free commissions over two years. traffic, you might want to look at that ad and see if it's still up to date >> yeah, now it's unlimited. >> we're off the session highs right now. >> off the session lows. >> we're off the session highs, too. >> that, too "closing bell" will start in about five seconds, unless they pick it up right now welcome to the "closing bell." i'm morgan brennan in for sara eisen on what has become a scary day for stocks to start the month of october we're down nearly 300 points on the dow right now after starting the day in the green will he follow further into the close? that is the key question we've got 59 minutes to find out. >> and i'm wilfred frost let's take a look at what's driving the action new manufacturing data came in much weaker than expected and reunited fears of a recession. more ipo worries as new listings like uber, lyft, and chewie hit new all-time lows. and the bond volatility continues, the yields rising along with japan and then falling sharply on the soft

manufacturing data this morning. we've got full team coverage of today's sell-off bob pisani is covering the market's reaction to that weak manufacturing data bertha coombs is watching the movers at the nasdaq rick santelli is looking at today's action in the bond market let's check in, though, where we stand. we are down 281, the low of the session on the dow was down 347. a slight improvement in the last 30 or 40 minutes or so but a significant fall from where we opened up 129 points or so let's check in with steve grasso from stuart frankel who's joining for the full hour. steve, what is this? recession fears again or is it justified to see this slippage >> you know, it's funny, you know, i'm tempted to just jump onboard and say it's all recession fears. and then you have the first day of the month and then you have impeachment. and then you have trade. but definitely, this is recession fears, but i wouldn't read into it as much as everyone wants to you have the first day of the trading month, there's a lot of different rotation things at work >> energy, materials, industrials are the three

worst-performing sectors they're all down more than 2%. >> all cyclical. >> cyclical manufacturing. it makes sense >> should you be buying some of the non-manufacturing sectors today? >> i think you have to wait until the market action clears just a bit, but i know there's a train of thought that you want to buy those cyclical-based companies that have been beaten up already, to deep, deep, deep valuation discounts. >> well, we have a lot more with steve coming up. but let's get over to bob pisani now for a closer look at what's driving today's drop >> it was a big miss on september manufacturing. i think that's a problem for the markets. the s&p moved in a 50-point range lower since the ism report came out at 10:00 a.m. eastern time that is a huge outside reaction, and partly responsible for the size of the miss, was just the amount of the miss, but despite all the turmoil around global trade and a weaker economy, the other big problem is where the market is. the s&p is still 3% from historic highs so you put those two together, you got a problem.

so this dropped cyclicals like industrials, materials, energy, and bank stocks, they fell as the bond yields dropped. we know manufacturing is weak globally, but will it impact u.s. consumer spending that's holding up the global economy? that's what's got people talking. this jobs report friday now becomes very important keep an eye on defensive consumer stocks, that have had risen dramatically this year small group, home depot, starbucks, mcdomdnalcdonald's, , all weaker today >> bob, thanks very much let's get to the nasdaq. also kicking off the fourth quarter with a big four. bertha coombs is having a look for us there >> reporter: the nasdaq biotech sector, part of the reason why the sector falling back into bear market, falling 20% from its high just one year ago, with no lows in both large and small-cap names. meantime, in large cap tech, apple today has been extending gains after jpmorgan raised its iphone estimates yesterday, but we're not seeing any follow-through on yesterday's

rallies when it comes to chip or other subsectors the nasdaq's best performer today, it's in consumer names, ulta with its biggest gains since last christmas the director disclosing he bought 330,000 shares. bear in mind, both those stocks are in bear market, well deep into bear market, morgan >> bertha, thank you the bond market has also seen some big moves today it's been a volatile day following developments in japan and of course that weak ism manufacturing number here in the u.s. let's send it over to rick santelli our look at today's bond report. rick >> well, thank you you know, whether it was a government pension investment fund in japan or the bank of japan, both aren't buying as many japanese government bonds so the futures dropped, the biggest drop in three and a half years. look at a one-week chart of jgb ten-year yields. you can see they're on the rise. ism, weakest since june of '09, and finally, an intraday of

two-year notes, down seven basis points huge range when you see the curve steepening, as it has done today, with rates dropping, that's usually not good economic news wilf, back to you. >> rick, thanks very much for that now the dow swinging more than 50 points in today's session joining us to break down the volatility, art cashin from ubs. art, good to see you what's your take on how volatile this is. at the lows of the day, we wiped out all of q3's gains. >> yeah, we've -- i don't want to be too fltechnical here, but we've had four days in a row, inside positive rotation and outside negative rotation. then an inside positive and right now a negative outside that tells me that the market is building up a real head of steam here and when it breaks out, it's going to be more than just a few pun points >> in which direction? we don't know yet? >> we're not entirely sure trade is where we're concerned that when they came today and broke below 26.6, that it might

begin to spiral. we didn't get a trap door sell-off in fact, we spent a great deal of the afternoon trading between 26580 and 26650. it's been a narrow band. we're testing that low as long as we stay within that, the bulls have some hope if you break down below the earlier lows, we could have a big problem. >> yeah, grasso, to that point, you've got the s&p on pace to close below the 50-day the dow is in danger of falling below the 50-day how much of this is technical from your perspective. >> we're about 30 handles lower than that now. so if you look at the recent highs, or all-time highs, then you look at the august lows, you bounce back from there, 2979 is your first support so breaking that is a bear set-up going forward so i'm not happy about it. but i don't think we are doomed, unless we start to break down,

as art said, below another 20 handles lower from here. then i'm going to start to get very concerned >> off yields for broad sentiment indices levels >> japan had an absolutely dreadful government auction and that has sent yields ticking up all around the world and we would probably be higher in yields, except with that dreadful number that we got in the ism. so things are changing i would keep my eye on yields. i personal think that yield are probably going to go lower here. the pileup on the repos may be a little deeper than people think. >> i'm sorry to jump in, but what does that really mean when you start to look at powell being back in play when you start to see his what's negative for the market is actually positive when the powell angle comes back into

play >> unless you think we're heading to a recession that's driven by trade and affecting manufacturing. >> but if it's driven by trade -- >> but it's driven by trade. if you're a short seller, do you want to get in front of that freight train with possible headlines coming out in the next 10, 11, 12 days, or so even if it's less negative, they're still going to be negative compared to the environment we're in just now. >> art, the fact that october has been the most volatile month of the year, how does that play into this? >> i think the first couple of weeks probably look like they will be volatile but remember one other thing, and that is, october's notorious for forming bottoms. and many of the great bottoms we've had come in the month of october. so i would be very wary of the first two weeks. and then see what we can build as we start to go out of the month. >> steve, in terms of sector performance at the moment, as we said earlier, the cyclical ones at the bottom, that includes the likes of financials, even though

that's not so linked to manufacturing. is that an opportunity >> it should be. at face value, it should be. the problem is -- >> ask him about the banks >> the problem is that the xlf to me, if you look on a long-term chart, there's an extreme double top going back to the financial crisis it's almost down to the penny. i need to see a breakout of that $31 range in the xlf to really prove the point. because if you go back there, no one knows better than you, you had less regulation back then, and you had high leverage. you had 30-1 leverage. we have less regulation now, but not to the level we had back then, and we're never going back to 30-1 leverage, correct? so why would it be a rosy scenario for the banks >> arthur, just quickly, we're off the lows as we stand, down 260 on the dow what are you kind of expecting for the final 50 minutes of trade. do you think we retest those intraday lows? >> i think you might what i want to watch is that band that i discussed before if they can cut the loss and rally back above 26650, that

will be at least a moral triumph for the bulls. and, you know, they'll say, okay, we escaped without a trap door sell-off and that was very good >> volumes today >> volume today, hard to compare, because you had the end of quarter, which helps swell the volume a little bit at the close. you had nearly $2 billion to sell on balance late yesterday, so i would watch, i think the market is going to be looking offshore, particularly at japan and what happens in europe tomorrow >> arthur, as always, thanks very much for joining us great to see you still to come here on "closing bell," recent ipos getting hit hard in today's sell-off, and some of silicon valley's top venture capitalists are holding a meeting. and we'll dive into the announcement from charles schwab today that's sending the online brokers tumbling take a look at those stocks right there. stay with us "closing bell" will be right back

welcome back we've got 47 minutes left to go after starting the day up triple digits, the dow is currently

down 299 points let's get a check on some individual market movers, though mall owners are getting hit today after forever 21 announced that it's filing for chapter 11 bankruptcy the average forever 21 store spans 40,000 square feet, some are even larger, larger than 100,000 square feet, which is the size of a traditional department store analysts say filling those spaces could be a burden on the malls. you see that right there with names like simon down about 2% and shares of spice maker mccormick on pace for its best day since june 2018 after reporting earnings this morning. that stock is up about 6.5%. the company cited strong demand for products in both the u.s. and china. sales in asia pacific were up 11% year over year as well and you can see those shares are bucking the trend in the broader market today >> we're down 300 points on the dow, with 45 minutes left of trade. let's get over to mike santoli for today's market dashboard hi, mike >> hey, wilf here's what we've got ahead.

