>> let's bring in bill and kelly at the nyse as we count down to their program, the "closing bell" in just about a few seconds. >> here we go again be. >> i'm surprised we still use decos. i haven't heard that -- >> they're out of date by the time we put them up this week. >> they are. interest rates have been getting the blame for some of this today. sully's survey not withstanding. if you take a look at the dow or vix, today is a mini version of monday because as equities have gone lower, the vix has moved inversely. it peaked as we hit the lows for the day around 1:00 this afternoon. i think we're seeing something of a modest version of monday's trade here >> the whole volatility trade brian's been talking about. >> i wonder, is the vix the dog or the tail? vix is supposed to be the tail market moves, vix move

now people are suggesting because of the weirdo incidents, cramer called them morons the vix is leading the market because people are selling to pay for positions they were in over their head on. >> wouldn't be the first time the tail wags the dog. >> is it the tail or the dog the answer is yes. >> guys, take it away. have a good couple hours. >> thank you >> this is the "closing bell," everybody. the final hour of trade has everybody focused on whether we're going to go back and retest the lows we've seen this week. >> we have sort of, but is it enough that's the question. is is it enough for the market another big selloff. the dow was down nearly 700 points at the lows midday, but we are well off those lows right now but that could change. stick around >> as bill mentioned, we have higher interest rates. that could be one factor sparking selling

another thing to keep an eye on, the u.s. dollar hit a two-week high earlier in the session before it gave background. >> right now we have team coverage of this decline today bertha coombs is at the nasdaq dom chu following stocks some falling into bear market territory. let's start with bob pisani. >> we're getting deleveraging and we don't know where it's going to end the dow is underperforming the market because big names price-weighted are moving the dow. boeing the biggest one, down $11, that's 77 points just in the dow. other big names, all high priced stocks, goldman sachs down $6, that's 2%. to your left, home depot is down about $6 right here. sorry, right here. that's about 3%. a swing all the way around right here, 3m down $6, 2.5% these four stocks are one-third of the dow's decline

just four out of the 30. the important thing is market volatility, you heard it start friday with jobs report. that was the trigger since then things have changed this is "x" factor making everybody crazy. volatility trades, most with short volatility, buyback stock. that trade is unwinding and that's causing all the volume and volatility let's what's happening in the last few days. in the middle of the day, three out of the last four days, all of a sudden we get heavy volume. this happened on monday, dropped the market tuesday remarkably we were waiting for gigantic waves of selling to happen around 2:00, it didn't happen and the market immediately lifted when they smelled there wasn't a lot of selling going on yesterday it happened about the same time and again it's happened an hour earlier

it's frustrating because we don't have an exact dollar amount to know when exactly is it going to end. we'll talk more about the etf business tomorrow. if this keeps going on, the retail investor will start selling, too. >> we've seen bearish markets we'll see you at the close thank you. >> let's get to the nasdaq and see what's driving the selloff there. bertha coombs. >> technology is usual decliners, outpacing advancers four to one. in this environment, if you do anything to support in your earnings, you'll get punished hard the big losers, tesla, take two, t-mobile analysts posted mixed quarters and getting hit hard in terms of the biggest declinele and biggest drag, it's coming once again from the chips. they are trading very strong volume to the downside right now already on pace for the worst month since may of

2012 the nasdaq 100 -- this is just a couple minutes ago so this could have changed already down 5%. chips are where the big decline is biotech off a small bit. small caps are relatively outperforming but down as well and the mega caps that are lower today across the board you've got google or alphabet once again in correction territory joining apple as well. back to you. >> bertha, thank you 10% drop that very mentioned how about 20% declines we have plenty of companies in the market that havefallen tha much from peak to trough dominic chu with that. >> one of the questions i've been tasked with answering for you and our viewers is, where has the most activity been over the course of this market melee? we took a look at the s&p 500 to see where the most activity has been in terms of downside and

upside we've seen a bounce. today, obviously, it's not as good of news we took a look at the s&p 500 overall and we figured out over 300 of them have hit 52-week multiyear or record highs just so far in 2018 no surprise with the market that is at record highs just as of a week and a half or two weeks ago. 160 have fallen by 10% or more something some traders like to call correction territory. among those names in that 160 numbers of stocks, we've got a slew that span all kinds of different industries netflix shares, a lot of ak tifrt there. now down 10% from the highs we saw earlier this year. fed fedex, a transportation company some like to look at for a market 11% off recent highs apple, you heard bertha mention that, down to the 10% pullback big name pharma, 13% downside, pfizer, off recent highs

and google you mention those stocks 20% from recent highs this year. believe it or not, as of right now, there's only four of them check this out align technology, dental company, one of the big performers last year, off 20% from highs hess energy, down 21%. ford is off 22% and arconic, 24%. those four stocks have been the biggest decliners from the highs they reached just earlier this year back over to you >> that align technology, that was -- >> it was such a huge -- >> that was ridiculously strong. >> topped all the charts. >> dental technology company there. thanks, dom. what are money managers telling their clients during these uncertain times? let's talk to some of them argie is with us, paul shotz from heritage capital. why is it important for the markets to test monday's lows, which we seem to have done this afternoon?

>> that's right, bill. typically after an outsized volatility event, in other words, a big plunge, water's got to find its own level. volatility, the gene any is out of the bottle. these not going any back any time soon. oftentimes good bull market behavior, prices are go back and probe, let's say, within a couple hundred points. maybe even below tuesday's low a couple of times. both in the short term this week and maybe out two to four weeks before water finds its level,wee can go back to highs next quarter. >> would you draw any analysis between this year and 1994 back then rates were resetting to new levels and the federal reserve was a big part of that but it did cause intermediate pain how could you characterize that? >> i think it's totally different. before when fed raised rates

they have precipitated recession by cutting off rates this time the economy is sk accelerating from 2% to 2.5% i see it to do nothing with the economy or the fed rate hike but the unwinding of billions and billions of levered volatility trades, which are really collapsing onto themselves and i think what's going on there is effecting stocks as we see cascading through the -- >> if i could just ask you about that for sure that's in the middle. whatever is happening with those bets against volatility in the middle of this is the it -- is it -- is what's happened with the volatility rates just a symptom of that >> i think there was a lot of nervous, nervous money waiting for the first signal rates would move up a lot, inflation would move up a lot.

we'll see inflation numbers next week i think it's very much overreaching for what the fed is going to do, which is a series of very gradual increases. if they see this rolling over into the real economy, i think so they will slow down in their rate increases unlike previous financial crisis, we aren't seeing weakness in the real economy and i don't think this unwinding will roll over and affect the real economy, the banking system, for example. i think it provides a good opportunity to buy and it looks like we'll get 10% to 20% bargains compared to the end of the year. >> if that's the case, what are you going to buy what do you like here that's presenting itself? >> first of all, bill, on the bond point, i think any spike to 3% in the ten-year is a screaming buy. buy it at 3 and sell it back in the mid-2s listen, bond yields have doubled since july of 2016 now all of a sudden it matters because the market didn't matter, didn't matter. now it matters

you're seeing whichever stocks had this more mediocre rise are getting hit the most if i'm looking three to eight months, i'm still looking at chips. chips are down significantly this month semi is there for me i think banks are -- people all of a sudden stop talking about banks. rates going up, it's supposed to be great for banks banks are getting hit hard today. i think banks are a pretty good buy. the consumer discretionary has been very strong surprised me in the fourth quarter of last year in is going to be the weak quarter for discretionary and i think you have another run higher volatility is here people embrace it and then we're going up again. >> it's quite a statement to say that it's a screaming buy at 2% and we're going back to 2.5% i totally expect that call but it's still a big call to make. i don't know why that would make

rates go higher if rates aren't going higher. >> i don't think the banks have fully appreciated, fully understood, fully earned enough on the ten-year going up 100% in the last year and a half to me the ten-year is a trade, not an own u.s. bank corp, my gash, 2% yield. i love the super regionals they're actually overresearching for bad loans that aren't materializing, which means they're underreporting earnings. if you want one bank, usb is maybe the best bank out there. i think there are so many great bargains you get a look down here and over the next week or two. >> got to go at this point good to see you both thank you. >>. >> thank you >> appreciate it >> let's check the markets a little more than 45 minutes to go dow is down 631. we're close to session lows here and there's a lot of focus on these levels that we hit the last couple of days. >> exactly >> again, we came close to lows

hit late monday afternoon, early tuesday morning. the question, was it enough for this market? is that enough to give us a platform to move higher? we're not moving higher. it's not like we just touch those numbers and take off again. but we did touch those numbers early in the session both the s&p 500 and the dow russell, by the way, didn't come close. >> that's true we just expect a lot more drama here because of what you described. we didn't come roaring back. dow is down about 650. >> as the late, great keith jackson used to say, whoa nellie a lot more coming up on the "closing bell. >> announcer: next up -- why the bank of england suddenly matters so much to you your portfolio, your money and your future. plus, investors get social with social media. snap soaring earlier this week now it's twitter's turn. still time to get in or is i it #sell

