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 we've seen

since back in 2020 and it's a broad-based sell-off every sector lower right now in the s&p 500 which is down about 4% the hardest hit area of the market consumer discretionary. that sector alone down about 7%. consumer staple is right behind it down about 6% and technology, the growth names, getting hit again, especially the mega caps, which have really been dragged into the selling late in this process but down heavily today talking about apple and amazon, even energy is down again that's been the strongest performer so far this year still up 45% heavy selling today. industrials, materials, communication services what's holding up the best defensive groups, utilities and health care. but even they are lower today. the five worst performers in the s&p 500 right now are almost exclusively in retail offof that target earnings miss which is a big part of the story look at target down 27%. the ripple effect here is large.

dollar tree, the dollar stores, the retailers in grocery, costco, kroeger, i can't remember a day like that tractor supply old dominion it gives you a sense of where the brunt of the pain is we just want to tell you for a moment why i just got off the phone with the head of an equity hedge fund it's twofold number one, there's always this delayed reaction to the fed chair powell he spoke yesterday he was very hawkish. very tough on inflation. we're going to do what it takes. not too worried about the market selling off. an anti-growth message that's percolating in the market today a day later. and then target was a big wake-up call after walmart that we might be later in the cycle than the market previously thought, that investors were thinking you have pressure on earnings as it relates to inflation. it wasn't just supply chain, which can kind of be brushed off a little bit because it can

hopefully get better it was wages it was issues they couldn't pass on to the consumer that sent a stagnation message we'll talk to goldman sachs' former cfo marty chavez, now the vice chairman of sixth street and we'll talk to allianz mohamed el-erian first up we'll start with the broader market and stocks taking this big hit mike santoli with a look at the recent pain we're seeing in stocks today compared to prior pullbacks. it might or may not be a new fade as mohamed is saying. we were right down here in the s&p 500. moore like 3860, that type of range. 3925 more than 1% above that. the closing low 3,930. the bounce weep got friday and again yesterday i and a lot of other folks thought friday's

rebound rally thought it had enough going to carry higher a lot of folks agree with that and they would be selling above. to go to your point before, sarah, in terms of what the market is trying to navigate it goes to what i've been trying to say which is we're navigating a narrow path to a soft landing. one side is a hawkish fed. the other side are we going to have enough growth to get us through the hawkish fed. i think you can deal with what powell said yesterday if growth is going to be okay, if the consumer is fine and vice versa. maybe both at once is tougher. also, though, it's continued l l liquidation. back then we were about 22 times earnings right now we're roughly 16 1/2 times earnings earnings have to hold up let's look at past cycles when you can see the decline in the s&p's price earnings multiple from peak to trough in prior pullbacks goes back to the late

1960s. a lot of them in this the multiple went down 20% plus. 18% here that was the 2018 sell-off but if you get a devastating recession and earnings fall apart, that's when the multiple really has trouble this is what we're trying to actually figure out is which side of this we might land on. also, we started at a higher level of valuation so that's why betting on the market because valuation looks better is in some respects hoping the pendulum doesn't swing all the way and it gets back to neutral. >> but if you are sitting there wondering another 4% down day on the s&p, how does this end you might want to see a day like today because you want to see that kacapitulatory selling >> what's going on today the market is attacking the areas people thought were relatively safe, right? that is the consumer staples costco and walmart are in the

sector but smucker and the branded goods companies are going down with it that's one wave in this process. yeah, sure, you would love to have a more comprehensive flush. we'll see. probably today isn't enough to do it if we land right here. >> down about 4% right now as we speak. we'll see you soon stay close for more let's bring in mohamed el-erian joining us on the cnbc news line. haven't been too optimistics about stocks, mohamed. what do you see happening today? >> today is a new phase as opposed to just a continuation of what we've seen initially this was a sell-off based on interest rate fears and based on financials conditioning tightening today it has all the elements of also being a growth scare. we talk about target we talked about walmart. we talked about the fed being