a new wild card has been played by one of the big brokerage players. and hit-and-run, one big style trade in the market has gotten hit, but now it's still running a little bit playing in shadows a little look at the macro here based on today's data and whether, in fact, we are seeing the shadows of a downturn ahead. and a high-leverage situation. corporations really taking advantage of an easy debt market first, to this news today about charles schwab deciding to go to zero commissions on most trades for customers, following interactive brokers in an effort last week. here's a timeline going back more than 20 years to 1997 it's the progression of standard commissions at charles schwab. of course, charles schwab, a pioneering discount brokerage from the mid-70s but this was a trade, $80 around 1997 for a live broker or by phone. 2999, went to a big deal in 1998, set the standard and you can see the stairstep down, we've got this deceleration recently all the

way towards zero clearly, the market saying the rest of the industry might have to get there so i do want to look at the breakdown of revenue for schwab. it's actually not very leveraged to trading commissions this is -- commissions are in there. that 6.8 of estimated 2019 revenue. that's split there you can see net interest, it's kind of a bank on the back end that's the biggest chunk and asset management fees are also a huge and important area that's why schwab can afford to do this. and finally, look at the stocks of the online brokers, compared to the s&p 500 over the last couple of years. they've now pretty much all overperformed. as of today, the market saying, look, this is going to be tougher for these guys, some more than others i would point out, this period here, the fed was raising interest rates and the markets were strong. that's a great combination for these guys who earn a spread and earn commissions, but that has been undone right now, guys. >> mike, fascinating story and analysis there i guess the other offset to that clearly falling chart of the price of commissions for a company like schwab is that the

aum has gone in the opposite direction over that time net/net, though, the effect, of course, has been fee compression across the industry. and i would just bring up, as well, for the banks and the banks that have more of this exposure in terms of asset management, they're all down today, but not quite as much, because, of course, when there's discretionary management, the fees have held up a little bit better there's not quite such a price war. but nonetheless, it's the same trend, which is a bit more automation, much less fees across the space >> that's exactly right. they want to gather the assets and for schwab, a lot of those are portfolios of etfs and things like that their relationships with many investor advisers. >> steve, major moves lower in these broker stocks today. i mean, is the takeaway here that -- because it seems to me that it was inevitable that we were moving closer and closer towards zero especially when you see start-ups like robin hood

getting in the game and helping to push prices lower. the move in the stock, is it because it happened faster than everyone expected? >> i think that's as good a reason as any. but it's about services. and as mike pointed out, net interests, they are banks when you look at it you want to be in a rising rate environment so they can clip some type of a fee or some type of a, i'm borrowing from you and paying you this. and it's just a net interest margin is with where they're going to make their money. but it's about services. what other services can these brokerage houses provide, other than the straight commission because they're dealing with a lot of retail membership and a lot of retail clientele, not constitutional clientele >> we've got 42 minutes left of trading here today the dow is currently down 281 points the s&p is down 31, 2945 is your level there. for more, let's bring in chris johnson, ceo and cio of johnson research group chris, what do you make of the sell-off today >> i think it's a little bit of

a reaction, obviously, to the production numbers this market is on edge we're playing around with a lot of technicals. when you look, the s&p 500's 50-day is right where we're trading. the technicals are a little more enhanced now when we break these levels, you'll see more volume and a little more volatility come in. a lot of expectations going into october, though. and i think that's what additionally is putting investors on edge right now. >> talk to us about the seasonality. what should we expect normally for an october and for a q4? >> sure, wilf. when you look at seasonality, october is known as this -- i call it the comeback kid it is the month that we best associate with volatility, because if you ask somebody when the market's crashed, typically they'll pull out october those are the ones they'll remember that's why you see indicators like the volatility index start to spike when you look at the vix, the vix readings on average over the last 20 years hit their highest levels of the year in october,

but they quickly subside and start to come down and as that negativesentiment unwinds, it turns into a rally that carries us through stronger november and into december you always have your exceptions. i mean, think of it this way, wilf it is a -- it's almost a self-fulfilling prophesy when we see that bottom, we know people want to go in and buy the dip here if they don't buy the dip, though, now it turns into a loathing situation, where the market if we don't finish october in positive territory, if we don't come back, typically we see that november and the december trade sideways to even down if you look at last year, the vix made another two spikes after the spike in october this really is where the market needs to kind of set into that volatility trend get through it, and have investors feel a little better about buying the market, either earnings, a trade war resolution, or maybe even that infrastructure bill are going to help to do that. but we need something right now to help fuel that optimism >> so how would you be investing for this october, given the fact

that there are all of those headline risks and uncertainties? what sectors do you like, if any? >> right now, looking at -- oh, there are some sectors out there that you can play, morgan. when you look at the sectors, utilities have been a safe harbor investors have been putting money into that. that's one of the areas we've seen a lot of cash migrating to. also, when you look at it, believe it or not, retail is still gaining some traction right now, and that's because we're in a strong seasonality pattern for retail that goes from labor day until thanksgiving the other group that i'm looking at, like everybody else, consumer products. when you look at companies like campbell's, hormel, et cetera, they're going to do well, because they're safe harbor, they're giving dividends that are better than what you're going to get on the ten-year, and oddly, the one that stands out are the technology stocks. if you start to see october actually bottom out and run into a higher november, technology stocks are going to become in favor, because a lot of those portfolio managers want to have the good tech names on their year-end statements.

so provided we have a good october and we come out on the other end in the plus category, november and december should provide some good returns in the tech sector. >> steven, for all the kind of seasonality arguments, last year is a good reminder to not believe too much in them >> and when you look at -- i'm a firm believer in, you never get the same action twice. you know, for us to look at, is october going to go to be down 11%, is december going to be down another 16% on top of that? i don't know if it's ever that easy, but it is interesting that everyone is panicking over the ism number today and when you look at european pmis, they were up in august and up in september. that's what's going around the street right now does that mean that europe has bottomed and that a lot of these stimulus measures that are taking place are, we are basically catching up to where they were and they're leading us back out of it and you'll see rotation out of the u.s. and into europe i don't think that's the case, but that is what a lot of the conversations that are taking place on the street are today. >> and certainly here in the u.s., we have seen things like

industrial recessions, not that long ago, by the way 2015, 2016, that didn't take the broader u.s. economy into recession, either. >> correct and just to put a bow on it, when you look at that, we were looking at a much different fed environment, right we had the fed that was overreaching and tightening. i know you've heard it a thousand times when we started this sell-off, we have a much different environment now, and after the ism number today, you'll hear a lot more dovish fed speak coming out between now and that date. >> we'll certainly see and the jobs number on friday will help bring us there chris, we'll leave it there. chris johnson, thanks for joining us today after the break, bank of america upgrading one tobacco stock due to its lack of exposure to the vaping market. the word on the street on that call, coming up next and in just a few minutes, we'll take you back into the "market zone," our new commercial-free stories that matter most to your money. ♪

