down more than 500. >> down 500 points. and what is particularly interesting the nasdaq reversing a four-day win streak and with a basically 2% decline here. the nasdaq has been a stalwart. >> 4.802. the ten-year yield keeps marching higher, the first time we've been above that level since 2007. >> thanks for watching "power lunch." "closing bell" starts right now. welcome to "closing bell." i'm scott wapner live from post 9. this make-or-break hour begins with wobbly stocks. it's doing it right now. 60 minutes to go in regulation, we'll start with yields. that's what we're showing you now because that's where the pressure point really is. that's where it has been and that's where it is yet again today, the ten year, continuing its climb to fresh cycle climbs. all three of the major averages under pressure throughout the session. transports, utilities sliding.

yutilities are green. unlike yesterday when tech manages to rise, the nasdaq getting slams. microsoft, amazon and nvidia are pulling back. the plus the congressional drama in d.c., disfysfunction on top everything else. how high will rates rise? can stocks handle the heat? it seems to be the only question that matters at the moment with earnings season more than a week away. let's ask our panel, mike santoli. it's good to have everybody here. mike, i have two things of green on my screen. the vix at 20 and that's not exactly a great sign. >> no, it's not. very faint bid. also staples outperforming.

you see the defenses responding to the market conditions we are in. you have essentially the bond market searching for the pain threshold. usually over time make its piece with a different level of yields. we're struggling with that. it felt as if last week was stopping just short of capitulation type move and everyone giving up because we had the seasonal strength, the fairy whispering in our ears. we have reprising of the market. you mentioned some of the mega cap stocks taking it hard today, in general it's not really concentrated anywhere. equal weight, small cap, s&p 500, they're all kind of in the general zone of down, getting a

haircut on this move. >> we might be talking 578s on the ten year faster than we thought even after the rise we've seen. we're at 480. north of that as we speak. >> rate volatility is more than levels. you've gone now back into extreme negative relationship between bond yield for the s&p. anytime you have moves to the upside. that wrapprapid rise put downwa pressure on equities. as long as that continues and vice versa, a stabilization in the dollar and oil, which started to happen a little bit for oil, that probably helps alleviate the stress you're

seeing. >> you have, mike, a lot of seasoned market watchers weighing in on what they're seeing. it doesn't seem to be that difficult to understand, at least according to what they're talking about. "last year markets were adjusting to higher rates. this year adjusting to rates staying higher for longer." it's like the commentary we got last friday. it is a different environment, and no one really knows what the price should be relative to what the earnings are going to be, the valuation of this market makes sense. the great unknown. >> it's not just about, again, plug it into the equation and what is 4.8% on the ten year get you in terms of paying for earnings? i think a not so terrible scenario would be that somehow the economy hangs in there. earnings estimates are not out of line with what we expect and the market may confirm. you're not going to liberate investors from the late cycle

psychology, from this idea it's when, not if, things buckle. even if we go a year from now, we'll still feel that way. that's why anything that moves fast and seems like indiscriminate selling like the bond market seems right now, it gets you unnerved. i understand that. we're lookingality an 8% pullback. the average stock is doing worse than that. at the index level we're back to four months ago. >> you make a good point, the words you use. malcolm, i'll come to you in a second. i apologize. indiscriminate selling. i think it's one thing to see it, mike, in the stock market that is unnerving enough, but when you see indiscriminate selling in the bond market, in h treasuries, because of the implications that come with it. >> to a degree. there's a lot of institutions that are just kind of passive owners of treasuries.

that said, we do have big buyers who are not there the way they were. we do have more supply. if you want to take corporate spreads are remaining tame, they have ticked up a little bit. yields are going up. cost to debt is going up, however you slice it. >> malcolm, the big thing that jumps out to me in your notes, resist the urge to buy dips. do you think the stock market is going lower? >> i do, scott. this is the part back last summer, probably, i was telling you i thought investors were too far over their skis as far as the risk they had built into their portfolios because the getting was too good. it felt too good to us. i was on air saying this is the exit people need to be taking if they know this is well beyond where their risk profile is, and i think we're probably going to continue in this down trend for a little bit. i do expect investors who missed out on the tech rally earlier in the year will want to buy these dips just to be able to right the ship a little bit and feel

