falls below a $2 trillion cap. it's actually amazing there haven't been more blowups. brian, thanks for watching "power lunch," everybody. >> "closing bell" starts right now. it has been called one of the most important stocks in the market this is a make-or-break hour for your money welcome to "closing bell." apple is taking the biggest hit on the dow jones industrial average, which is down about 200 points or so the low of the day was down 315, goes as high as 137. another 1% slide in the nasdaq, another painful week big tech definitely in the cross

hairs. financials for a change are outperforming, bulk up in yields again. small caps paying again, down more than 1% so much for the santa claus rally. he's usually pretty bearish on the market, but david rosenberg will join us on a group of stocks his's bullish on, and then alexis ohannian we'll get he outlook for tech valuations and outlook we do have some breaking news from the cdc in washington eamon javers has the details they say the airlines will be

responsible for administer this to make sure those passengers show a negative test they don't have a lot of data on how rampant covid is in china, due to some of the information-sharing problems they have from the chinese government, but they say they are concerned about the possibility that because you have so many people getting covid all at the same times in china, we could see the emergence of new variants. this won't keep all case from coming in, but they think this will help. they reiterated the u.s. government's offer to help with vaccine supplies and the like. they say the chinese government so far has said they don't need help from the united states, and they say this system will be in place for the indefinite future.

a travelers coming in from china will require a negative test after we got the news earlier that half of the flights from china to milan and it ititaly tested positive for covid. mike santoli is back from vacation welcome. on the china covid front, a new risk here. it was thought a few weeks ago the reopening of china would be nothing but good news for investors. >> the market is not reading it that way of course, energy prices are down again it does not seem as if -- even if the rules are being loosened, because of the incident of disease in china -- it's clearly something else weighing things down, or at least keeping the market in check. it's the weakest part of the market all year that continue to say create the pressure, the

biggest growth stocks, with the downside momentum, keeping the s&p 500 stuck in place here. eight trading days in the road clearly no late december tailwind has kicked in just yet, but also brings us to the point it's in the middle of the post-jackson hole conclave range. take a look at apple of course, compared to the s&p 500, so in 2021, when everyone was excited about more speculative tech stocks, apple, in white here, did underperform. it didn't do much. it's all about stability and perceived safety apple starts to hold its value better it's usually distinguishes itself in rougher markets.

it does not move along, except for recently, this last little plunge lower gets it below on the two-year basis to me it's not a lot of growth projected. people have less interest in owning it for that reason. the dividend yield a lot lower, so all those things, along with year end, just discarding of the losers that's another thing going on in the general market. >> it's the nasdaq as a whole. terrible performance, down 30% year to date often the losers of one year become the winners of next year, but it doesn't sound like people are getting bullish. >> i would say what often happens is the lag guards get a good bounce, but i think it's way too soon to say that the turn of the year is going to itself be a reason why this group starts to lead again, especially because it still has

the big valuation premium. the earnings estimates have been coming down. >> mike, thank you we'll see you later. let's bring in david rosenberg it's good to have you on so many place to say go. i wanted to start with the china story. we're getting news you have to test negative coming from china. clearly there's millions of case, we don't know exactly. this is an interesting experiment opening that country up with a mostly unvaccinated nation >> you know, i found it interesting that people thought the reopening trade was going to be inflationary because of the impact that could have, say, on energy and on material prices, but i found it a business disingenuous, because we were talking about all year long that, in addition to the war in

ukraine, one of the critical developments was that china continued with its aggressive covid-zero policy. you can't have it both ways. i think right now it's, you know, two sides of the reed coin you have the reopening trade, as you said, into a country that has had a very sloppy vaccine roll-out i think the overriding impact is what this does to chinese demand, chinese consumers. i think the fear factor -- we saw this at home in the opening months of the pandemic, how people reacted people were deciding not to go out even before the shutdowns took place i think the overrighting impact broadband more disinflationary what about winners into next year you think inflation is really coming down, right and that we're going into a recession? >> yeah. >> does that mean we should by

buying these stocks. >> i would say not yet i don't think there's enough valuation support just yet if my thesis plays out, inflation comes down more sharply than what is generally expected the fed ends up doing their classic pause, which they will do, and then a pivot that's just the interest rate cycle of play. the question will be timing. i sense that by the end of the year there will be a much better valuation support. i think there's a couple moss legs down in the group but i think in generally for the storm as an asset class, this bear market isn't over but my sense is, you're right, in the name of consistency, if

