forward. so you're paying more for next year's anticipated earnings. those valuations got stretched arguably because of things like zero interest rates. as interest rates have fallen -- or risen, rather, you can see the stock valuations have come down. >> got to leave it there, dom. >> thanks for watching "power lunch. everybody. >> "closing bell" starts right now. stocks getting slammed as the post-federall rally evapora. the nasdaq is below 11,000, breaching some round numbers there. the most important hour of trading starts now welcome, everyone, to "closing bell." i'm sara eisen take a look at where we stand. look at the nasdaq right in the middle down 4.5% big tech bearing the brunt of the pain as we've seen lately with these big sell-offs due to higher interest rates, the s&p is down 3.7%, the dow jones industrial average down almost 3%, 853

points just around the lows of the session, down a little more than 900 points look at the s&p 500 sector heat map which tells you there's plenty of pain to go around here it's energy that is the worst hit right now, down about 6% consumer discretionary also down 5 s 5.5% everything tied to the economy, technology, materials, industrials and banks are among the hardest hit today. what's holding up the best there, consumer staples only do you know 0.7 of 1% you've also got some green for walmart, general mills, procter & gamble and colgate coming up on today's show we will ask karen karniol-tambour to the fed's big hike. plus kroger delivering strong earnings, beating across the board, raising its guidance. ceo rodney mcmullen will tell us how he's managed to get through inflation, headwinds and what he is seeing from the consumer.

let's start with the sell-off. mike santoli taking a look at the market fall-off after the three-quarters of a percentage increase yesterday. >> the fed being followed by other central banks. obviously big volatile moves in global yields. a lot of things getting piled on this market. this is a two-year chart you've wiped away all of the 2021 gains we were above 3700 at the start of 2021. we're below that where are we headed now? there's a lot of people fixated at 3500 level, maybe 3400. why is that? it's not specifically clear. it's exactly halfway between the 2020 lows at the covid crash and the all-time highs so you went from 2200 to 4800. halfway back is 35 it's also about 15 times some reduced earnings estimate. it's a thousand day or 200-week moving average whatever the reasons, the market doesn't like credit spreads that

are widening out and a risk-off tone mechanical systematic liquidation is what it looks like look at the russell 2000 going back three years this encapsulates the covid crash. we're actually into that crash zone right now it's just below the pre-covid peak now, if you look at the companies in the russell 2000 that have earnings, they're basically at rock bottom valuations if you believe the earnings, that's a conversation we'll be having for a while because the market is starting to look quite reasonably valued based on earnings, but you have to believe the earnings will hold up growing consensus those estimates have to come down. >> especially if the economy weakens into recession i just want to highlight what happened in oil prices because i think that is causing a lot of pain right now we started off the day weaker in the price of oil lost -- the losses got wiped out and now we're higher, despite the fact that energy stocks are getting hammered if we're going into recession,

that should hurt the price of oil. the federal government is doing everything it possibly can, meeting with the saudis, releasing the strategic petroleum reserve, trying to crack down and pressure refiners to ramp up production. all of it. and yet oil prices continue to go higher. >> yes. >> that's the problem. the fed can't do anything about that. >> obviously stubborn. it's a supply issue, perceived supply issue, a real supply issue, a china reopening issue it boils everything we're worried about down into one number if you're worried about inflation being stun owner and the fed having to target it, that means the fed is targeting gasoline prices. that being the case that's why inflation expectations are higher and that's why they're more hawkish it's also the biggest downward pressure on the consumer therefore, if you're worried more about recession, it also captures what you're afraid of. >> this is the stagflationary fear of all this recession talk, they

cannot bring the price of oil down up another 2.25. >> i have to say if we're not making new highs, statistically it's not going to be as bad as you think it is. we talk about month over month and year over year numbers. >> we're near 120. people think we can go to 150. >> that's a problem. >> the fed's biggest rate hikes has all of wall street buzzing will the aggressive move push the economy into recession i gathered some key quotes from people pimco's cio telling me the global pandemic and unprecedented amounts of fiscal stimulus have dealt the fed a very challenging hand. they are doing their best to engineer a soft landing, but that is becoming increasingly unlikely therefore, he says, near term caution is warranted, especially in the most credit sensitive areas of the market. ubs today slashing little target on the s&p 500 following the hike david leftowitz lowering his target to 3900

he said in a downside recession scenario, ubs says the s&p falling to 3300. veteran market expert art cashin says to watch apple and bitcoin. if either breaks, it could lead to a spillout. both are down sharply today. and eric felder wrote we commend the fed for taking a more aggressive stance in tightening financial conditions rapidly as we believe increasing the chances of recession, while unpleasant, will be a more palatable outcome than an extended period of stagflation we are expecting continued elevated volatility as almost all global markets pursue a rapid price discovery process. for more on the sell-off and the fed, let's bring in eric johnston and mike santoli is still with us. eric, you've been bearish for a while now. i don't suppose anything changed after the fed meeting, did it? >> it has not. you know, the fed is right now in a very, very tough predicament. if you think about what is going

