pledge them. putting the chips on the table for this one. >> that is perfectly well said he is if it's going this way that is a huge stake that he is committing thank you. everybody, that does it for "the exchange. "power lunch" picks things up right now. thank you. we'll see you in a couple seconds. i'm tyler. welcome to a sell-off friday this hour, fed chair powell puts a 50-point cut on the table. not cut. what am i saying rise and the markets fall offer a cliff. dow down 1300 points since 10:00 a.m. yesterday is the fed getting too hawkish plus the restaurant rout now should be the time for them

to shine but they are dealing with huge spikes in costs, for food, for labor. which companies are best positioned to weather the storm? >> thank you hi, everybody. let's get an amp which can on the markets. they continue to sink. dow down 730 points. here's a two-day chart of the dow. we have seen all the back to yesterday morning. up at 35,600 down to just over 34,000 and change inflation hitting everything why are health care stocks the worst group today? hca cut guidance ceo said things went right in the quarter but offset by higher labor costs. unh with the biggest negative impact on the dow.e less

money to spend on clothes. shares down 19%. inflation a problem across a number of different aspects of the market can't win here let's bring in steve liesman for more. >> yeah. markets forced to separate what's real and not from fed speak and not easy a slew of fed officials talking this week has them pricing in a hawkish outlook for rates. jim bullard said a 75-base raise is not the base case evans said 50 but may have to go above neutral. san francisco fed president yesterday daly said the fed would deliberate and not rule out a 75 either. december funds rate contract added 40 basis points.

nearly two quarter-point hikes trading at 2.70 for december all of that leading the market to believe that maybe the fed floating a trial balloon of 75 hikes. the august yield of 1.92 suggest a 34% probability of one 75-basis hike. the fed seen hiking to 3.4%. august of next year or so. the market may be ahead of itself the hike would come after two or more 50s andself inflation reports that show what they are looking isn't working. i don't think they'll be quick to ratchet up to another one guys >> let's talk a little bit about what we expect by the end of this year. where do you think the fed funds rate will be we were talking with someone

yesterday. it occurred to me we haven't begun the raising of interest rates. >> no. and that's -- two parts to that answer there which is obviously a great question i take the fed or most of the fed at the word they like this 2.5% range bullard alone to 3.5%. we have not begun this guys, with a chart of the two-year is interesting. the market and bullard said on monday priced in a lot of where the fed is going maybe the equity market hasn't i can sure look at that number of 2. 0 or almost 2.80 and say you know what? 2.71 now the two-year priced in what is coming down the pike we have that 3.40 mark in for

august of next year. >> thank you have a great weekend. >> you bet. stocks selling off the dow on track for a fourth straight weekly loss all now negative for the month of april is this selling on the rumor let's bring in cnbc contributor michael farr michael, it is always great to see you. it is almost even better to read your remarks because when i do it is like i'm reading a conversation of a very interesting person, having a conversation with himself and sometimes the best person to talk to. own best conversationalist you think the fed will skirt

disaster explain. >> tyler, what the markets are telling you is that they still don't know if they can believe the fed. the fed didn't have credibility to stick to the guns go back to 2018 starting to raise rates. markets starting to fall the fed falls back your comments to ron were right. quarter of a point hike is all we have seen and the rest is talk taking interest rates up, great. but it could be that they overdo i think there's also a reasonable likelihood that this leads to a recession they're trying to put a large thread through a narrow needling here. >> talk about the kind of stocks that you think can do best or better under the kind of scenarios you forecast earnings are key

interest rates always key, as well you say you need companies with proven fundamentals. you have three examples that you pointed to >> i do. ifsz talking with tony dwyer yesterday. he is so smart stocks go up with earnings go up earnings go up whether the economy expands. if the economic expansion stays in place and earnings continue to go up stocks should survive okay if the fed kills it and overstep trying to tame inflation and kill the economic growth then the earnings stop going up and you have problems. the more secure companies, three, mondelez, is a snack maker, food goods. they make oreo cookies you own companies earning money with great balance sheets, good market share and people continue to buy oreo cookies.

