well, folks, it is one of those days welcome to "power lunch. i'm tyler matheson the sell-off is intensifying this afternoon the dow dropping 1100 points or thereabouts, the inflation threat looming you can't talk it away it looms large over corporate profits now and economic growth. this hour, we're going to look

at the impact of rising prices on retail hit hard today, housing and energy how you can protect your portfolio and the stocks to own in an inflationary environment like the one we're in right now. first, over to kelly and a check on the markets. >> thank you, tyler. hi, everybody. we are right near session lows the dow was briefly down below 1100 points and just off that level. the dow's gains in the past three sessions are now gone. it's 31,580. the s&p is below 4,000 in trading today. the nasdaq is down four -- almost 4.5% below 11,500 let's get right down to bob pisani who has more on what's driving these losses today, bob? >> it's essentially straight down for the s&p 500 slow, but steady descent straight down. i think what's most surprising to everyone is the reaction of the defensive names. consumer staples considered defensive stocks and everybody

has to buy consumer staples, right? they'll be fine. walmart is considered a consumer staple and shocking some people to see campbell's soup among the biggest losers in the s&p 500. kraft heinz, all what you consider defensive and safe plays even as the economy slows down and apparently not so much and here's where it gets confusing is dollar tree is a consumer staple store or discretionary store. for our purposes, target and walmart are impacting everyone best buy, which is clearly a discretionary and autozone you have to fix your car, but you'd have to consider that a discretionary, too >> remember something about the housing business that was the first industry to downturn in the beginning of january. these stocks are down 25%, 28% including carrier global which is the air-conditioning company and we're seeing another leg

down here today. what's the gainers this is curious to me because the gainerses have one thing in common, verizon, con ed, american electric and philip morris are all high dividend payers dividend and rg they all play yields, 3%, 4%, 4.5% and there might be interest in buying high-dividend yields and as where we are in the s&p 500. remember the closing low last thursday it was 39.30, we were essentially sitting on the closing low and that was the 52-week low last week. that was an immediate reference point. i think, guys what we're seeing here the consumer staples are weak because walmart and target are telling us essentially that there is very big risk to earnings here from the consumer reacting to these high are prices and maybe adjusting their spending that's what we heard from the target ceo today, and i anticipate now they'll take out some of the estimates for some of these names today guys, back to you.

>> thank you very much let's drill down further our next guest says we're seeing a perfect storm in the markets and p-e multiple compression and worries about a slowing revenue growth for more, let's bring in the always-cheery peter bookmar. that is a trifecta of trouble for equities multiple compression and revenues, perhaps, slowing and profit margins getting squeezed. >> hi, tyler >> well, those are the three drivers of equity prices at the end of the day and what the multiples will end up being and where earnings go and we know through rate hikes and quantitative tightening we see the compression that really started last year with the most expensive parts of the market we heard profit margin

compression and we heard that this week and keep in mind that profit margin compression is coming off record highs and there is a lot more room, potentially on the down side on the revenue side now we're obviously worrying about the economic downturn and slowing rate of growth as we progress through the year particularly in certain parts of the economy. so that's what gets to this perfect storm of compressed multiple and have earnings at risk. >> i don't want to linger on it and make this the point of the conversation, but wouldn't one rather have profit margin compression when who fit margins were high than when they were low. in other words, i'm trying turn the argument inside out a little bit. >> well, the one challenge with that is you're trading at 17 times earnings right now even with this pullback in the market and that 17 times earnings estimate is embedded with record high profit margins.

>> right >> so if you see a reduction in earnings estimates and earnings that are eventually realized at the same time you see this p-e multiple compression that's the toxic combination. >> peter, jeremy grant last hour when we spoke said he would recommend resource names and he recommended climate change plays and basically thinks that will be one area that does see huge top line growth in the decades, you can call it ahead. commodities can be very fickle over time and i know you've been a fan of this trade, as well >> can you give people some specific ideas are these names looking too crowded or pioneer said they think oil will be over $100 a barrel for a couple of years >> energy stocks, i still think have room to go. particularly the european stocks that are above the pre-covid

levels and the group as a whole of the s&p 500, and that's twis as much as where it bottomed out and the ratio will go higher and i remain very bullish being and i think it is a safer place to be this environment. where you can buy it as pop posed to speculating on the actual price which i think it will go high irare what would you say about the broader -- there were 17 times on near record profit margins is a risk the multiple continues to compress, probably 15 or less with quantitative tightening and interest rates going up at the same time that earnings estimate, i expect to fall as the year progresses. >> in other words, the multiple