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earlier in the day was down 65 we're close to that right now. in other words, we're seeing another push lower as we head toward the last half hour of trade today. >> better than 2% declines russell almost at those levels interest rates have been volatile as well we had the bank of england warning larger than expected rate hikes may be on the way let's bring in steve liesman. >> if there wasn't enough on the plate of bond and stock traders. the bank of england warning it may be turning more hawkish. saying, quote, were the economy to evolve broadly in line with the february inflation report projections, monetary policy would need to be tightened somewhat earlier and as kelly just said, by a somewhat greater extent over the forecast period than anticipated at the time of the november report in order to return inflation sustainably to the target here's the upshot of what that means, analysts see another rate hike by bank of england coming in may instead of august the fed is hiking and reducing

its balance sheet. the european central bank has reduced its bond purchases and forecast to stop all together later this year. what does that add up to a conclusion that the days of the easiest money are ending but does that mean easy monday is over stay a look at what the fed's going to do for your balance sheet this year. down by $400 billion to still $4 trillion this year and $3.4 trillion next year if it goes down by the full $600 billion so still over the 2012, a very large balance sheet that's coming down, gradually. there is an adjustment going on, getting used to central banks without their feet firmly on the accelerator. none of the banks is close to slamming on the brakes they're going gradually but going nonetheless. >> it's been ready, aim, aim, aim, aim - >> and a little bit of firing. >> not ready to fire yet thank you, steve if you want to stay there and join the conversation, we'll

bring in jim bianco on this. what do you make about this recent correlation now between stocks and bonds as steve is itemizing with these central banks getting ready to pull the triggers here? >> the correlation, what it means, is that bond prices and stock prices are falling together that's the first time we've seen this concerted effort since the financial crisis it's been at least ten years since we've seen this happen why is it happening? if you look at market measures, there is a bigger concern about inflation now than any time. as steve pointed out, for the last ten years we've had central banks ease and ease and ease and everybody thought that eventually it will end but it will be gradual, which bernanke told us in a block post, that might be 2026. that might be eight years away now the market's thinking maybe it's not eight years away.

maybe it's ten years away and it's readjusting. >> how do you know it's inflation which to me and what i think about inflation, i think about, okay, we have price hikes but it keeps going higher. what if we're looking at inflation or reflation we spent years -- everyone seemed to be desperate and it was returning to normalcy. >> that's what everyone hopes, that it's a reflation and a good thing. that's why everyone has been bearish on bonds because they've viewed higher rates as a positive i think the market is starting -- if you look at market measures, if you look at the fed regional surveys of wage -- of what they think about wages, these are the highest numbers we've seen in ten years. what the market is worried about is not that we're going to get inflation, it's that it's going to get enough of it that we'll have to reverse the central bank easing over the last ten years not tomorrow but it's coming. >> just a point of information here that as far as i can tell,

there's one date upon which these inflation fears are based. i agree with you that there's some survey data out there, anecdotal data but in terms of actual data, there's this 2.9% wage hike on friday and the real inflation data has been very benign if i had a dollar for every time someone called the beginning of the inflation cycle, i'd be pretty rich right now when it came to all those false calls out there. i would point people towards the 14th of february, we'll get the next cpi report and then the next day the ppi the market's trading in an absence of information and on conjecture related to anecdote when it comes to the actual inflation data. >> the dow was down 700 points we've just come off that low. >> jim, as you mentioned that, to emphasize steve's point, we also know the december survey could be skewed by what happened with the tax reform. a lot of that was one-time stuff. >> it's not just one or two

surveys but ate litany of sur y surve surveys. to steve's point, steve, you're absolutely right the market is fearing inflation. it feared inflation a year ago january of 2017. and it dissipated and we had a giant rally. if we do get that inflation, it's afraid -- the central bank, the fed included, are going to have to pull back harder that's going to be the question going forward. we're worried, we being the collective market, does it materialize? we got one bad number last week. markets are forward looking. they're looking into the spring and summer and thinking we'll see a lot more inflation that's what's bothering me. >> i want to say, i think all of that is true but what exacerbates this is the supply information. the fed will do less than 600 billion -- a trillion over two years. one thing that distinguishes the fed is they've been a buyer at any price. now you have them leaving.

then the additional supply from the federal government i think this supply issue needs to shake out and the market needs to see what it's like for a federal reserve that's reducing its purchases by $40 billion, $50 billion a month, along with the additional supply from the treasury. we just don't know where that yield settles out in that environment. i think it's the uncertainty around that together with the inflation story. >> by the way, joe, to take an example, said the unemployment rate in this country is going down to 3.5% this year i mean, is that what people say looks pretty likely? if we -- have we ever been at 3.5% >> is he a voting member, by the way? >> have we ever been down there? >> i have to check it's been a long time since we've been that low. maybe jim knows the answer several fed officials have talked about a three handle on the unemployment rate. evans talked about it yesterday, what he thinks happens in 2020 some -- it's not very hard to

get there. >> does that cause real wage pressure >> used to be considered 5% caused wage pressure we're not there. >> i have to say, the connection between wage growth and inflation is much more tenuous than it ever was >> how much of the the job from the fed is causing these jitters? bill dudley is swatting aside the volatility this week and saying, we're preceding at pace here you'll get rate increases. >> the fed gets paid to be calm in these sorts of circumstances. the only two things it cares about, if there's any danger to bank system and if markets seize up both of those would precipitate more immediate action from the fed. not reacting to things like that that has happened the last several days. >> jim, i want to let you weigh in on that point that the link

between wages and inflation. >> yeah, i mean, there is. and that's been the one thing holding back is that we haven't seen the wages or wage pressure coming and that's spooked everybody. it's all central banks that matter because rick santelli coined the phrase, all stimulus bank is fungible, as long as it gets done, it's ease if you add up all their balance sheets all together, they're at a new all-time high this week. we have more ease in the system than we've ever had. i think the market's worried that uptrend of ten years of central bank balance sheets might be starting to peak. and that's bothering it because there might be a return to inflation. >> i want to tell you the crack staff in the back has given us an answer. 1969 was the last time we were down in that kind of range on a 3.5% unemployment rate >> wow. >> and a few years after that they had to hire alan greenspan

to whip inflation -- >> where were you in 1969, bill? >> i was doing the same thing you were, steve. >> i was in school thank you. we'll let you get back to work as the gyrations continue. the dow was down 700 points moments ago. now down 570 we have news out of washington on that budget deal they've been working on. >> bill, the cbo is out with this estimate of how much that budget deal will cost. the headline number is $320 billion with most of that money being spent in year one. now, $290 billion comes from lifting those caps on both defense and nondefense spending. there's another $68 billion budgeted for disaster spending there's also $38 billion in savings from the mandatory spending size, that's

entitlement programs as well as tax changes. so, $320 billion is the headline number that doesn't include any impacts of economic growth and doesn't include any impact from higher interest payments by the federal government back over to you >>. >> jimmy p. was saying, new budget baseline. now this number alone is bigger. right? 329, what's -- >> there's a lot of ancillary things that were built into this budget deal beyond just lifting the caps your point is right, this signals higher deficits, higher debt for a long time to come beyond the ten-year window and it's causing lawmakers on both sides of the aisle some concern. the conservatives are against it the hard left is against it so we'll have to see if the majority of the middle can get

behind it and support it so the government doesn't shut down tonight. >> so, what do you think is this bill in trouble? are we shutting down tonight >> you know, there are a surprising number of both senators and congressional republicans who do seem to be coming out against this. elizabeth warren came out against it you're also hearing from the head of an influential government bloc who is leaning no there is clearly a lot of angst over which direction to vote on this bill. it seems like it's going to come down to the wire, guys. >> thanks. there's angst everywhere today if you're just joining us, we have pretty much tested the lows we set tuesday morning for the dow and the s&p 500 maybe a couple of times today. the dow was down 700 points just about ten minutes ago and we've

come off those lows. the s&p was at 65 off its lows, putting it darn close to the lows it set tuesday. even as that has happened, the volatility index, the vix, which we've identified as the bad guy in all of this has moved higher. we're giving you a mini version of what we saw in extreme on monday whenthe vix hit 50 on -- on tuesday morning and the dow was down about 1600 points for a time the vix today is trading right at 30. a bit of a rise. >> we're watching that intraday chart on the right side of your screen see how it forms the part of a "w." joining us is steve grasso from stuart frankel and rick santelli at the cme in chicago. steve, you know, is it important to test these lows and see if we can spring back off them >> sure. >> how do you feel about the final hour of trade? >> usually you want -- the day

we had those lows, we closed basically 100 points higher in the dow. we close much higher in the s&p. right now it seems as though we're weak going into the close and weaker to bill's point, if we're at 2623 in s&p cash and the low is 2593, if we test and break through that, they'll want to see the 200-day. that will be a 3% drop from where we are now to your point again, we'll have to retest that low some time tomorrow, monday or tuesday. this could extend it a little bit. we'd like to get it out of the way, test it, close higher than we are right now and then we could say, okay, been there, done that, but we haven't been able to cross that "t" and dot that "i" just yet. >> beyond the normal parameters you comment on, just as a normal trader, how do you see the market responding here >> you know, i think to level

off somewhere between 23,500 and 24,500 is not that bad if you look at how much ground we covered from december of 2016 to 2017 and do a commodity retracement on those numbers -- listen, the volatility, we should get used to it. even in the euro dollar options is short rate today, bill, there was a purchase all day of about 400,000 euro/dollar puts volatility -- i'm sure those were covering shorts because short volatility isn't unique to equities it also occurs in the treasury and fixed income complex as well short and medium part of the curve on the long end. listen, i think this is, you know, grown-up trading and we'll get retracements i don't think this is the big one. i think that it's going to play out. it's a process steve grasso said that many times. i think it will get its sea legs i agree completely with jim,

