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

1% even the better performing sectors like defensive groups like staples down a percent. the hardest hit areas of the market right now, materials, health care, communication services, and financials it's a mix technology stocks, growth stocks, value stocks, cyclical stocks all getting thrown out today small caps down 2.5% check out the s&p 500 sector heat map it really does show you just how extensive this sell-off is right now. as you can see, utilities faring the best of the bunch, down services, health care, and materials. coming up on this show, a key interview as fed policy is driving all this market action and this big sell-off today. we'll speak exclusively with a voting member of the fed, loretta mester, the president of the cleveland fed, about her outlook on policy and whether or not she thinks inflation has peaked fed goes into quiet period next week, so this is the final word from the fed

let's get to the market sell-off as all sectors are poised for sizable losses joining us, mike santoli is all of this being driven by a repricing in fed expectations? now the market is getting even more aggressive when it comes to what it's looking for from the fed. >> yeah, it's part of the same process. it's the same story only more so i think that's where we find ourselves repeatedly this year we have obviously repriced radically in the bond market there's a general recognition out there, and i would think by fed officials' own admission, a relatively narrow and uncertain path to a soft landing and a lot to happen between whether we know we get there or not all those things are the case. today and yesterday, one of the things that stands out to me is how kind of orderly and mechanistic this selling is on the same angle, all the indexes, major indexes are down the same

percentage it just seems like a real step back from equity exposure in general. it's been about valuation compression all year not really about the real time read on the economy or corporate earnings and that process is tough to handicap exactly when it ends. we still, by the way, are trading above the lows from late january. that's not necessarily a virtue. it's just saying that we have been in this process for a while. and we have kind of repriced the bond market a lot as the stock market has gone sideways to down >> to your note, liz ann, 2.7%, is that significant what mike just said that we have not broken below the january lows? >> we have seen a reflattening a little bit of the yield curve today. financial concessions have tightened, and mike talked about where the market is relative to where it was in early january. but i also point to the rally that started on march 8th, which lasted to the recent peak at the very end of march. for all the talk about has the lift in the market, is it suggestive of a better economic

outlook or a better inflation outlook, that was a very low quality biased rally it was the non-earners, well down the earning spectrum. it was a lot of the narrative driven type areas of the market. i think that was more about short covering and some bottom fishing reversion to the mean, buy what hadn't been working, as opposed to some healthy underlying message that the market was giving. so i think the theme more broadly this year has been one of economic growth weakening, you know, elevated recession risk and you have ten rate hikes priced in now inclusive of three likely 50 basis points and the idea of a 75, and it's kind of a witch's brew >> with that in mind, liz ann, it's no wonder you have seen groups like utilities and staples, real estate, outperform do you stick with those groups even though we have seen valuations get a little stretched here >> that's the problem. you have a sector like utilities

where the multiple is higher than the s&p utilities generally live in the value indexes, but that doesn't mean they necessarily offer value, as i have said on this show we have talked about it, sara. i think you can look for sort of defensive characteristics using that term somewhat generically as opposed to having it automatically applied to what might be perceived as typically defensive areas. i think you can look for value lower case "v" value quality, strong balance sheets, positive earnings revisions, and apply that everywhere in the market not just to serve preconceived areas that either define defense or define value. i would have that more factor quality approach right now as opposed to trying to pick a sector >> mike, there are some positive spots today. kimberly clark is rallying 9% off good earnings. it's really showing it's got pricing power.

twitter is up again, of course and some other names like lockheed martin, some individual stock stories. earnings season, are you getting any signs of caution from corporate america? or is this just about the fed and looking forward? >> well, there are signs of caution. i think in terms of downward guidance that you have of companies that have reported, it's running higher than average. the beat rate is fine. the absolute earnings growth is not that impressive. i think it's okay. earnings growth is good enough, and in fact, coming into this week or coming into today, stocks were trading okay in aggregate off their reports. up less than 1%, but not down, not a sell the news type response so i think that the caution or the reasons for caution lay ahead. it's nauot really what happened versus expectations in the first quarter. it's how much of a squeeze they're going to be on the economy. is the fed looking to really crunch the housing market for example, as those sector stocks would suggest they're afraid of.

so i don't know if you could take that much comfort in the fact that earnings forecasts have held up because really we have been working on the multiple, not on the denominator. >> is there anything, liz ann, a sign that this is just washed out or something from the fed or is there anything that would make you take a look at some of these beaten down technology stocks another day of heavy selling for the mega cap tech, into earnings next week. >> i'm not sure we're there yet. i think it may have something to do with the move up in rates and how that typically puts downward pressure on more highly valued segments of the market but i also think what you're seeing is a change in approach toward how investors look at segments of the market the acronym type stocks, faang or the big 5, and what we're seeing this year that's very distinct from really the entire period up until this year, post-pandemic bear market, is that we had these narrative driven pockets of the market the big five, the big seven. and now you're seeing much more

divergence and you're seeing especially in earnings season those that don't match expectations or have a negative preannouncement get hurt disproportionately, and i think we're rethinking this whole notion that narratives can drive groups of stocks, that you can look with a monolithic eye in groups of stocks, and i think that's falling by the wayside. that doesn't mean there aren't still opportunities in some of those areas that happen to live in the growth index. you just have to do quite a bit more homework on the fundamentals of individual companies. >> these levels and another hefty slide, down 845 on the dow, is the market starting to price in a recession is that in the forecast yet? >> no, i think the market is pricing in a slowdown, even when we were in rally mode, as i mentioned, there was that underperformance by the more cyclicly oriented industries, but i wouldn't say even on a down day like today the market is pricing in a recession.

