and jim cramer brought that up as well i think it potentially goes higher than that. vxx would be a great way to play the short term in terms of volatility >> intel, in addition to everything stephanie said, and this may make people hold their nose, but pc demand is much higher nan expected, and that helps. >> good stuff. guys, thank you very much. >> thank you >> thanks for watching as well "power lunch" begins now i'm melissa lee. fear on the street, stocks tanking. what is worrying wall street now? how to protect your portfolio and where the opportunities are opening up caterpillar tanking. 3m getting battered. earnings season not shaping up to be the catalyst many were hoping it would be slowing sales sparking concerns about one of the biggest parts of the american economy. as a long-expected decline in auto sales arrived "power lunch" starts right now melissa, thank you very much and indeed it does start right

now. welcome, everybody, to "power lunch" on a very busy tuesday here as october comes swiftly to an end earnings and geopolitical fears weighing on investors right now. that is sending the major averages down and down hard. the dow plunging triple digits as you see right there 331. lowest level in almost four months for the dow early today down almost 550 points, thereabouts, at the lows caterpillar and 3m, they are the culprits today today they are contributing about 150 points of that 330-ish point drop mcdonald's going the other way happy meals, baby. best day in three years there following its earnings more on those three stocks ahead and the s&p 500. lowest level in about five months nasdaq lowest level in about six. having its worst month since november of 2008 that tells you how rough it has been the russell 2000 small caps, dow transports, they are in

correction territory and three out of four of the s&p stocks are in correction territory. norfolk southern, united continental, they are leading the declines in the transports at this hour dom. >> tyler, thank you very much. let's get straight to the market action this hour we have every angle covered you can imagine. bob pisani on the floor of the new york stock exchange. kate rogers at the nasdaq tracking the tech wreck. seema mody at hq following the fallout from the slide in china and the rest of asia eamon javers in our nation's capital with the very latest on this possible meeting between president trump and china's president xi jinping let's go to bob pisani at the exchange to kick things off. bob. >> let's take a look at the s&p 500. i don't want to sound like pollyanna but they are actively attempting to buy the most beaten up sectors of the market. we're 25 -- 30 points off the lows that we had earlier this morning. i want to show you some etfs that are having very heavy volume these are badly beaten up sectors.

semiconductors were down 4% at the open they went green briefly. banks down 2%, 3%. that went green. home builders, disaster in the last month or two. they also have gone green today. so take a look at the earnings situation. i know cat was a little bit of a disappointment, 3m an outright disappointment mcdonald's was fine here domestic comps 2.4%. we saw ut x-raysing their full-year forecast verizon affirmed pulte coming out 1%, a little below expectations but still after the beaten up quarter we've seen for most of these home builders they're starting to turn around bank earnings, it's been a mess. banks report and they just drop the day after. not today. this is a change zion, huntington, fifth third, all decent numbers, nothing out of the ordinary, nothing we haven't heard before but wait a minute, they're trading to the up side on a down day. that's significant remember jpmorgan? what on the 12th their earnings great numbers. straight down practically. 6% since -- below since where they started it's just been a mess. this is money flows, people deciding they don't want to be in the banks

and finally, a point i'm making all day, people talk about contagion, and i just look at it and i say i don't see recession, i don't see credit disruption talk and despite vague concerns about liquidity i don't see it spreads are very tight in the stock market maybe a few small sectors of the bond market, but buy and large the contagion is stocks in the u.s. and particularly stocks in china. that's clearly a problem guys, back to you. >> we should note in just the past four minutes or so we have lifted across the major averages session highs right now, s&p, dow, as well as the nasdaq thank you, bob pisani. tech is getting wrapped in the sell-off nasdaq more than 10% from its recent high. it is now down by just under a percent. kate rogers is there tracking the big movers kate >> hey there, melissa, that's right. the nasdaq has been dipping in and out of correction territory all day at its lowest levels as you guys mentioned in six months also on pace for its worst month in a decade. down around 8% so far month to date now, tech names having the biggest point impact on the

nasdaq 100 today amazon and microsoft with a nearly 15-point impact apple and nvidia also around five-point impact. google, cisco, facebook all having an impact between one and three points the russell 2000 also down over 10% for the month. it's on pace for its worst monthly performance since september of 2011. also remains in correction territory as of right now. other names to the down side in the nasdaq 100, wynn, biomarin and csx. very few positive names today but among them is tesla, up over 9% back over to you >> all right, kate thank you very much. rising tensions driving a steep sell-off in asian markets. that's really where it all began today. china's stocks diving again overnight, now down 8% this month. more than 20% for the year so far. that's a bear market, folks. the emerging markets now on pace for their worst month since august of 2015, and seema mody is watching all the dirty work >> big news there.

chinese stocks falling deeper into bear market and all eyes are now on a key etf that tracks global stocks. it's the msci world etf, now dipping into negative territory for the year traders are also watching the index closely, flirting with correction territory only about half a percent away from hitting that level. it is those china growth concerns sending stocks across asia lower, japan, south korea, india, all down about 2% to 3% and pain being spread to europe as well. the stock 600 index there closing at nearly a two-year low. italy is where you're seeing most weakness. today the eu officially rejecting italy's budget, asking them to revise and resubmit. it comes ahead of the ecb policy meeting on thursday. we'll get to hear from central bank governor mario draghi on whether italian concerns could have an impact on europe's growth forecast. the other concern is earnings in europe two disappointing reports from asml, apple chip supplier, and french i.t. firm atos, which did

cite global growth concerns and that stock closing down more than 20% so some big moves there, dom >> thanks for bringing us that roundup of the global market seema mody now let's move over to washington and the sell-off coming as the trump administration signals a new meeting with china's president xi eamon javers live in our nation's capital with the latest eamon? >> that's right, dom we just got another tweet from the president of the united states the market weakness here not doing anything to change the president's mind in terms of tariffs. take a look at the tweet that he just posted a few minutes ago saying, "billions of dollars are and will be coming into united states coffers because of tariffs. great also for negotiations. if a country won't give us a fair trade deal, we will institute tariffs on them. used or not, jobs and businesses will be created. u.s. respected again." so the president doubling and tripling down on the concept of tariffs amid this trade war with the chinese. larry kudlow, the national economic council adviser, was out on the white house driveway earlier today talking to

reporters, and he emphasized that the united states has simply not gotten what it wants from the chinese side in the course of these negotiations here's what he said. >> they won't let us own our businesses and they won't give licenses they've got a lot on the table i'd love to see them respond thus far they haven't. the two presidents will meet for a bit in buenos aires, argentina at the g20 >> so larry kudlow there saying the two presidents will meet for a bit in buenos aires at the g20 at the end of november so there is a date certain to look ahead to in terms of these negotiations but it's not clear that all that much is moving between the two sides between now and then no indication of renewed intensity in terms of negotiations going forward larry kudlow there expressing some frustration from the u.s. perspective that the chinese are not giving the u.s. what it wants here, guys back over to you >> all right, eamon, thank you very much. let's take a look at some stats from today's sell-off. if you're brave enough

the dow touching its lowest level in almost four months. the nasdaq, correction territory. worst month since the beginning of the financial crisis back in november of 2008 and almost 75% of the stocks in the s&p 500 are in correction territory, meaning that they are down more than 10% or more from their recent highs so where do we go from here and where if at all are the opportunities? david sawyerbean is performing manager with ancora advisers and chris bert'llleson is president and cio with aviance capital management chris, let me begin with you we've had corrections before people say don't be surprised by them but seems like every time we have them in this rising bull market we can't help but be surprised by them. put it all in perspective for me >> absolutely. this is the first down stroke that we've had really since january, february of 2016. and they're to be expected after this run that we've had.

