also contributing to it. we did so much stimulus in the first half of this year that it boosted groeft, led to higher inflation, and now that spending is beginning to roll off, roll off in meaningful way, none of which that $3.5 trillion package will replace in the short run. that's another risk that's emanating here from washington as the fiscal aid begins to roll off. >> ends at 59 on the dot a. pro. that does it for us here on the exchange "power lunch" picks things up right now. >> kelly, thank you very much, and welcome, everybody, to "power lunch" on a very busy market day the selloff intensifying as you see right there. the dow now on pace for its worst day since about 11 months ago, october of 2020 now negative for the quarter the s&p near session lows. more than half of the index is at least now 10% below the 52-week highs set earlier.

and the nasdaq down more than 2.5% now down more than 5% from its record high. let's look at the ten-year the turn bond is right now you see it at 1.3% very little change today basically that graph overemphasizes the degree of change there is. let's dig a little deeper into what's driving the equities selloff. bob pisani tracking the action from the new york stock exchange bob? >> tyler, when you go for a year with no 5% correction, this is the kind of thing that happens here you get a sudden woosh, although it was from an unexpected source let's remind everybody about the market risk that exists. there is not one or two. there is several many times we talk about the seasonality, september and october being seasonal weak months we have got the debt ceiling drama, the delta variant wave, the fed speaking this week here's a little bit out of left field. we knew about ever grand, but we zb know about the systemic risk

or whether it was systemic now there is debate whether it is or is not that's a factor that didn't exist even a week ago that has come out of left field if you look at what's weak here today other man most of the market you see it is the global growth story, things like materials and energy the steel stocks, freeport mcmoran, mosaic. big global material companies. on top of that you see the big global oil companies and oil and exploration companies like apache and occidental, hess, and hall burton. all of them down 4 to 6% today then you look at consumer cyclicals in the united states on concerns that things might slow down a little bit ford and general motors. then retailers like tapestry and gap. what do they have in common other than the fact they are consumer cyclicals, they all topped out about may that was about the top of the global eopening story. we are actually, most of these stocks are significantly below the highs that they hit back in

may. same situation with industrials. caterpillar, all the big names there, united rentals. all of them topped out eshlier in the year on the global growth story. same situation, most down 4% or 5% the banks have been sideways many many months now as interest rates started moving up post election a year ago into january and february, the banks had done -- did very well. they have essentially been sideways lower today. a lot of people are figuring out what's going on on the technicals if you don't understand the fundamentals, trade on the technicals a lot of people are looking a the 00 moving average, the gray line the purple line is the 50 day moving average, already breached today. we haven't broken the 200 day moving average in a year and a half keeping an eye on that if we break that, s&p is down 3% that's another 7% or so blor

here that would be the 10% correction line, roughly 4106. >> bob, whether or not this is a correction remains to be seen. it is for some stocks already. but they feel worse when they are happening than they do in retrospect the vix today has made a fairly significant move but in one of my notes, it indicated that the vix has made more significant moves, which we now forget, four times prior this year alone. >> yeah. the earlier part of the year was very, very volatile. we were trying to figure out what was going on back in january and february and march and that's when we had days when there was a huge argument whether there was going to be a reopening and the extent of the reopening. i know the vix seems very elevated at 26 let's remember there were days back in 2020 when we were hitting 50 some days 26 still is not that bad

i generally pay attention to the vix whenever it gets a little bit over 20, 22 or so, so it definitely has my attention but it is not in the oh, my heavens rain >> mama told me there would be days like this, there would be days like this, mama said. bob pisani thanks. our next guest says today's selloff is the start of the pullback he was expecting. julian emmanuel of btig. t the correction or pullback you have been expecting. i want to start with what you say investors should do. what stood out to me is that you say this if you are an equity investor and you are not prepared to put more money to work in the market at a negative 10 for a negative