i think that is -- there's more pain to come if we start to get a more heightened sense of recession. i think a recession is a reasonable risk at this point. but frankly, it always is when you're in a tightening cycle the last 13 tightening cycles we had 10 recessions, 3 soft landings you can do the math. if you add in the unique factors of the fed simultaneously trying to shrink a $9 trillion balance sheet, a war between russia and ukraine, unfortunately a pandemic that is not in the rear view mirror, 40-year high inflation, i'm not sure if they move the needle in one direction or another, how that moves it more toward soft landing but there are still some strong parts of the economy in the hope of course is they continue to off' set the weak areas. >> so you like quality stocks. anywhere else to go? hard to go to bonds right now because they sell off so much every time the fed speaks. >> yeah, if you're taking a total return approach in the aggregate to bonds, it's been a very, very tricky start to the

year but there's also an opportunity now to move in, even in short duration securities, to areas where you get that yield pickup after years for investors struggling to find anything with a yield. so i think with a more active approach or if you have an active manager, there are opportunities in the bond market too. it shouldn't be sort of thrown out as not still a benefit from a diversification standpoint and an income standpoint >> liz ann sonders, thanks for joining us with the advice mike santoli, stay close we are seeing stocks plunging this afternoon dow is down more than 800 points the nasdaq down more than 3 moints 2.4% near the lows of the day, as we head into the close. all of this as fed officials weigh the size and scope of rate hikes at their next meeting in may. joining us now, for an exclusive interview, cleveland fed president loretta mester, president mester, thank you for joining us >> thanks a lot, sara, for having me. >> you just heard another really

steep sell-off, an ugly day on wall street. is this part of the plan to see tighter financial conditions >> well, yes, but not necessarily all at once. so again, you know, we're really committed at the fed to get inflation under control, achieving our dual mandate goals. and as we have poke, many people have spoken to and the chair has spoken to, we are trying to let the markets know where we see the economy going and why monetary policy needs to move off of that really extraordinary levels of accommodation that was needed at the start of the pandemic. so we're in this sort of recalibration phase. you know, you could think of it as a great recalibration of monetary policy from what was needed at the early stages of the pandemic and throughout the pandemic to support the economy to now movingoff of those emergency levels removing accommodation because inflation needs to be brought under control.

and of course, our goal is to do that in a way that sustains the expansion and sustains healthy labor markets. >> right the whole soft landing idea. so as we have heard from more fed speakers, including the conversation that i had yesterday with fed chair jay powell, the market has increasingly priced in more rate hikes, and more aggressive action by you. they're now several 50 basis point rate hikes priced in starting in may. is that right to you >> well, they're reading the same economy data and making their judgment and then taking what we have said at the fed about what our intentions are i do think we have to be resolute and intentional in bringing the fed funds rate up to a level that's neither stimulative where it is now nor restrictive. what we call a neutral rate. i would like my own view is i would like toget there by the end of the year. and my own estimate is around 2.5% for the neutral rate. and then that puts us in a really good position to look at

what the effect of our changes in monetary policy have meant for the economy, as well as a lot of other factors that are really driving these high inflation readings for example, the supply chain disruptions, war in ukraine, which is terrible but also adding an economic burden in terms of higher energy prices, higher commodity prices, higher food prices. the zero covid policy in china, which is affecting supply chain. so there's other things other than monetary policy affecting the inflation rates. but we have to do our part with our policy tools to reduce some of the excess demand in the economy and bring demand into better sync with the constrained supply side. that's what we're in the process of doing now >> what about a 75-basis point hike which is something that has been mentioned lately? is that something you would consider >> well, you know, everything is always -- as we always say at the fed, we consider everything. my own view is we don't need to

go there at this point and i would rather be more deliberative and more intentional about what we're planning to do and i see, you know, being on the path we're on now, you know, i would support at this point given where the economy is a 50 basis point rise in may and a few more to get to that 2.5% level by the end of the year and i think that's a better path i mean, doing one outsize, a one-off outsized move in the funds rate doesn't really appear to me to be the right way to go. i would rather be more deliberative and more consistent in bringing up the funds rate and signaling that that's what the path we're on. and then when we get to that neutral rate, where policy goes after that is going to really depend on how that policy has affected the economy as well as these other factors we know that fiscal policy is

going to be waning this year the effects of the pandemic results. but we don't know how that's going to look so let's be on this methodical rather than overly aggressive path and then see how policy transmits to the economy and see how the economy evolves. remember, it's always good to remember that monetary policy transmits to the economy the expectations, and movements in financial markets. that's why i kind of favor this methodical approach rather than a shock of a 75 basis point. i don't think it's needed for what we're trying to do with our policy >> methodical, multi-50 basis point hikes. is that what we're talking about? >> if i want to get to 2.5%, which is my estimate by the end of the year, yeah, there's going to be some i actually would favor doing some of that early on in the path rather than later, again, because we want to assess things as we go i would be comfortable, you know, front loading this a bit