19 1/2 times earnings and growing at 10% google i continue to like google even though it's an enormous company. projected growth rate for google over did next five years still 15%. so if stock prices are driven by earnings growth and their real earnings growth and not a lot of debt these are companies i like to own and then the other one that i had -- >> ross stores down 8% year to date but the business model is one to endure inflationary times. i want do get one of the holdings disney disney has been i believe the worst stock in the dow over the course of this year so far it has become a very easy target

being described as a woke company. gets people riled up why what is your view of disney which many people would say is a platinum franchise? >> platinum franchise. i would say it is. here's the concern you buy a company based on the corporate strength and want to make money if while you own the company you find out you own an esg company, right? the environmentally sensitive company. green company. company taking a position. if that new politicization of disney starts to impact the bottom line then you have to rethink the investments. i looked at this pretty closely and don't see it will impact the bottom line. we think it seems to be an emotional sort of reaction to disney if they unload 200 or so million dollars of costs every year that

doesn't hurt disney. disney theme parks through the roof we think they add 2 to 4 million subscribers for the disney online and we also think that the international visitors to the theme parks that spend more money haven't started to come back yet it is a powerhouse, we think a fortress company i own it and may add to it i haven't made that decision yet. i think the valuation continues to be reasonable the noise for disney strikes me as i dig deeper as being noise. >> great to see you. have a great weekend. >> you, too. great to see you thank you. let's get over to dom chu for a market flash with the dow near session lows. >> shares of verizon in focus around 6% lower on the day after

seeing the first quarter profits slide 13% even as earnings per share and in line with wall street expectations. the company also warned the full-year wireless services revenue at the low end of previous guidance with outlook as well citing the current economic environment and inflationary pressures and r rising rates it is basically flat on the year at&t and t-mobile up 5% and 10% respectively back to you. >> thank you. another sector getting hit hard by inflation. food prices are rising and hit with labor costs for the cooks and waiters to

serve it to you. which companies are best positioned and why and look at these big named stocks hitting 52-week lows today. disney are you ready to nibble like michael farr may be? salesforce and paypal. much more on the sell-off. 721 on the dow - thanks. -you got it. and thanks to voya, i'm confident about my future. -oh dad, the twins are now... -vegan. i know. i got 'em some of those plant burgers. -nice. -yeah. voya provides guidance for the right investments, and helps me be prepared for unexpected events. they make me feel like i've got it all under control. [crowd cheers] because i do. okay, that was awesome. voya. be confident to and through retirement.

welcome back to "power lunch. stocks are selling off today big.

a big reason why is that inflation is hitting the bottom line restaurants getting hit on both sides from food and labor costs while recession fears loom let's bring in kate rogers for more. >> as inflation runs hot and talk of a recession looms value sentiment is falling new data from black box intelligence said guest checks are up compared to a 3% increase in 2019 but as mentioned value sentiment is lower than pre-pandemic, particularly for limited service restaurants and off premise dining as delivery is more expensive. annual itselves have pointed to names that tend to cater to a higher demonstrate grarveg sweetgreen has a loyal customer base on the lower cost end mcdonald's and wingstop have been able to

hike prices but will diners continue to see value in domino's and papa johns. we'll hear if all the brands feel as confident this quarter as last time around. >> thank you. for more, let's bring in clarence otis, former ceo of darden restaurants along with the slew of others, clarence thank you for making the time. welcome. >> thank you glad to be here. >> i was going to ask if the industry is just -- i don't want to say has a future. obviously it has a future but how much smaller a piece of the pie is it going to take? when people talk about inflation it is at the grocery store and really at restaurant bills and that table service is a tall one to overcome in an environment

like this. >> let me really s.t.a.r.t. with the good news. it is a difficult past couple years for restaurants but the good news is that volumes are back traffic in the restaurants is there. tremendous pent-up demand. a thing the pandemic taught people is how much they value restaurants. certainly there is a future and seen significant volume and allows you to deal with challenges there are significant challenges with inflation. >> i wonder about where people at first so excited to get back out to the restaurant and then after a couple times i don't want to pay $90 or whatever it is for the experience. it is just too bad that inflation is what it is. talking to bob pisani talking about $32 for pasta and pesto.

