they nickal damage to work through. on a positive side, we've had five double digit pullbacks. they happen about once and year. when they happen, everybody thinks the sky is falling. i think the root causes of the problem, you know, we're seeing assistance put there, china with the, you know, providing liquidity. it seems like maybe the

commodities are starting to phone a bottom. the massive surge in the vix, actually i'd takes is a good sign that we're close to a bottom. >> it feels like the conviction in today's recovery isn't there. we're back sliding. as we're speaking we're hitting the lows of the day. >> a big part of that, mandy, is working through that technical damage. you know, bob pisani earlier in the show mentioned there were some margin calls going on and that all contributes to that. so -- but at the same time -- we have to work through that but at the same time, i think we are pretty close to a bottom here. >> pretty close to a bottom. how much more to the down side, rob? >> i mean, you know, i certainly don't think this is going to go anywhere near a bear market. for the emerging world to pull the developed world into a recession, that would probably be the first time in history that's happened. usually it's the other way around. it would be the tail wagging the dog so to speak. >> might be the new world order,

though, rob. thanks for joining us as always. sara, over to you. >> watching the markets. .gains slipping away at the lows of the day, the s&p up 24, the dow up 221. with these crazy, wild market swings that we've been seeing, are you a buyer, seller or on the sidelines today? go to powerlunch.cnbc.com to weigh in. we'll have the results in a few minutes. you're watching cnbc, first in business worldwide.

here are this here's power points. stocks losing steam. at the low of the day. the dow was up 442 points to the good. we've halved. wti crude bouncing back to the near $40 levels and again it's also stuck near six and a half year lows and is also fading as we speak, and new home sales rising 26% from a year ago, although the ratio of existing home sales to new home sales remains high as 11-1. >> sarah. >> with 100-point moves in either directions the wild market swings we've been seeing, are you a buyer, a seller or on the sidelines today? that's the question. in our latest cnbc.com survey,

dom chu has the results. >> this market starts to lose a little bit of steam heading to the closer bell. earlier we asked you to tell us how you were playing the recent market volatility and here's what you said. so after about three or four hours worth of our polling or survey at least unscientifically, a survey, we -- we asked and about 11,000 of you responded in, and here's in essence what you said. 34% said that they would take the opportunity given all the recent volatility to be a buyer of the current market, so about a third. that's not too bad. 11%, one out of every ten, just about there say they would be selling this market perhaps more downside to come, and more indicative of how many people are feeling out there, around half of respondents are just waiting. they are holding. they are on the sidelines and don't exactly know what to do just yet, and six people are just not sure, period. so, again, interesting here that among those viewers and readers that have responded to our survey, the vast majority of them, about half, are just

saying maybe i'm going to take a little bit of a break here, much more so than the third that say they are buyers and the others that are sellers in this current market. >> people can still vote. go to "power lunch".cn plunch". >> sarah, over to you. >> the dow has cut its gains in half and rallying back today, but it lost nearly 1,500 points over just the previous three sessions. where do markets normally go historically after these huge kinds of selloffs? we'll have that for you still ahead and the market volatility prompting some bullish stock calls from analysts today who have 15 of them to tell you about. don't go anywhere. "power lunch" is back in two minutes. tdifferent.ng this summer, challenge your preconceptions and experience a cadillac for yourself.

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major averages are bouncing back from yesterday's massive selloff, but we are off today's highs, and at least one strategist says there's a 50% chance we've already seen the correction. >> there's a chance the bottom's in, and i'm not going to say it's 100% but it's at least 50. >> hmm. it's a coin toss. i guess that means 50% chance we

have not seen the correction so where does that leave us? let's talk more about this. the chief investment officer with bmo private bank. jack, can you do better and give us more than a 50-50% chance of whether we've seen the bottom? >> i wish i could, but i can't. breaking it all down we've come a long way in correcting that overvaluation we've had. we went from what i would say 25% overvaluation if you look at s&p relative to revenues and down to around a 12% to 13% overvaluation. you know, at some point it's noise, and, you know, an expensive market can say expensive. but, you know, the economic backdrop is still positive. it's still very solid. there's no risk of recession on the horizon. recessions are built on excesses and there really aren't excesses certainly in and among household balance sheets or corporate balance sheets. >> go ahead, mandy. >> i was going to say, jack, does it bother you that today's supposed recovery lacks conviction and is already fading

this afternoon trade? >> i'm not surprised. you know, my last point are technicals and momentum have broken down. they broke our circuit breaker points last friday. we did reduce some risk. we're going to take a wait and see, but, you know, for our client's perspective we would rather run the risk of missing an opportunity than avoid a situation where, you know, there's more downside, so, you know, all in all i think this is, you know, relatively a controlled situation, you know. i don't think we need central bank, certainly fed intervention here either way. i think probably september is off the table for right now. i see no reason for them to tighten, but, you know, credit markets and credit conditions have tightened. spreads are widening, and lenders are somewhat reluctant to lend. >> so with this valuation correction, whether it's the bottom or not, do you stick with the winners? do you buy the netflixes of the world that have done all year and have been brutally hit on the selloff?