and i have said that before. and then we have more -- we're in a better position with our policy to really assess where things are >> speaking of how it's all going to impact the economy, i did have a chance this morning to talk to treasury secretary janet yellen, former fed chair, of course, and i asked her about investors increasingly concerned right now about the prospect of recession. here's what she said about that. listen to this >> i don't expect a recession. obviously, we are living in a time that's very challenging and developments in russia/ukraine and commodity markets, the chinese situation, these are all risks. >> she doesn't expect a recession this year, despite the fact we have all of these risks including fed tightening to what extent do you think the economy will slow as a result of you guys doing what you have to do to fight inflation, combined

with the war in ukraine and of course what we're seeing in china now, which is increasing shutdowns? >> yeah, there's no doubt there's risk out there to the economy. my forecast now is that growth will slow from what it was last year remember, it was 5.5% for the year but i still think it's going to be above 2%, which is my estimate of trend. and i'm fairly optimistic we can accomplish what we're trying to do with policy, which is get inflation under control and by that i mean putting it on this downward trajectory. i don't think inflation will reach 2% this year or even early next year. you know, it will be above 2% for a time, but i want to see that trajectory move down. and then keep the expansion going in healthy labor markets the reason i'm fairly optimistic is first, monetary policy is now very -- if you think of the combination of our balance sheet, which is very large, $9 trillion, and then with policy rates, yes, we moved it up from zero, but only 25 basis points

that's a very accommodative monetary policy. it's going to take a bit of time to reach neutral the second reason is demand is far outstripping supply. even with all of the uncertainty out there, you still see demand both in product markets and labor markets well above supply, which is constrained in both of those markets. so our policy can work by slowing excess demand quite a bit without actually affecting growth so that's why i remain optimistic that, yes, this is a challenge. there's no doubt about it. i don't want to underestimate the challenges but i do think that by doing this, what we can do with our policy tools to put inflation on a downward trajectory, we're going to be helping to sustain the expansion and helping to sustain healthy labor markets. >> one of the problems is even with all of this hawkish fed speak, this week, including from the fed chair himself, who was the most hawkish i have heard him yesterday, actually

mentioning that 50 basis point hike, inflation expectations in the market have risen since. if you look at the five-year, five-year forwards or some of these future looking indications in the bond market is that problematic? >> well, we don't want inflation expectations the long run inflation expectations to get unanchored from 2%, so yeah, the risk of running inflation this high for this long is that it could pose a risk to those inflation expectations that's why it's important for the fed to follow through on what we have communicated to the markets and to the public of what our intentions are with policy so it would be, you know, policy malpractice given where the economy is right now not to change and not to reduce accommodation. so what we need to do now is follow through so that those inflation expectations remain well anchored and remain near 3%, but it's certainly something i'm focused on because that is a

very good signal of are we calibrating our policy correctly. and the longer these high inflation readings go on, you know, the more chance there are that we could have inflation expectations moving up that's not a place we want to be, and that's why i want to be very deliberate and very intentional of removing this excessive accommodation, getting to neutral expeditiously by the end of the year, and then we'll have to determine whether conditions have changed so that we can pause there for a while or if inflation continues at high levels then we're going to have to go beyond neutral. >> expeditiously is the new word you're all using that word so you mentioned you don't expect clearly inflation to get to 2% target this year that would be crazy. next year, you said you don't even think you'll see it when do you think the fed can get back to its target >> i think it's going to take a couple years just the way the nature of this,

remember the shock we had is very different than any other shock. a lot of it is supply side so just in terms of our modeling of inflation, and we have a center for inflation research here in cleveland. it just takes time to bring it back down to our 2% goal that's okay as long as we know that it's on a trajectory to get down right? the issue is are we going to see that trajectory. that's going to be a consideration when i formulate my policy views on whether we need to do more, go faster, you know, or not so that's what i'm focused on. i'm focused on what's really happening with both sides of our mandate as we go forward they're all considerations, and of course, our balance sheet reduction, you know, plans which we articulated where the committee is centered on in the last minute, the minutes of the last meeting that's also going to be part of our tool kit for reducing

accommodation. we're going to have to see what the impact of the increase in interest rates and that balance sheet reduction will be on the economy. so again, this is a path we're on to control inflation, but we're going to be always assessing where the economy is, where we think it's going, what the risks are as we move through the year >> president mester, thank you so much for your time and for clearly explaining what you guys are doing. president of the cleveland fed, who is a voting member of the fomc this year loretta mester joining us. let's bring in ben emons from medley global. a little bit of a reaction in the market, ben. we saw the two-year note yield actually tick lower i think on president mester's comments that's she's not in favor of a 75 basis point hike. she pretty much took that off the table for her at least, and the stock markets seems to like it as well what were your reflections >> hi, sara.

obviously the words about being deliberative and intentional about the rate hikes so she confirms what the market has been pricing in. a new series of 50 basis point hikes to get to that neutral rate, but not the necessity of having an outsized one-off hike of 75. i guess takes a little bit of that anxiety away from what we experienced yesterday after your interview with chair powell because putting the 50 basis points on the table gave the market some sort of a green light to say if you could do 50, it could be a series of 50 plus the possibility of 75. the dynamics could change on her comments she's the last one to speak before the blackout period starts as we go into that next week, the market may consolidate on this area, an outsized hike may not be possible, but definitely a series of 50 basis points to get to neutral >> i think she also laid out somewhat of a predicament for the fed. she said it will take a few years to get back to the

inflation rate which is their target, which is 2%. if we see an economy that is slowing as a result of everything they're doing and sort of all the other shocks that we're going through right now, while inflation remains high, what then does the fed do in that environment and what does it mean for the markets >> yeah, it's definitely a predicament because you're going to have to keep interest rates higher than what you would normally have done if let's say the economy really slows down, you would expect the fed to pivot back to possible easing in that higher inflation environment, that becomes less certain that will be the case. that's something we have to account for. at the moment, we're still at the starting phase we have to get to neutral and hopefully in the fed's mind it will be sufficient to bring this inflation down, but we will be left with the residual high inflation off the target for, as she says, a few years. you cannot really cut rates as a result you have to keep rates then where they are or higher >> right now, everything is getting thrown out every sector is lower. the nasdaq is down about 2%.

