costs, looking at the investment in our people as well as in programs and where the service chiefs are is recommending very strongly that we look at all these and given the strategic approach adjust accordingly. all of that said, i have no expectation with -- from what i've seen secretary panetta and certainly the president, that we will send people in harm's way without the support ey need, and the resources necessarily to fund that support, and i expect that will continue. whatever the outcome in iraq or afghanistan or somewhere else. >> let me ask you. do you have the comprehensive review isn't complete yet. >> you've been listening to a guy who has had a his job as defense secretary for all of a month, actually the first time we've seen him as part of a news confrerngs secretary of defense leon panetta also sitting alongside joint chiefs chairman mike mullen, and they have been

talking about cuts and specifically what's handed to em because of the debt ceiling deal reached earlier this week. initially they know they have to cut 350 million which more or less they are okay with and won't necessarily sacrifice our national security, but where the big question mark comes is if that committee can not decide on how they will make those additional cuts to equal around or about $1.2 trillion, they will have to cut hundreds of billions, 500 billion, 600 billion, 700 billion just to defense, and to quote, i want to get this precise for you, the defense secretary said those cuts will be completely unacceptable. we're all over this story with our pentagon correspondent barbara starr and let's begin this hour staying with the money theme, i suppose. we're watching this very closely. has not been a day for investors with weak stomachs. stock markets all over the world have been racking up some huge, huge losses, and u.s. markets

have lost their gains for the year. one wall streeter explained today's plunge in this country as total fear, his quote, total fear, gripping the markets right now. take a look at just how brutal it is. let's take a big shot of the board. 370 points, plunging here, as we are an hour away from the closing bell. like i said, not a day for anyone with a weak stomach. let's bring in alison kosik and cnn's business correspondent ali velshi in new york. i want to girn begin on the flo the knowledge. how are traders explaining this late day selloff? >> reporter: you know, you talk about the traders and you walk around the exchange here, brooke, and i'll tell you, it's one of those somber days. they are usually a happy bunch but i'm seeing a lot of long faces here at the new york stock exchange.

what you're seeing is investors have had a diversion for a whole month with the whole debt ceiling and the debt limit debacle. you're seeing investors taking a broader look at the economy here in the u.s. and just globally, and they don't like what they see, and that's have we're seeing a massive selloff. as you see the dow down 361 points. actually come back a bit. saw it down as for as 411 points, but it's really been testing the correction levels. the s&p 500, that's what our 401(k)s mirror, already in correction territory. we're seeing investors pulling out of stocks, and they are looking somewhere safe to put their money. what's interesting is a lot of these investors are looking to not even get into gold or commodities. they are keeping -- they want to keep their money in cash because cash is king because there's such uncertainty in the market right now. there are a lot of worries about the u.s. economy and globally about what's going on in europe. brooke? >> i want to touch on some that have with ali velshi. you and i have been e-mailing back and forth and looking at some of these numbers and what

jumped out at me say the late day selloff say larging. you've been looking at all of this. why, why is this happening? >> first of all, brooke, takes a lot for me to get you and i to be on tv given our hours. >> nice to see you, sir. >> i like to watch this in the last hour that we're in now because when we want to see is whether it accelerates or whether buyers start to get in and say this is overdone. there's no particular reason why this should be happening, but that doesn't mean there isn't reason -- there isn't a reason why people are selling stocks. a couple of things are going on. in japan and in italy, the central bank in europe and the central bank in japan both did things to intervene to prop up their currencies today. that's supposed to calm everybody down and say, hey, the big guns are here. it had the opposite effect of causing people to get panicky and say there isn't enough money for these central banks to come in and save italy and spain and countries hike that so they got nervous, and as allison described very, very well, basically you're getting people

taking their money out saying i want to wait and see where it should go. coming out of gold and oil and out of stocks. that is not to say that it's not going to be deployed somewhere. normally you see an automatic shifting between assets. you see it coming out of here and something else gaining. today you're not seeing that. look at the nasdaq 100, almost every stock on the nasdaq 100 is down, except costco which makes sense because in tough times people go to places like costco. almost every stock, in fact every stock on the dow is down, so you're not seeing movement between stocks or movement between asset classes, people are cashing out and holding on to their money. at some point they will put it back in. a lot of people i've been talking today saying it's the steal of the century because companies are reporting strong profits. there's no reason to sell the stocks. this is kind of a pin icky momentum kind of thing. we'll have to see what happens in the next hour and we'll talk again. >> we will talk about. ultimately though that would be my question because a lot of people were tweeting you and i both because they have questions and want to know about what

about me? what do i do with all the money i have in stocks in do i pull out and panic with the rest of them? >> right. >> or do i hang tight? what's your advice? >> our friend leigh gallagher from "fortune" said it beautifully saying if you make a decision to sell your long-term investments on a day like today, you better be right twice. you better right that you've sold at -- that it's going to go lower than this because otherwise you'll have sold at a loss, and you better be right about when to get back in which typically the average investor doesn't do. they wait for a big run-up and then they say things are safe. let me get in. you know, this is not -- this is not a market for amateurs right now. i don't think that there's a brilliant play other than the fact that there's really good investments out there today this. looks like a short-term play from nervous investors around the world. >> aly, i was also reading articles from our good folks at money.com and writing about the vix, the fear index. >> the volatility index. >> apparently 0 is considered

more or less the tipping point fear. >> and we're in the 20s right now. >> 28.42. >> yeah. >> so what's the read here? >> remember that volatility is the thing that we all aim to not have in our portfolios. unless you're a day trader, you love volatility. if you're a day trader it's a fantastic market, going up and down, but if you're a regular person you would like to get a certain amount of return on your money relatively smoothly, so volatility is good for some people. it's bad for others. again, if you're a long-term investor, if our investment horizon is five years or more, don't pay too much attention to this, but it's a good sign of how nervous the market, is how worried they are and how much money is moving behind asset classes. i want to emphasize that. most people sell this stock by that stock or industry by that industry. bonds is an asset class and cash is an asset clash and precious metals and commodities. it's very -- it's atypical for money to be coming out of everything that the once, and that's what you're seeing today.

