finished three drinks so quickly. >> i have. it didn't end well but this did, right? >> thank you all for joining us for "power lunch." thanks for watching. >> you'll see us monday. "closing bell" starts right now. thank you very much. welcome to "closing bell." i'm scott wapner it begins with stocks sliding and rates rising here is your score card with 60 minutes to go in regulation. as you know the dow is pacing for its worst week since september. another hot inflation read upsetting investors today. here's how we look, yields moving higher, 3.94 on the ten-year and that takes us to our talk of the tape a bigger retreat in the cards? let's ask cnbc contributor joe terranova, and he is here with

me along with mike santoli good to have both of you here. pce, disappointed. at least it was hotter stocks moved do you -- we never expected the downtrend would be linear in its nature and to answer your question, i think it resides in tell me what the two-year and ten-year is going to do. those were the comforting indicators that allowed the market and really global risk assets to recover over the last several months right now they're being challenged by the premise that the terminal rate for the federal reserve is ultimately going to be higher than we expected but i do think you have to call into question, okay, if monetary policy that's being administered is running out of its ability to bring down inflation, are they really right now trying to continue to raise rates and this is more about supply challenges with inflation we talked about that last year out of their control at a certain point do they say, okay,

we got to stop we can't bring down inflation. we need fiscal policy and better supply initiatives. >> the worry, mike, rates continue to go up. financial conditions tighten we follow michael over at bank of america very closely. he says 3.8 by 3.8, 3800 by march 8th. why? rates continue to go up. financial conditions tighten on the idea the economy is good but that means the fed will do a lot more. >> exactly it's the equation that we're trying to wrestle with look, that's a four percent move from down here in two weeks. of course, that could happen and, of course, he made that call when the market was a bit higher so it was a little more bold when he did do so i'm trying to sort out whether we've gotten exactly the decline you might expect, not just today but this month from the highs and the s&p given what else has gone on. ten-year from 3.40 to 3.95 two up to 4.80 4% gain in the u.s. dollar index. all these things that helped, as

joe said, the market get to where it is and down 5 plus percent in the s&p does that all just fit together perfectly? is that the kind of choreography you would expect probably so. the s&p multiple has gone from a high of 18 1/2 down below, 17.7. i feel like we're just attacking that rank and it makes sense we are. i don't think we know that the fed has to do a lot more than is already priced or even as much as already is priced i think that's what we can take comfort in. >> the idea we posed, have we come too far to turn back now? we've discussed this on multiple occasions, right, what, are we 15% or or less off the low of the s&p. will we go back? >> that remarkable recovery correlates with the september 28th peak for the u.s. dollar. and it's really been a u.s. dollar story, not just domestically but globally. but i don't think you would ever

really come close to touching those peak valuations for the u.s. dollar once again so i'd be very surprised to see the market return to the october lows i think universally people would come on to the network and say it's a tremendous opportunity. i don't know, maybe the market needs capitulation at a certain point but what mike is defining seems to be the state of purgatory, right the market is going to remain in that state for the better part of the next three to four weeks, because you're void of any earnings the federal reserve meet something march 21st and 22nd so what are we going to rely on trade off what the jobs report is and inflation reading >> sure. why wouldn't we? what -- >> that's not for two weeks. you'll also find out that stocks look a little oversold in the short term bond yields look a little stretched so could be a lot of back and forth and i think even heartening to say at 3800 maybe you nibble again because you might have some of the help from the bond market if we're

starting to get -- to answer your question directly, nothing says you can't do begun 15%. we made more upside progress from june into august than we have this time on a percentage basis. what's helped is the passage of time, right? everyone says we broke above the down trend line, right, because time helped you out because you went further along the x axis and didn't have to get to as high a level. >> that's okay >> time is one of those two critical metrics you talk about to get out of a bear market, price and time maybe we've done both and we'll see. calling your attention to a couple of stocks, we've been wondering about where are the deals and when are they going to come back? there is a report in the oil space that pioneer is weighing a bid for range resources. take a look at both. they were halted a short time ago. they've now re-opened. range is up as you might expect on a report like that, 12% and pioneer is falling by some 5%. i bring it up now because it's