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welcome back to "closing bell." time to get word on the street bank of america upgrading phillip morris to buy with a $96 price target the firm sees attractive valuations and says the company will, quote, rise above the noise, given lack of vaping exposure keybank upgrading a host of semiconductors today, analog devices, microchip technology, and nxp semiconductors, all with buy ratings. the firm says asia channel

checks show that while overall demand trends remain weak, they're not getting worse. so maybe a bottoming out you can see it's a mixed picture for some of those stocks today, though evercore isi upgraded spotify to hold with a $110 price target. the firm says given that the stock is down 30% from recent highs, opportunity related to shorting spotify has diminished. those shares are down 1%, as well steve, what do you think of, i guess, any of these stocks spotify is an interesting one, because it's not like the analyst is saying, oh, you know, the fundamentals and the financials on the business are getting better, it's just that the stock has sold off enough now that the risk/reward seems balanced >> i can get onboard with that i bought ulta -- i bought ulta cosmetics back in the 227 range, because it was just sold off way too much if you're looking for an overreaction in some of these names, i can get onboard with that but i can't get onboard with just the competition, the mountain of competition that we see in spotify and the average

revenue per user going down. that, to me, is not a winning success rate but you can make money if you're looking for some type of reversion trade. >> bank of america on phillip morris i love that it's the lack of vaping exposure that makes this a buy. the one thing that had delivered structural growth to a declining industry and was the darling factor for the last couple of years, now gives it an attraction it's got a high yield, 6.5, i believe, percent yield on their numbers. >> and sometimes a high yield can be an indication of a red flag there but i would have went the same route that you picked. you're looking at an industry that has already gone to its peak and has been falling off for years now. and that you are only saving grace was trying to move out of that and cut down on their dependence and move into the vaping world they're not going to get in there now. at least for the foreseeable future but the truth is, we don't know anything about this yet. it's so early in the cycle there will be a viable event on these, as that reversion trade

happens or a bounce trade happens. i don't think we're there just yet. >> they have that icoqos technology big question mark around there that new manufacturing data came in much weaker than expected, reignites fears of recession new ipo worries as uber, lityft, and chewie hit all-time lows and falling sharply on that soft manufacturing data this morning. >> it's time for a cnbc news update with sue herrera. hi, sue. >> hi, wilf. hello, everyone. here's what's happening at this hour, secretary of state mike pompeo claiming in a letter to the house foreign affairs committee that democrats are trying to intimidate and bully state department employees and that depositions scheduled by the panel are not feasible pompeo is in italy meeting with italian leaders. australia says it is willing to cooperate with attorney general william barr's investigation about the origins of a probe into russian meddling

in the 2016 u.s. election. an australian official was asked if it was appropriate for australia to be cooperating on such a controversial u.s. issue. >> the government has put out a statement in relation to that point you've just raised, and we've said we've always been willing to cooperate in shedding light on those investigations. and again, that was confirmed in that conversation, that the statement from the government speaks exactly to that question. and sony is cutting the price of its subscription game service. its playstation will now cost $9.99 a month, down from $19.99. the yearly rate also cut from $99.99 to $59.99 it all comes as entertainment giants battle to increase market share amidst fierce competition. that is the news update this hour i'll send it back downtown to you. >> let the gaming wars begin, sue. >> absolutely! >> thank you we'll see you next hour.

let's send it over to mike santoli now for his second dashboard. mike >> hey, morgan taking a look at a hit-and-run pattern of sorts a lot of talk in the last month or so about a rotation around big growth stocks. this is a relative chart, a ratio of the russell 1,000 growth index to the russell 1,000 value. this goes back five years. obviously, a very clear trend. growth is winning on a longer-term basis. and i think what's interesting about this recent move down, which means value has started to outperform a little bit, is that that's a pretty sloppy trend line but just more or less, that's what you're talking about is, it really has remained in this trend. you had a couple of very sharp setbacks here, but nothing that really violated the overall pattern of big growth stocks reasserting themselves after they have one of these switchbacks. i think you want to keep an eye on this ratio. i would say today in the sell-off, growth stocks outperforming again, because a lot of those cyclicals have taken a hit on the manufacturing numbers, guys. >> mike, thanks very much for that we'll see you again later in the hour of course, we've got 28 minutes

left until the close slight improvement over the last hour we're off the lows of the session. the dow was down 347 at one point. it's now down just 298 still over 1% of declines for most of the industries the russell, as mike was just saying, down sharply still to come, we've got your last chance trade. steve grasso is picking one tech stock that's up. we think it's got further to go. we'll reveal the name in just a few minutes. and coming up next, the transports are getting hit hard as well amid this sell-off we'll hear what the ceo of u.p.s. had to say about his outlook for the economy right after the break. your brain is an amazing thing. but as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain

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increase as last year, but we still feel pretty good about what we're seeing. of course, we'd like to see industrial production and manufacturing increase but the consumer is holding on right now. and we're glad to see that >> now, on the international side, abney also pointing to brexit and china trade negotiations as headwinds. but also saying that his company has the flexibility to adjust, since we are in the fourth quarter right now. that means we're going into holiday peak shipping season i asked him about that, as well. he says the company is gearing up and is pretty upbeat, i would say, in terms of the forecast for the final couple of months of the year. but let us not overlook the news of the day and why i was speaking to u.p.s.' ceo abney in the first place. the company became the first of any to receive from the faa full part 135 standard certification, so it can do these big expansive out of the visual line of sight, at night, et cetera, drone

deliveries and it basically means that u.p.s. is now going to build out a drone airline and invest in infrastructure to deliver more packages, at least to start in health care with drones >> which is huge and we were discussing this briefly, morgan, before the news broke, you broke the news. stocks still trading down. one would think this is a massive step forward for them and for the industry, potentially, but particularly them i mean, transports all hit broadly, clearly macro sell-off. >> this is the manufacturing number again >> but no pop from -- >> but it's up on the year it's almost matched the market performance on the macro but did i hear -- it was a great interview, by the way. >> thanks. >> did i hear something about the weight of these packages >> weight is increasing, too going up to 55 pounds, including the drone and the package. so there's going to be a lot more leeway in terms of what they can deliver -- oh, my goodness, 26, 27, i don't know anyway, it's -- they've beat out amazon, they've beat out uber,

beat out alphabet and some of the other companies out there in terms of getting this certification. and i think on any day other than today, you wouldn't be necessarily seeing the stock down 3%. but there it is. the manufacturing number hitting the broader market, including transports >> morgan, great stuff up next, we've got your last-chance trade. >> and later, we'll get earnings results from retailer stitchfix. we'll tell you the key things to watch, that's coming up. ♪ limu emu & doug and now for their service to the community, we present limu emu & doug with this key to the city. [ applause ] it's an honor to tell you that liberty mutual customizes your car insurance so you only pay for what you need. and now we need to get back to work.

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we've got 19 minutes left to go here and the dow is inching closer to its lows of the day. it's down 321 points right now the low was 347. and that's, of course, after we started the trading session in the green. okay well, as we finish up this day here, steve, what's your last-chance trade? >> i've owned this stock for what seems like forever. it's apple and when you look at apple, it was sold off a lot with the tariff situation and with china

trade headwinds. and now you have a rebirth of apple. while you see a lot of the other large cap tech stocks being sold off, it seems like this one has a second, third, or fourth life. it's increased -- basically, it's leveraged to hardware and it's looking at a services company. but as jpmorgan said yesterday, if iphone sales surprise to the upside and there's more of a demand, now you get services along with hardware working at the same time. >> but the jpm upgrade put the price target at 252. that's for next september, as opposed to this december and the iphone surprise it put in was because they also think a new model will come out in the fourth quart first quarter or the second quarter next year. it's not as pure as this latest -- >> it's not as pure as the latest one that you're going to get in demathat demand for. but everyone was worried about it being the proxy for china trade issues and that is gone that's yesterday's story and people are thinking about this saying, wow, we thought it was just a services bouncing above $40 billion, as far as

their contribution to revenues being the catalyst for the bullish story. and maybe, now, it's still hardware so if that's the case -- but i will say there's one caveat. you have to wait until the stock trades above the 233 mark. that is long-term resistance wait until it trades above that. >> steven, thanks for that thank you for joining us apple higher today despite a broad market sell-off. this is the last commercial we'll take before the close, so we'll bring you uninterrupted coverage of the last few minutes of the trading day and bring you up to speed on everything an investor needs to know we'll take you inside the market newh "osg llzo, enclinbe" returns. - at southern new hampshire university, we believe in education built for all people. - [woman] snhu was the best experience of my life.