it's atypical which probably means it's not sustainable. >> ali velshi, stand by. i want to go back to allison kosik. you're in the thick of things and because we can't see you do me a favor and paint a picture. you're on the floor of the exchange. are you seeing a mad dash among investors? traders rather? what's the mood been like? has it been sort of a roller coaster day? >> reporter: you know what, i just see a lot of long faces. the trading that is done here at the new york stock exchange is electronic so you're not seeing any mad rush with paper going on, but you do see a lot of long faces. you know, it's clear what's going on here today, an -- and it looks like there was a lot of money lost today. >> ali velshi, final thoughts before you and i chat during the closing bell. >> my thoughts are going to be watching this and seeing -- i'm looking for two things. i'm looking for how much volume and velocity there is in the next hour, and i'm looking to see whether that trend starts to weaken and people start to get in. if that happens, that will be a better story in an hour.

if it doesn't happen and this market closes, then i start watching what happens at 8:00 when asian markets to see if there's a follow through so it will be a busy 40 minute. >> ali velshi, aka the man who never sleeps. thank you so much. allison kosik, thank you as well. we'll talk this through the next few hours. meanwhile, let's get you caught up on the story out of virginia tech here. following this here, on the virginia tech campus they have officially lift that had alert a couple minutes ago. we're also expecting a news conference from there, from the campus in blacksburg, virginia, right around 3:15 eastern time so just about five minutes from now. police had urged everyone to stay indoors for the majority of the day after a group of kids at a camp on campus reported seeing a man with what might have been a gun. take a look at this picture. this is a composite sketch that the university has recently released based upon the kids' description, report of a man possibly, possibly carrying a gun immediately put the campus

on edge. we all remember, i was there covering it back in april of 2007, a gunman killed 32 people on the virginia tech campus before turning the gun on himself. the tragedy prompted an overhaul of the virginia tech campus alert system. again, quick reminder. just about five minutes from now. we're expecting a live news conference from virginia tech. of course, we'll bring that to you live. also, we'll get right back to this story. in his very first news conference as secretary of defense, leon panetta just warned the room that defense cuts that would kick in under the debt ceiling tryingers would be completely unacceptable. we're going to talk about those cuts here in just a second. stay with us. the sons of former slaves and the sons of former slave owners will be able to sit down together at the table of brotherhood. i have a dream today! [ male announcer ] chevrolet is honored to celebrate

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gee, want to wring you up to speed on this vexing political standoff that has sidelined thousands of workers and is costing the federal government 30 million a day in uncollected taxes. if you may have guessed already, i'm talking about the faa employees an thousands of private workers idled now by the failure of congress to fund the federal aviation administration, the faa. today the white house is saying that president obama has phoned house speaker john boehner to try to get this thing resolved, even as congress is now officially on vacation, delayed summer vacation, i should note, and now we're hearing there may be some movement. joining me now from washington is gloria borger with some news. gloria, what's the news you're hearing? >> well, i just got off the phone with a senate democratic leadership aide who sounded quite optimistic, and in fact he said that -- that they are very optimistic that a deal can be reached to put people on the job

by the end of the week. there's a proforma session of the senate tomorrow. they hope to get it done then. i am told there is not an official deal at this particular moment, but it really seems to me, brooke, like they are making an all of lot of progress in being able to get this done, at least in the short term so that people don't lose their jobs and then perhaps in the fall negotiating out there their real differences, but nobody wants people to be furloughed while congress is on its break. >> of course. here's my question, procedural question. >> they are optimistic. >> procedural, a proforma session. this isn't the kind of thing where every single member of the house and senate has to come back to washington to vote. explain the mechanics of how this will work. >> exactly. they are hoping essentially you can maybe do something in this session by unanimous consent or whatever the procedural hurdles will be. they certainly seem to believe

that they can overcome them. i mean, what has been eluding them is any kind of larger agreement on what to do about the issues of collective bargaining or these rural airports, but i think at this particular moment what they would like to do is find a way to bypass those sicky issues in the short term and let get people back to work and then deal with the sticky stuff when they get back. >> we tonight know what will happen. >> we don't know when a deal would be, but will the president call john boehner? >> that's a big deal. that's news. >> maybe that will turn the tide. the president said i'd like to get this done by the end of the week. gloria borger breaking the news for us on the show. thank you so much. let me take tout pentagon now because new defense secretary leon panetta, alongside joint chiefs chairman mike mullen, admiral mike mullen, briefing reporters, still briefing reporters, in fact, and, folks, leon panetta

is pushing back hard against potential earningsly massive cuts to the military. we talked about this just yesterday. the pentagon could face $half a trillion in additional budget cuts should congress at that mittie, well, it's a 12-seated sub committee, cut that would take place automatically. let's take a listen to defense secretary panetta moments ago. >> if it happened, and god willing that would be not the case, but if it did happen it would result in a further round of very dangerous cuts across the board, defense cuts that i believe would do real damage to our security, you're troops and our tamulis and our military's ability to protect the nation. it is an outcome that could be completely unacceptable to me as second of defense, to the

president, and i believe to our nation's leaders. >> once again, defense secretary leap l.a. is concerned about the potential of ought maddic spending cuts that could perhaps be in the ballpark of $750 billion and this is from a letter that secretary panetta sent out to the military just yesterday. he says he considers those automatic cuts to be quote, unquote, unacceptable, unacceptable, says panetta, to me as secretary of defense. joining me now from baton rouge, louisiana, cnn contributor lieutenant governor general honore, are those concerned justified? >> we need to be concerned, brooke, because we've been there, done there. we went into a post- 9/11 conflict and our concern in the future is to go into the future

war being an unready army based on this prescription of defense cuts. we've got issues with equipment modernization. we are pacing the potential true cuts meaning troops coming back from war and being released from service. bottom line is the review in the department of defense, look at that with compensation and full benefits for our employees. that will shape our army, whether we'll be a ready army or unready army. the last time we played this song was the post-desert storm, when we had to hire contractors a . >> i know people are fearful about the future. i don't think a lot of people realize that robert gates, panetta's predecessor, he made