and really what i think is happening, it's time to embrace new strategies to me the market leadership has changed and you've got to look at things like verizons, the consumer staples, some reits, simon property group, even utilities, philip morris those are now coming back into view and it's a regression to the mean situation and certainly expecting a correction in this time is automatic. we've been way too long before we've had some type of an adjustment to high flyers. so you're tilting away from some of the market leaders and towards more of what we would call value stocks, right, chris? >> absolutely. i mean, value managers have skinned their knees a bit this year and even earlier i mentioned the financials is another area that i think is due for a turnaround on it and now i think they're coming into view. so embrace the new leadership is my words on it

absolutely >> so david, let me ask you. a lot of people are pointing to a variety of factors contributing to this sell-off. the midterm elections, trade but certainly interest rates are a big part of it but here the fed has been signaling what they were going to do for a very, very long time why does that seem to be so upsetting now to equity investors? >> frankly, tyler, it's because wall street has taken too long with its head in the sand to recognize just what the fed has absolutely told us that they would be tightening, that we were in negative real fed funds, most intense monetary stimulation we know. you cited? great statistics i'll add one more. at about noon today the average s&p 500 stock was 19%, real close to 20%, off its 52-week high when that happens and sentiment starts to get unusually bearish versus bullish, it's a good time

to put money to work wall street's just catching up to a good economy, leading to higher interest rates. >> aren't you worried, though, david, that some of the soft market indicators are maybe questioning that good economy and when you have a rollover like we've seen in the industrials and transports and small caps, doesn't that signal to you that perhaps the fed may be charting its path in terms of raising its rates? in spite of what the markets and companies are telling us this earnings season. >> well, i think this. if we watch what the economy is telling us today, we're not looking at what i look at to tell me that in the next year and a half the economy would be just fine. that is real money growth, m-2, still growing comfortably positive i'll watch the yield curve but i'll take the ten-year treasury less fed funds that's a full percentage point advantage. that's quite positive. i think those are ultimately the most important gauges. i don't dismiss what the market is telling me. but with respect to the economy,

and besides earnings look at cash flow. companies are still growing their cash flow at 10% the free cash flow margins are quite healthy. that's telling me that there's going to be a big one, the 25% correction this one is very unlikely to be it >> chris, it's dom here. you mentioned the idea that there's this move into some of these more defensive type names, these value-oriented stocks. does it worry you at all that that's the leadership of this market and not the less economically sensitive one what does it say when utilities, consumer staples and real estate stocks are the ones leading this market higher? >> well, no question that that's not the accepted norm and that's not what wall street wants to see. but i think that it doesn't mean that the rally in some of the other tech names are over. it just means you have to be really careful about what you do there's plenty of quality value names in technology like a qualcomm or an ibm that you can go and still get the yield i think you're going to see a big crossover to yield orientation and to fixed income

out of it. >> all right, gentlemen, we've got to leave it in we appreciate on this bezy day david sowerby, chris bertelsen >> i'm with chris on the rotation of value. >> duly noted. thanks, guys >> news alert in the bond market right now. $38 billion in two-year notes up for auction. setting up to be a record week for the offering scott nations president and cio of nation shares has been tracking the action. scott, what has demand been like >> that's right, melissa big number the yield on the two-year, the $38 billion worth 2.880% bid to cover was 2.67. that's actually a little light from the average overthe last six. indirect, a2.6%. indirect took down just over half that's aalso a little disappointing. i think what we see today, even though yields are lower than they were, say, at this time yesterday, that's largely because of our stock market having a tough day, actually a tough month. one thing that did support this

was the fact that the positioning by speculators was largely short in the two-year futures. so they were bidders but obviously, melissa, as you alluded to, hurt by this huge swath of sales from the treasuries 38 billion today we're going to get 39 billion of the five-year tomorrow 31 billion of the seven-year on thursday not only was the 38 billion today 1 billion bigger than the last two-year auction it was the biggest since 2010 so melissa, 2.880% bid to cover 2.67 times >> it's dominick here. just from a trader's perspective you mentioned the idea of supply out there. the treasury putting supply on the market you mentioned indirect bids. that is a group that includes foreign central banks. we've heard reports that foreign central banks are now holding fewer and fewer treasuries does that factor into the

investment thesis or trading thesis you guys have out there >> it has to and the news broke in the "wall street journal" that that is the case and you would expect that given what is going on with china. i actually think what we're going to factor in more is the yield curve because the treasury has just punished the short end of the curve and you see that this week they're selling a bunch of two years and five years less of the seven-year we see the yield curve has flattened since the last auction. i really think that's the issue. i think what may end up happening is everybody's going to watch that yield curve. they're going to watch the two-year versus the ten-year yield and they're going to see it's getting close into version and maybe it's not because of the economy, it's simply because of the treasury picking short-term maturities. >> scott nations, nation shares. thank you for that we've got nor supply coming up of auctions later this week as well we are well off the worst levels of the day the dow was off 400 points early on caterpillar and 3m the biggest drags on thain detection earnings fears front and center.

what you need to know about where these stocks go from here. and as we head out check out some of the other major laggards on the day dow, du pont, microsoft, chevron. much more on this major market nc ruradhe"pern ow luh"etns

welcome back to "power lunch. it's a sell-off on wall street today but we are well off the worst levels industrial giant caterpillar a major drag for the dow jones industrials. earnings beat but its forecast fell short of some analyst estimates. also saying materials costs were going to rise because of tariffs. shares rising 20% just this month alone. they've lost 30% of their values since hitting highs back in january. is this cat running out of lives? rod wertheimer is director of research at melius he just lowered his caterpillar price target today rob, it's maybe no surprise you would lower price target on a day when caterpillar's getting crushed but what was the impetus behind it and what was the basic math behind you why did it >> effectively cat had a is good earnings report. exceptional earnings report the past couple quarters so there was nothing wrong on the day and actually did a good job. we lowered our price target from 14 to 13 as the he market's been less confident so far but

there's tremendous up side >> so it's just driven by a multiple contraction in your mind do you feel as though with the forecast they gave that caterpillar is poised to deliver on those results and is it as bearish as the market would make it seem given today's market action >> they are. they didn't change the forecast and the forecast is reasonable and it's in perfectly appropriate range for the rest of the year and moreover cat sits at mid cycle-ish revenue levels and they've been executing exceptionally well there's a lot of room for them to continue to deliver results as the revenues continue >> is growth slowing >> no. growth is decelerating but -- >> that sounds like slowing to me >> stalling or slowing growth has been 30%. you can't maintain that forever. the position in the markets, they're sort of coming up off a very deep trough up to more normal levels. you've kind of gotten that super acceleration but you still have a lot of room to go. >> the one stat i read today that i feel encapsulates the trading action in cat is cat has not beat and not raised their

guidance since the beginning of 2016 so investors have become conditioned to a beat and a raise whereas this time they got a beat and a reaffirm. if i were an investor and you're looking at big gains, you're thinking are they playing it conservative to give them some leeway for slowing dems and/or trouble spots from china and/or increased cost from freight or materials? >> to be fair, cat has really executed quite well. so there's surprise to the up side as you mentioned for quarter after quarter after quarter and that's not always easy to do so kudos to them for doing it. i think the tariffs have introduced some uncertainty into the market and they're managing through that as we kind of understand what that risk is then we can sort of price that in better and maybe the rest comes down. >> what will you be watching in this coming, this current quarter to either reaffirm that buy thesis or tell you that maybe things are not on track? >> honestly the biggest thing with cat is are we at a point in the cycle where we're an economic beat? are we at a point where the revenues are at a peak the answer's no. there's no way we're at that high a cycle

if they continue to do well operationally, then they'll continue to have a lot of up side to earnings the biggest thing really is just watching them tick along on operations which they've done very well over the last two years. >> rob wertheimer, thank you very much for that look at research on cat. >> from the dow's biggest loser to biggest winner. shards shares of mcdonald's rallying after they reported better than expected earnings. the stock is on pace for its best day since october 2015 and with today's move has turned positive for the year. for more we are joined by peter sally, the managing director at btig great to have you with us. >> thank you for having me >> a swing of 6% on a component like mcdonald's is a very unusual thing. how much do you think this is just sort of the market environment in which we are? was the quarter that good? >> i think the quarter was good but i think it was a move of fundamentally three consecutive quarters of beats all year long. the stock really didn't perform well it actually went down on three consecutive beats. the global comp was better this quarter. global comp has been good all

year long. i think it was mostly this quarter we had more beats, continued beats, and the u.s. comp was essentially in line first two quarters of the year the u.s. comp was a little weaker so i think that's what's driving the rally now. >> in terms of the investment that was a major piece of the puzzle in terms of the earnings. heavy investment in the experience of the future particularly in the u.s. in an environment in which there are question marks surrounding the growth of the u.s. economy is that the kind of commitment you want to see mcdonald's left? >> absolutely. they have to invest in the experience fs future it is a digital investment, an investment to upgrade the restaurant labor costs are rising this will allow them to remove some of the front of the house labor some of the order taking labor at the front of the house. that will slowly go away and labor costs are rising it's a really tight labor environment. you can't even find employees to run these restaurants right now. i think they're getting ahead of the curve on tech and digital.