>> yeah, i mean, i think, you know, that's their momentum players, momentum's broken. it's possible they can be overly punished and come in and start, you know, chipping away at, you know, at the damage, and we're starting to see that in some of the upgrades that are out there. i would say the solid dividend players, look, you know, the fundamentals underpinning their businesses haven't changed but now they are dividends. the dividend yield has gone up, especially against a backdrop with lower yields so i think that, you know, that could be an interesting opportunity for those investors who, you know, just want to clip a dividend and not worry so much about what happens to the price over at least a short period of time. >> okay. jack. thank you very much for joining us today. jack ablin joining us from bmo private bank. and let's take another quick look at what's happening out there in the markets. the s&p is currently up by 1.5%, so slightly even getting back the 4% it lost yesterday. the dow is up by 250 points, but it was up by nearly 450 points

earlier on in the day at the highs. we're currently sitting at 16,120. and that is it for the very first hour of "power lunch," but we kick off the second hour now with breaking news and also thank you very much to you sara eisen on the floor of the exchange for joining us. >> let's get straight to sue herera. >> some notable developments out of the just released fed discount minutes at the july 27th gathering, that's just prior to the regular fomc meeting. 5 out of 12 regional bank directors urged fed policy-makers to raise the discount rate. that's the rate the fed charges the banks for loans. at that time those five thought economic and labor market conditions had improved to the point where a rate hike would be appropriate. the fed did not in fact raise that rate or any others at the july meeting, as you know, and we should note that, of course, this was before the recent developments in the markets cast doubt on whether or not we will see a september interest rate

hike by the fed. all right. back to you guys. melissa. >> all right. thank you so much, sue. welcome, everybody, to the second hour of "power lunch." we want to go to eamon javers who has breaking news at this hour. >> reporter: yeah, that's right. the department of justice is saying today the fbi took into custody a former jpmorgan analyst from the san francisco office of jpmorgan along with two of his friends in an alleged insider trading scheme. the department of justice says ashis agarwal along with two other men have been taken into custody. agarwal allegedly participated in an insider tipping scheme about conditions he learned from working at jpmorgan. two of the deals that were involved in this scheme included integrated device technologies, april 2012 planned acquisition of plx technology and also salesforce.com june 2013's acquisition of exact target inc.

according to the indictment the three men netted more than $600,000 of illicit profits which the defendants used, among other things, to cover previous trading losses and repay liabilities incurred by agarwal and other men. we'll be reaching out to jpmorgan to get their take but that's the news for now from the justice department. >> firmly higher on the day but the rally off of three gut-wrerning days of losses is losing steam. dow jones industrial average higher by 1.6%, up 259 points. the nasdaq was testing new session lows and is now up by 2.4%, recovering off those lotion and up by 107 and the s&p 500 is back in correction territory meaning 10% off of its recent highs, up by 1.5%. let's get straight down to the floor of the new york stock exchange and simon hobbs is with us for the hour and also joined by bob pisani. bob, i want to talk to you about

this witching hour because larry mcdonald flagged an interesting chart saying around this time of day is when people get tapped. margin calls are called in and this is when markets have had trouble. they have rolled over in the past three days. >> yes, and that would make sense. certainly on say friday and monday, i'm not so sure today though. it would seem unlikely that's an issue and remember, though, the s&p is 200 points off of its old highs so there might be something to that, and, remember, too, melissa, we do have record margin usage out there so there may be some residual and that's a very interesting chart. this is from larry, 2:00, you can see a little bit of weakness occurring and we did see some weakness at 1:30. one other thing i would just point out there was some weakness in the tech stocks. if you look at apple, for example, all of a sudden right about that time, apple lost about $2. you can put that up. that may have been a little bit of factor in the midday drop and it's coming back a bit. i saw the chinese etfs weeken a little bit on slightly stronger volume there. there's the fxi.