some cuts and the debt ceiling bill that the president signed, already cuts $about 50 billion off the top. where do you think those cuts will coming from? >> from deferring operation and maintenance. we'll take a tank from running it 2,000 miles and we'll say stretch it. we will stretch -- we'll lower the readiness ratings of the uni. that's what we did in the last draw doup. reduced our readiness and reduced the manpower in units and we cut rent from our army and logistics capacity. we've played this song before, and it will get ugly. when you hear the joint chief of staff, they are being driven by defense cuts than future threats. >> seems that they are more fearful of potential cuts if the

triggers hit. from what i'm hearing from you the initial 350 billion will put us in a bad spot. >> absolutely. we need new fuelers to fuel our aircraft and need new combat equipment and we need new and modern ships, and we need to maintain the sports, and don't forget, brooke, a lot of soldiers coming back from the war have medical issues. >> right. >> they will require long-term medical issues. the last time we got rid of troops with profiles meaning they were not ready. we cannot afford to do that this time. many of our troops will have to stay on active duty so they can get the proper medical care before they can be handed off. >> i know panetta used the example of the post-vietnam era when the pentagon was forced to absorb across-the-board cuts saying it left the military undersized. i suppose, sir, you remember those days as well. >> absolutely, worked in the

late 1980. we were driving golf carts around texas. we cannot go back to that. these young warriors that we have today have been given every resource to fight a war with and that young leadership will walk just like they did -- >> forgive me for interrupting but i need to go to virginia tech where officials are talking about lifting the ban on campus. >> you ready to go? >> okay. >> my name is larry heiniger. i'm associate vice president for university relations at virginia tech, and in just a second the chief will deliver a statement and i'll have a copy of that delivered here in just a few minutes in hard copy for you all. the statement will also be posted online. after the chief speaks we're

here to take comments for you as long as you would like. >> as you know, this morning we received a report from three young people approximately about 14 years of age who reported seeing a person near dee strich dining hall with a possible handgun. they gave us a good description. basted on this information and lack of information to disprove, that we felt it was the best course of action to issue a campus alert which is what we did. they described this person as a white male, about 6 feet tall, light brown hair. they said the weapon was possibly covered by a cloth or some type of covering. he was walking fast towards the volleyball courts in the area wearing a blue and striped shirt. we've found no one matching that description and we've not encountered anyone else matching

that description or found that person. we have not received any other sightings of this person or any other information concerning this person. we were assisted by numerous law enforcement agencies. we'll have a full listing for you, more than i can name at this point. we kept the campus on alert throughout the afternoon as we continued to search the campus, develop leads, try to find out more information, and we've interviewed several persons in regard to this. however, again, we've not developed any information about who the identity of this person may be. we will continue to have a large police presence on campus this evening. we'll maintain an active presence as we always do on campus, and this will be done through patrols of marked and up marked vehicles. we'll also continue walking through the buildings this evening and looking around the campus. as i noted earlier, three people

who reported that were attending a summer camp from a group called higher achievement from the district of columbia. they arrived on campus today, and they are leaving today, so i'll be happy to entertain any questions that you have. >> just curious, these teenagers, might hear that teenagers might have annage nation, but is there a way you deemed the information credible that they gave you? >> i wasn't insinuating that it wasn't credible. the officers interviewed them and the information was very detailed, concerning the description and what they saw so the officers believed him and deemed it credible at this po t point. >> [ inaudible ]. >> we've been posting blast e-mails, going on the university's twitter account, went on the facebook account, home page. we've had live broadcasts from here. based on what i've seen on the

media i don't think there was anybody in the nation that didn't know about this? >> did you search the whole campus? >> that was originally virginia tech police chief. very, very freightning when the shooter took his own life, not before killing 32 others. essentially the news coming out of that is that they have lifted that alert so students and others in and around the virginia tech campus in blacksburg can get out and about. there are fears there was this alleged gunman around. they have yet to locate this individual. sounds to me like they are still searching but still allowing now students to get out and about. we're going to follow, that and if anything changes we'll certainly pass that along. also there's still much more to come in a couple of minutes. we'll update you on the efforts to address the famine in somalia with a live report from the capital of mogadishu, and we'll stay on the markets.

keep a close eye with me, down 407, massive plunge in late day selloffs. it's 3 acso that final bell in just about 35 minute from now. we are back. you're watching "cnn newsroom." ♪

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♪ ♪ when you're resonsible for this much of the team, you need a car you can count on. ♪ quickly here. alarming numbers on the dow, 409 points down now. keep a close eye. of course, we'll keep the numbers on part of this screen. can you also take a look at the numbers this late in the day. go to cnnmoney.com. that story is certainly evolving. also the pictures are heartbreaking. the situation is dire. the entire horn of africa covering more than three-quarters of a million square miles is in the grips of a horrific drought.

it is so bad in somalia that the united nations says more than a million children need help immediately to save their lives, but famine is spreading in somalia, an rebels affiliated with al qaeda are stealing food from these people, these children who need it the most. a report now from the somalia capital of mogadishu. we'll talk on the other side >> reporter: humanitarian crisis in somalia is deepening, and aid agencies are trying to use every means necessary in their fight against hunger and starvation. the world food program through its local partners is supporting so-called wet feeding programs where food is pre-cooked before distribution. wet feeding only happens in the direst of humanitarian situations. the last time aid agencies rolled out a wet feeding campaign was in haiti. for those people that you see

queueing here this is the only guaranteed meal they have and wet feeding is necessary in somalia. increasingly here the hungry and vulnerable are being targeted for the little aid they are receiving. >> it was their suggestion to move my office and that the food should be cooked and everybody benefits. it's better that way other than thleaders taking away their food. >> reporter: but it's not just corruption that worries them. one won who is too scared to speak on camera says her son was killed by the members of the al qaeda-affiliated al shabab group for accepting western aids, so for these desperate community it's a seeming struggle and they must protect even what little they have. >> let's go live to nima live in mogadishu. i don't think desperate cover it beyond desperate situation