i think it's a necessary evil for them to make this investment now. >> so they got pricing power >> i don't think anybody has real pricing power that's the unfortunate -- >> but they've raised prices, right? >> 2%, which is in line with the industry but generally speaking taking much more than 2%, 2 1/2% -- >> because that's a price sensitive buyer there. >> absolutely. >> and when they have got anne way from sort of the dollar values and the $3 values they've run into trouble, right? >> what's interesting about that, though, is they mentioned this idea that the dollar menus, the value menus have gotten in the door and then people have chosen -- >> upsell. >> to upsell food. so their average ticket price is going higher so is that a good thing? >> it's a great thing. i think it's the way you want to bring them into the door, then raise the average check. but you can't take too much price honestly like 2%, 2 1/2%, it's about as much as you can take when you're seeing labor inflation of 3%, 4%, 5%, commodity inflation of 2% or 3%. your margins are under pressure p. you've got to find a way to reduce the labor hours because you can't do much about commodity stiz >> in the meantime, before they're able to take labor costs

out of the equation through this investment in digital, how much time do they have? and i'm asking because if you you believe that the economy is going to slow next year how sensitive is mcdonald's to that slowdown and how vulnerable are they to both the squeeze from the investment kochlts and also the labor costs? >> so i guess you have to believe that we're going to slow next year when we're already talking about wage inflation for this low-end consumer of 4%, maybe higher, and franchisees complaining they can't even find enough labor and they're having to raise wages and benefits to keep the employees at the restaurants. i'm not sure that i'm convinced there's going to be a slowdown >> i don't know how many of you guys have gone to a mcdonald's lately i go because i have a small child and we go there. one of the things we noticed is the idea that there are fewer people up front to take those orders there are lines. they're a prime cost for a reason thissing we should worry about, food cost and labor cost as a percentage

of their total revenues? >> i don't think we should -- it's not a concern it's a concern it is going up. but over time i think they're able -- they can't do much about commodities to be honest with you. commodities are going to go up, commodities are going to come down labor costs are rising they can price a little bit for it you about they've got to find ways to take labor hours out of the store. there's no other way to do it other than to implement technology it's about 20% or so of the overall labor in the stores is associated with order taking >> very quickly, 10 seconds or less, when they upgrade a store, when they bring in this new technology who pays for it, the franchisee or the company? >> it's split. generally speaking right now it's split between mcdonald's and the franchisees. >> peter solly, btig, thank you so much. >> thank you >> all righty. car dealerships across the country are sounding the alarm the auto sales slowdown may have begun. in fact, it really has begun we'll talk about the fallout ahead and as we head out let's take a look at the action in the bond market on the back of that two-year auction moments ago "power lunch" will be back in two minutes.

there are the numbers.

breaking news. atlanta fed president rafael

bostic raising his forecast of economic growth for this year and for next on the strength of consumer spending. he is speaking today in louisiana and he'll say that recent data suggests the economy is shifting into a higher gear now, what does that mean for rates? he spends a lot of time in his prepared remarks on the danger of letting the economy slip too far into a high pressure period. right now, though, he sees little reason for the fed to keep its foot on the gas bostic says the rhys tokz his outlook are tilted to the up side but the headwinds he talks about are market volatility and also trade restrictions and tariffs. even though firms are seeing cost pressures bostic says they don't appear to be passing that on to customers just yet high economic forecast for 2018 and 2019 and support for the fed getting back to neutral. guys, remember bostic is the only voting member of the fomc

who is speaking today. up next robert kaplan of dallas. thank you very much. >> ylan mui. auto remted stocks, they are surprisingly maybe rallying today but they have gotten whacked recently check out the index that tracks auto parts down more than 10% this month alone. 20% for the year to date the big three carmakers in the u.s. also tanking in 201837 down anywhere from 7% to 30%. 31% in the case of ford. after years of breaking sales records, are those sales pumping the brakes phil lebeau in chicago withtha story. hi, phil >> tyler, that's been the anticipation for at least six months, that we would start to see a slowdown in auto sales around the country and while they still remain at a very strong rate year to date we are starting to hear from a few dealers that they're seeing a slowdown in terms of sales and customer traffic this month. now, this is more anecdotal than anything else because all of the experts who survey the industry still say they're going to see strong sales this month. but there are dealers seeing

slow sales in october particularly with customer traffic slowing down in some of the dealerships. here's one reason why we might be seeing consumers pull back a little bit it's because the cost of buying a new vehicle, it continues to move higher. average transaction price close toon all-time high that interest rate is at least half a percentage point higher than a year ago. and a couple of points higher than it was maybe three years ago. and that means the average monthly payment, that's also close tie record high at $525. take a look at group one and auto nation. these are two of the large dealership chains. they will both be reporting earnings group one later this week and then you've got auto nation coming up next week. and these guys are under pressure, guys largely because there is the anticipation that you will see a pullback in new vehicle sales. but we should point out the used market continues to be very strong and that's one of the factors weighing on the new market >> phil thanks phil lebeau in chicago for us. as data and privacy scandals

roil silicon valley does big tech need a lesson in ethics kara swisher will weigh in plus a look at se tomofhe biggest laggards lowering the s&p 500 this hour. stay with us on "power lunch." ♪ ♪ fight security threats 60 times faster with ai that sees threats coming. the ibm cloud. the cloud for smarter business.

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hello, everybody eye sue herera here's your cnbc news update at this hour. amid the controversy surrounding the killing of journalist jamal karn okaycaskhashoggi the saudi prince attended the investment forum alongside the king of jordan he sat in the front row in an afternoon session in riyadh. the crown prince will participate in an investment conference panel on wednesday. hurricane michael has taken the lives of at least 39 people. according to the latest count. 29 of those deaths were in florida. it came ashore in the florida panhandle packing winds of 155 miles per hour bmw expanding a recall that started overseas to include vehicles in north america. 54,000 vehicles in the u.s. and canada made between 2010 and 2017 are affected. it's due to possible coolant leaks in some diesel vehicles.

and china has opened the world's longest sea crossing bridge, linking hong kong to the mainland, in a feat of engineering that carries major economic and political significance chinese president xi jinping attending the opening ceremony that bridge cost $20 billion to build, and it took almost a decade to get together i don't know i don't know whether i'd do it but that's it. that's the news update this hour melissa, back to you >> i'm with you. somebody else can go first >> exactly >> okay by me. thank you, sue let's get a check on the sell-off at this hour. disappointing earnings from caterpillar and 3m dragging down the dow at this hour but we are well off our session lows. we had been down 548 points. we're now down by 252. good for a loss of 1%. the s&p 500 did break a key support level about 74% of the stocks in that group by the way are in correction territory. the s&p is now down by about 30 points it is down 10% from recent

highs. 9 of 11 s&p 500 sectors are in negative territory with an energy industrials, technology, materials, all falling 2% or more dom. >> all right, melissa, now to mike santoli at the nyse following the fallout from the latest round of earnings reports. and mike, we are off the worst levels of the day but is there a feeling from the floor down there that this is something that we should maybe take a little bit of a pause on before we get all on tptimistic about t >> i think it's a show me market, you have to wait and see, although i do think the early morning plunge and the way the market kind of absorbed that early sell-off just checked off a few of the boxes of what people would like to see with regard to a retest of those lows from october 11. you can every call an all clear but i do think when you saw the very weak opening you did break the intraday lows from october 11th and it didn't really fall apart from there, bounced. and the volatility index made a high near 25 and came back all of this is fitting together.