they didn't miss out completely once the year turned over and they book it. i definitely think it's too soon. we have more pain on the way simply because everything we've been talking about as far as the ten year is concerned, but i'm more concerned about the inverse relationship still between the ten and the two that i know we want to move past and focus on and say this is no longer relevant. that yield curve has stayed inverted this long. i think it means additional pain is ahead. >> let's not forget, too, malcolm, we'll be talking about earnings, right? what happens if earnings come in to where expectations are, which are positive again, or even better? does that alleviate some of the pressure the market is feeling from this rapid rise in rates that we've seen over the last 30-plus days? >> yes. so my thesis in q1, that was the last positive earnings season we were going to see and i think that's probably proven true now. i think the positive earnings in the tech sector primarily

because when you hold that much in cash, you have companies like google and microsoft and apple and whoever who have tens of billions sitting in cash that's paying them yields north of 5%, not hard to have positive numbers in that regard. but i think in tech and in energy obviously we're going to have positive earnings. for everyone else we'll find out how weak the consumer has become. we'll find out just how little firepower the consumer now has and that, i think, will tell a totally different story going into q4 looking back at q3 earnings. >> what are we thinking, kev, about tech here? the nasdaq is down a touch more than 2% as we speak. mike was mentioning the sell-off in the mega cap names, amazon down 4%, broadcom is down, nvidia down near 3%. apple is not down quite as much but the whole area is being just pulled down. tesla is down 2% looking at all the stocks we talk about almost every day.

today are buckling. mostly because they host the big five or super seven, even if you look at the peak since july, the profile of all three is vastly different whether you're looking at percentage performance, percentage of names above their 50 or 200-day moving average. it's still scoring relatively well i think right at 60% of members, behind energy, of course, the only defensive name since the market in july. you have to take more of a nuanced approach not just in the current sell-off, not when we get the next bounce but approach the market in any monolithic way, whether it's growth versus value. correlations are still low. you can take opportunities even

in sell-offs like this to find what works well with an upcoming earnings season. >> how do you view what will happen in earnings season? we're going to shift our attention and will be hyper focused on the numbers more so than maybe the numbers in the bond market. is that enough to save the day? >> even though the earnings beat rate edged higher, the reaction for companies beating estimates was basically nothing. that has shifted the focus more to what was the revenue growth like. if you adjust for inflation it was down for the third straight quarter. you want to be focused on the mix. if you don't have top line

growth resurging but you still have earnings growth moving higher, that's probably companies aggressively cutting costs. you have to start showing some kind of demand. >> mike, you try to dig deeper than the superficial story we often focus on. the number of stocks up on the year. median s&p 500 stock down 2.3% year to date. the under the hood view that the engine itself is sputtering and it's been carried by a gas tank of tech stocks. >> forget about calendar year 2023. the question is what do you do with that information? do you say as a lot of people right now are saying who felt too bearish, yeah, but it's not

as strong as it looks and now there's an instinct to declare victory. do you say the market has been presold or say there's just no demand for stocks right now, and they're going to have to find lower lows to attract new buyers? i can remember years like 2016 when you had the stealth bear market and in 2019 when it was just a handful of the nasdaq stocks going up and it was not always predictive of we're going down. we've had a catchdown move and we'll see where it goes from here. 116 companies have preannounced for the quarter. in the s&p 500. you have a little bit of a cheat sheet. the banks are down 15% since august.

i don't think people are positioned for wonderful things for earnings. >> malcolm, what returns demand for stocks? what changes the narrative? >> well, two things, we have to get past the bad news/good news. the market has trended where we feel bad news means good news. we have to get to a place bad news just means bad news and accept it as it is. until that happens, we can't actually move forward to where it makes sense to moving chips back to the middle of the table. we have to find out exactly what is it going to happen in november and whether that is the sticking point.