where you are. how is the world stepping up and helping? >> well, actual, it's really a vortex of horror. these people are surrounded from all sides, whether the people banning aid groups coming in and are now being failed after they reach the capital. mogadish the capital itself, where aid groups can operate, brooke, is now a famine zone. >> i know you were -- >> >> reporter: so the issue really is now about the issue in response to the indicatiternati community as it is from the pressures these groups are feeling from the milt can't groups. they were planning on having a conference at the end of the week, and they are continuing to see the reasons for this, but our understanding was that the worry was not enough countries re willing or able to pledge

money. the u.n. says that they need $1 bill cuba to meet the needs here. they have just a little hover $40% of that at the moment, brook. seeing horrific pictures out of somalia. 29,000 children have died in somalia in the last month alone. how much worse could this get. well, unless that ave comes in quicker. if we're still dealing with the aids distributioner in the as we are at the moment. we had the undersunday secretary general a little earlier and she said that there may be up to 600,000 children that could die if this situation isn't resolved. they don't a way to get the aid

to the people who need it so badly, broeck. >> the issue with the islamic military group al shabab, affiliated with al qaeda. if and where the ail falls in it will fall in their hands. have you seen that happening, and race the impact of the rammed ann offense i ever? >> well, this was one of the reasons that the u.s. treasury actually, after putting sanctions on al shabab, it became very difficult for aid groups to operate in their areas because they were worried that the u.s. treasury might sanction them for allowing the aid to end up in the hands of al shabab. they are trying to tax the aid that's reaching these people and tax the aidizations that are trying to help. the u.s. has suspended the sanctions but the worry that that's created hasn't enabled work groups to work effectively

in al shabab area. the a lot of people are saying why isn't coming in quickly, that they will spend all the money, fly all the aid here and it's noting if to be affected. what we're seeing here in the capital, when the aid does reach and people put the resources in, aid is reaching vulnerable people. it's about the international community doing its part. brooke? >> we appreciate you just being there and sharing the stories with our audience. please continue to do though. and for those of you watching thinking how can i help, you can? a list of aid groups from our website to the folks who impact your world. as we go to break. let's pull up the big board. once again take a look at this massive plunge, down 438 points at this late hour in the trading

day. we're hearing words like alarming, panic, devastating. we're all over this story. follow it all at cnnmoney.com. back in just a minute. [ quack ] oh yeah? what about your family? ♪ we added aflac, so we get cash! it's like our safety net... ♪ to help with the mortgage or whatever we need! so my family doesn't feel the pain too. ha! [ male announcer ] help protect your family at aflac.com. [ pigeons ] heyyy! hooo!!! handle more than 165 billion letters and packages a year. that's about 34 million pounds of mail every day. ever wonder what this costs you as a taxpayer? millions? tens of millions? hundreds of millions? not a single cent. the united states postal service doesn't run on your tax dollars. it's funded solely by stamps and postage.

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welcome back to cnn newsloom. two vying breaking news stories. left-hand side of the screen, the capital dome. members of congress, they are out on vacation here for four, five weeks. we are getting some breaking news with regard to that faa impasse. we heard from gloria borger just a minute ago. we'll get to her in just a moment as there could be some news. there could perhaps be some sort of deal or vote brokered. stand by for that. right-hand side of your screen, take a look at the numbers. the dow continuing to pluck in negative territory, flirting with that negative 400 mark off and on. we're all over that. allison kosik is standing by in the thick of things all over the floor of the stock exchange. gloria borger, want to go to you. you broke some news already that house speaker john boehner and the president of the united states have had some sort of conversation regarding this faa impasse and this problem proforma procedure what. are you learning on the senate side? >> well, actually we were -- we were saying that they were very optimistic, and just moments ago

senator reid actually released a statement saying that they have been able to broker a bipartisan compromise between the house and the senate to cope those people from getting furloughed. it's interesting though, brooke. in the statement it says this agreement does not resolve the important differences that still remain, but i believe we should keep americans working while congress settles its differences, and this agreement will do exactly, that so as we suspected earlier they haven't resolved the larger issues of collective bargaining for airline workers or the question of the funding for the rural airports, but in the short term, probably because they all look terrible in this, i think you'll probably agree, they have decided to pass something to get them through the summer so that when they come back they can actually deal with the substance of what they disagree on. >> just so i'm clear, the thousands of -- the thousands of faa inspectors and all those

different construction projects, right, tens of thousands of workers, they will now be paid. is what that i'm hearing? >> the senate will be meeting in a proform, a special tomorrow meaning that the senators vent do have to there and they are open for business. it seems it me that you'll probably get some kind of unanimous consent request to get this temporary patch through so that people don't -- can get back to work. >> so it is quite simply an up or down vote, correct? >> hopefully, yes. >> okay. i'm also learning that we're hearing from our white house team who have been busy on this one as well. we're hearing we'll get some sort of paper statement from the president on this particular people that sounds to me is brokered.

gloria borger, perhaps we'll discuss that later. the numbers of the stock exchange and my colleague allison kosik who continues to watch the numbers plunge. what are you seeing? >> reporter: 20 minutes left in this trading day and we're seeing the selling pick up a bit, bouncing back and forth. the dow down 420 point. what you're seeing is investors are scare. this is all about fear and uncertainty. you're seeing investors get out of stocks, and they are looking for somewhere safe to put their money and they are not even buying the safe havens like goal. they are just -- take their cash out and kind of putting it end the mattress because at this point cash is green. it sort of gages the fear in the market plais and the volume tut. that's speaking 27%, close to

that dipping point mark of 30. it's about feet and the u.s. economy and worries about and uncertainty about what's happening in europe. the european economic troubles, they are still there, and now the latest worry is italy. italy is the world's eighth biggest economy and the big worry is that that country could default on its own debt so what you're seeing is this cycle of fear that's really rattling the markets. brooke? >> excellent point. not just a domestic u.s. story, very much a global story, global jitters and slowdown and fears over, dare i say, another recession. we have ali velshi and poppy harlow, our best team when it comes to crunching numbers. let's get a kwuk break here and then later more on the market right after this.