that being said the reactions to earnings are still pretty hostile on balance and i do think some of the forward guidance on the big industrials are confirming some fears we had coming into the earnings season which is we had to brace for earnings to come down especially into the first half. to me the market the way it's traded in the last month is mostly about what 2019 is going to look like and right now the first and second quarters of next year are forecast to have about 7% annualized earnings growth if the normal pattern of kind of customer cutting estimates ahead of the year, ahead of the quarter takes hold again, then you're talking about something closer to the flat line. that's@market has been uneasy and just sort of paying up for these reported earnings that look really good because we're not really sure how much of a falloff we're going to see >> all right, mr. santoli, thank you so much. mike santoli reporting sill quon valley under scrutiny the past year. big tech had to put out fire

after fire from data breaches to controversial tweets and now there's a bigger headache exposure to saudi money. recode's kara swisher addressed this issue in an op-ed in the "new york times. who will teach silicon valley to be ethical kara swisher is editor at large at recode and a cnbc contributor and kara swisher is unhappy today. how are you? it's good to have you here >> good. >> i'm going to read two lines from your op-ed. >> i love hearing you read my writing. >> you bet it can't get any better than this "it feels like too many digital leaders have lost their minds. dot, dot, dot, dot "as one ethical quandary after another has hit its profoundly ill equipped executives their once pristine reputations have fallen like palm trees in a hurricane. explain, and who are you talking about specifically >> well, you know, all these companies that have faced one thing after another, whether it's google in china or google with the hack that they didn't disclose for six months or it's facebook with so many things i mean, the elections, the issues around fake news, the issues around botts, the issues

around the russians and everything you know, to twitter with alex jones and things like that these are issues that are like hitting tech and that leaves out automation and robotics and all these other issues that are societally impactful. >> and it leaves out one of the things we mentioned there in the introduction and that is the presence of let's say compromised money. >> right from the saudis, yes >> well, it could be the saudis but it doesn't stop there. >> no. the kuwaitis the chinese. >> and other regimes where the money may come from that is less than pristine. you propose the idea of finding chief ethics officers and installing them. where would you -- who are those people and where would you find them >> well, academics there's a lot of people studying this stuff there's a bunch of a.i. ethics people there's all kinds of people studying these issues and the impact of social media especially on our society. and in a previous "new york times" column i talk about the weaponization of everything, that these things amplify and weaponize things

and the people who are running these companies are ill prepared to understand the impact of what they've created. and i would like them to have people around them that will allow them to think about that because it's not -- you know, you can do this for wall street, you can do this for the defense industry, you can do this for a lot but these are people who say they're changing the world and always tout themselves as the better thing when in fact a lot of their inventions are very damaging to society. >> but for some of the examples that you cited, kara, the ceo him or herself should realize we had a abreach, we should disclose that to investors or the board should be the conscience of the company. >> of course >> and time and time again they have failed. isn't it still the ceo isn't it still the board dent they have a lot to sort of answer for in these cases? >> it should be. but think of someone like mark zuckerberg, didn't complete college, never took a humanities course and i know he's been trying to since then, trying to learn a lot of things. but here's one person who has complete control over this company who is ill prepared to deal with some of the --

>> you don't think sheryl sandberg was saying to him, hey, mark, this is what we should do and he was saying we have control of the cannot -- >> no, i don't they don't think about it at all. they're so non-reflective it's a miracle they can see in the mirrors in silicon valley. they're like vampires. they don't reflect anything. >> all the stocks we brt up have one thing in common. they're all publicly traded. in the world of raising money it's very different for a public company to do it versus a private company. >> sure. >> does this ethics proposal carry over into how these private companies at early stages also try to raise their ethical profile and how did they do it differently than public companies if at all? >> i will a really interesting interview with the woman who is a lawyer for google in the early days and she explained how you create the pillars of your creation if you put things around viralty you're going to get fake news, if you put it around relevance and truthfulness you get a different outcome. they've been designing for speed and virality and it moves into the things, the problems we have so what you have to do is figure

out when you're designing these companies the possible implications and that's why i say there's not going to be a chief ethics officer because they don't want anyone to slow the brakes. and this is someone who would slow the brakes and say maybe we should pay more, maybe we should have human moderators, what's going on here in myanmar, what about india? but they have to start considering these because they're causing damage all over the world. and these technologies have massive impact into the future they're going to have even more so >> how much of what you're pointing to is willful versus ignorant >> come on they're adults >> well, you said they're unprepared that zuckerberg never took a humanities course which suggests that, well, maybe he hasn't played catch-up as well as he should have. but that it isn't as willfully intentional -- >> there are executives who are thinking about it. like mark benioff has thought about it he had a tough decision around i.c.e. actually border patrol, the customs and border patrol. they were doing some work for

them on recruitment. he decided to keep it and he decided to keep it he discuss td with his employees -- >> keep the contract >> keep the contract he realized these are issues that need to be discussed because there's bigger issues in the companies. wall street would say just make money, grow at all costs but these companies have put themselves out in a different way and they've had a big impact on society at point the -- >> what about the vcs and other capitalists? the investors. the big investors who are relying on what size percentage of money is coming from places where you would rather not disclose that. >> some of them are going to be concerned. what's going to be interesting, what happens with softbank's vision fund. this $145 billion fund, 456 which comes from the saudis. apple is also in there, some other companies who do have -- who have tried very hard to be thinking of these issues what will apple do if they raise another one? do they want to be adjacent to the saudis probably not the question is will start-ups take the money from the saudis

even if it's half? but like slack is a good example. stuart butterfield's an amazing ceo. i'm sure you had him on here before i con get him to comment taken $250 billion -- million dollars from the vision fund half of which is saudi essentially. so -- ewer, billions and billions 14 billion in total if you add up all the various ways they've gotten money what do you do if you're an employee there and employees are also starting to object like at google with the defense department stuff-w china or at microsoft with i.c.e. contracts so it's a really interesting time so i think they need more voices at the table to talk about the implications of it >> fascinating subject fascinating conversation kara, always great to see you. kara swisher with recode the nasdaq, russell 2000 and transports touching correction territory earlier today but the nasdaq out of it right now as stocks are bouncing off of session lows what is taking down tech, how much more pain is still to come? we will tell you straight ahead on "por nc weluh. oh, and there's the closing bell.

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dow down about 280 points. as you can see with the heat map here, we are off the worst levels of the day. we have about five or six stocks in the green right now verizon and mcdonald's heading that bunch if you look down the right-hand side it is 3m and cattar pilar leading the declines there we'll keep an eye on the mkearts as we come back. but again, markets off their lows we'll be back after this break to buy or sell? ie with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today.

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so they're ready for anything. stocks selling off today but well off session lows. the dow is on pace for its worst month since january 2016 5 of 11 s&p sectors are on pace to close in correction territory today. and the nasdaq touching its lowest level in six months joining us now is kenny polcari the director of o'neill securities from the new york stock exchange and jack caffrey, portfolio manager at jpmorgan private bank jack, i'll start it off with you. day like today, weeks like we've seen the past couple weeks, what have you as a portfolio manager been doing have you been lobbing in gains for the year have you been selling winners and rotating out into underloved, unloved stocks >> i've been trying to balance what i've been doing over the last two, three weeks. effectively i'm looking at what has worked, trying to reunderwriting that that can continue to work to some extent i'm also taking

losses and i think that is something that's part of the tape and the tape dynamic when you have about a third of the long only the mutual fund money having fiscal years that end next week. i do think portfolio managers are looking at things that haven't been working and a little bit more aggressive at exiting those positions and taking those losses to be somewhat tax-friendly for their investors. >> can you give us some examples of what you're ditching that hasn't been working? there's a lot, actually to pick from, jack financials, industrials, transports >> i do think you hit on a couple important points. if you look within the market, you certainly see the cheapest sectors, the sectors that trade currently cheaper than the s&p as a whole you see the financials, you see the industrials. the materials and energy and i certainly have looked through and i've taken losses in the financial sector some stocks which haven't quite worked the way we would have underwritten to when we put those positions on i think you've seen some losses. we've taken some losses in the

industrial space as well and i think those were less of that more macro and more of that thesis is the idea that we have that didn't quite play out as quickly as we anticipated. >> you're not alone, jack. kenny, when you go in on a day like today and the market's basically open at lows and here we are we're about a percent off the session lows, how does it feel we're going into the hour, the 2:00 hour where things seem to get tricky often >> right it's funny, i almost want to say it feels like they're going close up on the day, although that's a little aggressive because i don't really think it's going to happen it kind of feels as we approach the 2:00 hour they're not going to get panicky yet agent i do think at the end of the day you're going to see another push down in the last hour of the day. even when we were at the complete lows on the day there wasn't this sense of panic at all and quite honestly although i was a seller in some names i was actually a net buyer today for some clients, right? so therefore it was very interesting to see that they were being patient, they weren't