20% from here, you should begin to pullback your positions explain. >> you hit on it in your conversation bob pisani. if you look at the market now, it feels much worse than it actually is. if you look back at the year, and certainly the gains off of the pandemic low in march of 2020, we have come a very long way a lot of people have a lot of profit. but when you think about how to invest for the long term, it's been proven for, really, almost two entire generations that when the market trades up somewhere between 10% and 20%, which really are normal corrections in the course of bull markets, which we think this is what this is, you are paid to be a buyer at that. you are paid to sort of put your emotions to the side and do what you know to be correct, which is buy low. and so what we are telling people is, you have to really

gut check and know yourself. and if you don't see yourself being a buyer into that kind of weakness, chances are, you own a little bit too much stock here and you should trim to get to the point where you do see yourself a buyer. >> always think back -- i think it is wise to think back to march of 2020 when the market was do this in response to covid. the people who have done the best since then were the people who put money in then. not the people who bought six months later a year later, or what have you. let me talk -- i want to hear you talk a little bit about the art of trimming your portfolio where, if you are nervous right now, you are close to retirement, you don't want to see your money go down 20%, how and which areas of your portfolio should you look at to trim and by how much? >> so the first thing we would say is this, is that a lot of

the talk about cash being trash, there is always a time -- it may be very temporary, where cash is not that way in fact, if you think about it, building a little bit of cash supports the idea the possibility of buying lower. from our point of view, what's different about this cycle right now is that we've had this sharp drop-off in consumer sentiment at the same time we've seen savings, albeit elevated, run down that combination has in the past led to consumer discretionary stocks underperformance. when you look at it, there is a lot of consumer discretionary stocks that have really really worked well off of that march low. that's an area where we think you might be wise to trim. conversely, when you look at places like health care, and consumer staples, those are more attractive, more resilient into the kind of volatility and potential, you know,

continuation of politics and geopolitics that we have seen. so there is no magic bullet on how much you should trim you know, obviously, you can get advice from your financial planner in terms of what your age is, but, in essence, it is a question of your comfort level and your investing horizon and part of the beauty of this bull market for the last year and a half is that we brought in a lot more investors who have 30 and 40-year him horizons, which to us bolsters the long term case, x of our long term price target and the case for equities moving higher. >> why favor energy and financials health care i can wrap my head around but why those two in particular which seem to underperform on days like this >> they mostly do underperform on days like this, kelly but we are looking at two things number one, positions. and it continues to be the case that investors are overweighted towards growth, towards

technology we've seen a lot of the performance clustered in those number of stocks, the faangs, et cetera ultimately, when we think about it, the stimulus that we've seen, the economic sort of righting that we've seen, and in fact, actually the surprise right side starting to get a little bit better economically even though we are slowing down. and all the more, the fact that the rest of the world is likely to catch up to us in terms of handling the virus as we get into 2022. all of that argues that the more cyclical areas of the market like energy and financials are going to work particularly if, as we expect interest rates rise. >> which again is the if that's been in question for so much but what you are saying echos the discussion that we have heard from others, who think this is the way out into the next phase of this bull market so tell me if you are talking about trimming skuchler

discretionary, why, which areas? i assume it is the highly valued big tech kinds of areas. and why wouldn't those -- again, does this all make sense if interest rates are going higher? but what if they don't >> for us, it is less about exactly where you want to go no question about it that the big tech names within consumer discretionary are where a lot of the positioning is if you look at it, the second and third-tier names, the companies that have told us that they are still having issues with supply chains that are likely to extend into 2022, a lot of those stocks have done very very well, and so we think they are likely to be underperformers until we get to the point where those supply chain issues clear themselves up so it's really a waiting game. and with the market where inside likely to be higher volatility, you would rather not be in that kind of more highly levered waiting game >> all right julian, we will leave it there we appreciate your time today.

thank you. >> thank you. >> julian emmanuel of btig looking for further declines in the s&p 500 in the near torm. commodities a key corner of the market under pressure. oil and gnat gas lower even though they rallied over the past month here, dan years agoen author of the you math, energy climate and the clash of nations dan, it is good to have you back i thought we would be speaking more about the energy crisis in europe and how much of a risk it might come home. i don't know, maybe china is the bigger issue that's going to comprises come off the boil a little bit how should we expect these two issues to overlap and affect the price of energy from here. >> what i was thinking as i was waiting to come down, is that every financial downturn seems to be associated with a name will we remember ever grande in that same category

