i'm at it. >> oh my god >> those 20 miles are tough, man. i dreaded them during marathon training >> oz, great to see you. congratulations on a real tour de force last night on hbo >> you guys are the best >> thanks for watching "power lunch," everybody. "closing bell" starts right now. ♪ courtney, thank you so much. welcome to "closing bell," everybody, i'm scott wapner from post nine at the new york stock exchange we've got some big interviews just ahead liz ann sonders is joining me momentarily on whether this correction is about to get bigger another and richard clarida on what he thinks the fed will do in the months ahead just after the minutes released about an hour ago. we begin with unsettled stocks your scorecard right there with 60 minutes to go in regulation the major averages, not trading all that great today as rising interest rates remain front and center the yield on the ten-year note sitting at the highest levels

now since last october there's the ten-year 4.26%. as a result, the dow not able to get much going today and safe for the s&p tech and discretionary names, obviously that's hurting the nasdaq too as names like apple and microsoft remain, we'll call it, a bit edgy it takes us to our talk of the tape, the state of this market and where it might be heading from here. let's ask liz ann shononders good to see you. >> you too >> we felt unsettled, it's fair to say, over the last couple weeks. where do you think we're going from here? >> you had a distribution day yesterday, some weakening in breadth, but you're not yet seeing the kind of defensive leadership that you might see when you're getting toward the end of a consolidation period. it doesn't feel like, absent a catalyst, that this is going to unwind in spectacular fashion, but it is -- it feels like there's probably a bit more consolidation to go.

what i wouldn't mind seeing is a continued profit taking, maybe up the cap spectrum into those prior high flyers while you start to see improving breadth in other areas of the market not quite seeing that yet, but that would be one of the things i'm looking for to show a sign that maybe we're getting through this pullback correction, consolidation period, whatever you want to call it. >> so, you think the nasdaq, it sounds to me like you're talking about the megacaps that you think they need to come in a little bit more >> well, you know, when we started june, not only were they dominating performance, but only 15% of the s&p's constituents at that time were outperforming the overall index for the prior 60 days, and at least based on the data we have, that was a record low. and that was telling you that there was some risk of con convergeance i think more needs to be done there.

it would be healthy from the standpoint of sentiment that had gotten pretty frothy prior to this recent pullback period, and i think that needed to correct itself a bit >> do you think we've entered into the good news is bad news zone again i mean, atlanta gdp comes out at 5.8% we're like, wow. rates are already elevated so, you've got a two-prong problem. you've got the prospect that rates would stay elevated if the economic news continues to be strong, and of course what that means for the fed. >> with the hotter than expected retail sales and ip today, you didn't really see the needle move in terms of probabilities for the september fed meeting. that's still, last i looked at the cme tool, it was 88% chance of no move in september. that was reinforced by the fed minutes that came out. i think where the disconnect still lies is the basis for what is still about five rate cuts coming in 2024, and that may happen, but probably not without

some deterioration in the labor market or more broadly in the economy. the one thing i would point out about gdp now is it's a now cast it's not a forecast. it just takes the data that has come in so far and we're of course only halfway through the quarter, which helps to explain why the blue chip consensus of economists for the third quarter actually is actually still sub-2% we just -- i've heard it billed as a forecast, and that's not what it is that's now cast. it's the data that we have right now, what that says about growth >> sure, but at least you extrapolate the fact that growth is still pretty good >> it is still pretty good, which goes to the disconnect with what's the basis for five rate cuts next year. yes, if disinflation continues, and the fed's in pause mode, that means real rates go up and become restrictive, but absent a crack -- further cracks in the labor market, for the economy, that may be what the fed needs in order to really squash

concerns about inflation volatility so, i think that still doesn't seem to square yes, we pushed rate cuts out of 2023 into 2024, but it still seems pretty aggressive, and to your original question around, is good news bad news? it may be or not near term fed policy but what it means for next year's expectations around rate cuts. >> how many -- forget cuts i mean, how many hikes do you have in your mind as you sort of model out where you think the market's going to go >> it could be done. it's just a question of this sort of higher, higher the for longer part, i think, probably has to get pushed out further into 2024. i think unless we get some really hot inflation number between now and the september meeting, i think the market's probably right in assuming the fed is in pause mode right now it's just a question of the span of time. and by the way, if you look back

