this is "nightly business report" with tyler mathisen and sue herrera. et>> wall stree fall. the dow plunges 1,600 pointsay mi its biggest intraday decline ever. selling was arp, it was fast, and intense. >> tonight, we'll look at why, what might happen next, and what u, the investor, need to know to keep your money safe. "nightly business report" for monday, february 5th, gins now. good evening, everyo, and welcome. a dramatic day on wall street. the dow marked itsorst one-day point plunge ever, both at the close and adin. at one point during the trading session, the blue chip index dropped hundred of points in minutes, falling nearly 1,600 ints. yelling could be heard on the

trading floor. anxiety was high. volume was heavy. the gainshe for year now gain. the s&p 500 has lost more than on trill in market cap in february, and ity the third day of trading of the month. here's how the major indexes closed today.e dow jones industrial average dropped 1,175 points or 4.6%, t. 24,3 the nasdaq was off 273. that's a 3.8% dip. and the s&p 500 fell 113 points, or 4.1%. bob pisani reports tonightro the new york sto exchange. this was a roller coaster ride for the record books. at one point, the dow was alrey down 800 points going into the 3:00 p.m. hour, then proceeded to drop another 800 ints in six minutes, then rallied back 800 points in the next ten minutes or so before ending down 1,175 points. we lost almost half a year in an atafternoon! whhappened? we talked about the three risks the market is facing.

first and foremost, inflation risk resulting from a stronger economy and a concern the federal reserve may raise rates quicker than expected. the market's pensive and due for a pause many say. finally, there is a political riskntising re, not just about the battle between president trump and the fbi, but also the inability of congressional leaders to agr on a budget or get behind a plan to increase the debt ceiling, which is another deadline that is fast approaching. today there weredl no hes around any of these issues. instead, there were just technical problems. simply put, the sellers are not yet finished selling and the buyers are not yet enthusiastic haout buying. really, it's t simple. every time the market tried to rally, the volume was weak, indicating buyers weren't that interested. but when the market moved lower, particularly when it keptng dropelow the prior lows of the day, the selling pressure picked up,in indic sellers were becoming more active. and as the market dropped, selling accelerated because many professional traders have sell stops. thre levels in the market where they will sell to protect

their profits. th begets other selling. one important point -- the market function normally, we had very high volume, north of 9n billhares changed hands, 50% higher than normal, but there were no reports of any market malfunctions. it was just a big sell-off. for "nigh i'm bob pisani at the new york stock exchange. >> let's put it all into perspective. what does a day like tod mean? is it a sign that the bull market is starting to turn, sentiments shifting? veteran market reporter and analyst mike santoli joins us now from the new york stock exchange. mike, welcome. good to have you with us, as always. who is doing the selling today, mike, and what triggered it? >> reporter: allesxcellent ons, tyler. it's not clear what specifically triggered the selling today. really, it w not about an economic headline, it was not about corporate earnings, it didn't seem to be from political news.ea it wasy follow-through from friday's decline. i think t os is a bit payback for one of the greatest rallies we've seen over several months

in a long time. the dow was u 300 points since thanksgiving until a week and a half ago. we've given ovback a little ove 2,000 points fromthat starting this afternoon, you started to see a lot of mechanical hit the mark. it w fairly indiscriminate and seemed to be related to a rise in volatility measure that somehow really threw off a lot of these large funds that had been betting on the markets remaining calm. so, that's what we know for right now. obviously, the major index is down slightly on a year-to-date basis, butot more thanthat. the long-term market bull trend has not yet been threatened, but it's a sign of how far above we were of that trend just a few weeks ago that ts setba has not necessarily compromised that long-term trend just yet. >> and valuations in many parts of the market, mike, are pretty rich, so maybe this actually turns out to be an o tortunity fose investors with a longer-term time frame who have not been able t buy tho stocks that they like because they're too expensive. >> reporter: we, without a doubt, sue. in fact, the selling has been so

tdiscriminate, basically they're kind oowing out the good with the bad in the last, t i dosay six days, t think you're going to see some of that activity once the markets settle down a little bit and give people ae to assess what companies might have been sort of unjustly punished. i do think you're going to see that kind of reaction. look, nothing has compromised corporate earning are growing nicely. and even the bond market, which has been a cause of concerner lately in of yields going higher, was very calm today, so it really was not about macroeconomics or corporate shortfalls. it really was the stock m rket almocting to its own dynamics today. >> all right, mike, stick around. let's bring in matt maley, from miller tabak and kelly jones with the schwab center for research. welcome, guests. matt, let me start with you. how do you distinguish between what is, as some are describing this, a constructive sell-off, a welcome pullback? you know thead ctives.