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we've got 30 minutes left in the trading day. we're now in the "closing bell" market zone. commercial-free coverage of all the action going into the close. we'll tell you everything an investor needs to know in these final minutes and break down the market action after the closing bell rings >> you'll see some of the big movers in the dow, the s&p 500, and the nasdaq constantly changing and updating on the right side of your screen. and cnbc senior markets commentator mike santoli will join us every day to break down these crucial moments of the trading day. today, we're also joined by john patrides >> new data this morning showed a larger than expected slowdown for u.s. manufacturing the ism manufacturing index coming in at 47.8 for september, the lowest reading since june 2009 this marks the second month in a row of contraction for the index. mike, a much bigger contraction than expected.

the question is, is recession around the corner? and that's kind of spooking investors. >> no surprise, it was actually not a secret that manufacturing was the weakest part of the economy. i think the decline was steeper than expected, and also broader than probably was expected, as well in other words, the number of sectors reporting a decline in activity that's what has the market spooked. although, i think over the course of the day, the reaction in stocks and bonds was moderated slightly from the worst levels >> john, your thoughts >> i think we're probably already in or entering an industrial recession as long as the consumer holds serve, which is 70% of our economy, hopefully that keeps u.s. out of recession. but the global economy is clearly slowing. >> let's dive into some individual sectors industrials the worst-performers today. let's get over to seema mody >> it was that weak manufacturing and construction data, followed by a report by ubs industrial analyst steven fisher that came out this afternoon. he's forecasting weak demand for big machinery goods. in his report, fishers says

farmers are not optimistic regarding the timing of a resolution with china. how much the government steps into help in 2020 remains an open question, which could push farmers to delay the purchase of large machinery goods. that's why a number of these names like caterpillar and deere, which have that exposure to the agricultural sector are trading lower. separately, a tough day for rail operators, after canadian national railway was downgraded. you can see names like kansas citi southern and union pacific down about 3 pocket on the day >> and of course, they would be exposed to stronger dollar, any kind of weakness in manufacturing. seema, thank you john, i mean, it's so broad-based, the selling in industrials right now. you've even got defense names that are not necessarily exposed to the global economic story right now that are getting hit >> yeah, i mean, listen, the last two weeks, we've been thrown with so much information. the market finished up positive for the month of september

i was surprised that this volatility hasn't happened already. and we got this one data point to really push stocks lower. >> mike, just quickly, i guess a sign when you see these stocks sell off, that even if we expect more easing from the fed, it's not directly helping the cause of the weak manufacturing data >> right especially because industrials had lifted off their lows. so you had a little bit of a hope trade in there. and this idea that we were perhaps going to be getting a fed rate cut this quarter, at some point, without having to go through the tough period of a downturn in economic activity. so anything that happens right now, that detracts from that view is probably going to hit the stocks >> online brokers plunging today after charles schwab said it's ending commissions on stock trading. and dom chu has more on that story for us >> morgan, you would be hard-pressed to find a part of the market that's deeper in the red than those online brokers. yes, industrials are bad, but check out charles schwab, off 10% today. td ameritrade, off 25% etrade, off 16%, and interactive

brokers off 10%. these brokers now responding to the fact that charles schwab has now pushed commissions to zero will they have to follow suit? this is a stock that peaked a wile back and it's been rolling over since charles schwab right now, zero commissions. robin hood has had zero commissions for years. interactive brokers does have zero commissions for some of their products, but fidelity still at 495, td ameritrade at 695. the question is, will all of these folks have to go to zero dollar commissions at some point. you know they're all talking about it right now wiff wilfred, morgan, brokers very much in the heat today >> john, what's your take on some really big moves in the stocks >> i think areacheded the zero on commissions has been the trajectory for quite some time i think the market has been thrown off by how quickly it happened it was only a couple of years ago that we went to 495. investors were expecting maybe a

trip to $$1.99. the speed with which we've got to zero is what's surprising investors. >> and it's revenue that's being surrendered. >> is that why td ameritrade is down >> yes because schwab went to zero on options trade, as well that's a real profit center. historically you say, fine, kind of market orders for stocks or etfs you're able to discount on that, hoping that the more active traders will be paying you to trade options. >> we should mention, the broader market is slipping down 316 points on the dow, 1.2% in percentage terms all of the major indices down more than 1% we have 7 1/2 minutes of trade mcdonald's is under pressure after a note from jpmorgan >> that's right. jpmorgan out with a note today, reiterating an overweight rating on mcdonald's with a $230 price target, but also a warning all-important same-store sales could come in softer than expected for q3.

jpmorgan lowering projections from 5% to 6%. the note cites less value attention around the company's current offerings as well as a missing presence in the chicken sandwich wars and a bigger push into plant-based meats but on the upside, jpmorgan projecting that the investments that mcdonald's has made around technology could help to boost spending in the future back over to you >> it's pretty amazing mcdonald's has made at least three acquisitions in recent months that are focused on technology so how does that change the game in this company? >> that's right. so mcdonald's has been making a series of either strategic investments or straight-up acquisitions in the past six months all centered around enhancing and bettering the customer experience some voice recognition software technology so they're hoping that will be in play in the quarter to come that dynamic drive-through technology is in about 800 stores now and should be fully across the united states by the end of the year. that could push more traffic to mcdonald's in the future, guys >> kate, thanks so much for

that six and a half minutes left until the close. down 320 points on the dow all of the major indices down around 1%. if you're just joining us, you might notice your screen looks a little different we've launched the market zone uninterrupted commercial coverage into and after the closing bell we'll cycle through the biggest winners and losers of the day. and at the bottom of your screen, you can see a preview of the next few stories we're covering to guide you through the close. >> meantime, take a look at shares of general electric those are down about 4% today. today marks the one-year anniversary since outsider ceo larry culp took the helm in a company newsletter, culp once again calling 2019 a reset year, but also adding later in the letter that, quote, we expect significantly better results in 2020 and beyond, and that as operational improvements take hold, the industrial segments should, quote, yield cash on sales more than double last year's levels

culp has cut to a penny. the current selldown is raising $38 billion to put toward paying down industrial debt nonetheless, shares are lower in this broader sell-off and shares of ge over the past 12 months are down about 26%, although i will note, they are up something like 18% year-to-date, they have seen them come off the lows of the past year. >> i guess investorshope this is the final reset year. >> exactly when he got the job and took the job, he said, it's not going to be a quick fix and it's obviously proven that to be the case you're seeing the decline today, probably an exaggerated move it's become a bit of a trading stock. and that's why i feel like you can't lean back on current earnings to justify where it trades >> 4 1/2 minutes left to trade after the bell, we'll get earnings from stitchfix and courtney reagan has a preview. >> so ahead of results, stitch

fix shares are up in a down market, but investors will need to see some solid revenue growth to add to those gains. estimates for revenue growth to grow nearly 36%. research growth can come in the form of new consumers or current shoppers spending more investors largely want new customers. though stitch fix has previously louted increases in average user purchases going higher stitch fix launched in the uk in may. and last earnings call, ceo katrina lake said it seemed like there was a lot of excitement there, but did that excitement translate into new subscribers that's a big question. morgan >> that is the big question. we know you'll bring us those numbers when we get them, court. thank you! mike has one more market breadth chart today. >> as you would expect, you've had some pretty determined selling right there. if you look at the up and down volume, you obviously see right there, it's -- that's pretty much an 80% or more down volume move and that's usually what you -- what you see at a time when, you know, things are pretty dicey in

the market i also like to take a look at the equal-weighted s&p and the rsp has been underperforming. so the average stock suffering a bit more than the s&p. >> mike, all sectors lower, quite noticeably also, we're getting close to testing the lows on the dow, which we discussed with art cashin the low is 347 important to kind of hold above the low of the day >> i mean, you would prefer it, i think. obviously, if you're looking for this to be a one-day shake out but you did have a market on close, lopsided to the sell side so i think that's what you're seeing the effect of right now and if i look at 2940 on the s&p 500, that's a level a lot of folks have been looking at >> john, at these levels, both the dow and the s&p with today's losses are wiping out the entire gains we saw for q3. does that bother you here? >> not overly surprising i would expect more volatility as we get into earnings someone we need to see the rubber hit the road into how companies are operating in this environment.