on right now, the economy is clearly slowing down we saw it today, the philly fed new order number was one of the lowest in the last nine years. it was only lower during the pandemic gdp for the first half is probably negative. while that's going on, we just had the largest fed hieke since 1994 i think that right there sort of puts it all into perspective i think that there is a view, my view would be in there, which is that the fed is getting most aggressive at the time where they -- it's almost too late, as inflation is now likely going to start to come down and while they're getting aggressive, the economy is clearly rolling over and our view has been that the economy is going to slow very rapidly and that continues to be the situation. that's being reflected in today's market where you're seeing the recession trade being put on credit spreads are at their wides. cyclicals are getting hit hard

companies with high leverage that would do very poorly in a recession are getting hit the hardest. so the market is today for sure putting this trade on. >> how far are we till pricing a recession and what would happen to earnings in that scenario >> so one of the things that happens is that as things get worse with asset prices, it tends to have a self-fulfilling effect and so if you kind of fast forward to a market that continues to move lower, credit markets start to freeze up, you can see situations where this can kind of get out of control to the downside. you don't have any fiscal or monetary support like you've had for at least the last 12 to 15 years. and so because there's no fiscal support, republicans are likely going to take congress in november and clearly you don't

have any monetary support, it's going in the opposite direction. so certainly going to the low 3000s seems very reasonable to me it's unlikely to be a straight line we will get squeezes we'll get announcements that people will take as bullish. but when you put it altogether, we think earnings estimates which haven't started to come down need to come down and they're going to start coming down when we see second quarter earnings even though people look at the multiple having contracted, we don't think it has priced in what is about to happen, because you have to remember that the 10-year yield has gone from 50 bps to -- it's really moving down with multiple contractions with rates not because estimates are going to come down, because we think they will. >> mike, i feel like the bears best argument is earnings estimates have not come down but the bulls best arguments have to do with the fact there has already been a ton of pain the s&p is off 25% from the

highs. most stocks are down more than that we've seen evidence of panic selling. have we seen forced selling? have we seen some of the other things on the checklist that make it look like it's in the price? >> getting there absolutely. i think today will probably be at least the fourth of the last six or seven sessions we've had basically 90% of all volume to the downside you've gotten those characteristics a few times. i don't think it means it stops on a dime at that point but we're down 12% in a week and an hour about 2:00 on thursday a week ago, you were at 4100 on the s&p. it doesn't mean it can't go lower. in the long bear markets that started in 2000 and 2007, if you had bought the market when it went down 23%, it was a pretty bad experience for a couple of years. so i'm not saying the market is getting cut in half which is what happened those times, but that's what makes it tricky right here i do think the other bullish case is the fed can acknowledge

that financial conditions have tightened a lot. if something seizes up, they ca whisper that they see clear inflation rolling over i don't think we're there yet. >> we don't see evidence of that inflation rolling over. >> obviously there's a sense out there that it's a summer of waiting for these things that aren't coming in the way you want. >> meantime, when he got a real stark reminder of the global impact of all of this. i think the chart of the day has to go to euro swiss franc. we're seeing a move in that currency that we have not seen in years, an almost 2% move higher for the swiss franc after they went 50 basis points following the fed. nobody expected a move and now their entire monetary policy where they have had to come in and make sure that their currency wasn't too strong goes away now people are worried about them selling their u.s. tech stocks because they own a lot of

u.s. tech stocks so talk about the risk of the ripple effect of what's happening. >> eah i think that you're seeing six central banks in the last 24 hours raise rates, so this is not a tightening just going on in the u.s. but going on globally you know, outside you also have what's going on with the yen and you have the bank of japan trying to suppress the 10-year there at 25 bps. and that could -- at some point that could break. >> and they own a lot of stocks too. >> that's right. and so one of the things that happens in bear markets is there's all these ripple effects that you don't necessarily think about in a static market but once things start to unravel and you get moves like we've seen in the 2-year, it starts to have repercussions and you can't predict. that's where it becomes self-fulfilling. it happened on the upside to the

positive and can happen on the downside one of things you mentioned earlier was around supply. i think the one thing that would be really bullish for this market is something to, and this is maybe stating the obvious, but something to go on with russia/ukraine and the supply issue around oil that's one of the key factors here because if you can see oil prices come down, that's going to throw a positive ripple effect through the inflation outlook and really through markets. there's no sign of that happening, but of course governments are clearly in europe and the u.s. becoming much more sensitive to the sell-off and rollover of the economy and much more incentivized to try to do things creative to have the war come to an end or something creative around oil supply. that's something we'll look at closely. >> eric, given that you mostly focus on equity derivatives as a first step, short term tactically this expiration that

we have tomorrow, people are talking about how it was amplifying some of the action this week. is that an opportunity for where stuff is going to get swept aside once we get through that expiration and have a cleaner look or is that wishful thinking >> i think that's somewhat wishful thinking i think the impact sort of post tomorrow's close going into next week could have a modest positive impact. but i think the bigger impact is going to be just around where overall position is and sentiment is, which is very depressed. so could we get a bounce and could maybe expiration be a little bit of a catalyst, it's possible i just think that if that happens, the magnitude of the rally would be pretty limited. but certainly through conversations i'm having and looking at a lot of the data and what's going on in the derivatives market, positioning right now is extremely negative.