what he finished up with, this is really the reversal of all the central banks thinking they are hercules just consider this we all think our central bank's done, it's about run-off and balance sheet production all combined, all the central banks are well over 16 trillion, we're just under 4.5 trillion and three-year, ten-year, 20-year auctions today, the federal reserve for their account called soma about 12.4 billion. we didn't have a $16 billion auction for 30-year bonds. we had a 19 because they bought three. they bought 3.5 billion of tens yesterday. even though we talk about the taper, the real taper is when they actually see the numbers moving that's just beginning. i don't think it should be

shocking that's when the volatility is beginning. >> you know, oliver, the first couple weeks of the year when markets were just taking off, we were asking people every day, can you still find stuff to buy? you feel comfortable buying? is that getting easier now do you have a list >> we do have stocks we like we like them for long term we're long-term investors. everybody talks about that in the short-term you have to be ready for more downside voluntarily stilt. we might be up tomorrow but it doesn't feel like the fever is broke. another 4%, 5%, 6% down is probably very much in line keep in mind, as advisers, as money managers, weal like to talk about a 5% to 10% correction is in the cards at any point in time. >> we hear it all the time. >> and when it comes, all of a sudden everybody freaks out. i think the market right now is trying to figure out whether this volatility and a rise in interest rates is going to impact growth and consumer behavior and possibly corporate behavior. it's trying to figure out what is incoming secretary powell

going to do. is he more of a hawk or will there be a powell put where he slows down things? and then we want to see stability in the u.s. dollar, bond markets, inteshltly these are questions it will take some time to figure it out until we get there, we'll see more volatility -- >> clearly we're at a flexion point. we talked about how, gee, the market seems to be sensing we're going from deflationary period now we're getting used to the idea we're going to enter an inflationary period. >> we think. >> yeah. we've got a new fed chair, major central banks starting to pivot here there are all kinds of things changing as we speak. >> right on paper this should be an inflationary environment, but it depends -- >> it's not here yet we're getting ready for it. >> as i said before, a month ago the fed -- the fmoc was totally just discombobulated on why there was no sign of inflation now here we are 30 days later and everyone's saying there's inflation.

they're not but everyone else is saying there's inflation even yesterday, we heard evans, extremely dovish we think jay powell will probably be more dovish. he's already said the tax cuts will probably be a lot less inflationary than once he even had thought. i think before we put the horse before the cart, maybe there's not that much inflation we have to worry about the real thing is, to oliver's point, the derisking every leg we go lower is more derisking. >> down 710 for the dow. >> so, that kicks out a lot more ist it's about really programatic derisking going on where every time we leglower, it spits out sell x, y and z. >> oliver, if you're an individual inverse evestor on t sideline, you like cisco - >> yeah, names with strong free cash flow margins, and strong earnings, and low volatility relative to their peers. a tech company that has more

volatility than a utility doesn't tell us names. names like j&j and 3m are great names to own over the next two, three years. >> i want to get back to rick. first, steve, we're watching the market now another leg lower we're down 725 points right now. what are you seeing here what do you sense is happening here >> i'm sensing that people were looking for the market to recover as we did. we had a better day yesterday. they were looking for the market to bounce. when the market does not bounce, it's a self-fulfilling loop. you have people selling off the market but ironically they're going into the treasuries, which are creating a higher yield when this whole thing was supposed to have started with higher yields that scared the markets into selling. it's a loop, but watch the 2593 and s&p cash that's the level everyone is shooting against all computers, all pms, all traders. >> 2593 was the intraday low hit on tuesday morning. >> correct

we closed 100 handles higher we don't appear that that rally is going to take place let's see if that number at least holds on the close. >> we're right now at 2613 on the s&p. >> correct the dow, not to extend it too long, 23778 was the number in the dow. >> rick, do you think we'll keep ricochetting here where the ten-year -- look at this morning, we were up to 2.88 again. that's what happened on monday morning -- or friday morning after that payrolls number then we get the market selloff and drags the yields back down but then is it going to go higher on the next piece of data or central bank move are we going to keep ricochetting like that, do you think? >> i don't see the ricochet in the treasuries the treasuries are completely unchanged. 212 in twos, 2.56 in fives 2.84 in tens the only maturity is the 30-year bonds, up 1.5 basis points i understand, like stocks if for a while, there have been very few retracements in the rise in

rates for 2018 for treasuries. i think that completely makes sense. we're all concerned about a yield curve inverting or getting squashed in the middle that's not so much the case anymore. listen, i think the treasury complex, if anything, is being more well behaved than i would have ever guessed. that well behavior is based on stocks having this much volatility we're still basically four-year high on tens but still at 3% no, i don't look at treasury as a matter of fact, if you put just a dot chart on the closes for the last six weeks in treasuries and you didn't know anything about what was going on in the equity markets, it looks like a rate increase i couldn't pick out there's so much anxiety in all the other sectors. >> we are down more than 3% as we speak here, if you're listening on satellite radio those watching on television know it very well. is this the time when the phone rings and the clients start calling, looking for guidance or what do you do here? >> well, there's always a group

of clients that calls no matter what happens there has not been an unusual pick up in volume of calls we look at that as a very positive sign. look, you know, a month ago everybody was thinking it would be a linear market in 2018 was going to be another 20% and buy anything, buy everything, buy bitcoin at 19,000 and whatever else all of a sudden everybody's like, hold on a second trees don't grow to the sky. that's a positive. that's a healthy sign of a long-term bull market. we do think we'll end up higher at the end of the year ultimately, but there is more dust to shake out here. >> we were down 770, steve as we mentioned when we started this discussion, we were looking to see if we could form that "w request"w ." there's the intraday chart on the right side it's harder to form that "w" as we go. >> we're just a blink above the 24,000 mark. these are big, round, fat numbers everyone keys in on. as i said, the electronics key

in on them as well, ten handles above the 2600, another big, round number what people think about is, why do i have to hold onto risks so when people derisk, you have others chasing the computers to derisk these are just spitting out a lot of times because each portfolio has a certain risk barometer that has been breached and causes them to sell. >> we should put the vix up for that reason. the volatility gauge, which was at the heart of the whole selloff is back below the level of 33 right now. the inverse product we can check on we know that will be liquidated shortly now after it lost more than 90% of its value. 33 on the volatility gauge, steve. >> below 30 is where you started to see buyers feel more comfortable with the equity market, above 30 seems to be that line. >> we were talking earlier, who's the dog, who's the tail in this case. the volatility index, are they watching that and deciding to si sell as that goes higher or the

other way around >> oliver might have a different opinion but i think it's that way -- i think people are selling the equity market and it's creating every leg up that we have, is creating the volatility. >> because they, too, have been working in inversely today pretty closely >> the tail is wagging the dog, no question. >> the volatility is affecting the equity market. >> yes impacting people's behavior. >> rick, you agree >> i completely agree. you know what, we have to hit on that 320 billion on the budget deficit. i mean, are these guys tone deaf, seriously? you know, i understand this is all bad timing the fed should have started to try to be more normal years and years ago. they waited until now. 5 all of a sudden congress spending more money. we've given an adrenaline jolt to the economy with tax cuts $320 billion, i hope they have a tough time passing this. military probably needs more spending, i get that, but the problem is, even with the good aspects of the economy that are

underpinning us now and starting to grow a better economy, maybe 2.5%, maybe 3%, the problem is, these guys not only spend what may develop from that, they spend more, they spend more, they spend more. there's no religion in congress. this is the worst time to be talking about it. >> i told you the tea partiers wouldn't like that. >> that's the father of the tea party. it would be weird if he didn't make - >> bond vigilantes, rick you told us the bond yields are unchanged. >> why wouldn't they be going up more >> they are unchanged. i'm not saying this is about the fixed income market. that course is laid in stone thanks to central banks. i'm talking about equity traders are nervous and they're looking at things like what congress is doing and they are -- it is the tail wagging the markets and it isn't just volatility. but i think -- >> equity market vigilantes, sounds like. >> absolutely. they're there, too consider this, when we look at what's going on with the foreign exchange markets and inflation, steve said it's been 1969 since we've seen unemployment since

then what was the labor force participation rate this 2.9% trigger for wages doesn't make any sense because we have 95 million that if wages actually start to kick up other than that one number, you'll be drawing so many more people back into the workforce >> all right guys, thank you. i think we're letting you go here i know you probably have some trading to finish up. >> just a little >> i would think so. >> i knew we were down 800 points a moment ago because kelly punched me in the arm. >> i'm sorry. >> i knew the moment we hit down 800. now we're down 814 dom chu, let's bring you in for more hits, runs and errors. >> we knew it in the news room in california at cnbc hq because a big yell came out. we now have a bit of a price tag, if you want to put it as such on the losses that the s&p 500 has sustained since the record highs we've seen. our data team here at cnbc has

now crunched the numbers within the s&p 500. since record highs we saw just back on the 26th of january, s&p 500 companies have now lost approximately $2.2 trillion, with a "t" in terms of overall market value during that time span the losses have been led by 50-plus billion dollar losses in market cap by five companies in particular google is at the top of that list, which has shaved off nearly $100 billion in market cap. apple shaved off around $64 billion in market cap during that time span microsoft around $55 billion berkshire hathaway around $54 million. exxonmobil, a little over $51 billion. now, obviously, these numbers are changing as the markets ares, but it gives you a ballpark idea of just how at least volatile it's been to the downside for some of the biggest stocks in america. back over to you >> dom, thank you very much. if you had told some people in