for now -- obviously so much depends on what the chinese authorities do well, energy is down today, oil is still very much in the band of 60 to $80 still in fact 70 or over $70 a barrel the real story still to me is the energy crisis in europe, which will affect the united states as well and is kind of creating a kind of panic and governments not knowing what to do. oil -- electricity and gas prices are five times higher than the average price right now. >> they are. in europe it is a bigger issue it is more immediate they are already looking especially had the uk at ways to keep consumers from having to pay all of that. the state may step in and wayr pay the evident are. will authorities have to turn their attention to dealing with this issue and even in the u.s., as we were just speaking with dan clifton about a moment ago, is the

policy to keep the economy going during the pandemic becoming a victim of its own success where people are seeing that the end result is price spikes, some shortages, surges, inflationary problems that now have to be dealt with and is that taking away some support for additional stimulus efforts? >> i think it is clearly, a lot of it is around inflation and the amount of money that's been poured into the economy. and what's happened with energy prices, and also what's happened with supply chains, which you were just talking about, are adding to the inflationary pressures. you know, governments in western europe and united states have been cavalier about energy supplies, focused on the longer term but there is a need to focus on making sure there is enough investment in the sectors now. we have plenty of natural gas in this country, but you don't have the pipelines, you can't get the pipelines built to get the gas to consumers we saw last summer a sign of that when joe biden suddenly was asking opec countries to

increase oil production to keep gasoline prices down so politicians, you know, get into a frenzy when energy prices go up and voters get mad. >> why are we having such supply chain issues across the kind of entire economic complex? it's not -- it's energy supplies it's things. it's automobiles it's groceries you can't find gatorade in the stores why are we having these problems >> every -- i mean all the people you talk to, merchants who never thought about supply chains are now talking about supply chains. a lot of it goes back to the impact of covid shutting things down and then the way the nature of our economy has changed in terms of how people buy things and suddenly, companies that did not really pay much attention to really understanding under supply chains have to do that. like the automobile makers depended upon their suppliers to handle the computer chips. now they need to know what is going to be in their computer

chip this is a pervasive problem. i think as your previous speaker said it is going to last into 2022 and energy is part of it. >> you know, energy -- we have heard the phrase an awful lot this year, transient, transient inflation, transient price hikes. are these levels in the energy market transient or enduring >> i think with oil, it is in the 60 to 80 dollar range. i think natural gas prices are going to be up thicke they can be up higher in the winter supplies in storage are quite low. chinese lng exports have gone up 25%. european, up 20% so there is a real demand. so we are going to see higher gas prices i guess transient is in the defining if it goes on for years, is that transient or longer term? i think it adds up to inflation. >> i wonder, dan, what you would say to consumers who are going to be dealing with these bills and trying to figure out what they should do about it, to providers who are caught in the

middle root now in the u.s., and to policy makers who are saying okay on the one hand the economy needs support and on the other hand it seems like that support needs to be pretty targeted. >> i think i mean, the whole set -- like on rent we didn't get the money to the representers, but rather on the payment system i think for people, obviously, it has to do with prudence and how you use energy i think the suppliers are scrambling to try and assure that they have the supplies. what politicians are doing of course is pulling out the scripts that are now 50 years old and berating the companies for things that are not their fault but as a result of markets and the fault of some pressure not to invest in adequate supplies, actually >> yeah. absolutely do you think that's going to then, dan, lead people -- we have got the big cop 26 summit coming up next month i don't expect anybody to back

away from these goals. filling the gap is using coal power, but even coal prices are up in china. >> we may see an energy chunk in china custom will affect its economy and the world economy. coal prices are at their highest level, virtually so i think that going to cop 26, you will still have the more ambitious goals. but governments will also be more concerned -- i was just talking with the japanese. more concerned they have supplies japan is paying four and five times as much for lng this year over last year >> wow. >> that's what people did not expect to be there. >> quick final question. can u.s. suppliers ultimately step into this gap and help meet the need >> in terms of lng >> yeah. >> i think we are going pretty much at capacity right now, and

we see our own prices are high so if we have a cold winter, we are going to feel the pressures here as well >> wild. dan yeegen, thanks today good the see you. folks, the dow's slide accelerating so, too, across the markets. dom chu has a market flash. >> dow is down 180 points. metal and mining stocks. you were speaking about commodities right now. getting caught up in the selloff amid concerns over the ever grande and its potential impact on the chinese economy many of the worst performers in that group are stocks related to metals, mining, steel manufacturing, base mentals like aluminum and copper. that includes nucor teal, and u.s. steel as well china was a net importer of steel last year as it aimed to bolster its economy during the virus. fears amid a pullback in asia have an impact on energy