it is an experience, wonderful but is it sustainable? >> i think it is dining out is baked in to lifestyles and true for a long time and continued to be the k case and did good news is that some of the inflation is driven by significant increases in earnings so people are seeing earnings growth and helps them deal with it that experience is one again that really the value of it got reinforced as it was taken away. >> is being bigger the best strategy in this environment and economy? >> yes because you have the resources to respond so labor is about a third of all restaurant costs, escalating high single digits.

food costs are also about a third and those are increasing high single digits to even low double digits. and the way to respond to that really involves investing. you have to invest in the workforce to try to drive down turnover you have to invest in technology to be more efficient and respond to customers and the desire for really seamless technology driven solutions and the biggest players have the resources and came through the pandemic better than everyone else. >> what do you think the biggest changes are likely to be from the pandemic and inflationary period >> you will see restaurant models change significantly. so pre-pandemic there was a

digital transformation going on. that accelerated through the pandemic what that means from a model perspective is you're able to run the operation with fewer people and will continue as we look at not just inflation but also availability of labor as people think about alternative industries and careers so that's one for sure is going to be there it will touch the off premise for sure and on premise experience affected by it and how you operate the restaurants is affected. >> do you have a favorite restaurant >> i have a lot of personal favorites. the beauty of the restaurant business is it is one where consumers are diversity seeking and they have a rotation of restaurants and cycle through the rotation over the course of

a year for me it is larger than most but i still rotate through. >> you are like an own pyramid scheme holding up the industry. no it is great to have you and to get your insights. thank you. >> thank you. coming up, health care on the market is a laggard. they are digging deeper into that group gap stock sliding as much as 20% after slashing the guidance. we'll discuss in today's three-stock lunch and celebrate financial literacy month with the contributors here is financial wellness council member on why you should invest in your future self. >> a lot of times people talk about retirement investing and weird because i want to spend

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everyone will love. is this wagging? - good right? time for the etf tracker we are looking at travel etfs which saw $35 million in net inflows over the past week there's a general optimism about the strength of the summer travel season backed up by airlines in the earnings reports. talked yesterday about hotels. now look at these. the jets etf not the sharks. the jets etf focused on airlines up 3% this week. that's a one-week change down today the defiance hotel, airline and cruise etf is higher a little bit over the week and the travel tech etf ticker away is lower on

the week by almost 5%. data from the partner at track insight. more information on the etf wilshire hub now bertha coombs for a news update >> thank you in michigan reverend al sharpton demanding the police officer that shot a man publicly identified sharpton was speaking at the man's funeral saying authorities should not be allowed to keep the name of an officer who kills someone secret until any charges are filed. we have video of a mosque attack in afghanistan. no one admitted responsibility the united nations is denouncing the attack as horrific. former renault and nissan chief ghosn speaking on cnbc

he said he expects a fair trial in france, something he says he would not get in japan but he found the timing of the warrant suspicious just before the french national election. >> thank you coming up, less than a week away and excited over here 2022 stock draft is back we had it last year. this is each year back the normal we have several huge names competing and pick the draft order. next thursday and i think reveal the winner of last year. first major push in d.c. to grow the chip industry. ylan >> reporter: i'm at the advance ibm research facility.

can you guess how many chips are ll this? i'ell you coming up next on "power lunch."

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90 minutes left in the trading day. what's going on with bonds and commodities and the push of ylan for more money to build chips. let's start with dom chu 90% down day on wednesday they warned we haven't had one in a year. >> very broad based. looks like to build on the weekly losing streak for stocks unless things make a dramatic turn around. so the dow on pace to have a worst day of the month s&p is on pace for third straight down week on all of this as worries on rising rates hit stocks on the broad basis. for content this is just off the worst levels of the s&p, nasdaq and dow and every single sector in negative territory for the markets. the outperformers are less