has a couple of handles to drop and the earnings, and the denominator has fallen, as well? >> yes unfortunately. prices go down, earnings go down what sell-off does this sell-off remind you of? does it remind you of 2020 does it remind you of 2008-09? does it remind you like me a little more of 2000 where it began with a cascade in the internet names here you can say it was partly the meme name, partly the fashionable pandemic stay at home plays and what, and what can we learn, if anything? >> i agree with you 100% if you think about that time period, tech topped out in march 2000 >> correct. >> similar to the meme stocks topping out in february 2021 in 2000, the s&p 500 actually made a fresh high in september of 2000 even after the tech

stocks started to implode similar to the s&p 500 hitting a record high just in january well after the frothy part of the market started to sell off so this reminds me very much of that timeframe >> so what does that imply for the future and imply for how investors can both protect t themselves and shuffle into sectors of the market where they can eke out a little gain. >> the cheaper, so-called value stocks i still think will be a much better place to be. while not necessarily will it immunize you from losses, there are low expectations and there are still a lot of p-e multiple handles to come off the high-flying stocks, the tech stocks, the areas of the market that everyone has loved over the past five-plus years and i'm more attractive to thinks that

people care about and it's the same thing that happened in 2000 to 2002 where a lot of the value stuff actually stopped going dun. at the same time the tech stocks stopped going up >> peter, what do you think is the catalyst for the sudden return to the kind of capitulation moves we saw last week was it the comments from powell yesterday that seemed to indicate he would stick with their plans for tighteningand saw no reason yet to back off? >> i think so. i wouldn't be surprised if we do bounce to 4200-ish in the s&p, but what has really -- it's only beginning to get priced in is the economic impact of this inflation and higher interest rate world that we're in up until this point, it has been mostly on the p-e side that has seen this adjustment and it has barely been on the e-side which i think as i said earlier is to come >> all right, thanks peter, always good to see you,

my friend. >> peter boockvar. >> our next guest says those moves can result in inflation that's too high or a contraction in the economy that's beyond what's desired and he's still finding opportunities. let's bring in dave smith, the chief investment officer with rockland trufst good to see you again. let's start with what you're telling investors right now. >> we're telling investors as we do, as uncomfortable as this period is, you always think long term i don't know if it will last another month, another six months, another year, but for our clients when we think five, ten years out this is an interesting entry point and i don't know if at then of the day mach a big deal as to whether or not you wait a week or a month before you start to invest and you need to remain invested. it's time in the market not timing the market that results in success, ultimate leet. >> what gives you the confidence that this won't be a period of chronic underperformance for

stocks >> well, i guess at the end of the day we have some degree of confidence that the federal reserve will be able to manage their way to an okay outcome i think the fed has chaired what's not optimal and something dramatically bad >> if you think of underlying the quantitative easing and the quantitative tightening and we've only done this before, so it's calibrate, and to nail down the perfect resmooth landing for our system to prevail. sat at the same time we have companies that have the ability to manage through the environments and have some consistency and we can manage the cost side and ultimately grow their earnings streams at a reasonable clip. >> i wonder what you think of

how consumer behavior is going play out over the next, say, six months we will hear from mastercard survey, and it will tell us that consumers are spending a lot and spending on experiences and their airline bookings are above 2019, pre-pandemic levels and other areas of expenditure are higher, as well. i wonder what is going to happen when consumers have that ultimate reckoning that they have on the one hand, declining wealth a lot of wealth has been destroyed here or transferred and increasing prices. that is the anti-wealth effect that is going to -- i can't imagine that it isn't going to catch up with and dampen consumer behavior as we move into the summer and fall >> tyler, you're spot on, and it is murky about what will happen here and a lot of data is looking and clearly, was there

pent-up demand and we're seeing that in the statistics on travel on mastercard with transaction activity and so forth. what we peered through in some of the earnings we've seen this week, from some of the retailers and it seems to be the lower end consumers and the one who is most challenged here even in t.j. maxxs. >> as always. >> they're in the lower end demographics it's more challenging than their hiring demographics so there's a tale of two stories here and it's important to keep into context that yes, this has been a challenging start to the year, but we're coming off very strong years and the wealth effect is certainly a mental and psychological thing, but people, if they think back to where they were two or three years ago they're very much ahead of the game and are above long tomorrow averages and most people are still feeling good so long as this doesn't continue and persist. >> let's talk about two names