rates come down, which i think they will, that will breathe life into the stocks, but it's probably a second half of the year story at best i wanted to talk about defense stocks i know you're bull object that group. what are some of the catalysts >> because military spending is going up in every part of the planet when you start seeing stories, for example, in japan where they have shed their pasivism, you know, aerospace defense doesn't have a large characteristics if you're -- you're less sensitive to the economic cycle

and very sensitive to the government spending cycle on defense. that's where their contracts are. so you have tremendous earnings visibility in this group very quietly, everybody looks at the nasdaq, everybody looks at the financials, they look at value over growth, but what's missing on this, focus on energy, and the defense stocks and s&p this year have quietly turned in a 14% gain i think that will be a good place to have your exposure for the coming year. >> yes, it's true. i'm liking at ita as another way to track it. 18% in the last three months david, always good to check in with you thank you. >> happy new year, sara. when we come back, alex ohannian joins us with his outlook. the dow is down 264.

we're losing some steam here we'll be right back on "closing bell."

a new report says instacart has cut its valuation. the peak valuation was $39 billion. what does it signal for valuations in the private and public markets joining us is 776 founder and

red d reddit cofounder alex ohanian. is instacart unique? >> full disclosure, i was a seed investor in instacart back in 2012, so, yes, there are certainly some advantages to be the earliest round investors i think this is a reality. a sobering up in the private markets that i think many of us have been saying was long overdue. the good news is these days my focus is on early-stage investing. it's never been a better time to start a company, but folks who were getting too excited, too fat and complacent on the valuation front, will definitely see some recess. >> are you expecting a rough year next year.

>> we've been starting to plan for a scenario, since the start of this year, many of the hardest economic times that ceos have built businesses through, and multiple years of runways, and in any case to find paths to profitability and take cues from companies that have seen a renewed appreciation for efficiency, for finding profit and i think, look, the good news is these tougher times i think we'll see ahead will help create much better companies. >> is it a good time to be investing? >> yeah, we're actively deploying at 776 frankly, it's a fantastic time, because really this is when the best companies will get built

and formed when we saw companies like stripe and airbnb just getting started in the midst of this economic disaster, you saw cos and founders who were relent leslie focused on making things people love, solving real problems, on finding revenue, and it's that kind of sobriety that i think can bring out the best if companies and teams. >> what about crypto in particular i know you were interested we did a panel together back in may on web 3 it was a huge focus area for you. not many are excited about it. are you still? >> i get is it i've never been a trend chaser again, look, 10, 11 years ago, back in 2012, i seed invested coinbase i have continued to invest through every single winter and every single spring. the good news is, when you're

really, really focused on meeting with founders, best-in-class builders really at the early stages, it's less about the hype cycle, it's more about fundamentally solving problems in many ways i relish these winters, crypto winter included, because it brings a renewed focus. it shoos away a lot of the char even golf worst headlines, like ftx, those are stories of human failures they're not story of technological failures >> sure, that one may be the case, but there's been a lot of bankruptcies in the space.

if you have still conviction, where are? where are you bullish on >> infrastructure, you know, taking a lot of lessons again from being an early investor in places like coinbase we'll have big news, just closed an up round in the last two weeks. i can't scoop it here, but it's at infrastructure-type company, as long as people are spitting out nodes, and ways to solve problems, they'll need the picks and shovels to do it when it comes to solving the problems, i think we'll see a path forward here, a company like yugo labs, just grabbed a tremendous hire from activision blizzard the president came over. he's not leaving a position at the helm of titles like warcraft, et cetera, unless he sees an amazing opportunity.

i think what we're seeing in the cultures and create activity could likely be a new forefront of gaming, and consumer culture. another company, you know, wants to builds a next generation of disney, a whole world of i.p. giving people a sense of owner i described it if 100 years ago you bought shares in disney, i would have been happy, but if you could have bought some original shares of mickey mouse, you would be happy with that, too. in the past you could find them on ebay or auction sites, but today it's obviously digital it's early bird, just tell us a bit about it, helping families plan for financial futures of kids, something that any of them can relate to, but one of those

options is crypto, when i found. >> yeah, whether it's gifting some shares of disney stock to a child, or gifting them some ethereum -- obviously none of this is investment advice, but one of the things i wish i had gotten exposure to when i was younger, is just some basic understanding of how markets worked, and the next thing, they built software and now make it trivial for you to gift something to your loved one, usually in this case a kid that is meaningful and sentimental, but gives them something that could accrue value in the long term it's an interesting perspective shift. you know, when you're thinking about gifting something to your god it child or niece or nephew, you're thinking on a 20-year