at history, there's been a wide range of spans between the final hike and the first cut, but they're fairly correlated to the unemployment rate and historically, when the unemployment rate has been on the low end of the spectrum, the time span between final hike and first cut is much wider. vice versa when the unemployment rate is high so, i think that has to come into the mix when we look at what the next step beyond a pause is for the fed >> let's take your fed pause let's take the economy still good, and let's suggest that, you know, earnings are solid enough are those three items enough to keep the market from having a major upset? >> well, i think you need some definitive positive outlook on earnings yes, the consensus into fourth quarter is for lifts, but i'm not sure how valid those out quarters are i think analysts are being much more near term in making

adjustments to estimates they don't have the kind of precision around guidance that existed pre-pandemic so, i wouldn't put a lot of validity in fourth quarter, but given that all of the rallies since last october came via multiple expansion with no benefit accruing from the denominator and the pe equation, i think there needs to be confidence in those out earnings estimates to kind of justify valuations, especially given the blowout on the upside in yields, which, when that first started to happen last year, was what put pressure down on the higher multiple segments of the market, and i think that's in play right now with regard to some of the prior high flyers and the consolidation is that's where valuations were richest, and you have now got the yield blowout on the upside, and i think we need to sort of justify valuations at this point in the rally. >> i guess the issue is, though, if you do have a bigger pullback in those high flyers, as you coin them, whether you can get other areas of the market to pick up the slack to keep the

market from having any sort of greater upset at the same time when you're thinking about china's sluggish, if not weakening, and there's still going to be an overhang of questions about what the real trajectory of our economy is >> yeah, so, again, i think the 5.8% from gdp now is not reflective of what's actually happening in the economy i think the blue chip consensus probably has it a bit more right. you're seeing a rolling back over in some of the housing data, the hmi. you're seeing it on the good side you're seeing -- you know, renewed deterioration in some of the regional pmis tied in part to the weakness that we're seeing in china. so, i certainly wouldn't extrapolate the nowcast in terms of some blowout expectation for gdp. but enough growth that it does call into question the green light that the market views the fed as having to start cutting rates early in 2024. >> i'm sorry to interrupt you. >> that's okay

>> i ask almost everyone who's been cautious on the market. what's the signal you look for at this point to turn you more bullish? what is it for you >> the earnings trajectory, greater confidence that the inflection point that we're likely to see is in front of us. that would probably need to see a stabilization and a move back up in pmis, particularly on the manufacturing side of things that ties directly into earnings also, some stabilization in yields because the move up in treasury yields tends to put some downward pressure on earnings, and then a loosening in lending conditions, because that also has a high correlation to the earnings trajectory so, related to that sort of lifeblood of the market on the earnings side, those would be the things i'm looking for >> even the fed is still talking about sort of the unknown

effects on credit tightening from what they've already done and if they don't know, no one knows, i suspect let's add liz young into the conversation too of sofi liz, good to have you here with liz ann. you've heard what liz ann has had to say what's your own view >> well, scott, i think i've been saying this all year. i've been pretty cautious as the year has rolled on, despite the rally, and when you look at a lot of the data and some of the market action that is now showing its face, i think that this is probably a pullback that was expected even by bulls we got pretty extended as far as valuations go. that rally was very fierce, and it got to a point that didn't make sense congruently with where we were in the hiking cycle and really where we were with some of the inflation readings as inflation comes down, revenues come down so, we're seeing earnings now still weak, third quarter in a row of negative earnings growth. there hasn't been a whole lot that has proved that rally to be