does that mean we get a raise in november, or do we have to be looking over our shoulder into 2024 which i think the market just doesn't have the temperament to hold on? it could be bad news equals more. >> what if you have a crystal ball, the fed is done, the earnings will be better than i thought, does that changer perception whether you want to be engaged in the market or not? >> i think something else has to break. it doesn't make sense to raise more than 5% in about a year and i think that's probably on the horizon. 18 to 24 months to work

themselves through the labor market and maybe we see an uptick in the labor market while we talk about fighting inflation. yeah, but, the unemployment rate is at all-time lows. i think it's going to change because interest rates have a long lag impacting the labor market. that probably is where the bad news equals bad news mantra comes in. >> kevin, how would you address that question? >> if you look at when they've gone to the pause and they're done, that doesn't constitute a trading strategy because of the history of what the market is after. the hits you see a year after the fed starts tightening and to

malcolm's point about interest rate sensitivity, one of the reasons it's been different, if you look how we recovered from the pandemic, the strength of that part of the economy was disproportionate on a scale we've never seen. when you think about the padding in services, goods has gone through some form of a recession that, to us, remains the best case scenario. it's in different pockets and that rolling nature keeps you afloat from a broad economic sense. >> maybe one of the most accuse pain points within the market as we talk about the nasdaq and the sell-off are the higher growth, less profitable stocks. data dog -- if you would put

them up again, down near 3% today. it's easy to see where the bulk of the pain is being felt. >> when the market moves in a volatile way, it's having to go farther to find people who have conviction about is johnson and johnson going to make its numbers next year as opposed to the companies lightning in a battle. >> do you have a thought on that cohort of stocks? we saw the losses are 6%. you probably find half a dozen other names at minimum. >> a lot of those names were at the epicenter and ground zero of

that shot you had in 2021. that's where the bubble activity was, one of the reasons the rebound since then hasn't been totally catastrophic. it hasn't been great. now you have to think what is the effect of higher for longer and the fed wanting to stick to that message? if cost of capital stays relatively high, even if the fed pulls the rate back to a range that's not zero, that's a different environment than post financial crisis. >> i was looking at the banks, too. we flashed goldman sachs. those stocks aren't doing well. kevin, thank you.

malcolm, thanks. mike, of course, coming back in our "market zone." to our "question of the day." will the ten-year get above 5% before the end of the month? 4.80 as we have this conversation today. the results are coming up later on in the hour. in the meantime a check on top stocks to watch. kristina is back with that. elie lily announces plans to buy for $12.50 a share. you can see that stock is up 85% right now. shares of eli lilly down. alternative energy stocks are sinking on concerns of the general economic picture but more so the impact of what you were talking about, scott, growth focused companies. sunrun down 9% is array.

chargepoint and bloom energy also well over at least 5% lower. >> kristina, we'll talk to you. more on the sell-off on mega cap tech. the nasdaq dropping 2%. the biggest moves and the health of that tech trade at-large. we're live from the new york stock exchange. when you think of investment risk, do you consider climate risk?

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welcome back to "closing bell." the stocks are moving lower. the nasdaq feeling the most pain today. a look at today's action. >> reporter: the nasdaq, could be the first worst day of the year. a snapshot of names feeling the pain today. apple, shares down about a percent. early signs of strong demand for the iphone 15 pro is out there with wait times extending into a month. the september quarter that finished expected to be apple's fourth quarter of declining sales. however, in this current holiday quarter, comps will look better. an ugly september for apple down 9%. microsoft down 3% or so. the ceo nadella testifying yesterday in the antitrust case against google admitting he may have overhyped chat gpt's potential to bing's market share. the company released its co-pilot for windows 11 and will

start selling to business customers next month. amazon down 3% or so. it alleges project nese to adjust prices before canceling the program. and alphabet not as bad, down about a percent or so. expected to last several more weeks and could threaten its search dominance if it loses its case against the government. meta failed to wow investors with ai offerings like chatbots that mimic celebrities like paris hilton and snoop dogg. and, of course, we have to talk about ai darling nvidia down nearly 3% now but still up

nearly 200% on the year, scott. >> steve kovach, thank you very much for that. for more, let's bring in steve because he's zeroing in on the nasdaq. you suggest the qs have gone 198 trading days without a 2.5% or worse daily decline. that was your note from earlier today. prescient to what we're watching now. >> it's pretty remarkable. the last time we went a full market year was 2013. if you think about the nasdaq composite had pretty much 70% of stocks above the 200 day for the bulk of the year. 2013 was a classic low volatility environment. you would not expect it this year. it goes to show, again, another way of showing how dominant a handful of stocks have been and