and so you are right for any sort of headline that could come out to get a squeeze that's one of the things we've seen in other bear markets, where you get governments that try to do certain things they make these announcements, they typically don't work out, but it can cause quick spikes. i couldn't be surprised if we at some point get some of those headlines, whether it's around saudi arabia, russia/ukraine, or other things governments will try to do. we saw the ecb come out today saying they were going to potentially cap spreads, things like that, which in the long term really have no positive effect and could have a negative effect but in the short term could cause squeezes here and there. >> the other thing that's happened is the 10-year yield has turned around. it started out higher and now it's lower and that hasn't given a lot of support to the market but lower yields could be a sign of an economic slowdown. we'll leave it there, eric johnston, thank you for joining us a lot to talk about today.

look at the nasdaq, it's down 4.3%. it's down the most of the big three averages 4.35% right now. kristina partsinevelos with a look at what is dragging down the nasdaq yet again, kristina. >> it seems like things are getting worse but we're not at the session lows which was 4.81, so we're a little better than that the only one positive all day is astrazeneca. kraft heinz that trades on the nasdaq is trying hard to stay in the green right now as well. but ev maker lucid, the worst nasdaq performer, down over 12% now. then you've got a mix of cloud, enterprise and cybersecurity names. those are some key laggards in the etf which is down over 4% right now. and then its constituents like cloudflare, zscaler, okta, all of those almost down 8% or more and cyberark as well we also have fast-growing financial technology stocks that

have been among the biggest losers in the market downturn. take, for example, affirm. now it's down 10% but on a year-to-date basis, 83% lower. much of that drop coming from this month alone every constituent, though, talking semi conductors, in the smh atf, down at least 8%. qualcomm, marvell, advanced micro, down 8% and for a random group of stocks to move on to the next section, this is a basket of high growth names that we saw move yesterday. peloton, uber, lyft, down more than 10% this week alone traders are quick to fade yesterday's post-fed meeting rally especially as other major central banks are turning very hawkish with their own inflation battles. so a little reversal the past 24 hours and definitely a downward

trend on the nasdaq today. >> no shortage of losers lucid is the worst performer, down 12% thank you, kristina. shares of kroger are down slightly but outperforming the broader markets this year. the grocer reported first quarter earnings beating analysts estimates and raising its full year sales guidance but saying margins fell as rising costs continued across the supply chain with us now is kroger chairman and ceo rodney mcmullen. welcome back good to have you. >> hi, sara. thank you. >> what i keep reading in the analysts' notes and talking to investors why your stock is down, they say it wasn't good enough you're clearly doing better than most companies in this environment, but 4% comps i guess just didn't do the trick talk about what you're seeing. >> well, when you look at the quarter overall, toward the end of the quarter we continue to see progress and momentum. we had positive household growth, we had positive growth

in households. all of those things were stronger later in the quarter than they were earlier in the quarter. and as we talked about on our conference call so far in the second quarter we've continued that momentum. so we feel really good about where we are i'm so proud of the whole team we still continue to make progress one of the great things about kroger is we've been able to be successful in every environment and obviously in the current environment is heavy inflation and customers are starting to behave differently. >> talk us through that because last quarter you came on and said we're starting to see a shift. more coupons are being used. it sounds like this quarter you're seeing something bigger happen with the consumer. >> just a couple of things if you look at our fuel rewards program, we had 600,000 customers that had never engaged in fuel rewards engage in the first quarter. if you look at our brands products, they grew over 6%. and we're seeing customers in a pretty significant way be more

aggressive, engaging in promotions, using our brands and really managing how to balance their own budget we're seeing strong growth in things that are food away from home in terms of if you look at rotisserie chickens, an easy meal for somebody, strong growth there, so customers are definitely changing their behavior. >> you said the shift from branded to private labels has been, quote, aggressive. what do you mean >> well, the comment that i just made where identicals on our brands was up over 6%. that's basically about double what the national brand is, not quite. and that's broad based it's all the way from our private selection to our banner brand, which would be kroger, whichever banner it would be so it's across the whole spectrum >> what's going on with prices, rodney margins were a little bit lower. are you not able to pass on

fully the cost inflation that you're dealing with? >> yeah, for us we've been investing in pricing for over 15 years. we invest based as we are able to get costs out of the business this year we'll be able to take over a billion dollars of cost, and this will be a fifth year in a row that we've been able to take over a billion dollars of cost we take some of those savings and invest it in our associates, we take some and share it with our customers. so if you look at where we are on margins, we're exactly where we thought we would be we continue to invest for our customer and try to help them stretch their budgets where they can. >> and what about food inflation in general we saw a surprising tick up last month. is it still climbing >> in terms of where we think it will be, if you look at the second quarter, we would expect the second quarter inflation to be pretty similar to the first quarter. as you said later in the year, we do expect it to slow down a

little bit because you're starting to cycle higher inflation from a year ago. but certainly nothing that would look like deflation, and it still continues to be out in front of us. >> why why is that? how much is related to the war in ukraine and how much to other factors, supply chain, and stuff that the fed can control like demand? >> i think it's all of those things, because if you look at supply chain, obviously with fuel costs, heavy increases there. wages, heavy increases there if you look at the raw materials in terms of corn, soybeans, wheat, all of those are inflationary everybody is still working on their supply chain and trying to get it back to where it was before covid so you see continued pressure across the whole supply chain. you see continued pressure in operating costs as well. so all of those things together,