we had a very amusing headline in the middle of the day being pass around a lot, melissa and simon, from the shinway news agency. china's central bank researcher blames federal reserve for china's stock route. >> china's stock route or the stock route here? >> china's stock route. i, of course, am anticipating the federal reserve here should blame china for our stock rout and this is being passed around. i don't think that was the cause. >> there was a discussion, was it china or an early temper tantrum as we saw this time on the stock market? and if you look at the last three days of points, the outsides moves would suggest it's more than just a china reverberation given we hadn't had hard news out of china that would have -- >> particularly last week. we saw the week divided into the federal reserve of the middle of the week, everything before that and everything after that, and the market notably weakened after the federal reserve, and i personally felt concerned about what the federal reserve or the inability of the federal reserve

to come to a decision. >> and as you went through that period of time, of course, the market moved and the chances that there was pricing of a fed rate hike and lockhart came around yesterday swiveling around on the head of a pin saying the bar wasn't high for a move this time. he just thought we'd have one by the end of the year. >> yeah. i think the important thing right now we're getting a notable rebound today, and we are moving independently of china. that's what i'm most happy about. we were up 20 handles on the s&p before the people's bank of china announced they were cutting the reserve rate. >> well noted, but today, bob, the rebound seems a little -- i don't want to say flimsy but the volume is not as heavy as we saw the selling so participation isn't there. >> the volume is half what it was yesterday. >> yeah. >> so what this tells us is the intensity of people selling wanting out is not being matched by the people trying to buy again today, although i would say, melissa, on that rebound at 9:35, after an 1,100-point rout, we saw really intense buying for

at least 15 minutes that was really notable. >> to the point you're making at beginning about margin calls. it's margin calls and eat yefs and mutual fund redemption and a lot of foreselling that could have taken us through for three days. at some point that dries up simply if the market moves presumably in this direction and still 228, we're not where we were on the gains for the dow, but it's enough to look convincing. >> good point, guys. >> i would argue. >> let's check in with the nasdaq, also, as we mentioned, off the highs of the session. let's get to courtney reagan here with me. >> nasdaq composite still holding on to a 100-point gain losing steam. apple a part of that. off session lows at least. seeing about three times the advancing volume to 2.4 declining volume giving more reason to talk about to speculate about the easing of the rally. normal movements in an otherwise pretty range-bound trade day, at least relative to what we saw

yesterday with the volatility moves. china the big reason dragging us down, talking about it alo and i want to point out several china-based nasdaq names rebounding today after the country cut interest rates for the fifth time since november. yd.com up 6% and baidu up 1.8%, and the discretionary sector topping tech as the day's top sector gainer so we've talked a lot about netflix and that rebound today. look at starbucks, a pretty strong movement there, up almost 5% and amazon.com up 3.5% and that's among some of the top nasdaq 100 gainers. melissa, back over to you. >> all right. thank you, courtney reagan. kate kelly with us now -- we're down big yesterday, up triple digits now. what are the hedge funds doing with the wild swings? are they making money? >> no doubt hedge funds were nervous yesterday but instead of dumping out of positions discriminately many stayed the course, selling things they didn't already like and keeping

to the strategies they had before the meltdown began, be they bearish or bullish. some key themes in the last couple of days in addition to the widespread concern with china that security think was referencing in the stocks that were up and the lack of growth in europe, of course, a movement into less click call stocks like internet names, bearishness on emerging markets with some shorting developed emerging markets as a basket, concern about mining stocks which have certainly been punished by the declines in base metal price and deceleration of growth in china and in an extension of that perhaps continued strong skepticism on oil. on the upside people are pretty sanguine about the u.s. economy even if they think the growth numbers are softer than they would like to see and even if the fed rate hikes don't occur until sometime in the spring as barclays and a couple others now seem to be suggesting. as a matter of fact, speaking of that, noted hedge fund manager ray dalio said the fed may loosen before it tightens adding fuel to the fire that a september rate hike is now off the table. we'll see what the fed says and

what signals come out of jackson hole later this week and if markets continue to recover while we look for more signs. >> all over to mr. fisher. kate, thanks very much. >> thank you. >> let's look at the market moves, currently up 215 on the dow. a portfolio manager at the clearbridge mid-cap core fund that's rated four stars by morningstar joins us. brian, welcome to the program. >> thank you very much, simon. >> really appreciate some color on what you've been doing as an individual portfolio manager over the last three or four very difficult sessions and how you now view the markets. >> yeah. it's interesting. these times where you see complete market washouts or at least very solid corrections over time, unfortunately, the very good companies, high quality companies, have been trounced almost with the same severity as the lower quality companies, and so times like this you want to keep your head, keep your powder dry and go back to those companies whether you own them and now they are at

more attractive price or maybe you've always wanted to own them but they were not priced attractively, you go back to those and do your homework and maybe you have some -- some buying opportunities. >> or maybe employ somebody like you to do the homework which is i guess why you take the fees. i mean, you say keep the powder dry. is now not the time to buy the view? when you say a washout, is this a capitulation, have we hit the bottom? >> it's very, very difficult to call. thankfully i don't have to do that on a day-to-day basis. what i do is i spend all my time trying to find grossly mispriced unloved or underappreciated mid-cap stocks. >> okay. >> typically when markets bottom like this it's not a one-day bottom. it takes some time. we're going to bounce around and we'll feel it out and we'll come out other side in better shape. >> okay. so throw us some nuggets. what do you think are these value underpriced nuggets? >> yeah. you know, mid-cap, there are always unloved or