the s&p 500 down 2.25% all sectors lower, as i mentioned. ben, you have been recommending some of the travel stocks, which actually have been doing well and we heard a lot of bullish commentary from the airlines this week. is that a place that can withstand some of these shocks, including higher interest rates? do you stick with that or is it too cyclical >> it's definitely cyclical, because yes, at the moment, that sector is rallying while rates are going up it seems not to be affected by the prospect of multiple series of rate hikes here but we have to recognize, it's a reopening sector it's a dynamic reaction by the economy like everybody out there traveling, and these stocks go up, future revenues will be higher as a result of this reopening. we're going to get slowdown there, too we cannot ignore that energy prices are very high, that could be another risk. and if the economy does slow down as a result of fed action,

that sector will cool off. at the moment, this is going to be an offensive side you can continue to play against what right now is a difficult market >> ben, thanks for jumping on the phone with some reaction there to fed president mester of the cleveland fed. we're getting breaking news on disney julia boorstin with the details. now what >> sara, florida governor ron desantis signing the bill into law that strips disney of its self-governing status in the state. of course, where it has disney world, this ends the special tax districts in the state these districts were established before 1968. the provision that has existed for so many decades exempted the company from the likes of building regulations and saves it tens of millions of dollars in certain taxes and fees. and this change could create as much a a $1 billion in bond liabilities for florida taxpayers. but it is key to point out that this would not go into effect until june 2023. so there's still plenty of time to potentially appeal this law, so sara, this story is far from

over >> disney is down 2% with the overall market. he said he was going to do it, i guess he went ahead and did it i was talking to kevin mayer yesterday, who you know well, who used to be an executive at disney he said it was sort of a short-term issue for disney. so what is the story here, if you think they're going to appeal, how do they fight this >> i think we're going to appeal one of the things that's central to this issue here is the fact that because of this debate over the don't say gay law, disney said they were going to cease their donations, their lobbying spending in the state and their donations to people on both sides of the aisle, and politicians on both sides of the aisle. there's this question now of what happens now does disney start lobbying again, start making political donations, but it does seem like disney is invested in florida. they have so much real estate there. wall disney world is such a big employer for the state of florida that both of these entities need each other it's just a function of figuring

out what relationship is going to work, particularly around these taxes. >> yeah, hard to know who needs each other more. julia, thank you i know you'll stay on it >> stocks tumbling for a second day in a row both the dow and nasdaq off by about 2% mike santoli is back to take a look at some specific areas of weakness, mike, in today's dashboard. what stands out to you most? >> well, sara, former leadership areas kind of bellwether groups, stocks in sectors that are on the serge of breaking down, maybe they have actually observedly broken down here you see semi-conductors the etf as well as alphabet, pretty similar chart over the last two years. in both cases they have kind of broken below what people were watching as potential important levels that separates the whole kind of rush to all-time highs from what's going on right now you know, we're still going back to the early part of 2021 in terms of these levels. alphabet had held up much better, but right now, it is really just been wear and tear of the other big faang stocks having weakness and a lot of the kind of accumulations of

multi-trillion dollar market cap is where a lot of selling has taken place. apple, the conspicuous exception going into next week also take a look at tesla and nvidia i was pointing out how these two stocks have seemed to move in sync with one another. june 30th of last year, you see it really is a magnitude and in kind of cadence, they have been very similar nvidia has really broken to the downside still both companies consider having massive head starts in the huge disruptive areas. a lot of the same people know and love and own the same stocks not saying tesla has to follow along, although it did back in january. and this relationship could break down doesn't hold up over a multi-year period, but keep an eye on a lot of these areas that still people have had a little more hope that they were going to hold up and you know, often that's the final flush of a correction, when the big stalwarts finally buckle >> i'm taking a look at some of the other markets. credit spread has widened a bit

this week, mike. what sort of read are you getting there? and from some of the other markets as well. >> credit spreads have widened a little bit if you look at high yield spreads, they're not even back to levels at their worst from mid-march adthis point. it's been much worse in kind of the credit derivatives area, the areas people use to hedge risk, that's shown more alarm than people who own and trade the bonds. the volatility index, i think you could argue, is sort of underreacting. i don't know if it has to get more dramatic, but it's telling because we have been in this trading range. it has been slow to react to this decline over the last couple days. finally getting into the high 20s, but those two things, i think, kind of fit in with this picture of, it's a stressed market, but one that's more just kind of fatigued and frustrated than it is really panicking right now. simply again because we have been in this for a while it's bane familiar grind for a few months, even some of the same levels. >> just kind of negative, downright negative