that you would be recommending here. >> yeah. we're looking to try to pick from the rubble. meta, formerly known as facebook folks know it was hit pretty hard the first quarter was challenging for them in the way they were able to track their ad spend. they seem to be making some progresses on that and the stock in the meantime has come off what was sort of above market multiples down to levels below the market which is remarkable with a company like the growth rate was trading at higher multiples than the market and sometimes as high as 2x the market and we're interested in taking a closer look at investing and own our facebook meta platforms another one we're focused in are chubb, and they've been up for two or three weeks and high

interest rates are generally speaking and particularly to banks and insurance companies, the difference between a bank and insurance company is if you get the economy wrong and there are challenge e ths, the banks have issues with the history that doesn't ensure chubb. you get the benefit of the interest rate rise without the risk of a substantial impact from the slower economic environment particularly through chubb who ends up their insured skew wealthier so less impacted by that >> your final one, we have to move along is t. rowe price. you like their conservative management, you like their cash flow and you like their dividend. >> yeah, and the multiple is incredible at 13.3%. maybe the earnings multiple will come down a bit and great long term holding so we're very bullish on t.rowe.

>> thank you >> thank for having me. >> what may be causing much of the entire inflation story and oil and gasoline all taking a toll and they're averaging $4 a gallon in every state for the first time ever even in texas, brian. what's going on? >> even in texas their 4.54, and they're watching us and laughing at us and i saw th $6.50 in parts of l.a. prices very high and creeping up $5 bucks a gallon in the northeast. tyler, you know this you've been doing this a long time and this is the ultimate regressive tax and we all pay the same for a gallon of gasoline no matter hugh much we make or what car we drive, we'll pay about the same when we look at prices going up like this, the average driver

easily about 50 gallons of gasoline on average. do the average and multiply that by two cars, a household, kids, et cetera and soccer practice gets more expensive. for those who can afford electric cars which are still incredibly expensive by most beings they're just driving right on by, but if you are going to the station, it is inflation nation. >> it is also inflation nation when you look at diesel prices whether you have a diesel car which typically get better per-mile, per-gallon mileage and the diesel costs are way off the roof and that affects the transportation sector dramatically >> 1981 our family briefly owned a peugeot diesel wagon and it lasted about six months. it's cleaner now if you're a trucker, tyler this is tough it's not the united states and

the new york area. they were showing price of diesel around the new york area. in brewster, new york, long island city, i understand it's not representative of the country and it's a logistical challenge, but the price of diesel was $7.50 per gallon. if you back that out, just 42 gallons of fuel in a barrel of oil that would be the equivalent of $315 per-barrel oil it's not one to one. the price of gasoline is only half a price of a barrel of oil with marketing transport i'm just trying to make a point of how expensive it is and there were concerns about shortages and no doubt they have pricing power right now. oh, and by the way, tyler, you guys were talking about retail and margin compression everything in that walmart or target is probably trucked in. it probably came on a ship and

it probably gotta a train at some point and that's why energy inflation is the macro story in many ways. >> brian, we're also seeing a lot of pressure across the transports today at last check they were down 7%. this hits them hard as a bellwether and just a supply chain story it's about the most frustrating thing that could be happening right now. >> it's brutal i mean -- and the trucking companies, i've got a good buddy of mine who runs a small trucking brokerage and he does the small loads and not hit quite as much and they'll find ways to charge it back the trucker and the trucking company will not hold the whole thing. it goes down the whole line. natural gas is not getting the attention it deserves. we were in london in november of last year trying to tell their inflation story. everything focuses on gasoline i get it because i see it every day. do not lose sight, please, of

utility costs. natural gas over $8 and the utility bills, it will reset much higher and to make stuff. you need a lot of power to manufacture cars, solar panels and everything so the fossil fuel inflation story is going to hit a lot of other parts of even the esg story, guys and this may be the story and utility costs heading into the summer and with that in mind, s&p global dropped tesla from their esg index today and tesla's elon musk tweeting out, insane esg is an outrageous scam. musk back on the record this time going after esg good luck, america. >> thanks very much, brian sullivan our next guest says gas and diesel prices are headed even higher you're not surprised to hear that from what you just heard from brian he expects gas will approach $5

a gallon and diesel will average $6 a gallon. let's bring in bob mcanally. good to see you. did you hear anything in brian's report that you disagree with? >> no, not at all, and i feel the pain you know, these gasoline and diesel prices are enforcing the iron rule of economics that you can't consume what you are unable to produce or draw from inventory and import and the supply side is really stretched both in the crude oil market and the refining sectors and so i wish i had better news. i really did it's not a happy forecast, but these prices have to go higher because there is no sign yet of real demand capitulation, real demand declines and they will go higher as that happens, unfortunately. >> has there been any effect from the release of gasoline or supplies from the strategic petroleum reserves