underappreciated companies. some few people have even heard of. i would like to -- to use an example, oftentimes cignet because people don't know cignet as well as they know their brands which would be kay and jared and zalez and signet is in the process of killing its category not unlike home depot say 15 years ago. you're still getting an earlier stage category killer in the u.s. jewelry market that has tremendous competitive advantages and years and years of growth ahead of it. >> okay. we'll see. 119.68. nice to meet you, brian. thank you for your time. brian angerame joining us from clearbridge. >> stocks bouncing back and pulling back from the highs. is the rally for real or is this a big old head fake? we'll dive in ahead. today is move higher bringing out bullish calls. we found 15, yes, 15 stock upgrades to tell you about and

oil seeing a nice move to the upside but can it crack back above that $40 a barrel mark. the crude close moments away. you're watching cnbc, first in business worldwide. t td ameritre always working. yup, we're constantly making thinkorswim better. like a custom screener on your desktop, that updates to all your devices. and you can share it with one click. wow. how do you find the time to do all this? easy. we combined every birthday and holiday into one celebration. (different holidays being shouted) back to work, guys! i love this times of year. for all the confidence you need. td ameritrade. you got this.

bounce bang tuesday on cnbc. we've got 201 points on the dow and we've cut our earlier gains and still we trade at 16,000.

as you can see all but three members of the dow 30 are in negative territory. right at top there, apple and exxon. the top gaining sector in this rebound, this is fascinating, is consumer discretionary, and it's some of those names that we talk about so often for so many different reasons on cnbc. top gainer best buy, netflix, michael kors and starbucks another one people are buying. a lot of the names people know and follow so heavily on cnbc and on the web, under armour, a lot of questions about valuation, perhaps less after the selloff, and amazon. in the meantime let's get you caught up on some of the stock headlines, other stock headlines you might have missed. shoe retail er dsw down down today after missing analyst targets. the company says it remained confident about its outlook. alibaba shares dipping lower after yesterday's selloff.

shares fell to 69 and alibaba ipo'd at $68 a share and coming up to that anniversary quite soon and boeing is boosting its forecast for aircraft demand in china over the next 20 years by 5%, estimating more than 6,300 aircraft will be purchased, melissa, during that period. it's very similar to the sort of statement you got from apple's ceo, though perhaps not quite as timely. >> exactly. speaking of apple making a comeback from yesterday's slide. the stock is up almost 4% right now. it is the biggest winner in the dow. gene monies ter of piper jaffrey joins us now. gene, always great to speak with you. >> hi, melissa. >> obviously the valuation has changed over the past few weeks in shares of apple and also that e-mail that tim cook sent to jim cramer seems to have changed the minds of a lot of investors. seems wells fargo's mind and price target waiting for instance. when you heard about this e-mail did you think, maybe, yes, it

was good news about china, but did you think maybe this is very unlike tim cook? why would he do this, and why wouldn't he just come out and reaffirm guidance for either the quarter or the rest of the year? >> the thought crossed my mind and heard from investors similar thoughts. i thought back to the protocol is tim cook has done this similar in the past as he's reached out, for example, to the "the wall street journal" a couple years ago when the stock on a split-adjusted basis is half of where it was today and highlighted the opportunity and the reasons why he thought the stock was a good buy. steve jobs would have never done that, but as far as tim cook is concerned, what he did yesterday was in line with what he's done in the past couple of years. >> all right. so you're an overweight on shares of apple's $172 price tart. given the willingness, gene, that we've seen in the past few sessions, the past few weeks to sell apple, a high quality name that at any point you could have made the argument that valuation

"x" cash was extremely attractive. are you concerned that people are not going to take any lumps with apple, and so when you come up against tough quarters it's going to be a difficult story. >> well, i'm not as concerned because most of the investors that i talked to are on that same page, and they tend to share our concern about the difficult comps, and i understand that things have been rough for shares, but ultimately we see this as a golden opportunity, and because the setup over the next year looks favorable in part because they are going to continue to gain share at the high end of the fall market which is good for numbers and separately is once they come out with a six plus which is likely at the end of september, the calendar shifts to 2016 in a full version upgrade of the seven tends to be good for the stock so the answer to your question yes, investors are concerned, but i think it's overdone because there's large cat lifts in the future. >> thank you, gene. nice talking to you. simon? >> seen big moves in both the autos and airlines and a market

that's really shifting. phil lebeau covers both and joins us from chicago. >> a bit of a bunsback with both sectors starting first with the airlines. some of the stocks have given back what they saw earlier in the day and when you look at what the analysts are saying over the last week, they have remained very bullish on all of the airline stocks, and here's the reason why. take a look at what gulf coast jet fuel has done in the last year. you don't need to be a rocket scientist to figure out that this is one reason why so many people are continually bullish on where the headlines are headed. jet fuel trading near its low point for the last year and let's shift now to the autos and all of them up to today, though the rebound may not be as much as other sectors, but what you're seeing from gm, ford, ify ford,ify -- fiat, chrysler and toyota, tesla a momentum stock for a long time, many wondering how low would it go and dropped to 210 and now you're looking at