mike, thank you. we'll see you soon every dow stock is lower now caterpillar is the biggest drag, taking 90 points off actually just one positive stock right now, and that would be p&g. kimberly clark also had good earnings today we'll hit that later zeroing in on tech, as mike mentioned, the nasdaq down 2%, on pace for its third straight losing week. down more than 3%. after a disappointing earnings results from netflix, what can we expect to see next week, when we get more big tech earnings. they're all out. joining us now isabel kulina on the phone. joel, thank you for joining us sorry, i mispronounced your name joel, thank you for joining us what is the setup for tech earnings next week >> yeah, obviously, the price action over the last four or five days has been an eye opener, to say the least there was a lot of, you know, i want to say hope coming into q1 tech reporting season that it would be better than kind of what we saw three months ago, and i think clearly netflix has

dashed all those hopes with the horrendous report from them. we had multiple kind of announcements from the consumer tech space and netgear and corsair, and maybe snapchat wasn't as bad, but it's not illiciting any confidence in the social media digital advertising space either so there's a lot of caution, and i think mike just touched on it as well. that's kind of the concern a lot of the market leaders had been holding up. and up until today, i can't remember a time i looked at the screen and saw alphabet down nearly 4%, microsoft testing the low end of the range really only behemoth within striking distance of its highs is apple that to me is clearly the most important print on deck next week >> what do you expect? you think that's a market bellwether apple? >> 100%. still probably one of the -- still viewed as a safe haven, and checks across the street have been very constructive as well you look at, we actually got a

lot of imbalance on apple yesterday. the relative strength was very impressive and people are making a positive read across from what tesla said in terms of shanghai production so the thinking is maybe the covid lockdown situation in china hasn't been as bad as apple whereas other handset vendors are dealing with softer demand apple is a premium demand and their cycle is moving ahead relatively steady, and they're expecting to raise their dividend, probably the buyback as well. again, the bar is somewhat elevated for apple, but they continue to deliver one quarter after another. so that again is probably the most critical print we're going to see >> yeah, only down 1.5%. again, sort of outperforming the broader market today and outperforming alphabet and meta, for instance, which are down more microsoft is also doing better, down only 1% brent also joins the conversation he covers a lot of these tech stocks any read throughs from netflix to the earnings next week or sort of a sentiment thing with the faang names?

>> i think there's a direct read through. i think there's concern, sara, about the weak kneed consumer and a sign that it's going to filter in. i think our view is there's opening names, right are we watching more video and ordering more hoodies? and zoom equipment versus are we going to travel, are we going out to restaurants so i think many of our investors are trying to shift their allocation of where money is going, so i don't think netflix is a read through. i think the biggest read through for tech right now is that it's a buyer's strike it's chilly out there. i was in boston and new york seeing clients all week and no one wants to touch tech. our desk is very quiet on the tech side. everyone is concerned about the fundamentals and are we going to see a drop off as it relates to the fundamental demand valuation has reset. that is number one debate. that debate is gone now. the number one debate is are fundamentals going to hold i think investors right now do

not want to be in front of this next week. most cfos would talk more coxsly about the macro economy. if they don't, our clients aren't going to buy these stocks because it's inevitable everything is starting to slow and we have a pandemic hangover. >> does that make you like any of them more than others the fact that just sentiment has gotten so negative and valuations have come down? >> yeah y think we still favor, again, for our clients have to be long, so if you think about the microsoft situation, amy hood is a funomnm cfo, and i think she's going to come with a statement of the core enterprise business is strong, pcs are a little weak, but our job is to overexecute relative to where the environment is that's been her tone so that's a very good story that has obviously still double digit growth, margins that are improving, and an incredible position in the enterprise companies like intuit, on the tax side, you have to pay your taxes. there's also a fear of them losing share in the tax or not

making the tax number. they had consistency that's a great story 95% of the revenues in the u.s., you don't have to worry about europe with the intuit story there's companies like snap, good growth. they derisk and say look, we're not expecting growth to stay high it's going to decline, so the companies that actually give in and take the hall pass, you have to take the hall pass. if you don't, those stocks will get hit harder because no investor is going to buy it. our clients are going to buy the names that hit the reset button on the expectation i think there are a handful of names getting closer, but right now, no one wants to be in tech. >> joel, this was one of the most widely owned groups of the market when you have netflix down 64% year to date, what does that do to investors that hold it in etfs, that hold it in some of the other funds? clearly, there's a big spillover effect >> yeah, i think people who are

still kind of holding on to these pandemic stocks and these not just pandemic winners but the 2020 story stocks, the cathie woods of the world, they have to look in the mirror and realize all these tail wenldz that were a result of the covid boon and the turbo charged growth and the very favorable central bank policy across the globe, all those tailwinds have been reversing now for several quarters and i think the netflix print, yes, it is somewhat kind of company industry specific, but i think it is a warning sign to the others of high-flying stocks that valuations are most likely never going to be seen, what we saw just kind of 12-plus months ago, never going to see again for the likes of docusign, zoom, peloton. there are pockets of the market to own, and i think keep it simple is probably the best investment strategy at the moment, and i still love the reopening travel trade, go back to what delta and the other airlines have been saying. plus, cybersecurity, you have the tailwind of m&a and kind of

elevated threats for both government and enterprises so there's pockets - >> something to like still >> exactly there's stuff to like, but in terms of being cute, trying to catch falling chainsaws, people are just going to kind of lose hands along the way as well. it's pretty ugly out there so stick with what's been working and keep it simple is kind of the way most of my conversations have been going of late at least. >> brent, joel, thank you both for joining me as we watch the nasdaq recover a bit here, we're down only wunl.7%. appreciate the discussion. the dow has also recovered we're only down 678 points s sp coming off the lows as we come to the close want to zero in on health care stocks >> we're really seeing a drawdown on health care stocks and really the ground zero is hca health care, the hospital operator reporting a mixed report patient volumes are back