late and, therefore, having to tighten quickly. look at the bond market. unlike the previous sell-off, bond prices are going up and that just suggests to me that this is a new phase of the sell-off >> here's the problem, though. if you are starting to price in a slowdown or a potential recession, this growth scare that you talk about, you might want to be going into consumer staple stocks like a walmart or a target or a smucker or a campbell's soup, right, that are defensive and hold up. definitely not working today what do you do >> we have to recognize we are restoring value. the polite way of saying we went too far on liquidity we went too far on the notion that growth can remain strong even though inflation was out of control. and now we're recognizing a different macro environment. what you saw in target, what you

saw in walmart, even in home depot yesterday was all about the macro becoming micro the bond market was, as usual, ahead of the equity market and now it's playing catch-up. >> so what does that mean? what are we in for >> there will be trading opportunities. on twitter on thursday i thought we had sold off yesterday and i put it on twitter there will be trading opportunities. but this is a market that still is very vulnerable growth is slowing in the major economies. not just the u.s. but even more so in china and even more so in europe and we have to respect that. it's a different global macro environment and inflation will remain a problem for a while. >> so what, we should be moving to cash if you haven't already done so? >> cash and cash equivalent.

>> a lot of these safe havens just aren't working. gold is barely working the defensive stocks are not looking too hot. >> two basis points. the long end has moved by a lot more there is now value in the safe havens you're still losing money in real terms but it's a good place to shelter until this growth term passes. i think we've mostly priced in interest rate risk i've been arguing we hadn't priced in yet the growth concerns one other is market functioning. those of us who are looking at the micro of the markets, see pockets of liquidity this is a tough environment and you have to respect that >> where do you see pockets of

liquidity and what if we see that expand? >> you see it in sectors like, for example, what we saw in crypto liquidity disappears almost instantaneously and then in the very outsized moves in the treasury market. look at how much we moved yesterday. on what news did we move that much yes, chair powell was more hawkish but not to that extent even in liquidity, in the treasury market, you see an outside move in response to small news that would take us to another world. i don't think we will move there. >> you have been saying,

mohamed, growth scare, slowdown fears, that's what's getting priced into stocks right now you have not said recession. have you changed your mind >> i do not. the baseline is stagflation. i think recession has become the risk scenario. we get there if we get another fed policy mistake but this would be the first three policy mistakes were small compared to what this would be the fed is so behind this would be overtightening or undertightening? >> this would be slamming on the brakes, panicked into slamming on the brakes and not understanding market functions just like in 2008, just like in

2013 it's important to have market functioning if you make the policy mistake, it's because you're going to end up having the financial sector be the tail that wags the dog of the economy. it is a delicate maneuver and have to understand the marketing functioning of it. >> they have a new dallas fed market president coming in >> she is wonderful. >> it's always good to talk to you, mohamed el-erian from allianz. coming up in "overtime" scott wapner will be talking to scott minerd the stock story of the day, target reporting first quarter earnings that sharply missed wall street estimates. profits were hit by supply chain, higher fuel costs, lower than expected homes of discretionary items.

the same thing we saw yesterday from walmart trading at lows now we haven't seen since november of 2020. target was just down graded to a hold why were you and the market shocked from what we got from target and walmart >> i think we were all caught a bit off guard by target's really rapid and sudden shift in outlook. it was just about two months ago they had their investor day on march 1st and everything was relatively okay then and fast forward two months later and we're talking about big inventory, discretionary spending, higher supply chain costs. how fast things have turned the past two months or so. target specifically looks like a

lot of pressures experienced this quarter will flow into q2 even the back half of the year that's why we down graded from a hold to a buy. >> it's given back almost 30%. is there an opportunity there? is that overkill or no, you're not touching it? >> we are about $10. we were $15. the margin pressures we think will continue in the back half of the year. >> paul, some of the issues arun laid out, why you're seeing double digit declines which is why, i guess, you're seeing the market impact. extrapolate what this means for overall investors. >> if target and walmart can't