sustainable, so i think this pullback is healthy. i don't think it's over. i don't think we're quite at a point where it's rational yet, and i would agree with liz ann, we still have to give back some of that big cap rally and some of that stuff that was pretty imbalanced for the last few months, and i think we'll see that continue through august and maybe into september >> what happens if other parts of the market pull back in tandem with some of those mega cap stocks do you expect that to happen that portends a larger issue >> well, the thing that i'm watching to see if i would expect that to happen is the yield curve. a lot of the inversion that's been going on and the resteepening that's been going on and just the nature of that resteepening it's happened because the ten-year has risen the two-year hasn't budged much. it's gone up a little bit, but the ten-year has risen more, which a lot of people would say that's a bullish signal on the economy, and it probably has happened because of things like the atlanta gdp tracker, but it's a bearish signal for stocks, and it does suggest that inflation could be harder to manage, and i also think that

inflation will be harder to manage for the next few months if not through the end of the year, because now, we've got all of those base effects of peak inflation off the roll so, now, all the comps are going to get tougher, and it stopped coming down at the fast tlip w clip that it was i'm concerned stocks will see some pain. >> i've got rich clarida coming up, and i'm going to ask him this question as well, but i'd like your opinion on it too, because you've been tweeting on it the prices paid part of the manufacturing empire manufacturing index today just shows you how sticky certain parts of inflation are, and i would gather that the fed's worst scenario ever is this economy remains too hot for them at a time where inflation remains sticky if not going back up >> so, i think what's really happening here is not that inflation is going to stay high in perpetuity. i think what we're transitioning into is an environment not

anything like the great moderation from the late '90s up until the pandemic where you had this perpetual disinflation. i think we're going back to an environments that a bit more like the '60s and '70s, not high inflation staying there but more inflation volatility i think, you know, we've sort of lost the powerful drivers of this disinflation in that great moderation period of chieap and abundant access to labor i think this era is more inflation volatility i think the global economy is more subject to supply shocks, not just demand shocks we've got the reshoring and the regionalization happening, and i think it's probably going to be a trickier environment for the fed, just because of the bouncing around volatility, and liz made a very good point about the base effects that june was the kind of prime month because we were going up

against the nine handle on cpi those are really starting to fade, and we may have to deal with some of this bouncing around in inflation. >> yeah. liz young, i mean, let me just note too, stocks are at the lows of the day so, this, you know, corrective phase that we're in, whatever it's going to be characterized as by the time it's finished, and who knows when that's going to be. dow is down 155. i asked liz ann the same question i'll ask you now. the situation that good news is bad news for the stock market. doesn't want to hear that the economy is too good. >> yeah, i mean, i would agree with that, but i think we're still hanging on every word of the federal reserve, and once we get to a point where we have more clarity on whether or not they're done hiking and maybe even when cuts would be reasonable, that sort of chatter will stop. so, i do think that if the economy can withstand some of this pain in the meantime and bring inflation down, not let margins suffer too much, and that's another thing that's been

going on i think a question that you also asked her is what would change your mind? if margins were able to maintain at this sort of level, i would feel a lot more optimistic i'm not sure that they're going to be able to be maintained. they've fallen pretty precipitously since last year, and that was a big buffer, and that was a big point in the bulls' column of margins are so broad, margins are so big that we can withstand a lot of this pain we're getting to the point where we're not going to be able to withstand it much longer and i think this sort of hanging on the fed and everything that the fed does is not really healthy for market action. >> well, i mean, it's just the way of the world we're going to do it it's not like we're going to stop, right? jackson hole is next week. powell is going to speak and whether it's eight minutes like last year or longer, or even less, who knows we're going to hang on his every word because especially with elevated rates going into jackson hole, those comments take even perhaps greater meeting. liz ann, i'll go to you in the last couple moments we have. we've talked about technology, your expectations that maybe needs to come in a little more

other than that, what other sector is on your mind most? >> we're still much more factor-focused than we are sector-focused i think this is not the environment where you want to make monolithic sector calls i think you want to stay up in quality in terms of factors and look for strength of balance sheet, actual pricing power that isn't just tied to nominal revenues, by the way there is no more nominal revenue growth, and real revenues are in negative territory, which is the reason why a season, an earnings season where you had above average beat rate and percent by which beaten the stocks have not been doing well is because the beats are only coming because of cost-cutting with absolutely no revenue growth, so i think you want to look at the factors that buck that trend, that companies that have that pricing power, that have positive earnings surprises, that still have that revenue growth, and approach it at the factor level without trying to make the monolithic sector call. >> that's perfect to have both of you liz, i mean, i'm pretty sure you're more of a sector-based