they are seeing strong demand. however, on the bottom line, they came up short, and the reason is that they are seeing higher than expected health care labor costs. they're still using contract labor workers. they're trying to ramp up retention, benefits, trying to keep people on staff in some cases on the call, they say it even led to them having to cut back on some services because they didn't have enough staff to cover so it's one of the things that people are looking at particularly with hospitals today. they're getting hit hard hcat looks like it might be its worst day ever, certainly as bad as we saw back in march 2020 when the hospitals got hit hard at the beginning of the pandemic something that is also going to ripple through the rest of the health care sector, sara, because in order to deal with these higher labor costs, these hospitals are going to look to raise rates for 2023 and that is certainly going to

impact the insurers and the premiums that we're all going to be paying for 2023 so even as health care inflation has been a little bit lower than overall inflation this year, that could be about to change. >> bertha coombs, thank you. we have a news alert on bed, bath, & beyond courtney reagan with the details. >> hi, sara. yeah, so bed, bath, & beyond owns buy buy baby, it's part of the company, and there's a report in the "wall street journal" citing sources that there are several parties that have expressed interest in acquiring buy buy baby, and the article names service capital management and a spac that is run by former caspar ceo, philip crim when i spoke to mark tritton, the ceo of bed, bath, & beyond ten days ago, he did confirm, yes, we are exploring strategic alternatives for buy buy baby. there's no guarantee a deal will be done, and this is being done

at the request of ryan cohen, remember, he is the chairman of gamestop, and he now owns about 10% of bed, bath, & beyond shares are higher by about 8% after being halted briefly when these headlines came out sara >> it is a very useful store, i'll say that about buy buy baby thank you, courtney. watching bed, bath, & beyond cryptocurrencies and crypto related stocks are big underperformers today. kate rooney here with what's driving the weakness in crypto in particular. >> bitcoin and other cryptocurrencies really struggling to keep any upward momentum in recent weeks bitcoin is down more than 4% in the last day or so it's tightly correlated to tech stocks part of the broader sell-off and the move away from risk and investor sentiment overall really souring other major cryptocurrencies down as well today, although some look to be outperforming bitcoin at this point. look at some of the mining stocks as well these are the firms that are running those high powered

computers to create new bitcoins so you have marathon digital, names like riot, blockchain, that sector down an average of 40% this year and it's been outperforming -- underperforming bitcoin today as well. coinbase also faring slightly better than bitcoin itself it's been down about 3% today. the largest u.s. exchange. still off by 45% so far this year, really getting hit by a slowdown in trading and investors worrying about margin compression as well. microst microstraty and jack dorsey's block still seen as crypto plays. down today as well as software and tech valuations compress >> kate rooney, that is the story. thank you very much. let's bring in jim bianco, president of bianco research, he joins us to help us make sense of what we're seeing in the bond market and in the stock market this week. what did we learn about the fed that we did not know >> i think jay powell's comments

yesterday that the labor market is hot is suggestive that the fed thinks they can get really aggressive in raising rates and not cause people to lose their jobs so we have got now the market all of a sudden pricing in not only a 50-basis point rate hike for may 4th but a 75 basis rate hike in june and another 50 basis point hike inial that would be the most we have seen since 1982, 42 years ago. >> i will say, though, that cleveland fed president loretta mester who is a voter, was just on with us a few moments ago she said she's not there on 75 does not want to see a shock like that. i do feel like she's more closely aligned with the center of the fed and the chair than say a jim bullard. is that wrong? >> no, it's not wrong. you know, the fed may not be there yet. but also, this is part of who is leading the fed. is it the market that's leading the fed or the fed leading the

market if the market is going to price in 75 basis points and leave it there, we might see the fed average move, that's the pattern we have seen over the last several months either way, it looks like there's a realization that this fed is very serious about inflation. it is going to raise rates and raise rates aggressively as a matter of fact, i have been saying there might not be another 25-basis-point rate hike it's going to be 50s all the way through until they're done the metric that's going to make them stop is going to be falling inflation. not the employment market, not the general state of real growth >> two-year note yield just below 2.7% where do we go from here is that going to hit 3% and what does that do for stocks? >> well, unfortunately, the history has been when you see epic moves in the bond market, and this from a total return basis, using interest rates and

prices, is the worst market we have seen in the history of statistics which goes back to the mid-'70s usually doesn't stop until something breaks now, that doesn't mean the stock market it can mean something in the economy or it can mean something in the financial markets i'm unfortunate to have to say that, but i think rates are going to keep going. yeah, they could continue to move higher from here until we finally get to that point that something is put off side and then we'll probably see some sort of rally in the bond market it's too early to start looking for some kind of a peak in interest rates, and the stock market i think is finally coming to that realization. >> jim bianco, thanks for jumping on the news line heading south again here, down more than 700 points we were down almost 900 at the lows of the day at the top of the hour we're going to go straight into the market zone. mike santoli is here to break down these crucial moments of the trading day, plus dana

telsey on gap's big plunge and revenue warning and sam stovall on the big sell-off across the market another very ugly day on wall street the dow going negative for the week and for the month of april. joining the s&p 500 and the nasdaq mike, it looks like we're looking for a decline of about 2% on the week for the s&p 500 is it about rates, is it about earnings and the outlook sum it up for us as far as what we're set up for next week which is another huge week of earnings including big cap tech >> yeah, it's obviously about rates. it's about yields. it's about the idea that it creates a very rocky path toward the desired outcome, which is a tightening cycle that doesn't put the economy into recession if i look at the economic numbers, they're not giving you fresh reason to worry. the economic surprise index is on an upturn the leading economic indicators printed a new record today usually it peaks well before a recession.