keep up with the rapidly changing environment, who can? some of the biggest retailers in the world and having these types of issues. as an investor to make sense of it all is difficult. they referred to issues with the back of the store. the time for retail stocks when they do best is when the consumer looks horrible but things can get better. right now the consumer is in pretty good shape, but you have stimulus is gone you have inflation eating away at savings, and so you have an issue where the outlook isn't going to get much better for the consumer here and that poses risks for the overall economy and the retailer specifically. >> arun, if the problem in a

target and walmart and for all the other retailers are issues like freight costs or supply chain and even wages, that should be coming down. i hate to use the word transitory because it's banned now, as the fed continues to raise rates and the economy softens, should normalize, shouldn't they >> it sounds like inflationary pressures will continue at least over the next several months and after what's going on in russia and ukraine. a billion dollars. the retailers have been able to pass the costs on to consumers going forward a lot tougher times. inflation is starting to eat into budgets that will have a ripple effect

that's going to result in a lot of pressures from retailers. >> package food companies among the hardest hit. if this is the market saying consumers slow down. some of these pressures. where do you want to be if the u.s. consumer, which has basically been holding up the global economy starts to slow. >> i think this will be a rocky period for the markets a stock like walmart, it has over the last ten years is not necessarily cheap even after the pullback yesterday for the market broadly and different areas of the market we want to invest in stocks that have earnings and stocks that are trading cheaper than they

normally do. the tech sector trades at a premium but within technology which are trading in line on a valuation basis and have traded at about a 20% premium that's a sector we like here they've been outperforming the last six weeks even as the market has continued to plunge they haven't plunged as much but have been outperforming. as i've mentioned several times over the last several years semis are a great leading indicator for the market and when they turn higher and turn lower and the last six weeks they've been turning higher. that's one thing we can try and hang our hat on as something positive >> do you think we may be nearing an end >> you have sentiment which is

off the charts negative. you have the nasdaq -- half the stocks are down 15%. sure, we know about geopolitical concerns, the fed has given the finger to the market here saying you're on your own we have these issues, but they're somewhat priced in here. we are down in the nasdaq close to 30%, the s&p is down close to 20%. where we are a month or two i don't know longer term these types of periods and the strength we're seeing in the semis on a relative basis is something that makes us want to look at opportunities rather than sell into the weakness. >> paul, arun, thank you for joining us all 11 sectors in the s&p 500 are down the down more than 1,100 points. we're hovering at this low down 1,173. verizon is bucking the trend let's dig deeper kristina partsinevelos is covering the chips, some names

moving there and bertha coombs following health care. kristina, we'll start with you >> along with technology, chip stocks are getting hammered today, all constituents. etf in the red same story for the stocks. etf, a good barometer for the chip sector and this is today, though, at least three of the ten worst tech stocks on the s&p 500 are chip stocks. nvidia plunging the worst over 6.5% now the worst of the group land research down over 6% and then qualcomm above 6%. amd on a weekly basis, the only one in the green up over 1%. the biggest falls, though, from their grace, 52-week highs, sky works, marvel, a bright spot earlier today, early this morning, you hpd happened to be reading cnbc, you saw analog devices a strong performance raised full-year guidance. demand will be good with ev

sales and yet the stock down 2%. i was trying to find something green for you but couldn't >> you got amd on the week >> thank you >>kristina partsinevelos the health care sector is not turning out to be a safe haven there are a handful of silver linings in there >> the interesting thing a lot of these health care sectors have had a fairly good week. up 5% and there are a handful of stocks that are bucking the trend. gilead is the best performer the company announcing it's set to present data on breast cancer targets as well as other cancer trials and that big cancer meeting is normally a seasonal lift we'll see if that continues to be the case this month and ltc properties, this is a nursing home, among the best performers, it's up 11% year to date it has a 6% dividend yield which

is two points above the average for the sector the worst performers are health tech companies teladoc off more than 80% from the highs. >> the stay-at-home stocks lost half of their value since the pandemic jim cramer says he is buying shares of humana he put out that alert. you can get it yourself. sign up for more of jim's moves. crypto getting caught up as well coin base down 75% former sfo gary chavez -- marty chavez, excuse me, and good to have you here.