than factor-based in the way you look at the markets, so how would you counter the view that liz ann puts forth with the sector that you're most keeping an eye on right now? >> well, it's not a sector that i would necessarily be optimistic about, but the sector that i'm keeping an eye on is financials, and the banks have not traded well in this correction they hadn't really picked up too much steam before, so for them to not make it back above a 200-day moving average gives me some indication that maybe there are market participants out there anticipating a credit crunch or credit event, but if you look at things like utilities and staples, that haven't caught a bid, so there hasn't been this rotation into big defensive sectors, which tells me that investors are still in equities, and they're not rotating out yet so, there's some fear of an event but maybe not a fear of an event that's going to take everything back down i watch sectors more for, what's the sentiment? where are people putting money i think it's telling a pretty clear story right now. >> yeah, i mean, let's not get

over our skis either the fact of the matter is, it's late august. volume is light. i'm looking at volume of the new york stock exchange. it's not even close to what it typically is you're on what is a seasonably weak period for stocks, september and october. ladies, thank you so much. liz ann sonders and liz young joining us let's get to our twitter question of the day. is this correction almost over or just getting start? head to @cnbcclosingbell let's get a look at stocks to watch kristina partsinevelos joining us >> revenues coming in above expectations helped by its effort to compete with rivals by aggressively lowering prices shares are down amid broader concerns about chinese economy shares of jd down 14%, down 16.5% on the month and headed for the worst month since april.

elsewhere, h&r block is having its best day in over a year after earnings topped a revenue beat the tax prep giant is also hiking its dividend 10% to 32 cents a share and that's why shares are up. and since i cover chips, we got to end on nvidia, which got a new street high this afternoon, a new street price target high from rosenblatt who went from 600 to $800 a share. the love fest from all the analysts that's well above the average target of $528 a share nvidia right now is trading at $435 ahead of its earnings report which is out next wednesday. >> kristina, thank you up next, your retail rundown. what target's report this morning could mean for walmart's numbers tomorrow and a little bit later, coming up, former fed vice chair richard clarida gives us his first reaction to the minutes, his look ahead to what jay powell's next move might be and how it could impact your money in the market.

that's just ahead. we're live from the new york stock exchange, as always, and you are watching "closing bell" on cnbc.

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are target's problems target's problems, or are they retail's problems >> i think we don't fully know the answer, but we know what we saw last quarter, and last quarter, target had problems that did not seem to follow through at least as big for walmart, and some of that could be the assortment mix. everyone is trying to point to that, which, of course, does make a lot of sense. walmart has a lot of grocery, 56% of its sales or something close to there comes from groceries. it's a frequency business. repeat shopping traffic. and walmart has said that not only is it getting more customers, making those trips, but it's attracting higher-income shoppers, also for its grocery business so, analyst expect that that will continue. they're expecting comparable store sales for walmart to grow more than 4% compare that with target, where we just saw comparable sales fall 5.4%. the first negative comparable sales result from target in six

years, and target, of course, points out there's continued weakness still in those discretionary categories, things like apparel or home goods or electronics, and that has sort of been target's sweet spot for a number of years. yeah, of course, walmart sells all of that as well. but if it's weaker for them, it just doesn't take a bigger -- as big of a chunk out of their business as it would for target, because of the percentage of sales. so, i don't think that walmart is going to come out unscathed from things like lower discretionary spending in those categories i'm sure that shrink is also a problem for walmart, as it is for target and across the retail industry right now but i think they have other levers they can pull to sort of even things out when you're looking at the big picture, total quarterly numbers for a retailer like walmart. >> have we corrected the issues around inventories, whether it's for target orfor that matter walmart or anybody else who spent the better part of last year talking about how bloated they were? >> yeah, i think for the most part, yes.