january they could have had the stocks they were buying 10%, 20% than the prices they're buying, they would be thrilled now it's a very different story with the dow down 737. the lows a moment ago, we were down 884 this is the worst week in two years. 5% declines for all the major averages >> it was the worst week in two years. >> then back to back, we're talking about quite a nasty stretch here bob pisani has more. >> the way to understand this, and i know it's frustrating, is it is a deleveraging process yes, the initial trigger, the jobs report, the better than expected wage growth that we got on friday, the s&p 500 gap down on friday morning, it went straight dune the whole day, down almost 50 points at the end. that was the trigger yes, of course, concerns about deficits are playing in as an overall concern. but don't kid yourself what's been going on here is participants in the market reducing their exposure. we have talked about that short volatility, long stock market

trade. there are other trades that go in here, trend-following trades here the original trigger of job growth and wage growth has now led to this "x" factor that's very difficult for us to figure out in terms of the dollars involved that volatility trade now unwinding. there are several different trades around it look what's going on this week monday out of nowhere, with no particular news, heavy selling in the middle of the day just dropped tuesday we're expecting massive selling towards the end of the day nothing really happens we don't know why but the selling dries up and the market lifts. yesterday a repeat of monday middle of the day. all of a sudden out of nowhere, there's no headlines, heavy selling. today it happened again. it happened a little earlier today. heavy selling. can we explain that? no if you understand, though, there is deleveraging going on by companies, then it makes more sense. here's what makes us all crazy we don't have a dollar value associated with this when everyone asks, when is this

going to end we don't know. here's what i'm concerned about. there's deleveraging going on. that's good. taking risk out of the system. but if this goes on for a few more days, retail investors who bought heavily in january, substantially, $70 million in etfs in january, are going to say, wait a minute, i'm under water, i don't like this, and they'll start selling. i suspect you'll see etf outflows pick up if this continues. >> but your chartist hat on. grasso has me focusing on the levels we hit tuesday morning. 2593 is what we hit tuesday for the s&p. we're darn close we're down 76 points on the s&p right now. the dow, it was in the 23,800 range. >> down 846. >> clearly as we're doing this

deleveraging, we're testing those lows which is important for any trader as well, right? >> yes >> there are technical levels being breached as well so, again, remember, the fact that everyone was short volatility, betting there would be no volatility meant a lot of professional traders had no protection on monday when we blew through what we call strike prices in the options, suddenly everyone realized they needed to get more protection and traders needed to get get that protection. prices went through the roof you quoted them at the last minute traders who were long the stock market who had been selling puts effectively had to short more to keep their positions neutral bottom line is it all fed on itself the good news is, i think that this is a good thing that we are getting a lot of the excess volatility out of the market the problem is, we don't know where exactly it's going to end. so, right now we're still

sitting right near the lows of the day. the volumes are 50% above normal we'll probably be 75% above normal spdrs will probably do 2 to 2.25 times the volume i'm not diminishing what is going on but it's not quite as intense as it was on tuesday. >> if you just joined us, we've been following the developments in washington where the budget bill is up in the air. if there's no bill passed tonight, there's a government shutdown tomorrow. we're back to that again that is not causing this today on wall street this is very much the unwinding and perhaps the anticipation rates are going higher because of inflationary anticipation. >> i think 846 is still the

session low. that was just a couple of minutes ago. that's a 3.25% drop. berkshire, they hit 326,000, that was the 52-week high. they're now at 290,000 my point is simply, if you want to take a company with a long-term perspective, take a look at what's been created by this market, it's been quality, it's been growth companies, it's been pretty much everything. let's bring courtney reagan now, back at hq with a look at the transports which are down 334. >> hi, kelly i want to give you a real quick alert on what we're looking at for the dow jones transports we are down more than 10% for the most recent intraday all-time high for transport index which indicates we're in correction territory you know we watch this very closely. talk a lot about the three major averages and the transports is one we want to watch very close

as well, down 3% on the session. again, in correction territory for the transports back over to you guys. >> thank you to the nasdaq one more time with bertha coombs where we're down 2.5%. >> yeah, we're down here below 7,000 and we've got the nasdaq right now down about 9% from its january all-time high. not quite in correction. however, when you look at the mega cap stocks that have really driven a lot of the gains here, apple, as we know, back in correction that was one of the first stocks to break down in terms of those technical devils retracing a lot of the highs we had seen and the momentum now a lot of the other f.a.n.g. names moving in there. you have facebook, netflix, alphabet and microsoft also in correction as well so, we're seeing a bit more of a

technical breakdown. the small caps today fell below the 200-day moving average that is a support level, a bearish sign when it goes below that very long-term trend line apple is there as well we're watching the nasdaq composite. it's still down only about 9% from its all-time high part of the reason, we haven't seen amazon fall into correction amazon right now also about 9% or so from the all-time high but the other thing we have to remember is that these are the stocks this is the index that's really paced the move to the upside in terms of these markets and this is the first day we're seeing the nasdaq negative for the year back to you. >> thank you very much eight minutes to go. 854 down as we set new lows for the day. with us, one of the smartest minds we know. you've been given your mobile

device a workout as you've been sitting there, checking all the different stock prices stephanie link from tiaa investments. what do you make of what's going on right now >> sure doesn't feel good. i was looking at my screen of the stocks i own to see which ones are falling in and which is hanging in none are hanging in, unfortunately. the most popular names, especially technology, are the ones getting hit the hardest it's not that surprising you're seeing a pullback in those i still think this whole correction is about rates, about inflation creeping up, about people thinking the fed is either behind the curve or actually has to be more aggressive that fear, that unknown, is really what's driving a lot of the anxiety. even though we have really great, great earnings and great guidance and good margins and all of that, people are just not willing to pay 19 times forward estimates for that so we have seen a multiple correction that's kind of normal.

kind of what you'd expect. >> is that something that will make you change your holdings? >> no. well, you know, i've had this cyclical bias in my portfolio for a while meaning i've owned names like financials and financials and industries and materials. i would have expected that particular group of stocks to get hit very, very hard if we were really anticipating something really bad like a recession on the horizon. in fact, they're down and it's ugly, for sure and there are some stocks that are worse than others but they're not getting hit more than the discretionary stocks. frankly, the staples were getting hit. it's almost everything. >> i happen to agree with you that the inflation expectations are -- we're seeing this transition, but what about those saying, it's nothing more than volatility traders unwinding these positions they've been in

because we do see this direct inverse correlation between the vix, which is still going higher and equities, which are still going lower today. >> i think it's absolutely some of that, for sure. but in the bigger picture, what cause the whole thing to start was really the jobs number now, this makes the cpi number on tuesday all that much more binary let's not panic here let's not be so short term i think a little inflation is good let's hear what powell has to say about their strategy i think the growth in the u.s. as well as around the world is very good. they're pulling away from qe around the world because things are getting better we have to just adjust to that i'm very aware that, you know, we could see continued pressure and volatility not like whistling past the graveyard here, but i just want to set an expectation that if you're a longer term investor, you just stay calm and pick your spots and focus on fundamentals. >> we'll see you back here after the bell for some more on these

movers the dow down 892 at the lows a moment ago we're a little off that now. let's take a look at the sectors and see which are the best and worst faring nobody in the green. utilities are the outperformer with less than 1% decline today. consumer staples relatively defensive. they're down less than 2%. on the flipside, technology, which stephanie was talking about, the second or third worse, down 3.5% we know amazon is in that mix. financials the worst performer today, down nearly 4%. the broad markets for the dow is down 3.5%. s&p down 3.25. russell 2000 is holding up, down 2.5% meantime, as we mentioned, transports a moment ago, those have fallen 10% from recent highs. down about 300 points today. by the way, now the dow, let's put the dow on your screen it's down more than 900 points

we're below 24,000 we punched through 25,000 and 26,000 this year before sharply reversing course now going down the other way we were down 902 dow is around that 24,000 mark bill >> thank you very much, kelly. we have three minutes left here. let's walk through here. i know somewhere in here our gang has a chart, an intraday chart that compares the dow or the s&p with the vix and it will be a very clear -- it will show very clearly this inverse relationship that has existed all day today between those two instruments as equities move lower, the vix was going higher and vice versa. as we sit here with the dow down -- testing now just below the 24,000 level, down 3.6%, the vix continues to move higher we're at 35 right now. >> remember what the vix does.

the vix is doing its job there's nothing unusual going on. >> clearly, this is what's going on right now. >> we are measuring the effect of buying protection near term protection in the s&p 500. that's what you're looking at. 30 days out for the s&p 500. what's it cost to buy near-term puts in this case? what's happening because you're blowing through numbers that were way out of the money a long time ago, the market says, fine, you want to buy a protection, be my guest we'll charge you a lot of money. >> i know we want to keep the big board up there the s&p, if we can show that right now, right now we're below tuesday's intraday low we have now gone below that level. we needed to be tested, according to the chartists, if we could close above that level, that would be successful testing.