so fortuitous for us to have you here you own both >> i own pioneer still first of all, let's understand scott sheffield is a brilliant manager of energy assets he's also a serial acquirer. parsley energy, double point he's seeking consolidation in shale and i think what's going to happen, mike, you've had this performance which looks like an ocean right now between natural gas and crude oil so you'll have these cash rich oil companies, they're going to say, okay, i'll take advantage of a depressed price in gas and seek opportunities, specific to this deal, what does it do? so right now pioneer already has a presence in the area but the gas is a by-product of their oil well, not a pure gas play and this deal, if it were to happen, what this would do would give them expose 12450ur in the

marsellus basin in pennsylvania. that's a pure gas play but i think this is going to be a story not only for this year but the coming years, you'll see the shale consolidation cash rich oil companies going after gas companies. >> 250 i don't think anybody, anybody saw that coming but, mike, i would go to you, not on this necessarily specifically but more the opportunity factor that you do have in certain areas of the market and some are looking to take advantage. >> sure, it's the time of a cycle. you did have the dislocation in natural gas prices and reeled stocks where, okay, good balance sheets, go out and buy less good balance sheets, so i do think we should see a limb more of that you've seen an uptick in activism people trying to make things happen beyond just what the market is giving you again, financing conditions are not terrible but they're not as friendly as they were not that long ago it will be selective and i think it's going to be where balance sheet is an advantage for our

company. >> keep your eyes on rrc, pxd and we will as we head towards the end. mike, you will be back and look forward to have youing back then let's welcome courtney gibson of tiaa into our conversation, as well, court, so good to see your face and have you back welcome back what is your market view >> scott, it's so great to see you and joe as always. it's a pleasure to see you too so, you know, it's interesting at tiaa, we have a long-term view and so whether it's my personal portfolio as both of you know i've always been a buy and hold. rare i was playing in and out of the markets anyway because at the end of the day what i'm using the markets for is help secure the future and you can't kind of go back and forth. i love what you said about us being in purgatory around the markets. you know, the vix is a one to two-point range since the

beginning of the year and when you think about why that is, i mean, this is going to be the year of bonds if we're being honest with each other stock market, we'll be focused on high quality dividend playing stockses and see that flight to quality continue you're going to see a stock picker's market. this is not the time for passive managers to really kind of shine. it's the time for those active stock pickers to be in the market and when you think about a diversified portfolio, really thinking about what does that allocation to bonds look like? are you conservative, are you risky? everything was going up seven months ago when you think about where we were in the market cycle, anything you kind of threw a dart at a wall, you could win. but right now you've got to have some skills to be picking stocks and so if that's not your game, focusing on a diversified portfolio, high-quality stocks right now is where i'm focused, having allocation to bonds and to bond pox sis like the infrastructures as well as

alternative exposure including annuities. give yourself a well-rounded portfolio. >> are you then leaning on it's more -- if you're an equity investor, that it's more time to take profits than take on more risk, if you said in your words this is going to be the year of bonds? >> you know, so i am not telling you to sell your stocks. i'm not selling whine personally especially not if they're at a loss there might be some points in the market or in your portfolio depending on, you know, how long you've been in them that you have nice gains answer this may be time to take a little off the table but i'm not selling my quote, unquote losers, i'm not selling goldman sachs or walmart. i'm not going to be selling some of those names that are kind of in my portfolio for the long term i'm not scared of the markets. time and price, right? if you believe in the fundamentals of the equity holdings that you have, you stick with them until you hit a point where you believe that it's time to sell.