>> not really. one could say that the release of crude oil from the reserves made prices lower than they would have been otherwise, crowd, but the problem isn't so much crude anymore crude at $110, $113, the problem is shifting to the refining sector and the margin between the product price, diesel and gasoline and crude is $50 or $60 a barrel, what normally it is and it is that refining bottleneck which is now something that the xpr can't address well so no, it hasn't had a big effect and had it not been used and it's not the big deal, that's refining right now. >> bob, do we need a recession in order to balance the energy markets? >> i hate the word need, but you know what? not every recession began with an oil price spike, but every -- and i mean every oil price spike led to a recession

they just are there at the scene of the crime and it continues to rise until it crushes consumption. you can get from '03 to '07 and '08 you can have rising energy prices with the economy and with the central banks drawing liquidity and geopolitical risk and i'm afraid it will not end well and possibly, let's hope a mild recession >> as brian pointed out there, not only does virtually everything that you buy out of a target or a walmart or a best buy or a train that uses diesel and an awful lot of the trucks themselves have petroleum in them is there any way that you see consumer product inflation declining in the near term >> it can't.

not without a recession. >> diesel, we talk about gasoline and it's what we see and what we pump, but diesel is the economic fuel and the lifeblood of the economy and transportation and power in some cases and so forth so it really is embedded in economic activity and it filters through so many goods and services, so no. i'm afraid we'll have to march higher here. it will affect broader consumer price inflation. energy is the tail wagging the dog here >> bob mcnally, always good to see you, bob. >> thank you shares of target the results one reason the market is selling off deeply today they warn of unusually high costs that are eating into profits. courtney reagan is here. court? >> target and walmart results are key examples of the challenges that inflation inflicts on companies even when consumers are spending at least on some categories and walmart

and target have stronger than expected sales as costs soar well above levels even just a couple of months ago so target and walmart pushed vendors to keep the price of the day charge as low as possible to keep prices low for consumers, but with decades-high inflation there's only so much that can be controlled when it comes to those prices the cost of transporting goods was significantly higher for walmart and target this quarter and took a big bite out of profits. target now expects $1 billion in incremental costs this year. that estimate has changed markedly in the last three months doug mcmillin called out inflation particularly in food and fuel and the higher costs for containers and storage while both target and walmart say the u.s. consumer is holding up shoppers did buy less discretionary higher margin categories like tvs and

appliances at target while food, household essentials and beauty were top categories there. >> you still wonder how much read-through there is. for example, we get bj's reporting and dollar general and some of the home improvement names are holding up relatively better >> absolutely. it is interesting to try to see what this means for all of retail and generally what this means about the consumer and lowe's results were very different from home depot's results. it is about who can operate well in this inflationary environment. >> often a walmart and target are re-grouped in the same bucket like a tjx and ross stores when it comes to being beneficiaries in this environment. we know walmart and target did not manage those costs well even if they were higher than they had first thought.

tjx largely facing some of the external costpressures and the came in about what we expected and those shares are much, much higher today >> they're much better >> courtney, thank you very much courtney reagan. higher costs are also hitting the housing market on that note let's get to diana olick. >> inflation it materials to build the home and going into the home building materials are up 19% year over year and close to 36% since the start of the pandemic and that's according to the national association of homebuilders and part of why they reported a huge drop in builder sentiment to a near two-year low for example, the price of softwood lumber is up 60% from last september concrete up nearly 9% and gypsum up 15%, and that's the wallboard. furniture is up 15%. appliance nearly 8% and overall

furnishings and decor, up 8%. >> for homebuyers, talk about inflation in the price of of a home up 21% from a year ago and then add into that the rate on the 30-year fixed. it was 3.15% a year ago. now we're on 5.45. so no wonder mortgage applications to buy a home dropped 12% last week and single family housing starts, we have a read, affordability for buyers and cost for builders all taking a serious hit. back to you guys >> so, diana, are house prices likely to come down? i imagine maybe they would at the entry level where buyers might be most sensitive to rising interest rates. >> well, that's the million dollar question and you have the problem of the housing shortage which keeps overcoming all of the historical fundamentals that we usually gave to the market which is when sales fall prices start to ease up, too, and we've