>> let's get into the closing countdown. we've got just two minutes left of the trading session rick santelli is having a look at bonds for us. rick, a huge impact on equity market sentiment today >> absolutely! and i think it's more because of the policy implications. look at a 20-year chart of ten-year japanese government bonds. wow! we're just hovering in negative territory below zero for quite a while, while there was an announcement maybe the bank of japan is calling it off on qe and the markets reacted. then everything changed, of course, at 10:00 eastern look at intradays of twos. they're on their low yields right now, down eight basis points where the long end was unchanged a minute ago in 30s, it's now down 1.5. the curve has steepened. bertha, everything was painted red after that 10:00 number. >> we did see that sharp fall. and we really are seeing the biggest impact on the mid-cap and small-cap names. they're down more so than large caps and in health care, that's where

we're seeing an awful lot of pain that's where we're seeing most of the new lows today. gossam gossamer's bioscience was hitting a new all-time low, along with livongo health, one of the more recent health care ipos meanwhile, apple extending its gains. take a look at apple on october 3rd, it hit that all-time high it's still down from there we'll see if it can catch up and continue those gains through week finally today, alulta is seeinga bit of buying on the inside with a major director buying nearly -- more than 240 shares tesla today doing pretty well, despite reports that its new smart summon, not quite so smart. a few fender benders, bob, in parking lots as people try to use it back to you. >> the ism moved the s&p 50 points, bertha, today. that is an extraordinary move. it doesn't happen very often that's a big outside move for that and you can see the move into the close here you want to watch here the jobs report on friday, b

consumer names have had big run-ups. watch ross stores, home depot, nike, and starbucks. there's the closing bell the dow jones industrial average closing essentially at the lows of the day s&p 500, down 35 points. >> if you're just joining us, welcome to the "closing bell." i'm wilfred frost. >> and i'm morgan brennan in for sara eisen, along with mike santoli, cnbc senior markets commentator. we are in "the market zone." you can see the day's action on the right side of your screen, with the stories still coming up on the tabs on the bottom of your screen. >> let's take a look at how we finished the trading day as bob just said, the dow very close to the lows of the session. it was 347 at low at about 2:00 p.m. for the final two hours of trade, we attempted to come off of those lows, but did close 333 points lower

as you can see, 1.3% s&p, 1.2%. the russell down close to 2% all of the sectors lower industrials, materials, energy, and financials down more than 2% i picked out a chart of uber, as well, not really related, of course, to the weak manufacturing data, but some of those ipos really suffering of late, down a massive 4.3%. market cap below $50 billion compared to the $80 billion plus it listed it at back in may. >> transports are down more than 2% as well today and with the losses today, we have erased all of the gains for q3 for the dow and the s&p one name that has bucked the trend was u.s. steel that finished the day up 3%. that's after that company said it's requiring a stake in big river steel, basically forging a partnership with a lower cost rival that had threatened its core business, putting u.s. steel in more direct competition with newcorp, as well, which finished the day lower joining us to talk about the market today, john petrites is still with us here at the desk, along with jason trennert,

chairman at strategas research partners but first, mike santoli, the fact that we did close near session lows, what does that tell you >> it fell below the range the market has held in in the s&p 500 all of september the lift off of those august lows was premised on the idea that the recession fears had gotten overblown, bond yields had gotten too low, and you were able to have this nice sort of relief trade out of that i think the ism number, it didn't really, you know, render a verdict about whether a recession is on the way, but it did kind of disturb this idea that yields were going to be on the march higher to more normal levels and stocks could go along with them. and that we could get a fed rate cut, potentially, without having to suffer through the near-miss of a recession in terms of manufacturing. so i think that's what got disturbed today. it didn't really change the overall trend, but it did show you, there was a limit to how resilient the market could be. >> are you fearful the fed has not got the tools to fix the problems that exist in the economy?

>> it's a great question if my opinion, another rate cut is necessary, but i also feel quite strongly that another rate cut would not really solve all the problems that we have. the problems that we have are that we have a trade war with china that's still going on, that's slowing global growth i think the other problem is that the rest of the world is very focused on monetary easing, when it should be focus on fiscal and regulatory easing and so, in many ways, we're using the wrong tools, i think globally, certainly, some agreement with china would help out, quite a bit but i think when it comes to europe and japan, the amount of negative yielding debt is telling you that you've exhausted the use of monetary policy as an effective stimulative tool >> with that weaker manufacturing data, let's remind ourselves of what james bullard told us here on the "closing bell" last week, wanting, of course, further rate cuts. >> i go another 25 before the end of the year, but i would like to reserve judgment i don't like to pre-judge meetings

we'll see how the data come in, if you guys are right and i should be more optimistic, i'll certainly take that onboard. >> john, does another rate cut offset the negative sentiment we've had today? >> i think definitely another rate cut does happen, at least one more the market was baking in an october cut, but i think it happens in december. >> why >> i think you are seeing some -- >> i think the underlying economic data is slowing and the fed's idea is to cut off inflation by having higher levels of interest rates, but there is no inflation. so what are you cutting off? so why not loosen the screws to unleash some growth in the economy? and you're seeing it, look at the bond market. the companies are taking advantage of lower corporate -- lower interest rates you had one of the largest issuances of bonds in the month of september in quite some time. you will see some effect of lower interest rates >> mike, has the antejust been upped for this jobs report on friday >> it seems like it. you don't want to see a trend of worsening numbers, so the market is a little bit edgy about the idea that we are going to kind

of see more leading indicators of recession i don't think it has to be a blowout number, but you don't want to necessarily see it kind of spiral lower from here. >> jason, in terms of how you position expecting a further rate cut, but perhaps questionable manufacturing data, which sectors do you want to be buying right now >> wilf, it's very tough, because to be quite honest, i want to be overweight value and cyclicals, but i think that's not going to work. i think we're in a tina market until again you have something that's positive as far as economic growth, global economic growth is concerned. so we're kind of -- we're barbelled, if you will we're overweight consumer staples, on the one hand, and we're overweight industrials and technology on the other. and so we're kind of punting the consumer staples are awfully expensive. utilities are awfully expensive. buff again, i keep going back to the fact that you have $15 trillion in negative-yielding debt you know, those sectors don't look that expensive when you're comparing it to what the other

alternatives might be. >> jason, i realize we just had two straight months now of contraction in the ism manufacturing number and certainly, this reading we got today is the worst we've seen in ten years. but the recession talk, how worried are you about the fact that we could see the manufacturing, the industrial part of our economy, actually, the weakness there actually bleed out into the consumer part >> it's tough, just given the nature of our gdp equation, it's very tough to get a recession out of weakness in manufacturing. 85% of our economy is services, 15% is manufacturing we also run a trade deficit, not a trade surplus. so we're somewhat more insulated from weakness around the world by the same token, there's no question that global weakness is having an impact on business confidence and on capital spending so unfortunately, i think until the trade situation gets resolved, you're probably stuck at best about a 2% real gdp economy. and that makes profit growth

difficult, not impossible, but it makes it more difficult >> the dow finishing the day down 343 points. let's get over to bob pisani now for a look at today's biggest laggards bob? >> 50-point move in the s&p on that revised ism and that revived concerns about consumer growth, potential recession concerns so you saw deep cyclicals in the dow, your 3ms, your boeings, caterpillar, for example, all weaker goldman was down as the yields moved down mcdonald's, big consumer names that did well this year. mcdonald's, ross store, nike, home depot, starbucks, also all weaker elsewhere, online broker charles schwab kind of surprised a lot of people, announcing zero percent commissions on equities and etfs big move there but look at td ameritrade and etrade down really big there the difference here and there, trading, the reliance on trading revenues differs charles schwab is only 8% of its revenues from trading. whereas e*trade and td

ameritrade, they get 25% of their revenues from trading. charles schwab's got a big bank and a nice asset management company. we've got them, maybe don't have as much impact when you reduce your revenue from trading. guys, back to you. >> bob, thank. mike, i realize there are some very specific market-moving stories, including with the brokers that are out there today. but in general, when you see every one of the s&p sectors in the red today, selling was very broad based. is there reason to think it was maybe a little overdone or more technical than anything? >> i don't think it was overdone in magnitude, necessarily. i do think it was -- it was essentially representative of people reducing exposure across the board. it wasn't necessarily, i don't think, people pounding certain areas. what is interesting is, what qualifies these days as a flight to quality trade or a fear trade is, visa was up. apple was up a lot of these very familiar, reliable growth stocks some of them with very high valuations, seem like they're insulated from whatever it was that was bothering the ism