and there might be some points where you are reallocating if you're a young person in the market right now, you have a longer time horizon and you have the income to sustain without selling, maybe you're dabbling in some of the high quality names right now that you might be underallocated in your equity portfolio because of the dips that we've seen over the last almost two years at this point >> so i want you to weigh in i mean, it's an interesting comment and maybe, you know, controversial in some respects, it's going to be the year of bonds, right this whole conversation about 60/40. 60/40 got off to one of the best starts it's had in decades this year are we fooling ourselves into thinking where equities might be able to go >> well, first of all, i have to say great to see kourtney back on the network it's been this year about the value restoration in the taxable fixed income market and the fixed income market has been

leading overall markets to wherever the journey is going to take them. i agree wholeheartedly with what kourtney is saying where she's identifying opportunities that go beyond concentrating towards the big five, concentrating towards the hyper growth stocks, concentrating towards the u.s. or large cap or the areas of the market where you are rewarded the last several years now it's about considering full diversification and, yes, the bond market is giving you tremendous value being restored again. the last point, think to yourself a second. you have an unprofitable company, an equity company that's challenged by the terminal rate, the cost of capital moving higher and higher what are they going to do? they're going to be invcentivizd to improve the strength of their balance sheet. do i want to be an equity holder

or debt holder i want to be a debt holder because i will get paid on the process of improving the process sheet, exactly what happened in the wake of the great financial crisis with financial institutions >> do i want to be an equity holder, kourt, but maybe outside the united states where some suggest the real value is? >> so, again, i got to make sure that the viewers are taking my comments from me personally, i am invested, for example, in emerging markets i do see the growth in china coming back. do i know when it's going to happen, no, but given what we know, the power. the consumer in china is going to bring to markets, what we know as it relates to the shift in the middle class there, we know that companies are going to do well there and i want to be invested there so there are some opportunities for those who, again, don't need the capital tomorrow and have a longer-term view to think about some of those opportunities in emerging markets in both equities and

debt so like joe just said, let's look at the balance sheets, the strength of the balance sheets if you want to mitigate some risk you may become the bondholder versus the equity holder and get paid off first. let's think about how to play with different allocations in your portfolio to garner exposure globally. we're not going back to u.s. centric market i firmly believe that's not going to happen. so where are you going to find value across the globe and what is your time horizon for actually monetizing the investments in which you're makeing? >> speaking of bonds, i mean, you say it's time to take profits perhaps in investment grade. i'm wondering what your view is here when you hear that, you know, according to bank of america which we've already cited their flow show investment grade inflows longest nine-week inflow streak since october of 2021 you follow the money, right? that's where the money is going. >> but, so, again, you know, you have to decide am i going to take some money off the table or continue to

follow what you're seeing is fear in the markets, although the vix has been vacillating right here let's think about those who lost someone said we're back at the point where we were almost exactly two years ago so that means you invested money two years ago, you haven't seen anything in the market so far and let's say you are 60 or 65 and getting ready to retire you're kind of nervous preservation of capital is a thing and depending upon what your risk tolerance is having the ability to garner, you know, 5% returns on your capital plus the potential to give back principal back at the end of the day looks really good for a lot of people right now so you're seeing this flight to quality. this flight to safety. i don't know how long we see it. i don't know if it's a trend that's happening kind of across large institutional investors all the way through individuals or not but what i can tell you the individual level, people are not as, shall we say,

comfortable with seeing their money disappearing the way it has as of late in the equity markets. >> yeah, i don't think anybody is ever comfortable with that prospect joe, last word. >> some of us have seen cycles some folks hadn't so -- >> the uk and germany both outperformed the s&p last year so far year to date, spain, germany, france, the uk, you're getting nasdaq-like returns. give the consideration to what's going on in europe it's a cyclically constructed economy doesn't have the dominance of technology rewarded for that formula so far in 2023. >> joe, see you later. kourtney, we'll see you soon from tiaa joining us back on "closing bell. our twitter question of the day, we want to know have we already seen the highs for the year in stocks you can head to @ of cnbcclosingbell on twitter and we'll share the results later. also on top stocks to watch as we head into the close, seema mody is here with that

>> on a down day for stocks especially consumer names and get a check of two outperformers, dillard's rebounding following its disappointing earnings report now tracking for its worst week since july but, again, up about 4% at this hour and invest buy hanging on to gains after ubs raised its price to 87 from 80 bucks and reiterated a neutral rating that company is set to report earnings next thursday up 1.5%, scott. >> okay. seema, appreciate that we're just getting started on "closing bell. ahead, up in the clouds, the software space is surging but can that rally really last and what might it mean for the broader market we do discuss live from the new york stock exchange "closing bell" on cnbc back right after this

the eagle has landed. that's one small step for man... hey, what's up? uh... houston... we have a situation. how did you get here? you're characters in our video game! video game? yeah, it's what we do with xfinity 10g. it's like, you know, the best network imaginable. what the heck is that? those are the bad guys. are they friendly? the 10g network, only from xfinity. one giant leap for mankind.