inventories have been corrected, and what we learned from target today is that their inventories were down 17%, and that is a really big number but the context is super important, because as you point out, at this time last year, all these retailers had sort of gotten all this merchandise that they had ordered in the pandemic. they got clogged up and stuck in the supply chain all the stuff that we had kind of wanted and had really high demand for but couldn't get. then it came in, and then we were over it as consumers. we didn't want any more kayaks or bikes, so a retailer like target was stuck with a lot of it, so they had to slash prices, go really deep on the discounts in order to move it, and that juiced up their sales for this quarter last time but pushed margins down, and so they had all of that to compare on this quarter, but they didn't have that they had clean inventories they didn't have to discount so, profit was higher. but sales were lower so, we know that it was fixed at target and that was a particularly big problem for them every retailer had some degree of difficulty with that, but it was particularly bad for target,

and they figured it out. and again, because walmart has so much of its business coming from food, that's going to be less of this inventory issue, because obviously, that's a quick turn, right? you don't hold on to apples for that long. >> yeah. and lastly and quickly, if you could, tjx, right? stock's been up all day in a tough tape and it's up near 4% now. >> it's a really impressive business i think the analysts were looking for an increase of 3% in those comps and they put up a 6% that's pretty good and talk about discretionary, right most of what they sell is apparel and home and they figured it out their business model is very different. they have very little digital sales, so less in those kind of costs as well. so, really interesting stock there, a company we don't spend too much time with because they don't share a whole lot with us beyond what we learn every quarter. >> maybe we should maybe they should. >> exactly >> maybe they should courtney, thanks coming up, forecasting the fed, former vice chair rich clarida joins me with his first take on today's fed minutes.

more importantly, where he sees rates heading from here.

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stocks in the red across the board after the latest fed minutes showed officials are concerned about "significant upside risks to inflation. "the fomc warning more rate hikes could be necessary let's bring in richard clarida welcome back it's nice to see you >> good to be here >> all right, so, they're concerned about inflation remaining sticky, if not ticking back up, and possibly having to raise rates even more. what are your own expectations how many more hikes do you think are in the cards >> well, i do think the powell fed is data dependent right now, but i've also thought, and after reading the minutes today, continue to think that the risks are that we do get in one more hike this fall at the june meeting, the sep dots indicated that most folks thought that a july hike and one more would be required, and i'm leaning in that direction now.

they could get data that is sufficiently positive for them, that they could be done, but these minutes read like a committee that is worried not just about the baseline but about the risk, and as your quote indicated, the risk are to the upside on inflation. >> wow so, i mean, one more is -- i was wondering whether you were going to suggest that even more than one was potentially necessary. that's all you see i feel like the market would take that as a big "w. >> well, it could. right now, the pricing, as i look at my screen, is under 40% chance of getting in that additional hike this year, so it's certainly not priced in look, i agree. i think they're close to done. they've hiked a lot. they're in restrictive territory. i think that the debate does turn at some point to how long to keep rates in restrictive levels but on your specific question, i do lean in the direction that there is one more hike in the pipeline this year >> i'm curious as to your reaction to, you know, the atlanta fed, their gdp now

now, you know, it's not a forecast it's now 5.8% still got a lot of eyebrows going up, right? so, if they're even close to correct, what is the implication? obviously, that the economy's pretty darn strong what's that going to mean for your prediction and what the fed might end up doing >> i think right now, of course, atlanta fed's getting the attention, and they do get work there. i think other indicators that we look at do indicate that certainly the economy entered the third quarter with good momentum the economy has surprised me it's surprised on the upside this year. i think, scott, they're probably more focused on the labor market because, you know, we do have near 50-year low in unemployment the statement itself today, the minutes itself, emphasize that the wage gains, wage inflation, is still running hot compared to the long run inflation target, so i think probably more of the focus will be on the labor market, i would guess.