survey recipient >> let's get stitch fix earnings, which are just out courtney reagan's got them for us hi, court. >> reporter: so for stitch fix's fourth quarter, the company reporting 7 cents a share. that's better than what analysts were expecting at 4 cents per share. revenue essentially in line, $432 million active clients, 3.2 million, also essentially in line that's up 18% year over year the average revenue per active client was up each of last fourth quarters. this was the company's fourth fiscal quarter and that revenue per active client was up 9% in this quarter. shares, though, you can see here, are down about 6%. it's important to note, however, for the week, they're only down slightly, if that much, because they had gained 5% yesterday and 4% in today's session. back over to you >> court, thanks so much for that john, do you have a take on stitch fix >> so, i'm surprised that they beat on earnings and the stock is down 7 or 8%, still

this is, in my opinion, an unproven business model still. not surprising the stock has gotten destroyed this year so you're seeing a rally and the stock has come back here a bit, but, you know, i think this business model is still wait to be seen. >> and that certainly seems to be some of the sentiment out there on wall street, that in some ways, it's an untested business model that being said, mike, back to your point before, it has also been a growth story so far >> it has been a growth story in terms of being able, still, to expand users and all the rest of it but i think it's the kind of stock, when the market gets rocky, it doesn't necessarily have great sponsors. >> jason, want to have a quick final broad market comment from you. these kind of problems that we've seen today of weak manufacturing and the question mark of whether monetary policy can fix can issues, i guess that's an even bigger problem when you look around europe and japan. can that drag the u.s. further lower in terms of sentiment? >> it certainly could drive our markets lower in terms of sentiment. it would be difficult to drive

u.s. economy into recession, but clearly i think global growth has to pick up for the broader part of our market to do better. i think right now, what you're seeing is that companies with very high yields like staples and utilities are doing very well and things that promise you very high growth are doing very well. everything else in the middle is not working. and i think that's -- it's difficult to get a sustainable rally from here based on that. >> all right, gentlemen. thanks for joining us today. john petrides and jason trennert after the breaker, venture capitalists sending a warning about the downside of going public the alternative routes they are pushing peopleo ta tke "closing bell" is back in 90 seconds. ♪♪ ♪♪

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finishing this first day of october in the red with the dow down 343 points, near the lows of the session, 1.3% loss there. similar story for the s&p and the nasdaq with the russell 2,000, the biggest laggard of the day. meantime, recent ipo stocks are getting crushed, as well this as venture capitalists are holding a meeting to warn start-ups of the downside of ipos, favoring direct listings deirdre bosa is here with that story. >> hey, morgan that meeting getting underway just a few blocks from here at the palace hotel the agenda is titled direct listings, a simpler and superior alternative to the ipo well-known vcs like benchmark's

bill gurley are starting to start-ups about the benefits of that route and the drawbacks of underpriced ipos, which provide less capital for those companies. now, they're holding this meeting on a day that recent ipo names are getting crushed. you named a few of them. lyft, uber, smiledirectclub, peloton, all trading well below their debuts slack, though, we should note, one of two direct listings ever not immune to that sell-off. guys, back to you. >> d., thanks so much for that for more, let's bring in mercy victoria grace, partner at light speed venture partners what is your take as to where we stand in the broad ipo market and whether direct listings are a way out for some of the companies planning to list given the negative headlines of some recent ipos. >> yeah, you know, direct listings are something that work for companies that have a strong consumer brand and critically don't need to raise money from the public markets and they can be good options for companies that fit both of those things and they can also be good for

investors, as bill gurley has said, quite famously now, who feel like they're leaving money on the table >> so, in light of that, mercy, i mean, if there are companies that would not necessarily be candidates for direct listings, what then? because it certainly seems like in general, the cv community and the private markets would like to see some changes made >> i'm not sure what to tell you about those companies. >> okay. >> what's your take on whether this could have helped a wework, though clearly, wework faced problems due to the scrutiny that the traditional listing process offered, but it also desperately needed to raise capital. so it's kind of an odd dichotomy as to whether direct listings actually offer the right sort of alternative for companies that need a traditional ipo process >> given wework's cash position, they were not going to be a good candidate for a direct listing, and i don't know that we can draw a lot of broad conclusions from wework, which is a very

specific example >> do you think more broadly the sort of party's over as it were for tech-related ipos. has there been just one too many high-profile, either pulling the ipo or listing and seeing the stock price decline, like we were talking about with uber, down 40% since may >> no, i think the ipo market is definitely still open for companies that have an efficient business model and are attacking a really large market. the companies that we see having trouble are consumer brands that don't have a totally differentiated offering for the public and that can be easily subed in for something else so this is where you see lyft and uber, where taking a ride from one place to another is effectively the same and it's pretty different for companies that have very differentiated marketings and revenue recognition that's high and better business models >> we were having a conversation on "squawk alley," another cnbc show earlier today, about the

ipo pipeline with the ceo of a right now private company and one of the things he listed as a potential uncertainty when a company is looking to go public right now is the 2020 election do you see it the same way >> no, i don't see it the same way. >> okay. well, let's -- we want to get your thoughts on some other news of the day, as well, while we have you here. your take on facebook. the verge released some leaked audio of a recent q&a session with ceo mark zuckerberg here's what he had to say when asked about politicians and their recent push to break up facebook >> like elizabeth warren, who thinks that the right answer to break up the company, you know, if she was elected president, i would bet that we would have a legal challenge and i would bet that we would win the legal challenge. so it's -- so basically, it's, um -- and, uh -- so, does that still suck for us? yeah i mean, i don't want to have to

have a major lawsuit against our own government i mean, that's not like the position that you want to be in when you're,, you know -- it's like, like we care about our country and want to work with our government to do good things but, look, at the end of the day, if someone's going to try to threaten something so existential, you go to the mat and you fight. >> senator warren responding to this story on twitter in more details just a few minutes ago in one tweet writing, quote, zuckerberg himself saying that facebook is more like a government than a traditional company. they bill dozed competition, used our private information for profit, undermined our democracy and tilted the playing field for everyone she continues, my plan to hashtag break up big tech would undo their competitive mergers you'll still be able to use it to share photos of your dog, but they'll twa have to compete wit each other to make a before the product for you. >> how likely do you think it is

that we'll actually see breakups >> i don't know how likely that is obviously, it depends hugely on who's actually elected president in the next election, but what i do think is troubling is that we do have a democratic election coming up and facebook is a platform that has really an outsized voice and whose voice gets heard and they're inviting scrutiny because of that. >> mike, clearly he makes the comment, mr. zuckerberg, that if there is a current case against them, they can fight it and they might win under the certain terms but that doesn't acknowledge the possibility och new laws being passed to change the current set-up >> that is true. if there were a new law, somehow, you essentially made them, you know, a publisher, for example, which they've tried to avoid. basically, enforced some kind of other behavioral standards on facebook's business, that would really constrict it. no, that's exactly right to be honest, i thought the comments he said about, look, if they try to breaks up, we'll have to go to court and try to protect the corporate structure,

is what any ceo would say. literally, it's exactly what you would be required to do under fiduciary duties so it's not that outlandish. >> do you think it was foolish for zuckerberg to be saying this openly on a call, albeit on an internal call. and it doesn't suggest great loyalty that someone has leaked this >> facebook is certainly not a monolith everyone who works there doesn't agree with the political climate. but i mean, he is a ceo who is doing his job and as you said, taking steps to defend the financial health of his company. >> mercy, thanks so much for joining us facebook closed the day down 1.3% up next, major manufacturing weakness, weak ism data weighing on the dow in a big way. mike santoli will head to the tell traitor wiadministrato tele break. and big volatility after