sensitive sectors. you have materials and xhuns services stocks in the laggard jsz that decline driven by the plunge in netflix stocks puts the sector as the worst in the s&p by a wide margin now a stock wise the biggest drop in the s&p by hca health care it's not all in the red. kelly, svb financial, the parent of the regional lender silicon valley is biggest gainer in the s&p after reporting stroner quarterly results. specks of positive territory in the overall mix. >> that's a true standout with mtb. thank you. if we're selling off with rate hike fears why are bond yields lower today? rick >> if you look at the long data

treasuries you might get a different picture but ultimately what we are seeing here is really a short end fed funds move here's december fed funds. there's a month every month has a unique approach because every month adds into the logjam of what the markets are pricing in for the fed. right now at 97.28 that's down 36 basis points on the week. 2-year note yield at 2.71 up over 25 basis points on the week and 10-year notes at 2. 91 up 8 on the week. if you look at fed funds ds not minus 9 on the day alone that gives you the breadth of the short end and 2-year note

yields outdistancing the markets leading the way and if you look at 3 months to 2 years steepened over 20 basis points but 2s to 10s? that's flatter by 18 basis points which means we're at counter purposes the flatter the curve gets the rougher the stock market ride and the more the fed should prespire back do you. >> thank you let's get a check on oil with stocks at fresh session lows crude oil prices taking it on the chin down 1.6%. over 102 a barrel and traders cite concerns of china lockdown and the fed slowing the u.s. economy. that's a broader feel for why risk assets might be under pressure today let's go to the funding fight for chips. many companies like ibm push congress to increase funding for the u.s. industry.

ylan is live in albany, new york ylan >> reporter: kelly, this is the only lab in the world to handle that 2 nanometer technology that ibm developed last year. this wafer takes a couple months to make and 70 chips and on each 50 billion transiter why is the smallest component is smaller than a single strand of human dna. talking atomic level it took 20 years and $15 billion in funding from the public and the private sector ibm ceo said iffist wants to accelerate that research washington will have to step in. >> when you look at the history of this industry it is a very capital intensive industry there's a huge amount of risk taken by people.

if you look at advanced r&d side 5 out of 10 things do not work that is not a risk most businesses out to make a profit can take. >> reporter: ibm is not the only big company out here samsung and applied materials is also all the institutions stand to benefit if congress passes that chip act this year back to you. >> what happens if the industry doesn't get this help? >> reporter: look. the investment is still happening. look at what's happening with intel in ohio or samsung in texas but ibm ceo said it will happen slower and later than the u.s. wants and could lose the place in the race for innovation. >> thank you. >> the mask mandate is taken seriously. >> i think they wear masks no matter what.

coming up, running through key movers retail technology, home builders today's three-stock lunch. check out the fintech names. paypal, visa, fiserv yikes. there's the dow down almost 800 points the sell-off accelerates approaching e nathfil hour of trading. we will be right back.

welcome back time for the three-stock lunch let's trade three of the day's biggest movers with shares of gap down nearly 20% after slashing guidance. citing challenges for old navy in particular. ea is up 3% on this broad down day. it's rising on a bullish call and initiation and citi naming dr horton a top pick let's welcome in erin gibbs at

main street asset management great to have you. let's start with gap what would you do with the stock? >> if you own it get out of it definitely don't buy it. this is twactually the second te the company given lower guidance just this year and so this is something concerning is also citing promotional levels which means it has to put stuff on sale and not something others have been facing not only is the company giving negative news but wall street revising the profits down two months 90% of revisions negative. negative sentiment across the board. even know the stock is down 20% to date i don't see it as a place to get in and buy it when you look at constantly revisions going down and profits going down and the stock price can go down.