>> how would you assess as to whether the worst case, so to speak, scenario for the fed is one in which wages remain elevated, prices paid we just learned today were up in august. at the same time, the economy remains stronger than they expected is that a worst case scenario for not only them because it really puts them in a box, and for the markets? >> well, yes i think -- our baseline view is that the economy next year does down shift with inflation running in the 2s with perhaps some modest rise in the unemployment in that scenario, but there is a risk case it's not the most likely case. there is a risk case that inflation and the labor market is just very, very sticky in the case of inflation, resilient in the case of the labor market, and if they're sitting there next spring with 4% inflation and 4% or below unemployment, they're in a tough situation

>> do you feel like we're done talking about the possibilities of a recession now it's the debate of either soft landing or no landing do you feel like it's still a risk that needs to be taken seriously? >> oh, yes look, i think that, you know, recessions are in the eye of the national bureau of economic research, but historically, we've never had a period when the unemployment rate has risen by more than half a point that has not been an mber recession and even the fed itself and its projections in june saw the unemployment rate rising by about a percentage point so, at least if history is any guide, even a pretty softish landing could well be designated at least as a technical recession. so, no, i don't think we should rule out the potential recession at all >> i guess this week we've, you know, that leads me to, obviously, the idea of when the fed is first going to cut rates with projections by some firms on wall street that it will come

in the second quarter of 2024. now, do you think inflation needs to be back at target before the first cut or not >> no, no, i take the fed at its word, and we have interesting comments from new york fed president williams, not so long ago, and this is a point others have made on the committee, including chris waller, which is that if the committee does succeed in getting inflation into the 2s next year, then it could, and i think would start to consider rate cuts simply because if you keep rates at current levels as inflation falls, that means real interest rates are going up, which is actually tightening financial conditions i think we can get easing or at least a reduction in rates from current levels next year if inflation does demonstrably fall into the 2s. >> so, into the 2s, not to 2%.

there's a significant difference between getting all the way back to target versus at least confident or some degree of confidence that we're well on our way. >> yeah. and i think, to me, that is a likely scenario. it's that inflation's in the 2s and the fed is adjusting rates next year, not all the way back to the long run destination, but easing rates in the context of inflation that's fallen a lot and that's within striking distance of the long-run 2% goal >> you know, the other thing is the election obviously factoring into next year, and i'm curious as to what you think and how that will factor in if at all in the way that policy moves forward, how it could influence it in any way. >> well, let me just state bluntly, up front, the powell fed is going to do what it needs to do to keep at it until the job is done and get inflation going back to 2% i think the calendar isset up, and their guidance is set up for

them to get in the rate hikes they think that will get the job done, get those in place this year, but i also think that if they're wrong, and inflation is stubborn and sticky next year, i think they'll do what it takes to get it back down to 2% over time so, i don't think the fed wants to be the focus of attention, you know, in an election year, but in the end, i think they will do what they need to do to get the job done >> sure, but powell must know or at least he's got to be thinking about it somewhere in his being that, you know, you would expect perhaps the current president of the united states to be talking more often about the idea of cutting rates as you get closer to an election, which we already know is going to be highly c contentious. >> i'll simply say, i think the fed's communication and projections indicate that they think they're going to get rate hikes that they need in place, get them done this year.

you know, next year's a long way away i would say that past feds have hiked in presidential election years. volker hiked in 1984 greenspan hiked in 2004. so, if the fed needs -- the fed will do what it needs to do as an institution, and i'm sure that it will do that >> we going to get more than eight minutes from mr. powell next week at jackson hole? >> well, i'm certainly not talking to him about his speech. i don't know look, i was at jackson hole last year i thought it was a very effective eight minutes. it was very clearly in his voice, and so i'm looking forward to seeing what he has to say. >> you'll be there again, i suspect? >> no, no, i'm going to be with my family in some well deserved vacation, so i will not be in jackson hole >> you deserve it. i appreciate it nonetheless. we'll talk to you in the weeks ahead, i'm sure. mr. clarida, thank you so much rich clarida, former fed vice chair joining us we're tracking the biggest