we continue to see rallies being led by lower quality stocks that was certainly the case in january. similar to october and august and last march and so we get these sort of relief rallies,people cover shorts, chase momentum and then things sort of sort themselves out. >> that was famed short seller jamie chanos when he joined us earlier to discuss the market's recent run let's bring in frank holland looking at the cloud space, names that could put the rally to the test. what are you looking at today for us, frank?

>> well, first and foremost looking at the wcld etf. even with rates rising which usually hurts the sector due to higher borrowing costs many are down today, the etfs down as the ten-year approaches 4% the holdings in this etf, money.com, for example, up more than 25% year to date. app loving up more than 35%. fastly, up a whopping 70%. different business models but have one big thing in common a lot are short covering the other big coverings in the etf, c3 ai and considered artificial intelligence stocks and spiked from that buzz from microsoft's billion dollar open ai investment.

snowflake earnings, guidance is more an almost 50% increase in revenue. product is pretty much all their revenues when it comes to snowflake short interest is just about 5%. more in line for a typical s&p stock, scott. >> the bottom line, those you're talking to make the case it's not sustainable in any way this move that we've had as you suggested a lot of highly short name, speculative names, et cetera >> right i mean the question is whether sustainable or not, time will tell one thing for sure, yeah, a lot of short coverings and double digit interest on the names i showed you there's a bunch of names with high digitalle short interest. is there also demand to support this rally i talked to dan ives earlier he believes there is a lot of demand out there and raised his price target for microsoft on deal flow demand and believes

that the case for cloud stocks is only growing, about 50% of workloads in the cloud now, according to web bush estimates that will jump up to 70%, 75% in the next two years and believe there's a lot of runway for them but clearly short coverings are a big factor. >> especially when you see, you know, revenue growth in that space slowing as you know. frank, thank you very much i appreciate that. enjoy the weekend. up next bracing for a big downturn our next guest doubling down he'll explain why and what he thinks the fed needs to do to turn it all around during february we are celebrating black heritage through the stories of some of our leaders in business. here's odyssey's jason snipe by definition being a minority is not less than i thought i needed to assimilate into the boardrooms i

participated in but realized early on that diversity is a superpower and it's additive. so i encourage you to show up as your authentic self. there's so much value in that. mh a passion for what's possible. that's what you get from the morgan stanley client experience. you get listening more than talking, and a personalized plan built on insights and innovative technology. you get grit, vision, and the creativity to guide you through a changing world. ♪ 92% still active?

seems high. seriously? it's just a bike. wait. they make a treadmill with an intuitive speed knob? yeah. want to try? 92% stick with it, so can you. rent a peloton bike or bike+. terms apply. ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com.

major average is less than an hour away from closing out their worst week of the year on the heels that have hotter than expected inflation data. investors should prepare for more downside. let's bring in greg. welcome back we asked our twitter question. are the highs of the year in how would you vote >> i would vote absolutely yes, scott. there are two reasons i'd vote that way, number one, the analysts in the street are still way off in terms of their estimates. think about this for a second, scott. we went into the fourth quarter maybe a month before, mid single digit earnings growth, % earnings growth at the beginning

of the quarter by december 31st we were down to negative 3% earnings growth seeing one of the largest in-quarter revisions we've seen in quite some time and still weren't close to correct and still will end the quarter with around a 5% contraction for the fourth quarter and so the estimates are wildly off. they've come to probably a more realistic scenario for the first and second quarter but looking at high single digits for the back end probably -- well, not probably, again weigh magnitudes off and that's driven because the macro view is off. the street has settled into a view that 5% is the terminal rate and saying for some time it's likely 6% to 6.5% because we have 450 basis points behind us, unemployment hasn't been affected in the way that the fed would like to see in order to have some confidence. >> but that's like -- that's fed aggressive -- but i'm sorry to inte interrupt. that's like fed aggressiveness