apparel is tough but gap seems to have additional problems on top of it. >> bringing in a new ceo to run that division. go to number two which might be a spritely idea and that's electronic arts. >> yeah. this is a buy. i own this stock i think ea sports is a quality company. even though you would think of it as a growth and has potential for its valuations to come down. it is still able to maintain consistent growth and consistent operating margins but the real reason to get in the stock is if it can lower the 30% commission so that apple's been most popular of 30% fees but really paid across the board ea sports is a top profit line they're in a position to negotiate the lower commission rates and with the pressure from regulatory and

competitive if they can get the lowered fee, increase the margins that's where we can get that valuation expansion and the higher prices. >> what about d r horton hearing about the tailwinds for generational demand for housing but it is a tough year in this area. >> yeah. from a very long term trend they might be great i don't get into the stock while the 10-year is rocketing. you can see if you look at home builders and particularly horton against the 10-year yield almost perfectly inversely core lated seeing higher interest rates it is not a sector to get into. as long as the fed is as hawkish as it is i don't want to be in the industry at all. >> what's the market telling

you? the dow off 800 today. back briefly below 34,000. in the 33,000 area what are you seeing? >> yeah. it is selling across the board other days with the big down days it is more focused on the growth side. today it is most evenly flat and a complete sell-off out of equities a lot of cash coming on the side so for me it is really about this is a fear trade i think we continue to see this through earnings season and expect the plummets. i look to see if the market holding the support of march. >> if we needed to have this flush, that's the argument of wednesday saying it is 350-some

trading days since a 90% down day and in an odd way will people be gratified if we get hit that level on the close? >> i think so. if we hit that support and can hold for that week that will be the sign for many investors. not all. there's fear out there but that we are able to hold the support with increased interest rates. >> erin, thank you three stocks and more. we appreciate it. after the break, health care deep in the red. the etf on pace for a worst day since june 2020. hca holdings drag down the group as the ceo highlighted the weight oinatn rulf flioonests ou on a comprehensive wealth plan across your full financial picture. a plan with tax-smart investing strategies designed to help you keep more of what you earn. this is the planning effect.

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welcome back to "power lunch. health care stocks lagging the market today with the s&p health care index one of the worst performing sectors united health care dragging down the dow. almost 21% on the session after lowering guidance because of

higher labor costs les at e squared capital management, united health care is a biggest olding and owns a little of hca. les, the sector is so big and so sprawling and involves so many companies that do so many things i don't know how a portfolio manager like you decides how to call your shots and concentrate. so, describe to me where you are sort of overweight in terms of your health care internals and where you are steering away from. >> okay. we concentrate by using lots of coffee the -- in general because we are a family office first as we are geared a little bit more larger cap these days as the smaller cap valuations got out of hand last year. united which is a biggest

position we are looking at hca maybe to add some over the next couple of weeks. we are excited about companies like health equity that benefits from raising rates and looking for companies with increased li wave we are shying away from biotech we have for a while. we think particularly the small cap biotechs are, you know, still correcting and probably will take another year or so to correct. >> you know, one of the things that hca, which is down a lot today, and you say you're looking at maybe adding to it on this weakness, is the idea that labor costs are hurting them so the broad question then is why -- is that going to be broad across the board with the hospital companies, providers like that, and do health care companies as a group have more

pricing power relatively than some other sectors would >> yes, absolutely health care has more pricing power than most other industries because generally demand is more or less inelastic. but we have a lot of labor cost issues we're seeing this across all of our companies, whether they're public or private. everybody is having to raise salaries and that's fine. we will eventually accommodate this in earnings it may take six to nine months that will be true for hca too and medicare rates will eventually incorporate increased labor costs. on a longer term basis which i know gnaw everybody is these days, this will all be accounted for by next year for the labor intensive sectors. but on a top line, you have seen even intuitive surgical, who also had a less than stellar earnings yesterday, top line has been fine. it's really been the cost pressures. >> go ahead. >> so interesting this is now

ending a lot of the excitement over the health care stocks. and by the way, it's one of the reasons why goldman and others have been warning about inflation, because they saw it actually showing up in health care wages, for instance, broadening to that key part of the economy. it's a little harder to reverse once it happens. it's making a lot of portfolio managers second guess their exposure to health care, which if anything they have been more overweight lately. >> right well, we had a lot of we'll call them health care tourists come visit us to escape things like tech and other areas which were, you know, having their own growth scares. and so they have come to health care, not sure they all understand what's going on in health care, so they're now getting out of health care so it's more of a technical function as opposed to fundamental function and fundamentals are more or less okay. i don't think -- i'm not worried about the secular trends, for the most part, except for maybe biotech and to some degree life