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we're 15 out from the close. let's get back to kristina partsinevelos now with a look at the stocks she's watching. >> let's talk about shares of vinfast plunging right now only 22.5%, only 24 hours after they first went public. the vietnamese ev maker made its debut on the nasdaq yesterday via spac, hitting the market at $22 a share. we're still above that level at $28.70, but shares are pulling back around -- or they were down 30%. now it's just about 22%. other ev makers like nio are

also lower today after tesla cut prices in china. you can see a sea of red there switching gears, progressive is having its best day since march of 2020 after posting a 21% increase in net premiums over july 2022, and that's helping the stock recover from its big drop last month. shares are up almost 9%. scott? >> appreciate it, kristina, thank you. last chance to weigh in on our question of the day. we asked, is this correction almost over? or just getting started? head to @cnbcclosingbell on x. we'll bring you the results just after this break

all right, the results of our twitter question, we asked, is this correction almost over or just getting started?

the majority of you said, it's just getting started 60%. up next, your earnings set-up. cisco and wolfspeed about to hit the tape we're going to tell you what out for when we take you inside the market zone she didn't know they were talking to her. i just could not hear. i was hesitant to get the hearing aids because of my short hair. but nobody even sees them. our nearly invisible hearing aids are just one reason we've been the brand leader for over 75 years. when i finally could hear for the first time, i started crying. i could hear everything. call 1-800-miracle and schedule your free hearing evaluation today. you can't buy great conversations

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wolfspeed's quarter. we'll talk to mike santoli first. we're off the lows but not that far away >> yeah, getting a little bit more real, i guess, in terms of this pullback. clearly just repricing stocks in the face of what's happening at the longer end of the treasury curve. bit of a confused and maybe ambivalent message from the fed in the minutes, but reflects exactly what we have been dealing with for a while, an economy that has a little too much momentum to have long-term treasury yields, you know, below or near 4%, but also we went from zero to 5-plus percent on short-term rates unemployment stayed at 3.5%. the economy's picking up pace again, so therefore, it's not really about what happens on the short end. all that being said, the correction, the pullback is doing a lot of what it's meant to do. sentiment is definitely getting a little bit more apprehensive you're sort of taking the air out of the parts of the market that probably required it like the high beta stocks and the high flyers of the nasdaq.

that all sounds nice and easy and very orderly, and we can stomach that pretty well the question is whether, again, it has to get a little messier because you're not seeing a lot of real jumpy activity, the volatility index still under 17, because the market itself has really been pretty calm in stepping down this 4%. >> yeah. clarida, just a few moments ago, telling me, one more he only sees one more. i feel like the market worries that there could be another one h hiding out there somewhere >> the market is a little worried either that there could be more and that we're going to be on this treadmill for an indefinite period of time where the economy and inflation are sticky, or the fed is going to just stay here and maybe we have to see if inflation does what it does, and if rates really have a lot higher to go in the longer end. so, you know, we're not panicking, but we are aware, i think, of the two-sided risks

out there in a market that already took a lot of credit for a soft landing coming into this month. >> frank, cisco has had a pretty good year. last i checked, i think on "halftime" today, it was up about 12% year to date, so what do we look for today >> solid year overall, scott, but underperformed in the first half of the years. skoir shares outperformed in the second half of the year. there's been a shift to dividend stocks cisco has a close to 3% dividend now, in the report, guidance will really be the metric to watch. the guide for cisco last quarter below the current estimate from refentive. raul juniper highlighted weaker demands from telecom and cloud customers. according to jpmorgan, that's just about 20% of cisco's customer base. product orders is another key metric cisco has seen a downward trend. that number is traditionally released on the call that begins at 4:30 eastern time analysts are watching the trend and the commentary around orders, especially when you see

these double-digit declines over the last three quarters, and shares down. >> we'll see what happens coming up and i'm sure we're going to hear from chuck robbins in the next 24 hours as we usually do on the network. that's frank holland kristina partsinevelos, wolfspeed. what are we looking for? >> well, wolfspeed does make silicon in a product that is squished into really thin layers the company has been expanding in new york and north carolina and one of the focuses on today's report will be on capital expenditures, how much is wolf spending and where are they getting that money? we know they signed a deal with a japanese powerhouse to create wafers and got debt financing from apollo, pretty much a $2 billion cash injection. what about execution how long will it take for these plans to be fully utilized goldman-sachs and deutsche bank both believe results will be muted for wolfspeed and they have maintained cold ratings until we hear more about wolf's