producers and steel stocks today. as markets continue to tumble, cnbc pro crunched the numbers to highlight low volatility and high dividend stocks ameren, dominion -- every stock on the list pace more than the 2% yield, and they have 10% upside to their price target based on a wall street analyst more of the well-known names on the list, abbvie, bristol-myers, cvs and mcdonald for the whole list, head over to cnbc.com/pro. >> as we mentioned the selloff is intensifying. markets are at or near session lows right now the stills just off a little bit from that low of 850 points or more nevertheless, 2.3% we will break down the key levels to watch right now.

as we head to the break, nasdaq was the power house over the past few months. but today not the power house. it is leading us lower the laggards right now, pinduoduo. trip.com, jd.com,ed by you, nvidia a couple of chinese names in there. we'll be right back.

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well, the stock market now at session lows. the industrials off 866 points, 275% the nasdaq has now crossed the 3% down threshold at 14,584. the next guest says there has been a reversal in the amount of overbought and oversold stocks with a percentage of overbought stocks plunging over the percentage of oversold stocks. where is there likely to be a bounce with us now, paul hickey, bespoke investment group cofounder. why is that discrepancy between the overbought and oversold so important to you what does it tell us about what has been happening in the market and what is likely to happen >> thanks for having me, tyler this was even before today's decline. you know, we are starting to see

the market technicals start to revert to some oversold levels heading into today, there were a handful of sectors below their 50 day moving average. after today we are likely going the see every sector below their 50 day moving average. you can't get in an oversold rally until they tend to hit oversold levels. we are starting to see the market and some sort of fear levels kick in after, you know a weak start to september. and now, you know, friday, and then today really just -- >> there are a lot of coalescin factors here affecting investors' psychology, everything from china to debt ceiling fed meeting tomorrow to all the other things going on in the world. where is one most likely to find the oversold stocks that might be worth a second look now >> i think in the industrial sector, you are-- i mean, you are starting to see more oversold stocks in that sector because it has been so weak.

energy is a sector that you are going to start seeing that come through, too and energy is a sector that we like here. i think you are relating to the concerns of the market right now. they are all very well known here we have been discussing them for a while. just last monday, a week ago, the front page story on the "wall street journal" was concerns grow for an autumn putback in the market. i don't know about you, but i don't remember a front page story on the "wall street journal" anticipating a market decline. we tend to not see those kind of headlines when you are in a complacent market. in the options market, you have seen the sku, which measures the price of downside protection versus upside protection hit levels we haven't seen since 2018 there are some levels of concern in the market, individual investor sentiment saw one of its sharpest declines in over a year last week so those are things that even though people say that investors

may be complacent and themarke is complacent here, these are concerns that have been showing up in the market i think going ford we may see a repeat this winter of what we saw last winter. if you remember last year, it was in early september when we saw tech and the growth stocks peak in relative strength and then pull back it was heading into the winter as the covid wave, cases and hospitalizations and deaths were ratcheting up that you started to see outperformance of the cyclicals and the economically sensitive stocks, which you wouldn't expect the so given those negative headlines i think we are starting to see covid headlines and case numbers sort of stall out here >> uh-huh. >> the whole concern of the market recently has been this stag flags argument. since the beginning of last week we saw better than expected manufacturing data, retail sales, home building sentiment and weaker than expected cpi

it is just six days about that tends to lend less credence to the s, the agflation and more to the temporary factors. >> which paul would fit with what a lot of people have been telling us is that they want to buy energy right now, they want to buy financials. they think at that cyclicals are going the kind of lead the way out. tactically speaking, four or six weeks ago we had a monday where the dow was also down 800 or 90 points and that was it it little rally stopped. it was a one-day selloff what is this one is something similar? how would we know, other than by seeing how the market closes tomorrow >> these things tend to -- in retrospect -- tyler mentioned it earlier, pullbacks are more painful in the moment than they are in retrospect. we had another one of these pullbacks a few months ago