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manufacturing is strong as a rock and you know, i've been to wisconsin and i've seen firsthand the fruits of president trump's labor on the manufacturing front. >> i've actually been to that wisconsin factory myself that was white house economic adviser peter navarro responding to a question from kayla tausche yesterday, pressing him on possible weakness in the manufacturing economy. the weak factory data this morning is the subject of mike's third dashboard of the day >> talking about playing in shadows. some lengthening shadows over the manufacturing economy. they want to make a long-term view of the ism manufacturing index relative to previous recessions in the lead up to those recessions the green line is the level reported today, 47.8 obviously, 50 is the demarcation line between expansion and contraction. and the shaded areas are recessions, right? there's a recession, there's a recession. so what i find interesting is the times we've plunged in these areas, but not had a recession come so again, we keep pointing to

these same dates mid-90s is one of them and back a few years ago, 2011 and also 2016. so you can kind of get below 50, the manufacturing economy says it's in contraction. and it's not necessarily something that extends lower obviously, something like that is the financial crisis, that's kind of an unhinged. the other thing to remind people is, this is a survey, and it's a diffusion index, which means, how many people say things are getting better this month, how many say things are getting worse? 37.8 from a strong level is not as many as 37.8 from an already weak level i want to put that in perspective. not to really discount the message of the numbers, but this is showing you that it's getting touch and go in terms of recession indicators, but we're certainly not there. >> i do wonder, mike, along that chart, how often when you've seen the u.s. dip below 50, you also have china five months in a row ble 50 germany at 32.3. >> you certainly had it in 2011

and 2012 >> and it didn't lead to a recession. >> it didn't in the u.s. lead to a recession, yes >> mike, thank you still to come, we're looking ahead to tomorrow. bed bath and beyond set to report results what to watch, when we return. - did you know that americans that bought gold in 2005 quadrupled their money by 2012? and even now many experts predict the next gold rush is just beginning. so don't wait another day. physical coins are easy to buy and sell and one of the best ways to protect your life savings from the next financial meltdown.

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closed down a little over 1% today. time for a cnbc news update. sue herrera has got it for us. hi, sue. >> hello, wilf here's what's happening at this hour, everyone at a press conference in kiev, ukrainian president volodymyr zelensky says he has never spoke or met to rudy giuliani. former new york congressman chris collins leaving a new york city courthouse after pleading guilty to conspiracy and making false statements in an insider trading case he faces up to ten years in prison and up to $500,000 in fines. sentencing is set for january 17th virginia and new jersey reporting their first deaths by vaping, bringing the death toll to 16 in 13 states overall, the cdc reporting 805 vaping cases and illnesses in 46 states

and a federal judge ruling that harvard's undergraduate admissions program is constitutional he rejected a challenge accusing the school of discrimination against asian american applicants they claimed they were being held to a higher standard than students of other races. >> you are up to date. that's the news update this hour guys, i'll send it back downtown to you, morgan >> sue herrera, thank you. ism data coming in at its worst read since june 2009 this morning, sending markets tumbling on renewed recession fears. here to discuss is jim paulison, and lakshmanan that is number certainly seemed to drive the action today. the sell-off we saw, warranted >> i think it's a bit of an overreaction, morgan it was a weak number, there's no doubt about that and even the internals were fairly weak, as well

but i just think if you put this in perspective, you know, the economic surprise index has been soaring here in the united states, back from negative territory up to very strong positive levels, showing that most economic reports, a broad array across manufacturing and other areas are doing pretty well best they've done in a long time if you look at that, we had a good report on manufacturing day two. the ism market number went up from the low 50s to the low 51 area actually, the first turn upward in that index, which is a good sign industrial production, manufacturing index in the united states has had a healthy increase last month and has bottomed in april this year. manufacturing employment peaked out and came down has been rising of late china's ism is still negative, but has been rising since april. so i think capacity utilization rate had a healthy gain this

last month even data around manufacturing is looking a little better for me unless we get a little better job number on friday, that the market is going to come back from this bad number today >> lakshmanan, i presume you have a slightly more bearish take on the data >> yeah, but i'll pick up on what jim ended with, jobs. i was on with mike a month ago, talking about our leading employment index hitting a ten-year low in the growth rate. and i think when you look at the survey data, the ism, the market, the trends are to the down side. and in particular, when you get into the internals, some of that employment stuff is particularly troubling. and i like the lead-in that mike was doing with the charts, because it had the shaded areas in it for recessions and cycles. and when you see those moments where ism dips down and there's no recession, really, what's going on there is there's no manufacturing recession. you're not getting manufacturing job losses

and i think that is a risk here. we have to watch that. i think the market is beginning to wonder about that, as well. and even though the story goes that, well, okay, manufacturing is cycling down, but the rest of the economy, the consumer, is kind of offsetting that, all of that comes into risk with jobs growth really slowing. it's been a pretty sharp slowdown this year we're at an eight-year low in nonfarms year over year payroll growth and that's going to continue, looking at the leading indicators of employment so that could kind of undercut the consumer spending growth, which itself is over a two-year low in the growth rate, with the one exception of that december spike down that we had so, i'm not so sure it's all that we've turned the corner and we're off to the races and i think the market is wary of

that >> so, jim, if you feel like this is a bit overdone, we had every sector in the s&p finish the day lower, do you see buying opportunities here and if so, where >> i do, morgan. i would be -- i would be looking to, you know, move a little bit in the direction of cyclicality here, take advantage of what really got pounded today was most of the cyclical sectors, industrials, basic materials, financials, and lightening up a little bit on the defensive stocks that everyone's buying to help them sleep well at night. i think that we've got full policy support from just a dramatic reduction in the long-term cost of capital across the globe, interest rates have just plummeted in the last year. money supplies are up around the globe. fiscal stimulus has been in play in many places and we're now reaching about the one-year lag where that stuff starts to really starts to kick in and we're seeing that with economic surprise indexes turning up around the globe. and i think it's going to work it's not surprising to me that

manufacturing is still weak. that's an old story. we've known all year the other thing about it i would point out is, remember, that manufacturing is really a small piece here a lot of these indicators that were gold back in the '60s and '70s and '80s, just aren't that way anymore, because the new era economy, at least in business investment now, when we started this economy, new era accounted for 38% of the total investment. it now accounts for 54%. this is the first recovery where new era spending in business spending is the biggest part of the dock and it might not be that we could have a manufacturing recession that just won't kill the economy. it happened in 2016 already. it could be happening again this time so i would take advantage and be net/net turning a little more bullishy or risk-on. >> lakshmanan, very quickly, if we get more rate cuts, does that turn the economy around? >> yeah, eventually.

look, cycles always turn but those long and variable lags, don't forget about them. the markets can react very quickly to them, the economy, not so much. and we think it was a mistake, we were screaming it from the rooftops are since last fall, but they hiked in september and hiked in december, and only then pivoted. and we have to deal with those earlier tightening situations. and, you know, if you can look for places where they didn't do that, right? if you look over at europe, people are scared over there, but it's a little bit more constructive, because they didn't tap on the brakes so much there. >> not sure it's more constructive in europe, but -- >> well, yeah, look for the surprises. >> we're out of time, gents. thank you so much, as always, great to see you both. jim and lakshmanan still ahead, wework's real estate risk. we'll scs e padiusthimct of wework's woes on the broader commercial real estate market. ♪

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once thought to belost forever. the most personal technology is technology with the power to change your life. wework's struggles to go public, dominating headlines of late, but what could that mean for the broader commercial real estate market? robert frank is here with more on the story hi, robert >> reporter: hey, wilf

wework leases 7 million square feet of office space here in manhattan, by far the largest anywhere in the world. and this building behind me near union square highlights the risk to the broader market. now, it is partly owned by adam neumann, wework's founder, wework holds the lease, but this building is now for sale for $110 million, which will be a stretch given and neumann and his partners bought the building for $70 million. in addition to that, they have a $78 million loan on the building and this comes at a time with growing amounts of office space coming on the market here in manhattan, where until now wework was the renter at the highest prices and we've got a growing number of developers who now say that will no longer lease their buildings to wework, and those who have high exposure to wework have pulled their buildings from the market in this building, wework has the lease until 2031, so the big question is, will a buyer take that much risk for a lease that goes until 2031 and at what

price? guys, back to you? >> it's a key story, robert. thank you for bringing that to us these ripple effects on real estate for more on this and on wework, let's bring in greg diedelsweg i realize your company has never actually leased to wework, right? >> right >> but how closely are you watching this and the impact it could have on commercial office space? >> wework does have about 7 million square feet. and wework has really been sort of a leader in the co-working environment. so it's not just wework, it's all the co-working tenants that we're watching carefully >> to what extent has the big breaking news of the last three or four months for the stock market, ie, wework's ipo not coming good, already been priced into the real estate market that the smart money across your industry kind of already knew that wework wasn't, perhaps, hitting the ball out of the ground, as people were expecting