you know, obviously the fed has its work cut out in front of it, but i think they're taking aggressive actions but it still will be a while based on what we're seeing. >> so, rodney, you've been at kroger, i don't know, how many years? your entire career, right? since you were bagging shopping bags when you were young. >> since high school. >> since high school, exactly. you've seen recessions is that what this feels like to you now or what's coming >> well, it doesn't feel like a recession yet. it feels more in terms of people are being very cautionary. you know, i think probably at this point it can go either way, but it certainly doesn't feel like a recession because customers still have money in their bank accounts, those things, and they're saving where they can save so they're stretching their budget where they can but they're still splurging on items as well. when you look at our private selection, when you look at our meal kits, our home chef, all of

those things customers continue to invest there in things that are easy we'll use cheese as an example that continues to grow as well so i would say cautious and being very careful about how they spending their money. >> rodney mcmullen, thank you very much. it's great to get that color on the consumer. >> thanks, sara. >> kroger is outperforming only down a percent. home builder stocks getting crushed after a very disappointing housing starts data diana olick with the details. >> i don't want to sound like a broken record but the home builder stocks just can't get a break today. they issue a huge miss on housing starts and building permits in the may data. total starts down 3.5% year over year the street was looking for a 2% decline and that's the lowest level since the start of the pandemic more than two years ago. if you break out single family, which is what we're watching closely now, that was down 9% for the month.

building permits fell 7% for the month and were flat year over year lowest level since september of 2021 that hit all the builders as well as the home renovation names. you see the etf for home construction, ticker symbol itv, down over 7% on the day. it is down 41% year to date, sara >> diana, i asked you earlier about pricing and what you expect there you were saying like growth of 2% would be a healthier level. how long is it going to take to get to better levels, which we know the fed wants to get to, given that we're still in a tight supply environment >> it seems like it's getting to it faster every single day as we see home sales pull back and buyer demand pull back again, it's that supply an demand issue we have prices up 20% year over year right now that is not a healthy housing market healthy market, 4 to 6% annual appreciation could we get lower than that in this

it's possible, but we want to bring those prices back down as we get more supply, we're seeing much more supply come onto the market. both new listings of sellers who want to get in at the top and houses sitting longer on the market that is increasing the supply, which should help lower the prices a little bit. we are hearing about home builders who have a lot of supply in their construction right now that's going to come to the market soon they are starting to ease up on prices so we should see it soon the big question is when. >> right certainly the fed wants to see it diana, thank you diana olick. lennar is down 50% from its highs. >> absolutely. these are -- you want to talk about deeply cyclical businesses, they basically can trade down through book value because people feel like the land value is not worth as much. but what it might mean macro-wise, if we assume that the housing starts have peaked, the chart is down sharply

obviously from the high with this latest print. you say what does that mean for the forecast of recession, in past cycles, there's a long lead time from when housing, home building peaks, and you get the official recession like years sometimes it peaked in '05 you get the recession two or three years later. the issue is this has been suc a strange, compressed spring-loaded cycle. i feel like i've said that a million times the past few years. you didn't build up a lot of things that you normally see we ran it so hot for a short period of time so maybe all bets are off but i think home building coming off the boil and struggling for a while with very tough affordability is not in itself saying that means recession. >> so you're saying there could be a soft landing in housing >> or housing itself is not going to drag everything down with it. there's still such a tremendous shortage of units that you wonder how that plays into it too. maybe the clearing price has to go down. >> diana said more is coming on supply.

let's get to some of the other parts of the market feeling pressure there are no shortage of them today. courtney reagan is watching retail and frank holland covering the sell-off in cloud stocks cord courtney, what are you focused on >> look at the xrt, it's down just about 5% so that's worse than the broader market. walmart interestingly the only retailer that is higher literally across the board when i look at my stock screen and that is a dow component. it is often the focus when we're talking about consumers being stretched or in an inflationary or recessionary time perhaps we are looking at both of those situations right now. dollar stores, though, also generally do play well there for investors. but many of those names are lower today. dollar general is almost positive we'll see what happens here as we move towards that closing bell i think it's also interesting to look the athese department stores because for so long in the data we had seen these sales

start to turn around even with mastercard newest numbers. but macy's down about 10% here on the session and then i want to wrap up by just talking about higher end retail this higher end consumer, higher end investor has been a little bit more insulated than we have seen some other areas. we've seen lvmh, ralph lauren doing a lot of work at the company to improve the way that its company is operating and getting some nice return from its shoppers but even that area is really getting crushed here today there is just hardly anywhere to hide when it comes to retail, sara if you are worried about a recession, obviously the concern is about the consumer, even though there have been very few areas that have popped up showing us genuine real points of worry

it's more about what could happen and not what is happening when we're looking at those indicators for the consumer. >> one i see one retailer higher today, walmart. >> walmart, that's it. >> up more than a percent. and actually, courtney, walmart and target have been some of the biggest worry spots when it comes to worrying about fundamentals changing, which is interesting. >> absolutely, of course we know how good they are managing logistics and supply chain and their size often helps them do that if they were having trouble in this environment, both operating their business and figuring out what categories consumers want, then you know that could be a worry for other players that don't have as strong of logistics teams. they don't have the ability to react to consumers or flexthos different areas of the categories if you're in the wrong space right now, i think the worry is even a little bit stronger so those multi category players typically feel like a safer bet