a stock up five minutes, up to 224 and take a look at mobileeye, another momentum stock. got as low as $40 and today it's uptrading at $53 a share, not near its 52-week high but certainly higher. new survey out from jd power talking with new vehicle owners and that's why mobileeye is in the sweet spot of the market. what is wanted right now, blind spot warning technology, fuel economy indicator in vehicles. those are the two top tech features buyers want. conversely the least desired features, android auto and apple car play. not a lot of vehicles with those systems at this point. just a little snapshot of where the consumer is. >> not yet but will get them in five years, by the looks of it. phil lebeau in chicago. get yourself a pen or pencil. got not one, not two but 15 analyst upgrades to tell you about. those names ahead on "power lunch." and we're keeping an eye on the energy market as we count

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welcome back to "power lunch." i'm joorntsin. take a look at facebook and netflix. both stocks outperforming the market in today's rally. facebook shares trading up about 4%. netflix shares now up 8%. facebook rebounding from its decline over the last three days and facebook down 14% from its 522-week high and netflix shares have bounced back from its dramatic drop-off during the selloff. that stock is still down about 24% from its 52-week high which was just august 5th. melissa? >> julia, after yesterday's big selloff i spoke with mark cuban, billionaire investor on these stocks and listen to what he told me starting with netflix. >> it's the market leader and driving the whole content industry so i have no problems of holding this for the long, long term and i don't know what level it takes for me to buy more, but there is a point, and then i added to facebook because

i think facebook is in a similar situation. it's driving the ad economy. it's driving content consumption in so many different ways. they are doing a lot of things right. >> cuban, julia, has loved netflix for a very long time. it's a long-term holding, and we've seen analysts come out on this pullback really defending the stock saying the pullback has been a buying opportunity. >> yesterday we had oppenheimer come out naming both netflix and facebook as buying opportunities on the netflixics and a $143 buy target was reiterated today and japan will be launching next week for a real catalyst for the stock and facebook announced a partnership with softbank to launch a product there and get into consumer hands. >> a lot of people just want to buy what has been working. julia, thank you. simon? >> melissa, another check on markets, if we can. still in a rally mode but losing

steam from earlier today. the dow was up 411 points at the session high. utilities perhaps inevitably the biggest drag. the nasdaq still having its best day of the year. >> yeah. you know, simon, today's bounceback prompting a lot of bullish stock calls on wall street. take a look at a few of the big upgrades out there. apple, of course, seeing that stock help the dow and nasdaq as well as the s&p 500 and macy's getting an upgrade, sherwin williams, jpmorgan, a lot of financials, the list goes on and on and in fact we'll highlight some in street talk which we start off with right now and start with an upgrade. garmin gets an upgrade from outperform to market perform. it invests heavily in outdoor and fitness businesses and the recent currency moves should help garmin in the coming quarter. specifically the euro has appreciated 5% and the taiwanese dollar has depreciated nearly 20% and that all in all helps its posture. >> love the trackers.

>> second stock verifone. the analysts sites value as i as the key reason for upgrade. price target remaining 38.50, 30% upside. >> and a bullish call on pandora, not a ratings change but the price target goes to $25 a share and believing the stock will be an outperformer and rates, payment rates, tend to increase 7% to 8% a year. it could be a $35 stock in 2016. the copyright royalty board crb decision in december could be a risk but the risk owe reward is to the upside. >> double what you're seeing on the screen right now. d.a. davidson upgrading the management software vendor from buy to neutral, relative position and flight to quality and the price target, however, was decreased to $91 to 972 and it's worth noting the stock is down around 18% for the first part of the year. however, if that came true, then

you would have raised the losses and add 10%. >> it is. >> and i'm watching canadian solar. it is rallying hard along with all of the hard hit solars. recently today it's up more than 10% getting a boost from initiation at cowen and likes the focus on low-cost manufacturing and the setup for a proposed yield co. simon, this sector has been absolutely battered across the board because of falling oil prices. >> yes, absolutely, absolutely. >> that does it for "street talk." now to sue herera with your business headlines. >> i'm sue herera and here's the update for you. a french prosecutor officially opening a terrorism investigation into the attack on high speed train last week help. said it was based on the actions of the 26-year-old moroccan suspect who watched a jihadi video on his phone just minutes before that attack. iranian president rouhani telling a big crowd that financial sanctions could be lifted as early as next spring as a result of the nuclear

agreement with the six world powers. yesterday britain's foreign minister saying he expected iran and the u.s. to endorse that deal by october. republican presidential hopeful chris christie once again blasting the nuclear deal calling on all of new jersey's congressional members to vote it down. he called president obama a liar for his defense of the deal. >> now the president places us in a situation where not only is this a bad agreement but we have the president of the united states directly lying to the american people in order to try to force this through a reluctant and a concerned congress. >> a swedish woman has given birth from a transplanted womb donated by her own mother thereby linking three generations of the same family to a single uterus. the procedure was carried out by womb transplant pioneer in sweden.