i did want to start with bitcoin. art cashin was on before saying the instability we're seeing in crypto is part of the story here and i'm wondering if you see that as we're trying to figure out how much money has flowed in and to which parts of the market as it unravels how do you view it >> i guess i would step back from what's happening today and i would just look at a very big trend, the dematerialization of assets, assets becoming digital. when is the last time you saw a share certificate for a listed stock or a paper certificate for a treasury that is going to happen. bitcoin, stable coins, defi as fascinating research as experiments. i'm not sure how investable and

will really accelerate this trend of everything. until that hams i would be wary. >> of bitcoin, coin base some of the assets have been beaten down. >> i own three bitcoin i received them at the end of the meeting with the crypto ceo back in the early days a lot of attention to alm of these developments the famous white paper announcing bitcoin is just an amazing piece of work a lot of people have leapt into it's a digital gold or a currency and it's neither.

it's a fascinating necessary experiment i, myself, wouldn't invest in it today, don't invest in it today. see huge opportunities stable climbs are anything but and the name there, stable, is meant to be a distraction from the inherent instability to me they're just currency pegs it's hard to name a successful currency peg they were successful until they stopped being successful and, of course, as we saw last week, there are many kinds >> starting to happen. >> i would say, for instance, usdc is on the way to being the stable coin that makes sense if it were regulated as a narrow bank and had federal funds usdc is most of the way there

and the other stable coins not so much. systemic structured products and as we know the markets will explore the weaknesses of systemic structured products and find them and we saw that last week >> and i wonder how much more we'll see, the structured products and how many billions have gone into propping up some of these stable climbs we're going to see more, that's what you think just to draw on that, how much of that deleveraging impacts the equity market, what that link is >> well, of course, we always read about wealth destruction and it's a transfer from tech stocks to treasuries basically when someone is talking about losing money i'm interested in the other side of the trade for someone else who is the seller was a good trade so it all depends on your point of view. i don't make market calls, as

you know we can all look at trends, we can all look at comparisons to points in the past and say the nasdaq is getting pretty close to its prepandemic levels. if you look at very long trend lines we might be returning to some trend line. that doesn't mean we won't go way below it i won't make that prediction there are a lot of long-term trends, dematerialization of assets, the convergence of data science, computer science and biological or life science these are huge, important trends that aren't going anywhere, only going to compound as you look through all of the present noise to find what's investable in those very long-term trends. >> what about fintech? that's been your thing, your thing at goldman it's been what you're interested in right now not in the mood for an unprofitable company but concerns about the credit cycle

and what that will mean for a paypal or sofi which were once so sexy not too long ago >> well, sarah, again, i think these companies are doing brilliant and interesting and innovative things. i'll go back to something i've said on here before. it was the tag line in a class i taught at the stanford gsb during the pandemic and i meant it to be slightly provocative and maybe just not so clear the future is banks. and what do i mean by that it could mean a bunch of things. one of them, which i stand by, banks that aren't really great at making software, which, by the way, banks have been doing for decades, aren't really great at that are going to be road kill and then on the other hand when you look at the fintech side look at a lot of things that they're doing and i think that's what banks do and there is a

reason that when it comes to storing money you want to store it in a place that's got some regulation, at least i certainly do, not just people saying things like, oh, we're going to try real hard to get it on the reserves soon or we're not going to tell you about the reserves because it's our special sauce that, to me, is crazy. that kind of regulation needs to open up and accommodate the finteches fintechs we're exploring different parts of that search space right now the idea that you could just write some software and say i'm a fintech not a bank so don't regulate me like a bank -- >> not going to apply. >> that doesn't make too much sense, does it >> marty thank you. the banks are getting dragged in to the selling today down 3%