time horizon i think that's one of the most importantprinciples that we tend to forget investing but it's easy when you think about it with a child. but then also have your child exposed to opportunity and sort of financial literacy that far too few get access to. you know i'm going to ask about twitter and elon musk. >> yes >> you're still quite active on twitter, you're still using it. >> it's been a tough run i think there have been some wins, some losses. one of the things i said very publicly, gosh, back in the spring, when it was still a rumor of a takeover, was that elon is without a doubt a generational ceo, yet he's had his success in physics, company,

this is where you have to have an understanding of lots of things that are pretty immutable. physics are not fickle humans definitely are. i learned when building reddit, the role of a ceo is for a social media site is as much a head of state role as it is a business leader role that is a very different set of skills that you have to master i this that's where we've seen, frankly, the rocky road of the last few months. long term i'm still optimistic i'm not a twister shareholder, but i believe in the long-term value of the platform. i hope they sort it out. i think elon's time is best ceo'ing those companies that are physics based, and find someone

amazing to do the role at twitter. >> who should he find? your name came up, obviously because of your experience with reddit i think you ruled it out on twitter. >> yes, i did. >> have you had any conversations? if not, who should be the pick >> no, i have no idea. 776 is what i'm doing for the rest of my life. there's probably someone in the leadership at twitter that is the right person to do the job this should not be a vanity ceo project, right this is a major multimillion dollar company that's pretty key infrastructure for a lot of us to do our jobs, to get news about the world, et cetera, et cetera look, if he abides by the twitter poll results, as he says there will, there would be a new ceo. i think he put it well, where he said the very best people in the

job are the ones who don't want it that's the thing to figure out i still remain optimistic. >> to your point about physics, tesla stock is one of the worst performing stocks this year, down about 70% do you think it's having an impact, the fact he's been so focused on twitter >> i worry less about the brand. i think undeniably, having ceo'd one company at a time, i notice what a herculean task that is. doing it across two countries is already a lot, pretty extreme. so i think ultimately there's only 24 hours in a day i don't believe he solved that one yet, and where le spends that time should be the highest leverage i believe the skills required to do this time of job, they're

just very different. thankfully they're not rocket science. folks like me can do them fairly well, but where his strengths lie, and where he should be spending his time, not ceo'ing twitter. >> alex, good to talk with you the iron santa >> we've got to work on that name >> alex ohanian, reddit cofounder and 667. don't miss tonight 6:00 p.m. eastern time, and bill tai's outlook for a start upnext year we'll show you what's happening in the final hour of trade. down 300 points now. the s&p down a full percent. technology continues to bear the brunt. the nasdaq is now done .25%.

a tough week apple is in the eye of the selling. precious on a lot of these tech stocks within the s&p 500 every sector is now lower financials have just joined the other ten sectors. southwest getting no love from investors up next, we'll discuss when the carrier could turern to a normal scope, when "closing bell" returns.

we're taking a leg lower here financials were positive when we started the hour, not anymore. but it is technology in the eye of the storm again you've got stocks like apple weighs the most on the dow and on the nasdaq amazon, alphabet, nasdaq are lower at the top of the hour we got news that the cdc announced

travelers from china will be required to have a negative test a big risk here potentially of china now exporting another major wave of covid. you have to wonder about new variance in other travel news, southwest continues to get hit, cancelling hundreds more flights today, leaving thousands of passengers stranded. our leslie joseph covers this sector. >> remember, erbilier this week, the ceo, bob jordan said we'll be flying about a third of our schedule to try to get the operations back on tracks, get

planes where they need to do, flight attendants, pilots, because everything was in diagnose -- disarray very we don't know what's going to happen tomorrow and the next day. there is a chance it does get worse. they have a lot of people to get home there are people tranned in airports pretty much across the country. people in mexico and caribbean have reached out to explain their story, so this isn't something that southwest can clean up quickly, but they're hoping to. >> it's such a disaster. leslie, thank you. keep us posted up next, dan arieli discusses his new corporate

consul culture etf we'll explain what we come back.