>> that's a little below that. not far below it you're right technical levels become important. i would watch that monday level, i think, and if art cashin was here, he's off today - >> what take day to take a off, art. >> i think that 100-day is more important than the 200-day. >> we're seeing more acceleration of selling as we breached those levels. now we're at 2588 as we move below tuesday's intraday low. >> we'll do 1.2 billion shares, on a typical day we'll do 700 million. we'll do twice to two and a quarter times normal volume. on tuesday we did three times normal volume. so, maybe a little less selling but, as you can see, the effects are not that far off just knocking on the door. >> 248 seconds left.

we are down almost -- well, now we are down 1,000 points at 23,882 we are testing tuesday's low right now in that regard very critical moment for the markets as we head toward the second hour of the "closing bell." i'm sticking around here the dow's still moving even as we rang the closing bell. looks like we're down more than 1,000 points for the second time this week for the dow jones industrial average how quickly we gave back all the 1,000-point thresholds on the way up this year dow down about 1,033 to 23,860, a 1.45% drop for the blue chips today. the s&p 500 down a little less than 4%. it's down 100 points on the bell to 2581.

nasdaq composite, similar, down 4% the russell 2000s down a little less than 3%, down 44 points today. we'll dig into all of these market moves bill mentioned and this seemed to be key at the close, everybody looking at the lows we hit earlier in this week saw us go back through them and didn't like what they saw and that pushed us down into the close. we have bob pisani on the floor, bertha coombs is over at the nasdaq and dom chu is at headquarters with a look at how much we've traveled today. >> if you were to put a pedometer or fitbit or activity tracker on this, it was not a day the bulls want to remember or think about let's take you through the play-by-play quickly we start off low out of the gate as we started off from yesterday's close, we went right off the bat and kind of drifted lower. as you can see here, it is

orderly. there was no flash crash, no sudden drop in the markets as we got towards this level, we were off by 600 points we did stage, like kelly point out, to make a "w" pattern to end the day higher we moved up by 300 points after being down by 600 only to resume down again at this point, going into the last hour of trading, we were looking for at least the bulls were some kind of a move higher to see if that "w" pattern would emerge we did not see it. 600 down, 300 up as we're settling off, just down a little over 700 points further to go. so, we did finish on the lows. we did finish with a flurry of selling. right now the question becomes for a lot of traders out there, is this the level we could see stability tomorrow we have now retested those lows we saw from that first selloff earlier this week, guys. back over to you. >> dom, thank you. i know we'll be going back to you. back to bob pisani back on the floor. that's the question that's still

to be answered is this enough now for the chartists to test these lows from tuesday now we'll have to watch the futures market and see how they trade tonight. >> i don't think it's atd matter of technical levels anymore. i think it's a question of, when is the deleveraging going to be over this is overcoming all sorts of technical levels i want to note the dow notably underperformed the s&p 500 because some of the biggest names with the biggest momentum sold off rather notably. boeing, home depot, goldman sachs, 3m with big declines. fairly high priced stocks. trust me, they were down today, rather notably they were a big -- those four probably accounted for a good percentage of the dow's decline overall. this is terribly frustrating for everyone as we noted many times, the original trigger for these declines came on friday after we had the jobs report come out p.m. we hl wage growth, highest since

20009. s&p gap closing down about 50 points on friday much is short volatility, long stocks other strategies have been involved look what's going on heavy selling on monday with no headlines around tuesday, waiting for the market to sell off. selling was very light the market lifted as everyone was surprised by that. but wednesday, renewed again more selling in the middle of the day. again, no particular big headlines around that. today, of course, a little earlier today, we again saw selling relatively heavy again, this is deleveraging. it's frustrating because we don't have a number to give you. we can't say there's $200 billion. we can make guesses but until it runs its course, we're just going to have to live through it it is big issue is what happens to the retail traders, $70 billion in etfs came in in the

month of january that was an historic record. the issue is, when would the retail investor look at this if it keeps going on and saying, i'm under water for the year, i'm going to lighten up. we'll see how flows from etfs. that's what we'll talk about tomorrow morning. >> i wonder if we can get our friends at td and elsewhere on the horn i don't know if they can tell us in real time what they're saying, but it would be interesting to hear. >> and hopefully all websites are working. >> that's been an issue plaguing the traditional, and the robos bertha coombs is at the nasdaq with what's moving over there. >> if you're deleveraging you'll sell some winners in order to pay that off the biggest winners coming into this year and in january were the big-cap tech stocks. you take a look at the nasdaq composite, we're below -- closing here below the lows we saw on tuesday the nasdaq composite is not in correction territory but the large cap nasdaq 100 is.

now down 10% from its high the reason is that all of those big caps that have played a big move in the momentum are now following apple into correction territory, down 10% from the recent all-time highs. facebook, netflix, joining apple today. amazon not there yet but getting close. amazon over the last week has held up fairly well compared to these others this is another mega cap stock that accounts for a lot of gains here the things we're watching and has been the biggest drag have been the chip stocks the chips giving up all of their massive gains they saw in january now here in these last eight sessions of february we are seeing it down now negative for the year. also in correction territory as well we have earnings coming up, guys, and video after the close. but it doesn't seem as though earnings, unless they're pristine, really help the sentiment around tech these days back to you.

>> bertha, thank you here with us cnbc senior markets commentator michael santoli and rob cox from reuters breaking views to talk about everything we've seen today real quickly, by the way, in the dow today, exxonmobil, the relative outperformer, amex, american express, was the worst. earnings still do matter what do you make of this >> you're the old newspaper guy. itching to write that lead. >> i actually am this could have been the purge i don't know i think a couple things you can take away from today's action which was it was much more indiscriminate than the week's selloff. they were selling the winners, the stuff they loved and you saw a little bit more caution building up that this was bigger honestly, the sooner we stop

talking about mechanical instruments that might be doing something funky to this market and start to say, this was an overextended market that needed payback, i think we're better off. yes, those are all factors they're all in there but you don't want to comfort yourself with the idea it's a flukey thing and will come back. remember, we're coming up on the two-year anniversary of the dimon bottom, in a week's time. >> two years ago, this was the worst week since then. the early 2016 episode where we were concerned about china and -- >> on the 10th, didn't we? >> 10th or 12th, exactly there's two years of the s&p 500 on the screen. do it with your mind's eye draw a line from that start point up to where we are right now. that looks like what the trend is, doesn't it that little bulge up there was

your momentum chase at the end of last year we're back to where we were before thanksgiving, in november i'm not saying it's over, but they call it a correction because the price has overshot the trend and it has to correct. that's what we have so far it wouldn't shock me if we've gotten into the greatest intensity of the selling yeah, you're having babies thrown out with bath water all over the place. >> if you have an ipad pro, you can draw that yourself get the chart out and draw that line mike's talking about. we can't do that for you what do you think? we settled here right on the lows of the day. what do you think is going on? >> still doesn't feel good doesn't look good. to mike's point, we're down 10% from the highs, right? we're still up 23% from 15 months ago and so 10% doesn't feel good i don't like it. a lot of stocks have fallen much more than that, so it feels even

worse. but they're taking everything down together right now. you just kind of have to let things settle. >> to mike's point, they're taking everything down together. does that feel like a purge, the word he used, as well? >> i guess it does there's so much etf selling going on and it takes all the stocks down. i would rather have everything go down than one or two sectors go down and some kind of -- which is what happened last year we had rotation all year long. we talked about it since last january. i kept coming on and we talked about it finally, we're down. things are not great from a technical point of view but from a fundamental point of view it's hard to justify because things are quite good what are you paying for the good news that's the question. we have to let things settle down. >> what do you think we're learning about the market after a second 1,000-point drop this week what are the important questions that need to be answered

>> there's going to be a lot of unwinding. you call it a purge, mike. there's the unwinding of short volatility, the trade, as it were, which has been building up for some time. the qe gets rid of volatility in the market it's not just buying the funky instruments you referenced there are other ways to short voluntarily stilt in the market and they can be large trading strategies that when things go awry will take some time to unwind the reason for the unwind is it's what we all expect. i think what's not a secret, interest rates are going up. central banks are going to stop buying stuff in the market that mark carney thinks the uk may overshoot inflation. this is not that surprising. we've been writing and talking about them for a couple years but now we're starting to see

it now the unwinds are taking place. it's not like people are saying, i'll let go of this one and keep that one until that happens, you're better off just, like, going like this and trying to pick out the winners, which will be, by the way, i think some of these tech stocks. >> i just think when this -- when it's indiscriminate, there are a couple takeaways one is, holy cow, it means this is a systematic event. this is 20 08 we can talk about why that's not the case if that's not the case, you look through that, don't you, and you start to say, here's a stock down 20%, here's a stock down 10%, maybe more than that. are people ready to pounce on it in that manner >> i think people will be doing that every day. >> if you get that long enough - >> exposure stock was so high a

the end of january people were in you didn't have the cash to do what you had to do i'm talking aggregate. >> charts don't care why they're just looking at what's going on what's going on, as you say, no matter what the reason is just this comeback that's been long overdue from the - >> 23% in 15 months? that's a great number, right that's a really -- that's a lot. >> that's a pretty good career. >> exactly i'd take that. 7% in january is absolutely incredible i get it and these moves feel really bad so here's what i am doing as a portfolio manager. i'm very, very small i'll been buying every single day, bits and pieces of where i think fundamentals are strong.