five babies have been born through that method. that's the cnbc news update this hour. back to you, melissa. >> that's amazing, so i've speechless. >> good for them. >> an amazing story. >> he's a pioneer. >> yeah. >> final oil trades crossing for the day and let's get to bertha coombs. sub 40 close for wti. >> yeah. we saw oil get close to $40 early in the session. we're closing off those highs. nonetheless, looks like the last trades here are above $39 a barrel. that's a substantial move up from yesterday's lows. of course now the focus shifts to the inventory numbers, and analysts are expecting to see a build of up to 2 million barrels in crude inventory. they are expecting to see a decline in gas line inventories but gasoline is sitting out the rally because you have the bp refinering in indiana restarting, so some of the bullishness that we saw for gasoline coming out of that

market, but, of course, guys, if you are in the midwest that's very good news. you could see a bit of an ease on prices that have moved up while that refinery has been offline unexpectedly. back to you. >> bertha coombs, thank you. now let's get to dom chu with a news alert. >> now another major bank analyst and economist team coming out saying they believe a fed interest rate hike is still on the table for september. this time it's the team over at citigroup. in a note to clients that just came out here they basically say that there are signs of containment in the economy that keep us on the september timetable for a federalistoff, but markets are volatile and can gather enough momentum to induce global contagion and become systemic but not yet, so they say yes, there could be a scenario where things melt down globally because of certain things that are happening around the world, but that this is not the time just yet. they haven't seen very many pieces of evidence to support the fact that they could take a september rate hike off the

table, so, again, the economics team at citigroup telling clients they believe a september rate hike is still on the table, melissa. back over to you, guys. >> amazing the disparity between what people think on wall street -- amongst what people think on wall street and we've heard some think the fed should loosen policy. >> i think the split you've had traditionally coming into this is the economists more or less to a man or woman with the exception of perhaps goldman's thought they would hike rates in september but a lot of stock market participants thought they would never have the ability to do that right the way down to gundlach. i know they want the element of surprise but the argument of a central bank is to instill confidence and it's not doing that in this situation. >> funny that you mentioned that because they do mention a couple of items in the report. one of them is the u.s. economic data flow which they say is

relatively positive. they say especially the housing side of things, expect an upward revision to the second quarter gdp numbers, all of which should encourage the fed to move in september and we do know melissa, simon, that housing and housing stocks generally speaking have held up relatively well despite the market mealee. >> from a low point. >> true. >> major bounceback but still well off the highs, how stocks tend to trade after three big down days. that's next. plus, bank of america shares soaring off the back of an upgrade, three upgrades. we speak with one of the analysts who made the bullish call. you're watching "power lunch" on cnbc. we're first in business worldwide.

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on any normal tuesday afternoon in the middle of august, we'd be swinging from the chandeliers with a gain of 247 on the dow, but this isn't any normal tuesday. this is after we had, of course, huge down moves in the market on major volume. therefore, many people are

disappointed not to see a stronger bounceback today on heavier volume. amongst them it has to be our bob pinsy. >> look, it's a rally back. we can't argue with that, but it's not very enthusiastic, and it's a little disappointing in a way. volume is half of what it was yesterday. of course, it was the biggest volume day of the year, but still, let me show you the s&p 500 first and i'll show you some stocks here. so we moved now a little bit in the middle of the day. that's happened a lot recently, and we're still up 1.4% but let me show you some names, like amazon, for example, which had some rough days in the last few days, average volume. this is not out of the ordinary. just sort of meandering around here. all right. it's up 3%, but the commodity names are doing nothing and freeport had the stuffing knocked out of it. it should be up today and look at this thing. it's just drifting lower, now into negative territory on average volume. what's that all about? that's not a rally. how about the big multi-industrial companies like eaton and dover, you know, owens, illinois. this is nothing. there's no volume here. average volume and it's just

drifted into negative territory. this is not much of a rally here, and that's what's disappointing about the whole thing. we do have a couple of names up. best buy had a great report. i know we haven't done much individual stocks recently and a great report up 15% and the big thing here, simon, major appliances, large screen televisions and mobile phones were really good. that's their core. >> i guess it points to the broader point, just the idea we had an aberration. it was three or four days where we were hit by the side from china and there was a lot of forced selling through margin calls and eat yefs and low cash requirements in mutual funds and it's over and we're back to normal and it's not systemic. >> that may be the good news about it. i'm very happy we've decoupled from china and that trend will probably continue. probably be up in china thanks to the people's bank of china cutting the reserve rate, but i think it's very important that we traded differently and so did europe. >> bob, thank you. >> three down days, terribly down days. up today. what exactly happens after three