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back on the breaking news, back on the dow.

it continues to plummet, now down 460. 457. it continues to change, of course, as we are 15 minutes away, 15 minutes away from the end of trading here on the new york stock exchange. i've got the best team standing by for me. allison kosik on the floor of the new york stock exchange. on the phone i have ali velshi standing by in new york and poppy harlow of cnnmoney.com. ali, 15 minutes to go, what do you think of this? >> more about the sausage being made than more people care to know. the dow what, you're looking at right now is very representative of a portfolio that you might have in diversified stocks. the other things that your stock may mimic is the s&p 500. the s&p 500 is doing worse than the dow, so what you're looking at is 3.8% off on the dow. that's not the low, believe it or not. it's been lower, and what you're seeing now in the last 15 minutes is a real struggle. you've got people selling and other people buying who think that this doesn't make sense. this is based on fear of central banks that have intervened in

markets in japan and in europe having to do with italy, as allison was saying before the break. it didn't work. it panicked some people. on a day like today when there's this much trading and volatility, normally that bell rings at 4:00 and you get an idea of what's going on. this will probably take 15 or 20 minutes to settle down. it's a real struggle between buyers and sellers right now but we won't make up a lot of the ground. there's a possibility we're making some of it up there. >> i want to ask about context actu contextucontextur contextura l aspects. >> this is why you care all of the dow blue chip stocks are down today and the selling is accelerated right on the screen into the close. brooke, i want to give people perspective. the dow industrials down 481 points now.

as ali said the s&p 500 performing even worse than that, down 4.5%. to give you some perspective. down 475 points. the worst day we've had so far this year, up until today, brooke, with the dow closing down 279 points so we're close to two times as bad as the worst day this year. it hasn't been since november 2008 that the dow has closed below 400. we are very likely going to below below 400 unless we see a major relief rally into the close. 14 minutes away from the closing bell on wall street. across the board, technology, health care stocks, manufacturing companies. they are all doing poorly, and i think as one analyst on wall street said it best to me today. the market hates uncertainty. all they have right now sun certainty. yes, we have a debt ceiling deal but what we don't know is where the trillion dollars plus in cuts is going to come from, what

companies that will hurt and we don't know where the jobs will come from. we need a growth plan from washington and we don't have that right now. brooke, let's not forget that. >> jobs numbers. >> we're hours away from the jobs numbers at 8:30 in the morning. this is a very bad sign. shows absolutely no confidence heading into the jobs report tomorrow morning. at best economists think we'll see between 70,000 and 80,000 jobs added, nowhere near the amount we need to bring this unemployment rate down. no good signs right now, and it's not good that this selloff is getting worse heading into the close. >> you mentioned the much anticipated july jobs report coming out tomorrow morning. we were already getting the weekly jobless claims. first time unemployment claims totalled 400,000. that was last week -- that was a milder number than expected but obviously still shows some weakness there on the markets. allison kosik, are you in the mix, if i may, you know, down on the floor of the new york stock exchange. paint a picture for me.

you saw a lot of long faces and the story is still the same. >> it is the same and we'll see a lot of relief when we hear the closing bell. i spoke with one trader and one thing to keep this mind. what you kind of see is what they call a repricing here of stock with the realities of what's going on in the economy. you know, a lot of the time many people say, look, the major averages are doing so well and look at doing so well, and look the economy it's doing so poorly, but what we are seeing, is kind of a repricing, with the realities of how the economy is. you have to remember that the stock market is a forward-looking indicator, and because right now there are these fears about a possible recession around the corner and, you know, the economy really just slowing down, that's also why we're seeing stocks really take a hit, because there's a repricing going on to match what is going on in the economy, brooke. >> alison, ali, poppy, thank you

all. stand by. we're also going to get some white house reaction to with regard to the much anticipated jobs report. got to get a break in. stay with us. back in a moment.

a quick reminder, as we continue to watch the dow plunging, nearing that negative 500 territory here, as we are less than ten minutes away from the end of the day here, a day of trading. we have ali velshi, poppy harlow, alison kosik and dan lothian now. just reset the numbers, and tell me again the last time we saw the dow down this lo. low. alison, are you with me? okay. not there. ali, last time we saw the numbers this low, 2008? >> yes, and it's not just that. it's the percentage loss you're looking at on the right side. this is accelerating. often you see a turnaround in

the moments leading off to the sell-off -- >> crossed the 500 mark. >> we're down more than 500, 34.25%, and the worst is s&p 500 which has more to do with your portfolio is down more than the dow. pretty much every stock on the nasdaq 100, save for one is down, every single stock -- these indexes are combinations, baskets, basically, that's what you're seeing. this was triggered by a panic overseas based on the intervention of two central banks, the japanese central bank and european central trying to deal with italy. those two things created a panic. i've been on phone all afternoon, brooke. american companies have been reporting earnings for the last two weeks, many have been very strong, doing well, selling things in china, india, places where they're not having growth problems, but panic has overtaken today. you've been see investors trying to get in on the market all day.