on steroids. they're talking about the most hawkish like a bullard and he doesn't vote but nonetheless he speaks and speaksless, 5.375 100 basis points over that. >> i have been i generally have been doing that for about a year, i think, scott, but look -- >> i mean, what does that mean, though you know, you were negative and rightly so and then you started to get a little more positive on the market now we've come 15% off the lows, so you want to press it down again? >> well, no, it's not about pressing a bet i'm not married to my bets it's about reading the data and i think that's what the fed is doing itself you know, we started the cycle with them thinking 4% and then when they had enough data to reo realize that wasn't enough i couldn't say 6% six months ago but we have more data in now we're further into the cycle we're 450 basis points in

already and sitting at a lower unemployment than when we started the cycle so if we're at 3.4% now, 450 basis points in, do we think this next 50 basis points is going to be the panacea? probably not and so we should, i think -- i don't think we have any choice but to conclude that the fed's going to have to be more aggressive. now, a lag is an easy way to kind of rationalize that maybe they don't but i don't think we're seeing the lag. i think we're seeing something of a permanence and so when you look at construction, yes, we know how the housing market has met its demise but haven't seen the significant job loss we would expect so the fed might have to get more aggressive than they originally thought given the consequences haven't necessarily been there >> i mean both bullard and i think it was even mess ter are out today, you can get inflation down to where you need it to go

without causing a massive jump in unemployment. so you just don't believe that >> i think someone would have to spell that out for me. what does that mean without destroying the labor market? i don't know if i see 4% unemployment as destroying the labor market, per se we've certainly seen levels that were higher. but i also don't think that, you know, historic low at 3.4% unemployment is our status quo either i don't think i'm advocating for destroying the labor market but we will have wage growth as long as we have -- we just added 500,000 jobs in the last jobs report as long as the economy continues to add jobs like it has been, we're going to have continued wage growth and if you believe in the statistics point out that there is a connection between that wage growth and service inflation so long as they care about service inflation i think the path is clear. i'm not sure they have a choice, quite frankly. >> why can't they just accomplish what they want to for

argument's sake because the market has moved to the idea that you get three more 5 hike, right, march and may and maybe june and keep it there for awhile and they use the tools that we already know that they have it's the balance sheet and the qt and they let rates sit there. why in the world you think they would go above 6% and i can't even imagine what the risks would be on the overall economy if they did that, not to mention what the stock market would do >> right, well, the stock market wouldn't take it well. i'm not so sure it would be armageddon for the economy we tend to because money has largely been free for almost 14 years, become prisoner of the moment to that and the fact of the matter, scott, is that rates have been much higher before without destroying the economy and so i don't think that a 6.5% fed funds rate is necessarily going to be -- sure, it will slow it. it will certainly slow the

economy, but will it bring about disaster and fire and brimstone? absolutely not that's the kind of the prisoner of the moment thinking but at the end of the day, the employment numbers can, can be curtailed without necessarily causing a recession. we don't need to have 3.4% unemployment to avoid a recession. i think it be higher than that and see a soft land sflk are we going back to the lows >> absolutely. we will retest those october lows, so we will have a sub30,000 dow. we will have a 3500-ish s&p and we will have a mid-10000 nasdaq. absolutely as soon as the market digests what the fed has been trying to articulate probably gently in my opinion over the last two weeks, which is we have more data our original impression was wrong, it's not 4% or 5%, we probably need to be more aggressive as you rightly pointed out. the market isn't discounting that right now

the market is discounting under 75 blips, i think that's wrong we'll retest those lows. >> we will check back in with you on multiple occasions, greg branch, thanks so much see you on the other side of the weekend. >> thanks. up next the biggest movers as we head into the close. seema is standing by. >> two major companies reporting yesterday, both weighing on investors' sentiment and we'll explain why after this short break. what if you were a global energy company? with operations in scotland, technologists in india, and customers all on different systems. you need to pull it together.

so you call in ibm and red hat to create an open hybrid cloud platform. now data is available anywhere, securely. and your digital transformation is helping find new ways to unlock energy around the world. ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life

insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com. you'll always remember buying your first car. but the things that last a lifetime like happiness, love and confidence... you can't buy those. but you can invest in them. at t. rowe price, our strategic investing approach can help you build the future you imagine. nothing, it really is something. as an expedia member, you can save up to 30% when you add a hotel to your flight. so you can have a bit more money, to do even less.