being aggressive on the buy side because they didn't need to be but net net i was a net buyer on the day. so it's not a sense of panic at all in the markets >> so kenny, of all the headwinds that the market seems to be facing right now including as michael farr told me about an hour ago the headwind caused by you moving your arms vigorously, that this creates a headwind of its own, which one is the one that has you most troubled >> listen, i've got to be honest with you i think the interest rate story, the trade story, i think that's old news i think the one that's really bothering me the most is much more the geopolitical issue and how this potential saudi thing could spin out of control if they start imposing severe sanctions. right? because think of all the u.s. multinational companies that could potentially be affected. they don't want it to happen they're trying not to make it happen but if this situation gets uglier and uglier there's that real potential so that's kind of the catalyst for me that i'm kind of sitting out there watching to see how it unfolds. if they solve that problem, then

i think the market settles right back down. but that's really something i think it's out of left field that people should be paying attention to >> interesting the human headwind kenny polcari, jack caffrey. thanks a lot, guys we're off the lows, but the bears are still beating the bulls as we head closer to the final hours of trading over the past few weeks some of the biggest market moves have come during the second hour of "power lunch." call it the lunch effect don't go anywhere. it could be a wild ride. let's begin.

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hi, everybody and welcome to the second hour of "power lunch. i'm tyler mathisen the bears back in charge, at least for today. as they have been for much of this rocky month of october. earnings, geopolitical tensions, all weighing on stocks although we are off the lows and now 74% of the s&p 500 in correction territory maybe the index isn't down 10% but 3 out of 4 of the stocks are in or lower. are there buying opportunities among the rubble we'll look through to try to tell you from harley to housing to flying and industrials. we're going to go inside the numbers that are moving today's markets. and a short-lived bounce for

china as the shanghai sinks more than 2%. could there be a ripple effect for the rest of the emerging markets and what does it mean for u.s. stocks? "power lunch" resumes right now. and welcome to "power lunch. i'm melissa lee. a big sell-off on the street today with the dow falling more than 500 points at the session lows we pared those losses. we're now down 282 points. 3m and caterpillar are the biggest drags on the dow following earnings mcdonald's leading on the back of strong results. that stock is up 5.6%. 9 of 11 s&p sectors are lower, led by energy and industrials. let's take a look at some of the big stats on where we stand right now. transports and the russell are now in correction. the nasdaq has been in and out of correction territory throughout the day 5 of the 11 sectors are in correction half the dow is in correction. the dow and s&p are 7 1/2% off their record highs the s&p is having its worst

month since 2011 and the nasdaq having its worst month since 2008 now let's get the technical take on the markets with dom who's over at the telestrator. dom? >> this is a battleground right now because as you can see for the s&p 500 the 200-day moving average, that longer-term trend line is around 2768. we're well below that right now. however, this is a battleground area that's going to shape up to be something that either bounces like it has here in the past over the course of the past few years or do we see a deeper push into negative territory below that back here remember, that was back in the early part of 2016 when the diamond bottom actually happened on february 11th that's something to watch here the nasdaq also that same kind of battleground developing as well we are a little bit deeper on the nasdaq composite as you can see here. but that same trend is developing we didn't see that big push below it until that part back in 2016 in the early part but this trend line has stayed largely intact one of the places that's been the real, real sore spot for investors and traders has been the small cap side of things for the russell 2000 over the

course of the past three years we've seen a bit more of that push toward that long-term trend line, that 200-day but as you can see here a much deeper drop below for the russell 2000 small caps. but we did find bounces here over the course of the past few years. whether or not that becomes a trend you can play remains to be seen certainly levels to watch there. >> dominick, thank you very much harley, housing, aerospace let's dig deeper into what's driving today's action and the earnings movers. bob pisani at the new york stock exchange diana olick looking at pulte group lal e. rallying today. phil lebeau watching jetblue that stock grounded. and morgan brennan looking at the big sell-off in 3m we begin with bob. >> the important thing, tyler, we are 30 points off the low take a look at the s&p 500 and they are buying the most beaten up sectors that we have seen disastrous in the last several weeks. take a look here i watch this as a sign of sentiment. semiconductors were down 4% at the open essentially they went positive at a certain point during the

day. home builders were down 3% they too made attempts to go positive and the banks a disaster ever since jpmorgan reported earnings, attempts to buy their bottoms as well. consumer staples stocks. a number of these actually up on the week, believe it or not, including hershey's, conagra, smucker, kroger, all positive on the day. on earnings i know we're concentrating on qatar pil sxr 3m just want to note mcdonald's beat, good domestic comps, united technology raised their forecast they're all trading up verizon affirmed you'll hear more from pulte from diana about their numbers but not bad at all bank earnings something happening today i haven't seen the whole time they report decent numbers, these three big regionals and they didn't drop it's been an absolute disaster since skrorng. that was on the 12th jpmorgan had terrific numbers but it's down 6% and today it was right near a 52-week low finally bounced around 103 at the bottom this is jpmorgan now moving to the up side. the important thing here is when is the bottom? when i see jpmorgan really

starting to move aggressively up and it gets back to where it was before its earnings, 109d, 110, somewhere around there, then i'll start talking about i definite bottom. not yet but getting there. back to you. >> robert, thank you very much let's move on to housing pulte group, bucking the down trend. and rallying today up 8% on earnings. diana olick live in washington with more. hi, di >> you're right. pulte beat expectations on earnings thanks to solid sales and higher prices in the third quarter. that has the stock higher for the day but way down 35% year to date new orders also came in below expectations up just 1% compared to a year ago. and that's in a housing market where there is a shortage of existing homes for sale. affordability is the problem pulte's average home price jumped 7% from a year ago to 427,000. and ceo ryan marshall was optimistic but realistic about the current market saying that while buyer concerns around affordability and rising mortgage rates appear to have

impacted near-term market dynamics traffic trends indicate buyer interest levels are still high home builders a bright spot in today's sell-off best day since august 21st but worst month so far in eight years. but well off their january highs. despite solid fundamentals and low supply and strong demand in housing. just a note, we get september sales of newly built hold tomorrow morning at 10:00 a.m. eastern time also if you want to see how higher mortgage rates are impacting costs in your market, that's on cnbc.com right now back to you guys >> thank you very much, di and shares of jetblue down more than 2%. profit fell. why? higher fuel costs. phil lebeau has the details from chicago. mr. lebeau >> tyler, this is a stock that is now at a 52-week low. let's see if they'll be able to bounce off of that and move a little higher in the few hours left of trading. when you look at the third quarter for jetblue, it's pretty simple here. those higher fuel costs were weighing on the stock. they did beat earnings expectations and they have indicated that fourth quarter booking trends are encouraging. but for jetblue this is a stock

that's been under pressure for the last year largely because as you look at their margins they're being squeezed, their fourth quarter revenue per seat mile guidance up 1.4%. but the jet fuel cost continues to weigh on all the airline stocks take a look at jetblue and what it's done the last year, continues to move higher up 37% year over year for jetblue and this is one reason why you look at all of the airline stocks today and they are all under pressure they are bringing the dow transports lower whether it's united, american, delta, southwest, all of them under pressure today don't forget we're going to be getting americans' earnings coming up on thursday morning. tyler, back to you >> thank you very much we appreciate it phil lebeau. two big industrials weighing on the dow. which would they be? well, you know you've been watching all day 3m down 4% or more and caterpillar down almost $9 a share or almost 7% disappointing earnings there some commentary. morgan brennan covering that for us from the nyse

hi, morgan >> yeah, both of the stocks moving to the down side, though i would note paring some of the earlier losses we saw. disappointing earnings from 3m also that company lowered its full-year outlook. slowing sales across the board but especially in health care and consumer segments for which sliding consumer product sales in china was mentioned on the call currency a headwind. so were rising costs that's the reason the maker of post-it notes and industrial coatings now expects a roughly $100 million headwind from tariffs. but 3m does expect pricing to more than offset that and any additional raw material increases into 2019. that is really the theme for industrials so far this earnings season you've got higher costs versus higher pricing and what that means for margins and how each of these companies is mitigating all of that. take caterpillar which did beat. it also reaffirmed its outlook stocks still down about 6 1/2% right now. why? it's become more expensive to manufacture the earth-moving