for investors. today i guess it's really only walmart. >> yes consumer discretionary is a sector that erased all of its pandemic gains, back down to february 2020 levels courtney, thank you. let's get to frank holland on the cloud stocks which have been beaten down and the drubbing continues today, frank. >> cloud stocks getting hit harder than the broader market twilio down almost 25% workday and datadog also down double digits. salesforce with cloud exposure like oracle, not as much impact. we continue to see, however, the impact of rising yields and inflation as well as the rising dollar we showed this chart a number of times and have to show it again. you see that inverse relation between the rise of the 10-year and the performance of the wcld etf as the yield on the 10-year goes up, those cloud stocks go down their potential for future revenues and earnings being

diminished by that rising interest rate. one area that's defensive is cyber stocks they have been seen as a defensive play in tech reports not seeing quite the same impact from currency and inflation as other cloud names, especially overseas where a lot of people are impacted by the stronger dollar. crowdstrike reporting pretty good earnings not too long ago and saying demand was very strong those stocks also hit harder than the broad er market right now as investors try to figure out the valuation of these companies and their future prospects going forward with inflation. the prospects of recession and other headwinds. >> frank holland, thank you. mike, sorry to pick on datadog, but what should the correct valuation be for a high growth cloud name, whether profitable or unprofitable. every time they get super cheap, they continue to go lower. relative to where they were. >> i mean they're way cheaper than they were on a

price-to-sales basis even six months ago so i think a lot of that it's really is this the right idea for this moment in time when you have high nominal growth in the economy. stuff that has current earnings, current cash flow and share their shareholder capital return so it's a tough spot to be in. what's interesting too is a lot of attention is on the very largest nasdaq stocks. apple, microsoft because the game is how high are they still relative to their pre-pandemic peiece you have so many parts of this market and those are two stocks that have not. apple in the high 120s, almost 130, it was around 80 in february of 2020 microsoft was at about 185 so plenty of room to go to the downside it doesn't mean they have to get there. their earnings are much higher they also provide safety in a tough market but that is the situation, i think, that a lot of investors find themselves in they're not really anchoring on

much of anything in terms of next quarter's earnings or anything like that it's all about where are we relative to some various bad case scenarios, if not worst case scenarios maybe that's bullish in itself that we're talking that way and everybody focused on further downside at some point you said these washout points some people feel like you buy them and close your eyes. >> i just want to show you where we are the dow is down a little more than 700 points right now. at the session lows which came at the top of the hour we were down more than 900 points. you've got three dow stocks higher, walmart, p & g and boeing, which tells you about some of the fears on the economic slowdown. the nasdaq is down 4.3%. as kristina said the low was 4.8% so it's still pretty painful. the s&p down 3.5%. energy still the hardest hit area despite the fact crude oil turned higher and is popping 2 or more percent. staples doing the best the other thing that happened during the session is treasury

yields turned around there's buying of bonds which is maybe a safe haven bid reflecting some of the broader economic concerns. let's bring in karen karniol-tambour. karen, have your thoughts about the economy and the markets changed after the fed meeting yesterday? >> well, i think that the market action today represents what's been happening in people's minds, which is the realization that until now, you've basically had a lot of tightening priced in, a lot more expected fed catching up, but actually the sell-off in stocks and risky assets was pretty much just pricing in higher discount rates, higher interest rates, and basically not at all pricing in that the economy will actually reasonably slow if you think about a stock, a forward series of cash flows discounted today, only the discounting changed. only the discounting today's market action actually looks like what i would expect

would happen from here which is the realization the fed is going to tighten a lot there is a lot of tightening priced in. you have a big contraction in stocks the economy has to start slowing from here. now you have a day where treasury yields don't move, stocks fall. that's telling you that actually the path of earnings is being discounted because actually an economic slowdown is starting to be priced in but it's maybe the first day of that move and i think there's a long way to go with how much the economy will have to fall getting priced into the market. >> so you see a lot more market pain from here, even though we're off about 25% on the s&p, about 35 almost percent on the nasdaq >> i would say without the fed blinking, without the fed saying, you know what, i'm going to tolerate higher inflation, the amount of tightening they're going to do is going to cause a lot more economic pain than is priced into stocks it doesn't really have any pricing for a worse economy, for

moreolatile inflation, for the risk premium associated with that unless the fed blinks and says i'm going to live with higher inflation, which they might do and tle really painful to tighten in a falling economy, you're going to have to have more rain and risky assets to reflect that. >> so it's clear when you think about where stocks are headed. what about bonds, if we moved on to the pricing of the economic slowdown from the rate hikes all started to being priced in, should you buy bonds >> i think the front of bonds is kind of uninteresting. there's a lot of tightening priced in. it can kind of go ooefeither way we went through a place why bonds were extremely unattractive because there was no tightening priced in. long end, i still think is a sell because you're still in a situation where all the qe money is coming out where you just have a liquidity hole.