appreciate it. marty chavez, former ceo of goldman sachs, which is a bank amazon one of the weaker links today, in the tech sector which is getting hit hard. it's been a rough year for amazon shares down more than 30% in 2022, but the stock still very expensive based on priced to earnings ratio deirdre bosa with a look at whether amazon's best days are behind it or still ahead >> absolutely. are we at peak amazon? 7.5% drop brings its year to date losses to more than 35% to put that in perspective, that's far more than the other mega caps in that trillion dollar club we're looking at today. that still makes it the most expensive on a p/e basis by a long shot. 71 versus 23

cracks in the fundamental story, they have also begun to emerge this year. you have slowing e-commerce growth, over capacity, over hiring the biggest labor battle in the company's history. stiffer than ever cloud competition and today more worries about the inflationary pressures and consumer demand on the back of those walmart and target earnings. all of this happening under a still untested ceo in andy jassy. it remains that go-to success story out of the dot-com crash it went on to earn a lot of money. jeff bezos may be reminding investors of that with the tweet just a few minutes ago that risky bets can pay big dividends. he posted a cover of "businessweek" in 2006 and said wall street hated awz but recognize of $62 billion amazon's profit engine

this time amazon is bigger, perhaps maybe less nimble. wall street is willing to give it the benefit of the doubt. it remains positive on the stock with one sell rating in a price target over $1,000 where it is today. >> amazon is just so many businesses, what happened to an amazon during a growth scare or recessionary period because they sell a lot of staples and have become a mainstream part but also are very connected with i.t. spending in the web services business. what is the thought on what to do with a stock like amazon in a slowdown >> i think that's what investors are trying to figure out we know that is facing more competition. we know that overcapacity problem is weighing in they have advertising which is higher margin. if we're going into a downturn, we talked about this with alphabet, streaming isn't looking like the greatest business

aws remains that north star which is why bezos probably tweeted that out a few minutes ago because that is what's going to most likely hold up best. this is a different story. that business had a seven-year head start on the likes of microsoft and google no longer. they are becoming more and more competitive and that growth rate is decelerating. >> deirdre bosa, thank you check out what is happening in the dow transportation index today. right now that key economic bellwether down about 7% or so and a lot of the names right in there down sharply on pace for its worst day in nearly two years. big names, big losses. j.b. hunt, the trucking company, down almost 9% fedex down almost 8% the ceo of transportation and logistics company, c.h. robinson another one of those big shipers in that index, bob question of the day, are you seeing a slowdown, something materially changing in the economic outlook >> good afternoon, sarah it's good to be with you today

as we look across our portfolio of global services, we really see different trends emerging. participate of our business is having this integrated service from global forwarding to one of the largest franchises of surface transportation globally we're not seeing much of a slowdown in our business. demand continues to be extremely strong domestically we have started to see the market slow a little bit there. we still feel very confident in our business model to emerge through this part of the cycle >> you were a big problem in the target and walmart corridor, the increased trade costs weighing on profitability and really we're hearing it across corporate america. what's happening on prices has it calmed down at all? >> if we look at some of the domestic benchmarks the encouraging news for shippers and receivers is we are starting

to see pricing decline from the peaks we experienced earlier this year. the challenge that's in front of us, however, really the rising in record costs of diesel fuel if you consider that a year over year basis today diesel fuel is up over 70% year over year and to put that in practical application if you're going to move a shipment, a carrier will pay close to $1,000 more today for fuel than they would this time last year and that's a real pressure on inflationary costs >> bob, thank you for joining us sorry to keep it short we have a 1,200-point sell-off on the dow interesting comments especially on the inflation coming down a little bit when it comes to freight. i want to show you what is happening in the markets we continue to sink lower here into the close, down 1,250 on the dow. every dow stock is lower united health care is the biggest drag verizon has dipped negative.