machines it makes. cost headwinds will come in at lower end of previous guidance and that they don't expect a major impact it's already baked in. cat plans to raise prices to make up for awful those costs. similar story for united tech which has been largely trading higher which said it will hike price as cross its portfolio as long as tariffs are in place >> morgan, thank you so much for that with 74% of the s&p 500 now in correction territory and 2 pun of those stocks in a bear market, are there values out there for investors? let's bring in kate warren she's the investment strategist over at edward jones also noah blackstein, portfolio manager at dynamic funds kate, we'll start with you ladies first as we look at today's sell-off, are you advising clients to add to positions and if so what should they be adding to? >> we are advising clients to add to positions if they need

additional equities to their portfolio. we're also saying this is normal volatility if you're really uncomfortable, you may need to rebalance and have more fixed income but when i'm looking out, i want to be sure that clients are keeping a well-balanced and well-diversified equity portfolio. look across the sectors. if there's one you don't own, take advantage of the pullback because when you see this tug of tar between the bulls and the bears as you've been talking about, what you know is it's the fundamentals of solid earnings growth, which we're seeing despite the misses this morning. and okay economic growth that will drive stocks higher so a pullback like this in our view's an opportunity. >> all right it's an opportunity for many parts of the market. right now we see defensive sectors like staples and real estate doing very well but noah, that's not exactly what you're looking for in this kind of a market you're trying to find some of those places where you can actually get real growth what are you looking for in terms of today's sell-off? where are you putting money to work >> well, what i'm looking for is

the fed just to stop or to blink or -- i think a lot of this sell-off started on that interview that powell gave where not only are they going to keep hiking rates for a long time, we'll go well above the neutral rate, and that's been reiterated by several fed governors so if you look at what they're doing with interest rates, and you're looking at expectations for december and even into next year, even with this chaos in the global markets, look at the regional bank index, look at a whole host of small caps and even the larger banks, they seem to be completely oblivious or willing just to continue to hike interest rates the problem is my kreers been a long one doing this and i've yet to see a cycle not ended by the federal reserve. it may be a buying opportunity but the risk is they're going to keep raising interest rates until they completely put the economy into a recession >> noah, declines -- >> and that's -- >> the declines you cited in banks, in transports, in industrials, in small caps, do you think they indicate that the

economy is in fact slowing is the market telling us something? >> everyone says the fed's data is historical data and the market is a predictor. but the market can also be a catalyst so i think these steep declines in earnings, for example, the fed really does have to pay attention to some of this. their actions on interest rates, everyone says 2, 2 1/2 isn't that high, but mortgage rates over 5% are high hiking interest rates isn't going to solve high prices in housing. the only thing that's going to solve high prices in housing is if people keep building houses because they're too expensive and more supply comes on the market that doesn't get solved by the fed raising interest rates there's also been papers from the san francisco fed and the philly fed saying the entire idea that low unemployment causes inflation is bunk yet they still continue on this phillips curve the market really doesn't know this fed, but the fact that expectations for future rate hikes aren't budging with this sell-off, it's concerning to people for sure. >> so kate -- >> coupled with the trade war

and other stuff. >> kate, we know ceos are concerned about trade tariffs, trade war, inflation, the fed, that sort of thing what are your clients asking you? you deal with a lot of retail investors. what is the concern that most of the edward jones clients are asking are they asking about tariffs? they're asking about trade or taxes or anything else what's the key concern there >> well, the first question i always get is about trade and tariffs because that's been so much in the news and part of that is we really haven't seen the impacts yet from the 200 billion in additional tariffs that were put on a couple weeks ago and th potential that we get into a bigger trade war and more tariffs are hiked next year. we are starting to hear companies talk about higher costs as a result of the tariffs and we will see price increases. but so far they've been pretty small. and i don't think they've overall changed the trajectory of solid economic growth or stronger earnings. and while higher interest rates could slow that down, the fed's interest rate policy right now is still accommodative, and that

means that we're still seeing stronger demand for borrowing and even with mortgage rates at 5% as the other guest said, what we're seeing is a lot of demand for houses it's a problem with supply, not with demand. so i think all of that says the economy's in good shape, earnings are in good shape, tariffs are slowing things but they haven't yet led to the situation where they're actually snuffing out growth. >> got you thank you to kate warren with noah jones also noah blackstein with dynamic funds for those insights on the markets >> one company beating the street, harley-davidson. shares, though, are lower on a double-digit drop in u.s. sales. tariffs adding he extra pressure will moving the supply chain a difference or will harley's headaches continue industrial sector's slow down. worst month since 2011 should you stay clear or is this a good month to get in the dow coming back from a 548-point drop right now the dow is down by 178 points

s&p 500 moving back toward session highs. we're now downbo aut 24 points "power lunch" is back in two place, the xfinity xfi gateway.

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♪ welcome back to "power lunch. shares of harley-davidson under pressure today but off session lows now down about 2.7%. all this on the back of earnings the motorcycle maker beating on the top and bottom lines but u.s. sales continue to fall. the company also saying it expects up to $48 million in costs from tariffs joining us now to discuss this is robin farley, the analyst over at ubs. robin, great to have you with us >> hi. how are you? >> a u.s. retail decline of down 13.3%. market pare loss of 220 basis points in the u.s. alone this sounds like an incredible problem that harley has to get its hands around what can it do to reverse this, if anything? >> well, this is harley's actually fourth consecutive year of u.s. retail sales declines. so it has been a problem for a while here with an average rider aging. of course the q3 retail numbers came in worse than expected. i think probably single-digit

dloinz were expected but it was considered an easy comp versus last year. so disappointing to be down 13%. and also globally down 8%. >> are you getting a sense is that the trump calls for boycott of harley had any sort of impact on the third quarter since it was supposed to be a decent one relatively speaking? >> well, i don't think we can say it was strictly related to any one factor it's been a couple of years of these declines and harley over the summer launched a program for new models that would be introduced over the next two or three years. there isn't anything near term they wanted to talk about things they're going to do further out. they're going to take time to address these declines so i don't think it's any one thing responsible for the decline. >> could this be an acquisition target could there be an activist that could come in? i'm just wondering if there's any sort of external catalyst aside from waiting a very long time for a portfolio of new products to hit the market

>> certainly there are things like a strong brand name here. but i think what an activist would usually look for is something to do to change the management it's not clear here what can be done to turn around the sales decline because harley's declines are certainly worse than the overall u.s. industry but motorcycle sales in general are down this year as well but there's -- you know, i'm sure there will always be views about what could be done differently. >> all right robin, we're going to leave it there. thank you so much for your time. robin farley of ubs has got a neutral rating on harley-davidson. >> all right well, coming up, the dow down only 123 points. 548-point loss is what it was at the low. as the industrials getting hammered today the sector having its worst month since 2011 86% of that group is in correction level or worse. is this a good opportunity to buy? seems like traders already are the trading nation is coming up next and as we look ahead, the biggest dow laggards

caterpillar, 3m. also chevron in that mix lots more on this sell-off ahead on "power lunch.

welcome back to "power lunch. i'm mike santoli and this is "trading nation. industrials tanking today as one of the market's biggest laggards the sector now on track for its worst month in seven years, off 13% from its year-to-date high industrial giants qatar pil skr 3m among the worst performers after reporting earnings today stacy gilbert is with susquehanna. craig johnson with piper jaffray to weigh in on where this group might head from here stacy, obviously kind of a bellwether group for the cyclica cyclicals, for the overall market, for global markets where do we go from here is this just the beginning or maybe can we have a comeback for the industrials? we don't have stacy's audio there. craig, give us a glimpse of what your charts are telling you about this group you obviously have had some down side leadership from the industrials, at least in this market pullback.