0 minutes to go until the closing bell here's where we stand. we are down on the dow jones industrial average 369 pretty much set for the worst week since september that inflation report, hotter than the market liked. stocks have been down for the most part all day. nasdaq is the biggest loser down 2% lots of things are moving. seema mody as a look at the key stocks >> if you're wondering if americans are thinking twice about buying a used car, look no further. ca ca carvana had a 3% drop in cars sold to consumers in 2022. the ceo said the world changed on us quickly reflected in today's shares down about 19%. look at autodesk, the worst

performer on the s&p 500 at this hour as the company's outlook missed wall street estimates but oppenheimer analysts still see opportunity in what they say is overly negative investor sentiment. stock still on track for its worst day since 2021 down 13%, scott. >> last chance to weigh in now on our twitter question of the day. have we already seen the highs for the year in stocks head to @cnbcclosingbell we'll be right back.

dad, we got this. we got this. we got this. we got this. we got this. yay! we got this. we got this! life is for living. we got this! let's partner for all of it.

edward jones

for businesses of all sizes, let's partner for all of it. there are a lot of choices when it comes to your internet and technology needs. when you choose comcast business internet, you choose the largest, fastest reliable network. you choose advanced security for total peace of mind. and you choose a next generation 10g network that's always improving, getting faster; more reliable; and more intelligent to keep you ready for today and tomorrow. the choice is clear: make your business future ready with the network from the most innovative company. comcast business. powering possibilities™. let's see the results. have we already seen the highs for the year in stocks

well, you said no. 64% of you think no. all right, up next, trading with turbulence it's been an ugly week by bank of america is highlighting a key shift in navigating key rkmaet risks when we take you inside the market zone. the first time you made a sale online was also the first time you heard of a town named... dinosaur? we just got an order from a dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. godaddy.

tools and support for every small business first. ♪♪ inner voice (kombucha brewer): if i just stare at these payroll forms... my business' payroll taxes will calculate themselves. right? uhh...nope. intuit quickbooks helps you manage your payroll taxes, cheers! with 100% accurate tax calculations guaranteed.

92% still active? seems high. seriously? it's just a bike. wait. they make a treadmill with an intuitive speed knob? yeah. want to try? 92% stick with it, so can you. start a 30-day home trial today. terms apply. there are some things that go better...together. like your workplace benefits... and retirement savings. with voya, considering all your financial choices together... can help you be better prepared for unexpected events. voya. well planned. well invested.

well protected. i think i'm ready for this. voya. well planned. heck ya! with e*trade you're ready for anything. marriage. kids. college. kids moving back in after college. ♪ finally we can eat. ♪ you know you make me wanna...♪ and then we looked around and said, wait a minute, this isn't even our stroller! (laughing) you live with your parents, but you own a house in the metaverse? mhm. cool...i don't get it. here's to getting financially ready for anything! and here's to being single and ready to mingle. who's ready to cha-cha?! ♪ yeah, yeah ♪ >> announcer: the market zone is sponsored by e trade from morgan stanley. no account minimums. we are now in the closing bell market zone mike santoli here to break down the crucial moments of the trading day plus bank of america's jill kerry hall with her market outlook and joe

terranova is also, of course, back with us mike, i go to you first. twitter voters aren't giving up on the market yet apparently they don't think the highs of the year are already in. >> if we pull that apart all that says is that you're not going to foreclose in the possibly the next ten months the market trades 6% higher than where we are now, a new high for 2023 it's actually logical to say, no, i'm not going to assume the highs are in for the year. i think we're in a spot right now where every really nasty, deep sell-off in the market starts looking like a 5% to 6% shakeout which is what we have not every one leads to the deeper pullback and that's, i think, nothing that has gone on right now tells you we're destined for much lower prices but are at a testing point sitting on the 200-day average and sitting where the down trend and up trend lines come together on a technical basis, i understand why there's suspense built in but we often yo-yo