estee lauder, amazing. the stock couldn't hold its game because the market was down. i would love to buy that stock down 10% because, guess what, the fundamentals are really strong earnings are going higher. the secular trends are in its favor. union pacific raised its dividend today got totally ignored. federal express, great numbers, beating and raising. also now down quite substantially from when it reported so es those kind of examples in every different sector, by the way -- i can find something in every sector that reported a good number where it's down and where i'm slowly buying because if it's -- if i'm not right on the timing, all right, short term i might not be right but i think fundamentals will carry the day eventually. >> what do you think the wall street reaction is going to be to all of this i'm sure we're going to read more about funds that have lost more than they would have liked to, maybe more than they're really able to in a day and that sort of thing. what do you think the reaction's going to be now that this has happened again this week >> yeah, you use the word systematic in the conversation

and i think -- i think there is -- oh, there is something systematic but i wonder if there isn't a mini system. in other words, you can have a systematic problem that isn't deep, as deep as the mortgage-backed crisis was, right? and i think that when wall street -- you know, there's going to be a lot of people calling -- remember, there's record margin. i think margin loans were at a record every month there was a new record so, all of that, there's a lot of really rough phone calls going on from the prime brokerage desks of goldman sachs, jpmorgan, it wouldn't surprise me to see the reaction of a couple, as we always see, when you have these moves, despite everyone saying how low volatility is bad for their business it will hurt a few people, and those will be interesting stories we'll be writing about i'm not at the point where i feel like, i don't know, there's a systematic -- i almost -- i don't want to use that word. i don't think there's any reason to panic i mean, it's - >> look at the indicators.

alluding to other things you would look at. you're not seeing the kinds of indicators in the credit markets, even in the foreign exchange markets that would kind of say that we're sensing a larger systematic problem. the banking system or the economy. >> look at the dollar. if anything, the dollar has been creeping up in the last couple of days, which has hurt some commodity complex, which is why they've not done well. but that's not a bad thing. >> >> i think the cds market is chasing stocks down a little bit. i don't think it's anything where you would say that the stock market has figured something out that ef we've been ignoring >> you take high credit yields -- the absolute prices have fallen but a lot is because the benchmark yield has risen.

>> maybe that's not where the excesses are and that has to be bled away. to rob's point, i always say we're at that moment in one of these selloffs where you do have to be aware there could be more bodies washing up in the surf and you didn't expect they would come from a certain direction. but that's the game. that's what you have to do. >> what's funny to look at is bitcoin. it was going crazy -- i wonder if it's an interesting indicator of where things are going. it goes up to 18,000 a month and a half or whatever it was before we had the blip in the stock market and, you know, in a sense -- >> we just tried to call it up >> yeah. but it's kind of like this weird indicator prp all it is an indicator of sentiment of a bouy. >> we had a huge selloff and caught the attention of the white house as well. eamon javers posed this question to deputy press secretary. what do they have to say there, eamon?

>> reporter: as we stand here, the dow is off 1,000 points or more can you give me the president's reaction to the stock market volatility we've seen? and does the administration use the stock market as a barometer of its own performance >> the president, like the rest of the white house, is concerned about long-term economic indicators and factors and the fundamentals in terms of the long-term are very strong. again, unemployment and the labor market are very strong unemployment at 4.1% we saw wages rise on friday for the first time -- not for the first time, but at a measurable level for the first time in nearly eight years osh nine years. and corporate earnings are high. we believe these long-term fundamentals demonstrate a healthy economy. >> which is what we've been saying, right? if you -- i don't know if we're whistling past the graveyard or not by saying that well, gee -- >> i don't know. it's not just one indicator. >> name me a market break in the

past which has been the result of an economic problem here? the financial crisis notwithstanding. the end of the internet bubble the '87 crash. >> you have to distinguish '87, '88, '89, where you had these sharp wrabreaks that were not associated with the financials >> currency crises - >> but you did have a recession in 2001. the stock market then was not divorced entirely from the economy. >> look, we've had good economic indicators here in the united states as well as abroad just this week alone we had great services ism, the composite pmi in europe, china pmi. let's not -- that's just this week, right? then jobless claims today that were great >> 45 hive year low. >> right those are good things. consumer confidence, maybe it

comes back a little bit because of the market impact, that kind of thing or maybe we slow a little bit from this. i don't think you're looking at a recession. if you're not looking at a recession, you have to take a step back. i get it that the fed and the global central bankers are actually pulling the money away. they're getting tighter. i get that, too. but i think we have to appreciate that we're -- the reason they're able to pull back is because we're growing a little bit better. we're not growing at 10% but a little bit better. >> that's what i was going to ask you. i'm remrinded what the president tweeted a few days ago when he said, in old days good news is bad for the stock market given the litany of things stephanie was citing, are we at that juncture? since we're not stalking about some kind of worsening in the fundamentals, are we talking about an improvement that's hard to swallow for stocks? >> it's interesting you're having this discussion can you have -- can you have a boom in the economy without a robust stock market? is that -- i'm trying to think

back probably in history you have been able to do that remember, stock prices anticipate future earnings they are basically in anticipation of the future we may have anticipated the next few years of growth with this extraordinary run we've had over the past two years we may be flat but that doesn't mean wages won't go up and all the jitters around the central banks. >> like you suggested, that points us in one or two directions if this is one of those things where the underlying economy is worsening, it points you towards stocks going down. the bear market that comes with those events, rob. if it's a different kind of thing, 1994, other episodes where it's reassessing or readjusting to maybe some good news in the economy, that can end a very different way that can end in a bull market. >> right, right. look, you see these cracks

they're cracks of the bank of england saying it may overshoot the inflation target two years ago people would have been slightly happy to hear we'll have more than 2% inflation in some jurisdictions, right? these things aren't the end of the world. a big decline in the stock market when you're highly exposed to it can sure as heck feel like it. >> i'd love to know what jay powell is thinking right now he's the one guy we haven't heard from bill dudley, as i mentioned earlier, poo-poo'd the idea they would have to change their monetary policy because of this. >> very first week on the job. >> and jay powell is trying to figure out where the men's room is. >> you can imagine he's going through the exact same exercise as we just did is this an internal stock market panic, correction, payback for unusually great period of time or is it telling me something i need to know about the economy and the things that i have stewardship over that's the question. >> by the way, we've had a bunch

of earnings coming in. one of the big movers to the downside is aig. >> aig reporting adjusted earnings of 5 cents a share, compared to 75 cents a share consensus. adjusted accident year combined ratio is also 100.2. catastrophe losses, 162 million, 572 million were the southern and northern california wildfires. the company preannounced $305 million on the call. ceo saying despite full-year record catastrophe losses, we delivered $1.5 billion in tax income fourth quarter review with adverse and general insurance north america commercial business showed notable improvement and reserve stability. two things analysts were looking

for. first, book eserve charge, it did, but it was very, very small. much smaller than expected of course, with the commercial businesses in north america, logging underwriting department. the company took charge of 6$6.7 billion tied to tax reform and build dsa reinsurance to insure legacy life and run-off lines. this is to consolidate that. the stock just turned positive in extended hours. it had been down about 5% a few minutes ago. we get more from the conference call at 8:00 a.m. eastern. back to you. >> very interesting. >> thank you very much >> we knew the headline was going to be bad for cat losses it was all about reserve the reserve was less bad, if you will we were expecting $300 million

we only got verbal content, and less than we thought that's a good thing. >> down 5%. >> maybe that's what brought it back. >> very cheap stock with amazing new ceo that's going to turn the story around it's going to take a long time you have to have patience. >> aig hanging onto a gain of less than 1% at the moment. >> we still going to julia it's very quiet. we're getting crickets julia boorstin, you have snnz for us >> yes, we have numbers on activisi activision/blizzard coming at 94 cents adjusted versus 93 cents expected stock is moving higher that seems to be perhaps in part about some guidance which is stronger than expected company guiding for q1 earnings per share of 65 cents adjusted versus estimate of 43 cents. some positive commentary here about the strength of the

different -- of the bookings saying an all-time record and activision/blizzard had 355 million active users, 1 million more than the prior quarter. shares up 3.5% >> another company that initially moved lower. now five percentage point turn-around. josh lipton? >> kelly, nvidia reporting $1.78 beating expectation of 1.17 bucks. revenue up to $2.91 billion. gross margins of 61.9% better than expected turning to the guide here, nvidia expecting $2.9 billion in the first quarter and up 1% to 2% better than the estimate of

$2.47 billion. conference call kicks off at 5:00 p.m. eastern and we'll be on it. back to you. >> thank you, josh nvidia up 6% yes? >> i'm wondering -- we're seeing a similar trading pattern for all of these stocks. i think it plays to your argument, stephanie, that a lot of these companies were just taken down anyway, indiscriminately and now the market's left to respond to these earnings whether they're good or not, they're going higher. >> they have to be good. they got a beat in raise, especially nvidia but it just beat and raised. that's why it will take a lot of homework and hard work to figure out which companies are downed on nonfundamental reasons, to your point, bill, and which ones are already down because they didn't deliver the ones that didn't deliver, we have one in the after-market hours, i'm sure we'll talk about -- >> are you referring to expedia? >> i sure am. >> what a tease that was. >> i'm getting the hang of this tv thing. >> yes, so are we, we're trying. the broader market dow etf, on

monday we saw after we closed at the lows of the session, we kept going lower. a little different story here today where it looks like there's some traction, even though we closed down 1,032. some traction after hours. maybe that's a little supportive for how these earnings are reacting the dow etf on your screen want to talk to james wang about nvidia it's a pretty impressive move here why do you think that is >> well, the revenue beat was very dramatic, $2.9 billion, that's over 20%. what we see -- people are looking for a data center number and that analyst expecting $550 million. we saw that come in over $600 million. that's sustained >> what are you looking for on the call >> we want to see a sustained growth story right now nvidia, if you think of it in terms of a rocket, this is in its second phase of