home depot 114 points off the dow. they had a good quarter yesterday. beat on profitability and on sales. microsoft, mcdonald's, walmart, procter & gamble and apple are the biggest losers in the dow right now. the s&p 500 down about 4%. let's get a closer look at the sell-off bob pisani, frank holland at the no, sir nasdaq bob, what do you see >> so-called safe sectors are not so safe anymore. some of the dow laggards and consumer staples and even some consumer discretionaries walmart is at a new 52-week low. coke is still up on the year about 4% you look at some of the consumer names, campbell soup, kimberly clark. procter & gamble, you could go many down 6% today you could go many years without seeing it down 6%. that is a low beta stock, low volatility, never move 6%.

that's a remarkable move to the down side. merck is at a new high they are safer names and are trying to replace the safe names that were consumer staples before verizon, travelers not down as much we are eight points below that that's a closing low this is very hard to figure out but i look at the vix here when i see the vix go above 35 and to 40 that's a short-term bottom we're not there yet. let's go over to frank standing by over at the nasdaq. >> thanks a lot, bob the qqq representing the nasdaq,

the worst day of the year. names caught up in the sell-off facing some of the pressure we've been talking about falling after reports of reduced iphone se orders making it easier for cloud companies to host office and other products not clear how much of an impact that is. cloud stocks sensitive to that interest rate pressure falling even harder. a persistent headwind, concerns into i.t. concerns cyber security names among the hardest hit. >> frank, thank you. ben, you put out a note, china

helped people figure out how to construct a portfolio to deal with rising inflation and slowing economic growth. >> you have to look at sectors that are positive for inflation but not such a high correlation to growth. if you think of consumer staples down, i was thinking of the portfolio it is an energy portfolio. airlines or even asset managers will probably pick up trading apartment. telecom services like at&t have done fairly okay in an environment of higher inflation.

it shows a positive return it will be the last option to take if this gets worse. >> you put the airline in there which is considered discretionary but we're sort of out of covid but still dealing with the waves of covid and there's a war still in europe. you still like the airlines? >> the reason i like it, it seems as much as airfares are really high and a lot of inflation that yet has to impact earnings airlines will go through something that inflation will impact the bottom line the reopening continues. it's flat for the year compared

to any of the other indices we've talked about on the show >> target is a big spark the stock down 26% both of them having their worst day since 1987 we remember what happened during that year. are there any portfolio moves you should be making based on what we learned which took everybody by surprise? >> i think it echoes of mohamed's comments earlier we do have to embrace the idea there is stagflation in the economy and on that basis you have to think about what does well with inflation and what is really not working in terms of growth these are the moves you have to make it's not just u.s. issue

>> ben emons we're going to go straight into the closing bell commercial free for you all hour long as we look at more than 1,100 point slide cnbc commentator mike santoli to break down the crucial moments of the trading day new data to tell us about. we'll kick it off with the broader market the major averages are near session lows even jim cramer says this has to be one of the worst days i can recall in years and i have been around the block it's ugly. >> absolutely. it's because of all corners of the market pretty much are getting hit and hit hard things like s&p futures on relatively low volume.

it's a little bit soon in terms of time to have a retest of the lows you would want to see this develop over a longer period and if, in fact, there's any buying interest the same general zone i think people have been watching, 3,800, a lot come together, a rallying point or an area maybe you would have a selling slowdown right now the stuff is overshooting we don't have a market to look through the challenges having the retail sector absorb the freight and logistics costs rather than having it flow through that's not an absolute negative >> did you hear what the robinson ceo told us the prices are starting to come down and he said demand is holding up very well

to me that's a message of demand is still strong and, guess what, some of the extreme inflationary pressures hurting profits are starting to come down. >> it's fascinating. when we saw the freight waves report, people took heart in that walmart and target for quarters that began february 1st and we're suddenly thinking this is a present issue. having overstaffing issues, that's a problem for the valuations of the stocks is it a new problem for the overall economy? that's not clear this is a market quick to sell you've not been rewarded by trying to be a hero. a number of stocks making new lows >> if you wake up and you're one