it to, with its ipo? >> you know, i was thinking of peggy noonan's article, her op-ed in the wall street journalist, where it was entitled, everybody knows. and she was talking about politics, but i think the same could be say about wework. and everybody knows that wework is not truly a technology company. everybody knows that there's a disconnect, really, between the long-term leases that they sign and the short-term leases that they license out to their licensees. >> because we'd seen their debt prices already rise, quite significantly before this ipo was pulled so is that already priced into your market? or do you think there is a big shock to come from wework's travails >> i don't think there's a big shock at all in terms of new york, you know, new york, it seems, has never been more vibrant in terms of the types of tenants that are coming to new york so we're seeing a lot of technology tenants, financial tenants has always been the case, creative tenants so wework is just a small portion of this space. >> but you sound like you are skeptical of some of the other

flex office space operators, and names like convene, no convene, industrious. >> they all suffer from the same issue. the durational inconsistency between the long-term leases and the short-term licenses. so that's really everywhere that we're seeing that. and then, you know, also, in terms of the spaces themselves, as a landlord, we really like to control who's in our tenants and the short-term nature of these sublicenses means that you can't really control who's in your space that's really a concern. >> i can see why as an owner, you would be hesitant to participate in this market but has that type of activity caused mis-pricings out there? what actually affects other landlord who not participating in that space that would really matter for the longer term >> well, we are seeing cap rate differentials between those buildings that have a big exposure to wework and those that don't so, that's already been in the market so there's nothing really new there. i mean, wework is just very much

in the news. you know, so that's just part of it but the real story has been the story all along. >> quickly, is there too much office space online here in new york city right now? >> no. in our buildings, we're finding that we've never been as busy as we are now however, the smart landlords are really learning from wework and creating communities in their buildings, and that's really attracting a lot of tenants. >> thanks so much for joining us here today, craig. >> thank you up next, violent clashes breaking out in hong kong. the big global impact, that's straight ahead

welcome back to the "closing bell." let's send it over to mike santoli for his final dashboard of the day mike >> morgan, a high-leveraged situation, it's kind of a nerdy baseball term on this the first day of the baseball post season. i didn't make it easy for you today. >> now i understand the theme here >> october baseball was the thread running through this -- >> i thought it was batman subtitles, playing in the shadows. >> could be! >> it's a rorschach test, you know that's the good part about it. but take a look, this chart showing investment grade corporate bond issuance, it has been a bonanza companies taking advantage of very, very low rates, huge demand for corporate debt. this is a breakdown that the bank of america merrill lynch folks put together in blue, it is the volume of issuance, of investment-grade corporate debt that's been used to refinance existing debt in other words, lock in lower rates on new debt. and then down here, this is for

stock buybacks and m&a so those are somewhat more risky, if shareholder friendly-type activities what this suggests is that the corporate issuance boom is not companies trying to lever up and squeeze more returns out, it's essentially saying, we're just going to take advantage of what the market is trying to give us here in terms of low rates it creates a accusation for corporate cash flows on the whole going ahead, and probably means that we kind of refreshed balance sheets poet to strain them more. >> mike, thank you so much for that still ahead here on "closing bell," tensions rising in hong kong national day demonstrations turning violent earlier today. we'll bring you the latest when we return. make fitness routine with pure protein.

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♪ that could allow hackers devices into your home.ys and like all doors, they're safer when locked. that's why you need xfinity xfi. with the xfi gateway,

devices connected to your homes wifi are protected. which helps keep people outside from accessing your passwords, credit cards and cameras. and people inside from accidentally visiting sites that aren't secure. and if someone trys we'll let you know. xfi advanced security. if it's connected, it's protected. call, click, or visit a store today. welcome back violent clashes breaking out in hong kong on the 70th anniversary of the people's republic of china. for more developments let's bring in olivia emos thank you for joining us gauge for us exactly how much of the violence has picked up over the 70th anniversary celebrations relative to the peak over the summer months. >> well, last night marked the most violent evening of

protests we, of course, saw an 18-year-old student allegedly shot by a hong kong security force operations policeman and you know, this was the first shot that has taken place. this came in the midst of immense violence from both protesters as well as security forces where you saw protesters actually in some cases throwing pechlt tro bombs into the metro stations you saw a number of activities you would say are generally violent. and i think this is which many in the international community are calling for an independent investigation into the conduct of the hong kong security forces but also in general calling for peaceful protests. these protests have been by and large peaceful this marks an abrogation from the norm appear there is hopefully going to be a return to the more peace

of the beginnings which have traditionally marked the protests >> olivia, what's it going to take for the protests to come an end? what do protesters actually want now? and how will this play out >> so of course the protests originally started in response to an extradition bill which would have enabled any individual for any reason at beijing's request to be kprated to china that posed an existential threat to freedom in hong kong was a great reason for people to take to the streets but as protests continued really we saw demands pro liver eighting so there is been a call of course for carrie lam, the chief executive in hong kong to resign, also an independent investigation into into the police brulgtsty i think that these are the types of calls that are now, you know, central and a focus. but i think at the end of the day there is a real need for the protesters to go back to the

drawing board and to make smur they have legitimate reasons for taking to the streets. the central claim they want to defend freedom and liberty there needs to be the primary motivating factor. >> olivia, this is one we continue to watch close i. thank you for put going in context for us up next a few things every investor needs to tcwah heading into a new trading day when "closing bell" comes back. best.. to managing your fleet... to collaborating remotely with your teams. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence. whai tell clients, etfs can follow an index, but which ones target your goals? it's not about quantity. it's about quality.

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welcome back to check out shares of stitch fix, volatile after earnings this hour etf top estimates. revenues in klein. active clients come in at 3.2 million. the stock downhill are down double digits as you you can see now just 1.5%. and this friday on "mad money" cramer sits down with stitch fix ceo katrina lake >> it's one to watch for sure. looking ahead to tomorrow, though, bed bath and beyond set to report results. and courtney reagan has a preview what to expect. >> hi, morgan. investors are likely to look past earnings focusing on strategy updates we had bush things a new ceo will be named. after activist pressure betted bath and beyond changed the board ant ceo stepped down happening earlier this year.

since the retailer undergoing measure as cost conduction cutting bab inventory and core assets and more as it looks to regain lost market share while that's some quick fixes others taking a while to take hold the shorts have grown in the name to 52% from 47% of float last quarter back to you. thank you very much. leaves with us a couple minutes. mike to chat about the market day to day as we have skted all sector lower. selling over 1% for major indices. apple and netflix stood out higher. >> a bit of return toward the secular growth stocks that had come in a bit in august and september. obviously that's a little bit of a reflection rotation move because they're not affected by the downgrading of the expectation of manufacturing obviously a bit of a gut check for the s&p at this point. we did buckle below where the market had held in all of september. but that being said, it didn't

seem like it was a really run for the hills move bond yields even though down on the day and long-term end didn't go anywhere near the lows of august i think you have to consider it a one-day adjustment and see where it carries from here. >> biggest thing to to watch as the rest of the week unfolds >> obviously the jobs report friday you do not want a narrative developing that's spraus that says the economy has reached a point where it really is on a slide. down toward recession or something close to it. i still think you are give or take 2% economy. ed gdpwise in the third quarter by most estimates. so the market can live with that although if we get a fed rate cut in october or des it's going to be the hard way not easy way. meaning dealing with ugly numbers in terms of macrodata again. >> do we need sea rise. >> as -- the yields were rising for whatever reason and the stock market followed along

until the december a.m. report. >> big intraday swings opened hire on the dow. the low of the session around 2:00 p.m down 347 the final hour or two we tried to get higher but ended chose to the lows down 343 points out of time that does it for "closing bell." >> "fast money" begins right now. live from the nasdaq market site overlooking new york city's times square this is "fast money. i'm mels aye pleep pete narjen tim seymour. karen finerman and dan nathan. a brokerage babying down a as schwab ups the ante in the price wars who comes out on top to race to consent decree. we debate. watching stitch fix bound bouncing after reporting results. the conference call getting under way. we'll bring you highlights and later one top technician says in chart is looking so bad it's good. where he is finding big opportunity right now. but we begin with the manufacturing medo