>> yeah, hey, mike we've been underweight the industrials now for several months and as you can imagine, on days like today we've talked, had conversations with a lot of very smart investors. and when you look at a chart of the xli you can see very clearly that a double top has been made here so you've got to look at a chart like this and then make an implication of what this means for the overall industrial sector, what this means for cyclicals and for growth stocks. and i look at this kind of setup on this chart and we're just now starting to break below the prior lows i think from here we're going to have to at least come down and look at the mid 60s, if not kind of a measured objective for me would put this industrial etf down into the $630 range i think we're going to see more weakness ahead in this, and i look at this and view this as a bit of an indicator for the overall market at this point in time i'm still cautious on the industrials and definitely cautious on the xli >> all right, craig. sorry about that, stacy. but we'll get you again soon tr more trading nation head to our website or follow us on

twitter @tradingnation tyler, i will send it back to you. >> mr. santoli, thank you very much next on "power lunch," from china to japan to brazil, the global markets tanking today as geopolitical concerns weigh on sentiment. are any of these markets, as you look over there, are any of them a buying opportunity or will that falling knife continue to fall and take a look at some of the regional banks pnc, state street, northern trust, and synchrony financial lots more on the markets and this moderating sell-off ahead on "power lunch. >> announcer: and now the latest from tradingnationcnbc.com and a word from our sponsor. >> a good first deposition of any risk management strategy is to determine the amount you're willing to risk on any given trade. traders use the 12% rule where they try to limit their loss on

any given position to no more than 2% of their total trading capital.

the dow is now down only about 136 points, as you can see

there. the nasdaq only off by just around we'll call it half a percent, 39 points, and the s&p 500 off by about 16 as well. so let's drill down on some of the stocks seeing the biggest intraday reversals a number of s&p 500 names in focus including glass and ceramics maker corning that stock was down by as much as 9% at the lows. now higher by 1% several tech stocks staging major reversals including seagate technologies after being down by as much as 11% in earlier trading seagate technology makes its move higher. now let's go to sue herera for a check on the cnbc update >> national security adviser john bolton meeting with russian president putin at the kremlin putin telling bolton that he would like to meet with president trump again, suggesting that they talk in paris next month a bit later bolton talked about

the u.s. leaving the inf treaty. >> it was important from our perspective as president trump said on saturday and said again yesterday to deal with the question of russian violations of the inf treaty. it's a position russia doesn't agree with but which we feel very strongly about and was a major factor in our decision to withdraw >> saudi tv airing video of saudi arabia's king and crown prince receiving family members of killed journalist jamal khashoggi where they expressed their condolences. the saudis say khashoggi was killed in a fistfight at the saudi consulate in istanbul, and they have arrested 18 suspects and dismissed senior officials as a result. and a rectangular iceberg in antarctica take a look at that. is capturing attention online for its near perfect shape the image was captured by nasa's department of chirospheric

science, known as nasa ice it's amazing what nature can do. that's the news update at this hour, guys i will send it back to you. >> all right, sue, thank you very much. from wall street to washington to the world, let's get more on what is driving today's wild market ride. down, up, where will we end, we don't know kate rogers at nasdaq looking at the tech tumble. steve liesman watching the fed and the movement rates hadley gamble live in riyadh with a look at the u.s.-saudi tensions and seema mody watching the global sell-off for us we begin with kate rogers at nasdaq hi, kate >> hi, tyler we told you earlier the nasdaq had been dipping in and out of correction territory today out currently at this moment it's at its lowest levels in about six months also on pace for what could be its worst month in a decade, down on 8% so far month to date. as you mentioned, tech names really getting hit hard today. those having the biggest point impact on the nasdaq 100 today amazon and microsoft having a nearly 15-point impact apple, google, and facebook also

all having between a two and three-point impact the russell 2000 also down over 10% for the month. it's on its pace for its worst monthly performance since september of 2011. also remains in correction territory even though the nasdaq dipped out of that other names to watch today, to the down side in the nasdaq 100, wynn, biomarin, csx and we mention the earlier very few positive names today but among them tesla, up around 9 1/2% another tech name avoiding this wreck so far is net flix, just slightly in the green. back over to you >> all right, kate, thank you very much. now to steve liesman who's keeping an eye on all things fed. five members giving speeches today. steve? >> reporter: one happening right now, tyler richard -- robert kaplan, sorry, the dallas federal reserve president, speaking right now in galveston, texas he says he expects growth to slow a little bit in 2019 and in 2020 but sees the consumer in pretty good shape and gdp this year will be around 3% unemployment down to 3.7

will probably keep going down but he sees the rate of that decline probably slowing now, he is aware of and mentioned turmoil in emerging markets, including argentina, turkey, and china. he said china should increase leverage in government spending to increase growth trade is affecting that. and generally he says his measure is what's happening outside when it gets weaker, spilling over into the u.s., hasn't seen that just yet. i'll remind you that on the 19th of this month kaplan says he sees two or three rate hikes until the fed is at neutral. atlanta fed president raphael bostic saying that he is raising his 2018-2019 growth forecast. he says the economy is strong enough without accommodative policy and the gradual movement of accommodation is appropriate he says. >> this is something interesting as well. just the idea that you would have a voting member like bostic right now. the only one speaking today on this whole idea. >> he's the only one of the five

speaking we had cakashkari this morning. he did not make comments on monetary policy. two this evening, both of whom are not voters but i think the important takeaway is the fed doesn't see this 300 or 400-point bump here or what in total, are we 5% down below where we were at the highs now. on or thereabouts. that is not something right now that is enough for them to take them off of their plans to gradually raise interest rates toward a neutral rate. >> that's a lot of fed speak for sure today thank you very much for that, steve liesman. let's turn to the global picture. the future investment initiative event kicking off in riyadh. saudi arabia today this following weeks of controversy over the death of a prominent saudi journalist that led many business leaders to drop out of this particular event. hadley gamble's live on the ground for us in the kingdom in saudi arabia and riyadh. hadley >> that's right, dom just hours after president of

turkey erdogan came out and essentially said that these folks were going to have to provide more answers as to what exactly happened to jamal khashoggi, we saw the crown prince of saudi arabia, mohammed bin salman, arriving at the davos in the desert to a rock star's welcome he was crowded by supporters they were all looking to take selfies with him i have to tell you, even though some 25% of the c suite level major international ceos and investors like steve schwartzman, like larry fink, like richard branson decided to drop out of this summit, he still had a very, very heavy crowd awaiting him when he arrived today and certainly it's been an interesting sight to see. $55 billion worth of commitments in terms of investments announced just in day one. and frankly a lot of support from folks in the region we saw mohammed bin rashad, who is the uae's prime minister and the ruler of dubai we also saw king abdullah 6 jordan we also expected to see lebanese prime minister saud ha riri. and if you take a look at the

video right now you can see someone who seemed to be on the outs last year with the crown prince of course that's billionaire investor and prince al walid bin tillal walking in right beside the crown prince of saudi arabia, mohammed bin salman. a lot of folks heading into that conference with questions today about what exactly would happen there. we are expecting to hear from mohammed bin salman, the crown prince of saudi arabia, tomorrow guys >> hadley, thank you so much for that update live in saudi arabia the oil market also closing for the day. crude sinking over %, settling at around $66.43 a barrel and breaking a two-day win streak. it's the worst daily performance since july and the lowest close since mid august for those oil prices, melissa. >> all right well, china's shanghai composite down more than 2%. let's get to seema mody with more on the global sell-off. seema. >> hey, melissa. we've been running the numbers on china's correlation with stocks here in the u.s., and what we found is that u.s. stocks are lower, about 70% of the time in periods when the shanghai composite drops 10% or

mo more, big blue chips like goldman sachs and cart pilar are among the names that underperform when china's market sells off. analysts say the correlation just speaks to how interconnected global markets have truly become. and it's worth pointing out that the drop in chinese stocks that we saw overnight comes after the shanghai composite posted its best day in three years on this expectation that china's government will continue to use economic tools like tax cuts to stimulate its slowing economy but perhaps those hopes were short-lived. later this week a flurry of central bank policy meetings in europe we have the ecb meeting on thursday followed by russia and turkey so expect some more commentary on global growth concerns from those central bankers as well. >> all right, seema, thank you seema mody we do want to get a check of the markets because we've been noting for the past 15 minutes or so that it has been quite a turnaround from session lows and right now the dow is down by less than 100 points we're down just 87 points, or a loss of .4 of 1% the nasdaq is down by just a