of the dollar stores seeing your stock go down off target's news. one thing i keep hearing we need to see the estimates come down on the numbers because earnings have been broadly, i would say, a disappointment have we seen analysts capitulate in any way to reflect the fundamentals the market is seeing here which is weaker. >> you've seen it in pockets they are trending a little bit lower for the coming quarters. it's not as if people are oblivious. it's not clear to me what you actually need is for earnings forecast to start plunging you don't want people to be artificial

the market has to find its right level in terms of valuation, in terms of people's risk appetite and also what it expects out of the fed. that's good news if you thought it was going to be more but still 100 basis points >> and no fed put. every few weeks we get into this period where i feel like people are talking about, well, the fed will not tolerate this much pain or this is too much and yet we have powell come out and say the market is pricing it pretty well >> the stock market, you're at 16 times earnings. the prepandemic highs down 3,400 or something like that you give it up the past year's

upside. >> it certainly feels like you are cutting into muscle, a day like today and some of the days we've had. not all red arrows in retail tjx, the parent company of tjmaxx and whole goods is the best performing stock. courtney reagan joins us is it executing better >> this one is execution they also, of course, experienced the really high freight prices they said we actually planned for it it was higher, but that's what we planned for we can figure it out no push back 90 percent plus of their initiative

it is marked down goods. so tjx is actually performing pretty well here when they looked month by month they saw accelerate and that trend has continued here into may. the tone was just so very different from what we heard from tjx and from walmart. you might say aren't alm of these retailers considered in the discount bucket. shouldn't all of them be beneficiaries right now in an inflationary environment that's not been the case the last three days. >> to be on that call today, courtney, inventory markdowns seemed to be a big negative point out of the target quarter, also maybe walmart what's happening with inventories because they were so lean on all the supply chain issues take us through what the problem

here is? >> reporter: i think a lot of it is dislocation i think that word sums it up they tried to get ahead of it. maybe it came in too fast or at the wrong time you have these lockdowns they also said customers are buying but they're buying differently. and then you look at tjx, their inventory was up, too, up 37%. to get to a more normalized level so it comes down to management and it didn't for target and

walmart as much as for tjx this time around. >> courtney reagan, look at the home builders after the commerce department reported housing starts fell for the second month in a row in april. building permits declining and mortgage applications falling 12% last week as rates for 30-year fixed mortgages are hovering yesterday we got a big drop in builder sentiment but stocks rallied. >> reporter: i call this data-palooza week. we'll get sales information tomorrow which we're not expecting to be particularly good either. the home building etf is off almost 30% year to date and i say year to date because it is when they started the rise and shot up.

they had no way to go but up during the market rally. with this bad data that we're seeing from the mortgage application, the housing starts and that permit data on single family homes, the permit, of course, an indicator of future construction and seeing that come down is a big indicator the builders are in for a rough road ahead. >> we know it's in the cross hairs and it's going to slow down there are supply shortages that might keep things better than normal what do you hear >> not that great for the builders i hear the same two words, inflection point it was a darling of the pandemic so much demand and so little supply the builders are not doing as much

they have a record number of homes that have been permitted but not yet started. part of that is because of inflation. costs are up 19% they're concerned about delivering those homes on time dr horton was raising the revenue forecast, very bullish on the coming year now when you have 5.5% on the 30-year fixed and you are at around 3% at the beginning of the year, that is going to change the picture big time for housing. it's just affordability, plain and simple >> and don't fight the fed diana, thank you mike, how much bad news is already in the housing stocks? >> well, plenty of them if you look at valuations, but that's the whole problem because you don't buy deeply cyclical stocks when they look cheap on a p/e basis. housing is peaking that's going to mitigate some of the supply issues.