seen sales down and we haven't seen any ease up in home prices and we'll existing home sales in april and maybe we'll see something there, but so far what i'm hearing from realtors on the ground is sellers are still not lowering their prices and they're having to have tough conversations with them, but buyers right now, they're getting to the point where they might want that house and they don't want to pay it and they're see a big drop in bidding wars perhaps prices don't cool soon >> diana olick let's go to dom chu. >> we want to watch some of the hardest-hit sell-offs and it's the chipmakers we're focused on right now. constituents of the etf ticker smh down more than just a lot of folks out there. you've got giants like nvidia, qualcomm, amd all off by 5% or

more and you can see there in trading so far elsewhere in technology. it's the cloud stocks and also enterprise computing, extending recent weaknesses. you have zscaler, okta, tata dog. all down 30% just in may alone then you have giants like adobe and salesforce so watch those mega-cap names especially in software and semis. ty, i'll send things back over to you. >> kelly >> big tech stocks getting rocked in today's sell-off amazon down 6% and apple down 5% and alphabet dun about 3% which is one of the stocks wall street is looking to for steady returns. deirdre bossa standing by. let's do a quick check on the nasdaq as we go, as well 4% down today, deirdre and no selling relief in mega-cap tech. >> yeah, well with today's drop,

kelly, alphabet shares within striking distance of a two-week low. this is a name that wall street looks for for steadiness and consistency, so today's move is indeed, jarring, but if the ad market softens in an economic downturn and recession google will get hit when i spoke to sialcindar pa chai walmart and target raising concerns about inflationary pressures and consumer demand. we talked to venture capital investors on tech check, kelly, who are warning their portfolio companies to scale back on marketing and ad spend and that is typically the first area that companies scale back in a downturn and advertising refer new that is still alphabet's bread and butter despite efforts to diversify revenue

they like snap and meta, not to mention they love that quickly-growing cloud business that's susceptible to the backdrop it's hard to pay attention to that including the mega-caps that still large leigh remains intact among analysts. >> less than 30 minutes left in the trading day. maybe you wish it was 30 minutes and stocks were near sessions lows let's go to bob pisani for a full report. bob? >> the important thing here is we're off of the lows and we're near the closing low of last thursday it is a very rare day when you are going to see walgreens down this much. all of the consumer staples and defensive names and that's a new 52-week low for walgreen's not coke coke is one of the few

performers that's up on the year it's up about 4%, but procter & gamble, 5% down. folks, i've been doing this for 25 years it is a rare day when you see proctor down 5%. you can go years without that ng that is the lowest volatility stocks and lowest beta stocks, it just doesn't move that much on a daily basis for it to move 5% is quite extraordinary. a curious group here, pharmaceutical stocks have become the new consumer staples and they consider relatively safe and merck's had a 52-week high right now, for example. amgen is doing well. verizon is doing a sdeebts day and travelers, as well do they have anything in common? on the dividend yield side of things and some of the utilities are doing better and the higher yield has a little bit of cache although not that much if you look at the s&p, 39.30, that was the closing low last thursday and we were above that level scaping in the bottom for

the last half hour or so one thing i watch is for the vix to get to extreme levels to see if we have short term. i emphasize short term bottom and what is an extreme level for the vix. usually when you get up in that territory you get short term bottoms. i don't know if there is a bottom, and i'm considering the fact that we were down so much the vix is not that dramatically high keep an eye on this going into the close. >> thank you, bob. >> to the bond market where yields are falling as inflation concerns linger. people buying bonds. rick santelli, tracking the action hi, rick. >> hi. yesterday our chairman, carl, had very tough talk at a wall street journal event keep that in mind. if you see the two-year note yields most associate it with the fed is down about 3.5 basis points and if you do a two-day

chart you can see it's still in the upper end of that and that's significant. his tough talk left a lasting impression on short maturities and fed fund futures they they haven't moved much. it looks like the 24-hour chart until you tag on yesterday you can see how much more damage there is than the long end which is a hedge to equities like it used to prior to the inflation issues and supply chain issues that have arisen and if you look at the dollar index historically noted for a flight to the safety when the dow gets dicey with the four digit down territory while the 24-hour chart is going up. while you pair that with yesterday it has aren't gone up to negate the session yesterday. it is all very important because the yield curve is flattening and fed funds futures aren't changing much. so the tough talk has had a lasting impression in treasurys. tyler, back to you >> rick, thank you very much >> let's look at the energy