but most people can't remember why the market pulled back in january of this year, february, march, or in may at the time, the concerns of the market at that time were that it was going to undo the market right now, we don't even remember what caused it. i think looking back at this period you may get that same kind of idea the one major divergence into the market heading into august and heading into september was that high yield spreads were widening even as the market was rallying but we have sean that process even reverse itself over the last couple of weeks. >> uh-huh. >> even there, that -- the biggest fly in the ointment, so to speak, that has started to reverse itself heading into this week i think that's something to watch what's going on in the credit markets, especially now with china. >> thank you very much paul hickey, we appreciate your thoughts today. a friend of line, dennis -- a friend this program, people will talk about today and think,

is this a lehman moment? as dan years agoen pointed out he made the case it is not a lehman moment. but it may be a japan moment, like japan in 1982, where the country was so overbought into real estate, and then they were putting the profits from real estate into the markets. real estate cracks, market cracks >> well, in china, this didn't come about overthe weekend. >> no. >> people have been warning -- it goes back to andrew left who ten years ago wrote a report saying ever grande is not sustainable. it doesn't work at the time. why does china now choose this year, this month. >> bang. >> to say no more. >> yeah. >> does it fit with the behavior we have seen in other industries the last few months? it kind of does. we are digging to find stocks worth buying on the pullback up next our guest will walk us through banks, materials and chips. steve grasso one by one, the banks.

you are in on this trade, too, then >> yeah, let's go goldman sachs on this one, kelly you know, everyone has been looking at the banks and looking at the yield curve that is the number one thing you should be looking at when you look at the technicals on the banks, rsis always come up to me, that's the relative strength index when you look at goldman sachs, goldman sachs is up over 40% year to date that's double what jp morgan is up year to date. jp morgan is the poster child for all financials, right, everyone loves jamie daimler when you look at goldman, goldman has actually performed when you get a chance to buy goldman that is under water, so to speak, on an rsi level i think you want to jump at that but yes, you have to look at the yield curve. eventually, yields will go up. eventually the curve will steepen. hopefully the curve will steepen

because i am pretty deep into value stocks and value stocks do need that? >> banks are value. >> steve, we will take a break here stick with us because we have breaking news on general phil lebeau. >> general motors has put together a plan to fix the recalls on chevy volts to fix the battery fire problems. chevy will be repairing these modules starting in october. they don't say how long it will take but they are working through this process of not only fixing the defective modules now that they have determined exactly what the problem is, in these chevy bolts that have these batteries that were manufactured by lg chem. they are going to be fixing them and putting in diagnostic software so they will be able to even better monitor these vehicles so they can determine

if there are any problems in the future again, the significance here is that for chevy bolt owners -- i think there are 1,400 of these bolts that have been recalled all together they now will have a fix in place so they can have their cars fixed at a chefsy dealership and they will no longer eventually have to have restrictions put on them in terms of charging them, not charging them alone, parking the vehicles away from other vehicle. awful those steps that have been put in place to mitigate any potential problems with a battery fire if one develops. >> to be clear, it is the bolt, b-o-l-t, not the v-o-l-t, the chevy bolt. >> correct, correct. >> the question is whether the car has any bolts in it. it probably does phil lebeau, thank you, man. let's go back to steve grasso and get his next thought, tse trinseo am i pronouncing it equity

correct? >> but nobody cares. let's talk about tse that's in the chemicals space. when you look at the material space and the potential china slowdown, they are constructing that slowdown. they doing it on purpose so why are they cutting back on the steel production because of the environmental concerns so that's the reason if they are going do that chemicals -- they slow down the refining space, chemicals are a by-product of that refining space. what does that mean? it means that they have to import more. so this actually is a tail wind to trinseo but everyone throws out all materials with a blanket sell rating for me, when i am buying this -- think about this also. trinseo has leading technology in esg so in recycling. they should be your number one bet for esg. >> all right let's move on to another one

this is one that is -- really has been a market darling. i mean it has been -- it has really got its game together that's nvidia. >> yeah. i think nvidia is an easy one, right? it has been outperforming the entire chip space. it's in gaming, tyler. but what people don't realize, it's in the smart home it's in the autos. it's in everything that you touch. and i think the knee jerk reaction to sell everything on the semiconductor front because of china -- when you get back to supply/demand issues, i think this one will be your winner i know it is tough to buy a stock like this that looks like this on a chart. >> mr. grasso, always great to see you, ma on. >> grood to see you. >> we are all over this selloff. we will have more on the markets next as we head to break, check out the treasuries on this down day, for equities