there isn't that much tightening priced in past a year or so from now and inflation is likely to be pretty sticky past that. >> what about commodities? i feel that's one of your favorite diversifies with stacks and bonds not working that well. is that still a place to be with the fed tightening so much, trying to crush demand >> i think commodities are a lot less attractive than they were in recent months because commodities are a mix of inflationary pressures and growth pressures you need actual growth in demand to want commodities. commodities are perfect because you're saying whether growth is stronger or inflation is stronger, i want my commodities for inflation hedges if you know you're in a stagflation environment, commodities are better than some other things you can hold but not as exciting. then you really get to some issues around, for example, what will china do in its stimulus package. they buy a lot of commodities. it depends on how much they'll do in infrastructure so it's

less of a slam dunk than it was before having this much tightening in the system that's going to slow the economy. >> so not a fan of stocks, not so much a fan of bonds and now less convinced on commodities. what, cash >> it's a really hard time to be an investor. cash has been the best asset this year except for oil, and you don't want to bet on what the moves are going to be. the reality is when you have the kind of inflationary environment we're in and you need to have tightening to slow it, that basically says we have to make cash more attractive than all these other assets you had such a big run-up in financial assets relative to the economy prior to this round that there's a lot of room for financial assets to be worse than the rest of the economy for quite a while and we're just living through the beginning of that probably a hard time to be an investor and probably the hardest time to be the fed, to be honest. >> i totally agree with that and the ecb and the bank of japan

and erverybody else. so karen, is bridgewater in the recession camp >> we think you'll get slowing the second half of the year. whether it's a recession, we're not sure but it's absolutely going to slow. when you look at the last few months, already consumers were basically spending from doing less savings from borrowing, credit card borrowing exploded, housing borrowing and that's obviously unsustainable. mortgage rates just rose 3%, the fastest in decades rates are rising very quickly. a lot of consumers were invested in things like retail popular stocks and crypto and have seep their wealth fall so it's not a good time to continue spending off of your savings. while the employment market is extremely strong and wage growth is strong, you've had inflation in areas like food, like oil and transportation costs that you can't take those out so actually real wage growth is negative for most people and so all the tightening that's been in the system has to slow spending from where it's been.

and whether it depose to literal recession levels and how harsh it is really depends if the fed blinks if the fed is serious about getting inflation back to its target, the economy will crack in a very serious way. there's a good chance that it will slow but not get to terrible levels because the fed will blink. >> that's something you're watching whether the fed blinks. anything else that would make you change your mind and say, hey, got to step in here when it comes to the market and stocks, too much has been done what would you be watching >> well, you know, i think that seeing how fast does the consumer turn and prove more resilient than i would expect given the fact they're already spending down savings and in a situation where tightening is coming at them but that's definitely a thing to watch very carefully, what the consumer sort of does and part of the inflation pressures have been somewhat idiosyncratic so you could get a surprise in geopolitical

developments that eases some of it but i would expect inflation will be a lot stickier than people expect so any data point in the other direction would be very useful. >> karen, thank you. karen karniol-tambour. we're going to go straight into the "closing bell" market zone, commercial-free for you. mike santoli is here to break down these crucial moments of the trading day as always. plus we've got steve kovach, pippa stevens. we'll start off with the broader market stocks are plunging but we're off the worst levels the dow was down 928 points at the session low. got that in the final hour of trade. we recovered a little bit but boy, is it still painful there's the dow. s&p down 3.5%. nasdaq down more than 4% just one quote that also sticks with me today. peter sheer, who is really smart on credit from academy securities writing the market got what it wished for, but maybe, just maybe, hiking 75 basis points into a rapidly

weakening economy isn't the best idea whether it was the right idea or not, we're certainly feeling the fallout today. >> yeah. obviously it wasn't the optimal decision nobody wanted to have to make that call most likely. but given the circumstances, that's where we are. i think that does shadow the credit market right now. even if you're only talking about it's only 75 basis points, credit doesn't look quite as stressed as it has a couple of times in the recent past, it does mean you're raising capital across the board you have people very unwilling to step in and be a buffer for these moves. revlon declared chapter 11 today. not unexpected this is a company that was skirting that place for a while. but it doesn't help when you have that, so i agree, you have to be alert to the possibility of some kind of financial mishap out there. that being said, a lot of extremes being registered today just in terms of the urgency of

the selling, the lopsidedness. i've been saying this for a trial, it's just true more so right now given the action today. >> it does make you wonderi if you're going to see more default. revlon was always under pressure they missed a lot of key trends like digital and haven't grown as fast. are we going to see more pain like this? >> it's also a completely awful capital structure and not run well so that's one situation but i think if there's a silver lining on that front, it's that we've spent the last couple of years allowing almost every company to turnpike out their debt and there's not a massive amount of securities coming due. i don't think it's critical but definitely one of those things that people place on the screen and say does this tell me to take more risk or less risk if you're in stocks it's not telling you to take more so in addition to don't fight the fed and don't fight the tape, you have those signals