growth ai is second phase of growth first phase was gaming, that was a nice $3, $4 billion business we estimate at least a $10 billion opportunity there. nvidia has claimed $30 billion so we want to see them bridge to that opportunity also autonomous driving is a huge driver for nvidia that will be a huge $30 to $40 billion. even if they realize a third of that, they would more than double their revenues today. >> thanks, james james wang with what was a standout last year. >> oh, yeah. as we mention, expedia looking weak after its results seema modi is here. >> shares of expedia down over 15% in extended trade on what was a disappointing earning report 84 cents adjusted, well below wall street expectation of $1.15. revenue was weak, $3.32 billion

versus estimate of $3.26 billion. what's interesting is when you look at gross bookings, they increased 14% year over year, slightly higher than anticipated. if you take a look at the broader yoof of 2017, gross bookings on homeaway platform competitor to airbnb increased to $8.7 billion. it touches on the broader challenges that the online travel industry has been facing, which includes intense competition, not just in north america but abroad as well plus, this trend that is concerning that touches on consumers circumventing the ota websites to book directly on the hotel sites. plus, increase in marketing. that's something we're seeing across the industry in hopes of kind of differentiating their platform from the rest stock down on this disappointing set of numbers the conference call starts shortly. we'll get you that commentary as we get them. back to you. >> thank you very much

before we do the reset, stephanie, i know you were interesting in commenting on this. >> yes. >> you look like you're disappointing -- >> i have companies beating and raising and going down, so this is missing and lowering and going down, which is probably should this is a company -- it's a great franchise but they are in an investment cycle. they really have to make major investments. so, missing the top line is a disappointment but i expect the margins were also weak as well because they have heavily investing. you got to let this play out it's going to take time. >> you're being patient with them. >> i don't own it. maybe i will some day. you never know. >> if you didn't - >> i got a lot of great fundamental stories that are down i might go to them first. >> if you just joined us, yes, it's happened again. a big decline. not quite to the degree we saw on monday and early tuesday, but still eye-opening nonetheless with the dow closing down 1,000-plus points.

more than 4%, back below 24,000 now. essentially to lows we saw on tuesday morning for both the dow and s&p. the s&p closed below the low we saw on tuesday now the question becomes, is this enough to test the session lows at any rate, as you can see, 3% and 4% declines for the major averages this thursday. >> and still watching the etfs for majors in the after hours. ron, it's interesting to watch some news alerts go out about what happened in the market. "the times," for example, says it goes back to the decision this morning, saying it's goin to raise rates faster and maybe more than expected you think that's fair? does this go back to bank of england, central bank policies >> i think this is one of the

presip tants i think this is getting serious as you have accelerating in som spots and the bank of england and fed and others talking about accelerating increase rate increases and going more times than we had anticipated. what we're finding out right now is the degree to which these markets are sensitive to a certain level of rates each time we've approached 2.9% on the ten-year treasury late last week and again today, the market really began to tank. so, i think as stephanie said earlier in the program, interest rate sensitivity is extremely important. it's shaking out all the weak, overlevered hands. the real question now involves longer term issues about increasing the size of the deficit, who finances, at what cost there's a lot of moving parts on this this is more like three-dimensional chess than it's been in a while

i don't think we're quite out of the woods yet. >> has the move been magnified to some degree because of the unwinding of this voluntarily vilt tra -- volatility trade >> we talked about insurance deployed in the '80s before selling begot selling. if the market was going down, you sold futures, which prompted more people to sell stock. we have the inverse problem with the same result. you were buying the dip and selling volatility now you have to buy volatility and sell stocks and that's exasser waiting downside action. mike santoli was talking about this earlier in the week now it's starting to buck up against fundamental issues around the pace of growth, whether or not inflation accelerates and whether or not central banks accelerate faster. to the extent deficit grows and the fed won't be the buyer of bonds, what happens to the cost of servicing u.s. debt, the size

of deficits. i think markets are beginning to grapple with that a little bit >> before you step in, mike, just point out, if you hadn't heard, they're still talking in washington about a budget bill that the cbo just scored in the last hour which showed a much larger increase in the deficit if it were to pass this is still a big question whether this thing passes tonight or not. >> without a doubt it's certainly invading the psychology of the market this idea that here we are, full employment and we're still going to be looking at trillion dollar deficits on the other hand, at least today or this week, ron, the bond market is not in any kind of similar state of deep concern about this sure, the yields are at their high on the longer end but they're not spiraling. the scenario you set up there, if we're going to be trapped in this squeeze between what central banks might do and despite a good economy, stocks

struggling, it means we're going to believe central banks are, in a sense, forced to go in this direction. they won't really have discretion because inflation will not allow it. that all remains to be seen at this point we're jumping ahead a few spots. >> that's what markets do. they typically jump ahead at least one if not a few spots psychologically people are looking at this and saying, hey, if the fed is not only raising rates but reducing the size of its balance sheet at a time when deficits start this year or next may top $1 trillion annually, the tax reform will cost $140 billion annually, this new budget, if it passes, is going to be $360 billion over tw years, on top of the exiting deficit. that pushes you over $1 trillion you don't, unless you fed decides to monetize that debt and continue to buy bonds, which is in and of itself inflationary, you then have no big natural buyer of bonds we're about to enter a trade war with china will they continue to buy bonds? we have open questions as to who

the natural birsz of bonds will be as the deficit gets larger. that's a place you shouldn't be at at this point in the cycle. quite the con temporary. we should be running surpluses after nine years of expansion, not accelerating the size of the deficit. >> let me just mention a couple of stats for the dow, the worst week since october 2008 for the s&p, only the worse week since august 2011 it really is the dow taking it on the chin here. >> it just feels bad it feels really bad when it's day after day after day. even though we rallied from the lows and we pull back and rally off that you know, we're -- >> wasn't there a feeling of anticipation didn't you feel a little anxiety that we hadn't had a big pullback in, you know, two years or something >> oh, yeah, sure. of course. >> now that we're having is it, okay, let's exhale. >> i'm certainly not panicked.

i keep coming back to the fundamentals i'm a little surprised at the speed of the decline day after day after day. ron, i just want to ask you a quick question what happens to the dollar we have the deficit and also the fed raising three, four, whatever times they're going to. in that environment, what happens to the dollar? i think that's important because the dollar weakness has helped earnings, helped multinationals, and obviously for a lot of other reasons it's important to watch out? >> it's inherently inflationary. if you look at the dollar against the pound, which is at 1:40, the highest in quite some time because the boe is raising rates more aggressively than we thought. we worried when aid raabout a r devalue currencies that's another variable. i've said before that i think the dollar has been the canary in the coal mine it's been falling for over a year even as stocks have gone to new all-time highs

it's interesting, you said it's happening day after day. it's been five days. you know, we've -- if you fall 10% or 12% in five days, we had a word for that. it was panic or mini crash but this doesn't feel like it's done yet, i suspect. i do think it might get a little more complicated before it gets easy again, we are probably still just in the midst of a correction it might go larger than some people think some people are talking 10% to 15%. we're already there. maybe a little above 15% this is a little more complex because you do -- you are finding out, as warren buffett said many times in the past, you find out who's swimming naked when the tide goes out the tide has gone out and we're seeing levered trades and strategies get tested. >> a lot of tan lines. >> yes. >> or not. >> or not. >> if you're on the french rivera, no if you're on the jersey shore -- >> meantime, we've had other news breaking as the market was falling. qualcomm, josh lipton in san

francisco, tell us about what they said. >> bill, this news from qualcomm qualcomm announcing its board of directors here, bill, has unanimously rejected the revised proposal by broadcom to acquire all outstanding shares of qualcomm for that $82 per share offer. broadcom announcing that on february 5th the qualcomm board determining two things they said the broadcom proposal, in their word, materially undervalues qualcomm two, it falls well short of the firm regulatory commitment the board would demand given the significant downside risk of a failed transactions. necessity say qualcomm has offered to meet with broadcom to see if they can address these, what they call, deficiencies and values in their proposal broadcom had previously described that $121 billion offer as its best and final

offer. that qualcomm shareholder meeting coming up on march 6th back to you. >> i mean, this is what david faber was talking about earlier this week, uphill battle for qualcomm in this one both the shares -- this is extended hours trade -- qualcomm up 1.5%, broadcom up fractionally courtney reagan with fireeye. >> they are hanging onto gains reporting fourth quarter earnings of one penny but a loss had been expected. that was a beat. revenue coming in stronger than expected at $202 million the street was looking for $193 million. that revenue number is up 10% year over year the ceo noting both year over year and sequential growth in every major product growth and geographic region, calling it a record number of transactions closed for over $1 million

if you're looking at the guidance going forward for the full year, very strong guidance for both earnings and revenues for fireeye. you can see that shares are up about 12% in the after hours after finishing up just ever so slightly during regular trade today, bill, in that downmarket. back over to you. >> thank you, courtney technology >> well, this is not one i'm involved in. i'm actually playing cisco for the security piece and a lot of other things, a better balance sheet and cash flow. i actually think this one -- there's a chance they're getting their act together there's a chance that somebody comes in and buys them i wouldn't be surprised it were someone like cisco you'll see a lot of m&a -- >> samplike pharmaceuticals buy biotech for a particular treatment. >> in technology was one of the worst performers that was different from earlier in the week. >> but in the -- >> it was more defensive in the

first selloff. >> you know, stepping back on technology, it got to like 23%, 24% weighting in the s&p 500 like, the all-time high. that is a huge weight. >> probably doesn't include amazon. >> that's right. it's over -- >> and netflix at the same time, energy got down to like 6%, 7%. there was such a wide discrepancy in terms of where people were positioned. >> does that mean it's dangerous to be be - >> i think it's part of the dynamic of selling what's up a lot. when you're harvesting cash -- >> well, we were selling energy today. they were selling energy today, too. that's not up all that much. >> no, no. i'm saying it's indiscriminate it's not like, let's hold these aside. >> if these stocks come down enough, i think the fundamentals are so strong and the secular stories -- not all of tech, but the secular stories, there's so many of them that are going to be winners for the long term that's a group i'm not adding to right now, but i'm on a big, big pullback, certainly would be one i'd add to, sure.