around technical levels before they're settled one way or the other so i think it's okay, orderly today. maybe, you know, someone will argue too orderly based on where the fed has to go. >> we've been sitting at this basic level for most of the day. >> yeah. >> joe, you've seen later day pressing on some of the megacap tech names nasdaq will be the biggest loser down about % but watching throughout the session, apple, microsoft, amazon, netflix as you were pointing out a molt ago. >> mike and i were talking in the commercial break there's on effect on the weekly then these crazy zero dated options, see a lot of activity whether tesla puts or overall in the qqq puts themselves so that's where a lot of the selling pressure resides from. there's been no downs today. i think that's a surprising element of the day is the market opened lower and it's really just kind of sat here. we're in a consolidation range i think mike is right. and the range is 3800 to 4200. >> right.

>> if you break 3800, you're going to really then begin to see within your sights the lows from october. >> no bounce, for sure, but no graterolover either. >> no. >> on that note let's bring in jill from bank of america joining us how would you vote in our twitter poll have we seen the best of the market for the year already? >> well, i think we were expecting coming into the year we could see a bit of a bounce given how negative sentiment had been at the end of last year and, you know, sort of the growing con cens s, not too far from where we are today. we think there's potential downside risk. a lot of the sign posts we look at in terms of what could signal a potential bottom in the market haven't been hit yet, so, you know, we think this is going to be, you know, potentially volatile for the market and there's better opportunities in

spots in the market whether it be small caps or sectors or being an active manager and keeping stocks rather than owning the s&p 500 this year >> how would you describe the disparity between your s&p target which with where we are and the fact that you look for a really big decline, though, in earnings you're at 200 bucks, that's pretty weak all things considered >> well, i think, look, it's half the magnitude of the typical recessionary range decline so we are expecting a mild recession to begin at the second half of this year and last until early next year usually the s&p earnings decline about 20% during an average recession, obviously they've declined during some of the more severe ones so this would be less than half of that obviously there's been strength in the data but when we look at what happened this earnings season, earnings have generally been in line to a slight miss

and that was even after earnings were cut substantially, guidance has been weak. you know, a lot of the measures we look at of mentions on earnings calls have suggested some weak demand so, you know, we do think there's more downside risk to earnings forecasts at this point but not looking for as dramatic as what you usually see during a recession. >> are you looking to play more defense here than offense? let me just note before you answer too, we are sliding a bit as we head towards the close, dow is down by more than 400, 1.25%. the nasdaq down a cool 2% as some of those megacap names drag things lower, how would you play things offense versus defense and if defense, where? >> i think, you now, we're not necessarily overweight all of the defensive sectors and areas, i think when you look at what's priced in already, how positioning is, you get some different results than, you know, maybe the typical recessionary playbook. also when you look at the

shifting risk profiles of sectors, some of the traditionally safer low beta sectors have become higher beta so we're overweight, some of the more cyclical sectors right now, energy, materials, financials, and then we're overweight staples is our preferred high-quality defensive sector but, you know, we think a lot of these areas, you know, energy, materials, sort of your old economy sectors, there was, you know, massive underinvestment for a decade companies that were more in the new economy tech benefited from zero interest rate policy, globally says so we think there's longer-term shifts that are going on where we could see a change in leadership, and then, you know, small caps are another area that have been really the only area pricing in a lot of the macro risks and, you know, we see as better positioned even amidst the recession risk right now >> why are you underweight consumer discretionary i mean the consumer has been strong that space was leading why do you make that call here

it is up 10%, the best performing sector of this year to date up near 11%. >> yeah, i mean, usually consumer discretionary is a typical early cycle sector so at this point if we're till expecting several more fed hikes, typically you don't want to own the sector until the fed is done hiking and you're into more of that early cycle phase consumer discretionary is also the most labor intensive sector as we continue to see wage pressures, the area where we see the most downside risk to earnings estimates it's still generally crowded and expensive by active managers, so, you know, that's an area that obviously some of the data, you know, the consumer has generally held up well but do see risk to companies' earnings and, you know, think it's a bit over >> jill, appreciate it we'll see you soon let's turn to you, joe, what an interesting week it was for