i don't know that it's the epicenter from whatever the wave we get down here in the market, i doubt the down side leader it does show you there is more of a macro element to other parts of the market as opposed to just what yields are doing or people pay too much for some nasdaq stocks. >> we're down more than 4% we have about seven minutes left of trading no relief here into the close, down 1,200 on the dow jones industrial average and the nasdaq getting slammed down almost 5%. mega cap tech names among the biggest losers, tesla, amazon, apple, netflix managing partner, a total rethink of this group. they had been holding up better than the more speculative, unprofitable tech names and now they're selling off pretty hard. why do you think that is >> i think it's actually a healthy dynamic investing in tech a lot of investors i spoke to, myself included, have been waiting for some of these

companies to come in it just has been a disconnect from what we've seen with some of the small cap tech performance the last three months versus large cap. and when it comes to investors and buttoning down the hatches, they're going to look to companies they've had some gains in and i think the large cap companies coming off i've heard repeatedly that until microsoft, apple and tesla break, the market is not going to be able to get back up and running down. i think that is what we're seeing today keep in mind even with today's drawdown 5%, we'll call it 5%, the nasdaq is still up 28% over the past two years and much of that has been driven by large cap tech and so i think this actually is a very healthy piece it doesn't answer the question of the day, of course, sarah, which is when will all of this end. >> well, of course but when it does, if you're a long-term investor, gene, are you getting an opportunity and if so, which ones?

>> so we're still 50% in cash and we're 70% in cash a month and a half ago we believe that one of the x factors, to quickly answer the question when is to look at the commodity pricing. that is what chairman powell needs to batten down if you look at the seven key commodities in the u.s., orange juice, natural gas, lumber, up 100% they're not going to come all the way back down but they do play into the inflation piece. i will get to your answer to your question about buying i do want to answer the question about when is the bottom put into this. my belief is just look no further than these commodity pricing. until those come down, i think

investors are going to have unea uneasiness >> food and energy keep going up what are you buying? >> we bought amazon. the first time our fund has owned amazon the reason we bought amazon today if you look at their aws and advertising business, assume they continue to grow slower than now the retail business is priced for no growth based on our model. that's something we look to add more over the next few months. >> you also have take two which i think is actually up today or was up hard to find some winners in this environment what's the story there >> it is we've owned take two for a long time

ultimately what's exciting is it's a play on the metaverse, on content, grand theft auto is iconic franchise and will be upgraded in 2025 i did not misspeak there the mother of the mother of all gaming upgrade cycles. one thing i've learned you want to own ahead of product cycles it has a big one coming. >> apple is down almost 6% today. what are you doing with that stock? >> i think apple will be able to buck the trend i don't think we'll see that it's coming down because people are taking profits what's important are the fundamentals they are cutting iphone production is misleading it is a statement of fact they are cutting iphone production.

they typically expand the build plans going into a cycle and contract it right after. they will get into other markets. a rock steady company. i would continue to own apple here >> you've been a believer for a long time. thank you very much for some of your picks we have two minutes to go with the dow down, what do you see? >> it's pretty nasty, indiscriminate it's more than 90% to the down side this undoes that a give-up trade here it's part of the process very closely linked sectors, the pharmaceuticals, have been in

lock step. it's everything else, too, quite a little bit of a blowup trade and a wide blast zone. back to 31 not showing a lot of intense panic. it's not showing that kind of stretch. you could read that as a net positive it doesn't show you any crescendo of panic if that's what you were looking at >> it's a nowhere to hide kind of a day mike, thank you. as we head to the bell, take a look at the dow down 1,178 every dow stock is lower united health care is the biggest drag every sector lower, that is the hardest hit sector and that is target down 25%. dollar tree down 14.5%

tractor supply, ulta beauty. growth names selling off across the board, the mega cap tech, the nasdaq down about 4.75% into the close. nasdaq down about 30% off the highs after today's sell-off, about 29.5%. there goes the bell. the s&p down 4% and the dow closing lower. now to "overtime" with scott welcome to "overtime." i'm scott wapner you heard the bells. we are just getting started. i'll be joined by "halftime's" josh brown, adam parker on this very brutal day in the markets and what, of course, it means to your money we do begin, though, with our talk of the tape it is the sell-off in stocks, really set in motion by target's terrible earnings and what they could mean for big businesses everywhere did that report stop the bear market bounce before it got started? the global cio for