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welcome back to "power lunch. we want to call your attention right now the what's happening with the overall markets what you are seeing are the lows of the session right now for the dow, down roughly 920 points there is a question about whether or not we are going see that psychologically significant 1,000-point drop however, look at that, 900 and some points down the nasdaq composite off by 3.25%. and s&p off 120 handles.

the s&p is on pace for its worst say since -- 25th. check out shares of american airlines, the best performing stock in the s&p 500, up 1% off the session highs, helped along by anticipation that the biden administration will ease travel restrictions for those entering the u.s. from the uk and the european union so long as those entrants are fully vaccinated against covid other travel related stocks like delta and booking holdings are not higher but outperforming versus the 900 point drop. >> down fractions of a percent as opposed to 2.5 to 3%. let's bring in matt mayly of miller dayback always great to see you. we can enumerate the reasons for this selloff today is it is it something we should be worried about long term i guess everybody wonders on a

day like this whether this is the moment that the market -- that the bull market is ending or signaling that it's wheezing. >> it is always hard one day, it's always hard to see it in just one day you need more than one day to show whether this is going to turn into something bigger of course, the market has been coming down for a while here, not a lot but i do believe this is the beginning of something bigger because we are saying -- when dom mentioned one of the stocks that's up today is american airlines, it is one of only seven stocks in the s&p that's up today. it tells that this is a very broad decline. importantly, you see the widening in the credit spreads, the hyg high yield etf coming down significantly this is something we haven't seen in the other big one-day moves in the market this year. i think there is going to be more to it this time around. >> when you say that, what are

you predicting or forecasting or anticipating what is the something bigger >> well, i think it's going to be -- again, we heard it many times today, on your air, and it is absolutely true corrections are normal, they are healthy. but they are scary and one of the things, i think it is going to be at least a correction of 10%. i think it could be bigger than that simply when a market gets down 10% when it is heavily leveraged like it is now margin debt has never been this high, with you that's when you get the margin calls, kind the forced selling i think if we get down that much it could kick it down and knock it down even more. at the same time we still have the fed providing their stimulus, even if they are going to pare back on that i don't see it as a major bear market but i think it is going to be more than the 8 to 10%. >> we are seeing lows heading to the close. a lot of asian markets were

actually closed. if pressures are based on asia or europe, it tends to let up after those markets close. not happening today. >> i think the biggest thing is people are finally coming to grips with what china has been doing this year. it is nothing new, our market reacted so well we just didn't care but they have gone out of their way to deleverage and derisk their markets. it started a years ago with alibaba and jack ma. even the second largest economy in the world, and the government and president is purposely trying to derisk it has got to spill over to the rest of the globe at some point. it's not a lehman moment if we have a lehman moment it lo come down the road

but i do think the derisking wil continue. >> explain the difference and explain the lehman moment that happened to the u.s. government. and now china is finally going to do something about this bloated property sector. >> the lehman moment, lehman was one of many companies that were -- many big companies that are becoming insolvent they actually did save several companies. a few days laterer aig was the most prevalent right now we kind have one there are others having problems but they are much smaller. you know, i -- they can step in and fix this thing at some point. the problem is even if they step in, when they step in, it won't be something where they say don't worry, the bonds in ever grande are going to go back to 100 cents on the dollar. they are not the kind of derisking thing is

something i think that has to play out a little bit more over time. >> matt maily, we always appreciate it. >> for more on the selloff, which is intensifying into the close, art hogan the dow is down about 900 points is this a buying opportunity for you yet? >> you know, it is going to be a buying opportunity, i think, kelly. i don't think you need to jump in there immediately you know, over the course of tomorrow and wednesday, we'll likely see the level at which we find support that's been true for most of the year this is the first time we have tested the 100-day moving average in over a year multiple -- half a dozen, dozen tests of the 50-day has worked this time it doesn't i think on a technical basis clearly we are getting very close to being oversold. the rsis on the dow, 29, s&p, 30, nasdaq example 35. all getting close to the oversold territory they can get more oversold