you've been see the ups and downs, people have been trying to buy in, thinking it's oversold, but the downward momentum is taking over. the worrisome part now is when you see it level out is it's done, when you see strong selling at the end like you do now, we'll have to turn our attention to 8:00 p.m. eastern when japan and australia open to see whether investors globally are still trying to get out of stocks. these markets are not national the way they used to be. what you're seeing is a global reaction right now. that's worrisome, 520 points, 4.35% lower on the dow, lower on s&p 500. >> ali, stand by. i have teddy weisberg on the phone, a seasoned trader, sir. how long have you trading there? >> almost 43 years on the floor of the exchange. >> put this into perspective, looking at the dow plummeting as it is. what's the reaction there on the

floor? when's the last time you saw it this bad? >> well, you know, this is -- it's a com impinges of a lot of things. nobody ever likes it when it goes down like this. the screens are all red. there's no green anywhere. you know, basically folks have just kind of thrown the towel in. it's a combination of reasons that got them to this point, so much of the stock market is based on psychology and clarity and right now the psychology is very negative and there is no clarity. the economic message out of washington is flawed at best. the whole debt ceiling process was toxic, and i think it sends a negative message to the rest of the world. then we had negative numbers and now all the problems out of the euro zone. the bottom line is, as ali pointed out, the second quarter earnings have actually been very good, if not excellent, but it's just not enough to overcome the

negative psychology as a result of the economic problems both in the u.s. and internationally. >> ali, hop in. >> good to talk with you, my friend. you can see what's happening is still a struggle right into the last minute. there are still people buying things. do you think the point will sit out for a day or two and figure out there's a big sale on the market right now? >> it's the only business in the world when they hold a fire sale, nobody comes. the fact is that people are just throwing stocks away. on the other hand, a lot of stock trading as you know is driven by computers, high-frequently traders, and it's all about momentum. unfortunately this is the volatile world, that's the topic for another time. i would have to think that logic would dictate you need to zig

when the whole world is zag. there's some compelling values here, and i think clearly the market is oversold. unfortunately they're not going to tell us where the bottoms are just like they don't tell us where the tops are. >> i can't help but think of the viewers who are watching these numbers with their hearts in their throats, thinking of their investments, stocks, worrying what next? you say stag, you say hang tight? >> listen, if you own good stocks and they're good companies, andal ali pointed out, the vast balance of u.s. corporations are doing just fine. at the end of the day it is all about corporate earnings and fundamentals. so one has to just think that, number one it's not a zero-sum game, stocks are not going to zero. if you own good securities, i think you hang on to them. if you have some money sitting on the sidelines, prapz there's a good opportunity to put some money to work. >> we are less than three minutes from the closing bell.

teddy, 43 years there trading on the floor of the new york stock exchange, let's look ahead in our crystal ball to tomorrow. ali mentioned 8:00 p.m. eastern when we start watching japan and australia, but tomorrow, could it bounce back? >> well, it could, but we have a big number tomorrow. >> yeah, and let's hope we get lucky. that's what we need right now, a little positive luck, but we've had negative gdp number. it doesn't necessarily mean we're going to get a negative employment number, but a lot of people will be watching tomorrow. >> teddy, we are 90 seconds away, 90 seconds just about here from the closing bell. we're going to take that live. ali velshi, i think you made a great point earlier, and teddy made the point about looking at washington, and people are vexed at what happened, this back-and-forth bickering, even though the debt deal was done,

it's sort of the hangover, the europe, japan, all of this -- >> it's frustration all around with a economic that isn't moving as quickly as we'd like it to do. the u.s. did itself no favors and did the world no favors with this protracted debt negotiations. we can't pin it all on that, but the fact is it had something to do with it. we went from greece into our debt negotiations, right out of that into a big problem in italy. there's been no respite, no sense that things are getting better somewhere in the world. again, i have to tell you, and teddy makes this point, there are companies doing very well, selling in india and china, those economies are good, even africa is growing at 4% or 5%, so there are things going well, but we focus on the industrialized economies, because that's where many of the companies are, and that's what you're seeing play out here. italy is a big economy, spain, japan, the united states, and they're not firing on all

cylinders, and you're seeing frustration here. i have to tell you, brooke, there are some companies in america doing very well, and i think some companies will buy stocks right now who will be very happy they did that. >> ali, let's listen, let's go live. >> it will start ringing now. >> i imagine a lot of people not applauding at all. do we still have teddy on the phone? >> you do. explain why it's going to take a while for these numbers to settle. no, it's moving. why is it still moving? >> well, because the tape is probably slightly delayed, so not all the final trades are calculated yes.

136 statistic last time we closed below 400, it was 2008. remir us about that time. >> 2008 and20 were very bleak. we were down 38% give or take a few person points on the poplar averages, and tacked on another 12% or 14% during the obama administration. i think it would be a mistake to connect the dots and say we are basically looking at another 2008 and 2009 again. >> right. >> simply because of what ali has pointed out a couple times. yes, there are clearly huge issues, we have huge issues in this country, no economic leadership, and we don't have time to go into all of that. certainly there are major issues in the euro zone, t

corporations, at least in america corporations have never been in better shape. balance sheets have never been more flush. corporate america is in good shape. 2nd end of the day the market could still flow out, but i think the compelling values will float to the surface. we don't know where the levels are, but we have to be at those levels or must be getting close. >> i like that hint of positivity. ali velshi, a heck of a lot of red on the screen. one final thought? >> yeah, that is you havely the stock market is a combination of the value of the stocks of the companies listed on it. the way you price is a stock is based on what that company earns and what it is likely to earn. if you do that math, this dow doesn't make sense, which means it seems irrational, emotionally driven, and these days the trades are done automatically, with trigger points. this may not be a true reflection of what's going on out there.

to everybody that i've spoken to, this seems a little weird and out of place. >> teddy weisberg, i appreciate you for hopping on the line. 43 years there on the floor of the stock exchange. do we have dan lothian? >> reporter: yes, i'm here. 9. >> dan, huge, huge, lugely anticipated jobs report coming out in just a couple hours for the last month? >> reporter: that's right. i think everyone will be watching closely. one of the things that i think a lot of people perhaps were too hide on the optimism scale, if they were to reach a deal, it would prevent this kind of sell-off that we have seen here, but it shows it's another sign there are a lot of negative points on the overall u.s. economy. the white house not commenting specifically on the stock market. jay carney saying earlier today they don't comment on something that they can't control, but they've been pointing to a lot of negative pressure on the

economy, including what happened in japan, other head winds, oil prices and so forth, that have been putting pressure on the overall economy, and saying this just shows there's still a long way to go. the issue for the president now, as we've been talking about over the last couple days, is how to come up with any kind of solution to inject some momentum into the economy. the president planning over the next week and a half or so to hit the road, to start pushing jobs and the economy, but the big question is what more can this white house do to create jobs? to turn the economy around? i think white house spokesman jay carney had a bit of a hard time trying to explain, beyond the usual, which is talking to members of congress, getting them to move forward on these trade deals, nothing out of the box that this white house, at least as far as we know, has in its back pocket in order to inject life. nobody here is looking at what's happening and saying this is all