chips, nvidia stole the show. >> sure did. >> so to speak and has us looking towards next week, broadcom, one you own. give me your thoughts based on what we got from nvidia. >> i think it was critical to sustain the positive momentum that the chip sector and overall the industry has maintained since the october lows and there are winners in the chip environment, i've said that. they were first in, they're first out. you're going to hear from broadcom next week and scott is a much different type of chip company than some of the others. it's not a company that's reliant on the cost of capital, right? it's a company that has a great balance sheet. it's a company that has 80% of its revenue overseas if you think about and it's owned within the quality momentum joe t. portfolio, it is 1 of 23 technology holdings, its dividend yield only second to corning. rare to get a chip company where you have a yield of 3.2%

in addition to that, a phenomenal job maintaining margins, average earnings, 14% last four quarters, 24% and what is he doing with that? taking the capital and deploying it, 49% of earnings so this is just a quality strong balance sheet chip company and find out next week how the most recent quarter was, what's the update with vmware and with ample, 2025, lessening the exposure. >> you're a low beta chip guy also, right? well, you don't have to be because you could be in nvidia which you used to be in. you can win on both sides but you choose to play it that way thinking of texas instrument. >> i don't want to incur the volatility look, nvidia arguably is on the other side of this going -- i heard you say this yesterday is going to potentially maybe

replace some of the megacaps in terms of the critical importance, the dominance because of ai. >> i just ask fundamental it was the stock now that you have to own in the nasdaq outside of what used to be a very singular conversation of, well, you just got to own the megacaps, of course. >> i think the answer to that is yes, i do. i really believe it is but i think it's an idiosyncratic story in the chip sector and that's why i still believe, you know, this is the environment where you want to have the low beta exposure. >> what's your takeaway with nvidia and as we look towards next week? >> i take it in a marketwide view as the signal of how the semis are performing and what it means. and i think it's one of the more bullish things you'll look for, it's not a clinching argument for why this market is now in an up trend but i think it's one area you'd say, you know, you'd want to check off that box to say, i believe in this rally

more when semis are outperforming and have been. they've obviously had a lot of risk swept out of them on the valuation side of things and on the inventory side doesn't mean we go back to those highs. i think nvidia super overheated. a little excitable how that stock trades but outside of that, things seem like they're more grounded. >> you know exactly what the narrative would have been, too, had nvidia laid an egg it would have been like, you see, we told you these stocks like in that were up 60% or so year to date are ridiculous and then this is the start of a potential reversal and, in fact, i mean, you just didn't get it. >> you didn't get it but what you did get is a reminder it's not going to be monolithic i keep saying that nvidia performed they have the right story. they're going to draw the dollars. it's not like you're buying every single tock that we went to the moon like nvidia did back in 2021. >> so consumer discretionary as i mentioned to you is still leading for the year up now

better than 11% and leads me, mike, into what is going to happen next week a whole heck of a lot of retail earnings how do you view that given what the space itself has done? >> viewing it as, first of all, we're sensitive to anything that says the consumer is in free spending mode again. you have to expect a giveback. you won't stay at january's base overall. i don't think the retail stocks will be the ones that matter the most yeah, target is great. costco, excellent operator, so i feel like, you know, they're not necessarily the things that are going to be the engines for the market, but you want to see that they're being smart on pricing and maybe if their margins are squeezed it's actually helping out the overall inflation picture because i think that's part of the story here. >> does get us over the last great earnings hurdle, if you will, that last slew of companies from the real key sector. >> yeah, two months into the year and earnings estimates in

aggregate are down a fair bit but not falling off the cliff just yet we still wait for that moment when a lot of people said that they're shooting down to 200 for the s&p. >> you're hearing the bell that will lead us into next week let's send it into "overtime" with morgan brennan and jon fortt. >> thanks, scott that's it. worst week of the year for the major averages this is a score card on wall street but the action is just getting started. i'm morgan brennan with jon fortt. coming up we'll break down the selloff and the opportunities ahead with former carlisle partner. >> plus, we'll discuss tech's rough week and the setup for software demand with bill mcdermott. >> but let's get straight into our market panel joining us now are chris