it's all about can we absorb what the market prices in in terms of rates it's also this massive unwind in the former growth leaders. i don't think it's just about yields the implosions of facebook and netflix has everybody looking to cut risk in every other type of digital business you thought had a massive addressable market so that's happening alongside the rest of it and by the way, we have been talking about this being a trading range for months what's the bottom of the trading range. 4100 to 4300 on the s&p. so we're now kind of at the edge of the low band there. >> yeah, mike, thank you let's take gap, because retail is getting hit overall, but nothing like gap today it's getting absolutely hammered losing around a fifth of its value. the company announcing a double whammy, slashing the first quarter sales guidance and saying old navy chief nancy green will be leaving her post later this week. let's bring in dana telsey old navy was the bright spot, dana, and also thought to be well positioned in this kind of

environment of a consumer slowdown what is going on here? >> basically, you have an issue at old navy given its 55% of sales, 1200 stores they have been having the wrong balance of merchandise for a while now that was supposed to be corrected by the second quarter. they didn't switch to occasion and reopening as quick as they should have. they stayed with casual and they're missing the mark everyone is talking about dresses, tops, foot wear all doing well because people are going back to weddings, they're going out to parties, and they're going out to restaurants. old navy is not positioned with a consumer with a household income of $75,000 and the headwinds of inflation, the headwinds of what you had going on with the cold weather spring, they're hit and their merchandise is not balanced properly this takes all this year it's a lost year, and losing a ceo, bringing in a new one, we may not be back to where you need to be until 2024 to get this right >> wow so i mean, it's interesting you said that about the income

levels, because i did a report earlier this week about who gets hit in consumer stocks by rising interest rates what i learned from some of the analysts is it's the lower income consumer stocks, you know, five below, that do okay, the dollar stores, and then those that cater to the higher income, who are more immune to the higher interest rates. those in the middle, like a gap, get squeezed who else is at risk here >> when you think about the other players, it's anyone who caters to families and these family apparel retailers have a real issue. we heard about it and have seen it from some of the teen apparel retailers where it's been slow we heard about it and seen it from some of the women's apparel retailers. if you're stuck in the midpoint, you have to watch, and the trade down you mentioned, that will help the off prices overtime too, but it's got middle department stores that really get hurt we're going to watch kohl's numbers when they come out because obviously there's other things happening there, but you want to see if there's an

impact we're watching closely while the reopening, high end works. >> gap has been hit hard now down 64% over the last 12 months is there a level that looks attractive to you? >> where's the earnings going to be you have a loss in the first quarter, you're going to have a year basically that you're probably lower than what you have had in the past four or five years do they look at athletic to break it off and get some more value there? we know they tried a couple years ago to split off old navy and athleta. that did not work. overall, the stock is dead money to move lower until we see some stability. watch other valuations of other retailers because this could be the opportunity. to me, this is more gap specific, and whether it's other things that are interesting like a ralph lauren, like an ulta, like the estee lauders, that's what i'm watching. >> that's what you like better, ralph lauren, estee lauder, and ulta >> yes >> dana telsey on the retail stocks want to hit another consumer name that is actually a big

winner today which is kimberly clark. the company which makes kleenex tissues and huggies diapers beating on the top and bottom lines, raising the full years sales forecast for growth. the stock is jumping 8.5%, but the company warned prices would rise higher than anticipated even though we got the same kind of numbers prom pro proctor & gamble, it was seen as the leader in the group when it came to sales growth and taking market share what we got from kimberly clark was really strong. i want to highlight two points of strength. north america and also the business segment and it was a mix of higher pricing so they are able to pass it through, and also higher volumes. it's interesting move given this appears to be one of the favored parts of the market right now. >> yeah, kimberly clark, you know, somewhat of not necessarily a serial disappointer, but one where there's a lot less confidence they're going to get pricing, stick to numbers

they did it this time. i also think they're benefitting at least in a back door way from people wanting to own the very traditional defensive stocks staples have been a great performer. people are willing to pay 24, 26 times earnings for a kimberly clark, because by the way, in a high nominal growth economy, they do capture some of that consumer price inflation so it makes sense given what's going on right now hard to necessarily extrapolate this onto multiple quarters of good results >> we're showing you the intraday dow chart because we just took a leg lower and we're making new session lows. down 956 points on the dow s&p 500 also down at session lows every dow stock is lower right now. united health care is the biggest drag along with caterpillar, goldman sachs, and home depot every sector in the s&p 500 is lower right now. the s&p 500 down 2.75% the nasdaq composite down 2.5% we're sinking as we go into the close. worst performing sector right now, materials, health care,

communication services and financials we spoke earlier to cleveland fed president loretta mester she gave a piece of positive news for the markets when she said a 75-basis point rate hike, a triple in other words, is not really what she's thinking about. have a listen. >> my own view is we don't need to go there at this point. and i would rather be more deliberative and more intentional about what we're planning to do and i see being on the path we're on now, you know, i would support at this point given where the economy is, a 50-basis point rise in may and a few more to get to that 2.5% level by the end of the year. >> joining us now, sam stovall, chief investment strategist at cfra with the dow down 918 points just getting uglier. it's a brutal week on top of several brutal weeks in this market what do you do in this environment? >> absolutely, sara.