days of slides though? deidre broeshia is here with more on that. >> the rebounds we see over the next two days could go significant. we look at analysis to look at previous instances where the s&p 500 has fallen 3% or more in two trading sessions back to back. there have been eight instances excluding the latest one since 1980 and pretty rare and this kind of analysis helps us to perhaps smooth out some of the emotions involved when markets are so volatile. here's what we found. the s&p 500 and dow industrial rebounded strongly the next day and next week. the following week, and here we were able to analyze seven not overlapping instances. the s&p 500 trades positive 86% of the time, and it has returned on average nearly 5%. the dow industrials index does even better trading higher in all but one of those past instances, six out of seven instances and returns on average 6%, and melissa, i'll say as well we can go to the website

and find out which stocks trade positive 100% of the time and return double digits in the week following in an s&p decline of 3% more in back-to-back sessions. >> is the worst over for the market and let's ask the trading nation with our guests. rich, what do you see in the charts? >> melissa, clearly risks remain here as we enter september. historically the worst month for the s&p going back to 1950. facing that cross alt fed meeting. however, we see some subtle signs of trend exhaustion across the technical landscape which suggests to us that the overwhelming majority of the damage has been done. the first evidence would be the vix. if you can pull up that chart, melissa, you'll see a very long-term chart here. yesterday the vix soared above 50 for the first time since the lehman bankruptcy. in fact, the only other time since the lehman bankruptcy eclipsing all the previous crises and the unspeakable tragedy of 9/11. now down 40% off of that high. that tells me that fear was

palpable. that oftentimes suggests a tactical turning point. looking at a chart of the s&p itself, i'm focused on key longer term moving averages. the trend is higher. a 12% pullback, not our first rodeo. watch the 150-week moving average which comes in around 1827. much lower from here. horizontal supporter on 1877 which i would expect to hold. yesterday's low around 1867, also a critical area of support, once again the trend is higher and we've been here before and this is ultimately part of the bottoming process. >> andrew, has the majority of the damage been done in your view? >> i would agree. we're following the classic bang, intensity, high intensity low with a whimper retest. it's going to take time. that's the only thing we're missing. the correction so sharp we haven't had time to really recoup. go back to 2011, 2010 during the flash crash, following a very similar road map in our opinion where maybe we'll undercut the low by a little bit but not by a

percent or two but probably over the next lee to six weeks. >> three to six weeks, all right. thank you. for more trading nation head to tradingnation.cnbc.com. s&p sectors, consumer stocks, best performers on the day. no surprise there considering the big pot we saw in the shares of best buy, bond proxy in the red, down by 1.3%. financials though, real standout here. we'll talk to one analyst who is upgrading the bank stocks. that's next. and now, the latest from tradingnation.cnbc.com and a word from our sponsor. >> a common mistake that some investors make is searching for stocks with the highest dividend yield, but this can be a dangerous strategy because a high dividend yield would mean the stock prices come down sharply or it may mean the dividend is at risk of being cut so before you reach for yield be sure that the stock i

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no sixth grader's ever sat with the eighth grade girls. but your jansport backpack is permission to park it wherever you please. hey. that's that new gear feeling. this week, these folders just one cent. office depot officemax. gear up for school. gear up for great. got a slew of bank upgrades. jpmorgan, bank of america, sun trust all getting nice boosts on the calls. on the phone is david george of r.w. baird and one of the three upgrades for bank of america. david, great to have you with us. you've got outperform rating now on bank of america. what's the base case for that outperform? do we need to see a steepening

yield curve. >> that would certainly be great, melissa, to get a steep yield curve for b of a. the fact is we've gone from euphoria in bank sentiment and panic in just over five or six trading days, and regardless of really what the yield curve is during, if you can buy a high quality franchise like bac or tangible book it tends to work out over time. >> do you think the move from euphoria to panic, part of that is the notion that the yield curve will not be as steep as investors had previously thought? >> that's a fair question. you know, from our perspective, you know, 15%, 20% ago when the stock was at 1, there was probably 100 to perhaps 150 basis points of fed tightening reflected in consensus expectations, and when a stock gets, at least a bank stock, that is, gets close to tangible books, the earnings outlook is not nearly as meaningful, at least from our vantage point as it moves from prospective moves in the stock. >> this is within the bank

shifting into higher beta names, partially because of names like citizens financial, comerica, if and those got clobbered so there's been a re-rating? >> what we've seen is the stocks that tend to have the most expectations of rate hikes embedded in them, and those are several of the ones that you've mentioned, have gotten clobbered and b of a would be one of those as well relative to some of the safer stocks that have held up quite well. b of a from our perspective, just 105 of tangible book. looks like a pretty compelling long, and i think it's a fairly uptune time to add risk to the bank portfolio so this has been a tough environment from our vantage point, but, again, the selloff i think provides a really good opportunity. >> tough for a lot of people for joining us. emerging markets bounce is back after being hit by china. where do emerging markets go from here and the big chinese internet stocks rebounding,

alibaba and others all higher. we'll be back.