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or live chat at calhope.org today. dow down 300 is the market estimating the potential impact of companies that keep them motivated and engaged? designed to capture what he says is the market disconnect

dan arieli, he's delivered numerous ted talks we know you have a very big following. this is a tough market is there evidence that this strategy that you come up with delivers high returns? >> yes there's very good evidence and evidence comes from multiple sources, trying to understand what is it about motivation. every ceo says the quality of the people is the best thing i have, the main asset they don't understand what that means. i'm not blaming anybody. i don't think it's out of bad intention, but understanding that human capital is not a simple task. we have a lot of data going back

to 2006 about lots of companies, and we spent quite a few years. >> translator:ing to kwan fit the relationship we found them really -- special that social scientists would, that it's actually acting the way that human capital translates into alpha. for example, we found that absolute level of salary doesn't make a big difference. perception of fairness of salary makes a big difference we found that retirement benefits don't make a big difference the level to which people feel appreciated makes a big difference in general, we have lots of evidence like this, but we found it extremely motivated

internal, and how much they care about omebody, how aligned the feel the direct managers, those these carry a lot, and we're happy that we now invest this way. >> how do you measure those types of things. >> i know you spend your life's work in studying behavior. how do you quantify that in a way that investors can see basically our data set, for each company we have lots of data about sentiment of the employees. we got it from private sources, some public sources, and we're trying to figure out what matters for the way it

translates into alpha. and then we took aft of the things that matter and take this box of things, they including feeling appreciated, fairness in salary, sfarnts in promotion, they include psychological safety, all kinds of things that lets people flourish in temples of their moth motivations. there's not a lot of other way to say invest. imagine whenever that storm started, and they asked -- human capital, companies should think very carefully >> there is an etf for it, is it

mostly technology companies? what sort of companies -- i know you don't necessarily want to name names people can look at the etf, but they have the esg policies are generally the best at taking care of and mott raiding their employees? >> there is a link, a correlation between companies that care about a lot of things. by the way, if you think about esg becomes a strategy, it's mostly through employees moti motivation yes, we're tech heavy but not too much when we started this, i had the intuition that human capital would matter a lot for tech, not so much for manufacturing, for instance but the data proved me wrong then it showed that the equation we have to help quantify human

capital is basically the reed across all sectors maybe generation, whatever, they're different than the boomers. no, until it's a deep psychological motives, things like wanting the feeling of belonging or connection. were all very similar. we hope that a few things would happy. first, we hoped people would invest in the e it f, and also reward companies who are treating their employees well, but we also hope that companies will start thinking more carefully about human capital, that companies will become interested in measuring their own human capital and knewishing it. when we talked last time, we mentioned the amaze mment, and

people have this capacity, and the opportunity to find motivm moti motivation, in all kinds of places we found out that during covid, anything before covid became even more important. why? because the law of intrinsic motivation became more important. imagine a kid in seventh grade, if they're in the classroom, the teacher can say -- reed is true for us if w intrinsic motivation is higher

it could also become more and more important as we are having a mixed -- >> it makes sense. >> -- and from home. dan, it's fascinating, your insights we appreciate you coming on. dan ariely thank you. how new covid restrictions on travelers from china could impacthe t industry. and dow is down about 350 points we'll have more when we come back trading feel effortless and its customizable scans with social sentiment help you find and unlock opportunities in the market with powerful, easy-to-use tools power e*trade makes complex trading easier react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity

we are now in the "closing bell" market zone. mike santoli is here to break down the crucial moments plus we have steve kovach on apple, and seema mody on the travel stocks.

mike, it's been a rough hour, rough day, rough week, rough year it seems -- there's been some resistance for these tech stocks is lower is there any specific catalyst the nasdaq composite and high, so that's 9800 it has to get there, but we're unspooling a lot of -- there is some yearend selling , and the bear really comes for the apples of the world, the other stuff that had held up we're getting far along on the process where you couldn't have some place safe to high. hard to say that we are finished with everything, plus the news out of the cdc and china, the

risks to economist growth are certainly not dismissed either, what it would mean, and they're stimulating. millions of cases that could be exported all over the world, and now we'll see travel restrictions pop up again in the u.s., potentially other places around the world, that's a hit. >> i would point out, it's not as if treasuries are rallying. that would be the classic playbooed. the yield is modestly higher, one against threat anyone to hoyt 1%. >> there's also this narrative that it will drive up inflation again. as the chinese economy recovers, they're going to consume more energy it just makes it harder for the fed. i want to hit apple, mike.