and one that is less constructive and less welcome? f at are the telltales? >> onee most important things we look at is, if you see a deterioration in the underlying, not just in the economy, but the underlying of the keys, and o things is watching credit spreads, especially high-yield credit reads. now, they have widened out a little bit recently, but only slightly and they've g very, very tight. so, this is not the big kind of tdening out that would signal that we're going see a big decline like we saw in 2008 or in 2000 in the stock market. and i think as m aeuded to earlier in the day, is that we don't really get -- you markets very rarely crash from the top. they usually have a sell-off a a retest and internals are poor with poor advanced deines, lousy volume when you get that retest. that signals that the market's going to go a lotlower. we haven't had any of that. as scary as it is, this is more normal, i mean, 7% crrections afoves we've had are very, very normal and actually very healthy. >> kath weigh in on the bond

market activity today, because i friday we were talking about the fact thaterest rates were creeping up rather rapidly and that that was going to be a probm for the market. today people were moving into the bond market and the trading was much mor orderlyhan what we saw in stocks. >> yeah, today was more traditional, safe haven buying in treasury bonds. actually, one of thegu disthing factors last week was that stocks and bonds were moving together, which is a little bit unusual when you get very rapid moves like this. but today, treasury bonds found a safe haven from the turmoil and volatility in stock. but i would say as lot of wha happening in the markets now is this cumulative impact of the fe tightening. they not only have been raising rates for over a year, but they're starting to reduce the bond-buying program, the bonds ir balance sheet. and so, we're seeing this liquidity start to tighten up. and whenever t t happens, markets have to readjust to that, and i think a lot o this

is driven by the fact that we're getting shrinking liquidity from the major central banks of the world. >> you know, mike santoli, maybe it's just as simple as investors didn't like the fact that the eagles won. i don't know. who really does know? but -- >> you ow, that's not what historical patterns would have told us, i don't think. >> no, w usuallyn the nfc wins, the market goes up. but nothing has changeyin the econver the past 12 days, has it? >> no, hardly at all, really. in ayfact, t i think you had a little more good economic data t reported sort of services index for the broad economy was higher than expected. so i do think it's been much more about how far the stock market had climbed in a very ort period of time, how stretched valuations have become and also how setched investor sentiment had come toward optimism. a lot of those require a sh eout. and just today, i don't mean the general move from the highs a week or so ago, but justay t action when you really accelerated the selling in the middle of the afternoon and then you yo-yoed around a down

1,600-point dow and back up and the rest of it, that really was a lot of trading mechanics based on seemingly some funds who were forced to do some selling, may, perhaps, spill over into the next day or so. >> so matt, if you'ren intermediate-term investor or even maybe a longer-term s investor, y take a look at the market and make some choices now. tell me more about that. >> well, going back to whke mike just tabout in terms of how -- you know, we just saw indiooriminate selling that place and the market had gotten very, very overbought. and you know, when you get these kind of down drafts, people tend to want to panic at the exact wrong time, when the's mark really hitting its low. but if you have your stocks and groups picked in advance, it gives you a lot more to buy.ence warren buffett has become a of taking advantage of when everybody else is panicking. that's what you want to do in advance. work with your financial adviser. have those stocks and groups at the levels you like them at. maybe stare it down a little

bit. you don't have to buy it at all once. you can scale it . that way, instead of selling at the wrong time, you'll take ad eat tip and get some great prices. >> kathy, talk about interest rates. today was an interesting day. the ten-year bond yie moved up initially, moving into the 2.9% utea, by the end of the day, maybe there was some panic buying, becse it ended where, 2.7%. i wh the range that you think interest rates are going to be in here over the next f nths? >> well, we're looking for rates t grind higher as the economic data continuebe pretty good and the inflation picture contues to show move up towards 2%nd inflation fell. our expectation is that the rates will continue to move higher, both at the long and short end of the yield curve. today was that anomaly where because of the panic in the stock market, people moved into nds justs a safe haven play. >> it's ironic, is it not, mike,

that it also was the first day on the job for mr. hepowell, new fed chief? >> exactly. >> do you thinkerhaps today's market action, if itli continuea le bit longer, puts on hold any move to raise ratesy the fed? >> you know, the market did kind of hint at that potentially, in terms of if you look within the bond market, what its expectations are for how many raes we might get this year, so i don't think today's action itself is going to change that storyery much, but perhaps the fact that we do have a new leader of the fed, we're not entirely sure of exactly how, you know, he and the committee will rea toincoming information. you know, there's an old wall street kind of lore that says new fed chairs arehe tested by markets at some point. i don't want to make too much of that in terms of what happened today, but i do think it's interesting that a of these things kathy's talking about, how we have to get our heads around how the economy is too hot or just hot enough with regards to ilation and