we have been seeing volatility three times as high year to date through april as we have on average going back to world war ii so the market is nervous, and i think that based on the fact that we have been seeing large, mid, small caps as well as the nasdaq fall by similar amounts, the implication to me is that investors are expecting a slowing economy and that prices are leading fundamentals and even though we have been seeing an improvement in q1 earnings estimates in full year 2022 estimates, that those numbers are likely to be coming down >> it does feel more about the fed than about earnings. the s&p if you're keeping track is now down 10% for the year so a correction this year. officially nasdaq composite down 18%, mike frrx the year. what sort of levels should we be watching, what sort of action should we be watching when we get heavy sell-offs like this? >> yeah, keep in mind, the lows that we havetraded intraday this year back in march, are

below 4200 on the s&p, so 4170 was a close in mid-march that was the low by the way, the low on the day before the first rate hike, so the way the market has gone is it's worked itself up into an anxious state, anticipating fed hawkishness, anticipating how aggressive the rate hikes are going to be and then we got the first hike and it was a bit of a relief, a buy the news type of reaction who knows if we're in for something like that. it's more than a week until the next fed meeting the market has been unable to make much use of the typical late april seasonal tailwinds, that's for sure. i think we're at the zone in the 4200s where the market has a few times more or less kind of gathered itself over the course of three months. >> four-week losing streak here for the dow. s&p 500 on a three-week losing streak and so is the nasdaq sam, would you buy in a sell-off like this? would you look for opportunities? >> not yet i believe that as mike was

implying, that we still have more to go in terms of what the fed is likely to do to slow the pace of inflation. going back to world war ii whenever the fed started a rate tightening cycle, you had the fed funds rate above the year on year cpi level and that the average was a difference of 40 basis points. this time around, the cpi is higher than fed funds by 825 basis points so we have a long way to go to get to neutral >> well, i guess the question is how much the economy can handle in the meantime when it comes to these rising rates, these inflatio sam, some of the better performing sectors are down today, but they're working better than materials, health care, communication services, financials basically anything tech or cyclical related do you stick with those stocks, especially after a quart like kimberly clark just put up >> i think you stick with those groups that are showing strength

despite the downward movement in the market looking at those groups that are above their ten-week and their ten-week moving averages above their 40-week, you're seeing names like fertilizers, food retail, agriculture products, and farm machinery as well as many of the oil areas. so i think you basically let your winners ride at this point. >> mike, i just want to point out some new 52-week lows which are actually lows that are longer than that meta and netflix, both going to new lows on some real fundamental concerns ahead of earnings is that it for faang >> well, obviously, faang is kind of splintered up. you've got very specific corporate drivers here what's interesting, too, i mentioned earlier, alphabet starting to feel the pull of that same type of gravity. at some point, they all of a sudden start to look more reasonably valued. i'm not saying all of them, i'm not saying amazon is close, but

alphabet i just looked earlier, 5% free cash flow yield based on this year's numbers it's probably going to hit those numbers. that's not too bad in an environment where we're talkingurt other companies having their growth rate challenged that's not going to turn the market but it's going to be the thing people notice once we maybe get a flush and start to stabilize a little bit you know, when valuations come down, risk goes out of the market and forward returns improve. you just never know when that moment is when it's going to start working in your favor. >> twitter is up 4%, bucking the trend. sam, thank you for joining us on this sell-off day, down 2.75% on the s&p. two minutes to go in the trading day. what do you see in the internals now? >> this is a pretty comprehensive flush. at times today, the nyse was looking at a 90% downside versus upside volue not quite there, but it's still very, very lopsided in terms of the breadth of this sell-off what's been going on all year, and this is really the fed

effect, the risk aversion effect the high beta stocks, aggressive, volatile stocks have massively underperformed look at those versus more defensive low volatility stock wh real divergence there. volatility index, i mentioned earlier, still below 28. keep in mind, we got well up into the mid-30s at the early year correction levels that's because it's a friday, it's because we have seen these levels before. the s&p is in this very choppy kind of nerve shredding trading range. we'll see if it continues lower from here, but for now, the vix is saying we have done this already. we have been at 42 and change before in the s&p. >> we are now down 1,000 points on the dow, with moments to go until the close. 1,009. it's been a sell-off all hour long got a little bit of a reprieve and then heading south again every dow stock is lower every s&p 500 sector is lower.

we're adding to our losses for the week it's the fourth week in a row where the dow is down, third for the s&p 500. s&p down 2.8%. lower for the week and for the month. the nasdaq down 2.6%, and there goes the dow at the close. down just less than 1,000 points have a great weekend, everyone that's going to do it for me from "closing bell." i'll send it into overtime with scott to pick up on this breaking news. >> thanks so much. welcome to "overtime." i'm scott wapner at post 9 you heard the bells, we, of course, are just getting started. halftime's josh brown will be with me in a few moments we begin with our talk of the tape obviously, this brutal market and how much worse it's likely to get if rates continue to rise and the fed continues to talk as hawkish as it has. there's a look right there, just settling out, just below a 1,000-point loss for the dow let's talk to "mad money's" jim cramer he joins us in "overtime." jim your thoughts as we go out pretty ugly. >> let it go