take a look at the chart of the eem up 4% today. getting hit hard in recent sessions. it is in bear market territory right now. let's bring in tim seymour and

head of emerging market debt. great to speak with you. tim, we've seen equities get crushed. a lot of emerging markets are in bear market territory. we've seen a flight from im bonds. has the worst been priced in from the china contagion? >> the bond outflows put pressure on the currencies. trade terms changed globally. the local markets are nowhere near as impaired as currencies are. it's a china call, a fed call. >> we've seen a lot of damage. is the next shoe to drop in the

em bond market? there are a lot of tourists, investors looking for yield, getting in that area of the world looking forward investment. they got into corporate bonds in the emerging markets. now what we are seeing is people are questioning whether or not these companies will actually pay their bills. what have you been seeing? is this an area of concern for you in terms of debt? >> we look at emerging markets from three different angles. from that perspective, we don't see major areas of concern. we see opportunities. as a matter of fact, the market is reacting by selling all companies and all countries on the same bucket. that is creating great opportunity. we are finding that a lot of these countries and companies have made the adjustment and have a lot of up side from here. >> there i be pressure or some sell-off or selling pressure on emerging market debt but fundamentals are still there? they have not changed?

>> correct. we look at starting conditions. a lot of them start with good levels of international reserves. start with not very large deficits. the second component is whether they have the ability to adjust. that gets reflected in floating currencies. from our perspective, countries that the market seems to have disfavored like south africa, colombia or indonesia look attractive. >> if you were to dip your toe into merging market equities? >> i'd say mexico, turkey looks interesting. and brazil is overdone even though politics are a mess. >> thanks some you. >> this is great news. if you are looking for a decisive break to the up side after the recent selling. we lost 300 points on the dow,

but still up 292. more on that after this. ♪ ♪ ♪ if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for

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24 hours ago the dow was thundering 600 points to the down side. we are now 303 points to the up side.

alan gale and david salsby is with us. does this rally convince you the correction is over? >> no. but good luck trying to find the bottom in a correction. as recently as 2011, 2010 we saw retest of the lows. i think which are secularly in a bull market where stocks over the next two years are going to return about 8% to 9% annualized. where also am i going to find better returns than that? to try to find the bottom in this correction is good luck. i'll add quickly. the average stock, large cap, mid cap and small cap is 20% below its 52-week high. simply knowing that tells me if i have cash on the sidelines, i want to be looking to buy. that's the most important factor. >> alan, would you agree? >> i would say for the most part i do.

i think what we've seen, barring the last several days, what we've seen has been basically a horizontal correction where the market has gone nowhere all year due to a number of factors. the important thing i guess for us in the allocation strategies is the valuations for the u.s. market remain attractive. they're even more attractive now as already pointed out. the macro tail winds here in the u.s. are good unlike emerging markets. we think that the policies and market momentum is going to be restored. i'm not convinced that we are through this turmoil yet. i do think we are going to finish the year higher and probably at new records. >> david, i'm going to play devil's advocate. you cited the stat about the number of stocks below the 52-week high. why is there a belief stocks will go back to that 52-week high? could we be in an environment where people will question the

evaluation stocks were at in the first place? and with the federate coming whether in september or march, that could put a damper on things. >> sure. spoesk to those two points on valuations, if you value stocks, not just on a price-to-earnings basis, but on a cash flow or free cash flow basis, the market gets about a c plus to b minus in valuation. that's positive to me. second. the fed will begin to raise interest rates. i believe they should raise interest rates to keep their number one mission of low inflation and price stability. inflation rates today at 2% to 3% are a good back drop to 9% to 010% annualized returns in the stock market. i think those two respectable tail winds that bode well for the market. >> very briefly, a reaction to that? >> i would say the important thing here in the u.s. markets is positive.

we've seen an ongoing recovery from the depths of the financial crisis. that means the consumer is getting back onboard. this is all going to be good for spending. top line sales growth. i like this market. >> we'll leave it there. thank you both for your time. >> see you at 5:00. "closing bell" starts right now. welcome to the "closing bell." i'm coaly evans at the new york stock exchange. a relief rally on wall street is taking place. china's central bank cut interrates overnight. made other measures to support the economy and markets. today's gains have been fading throughout the day. the dow up 442 points as a session high. now up a little more than 300. the s&p 500, broad index there up about 1.8% adding 33. the nasdaq still having its best day of the year despite what we've seen. it is