again, at some point it becomes so bad it's good >> let's hit technology. mega cap tech stocks remain under heavy pressure steve, why is meta getting hit especially hard, reaching multi-year lows here >> it's hitting a two-year low actually it hasn't seen a price like this since back in 2020 it's down 5% now again, meta is facing so many headwinds from competition with tiktok to the scaling back of its ambitions to spend billions and billions and billions of dollars in the metaverse so it's the worst of the group today falling way more than 5% moving on to apple, though, it's down more than 4%. looking back, it's lost more than a quarter of its value so far this year, sara, and that's $900 billion off its market cap since it hit the $3 trillion market cap high back in january. so ugly things there what we're looking for in apple

is any signs out of china that covid lockdowns are easing, and they are but there's still certain areas that are getting locked down. microsoft off 3% foreign exchange headwinds a big problem there. amazon off 4%. managing inventory in their warehouse. alphabet the best in the group down a little more than 3%. >> so what are the analysts saying are they taking down numbers in a material way for earnings on some of these mega caps with outlook deteriorating? >> with apple, for example, katie hubberty has thrown caution about its services business saying it looks like it's slowing down and the app store sales may not have been as good as before but the story as we wuchatched e sell-off, people still have buy ratings so analysts are optimistic about most of these companies. >> well, we'll see how long they can stick with that. thank you, steve tesla is one of the weaker

performers in the s&p 500 after raising prices across its ev lineup by as much as $6,000 to offset those higher raw material costs and ongoing supply chain issues our phil lebeau joins us phil, what do we know about the tesla price hike and what have we seen before when they have done this? >> this is not the first one i think we've seen four. at least four have been documented in the last year. in this case they're talking about the long-term model y. they are bringing the price up to $65,990 anything that's green these days, not just with tesla but across the board, look at the price increases that jd power has seen in the last year. plug-in hybrid electric vehicles, 27% increase pure electric 24%. we are seeing these price increases, a, because there's far greater demand than supply

and b, when it comes to evs, the components, those costs have gone up so much that the automakers have to increase the cost or the price of these vehicles otherwise they'll lose even more money on these vehicles. >> what about the earnings estimates for tesla, have they changed lately >> no. they have generally been staying in the same area they were brought down i would say three to four weeks ago considerably because of what's been happening in china. that really has been driving any of the action in terms of what analysts are expecting when it comes to tesla's earnings for the second quarter. >> tesla, mike, down 9.4%. a lot of people look at this stock as a poster child for the high liquidity environment that we've had not just a few years from covid but really over the last decade or so. it is starting to unwind but not as hard as some of the other high-growth tech stocks. how do you view tesla? >> it's exactly that it's been a barometer for risk

appetite willingness to put capital behind a very long-term idea and essentially to ride momentum too. this stock by now has almost been cut in half by the high so it's not really resisted the undertow of the overall market but just built up such tremendous gains that it left its pre-pandemic levels in the dust i agree with phil, the last little while you've seen some trimming on the earnings estimates. the question is all the ovther attendant issues, the twitter bid by elon musk and overhang of potential sales by the stock and lawsuits and whatever else you want to name are not helping there's a certain meme aspect to tesla and those things have all been unwound. >> phil, all of your areas of coverage have the distinction of being at the bottom of the market auto parts, equipment, automobile manufacturers and then not too far behind the airlines getting absolutely crushed.

despite everything bullish we continue to hear about travel. >> remember, the bullishness on travel is what's happening right now. and when did most people who are flying this summer book their tickets? back in april, maybe in march when people said i've got to get out. i've got to fly. people who are looking at buying tickets right now are generally speaking looking for late august going into september, even october. the question right now is are you willing to pay what the airlines are asking and, b, are you comfortable with your financial situation? i think that's why we've seen a slight downtick in terms of domestic airfares. we may see fewer people flying this fall than the airlines originally expected just a couple of months ago. >> it will be interesting to see if lower airfares factor into cpi. last month it was 37% increase over last year we've also got oil prices rising, which is not a comfortable thing for the airlines, especially if they see demand weaken. >> no.

it is not a good setup going into the third quarter for the airlines they're doing great for the summer god bless them, i think that's what they have been waiting for. but the fall is going to be not as robust as originally promised >> phil lebeau, thank you. look at some of those declines, 9, 8% lower just today on the airlines. speaking of oil, energy stocks are the worst performing group in the s&p 500 despite that turn around and rally in oil prices pippa stevens joins us pippa, why such a disconnect between oil and those energy stocks, down more than 6%. >> yeah, the worst sector today despite that rise in oil and energy stocks are now down about 14% over the last week you know, oil and energy stocks often trade together, but not all the time energy stocks are certainly not immune to selling going on in the broader market we talked about this before, but it's still the only sector in the green for the year and hit a

multi-year high last week when basically everything else was zippinging its rsi topped 70 meaning it was in overbought territory. it is one of the only areas where it makes sense in some cases to lock in those gains and those gains can be used to cover losses in other areas of the market i think btig summed up this point well saying that energy is a vulnerable last man standing also quickly wanted to note that morgan stanley took a look at how energy equities have performed during prior recessions find that it had been mixed performance and probably not surprisingly the setup for commodities is keer here they say right now the backdrop remains supportive for oil and gas and that should continue to boost energy stocks even despite the slow in growth fears and the recession fears. >> there's just such extreme supply shortages the biden administration continues to intensify rhetoric against the oil companies,