before they bounce but i think we are close here. i think this is less to do about ever grande and more to do about the total of what china seems to be doing to regain control and purposefully slow its economy down to regain control in chinese corporations >> does today have any effect on the deliberations of the federal reserve that will begin tomorrow and we will hear the results on wednesday? >> tyler, that's such a great question usually you would say no, you know, they are pretty baked into what they are going to talk about and the things they have already looked at. but it certainly has to come into the room and the conversation a bit i think the whole concept of what china is doing to relever the real estate markets and sort of restrict thing like online gaming, actual gaming, for-profit education, all of the steps china have taken has been part of the conversation for them and continues to be i think they are going to have a conversation about tapering and

not announce it again, which would be the fourth meeting in a row that that would be the case. they will likely hold off until november which gives them plenty of time before the end of the year to start the tapering process. i don't know that we get major surprise franchise the fed over the next days. to your point it is going to become part of the conversation. absolutely and not just the market but the overall economy. how much of a downturn did we see because of the delta variant in july and august and what the economy looks like in terms of picking up the pace as it starts to peak. >> we are talking near term tactically speaking about what you want to own coming out of this correction. a lot of people want to own financials, energy, value trades, that kinds of thing. if you look beyond that for the next couple of years, do you think china's economy is going to be a slower grower? does it change the kind of exposure you want there? >> that's a great question the kinds of exposure you want

there, it is hard to know until china done with you know, sort of grabbing back control of things right? so we don't know you had peter boockvar on, i thought it was interesting that he said they are not going to touch health care, pharma, not going to touch biotech i don't know whether any of that is true because, et cetera not knowable at this moment. until we see how far china goes in terms of grabbing back companies and sectors, et cetera china is not investable. that may change at a time when they get back to a employs where they think they want to be and we move on to business as usual. we are not close to that i wouldn't be sticking my toes in the water on chinese-related equities right now therefore, we are slowing and you have to watch yourself in the commodity space because they are big users of those. >> art hogan, national securities always appreciate your time. as these losses accelerate this hour, dom chu is back with a look at the intraday moves in the market averages.

>> tyler, kelly, i mean, we saw 950-point drops just in the last five minutes or so if you look at the way it played out so far, you hate to call it orderly. a drop of this magnitude, but that's kinds what have we have been seeing so far the reason why i want to point it out is because the dow industrials is down 275%, 900 points at this point from the ep toing bell, in the first part of the opening session we were down 1.7%. from there we tried to find our way up top then drew another leg lower, 1.5, 1.75% lower then tried to go higher again, and down to the session lows which we are seeing right here that's a play by play of how we got to where we are now. similar moves in the s&p 500 and the nasdaq composite as well inside a notion that every time there is selling pressure there

are a moment or couple of moments where buyers try to step in either to cover shorts or perhaps to sell forth into that pressure any time they are seeing strength. that's what we are seeing playing out here in the s&p 500 and the nasdaq as well one thing to keep an eye on, trr friends will cover that. whether or not you see the losses accelerate into the closing bell for institutional traders behaving on half of etfs folk just they try to true up the positions towards the closing bell once they have an idea of the selling interest that may be present for those retail clients that have to make good on the cash so watch the markets in the last hour. because it might give you some idea to see another bigger wave of selling tomorrow perhaps or a bit of a bounce. >> i'm always curious to watch it going into the close and how asia trades tomorrow. >> yeah.

asia and what will happen with europe seeing the carryover effects there. today we saw that starting in the asian session carry through to the middle east and europe. the asian session tomorrow might get more of the wave from our way of things to the outside of china happenings here so yes it is going to be critical and watching macromarkets more closely. often we focus on the stocks but you will see continuous trading of interest rates and currencies >> all right thank you. let's get down to bob pisani >> stocks takes the stair up and the elevator down. remember we haven't had a 5 pis5% correction in a year

corrections happen quicker than rallies. you will get a big whoosh. let's show you the dow laggards. all 30 are down and cyclicals, caterpillar, the industrials, dow chemical in the materials, as well as the banks of course on lower interest rates, jpmorgan, chase and goldman sachs. take a look at what's going on see stocks not down as much in the dow industrials so for example merck down fractionally. the big pharmaceutical stocks had a terrible month on issues of drug pricing and the biden administration so lily and all the big names around that like merck and pfizer down on the month. the big consumer names like coca-cola down fractionally.