>> let's stand by. ed >> garden variety 2,000-point drop. >> 4% down or 200% up, whatever. >> major averages are on track for the biggest weekly losses. for the dow, since '08 we'll talk about how to strategize and protect your portfolio. what is the power of pacific? it's life insurance and retirement solutions to help you reach your goals. it's having the confidence to create the future that's most meaningful to you. it's protection for generations of families, and 150 years of strength and stability. and when you're able to harness all of that, that's the power of pacific. ask a financial advisor about pacific life.

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welcome back clearly i'm not kelly evans but it was a wild day again on wall street here's our rapid recap

>> here we go again. big time dow futures point to another lower open following yesterday's roller coaster ride on the ten-year. >> the ten-year, market picture. dow it was down by as much as 476 points or so. >> corrections are normal. they happen about once a year. you know what, they take a few weeks to unwind. you're a lot closer to the bottom than the start of this thing. >> the dow jones industrial average is down by a touch more than 500 points. >> markets take the escalator up over the course of many years and the dow down. >> dow is down i go more than 600 points at this moment sitting at $24,277. >> i think we need to go lower to generate a level of fear and capitulation that can bring a bottom. >> what a crazy market this has been the dow is down, and i say this loosely, quote, only 390 points. >> the dow was down 700 points

moments ago. now down 570. >> the dow is down more than 900 points we're below 24,000 we punched through 25,000 and 26,000 this year, sharply, before sharply reversing course. now we're going back down. looks like we're down more than 1,000 points for the second time this week for the dow jones industrial average how quickly we've given back the 1,000-point thresholds we crossed on the way up. >> potentially an important day on the close here as we did get back to those lows from tuesday morning. now we'll wait to see what the market does with that. does it continue lower from here sl entirely possible. or do we get a bounce? >> technology stocks got clobbered. should investors look there for leadership, do they avoid it karen and dan join us from the

"fast money" crew. we want to get your take on this karen, what do you think about tech relative to what's happened with the broader market? >> i think, obviously, the woosh down has been pretty hard. i think we'll see a reversal there. i think there are other places maybe we should look that have been sort of underfollowed or not thought about so much. one of those is the oil field services sector, which we've had pretty stable oil prices for a little while now yet we've had some big underperformers. i brought a chart. normally i don't bring toys to play date. it's someone else's house. but this isn't what i wanted to show we had one showing oil having gone significantly higher over this period of time than the oil field services index which has mirrored the s&p i think that's a place for some potential outperformance because the fundamentals are good and getting better >> yeah. we saw -- that was a space that really got clobbered tech did poorly but then energy did poorly, too. anyway - >> i've heard about those play

dates at karen finerman. they involve board games more than anything. >> dan, what do you make of these moves with tech especially >> i think tech is trying to do its best to hold up. it's been a leadership sector. obviously, we saw apple, iu on fundamental news. we saw google sell off on fundamental news those are the two biggest stock in the market. amazon is trying to hang in there. facebook, while it is down, i think what, 5, 6,.% it is more constructive it didn't have a parabolic move up in december and january that's just been given back in a week or so i agree with the notion that investors will look to technology to help find a bottom in this correct. at the same token i think a lot of investors thought that the move in december and january, the straight up move was a bit irrational i don't see this correction as

that irrational. it depends how it finds a bottom i think if you the want to talk about what are some of the leadership sectors that are important to keep an eye on outside of tech i would say industrials. when you think about them anticipating this global synchronized recovery. you know, obviously, there is a lot built in as far as potential for infrastructure here in the u.s. this tax reform. you have got to see industrials hold on. to me, so far, boeing has actually traded pretty well. i think that's been the poster child for this to me, industrials are an important area to watch. >> what do you think, karen? if it's not technology, which sector could lead us to the light? dan says industrials >> i agree with that although i have got to think with the cbo score the infrastructure spend people are hoping for is less likely. financials, which hung in there very well could continue to do well after hopefully what is a very short-term correction. >> is that, karen, even no matter what happens with interest rates i mean if that is a big part of why everything is gyrating here?

>> i'm okay with higher interest rates. the scariest thing for the market and financial is spiky interest rates if they get there right away quickly. it's okay if they get there gradually over the year after a few fed raises that's fine. a spike is that scares me. >> dan, where are you on the financials >> i think banks were the one sector that was anticipating the most excitement from tax reform. obviously they benefitted from the notion of some sort of deregulation i think if this correction turns into more than that, if we go down 20% -- just to be clear, if you look at the s&p 500, it topped out at 2900 if we get back to 2200 or something like that we are in a bear market at that point. what does that mean if asset values decline significantly, the effects of that bank would have problems with that. to me i don't think the banks are a layup here other than the fact we know valuation is cheap. we know they are set up in a good economy to do well and her going to be returning cash to shareholders in the right sort

of environment. >> one quick word guys for consumer discretionary a lot of folks are keying on the fact it has outperformed in this whole mess that's not just about amazon if you go to the sector, it has held up okay i think that's intuitive because a lot of what's going on is really not bearing upon main street in wall stre mine street world, where it's hot, and wall street is not so much it's discretion father. >> what about the staples. it's more of a yieldy play they are not performing as well here >> they haven't been >> who are you betting on? >> i like financials, i think the capital companies are going to do in the volatility. we haven't seen volatility in a long long time and i think you will see positive results from goldman and morgan stanley and

backer bank of america whoever has exposure to it, that business may be on fire at this point. we have deregulation coming. it may not be to the extent we expected it to but it's good. lower taxes, a lot of cash, good cap at that. i think let the dust selling on them to karen's point, you can't have rates sfik because you can't have deposit betas go up substanti substantially. that's another conversation. >> "fast money" is coming up in six minutes time, stay tuned for all of that. >> up next, much more on how to play this wild market and how to protect your portfolio stay tuned [ click, keyboard clacking ]

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big down day the dow finishing down 1,000 points, testing the lows s&p 500 and nasdaq doing the same thin we could point to a number of issues facing the market today, fear of inflation, higher interest rates, the unwinding of a volatility market. whatever it is -- what's your version of what's doing on, ron? >> volatility is back. it started monday. the people that made a lot of money being short volatility, especially leveraged short volatility they got wiped out. you are still seeing remnants of that the question is, what is spilling over to the real economy? from where i sit earnings are very strong, global growth is strong, interest rates are not out of control this market has given you an opportunity to layer into the market i will say this, there is a lot of oh, my, tigers and bears and all the things their wrongful

i'm confident there is no recession coming and i believe the market will be higher at the end of the year. we are going to go through some volatility patches here, but look, i think this is an opportunity for invest torres ma -- investors to make some money. it's hard to buy stocks in times like this. >> are you up some money because volatility is up so much we were talking about the capital markets banks being attractive. >> i think this environment is good for financials. i agree with some of the things that were said no one wants sudden moves in any direction. i just want to understand what is changing in the overall economy. if this market spills over and hurts investor confidence and have a wealth effect, maybe. but i don't see it i see this as do you want an umbrella when it's raining like this or do you want a bucket to buy some stocks? i'm going to go on the bucket side i don't know where the bottom is, but i'm pretty sure the market will be higher by the end of the year. >> ron, you know, we did have this episode just after the

public started to get truly excite approximated stocks you had $100 billion by some measures go into equity products in january now that's basically worth $90 billion, right >> yeah. >> do you think there is being to be ang loer term effect of that or is that just a constructive way and a painful way to rebuild the worry that we might have lost >> the market has gone almost straight up since the election i think this is a healthy correction i think it started with a financial unwinding trade that has nothing to do with the real economy. this short volatility trade has a bigger impact than many of us are really understanding when this shakes out and once the fear comes up and a little capitulation, this mark will be higher it's an opportunity. i do not see a recession i will tell you this you look at history. when vix is above 30 and there is no recession, you buy stocks? l we are betting our buckets out. ron, thanks, good to see you

ron crew chefski of steeple joining us today. >> what's on your bucket ist. >> let's get through tuesday's cpi number. >> next tuesday's? yes. >> but i'm focused on fundamental. >> we will check in with you at 8:31. >> i will text you >> perfect i was going the say i'll tweet it to everybody. but i can't. bill will did that stephanie, and michael, for me and bill, that does it for "closing bell. "fast money" starts now. "fast money" begins with breaking news. the selling rages on, and another milestone moment for your money the dow dropping 1,000 points, or 4% in a wild session for stocks incredibly, this is the second 1,000-point drop this week it is the worst week now since october of 2008. right at the heart of the financial crisis the dow, now down 10% from its highs on what wall street calls a correction the s&p 500 also in a co