complex which is closing for the day, pipa stephens with the number pipa >> tyler, oil down 2% and proving it's immune to broader selling even as supply concerns exist. we have inventory data with a drop in oil and gasoline stocks although there was a modest $1.2 million a barrel build in distillates. this data was broadly supported and maybe not quite bullish enough for the big gains we've seen recently. so the market is still tight, but maybe not as tight as some were anticipated wti and brent ending the day down 3% at 109 natural gas, though, is up about 0.4% at $8.35 per mnbtu and gasoline futures we're treating now down 6%, retreating from the $4 level that we saw earlier in the week >> pippa, thank you very much. let's continue watching the markets here with our next guest

who says the problem isn't just inflation itself it's the expectation that it is here to stay for a while transitory that was so 2021 let's bring in ann barry, wheelhouse cio, welcome back good to see you. >> thanks, tyler. >> what has to change for inflation to go away >> we need to start seeing the big distributors of consumer goods start saying that they anticipate supply chain blockages and other factors coming down, tyler so when i look at something like the walmart earnings and i look at the target earnings, here's what i saw to worry. you have two of the biggest products in the united states saying our margins are being compresseded which means it means only one thing they are going to be putting up prices and putting supplies back they'll be close to the retail customer and to the supply chain for the foreseeable future and the expectations that aren't

coming down in the wake of these news items any time soon >> they're at session lows off 1113 points at 31,000, and i asked one of our earlier guests who mentioned the idea of a perfect storm. i wonder how you will have declining declining wealth as people have 401(k)s and they see the sell-off and on the other hand you see rising prices, airfares, clothing these prices will get passed along and already are being passed along high are food, higher clothing and so forth is there any way that this doesn't end in a recession >> i am hopeful that if you look at recent analyst reports there's a 70% chance of the recession priced in. >> i'm in that camp and when i look in that dynamic

i think some of the consumer staples are oversold i've been in walmart for a while now and i think walmart saw it today and the big scaled businesses that aren't going anywhere any time soon, whether it's food, healthcare related and those are pockets to start looking in this recessionary environment and some things are trading at favorable price earnings ratios and accounting for slowdown in the macro economy. >> where are the best opportunities right now as we've seen so many different asset values deflate, whether it's tech or media or everywhere you turn these days? >> kelly, one i like is google and alphabet i like it even more now and there are a couple of reasons why. off the bat suite of products like utilities are the modern consumer and to the modern business we are going away and we will continue to pay for services and some of the consumer products and it's also a business with

phenomenal cash flow and goldman sachs is anticipating for this year over $9 billion of net cash flow even after $30 billion of capex spend and share buyback and return of capital to investors and that's a business i saw the cfo speaking and that's still investing behind productivity to get the cost space down and to provide cost saving tools to the enterprise client that's the kind of business where there will still be secular growth and trading at less than one times price to earnings growth and i think it's attractive >> say i am a devoted investor in index funds as opposed to individual securities. is now a time to start dollar cost averaging in, even if i've not stopped doing it can i get back in here on the theory that in five years from now while there may be bumps in

the short term it may be higher or significantly higher? >> tyler,to your point, threading that needle feeling as if asset value are seeing it and also having the patience to ride it out i do think this is a good time and one area that i've invested in the etf has been in the high-yield space and it's over the last 12 months i do think if there is patience. i do think if there is a willingness to ride out the cycle and it's the old cliche and it's not timing the market and it's time in the market, and i hear it over and over again, and this is the time to redeploy it in the etfs and actually being in this market over the longer time is important. >> interesting answer. >> ann berry, good to see you again. >> thank you let's take a quick check of

the markets with the dow near session lows and the dow is below its year to date closing low right now. so if we closed here it would be a new year-to-date low the s&p 500 at 3928 is below its year to date closing low of 3930 from may 12th and we are two points below that and the nasdaq down 459 points and only 60 points above its closing low so far from 2022. let's get to dom chu. >> where they turn to, consumer staples overall. the retailers in that sector are impacting companies like target, walmart and costco down double digits and 13% in trading so far

today and the food staples, we're talking names like j.m. smucker, kraft heinz, campbell's soup firmly in negative territory down between 10% and 8% they were at highs less than ten days ago and have fallen similar to what's happened with general mills and kellogg. so those consumer staples, usually a safe harbor in storms not performing that way. >> thank you very much let's check in with the options activity about where the market could be headed next for that we bring in chris murphy at susquehanna. chris, welcome and what have you got? >> well, you guys keep talking about the staples and the xlp the saptaples etf, typically ths