great. i think everyone is saying this is a long way to go and this is part of that painful process. >> i guess initial numbers coming in will indicate for the month of july the economy created 75,000. poppy harlow -- thanks, dan. poppy, you were saying the anticipated number in the 70,000 ballpark. and all of the dow 30 blue-chip stocks, all of them down today? >> absolutely. it doesn't matter what company we're talking about, brooke here. the reason you care about the sell-off is you probably own these companies somewhere in your retirement. wherever you look there's red and we bled right into the close, as you see, down 512 points. this comes at a very bad time, ahead of that critical jobs report. remember, for the june jobs report, we got only 18,000 jobs added in the entire month. that was significantly worse than what economists expected, so yes, heading into tomorrow morning, we expect about 75,000 jobs created.

it could be better than that. it could also be worse. when investors are telling you with this selling, they think it will be worse than expected. i would not be surprised to see? revision of those numbers heading into tomorrow morning i think there's a disconnect between how companies are doing, their profits are doing pretty well. 70% of the companies that have reported have beat expectations, and they're selling to people overseas, emerging economies that are doing so much better. if you take these companies' earnings, they're on two different pages. the question is how long can these companies keep pushing out these earnings, keep doing well, when you don't have strength at home, and you don't have strength at home when you have job numbers like this, when you have unemployment over 9% for a very long time. at some point you have to revitalize the american economy,

revitalize the power of the quiter to buy things, buy homes, buy cars, in order to prop up this economy to get jobs. that has not happened yet. brooke, one weight expert telling me today what he doesn't see it any growth plan at this point from the administration, from washington at all. without that growth plan, there is no strong base overall, so you're seeing a reflection of the fear on main street played off on wall street. as ali said, this isn't rational, so heading into 8:00 tonight, when asia opens, a few hours after that europe opens, then our market openings tomorrow morning. wee see if this is a rationality for one day of trading or if this is substantial. remember, for the last ten days we've only had one day when the market has closed higher. >> it was just about this time yesterday -- >> exactly.

>> it was up 28 points or so this time today, and it is amazing to see 24 hours later, and it's still settling, but down 512 points, poppy. also to your point 8:00 eastern, four hours from now, you mention when the markets open for japan and australia, that's the early indicating factor. how those numbers could foreshadow our numbers there at the exchange? >> absolutely. i mean, as ali said earlier, this is a global economy. this is not about how the u.s. or arable i don't is 3r678ing. this is not just about europe's sovereign debt problems. those problems bleed over here. the intervention of central banks in asia and europe bleed over here. this is an interconnected global economy. yes, you see china growing as a very rapid clip. you also see their government trying to slow down that growth.

brooke, it was last friday, but it has to be noted when we got the gdp report that showed us how our economy was growing, it was abysmal. we were revised down to just 0.4% growth. so those are the fundamentals we have to be looking at. you have to ask the questions, how long can the economies can they do very well if there is not a solid base for them here in the united states and elsewhere? you do have a lot of weakness in europe. that is plays out here. the fundamentals of how our economy is doing, from manufacturing to housing, to just consumer confidence, which is nil right now. it does not support a strong stock market. so -- >> poppy harlow, i appreciate you helps to put this in

perspective. thanks to you, dan lothian, ali velshi, teddy weisberg. we'll have one final check from the new york stock exchange, alison kosik after the break. state right here. [ jack ] what's for breakfast? um... try the number one! [ jack ] yeah, this is pretty good. [ male announcer ] half a day's worth of fiber. fiber one.

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call this number or go to selectquote dot com. selectquote. we shop. you save. personal pricing now on brakes. tell us what you want to pay. we do our best to make that work. deal! my money. my choice. my meineke. we have now officially closed at 11,383. let's go to alison kosik.

>> what you're seeing is basic uncertainty a fears from investors. we saw that play out all day on the screen in bright, bright red. the dow settling 512 points we're in correction territory for the dow and s&p, all of the major averages wiping out their gains for the year. we talk about companies, about corporations, they're flush with cash, so then you think there's a disconnect here, why all this selling? why all this selling? this is a reflection of what investors feel, so you're seeing a lot of emotion placed out dat. it's a global story. we talk about what happened with japan and the yen today, european central, and also what teddy wise imperiling was talking about, his words, you know, failed leadership when it comes to the economy and this whole debt deal, the debt mess

we've been watching, the amalgamation of all of the above that triggered what we saw today. >> it is, it is. it's a realization that now that the dust has settled on that, so now the focus is turning back to the harsh realities of our economy, of the economies in the euro zone. if you just focus on our economy, we have enough problems of our own. our economy is not moving fast enough to even grow jobs, so you're seeing that fear today, a day before the jobs number comes out tomorrow, there's a big worry that the economy is not moving -- not moving forward enough to create enough jobs. we have millions of people out of work, brooke. >> alison kosik, thank you very much. i want to bring gloria borger back in. we know alison mentioned it,

we've also been hearing a lot from the president, the "j" word, jobs, what are they watching for in washington? >> they would like to see a good jobs number, i think that's obvious, but they're bracing for the worst. you haven't had a lot of good news. the anemic growth of the second quarter, consume terr spending, everything points in the wrong direction. i think what's interesting about the situation in washington, brooke, is everybody here was so focused on raising the debt ceiling. there seemed to be a presumption that if you got a economic indicators that you have been talking about, and you could say panicking, you but the market has been saying things aren't going well.

the market was thinking about something else, not what we thought they were thinking about. >> according to our folks with cnnmoney, that preliminary loss, the ninth biggest loss ever, ever for the do you industrials. i do want to talk with you quickly with regard to this faa -- we know they have been talking. talk a bit more about this faa deal. >> they resolved to put the so people can go to work. you'll have a deal where they're essentially bypassing -- going to get what's caught a unanimous consent request, and again it's putting off the tough 2

decisions, but it mimes that workers will not by furloughs for the desire summer. >> that's good news, gloria. thank you. i appreciate it. i do want to read the statement that we've gotten from ray lahood about this whole impending agreement reached on the hill. it reads, quote, this is a true victory for american workers everywhere. from construction workers to our faa employees, they will have the security of knowing they are going to go back to work and get a paycheck, and that's what we've got fighting for. he continues on. we have the best and i have yay system in the world, and we intend to keep it that way. gloria, my thanks to you. let's tend on here. more breaking news from wall street. a quick break, we'll be back in a moment. thin squares of crispy granola layered with creamy peanut butter or rich dark chocolate flavor.