as you and mike were discussing earlier, it has not been a good year for stocks in general. the s&p up 12%. the nasdaq up 35% or so. it really is in a completely different ballpark from the median sock which most institutional investors is what they're owning. we think this 4,200 level on the s&p 500 with the 200-day moving average is a very consensus call but that will hold. the fourth quarter rally is a consensus call. we're not sure it will be that easy and we're at the point you're starting to see some of the winners, some of the high momentum stocks catch down to the laggards and that's ultimately what drives the nasdaq lower here. >> read at least one note, speaking of nasdaq, the risk to the negative market call, there is a late year dash for performance and it goes into the seven stocks that have proven to be tried and true.

a little bit of defensive, better balance sheets, all the cash, not relying on debt, et cetera. >> look, i think that's why they're up so much and that's the crowding risk. i think we're getting ahead of ourselves talking about the year-end rally until we see where things shake out as we get through october. we don't know that. if we get a bigger washout in the top seven stocks, that's the case. there's a lot of down side to these names. you see some of the worst performing stocks on the year, dollar general is up. you see some of the laggards being bought and winners being sold. i think we're still early to flip the script there. >> i'm looking at some of these losses today out of the discretionary space that gets over moved, if you will, by an amazon or a tesla, for example. the losses today in some of the

restaurant stocks, domino's down more than 4%. the cruise lines are getting absolutely hammered. carnival is down near 7%. mortgage rates, we're talking about yields going up relentlessly. 7.7 on a mortgage rate. people are just not used to the levels being where they are. pulte group down, depot and lowe's. how at risk is the discretionary space for a consumer that's held in there better than most ever expected it would? >> we talked when crude oil and gasoline were breaking out. we thought the spike higher in energy prices was another headwind. the trends are weak and continue

to be weak. the extremely washed out names like a dollar general but it's not an easy path. it will take a lot to reverse those down trends. >> how about energy? we're basically at $90. >> i think outside of some of the beaten down areas we'll probably stick with the energy trade. even the best stocks so if this intensifies, more of a tactical pullback. >> jonathan, thank you. straight ahead the latest on dysfunction down in d.c.

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judge you by the way you look, the way you talk and treat them with respect. you give them good service, show them kindness. being able to offer a service to the community makes me feel really happy. if i made it, then so can others. breaking news out of d.c. the house preparing to vote whether to oust mccarthy. emily? >> reporter: hi, scott. there was already one vote today, a vote on whether the house should even be voting on whether to remove mccarthy. and on that one we saw every single democrat join with 11 republicans in favor of ousting mccarthy and moving forward on that. that means mccarthy has a lot of republicans who are supporting him. the fact of the matter is republicans always had narrow margins and it meant something like this was possible. in the house they are debating moving forward. we're expecting to see a vote begin around 4:00 on whether to

remove mccarthy from his office. that will be a roll call vote so probably will last a while. it's not looking good for mccarthy. there's a high likelihood there could be no speaker of the house and no sense of which path to go forward. matt gaetz told a group of us last night steve scalise's name but he's on the floor right now speaking in favor of mccarthy. so it's not clear who could have the momentum and support to be speaker at this point. if the house does have to go to a speaker vote it means everything else stops. everything to fund the government, to move things forward -- [ no audio ] >> i think we lost the audio from emily, at least i did. if there's any news that develops we'll bring emily back. joining us on the phone is eric

johnson. are you there? >> hi, scott. >> we've had a rip higher in points. i'm looking at banks down sharply. they're retesting the failure lows, discretionary stocks getting hammered, tech is in the high of the storm today. what's your broad view on what we're witnessing? >> i think the big story here is what's going on in the rates market and the reason it's important is that inflation breakevens are lower. and very little change in fed expectations. so the entire move higher in yields is all real yields moving higher and moving higher because of this deficit and debt issue that we have. so the market has -- and the