plans to ramp production and cut costs. scott, just last week, i was at wolfspeed's new manufacturing hub in north carolina, and the ceo told me that the new plant should provide ten times the capacity of its other north carolina plant, so now we wait and see if and when that materializes >> yeah. kristina, thank you. cisco is going to be closely watched, and the commentary on the backside from chuck robbins, certainly going to be watched and listened to closely as well. >> it most likely will i think there's a little sensitivity out there to what's happening in terms of big company spending on everything i.t.-related i mean, cisco itself, the way it's valued, it really is kind of cash cow. it's got, like, you know, 8% free cash flow yield the market is not viewing it as real growth story, but you obviously have to have the top line keep up in order to continue the cash flow production and the shareholder capital return, which has been a big part of the story. when it comes to something like wolfspeed, really just semis in general, they're down another couple percent today, and 10%

off the highs. it's right in line with what you might expect given the overall market and given how high they went but it's also happening when nvidia has, you know, had another little lift and it's down today, but so much is really being concentrated in terms of all the enthusiasm for the big long-term tech story is being channelled into this one name you have the $800 price target on there that went out today on nvidia. it implies a $2 trillion market cap. so, eyes are getting pretty big, and it's almost nvidia to the exclusion of everything else so, can that kind of restart the real kind of frothy part of this market, or is that going to be one of those, it's not good enough to satisfy maybe a more discerning tape right now. >> start talking about big market caps in tech, and obviously, i go to apple, which, you know, on "halftime" today, i know you're watching it closely. it hasn't traded all that well of late. >> no, it hasn't if you go on a one-year basis,

it's basically in line with the s&p 500 again even after it seemed as if it was kind of stealing all the market's oxygen and this was one of those where we know it wasn't going up in a straight line for months because earnings estimates were climbing or, you know, because there was some real build of excitement about products it was just high-quality companies with predictable paths ahead of it. great balance sheet. we're going to buy them and that was just sort of a reflection of overall what was going on with the nasdaq 100 you're retrenched a little bit it's still up 35% year to date you're not exactly hurting if you've owned it for any period of time, but it is just part of this sloshing around period that we're in, in the market right now, which might have to, you know, continue for a little while. i keep saying, credit looks fine it's really all about making some kind of peace with 4.25% on the ten-year treasury yield, what that also means for repricing of mortgages and consumer loans and see if we can

handle it. as i said last week, last year, when we were talking about stock market sensitivity to rates, we were talking about 3% ten-year treasurys and 3.5% as levels that the market couldn't handle. we got over it it happened in the context of a decent economy you can get over it again right here as a matter of fact, if you look back throughout all of history, when the s&p has traded at like 20 times trailing earnings as it is right now, the average ten-year treasury yield is around 4%. so it's not as if this is incompatible with where stocks are. you have to be confident the earnings are going to come through next year and the economy can take whatever the fed has left to do to it >> this conversation about market breadth that we had so often with the magnificent seven going up at the expense of sort of everything else, and how long can that really continue, now it's sort of reversed into, well, if these stocks are going to start going down, then the other stocks pick up the slack to keep you from a bigger move >> right now, it's very mixed. you have had the equal weighted s&p slightly underperforming

from the highs not dramatically so. ironically, what you want to see is most stocks go down to get washed out, so we look oversold and it's going to get them a reason to come back in >> they're cheering as they always do at the bell here, but it's a loser today across the board, red. morgan brennan picks up the story for me now in "overtime. ♪ well, closing basically at session lows for stocks in what is back-to-back losses for the major averages that is the scorecard on wall street but theaction's just getting started. welcome to "closing bell: overtime." jon fortt is off today earnings results from $200 billion networking giant cisco are just moments away. we will also get numbers from wolfspeed. we're going to bring those to you as soon as they cross. plus, we'll talk to the ceo of ww international, formerly weight watchers, about the company's recent earnings report and how weight-loss drugs like

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