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this is such a stun seg enough better. the closing bell just about 20 minutes ago there on the new york stock exchange ending incredibly low, in the red there, down 512 points. the dow now sitting at 11,383, s&p down, nasdaq down as well, all three indices in the negative territory. morning anchor, a guy that doesn't get enough sleep lately, ali velshi, quickly your reaction to they numbers? >> well, it's a lot of fife about the global commit. we have such a global economic that if there are consumers in jaap japan or the united states, what we've got is problem in europe, across europe getting

worse in italy and spain. we have real uncertainty in the u.s., and that caused investors to say i'm not sure where my money should be. usually you move it around piles, but today something unusual happens. this started well before we woke up here in the united states. investors started to stay i'm going to take it in cash and wait. i don't knee that well well founded fear, but the markets of not based on having to prove what you're fearful about. gold was sort of flat, oil was down. this is a case where people have taken their money out and waiting to see what happens. which means they could put it back into the market. this is not an indication of the

performance of the companies in the storm. those companies have actually been doing quite well. this is fear that caused people to sell off. >> ninth biggest point loss ever on the dow, in fact second to the last time it was this low was down 514 points back in october 22nd, 2008. ali, stand by, and jay loop is on the phone, a mutual fund manager with grubb and ellison. jay, what do you make of the numbers? what do you tell folks who have a lot of money in the stock market right now? >> well, i'd say hang on. if you have cash available, now is the time to be buying your best ideas. as good long-term investors, who are focused on fundamentals and values, these are the best days to buy stock. you should have some extra cash in your portfolio. if you do, it's days like today,

when the panic is at its utmost, that's which you want to step fwl and buy. if you have cash, put it to work in your best ideas on days like today when the rest of the world is panicking. >> but jay, it could be worse before it gets better. you think they should buy up stocks now while cheaper? or hang tight? if you're an investor that has cash available, i would have started a position today, or i would start one tomorrow. don't use all your cash, and wait for additional weakness, but i would not be a panic seller in a market like this. i think fundamentally the economy will continue to grow. it will grow slowly, but it will grow, so again, do your research, pick your best ideas

and put your money to work on days like today. >> jay leupp, i appreciate your calm, nor non-panic-stricken voice. i think people like what you're saying. ali, do you have a question? >> jay, this is the issue, on my twitter board there are people saying this is about the u.s. economy, the debt deal, about the government's inability to deal with that. i think a message people don't necessarily know about most of the revenues of most of the company that is traded in that building on wall street are not from the united states. they're from other parts of the world. so in the orlando parts of the world get shaky, it affects those companies, but there's a lot of the world we don't think about that these companies are -- there are a lot of places they're doing very well irrespective of what happens here. >> that's exactly right, and an excellent point. most much the companies in the s&p 500, revenues are globally

diversified. that is, they generate revenues from all over the world. there are concerns about what's going on in europe. we returned from a two-week research trip there, but those aren't the dominant forms in the u.s. economy. asia and latin-american are healthy, we're coming back in the united states, canada is healthy. it's a good time to buy stocks on days like today. >> jay, stand by for me, ali, stand by and being the global network we are, we have a correspondent overseas in asia, we'll get to that person momentarily as well. . i want to pause and go to poppy harlow. specifically, people are sitting there, they have the apple stock, they've got google. how did they fare today? >> you know, not well at all.

general electric down 5.7%. let's look at exxon oil, down 5%. google, you know the company well, down almost 4%. i want to point something else out. alc alcoa, you use its product, biggers loser on the do you. brooke this is a company that tells you about the global economy. you use aluminum for everything. 89s this is a demand picture, but i want to bring jay in for his take on where, if any, the safe havens are. you saw a decline in gold and silver. if you were putting your money in oil, guess what?

oil futures dropped 6%, gasoline down 6%. the question, where is the safety? treasury yields dropped as well. so the big question is where do i put mire money to work? jay made an important point, this is not a time to sell your investments. you stay in if you are already in it. however, if you want to put some money to work, this might be the time, but the real thing that people are looking for is where is the safety? just to reiterate the point, there is a huge disconnect here between the corporate america and their profits, and the reality of the u.s. economy, the reality of our jobs picture. full analysis here. we'll be here all night looking at asian markets, european markets, you'll want to come

here to see how this matters. >> and also, speaking of looking ahead, what if you have a 401(k)? what are you supposed to think in and out? we're going to address those questions after the break. poppy harlow, thank you so much, and you have cnnmoney.com popped open. ali velshi, i that i you and jay leupp. thank you. we're going to talk 401(k)s right after this break. ♪ ooh baby, (what) can i do for you today? ♪ [ female announcer ] need help keeping your digestive balance? align can help. only align has bifantis, a patented probiotic that naturally helps maintain your digestive balance. try align to help retain a balanced digestive system. try the #1 gastroenterologist recommended probiotic. align. when i got my medicare card, i realized i needed an aarp...

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huge, tremendous loss by the dow today. last time it was this low, october 2008. we want to bring ali velshi back in. i want to talk about the why, but first let's talk 401(k)s. so many people have invested money through the years, and they're thinking about their 401(k)s now, and probably having a half-heart attack. should they be worried? >> no. i can't say you can't be worried. that's a big number, 4.3% to lose in a day, more than 10% in the last days or so, but your

401(k), first of al