products don't move that much. that's supposed to happen once every couple of years. you don't see that very often and this all follows earlier this month a lot of bearish options flow in the staples and a lot of the individual names that we had been highlighting. >> what does that tell you >> you know, we're down about 10% in the xlp, the staples since we highlighted that. i'm looking for the trades to start to be closed down and monetized and that might tell me, this hedger which has been right is seeing the end of this move we haven't seen any of that yet. they seem to be riding this position out and until we start seeing some monetizing of that position, some of these hedgers might think that there's more down side. >> wow that's on the staples specifically

we talk about other areas where we see pretty big standard deviation moves and transports are down 7% on the day >> another thing that we've kind of been looking for is the broad selling and everything type move they're typically lower with volatility and those were a little bit less expensive to buy options compared to a high growth tech, but now we have an instance where it's somewhat of a buyer's strike and everything is being sold at once so we're seeing some outsized moves in a lot of those other areas just because everything is being sold together and you have typically lower volatility sectors of the market with you're looking at a hedge. are you surprised that so many sectors of the market including those consumer staples like walmart and target

that's number one. if this were really a volume have we seen that yet? >> not surprised if you want to think we're closer to the end and you really want to see everything sold together and that is happening, but you make a great point about the volume so i was just recently looking at the volume for the s&p components today it was about 5% below its 20-day average. so in a day when the s&p is selling off 3.5%, 4%, you'd expect a lot of volume you're seeing a lot of volume from the last 20 days and the spy is even lower. if you look at the volume spike to mark a bottom, you're certainly not seeing that. >> chris, would you offer a parting word as we go out here we saw obviously, some pretty poor trading behavior last week. we had three relatively better days and now this. what does that tell you?

>> well, you know, everyone was talking about and expecting the bear market bounce and everyone was talking and expecting this we'll need a bear market in the s&p and it's not down 20% from the all-time highs and we're getting pretty close and that could potentially be a sign and i would watch out for that volume we'll need to see the volume spike before we feel comfortable from a trading side. >> all right volume, volume, volume chris, thanks so much. we appreciate it chris murphy >> let's get a check of what the charts are signaling here with the next guest who says they're still positioned for a bounce. ari wall is head of technical analysis at oppenheimer. great to you here today. tell us more about this. >> yeah. the market is in a bear market i don't think the evidence is compelling that this is a regime

shift. as you look back through history and go to 1932, the median bear market in a longer term bull cycle has lasted seven months. you typically drop the peak to trough 21% so at the recent low point the market was down four months. so we hit a lot of magnitude and we do think more time is needed and you need to fill out that base, and i think rallies should be considered bear market rallies, with that said, but a lot of the indicators have reached subtle extremes and it feels we overshot the down side indicators and they're at pessimistic levels and we could be set up for a bounceback in the 50-day moving average. >> would that be a headfake? >> i think that should be the assumption, tiyler

the damage has been done it's down to a full reset and until you see a multi-month pattern, i think upside is limited at that 4300 and you can see a final q3 low ahead of a y, the presidential cycle, does typically improve in the fourth quarter of a mid-term year we could see a resuming bull market in the fourth >> the s&p, i'm not sure what it is to the minute, but something like 18% as a broad index, off its 52-week high, which was back in the first week of january if you take that index apart and you look at the average stock in it a large percentage of those stocks are well more than 20%, correct? >> that's right. and that's been the key technical warning throughout this

how bad the internal bredth has been, didn't confirm the january peak the cap weighted index was masking weakness on the surface. we like to look at the percentage of nyse stocks it's a great indicator it got down to 22% only 22% of the nyse was above their 200 interday that's a low reading historically readings has marked your major low point what that indicates to me there's still some surrendering that's needed in some of the leadership names, possibly in the value areas of the market. >> where would you tell us to look for the best opportunities right now? >> it really depends on your time horizon, kelly. our top three sectors are

technology, utilities and materials for three very different reasons. i think obviously in a bear market, you want to have some defensive exposure i think utilities are best for that i still think this tech-led secular bull market is intact. i think longer term rotation once we get a turn in the market, growth is going to rally a lot. i think positioning towards that you want to be on the large cap side i think the small cap side is probably dead and done and you get a speculative bounce the mid-cap names are structurally intact. that's what you want to be picking at here. they're going to continue to back and fill with the market through the summer as we think of that turn in the back half of the year, it's a great place to be. >> you mentioned three things. which one of these doesn't belong you sort of think technology