economy has benefited from the deficit. we talk about this for a long time. and that has been a stimulus. if it was that easy just to run a large stimulus then, of course -- or a large deficit, there's a down side and we're starting to finally see that down side. and that's what's happening with yields moving higher. you're seeing it across sectors and seeing the financial situation show up back in february/march. we've now seen the utilities situation show up as of last week. we've seen a lot of pain in that sector. you can see it's rolling through different sectors because higher rates not only impact the consumer but also corporations. >> these discretionary stocks today, hotels, casinos, restaurants. all these sensitive areas. are you suggesting as long as this move in rates continues to

be at the forefront stocks will not be able to do anything but go down? >> it will be really tough for stocks to work as long as stocks are in this zone. it's not only the head winds from corporate interest expense. but it's looking at valuations. and what's important is the reason why yields are moving higher, one of the big reasons, the government net issuance of treasury will be $800 plus billion this quarter. that was less than 400 a year ago. capital has to come from somewhere in order to absorb that supply and it's unlikely to come from our international friends, will have to come domestic and pull capital from other places. yields right now, bonds are very

oversold. there is a possibility of a reversion. i think the trend is in place we'll have higher yields for longer. >> we are approaching interesting levels on the s&p. 22, 23 points away from that line which may be a critical level to keep your eye on. >> a very important level, near the 200 day. the rsi is 28, so we are oversold and, of course, people are hoping for the fourth quarter seasonal bounce. we are susceptible to a potential reversion bounce. i believe the trend is still lower. >> i appreciate you coming to the phone, eric johnston of cantor.

tracking the biggest movers. kristina partsinevelos is back with us and has those stocks. kristina? the maker of frank's red-hot sauce not red-hot in china. i'll explain next.

about 15 to go before the closing bell.

back to kristina partsinevelos now. >> i'm watching spice maker mccormick. the maker of frank's red hot sauce due to a slower recovery from china and that has some investors selling shares, the stock down 8%. warby parker getting love after a rating of outperform. their internal survey results show repurchase intent. they say 2024 will be an inflection year and that's why shares are trading at 13.79. mortgage rates are on the rise. diana olick is following that. you can see the housing stocks, right in the wheelhouse of things you look at every day.

>> housing stocks are having a rough day. higher bond yields, the average rate jumped to 7.72%. the treasury has been climbing on strong economic data and that j.o.l.t.s. report today. higher rates have crushed affordability. take a look at horton and lennar and zillow group is down. the builders had been benefiting but higher rates are killing them. now in negative territory for the first time in five months, scott. >> it's hard to be optimistic. i appreciate it very much. diana olick joining us from washington. the last chance to weigh in on our "question of the day."

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let's get the results of our "question of the day." will the 10 year get above 5% before the end of the month? the majority of you said yes. i guess one of theish be use, will it get there before the end of the week because of the way it is marching there today.

4.80. that is a fresh cycle high for the 10-year note yield. consumer stocks, courtney reagan is following those moves. >> if you look at the consumer discretionary sector is the one hardest going into the close down about 3%. and then when you dig below the surface, what are the names in the sector hardest hit? airbnb, royal caribbean, caesars down 3%, almost as much as 7%. areas the consumer had been spending, not completely without abandon but freely after being pent up in the pandemic. amazon a really big, important name. and that's down almost 4%. part of the discretionary sector

is weighing on things. it becomes more expensive. names like big lots and victoria's secret, wayfair, canada goose, are names being hit hard today crossing over all different areas of the consumer. back over to you. >> we are now, by the way, in the closing bell market zone. mike santoli here to break down the crucial moments and bob pisani on the fed's next move and on why jessica is sticking with tech. mike, you first, what are you watching right now? >> you can see the worst of both world scenarios, the economy is good enough right now and the

fed has to stay higher for longer. at the same time we're building for the economy to buckle down the road. all those things together are weighing on what's happening now. it is definitely building towards tactically the kind of places you thought the market needed to get to just to maybe have hope get to that point you have the makings of a relief rally. eventually a moment it's too close not to touch it. >> bob pisani, fresh high 7.7%. we know the impact on the housing market. banks today a real point of concern, you could pull up any number of these stocks.