quarter of a percent so we're seeing a major turnaround in communications services, for instance that sector is now higher by .4 of a percent and netflix up by 1.3% one of the stocks helping this whole technology complex turn around the s&p 500, by the way-s down by ten points. moorkt market fears, though, spreading overseas what are the potential ripple effects on global markets? are there any buying opportunities overseas let's bring in sameer samata, the global investment and technical strategist with walz fargo intoout. great to have you with us. >> thanks for having me. >> at some point something's got to give. that's sort of what you're saying what gives. >> does the u.s. market take a leg lower to catch up with emerging or vice versa >> we're in the latter camp. we think emedging markets represent the great value here one of the xernlts of the trade issue is both the u.s. and china are at the same time stimulating their economies while they jostle over trade. what that means for investors is they could have both plunge

protections teams if you will on both sides of the pond helping their stocks to stabilize and maybe even go higher from here so our opinion is emerging market equities have some catching up to do and that could be over the next 12 months >> when you say both china and the u.s. are stimulating the economy, when you say china what measures specifically are you pointing to? the ones you've been talking about for the past couple of days because i mean if the sell-off overnight is any measure maybe people don't believe that whatever they're doing to stimulate is actually going to stay >> it will take some time. but i'm referring to the reserve climate ratio. there's some targeted stimulus they've done in terms of trying to get domestic growth going they've talked about their own tax cuts interestingly all those different things will take some time to gain traction. we are clearly in a down draft of sentiment here. but we're not surprised at all that markets have come back as the day has gone on. then on top of all of it that the saudis are now talking about pumping as much oil as they can and oil prices are down 5% on the day. i looked

gasoline prices are down 20% from their may highs that's going to be a big boon to the consumer heading into the q4 holiday season >> so explain to me the transmission mechanism of how a stimulated chinese economy robust and maybe stimulate d american economy would trickle through to emerging markets and which ones stand to gain the most >> sure. so tyler, the way it would work is basically it would allow p/es to expand a little bit, especially on the emerging market side. they've gotten very depressed. two, it's going to help kind of stabilize those corporate earnings everybody's worried about today. and three, as far as where we would focus, it's probably still to a certain dpent emerging asia they've had some better fundamentals they also tend to lean a little more toward the technology sector as opposed to things like commodity production that would be maybe a slight preference for us. >> if you had to choose some of your fresh dollars to work today, since we have seen a market dip, in the u.s. or china, what would you tell investors? >> we'd probably tell people them engineering markets and china's the biggest weighting, so we'd tilt a little more in

that direction >> sammeer, we're going to leave it there thank you for your time. sameer samata, wells far go investment institute coming up, along with everything else casino stocks taking a beating today there could be more trouble ahead for those with property in mac macau. macau. we've got that story next. macau. we've got that story next. hey, what are you guys doing here? we've so? we're voya. we stay with you to and through retirement... with solutions to help provide income throughout. so you'll still be here to help me make smart choices? well, with your finances that is. we had nothing to do with that, uh, tie. or the suit. or the shirt. voya. helping you to and through retirement. anything worth pursuing hard work and a plan.

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welcome back to "power lunch," everybody. casino stocks down today double whammy for those who get a big chunk of change from their properties in that caw and contessa brewer is following it all for us today. hi, contessa >> hi, tyler rough day for these casino stocks wynn, mgm, and mel co. resorts are seeing macau's growth slowing dramatically any growth they're seeing from mass market gamblers, frn vip. analysts are readjusting their expectations they're questioning whether china's economy could push

gamblers to walk away. there are worries about the trade war. questions like will china target u.s. casinos through these qualitative measures cushing capital outflows could cut into the profits and concessions are due for renewals starting in 2020. right now there is no public discussion i. nelson rose is a visiting professor at the university of macau, and he writes, "the next time trump insults the prc china's leaders could react by reimposing visa restrictions on mainland travel to the u.s. and also to macau. after all, the name trump is associated with casinos. and he goes on to point out that las vegas sands ceo sheldon ade adeleson is one of trump's biggest supporters contradiction make him one of the biggest targets. we'll hear more from lvs and macau on the earnings call tomorrow dan graziolik says in regards to the trade war our long-held view is that licenses will be renewed but it's extra costs given the strong margins the macau gaming operators see as the government

looks to take more of the profit and of course analysts generally think yanking these concessions would send a chilling message to other western companies looking to invest, which makes it more unlikely but still it's a risk that they say they have to keep tabs on. >> limiting visas, though, would also hurt the empire of stanley ho >> and companies like melco, which is a chinese-based company. so that doesn't make a lot of sense. but we have seen china crack down in the past on how often visitors could go to macau, and that had an immediate impact and not only that, the cultural implications of visiting las vegas and being seen gam sxblg diagnose out and spending money in las vegas could have a chilling effect. and the same professor points out that when the crackdown happened on corruption back in 2011, 2013, 2014, that they saw a switch in the amount of money that baccarat brought in versus blackjack. it cost las vegas $400 million when that happened now, the circumstances here are different. maybe that wouldn't happen

maybe you have different visitors but when you look at that, you say there could be an effect >> high stakes out there for sure contessa, thank you for that update coming up, more on these volatile markets the dow had been down 548 points right now the dow is off by about 100. the s&p off by about 12 points the russell 2000 small cap index is only down by about a third of 1% the nasdaq composite off by a similar percentage amount. "power lunch" is back in two minutes. many people living with diabetes

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we are just minutes away from the last hour of trading. an hour and nine minutes away. the dow is down 43 points. the nasdaq off 12 and s&p off 6. what a difference jan when the tariffs jump to 25%. fear that our relationship with saudi arabia is deteriorating

and peak earnings and all of these have been tucked away. it seems like the market gave up and gave ground and decided it all matters. >> the earnings have not been bad by any stretch of the imagination. i know you look at trading levels, what do you infer from how the market has traded today and bounced off of various levels and come back >> if you look at the february lows it is 3522. highs around 3540. a cup ofrl recent lows, 2710 was your recent low. replacement levels were 2688 we stopped basically on a dime there. this isabout interest rates. would you not agree? october 3rd peeks. it hits another recent top and sells off again. this was all about rates

the other stuff doesn't help this is all about rates. >> i don't disagree. i think going forward if indeed the stock market recovers we are back where we were, where the federal reserve doesn't have any reason to pause unless something happens globally, some external factor but then we are back where we were with feds likely to continue. >> doesn't it feel a lot like when green span raised rates in the face of a yield curve but said it wasn't really important or the market signals were wrong on that? doesn't it feel as if we are raising it into a slowing economy? doesn't it feel like the same sort of environment? >> yes i agree. if the stock market were to recover everything i heard was if the market continues to go down will the fed say something conducive to the market recovering in will they suggest there will be a pause if there are too many variables to

consider >> so what i could say about the levels, which stocks have made the biggest climbs >> maybe some times just like the sightly positives. we are talking about housing, home builder stocks. >> regional banks and everyone tech names it could be closing out the wins bets or deep value buying. how much of this is really people taking profits off of winning positions betting against the market and how much is people getting in there and saying these stocks are gotten so beaten up it is time to get in

>> the best guess is over my 25 years on wall street it is roughly 20% to a third short covering if you look at the housing complex it has been so decimated is this a real pop >> i don't know. when you really look at it they have given back 30 to 40% of their share price. if this market -- where are we if we recover back to the day it would screw so many people up they will think it is okay to get back in and i think that's -- >> what level is that? >> 2768. >> 2768 for the 200th day. it's not today that will get there it is that we get there this week and they will view it as an all clear and i think they will be grossly mistaken the rates issue is not going away >> the rates issue isn't going away it certainly makes it easier to digest when it is versus 3.26

which is where we were a couple of weeks ago >> as we approach it is way off of session lows. it is the best performing sectors right now. look at what is bringing us back that's next.

all right. welcome back let's take a look at some of the names seeing a big reversal. it is near the best levels of the day tomorrow netflix shares positive by 1.5%. it is a big move higher off of low points earlier in the session. qualcomm, both of those down by 4% or more th apple moving into positive territory. the dow is a component two-thirds well up the worst levels of the day. the spider bank etf both up by about half a percent right now to session highs this has been a pretty amazing move higher. >> yeah. i think you made an important point. let's bring in the closing bell

team who will take us through last hour of trade team. what an interesting couple of hours with this major market turn around when it comes to communication services names in general, the home builders >> i hope we can continue the improved positive momentum both consumer sectors and the communication services we will pick it up from there. thank you very much and welcome to the closing bell. >> we are kicking off the final hour of trade with major improvements for stocks. we were talking abou