science tools related to funding because you have seen there's been sort of a drought of ipos and secondaries. there may be some liquidity pressure going into the second half of '22. >> talk to me about your second largest holding, johnson & johnson. a company with a sterling reputation that at the same time has over the past half decade or so had to pay out or get involved with large litigation costs, having to do with a variety of products, implantable products, drugs, including opiates, other things. are those large settlements that they have had to deal with, some of which they're still appealing, are they material to the company's results? how do you process that, and if any, the reputational damage that attends to them >> well, yes, you're right there has been some reputational damage, for sure, but there isn't -- there's a new ceo and a bit of a new management team i would like to think that a lot

of this has been at least put to rest and then they will settle, but you know, hopefully we have got this solved. material, not so far and so it does seem like they are coming out of it you'll recall, merck went through vioxx in the mid-aughts and has recovered. >> is there anywhere in the health care space that have relatively lower labor cost exposure or inflation pressures? >> i mentioned, we have a significant weight in a number of them like dexcom for diabetes, and abbott, shockwave, so again, they're mostly sales very few personnel, so they will tend to do a bit better than hospitals, as long as we don't have more waves of covid, which leads to a decline in

procedures so we would say devices, insurance, pharma, biotech, if i had to rank order. then some of the special situations like health equity that benefits from rates >> les, thanks for joining us today. >> the sell-off still picking up steam. the dow down more than 800 points while the nasdaq also down more than 2%. we're going to drill down on some of the big tech movers after this quick break with the nasdaq having its second worst st wh ybinisry ayitus

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it is an ugly day. look at the dow right now, about 1500 points lower than where it was early in yesterday's tradin session. big reversal lets bring in dominic chu for more on this big sell-off. the numbers keep getting worse >> and every time i come on for a market check, i say session lows session lows session lows here it is again, but what's curious about it is something we talked about in the exchange it's all fairly even there's no under or outperformer this is a broad based sell-off with the nasdaq and dow down the same percentage amount i also want to she you what's happening with the nasdaq because that's a key one to watch. the reason why i'm pointing it out is because if you look at the record highs we saw last fall down to where we are right now, we're now down 20%, so you're back into that so-called bear market territory for the nasdaq that we talked about in the past it's not at the lows we have seen for the year so far, but still at that kind of level generally speaking

also, if you kind of dig down into the moves we have seen over the course of the past week, one of the curious ones we're going to lack at here is the outperformance in computer chip stocks semi-conductors are holding up relatively well, compared to what's happening with software, which is down 5.5%, and fintech, which is down nearly 7% as well. that's one to watch. and then from a stock perspective, you really have to take a look at what's happening here with these names. apple, microsoft, alphabet, amazon, and tesla. you and i all know this is the trillion dollar club they're worth so much for the overall market i'm going to put a star on tesla because that's the only company in the trillion dollar club that's reported earnings so far. every one of these guys here report next week so this is going to be key for the market four of the biggest companies in america are now reporting earnings next week it's going to be a big catalyst week we'll see if it can change the momentum >> i'm watching the 90% figure if we see 90% down day, which

jonathan was saying earlier this week, i was asking erin, is that a buy signal for the market, and he's saying not necessarily if it's the beginning of what could unleash more volatility. that's a stat, i think, to watch. >> it's the capitulation thing maybe it happens or maybe it doesn't. >> a big day nonetheless, and sara eisen will be all over it as she brings you to the close >> thanks for watching "power lunch. >> have a great weekend. "closing bell" starts right now. >> thank you, tyler and kelly. and stocks are falling hard. we are at session lows the dow is down almost 850 points wall street ends the week on a sour note. down 2.5% for the week for the s&p. the most important hour of trading starts now welcome to "closing bell," everyone on a friday, i'm sara eisen, coming to you live today from washington, d.c. take a look at where we stand in the market it's broad, and it's ugly. the s&p 500 down 2.4% right now. every sector lower by at least