what are you watching more than anything else? >> only two questions i've been asked today. why is this happening and when is it going to end? there's a combination of factors. one is the macro factor. higher for longer from the fed. we saw what the j.o.l.t.s. report did. there's a macro overlay to this. i think eric johnson had a great point for treasuries. on the supply side we know this huge supply of treasuries, of corporate, janet yellen talked about a trillion dollars. on the demand side we know foreign buyers are not going to be nearly as present in the treasury auctions. and the fed is not doing anything. they're doing the opposite. >> it has to stop somewhere. >> what's at the highs of the day? utilities. what's also moving up today? consumer staples. tech is hitting new lows.

we might have further to go. that collapse in utilities was historic. they will be studying that. >> the thing i would migrate to when you talk about the setup for bonds is the realities about supply and demand but the market is overshooting the reality of the supply/demand. it's just a ferp of more supply is driving the selling today. >> i feel we've gotten there quickly. supply, supply, supply. who are the buyers? >> remember how yields go up. people sell bonds. we didn't have an auction that nobody bought the bonds. and, by the way, the setup was badly positioned for this. the idea of the weakened yield

curve to ride and not fade is being unwound. >> we've been spoiled, bob, by the nasdaq itself. jonathan was on. >> 2.3, what are we down? >> we were due for an upset in tech as rates continue to rise and the pressure point that causes. you can't have it roll over too hard or the overall market won't be able to find its footing. >> the problem with the technical analysis, the rsis are crazy on these right now is, as you know, mike, oversold. mclellan used to say it was a condition not a signal. this is not necessarily, we're

four standard did he ha deviati where we usually are. simple stuff like the turnaround in utilities, in consumers, and the fact we haven't bottomed in tech stocks yet. >> when you say it's not necessarily a buying opportunity, jessica and skip, with us today from options play, suggest that it is a great buying opportunity and some of the tech names have sold off pretty hard. >> there's a big test coming up. this large move in yield, i'm watching the broader s&p 500 that has been propped up, a large area of demand at 4195. and that's the real test, and that's lining up with so many other technical indicators like the rising 200 sma looking to

get the yields. we're so close to those levels of finding stabilization. i'm looking for the test of those levels. to your point on tech, and we're talking about structural g.o.a.t. and the narrative, that is created through increased productivity. we have higher labor market participation. we're at prepandemic levels and increased productivity. that's where i do see the value and where we could absolutely see a strong amount of demand that will come from the tech side through the end of the year. >> bob, you watched the markets so closely. if you think about all the risk factors, rates, geo politics, labor with the ongoing rolling strikes we've seen in so many different industries and now

we're talking about political dysfunction yet again in washington as we speak, as the speaker tries to hold on to his gavel. you wonder what happens if that takes a turn for his demise in that position, just another thing the market snedz to get its arms around in a mushy ground area. >> yeah. and now we have this whole issue about the amount of debt out there. 8% of the u.s. budget goes to paying down debt. that's going to quickly go up to 9%, 10%. this is now going to be more of a political issue and will give people who have been the bond vigilantes screaming about this for a long time. i'm just looking for signs of capitulation at this point here. volume is up higher. it's been up but not that high. i look at quick call ratios but

i wouldn't say. the vix, i don't see that panicking yet. >> don't we normally do 900 million to a billion shares? >> we have 555. the floor is not necessarily indicative of the off trade. >> that's going to go up. about 10.5 billion shares on the nyse today. that's not dramatically high. i wait for the traditional signals. >> down 8%. you don't know the perfect amount of panic you'd like to see on that for the s&p move. i do think in terms of if it's not one thing it's another and geo politics piled on top of congressional dysfunction, there's not a correction in history that did not seem at the lows like there was intractable issues people were noticing. it's not one economic report. it's the sense there's no escape.

that's not uncommon to have the feeling we're getting stuff piled on top of us. >> jessica gave us numbers. jessica, thank you for being with us. bob pisani, thank you. mike, of course, to you. we're red big time. not 500 but the dow down 437 as we speak. to "ot" with morgan and jon. a lot of red on your screen with the dow having its worst day since march and the ten-year treasury yield hitting a fresh high going back 16 years. that is the scorecard on wall street. the action is just getting started. welcome to "closing bell overtime." fundstrat's tom lee breaks down the storm clouds that are growing in the market and if he thinks the highs are in for the year. later moody's chief economist mark zandi as yields get another significant pop.