trying to force them to produce more and refine more any of these new orders have teeth? is that what could be behind some of the selling in the stock? >> certainly a little overhang and headwind as traders try to assess exactly what can be done. of course that's the key question, what can be done at this point we have the biden administration urging these companies to drill more, to refine more. the companies are saying, look, we can't plus your policies have not been supportive for us, so we had a bunch of companies respond outlining what the administration can do in terms of friendlier policy, pointing to things like leasing, opening up some of the federal lands and waters and so there's certainly a disconnect between what the administration is claiming and what the oil executives are claiming but definitely can act as a headwind here with policy uncertainty. >> mike, some of the names getting hit the hardest, valero, marathon, diamond back some of the refiners are under a

lot of pressure. it feels like this group of stocks may be starting to worry about a slowdown but oil prices remain high. >> these are stocks, people are selling stocks and these are part of the indexes. what pippa mentioned about that margin of outperformance against the rest of the market, usually that's not something that can be sustained very long. bear markets don't leave you an easy place to hide like that on the other hand there is some concern that demand destruction is a growing risk and so therefore you don't want to extrapolate the earnings in cash flows they have had. it still looks like a correction and very strong trending for the stocks. >> does it mean we've seen the top for these stocks >> new york city i don't think so it's a very stiff correction but at this point i wouldn't call it over. >> stocks are down sharply here into the close show you what's happening. the low was down 928 on the dow.

we're down a little more than 700, 833 right now ben emmons joins us now. whether it's the hangover from the fed or the shock announcement from the swiss national bank, what are you hearing as far as the selling today you worry about central banks have to do a lot more than thought. there's such a steep path of rate hikes ahead of us and the ambiguity, when steve liesman asked about that so coming into today getting a surprise from the swiss central bank for a country in inflation so long, they come off the sidelines, tonight we get the bank of japan. they may not do anything but eventually getting out of that policy it just all adds to the uncertainty about what monetary policy is going to do from here.

and slowing growth but sticky inflation. i think this is really a stagflationary environment and that makes a lot of asset classes struggle >> what, if anything, works in this stagflationary environment? >> we talked a lot about this the last several months. listening to your previous conversation, the airlines is a trade but not anymore. >> you loved it. so you're giving up on it. >> i have taken profit, yeah you do deal with airline inflation and i think consumers are picking up on, so there's going to be saturation of demand there. there's a lot of energy

companies in there and also a lot of technology type companies. yes, they get affected by the market but that's one way to do it on the other hand you're going to sit on the sidelines. you can't be engaged here much until we get a better sense of the direction of policy. that's pretty difficult at this moment. >> two things i want to note what makes today's sell-off a little different flavor-wise than what we've seen lately, which is treasury yields are lower, so there's buying of bonds. they're working today as a safe haven and the dollar is weaker both of those things have been tightening of financial conditions and higher interest rate story that have pressured stocks so what does that tell you have we moved on to the slowdown >> there is definitely a slowdown building in treasuries. if you do have to raise rates that much, then it's going to slow down the economy. the housing data showed it clearly. that's where high rates are impacting activity so i think that's one reason

but is it all out clear to be in treasuries no because until we have inflation really down or materially down, i don't think it's an all-out die. the dollar was affected by the swiss central bank's surprise. i still think the dollar has a lot of upside because the fed has to fulfill its tightening path so the dollar will benefit from the widening interest rate from other countries. >> ben, thank you. the dollar down 1.3% and the overall market getting slammed all day. two minutes to go, mike. what do you see in the internals? >> it's pretty much a wit, sara take a look at the volume split in terms of downside volume versus upside. it's well over 90% in declining stocks right now the fourth day in the last week or so that we've had that lopsided view. eventually that becomes super oversold but it also tells you a ton of supply still getting liquidated take a look at gasoline prices,

wholesale gasoline prices, this is on the exchange coming off their highs pretty sharply. that's still an uptrend but they peaked around 4.29 just about a week or so ago and so that does tell you maybe some relief is coming to the pump we'll see if that continues. the vix up below 34 still so we're butchimping up against the recent highs people continue to say it has to go higher. it doesn't have to do anything but it would put an exclamation point on this give up type action if it did really spike from here. >> down 3.4% on the s&p as we head into the close right now. we've got every sector in the red. staples hold up the best they're down about three-quarters of 1% energy hit the hardest, down there with consumer discretionary which wiped out all of its pandemic gains at the lowest level for that sector since february 2020. if you look inside the s&p 500, you see what mike is talking about, which is a sea of red what is at the bottom, norwegian

cruise, royal caribbean, carnival cruise. so economically sensitive cruise lines. but pretty much all s&p 500 stocks are getting hit except for walmart, and a few other staples. that's going to do it for me on another ugly day here on wall street on "closing bell. i'll send it into "overtime" with scott wapner. >> all right, sara, thanks so much welcome, everybody, to "overtime. i'm scott wapner you just heard the bells we are just getting started here at the new york stock exchange i'll be joined by chris toomey, who runs one of the highest rated private wealth advisory teams in this country. we begin with our talk of the tape the brutal sell-off in stocks amid signs the economy is weakening while the fed is aggressively raising interest rates. what is an investor to do? let's ask famed wharton school professor jeremy siegel. he joins us today from philadelphia professor, it's good to see you. welcome to