doesn't belong but you explain why you think it's a good place to go right now. thank you. appreciate it. >> my pleasure >> let's get caught up on where the market stands. the dow is off at 1122 i believe it was steve grasso could see a low in the 3800 enabled, 3850 for the s&p. the nasdaq off 4.5%. this is getting to be, kelly, a somewhat familiar story with nasdaq down 560. transports, the worst day since june of 2020 we remember what was going on in june of 2020 nothing, honestly. big cap tech selling off amazon down 7% apple down 6%. kelly, they're taking my apple, they're taking my amazon,

they're taking my walmart. target and walmart getting punished higher costs are eating into profits. there are bright spots always are as jim cramer says, there's a bull market somewhere. verizon is higher. verizon up two-thirds of a percent. draft kings and ea, top performer in the nasdaq. ea, electronic arts. my son plays a lot of games. >> he's single-handedly holding up the market. >> he's a player for more on the market sell-off let's bring in our friend the market veteran art cashin at ubs financial services how have you been? >> well, i've been okay. this is an interesting day you might take me with a grain of salt, tyler i wrote this morning i thought it would be a down day and i thought the dow might get down about 400 points or so

i got the direction right. i seemed to have missed the amplitude. >> we have an hour to go, art. you may be righter than you think. this last hour has often been where the tale is told what can investors expect the next few months as you look at how the indexes are performing and how individual sectors of the market are performing? >> i thought this bounce we got on friday might last for a couple of days, maybe even the week that doesn't look true to form i think we've yet to see the true lows, tyler i think there's a couple things that have bothered the markets for a week or so now

one obviously the yield on the ten year that gets up above 3%, the market gets very nervous and itchy, particularly the tech stocks and the other things, strangely, bitcoin because they were shocked with that so-called stable coin which proved to be unstable i think that left the fear of a systemic crisis in everyone's mind orange county, california. weakness in bitcoin, the market gets edgy again. i think what you heard from target, everybody saw the walmart thing, how could they have missed things so badly? and yet target -- you have two of the greatest retail

merchandisers in the world, and they both admit they missed some of this. systemic inflation is there and shipping problems continue, and most importantly, tyler, they brought up the idea that the cost of diesel and other things are going to begin to eke heavily in that shocked the market to a degree here. as you say, i think this last hour will be critical. >> we've heard a lot of talk today, but you're the first one i've heard who mentions the deep, deep sell-off in bitcoin and cryptocurrency and the disappearance of that so-called stable coin and the idea that we could be looking potentially at some kind of systemic risk like those references to orange county i remember that bond crisis out

there or long-term capital it's important the linkages in the market or market psychology, art. >> yes when you've been around 1,000 years, as i have, and you get to see these things over and over and you could watch almost by the tick in bitcoin over the last couple of days. so i think what the viewers have to watch now, we're at a critical point, if we go into freefall or if we get much weaker, i think bob pisani noted that the s&p closing low is 3930 and if you get blow that or, god forbid if we go into free fall, 3860ish is the intraday low. you don't want to make a lower low that will make a lot of people who hadn't been nervous even more nervous. >> one of the great benefits of speaking with you is to draw on the cycles you've been through give us some thought what

analogies pop to your mind here. 2000, 1970s, 1987, the financial crisis what comes to mind for you here? >> yeah, no, i hear a lot of people talking about 2000 but to bore you hopefully briefly, 2000 was like nothing else. do you remember the phrase y2k, watch out for y2k and computers were going to fail and your bank account was going to disappear and the fed decided that people would wind up hoarding money and they pumped money into it. and what happened the computers were going to fail, everybody bought new computers so you had a big rush in to tech stocks with a bubble of money that the fed had put in. and when y2k came and the fed called up and said how much money are they hoarding, the bankers laughed and said they're not hoarding anything. they're using your money to buy computers. they took the money out and we collapsed. i don't think that is analogous. what is a bit more analogous are

the surprise events. if you look at the orange county, california, usually you get an event like that and so i think you want to be very careful here. >> all right >> let me just sum up by saying, viewers, never bet on the end of the world. it only happens once, and that's pretty good odds. >> and we're going to leave it there, art. >> be careful. >> thank you so much for your time and insights today. thank you for watching "power lunch. >> "closing bell" begins right now. thank you, kelly and tyler major averages under serious pressure as we head into the close. the dow down more than 1,100 points the most important hour of trading begins now welcome, everyone, to "closing bell." take a look at where we stand with an hour left of trading down across the board in just about session lows it's the worst day