that's tracking now for the worst year since the financial crisis, the stock also weighing on the broader market. steve, are apple's troubles as a result of iphone production and demand or something else happening here >> that's the bulk of it, at least for the next couple months like we've been talking about, these shut joins of production in china, those closed-loop systems have made it so hard for them to get iphones out. now, the big question is, does that demand carry over into january and february if you didn't get an iphone for christmas, are you odd buying it in the new years instead this will be an important earnings report how robust was demand through the supply issues, and how are they ability to keep the demand up or even if we head to a tougher

recessionary environment last week talking about how smart phones will be flat to down, and analysts signing warnings of that that it will get worse if consumers spending goes down, so lots to be worried about. it's largely on china, largely on the iphone business and there shall some things to look -- some bright spots, new products coming up the ar/vr headset is likely going to come out, and then more additions to the services, they'll have a high-yield checking account pretty soon, sara >> what about the china factor clearly the whole market is following news out of the china. what has apple said or what have you learned from covid zero to covid reopening, everything is impacting the supply and demand. >> unfortunately we haven't heard much from apple.

we got that early statement in november, that they won't be able to ship as many i phones as they originally expected but at the same time, the cases rising, and at what pint, if workers are too sick to make the ip iphones, so what we heard from apple is we have people on the ground, that's what they told us thanksgiving week, and they're monitoring the situation, but we have not gotten an update on what the sit really is like there, especially the for a facility shen gzu steve kovach, thank you. apple may be lower again, but tesla is rebounding today, still

on track for its worst year ever baird is cutting its target from 252 to 216 tesla trading near its lowest level since 2020 a lot of damage being done here. are the analysts finally caving? >> they're essentially trying to chase the actual share price down you'll know they're not necessarily changing the actual stance for the most part just more or less trying to accommodate what the stock has already done a lot of damage done, but just because it got to a $1.2 trillion market -- it was built on the basic electric vehicles are going to be gaining market share.

all of that happened they used up the catalyst, and it was on top of it the next few things coming, and he had the vision, and they were just goods to trust he would somehow make it work. the twitter deal clearly was a negative catalyst for tesla, for whatever reason, for the distraction, for showing musk may be tarnishing the brand. i don't know where it settles out. it's a more reasonably valued stock based on what the business is produces, but right at the same time when we're questioning what the demand will be for next year. >> yeah, for the first time really questioning alex on hannihan i -- ohanian, said go back to

running tesla. seema mody joins us with what does this covid restriction mean for the travel industry. >> i think what wall street is trying to figure out is whether this covid test that would be required to enter the united states will stop the china etraveler from coming here we did get new data from trip. com, the expedia in china, they found an up tick following the removal of the quarantine requirement. so what that tells us is the demand, the appetiteto travel outside the country is very strong following stringent lockdown measures. remember, the u.s. economy is very dependent on the chinese traveler prior to the pandemic, the chinese traveler on average spent about $6700 here in the u.s.

that's why these key to this this trade, specifically companies loon marriott. mike, i wanted to point out, amc shares are lower because shareholders have not had a good year in the stock, but i thought we should talk about it staff a gimmick? >> i think it's a gesture. the business is struggling, it's not in great shape they got a credit downgrade today, because, look, revenues

are 25% or so this year below 2019 levels, which were basically flat with 2018 amc has raised a lot of capital to keep this thing going if you go back to covid before it basement a meme stock, it was well under a billion dollars so now it's mull pals of that. i think he's done that well. he has this following out there. he needs to seem as if he's a team player. >> 52-week low for disney, which is now trading at the lowest level since march 2020

what's more stark for me is how clearly a lot of business to full forward what is interesting, is to see how stocks are trading in the new years. by the way, today is really the last day functionally you would want to sell something for tax purpose to have it settle before the end of the year.

>> light volume as we go into the close. four to one declining to advancing on the nasdaq 100. take a look at the qqq really it's some separation here spot biggest stocks of the weakest, and the equal-weighted version is where the market cap version is and is the volt tilt index on this leg lower people still expect in relative holiday thin trading. as we head into the close, we're down about 350 that's the low point of the day. >> there's the s&p, every sector is going to close lower on the day. what's being hit the hardest

down 2%, the worst performing sector down 1.3, are all the biggest there. small cast -- and worry about china's reopening. that's it for me today now into "overtime" with scott wapner all right, sara, thank you very much. i'm scott wapner we're at the new york stock exchange in just a bit i'll speak to dr. scott gottlieb on the worsening, even as that company loosens some restrictions. and we'll find out what it all means for already nervous investors.