if you want a sense of where things have been, i talk about the rolling correction going on. freeport mcmoran is a topped out at $45 way back in may. that was sort of a top of the overall global reopening story that's when, for example, retailers hit tops retailers and industrials hit the tops and many names, freeport is essentially 30% off the 52-week high the s&p 500 not having a good day and essentially back where we were in july. in the end of july as a matter of fact. we are still up 15% for the year these whooshes get people a little out of joint but we have had a great year up notely back to you. >> thank you let's go now to seema mody

>> on a day like this it is important to look at technicals. bring in the team. boris sloshberg and ari wald boris, the 10-year at 1.3. what are you watching? >> watching i think nasdaq, as well at the 15,000 level. this is some ways a predictable correction in a long time. almost everybody starting to see signs of weakness over the last week or so because stocks were not going up at nearly the pace they were in the summertime. nasdaq exhausted itself. coming down now. it reacts the most to increase in rates the single biggest macro fablg or the going forward will be the 10-year. creeping up that's going to have a deleterious effect because it's impossible to catch up on the profit side if interest rates start to really push up

higher. >> ari, what is your outlook ahead of the fed meeting >> the 10-year is basing and should creep higher to year end and be a net positive for the stock market overall and we do see this pullback in the weakness and the volatility we see as the final stages of a capitulation or the final part to the selloff and a bull market opportunity to buy stocks. what's really notable here, the issue was that the weakness we had seen in the small cap russell 2000 for months now hadn't spilled over to the large cap benchmark. it is finally spilled over s&p 500 sold out as well with that the sentiment gauge from 4.0 to 2.2. least optimism since may 2020. from 89% nyse closer to 50%. so for the s&p 500 we see

support at 4230. the may peak and the minimum ret retracement rally since the fourth quarter. >> trading at 4313 on the s&p. thank you. kelly? >> all right thank you. as you may recall in march 2020 bill miller came on and said it was a once in a generation buying opportunity. i asked him for commentary on the selloff today. he says, i think this is a normal selloff we have had seven corrections in the past year that broke or tagged the 50-day moving average and comparable to the one in march of this year bill miller saying it's a garden variety pullback and takes equities to the level of two months ago. >> just as we talked earlier today it's not as though this hasn't happened before we are used to it but seeing down 932 looking across the wall

there at it it is still making you gulp a little bit. >> does it change the story fundamentally because it's a -- these concerns about china and evergrand and i think what bill miller's point is to quote more on the fundamental side in terms of gdp, interest rates, things are fine. >> let's get a check on the retail names from courtney reagan court? >> hi there. there's several reasons for today's selloff. but if the delta variant causes cases to increase shoppers may revert to thorly shopping habits and some cases in fact worse than the broader averages with a rebound in retail and if that's at risk the stock rebound could backtrack, too while it's about on par with the broader market the etf is off

for the most of the day down 3%. among the retailers selling off more than that broader average include darlings like target, boot barn, and decker's and beneficiaries like amazon, dick's sporting goods, nike, lowe's, tractor supply all lower, amazon down 4%. we're probably going to wear less makeup so ulta, revlon, under pressure, as well. even resellers are taking it hard like threadup and the real reel off 3% or more. >> thank you >> breaking news, ylan muoy has it. >> democrats are proposing to increase the debt ceiling

through december 2022 and they want to tie it to a separate measure that would keep the government funded through december of this year. this is creating a standoff between democrats and republicans but because republicans have vowed to block any legislation to increase the debt limit as a protest to democrats' $3.5 trillion spending bill and democrats say they plan to link the government funding bill to a debt limit increase and to have that debt limit increase last through december 2022. guys >> how does this play out? what -- where is the middle ground or the compromise point if there is one right now or is this what we have seen so many times before, a game of high stakes poker and posturing >> the middle ground is very hard to see right now. the worst-case scenario is to face a government shutdown and a debt ceiling breach. that would be catastrophic as the administration said for the

markets. republicans say that the democrats can do this on their own. they need time in order to enact the processes to make that happen without any republican support so we have to see how it goes and could be scary. >> reporting there with the phone in her hand. >> that's the way we do it dow down 917 vix is spiking the things that we see in big days of fear are playing out again today. >> don't go anywhere because "closing bell" picks up from here. >> china troubles and debt ceiling uncertainty sending stocks to tumble the dow down over 900. the nasdaq slammed down more than 3%. >> let's look at what's driving the action concerns of chinese property giant ability to repay the debt over contagion fears at hom