interest rates, that's really the market conversation and that has a lot to do with what the fed's going decide. >> well, we thank you all. we'll see what tomorrow brings. matt maley with miller tabak, kathy jones with charles schwab, and mike santoli, thank you all. ahead, what long-term investors need to know about the market sell-off. ♪ ♪

all 11 sectors0f the s&p traded lower today. financials, the biggest hit, off nearly 5%. >> and wells fargo contributed to that sharp decne inhe financial sector, the stock falling 9% after the federal reserve took an unusual step late friday. it basically put the big bank in regulatory purgatory. the move a response to the bank's fake accountsal sharply limits wells' ability to grow until it takes certain internal corrective actions. wilfred frost has the details. >> reporter: an unprecedented reprimand from theal fed reserve for what is described as "pervasive anderstent misconduct" at wells fargo. the fed will limit wells fargo's growth by capping total assets, something regulators have never done for now, wells fargo cannot grow any larger than it was at the end of last year. that means the bank could have a harder time offering new loans to customers at a time when interest rates are rising. the punishment is in response to

the fake accounts scandalrs tha emerged about a year and a half ago. the bank has admitted that its workers potentially created more than 3 million unauthorized accounts and forced customers to buy auto insurance they need. wells fargo must now submit a new risk management plan in the next 60ays and will face a review on september 30th before the sanctions c be lifted. the bank is also replacing four board mbers. ceo tim sloan maintains that the co"oany is n for business," is confident that they will pass the 30th of stember review, and the impacts to earnings this year will be minimal. many have questioned the, timi given that this arrived on janet yellen's last day in office. but new fed chair jerome powell also voted for the action. powell is the one who willa pla ey role on whether to lift the sanctions come this fall. for "nightly business report," i'wilfred frost. >> and jerome powell did take the oath of office as the 16th chairman of the federal reserve. he was sworn in ande faced s immediate challenges, like that

unsure stock market and rising interest rate powell is a former fed governor who is expected mostly to continue the current of monetary policy. time to take a look at some of today's upgrades and downgrades, if you're brave enough.rg wells s rating was cut today by at least five separate investment banks. one of thoanks is rbc, now rates tha a company underperform down from outperform. the analyst says the penalty will result i an ongoing cloud over the stock price and wells' earnings. shares of wells down 9%o $58.16. dick's sporting goods saw itsut ratingo underweight from equal weight at barclays. the firm sit increased competition in the apparel market. the new price target $25 a share, and the stock fell 5% on this down day to $29.87. lowe's was upgraded to buy from hold atjefferies. the analyst says lowe's can triple its earnings per share in

ve ars. the price target was lifted about 60% to 29, the highest on the street. shares of lowe's, though, in this down day on wall street, fell 4% to $97.58. charter communications was upgraded to outperform by the research arm of wells fargo, citing renewed confidence in the turnaround despite the competitiveenvironment. the price target was increed to $460 a share but was down 2% to $352. the big story of the day is the stock market decline and the dow's 1,100-point fall. all in, the dow traveled an incredible oi5,100s with all those ups and downs during today's trading session. for se perspective, we're joined by financial journalist ron insana. ron, always good to see you. >> thanks for having eme. >> youot a historical perspective. you've sat at this desk durin these types of days before. >> with the person next to you. >> and with me too! >> for that >> yes. >> what do you expect to see tonight and tomorrow as those

ian markets open andhen the trading moves around the globe to europe and then back here? >> so, the nikkei in japan was down 2.5% last night followlig friday's ds here. i suspect we'll see additional selling in asia for a variety of freasons, not the least which is the federal reserve, whose policies we're worried about with the pacet of interate increases, but central banks around the world where we're seeing economic growth accerate in developed countries, so does japan tighten, does europe tighten, does china have to slow things down because they're growing again at 7% largely based on infrastructure -- >> we've gone from quantitative ndsing to a very different monetary regime tightening. a little bit. ertainly here, and what we're seeing, as kathy jones was saying earlier, the federal reserve is reducing the size of its balance sheet. it's not theer last bf bonds any longer, at a time when the u.s. treasury, because of the x reform bill, will be borrowing more money to fund the deficit $1 trill everyone this. ye that's a huge increase from lastar, so the fed's not going to be buying the treasury's going to issue

more debt, and the economy's accelerating and inflation may also be picking up. that's not a beautiful environment in which to invest in bonds, so that means rates could go up. that's problematic for ocks. >>hat about the political rhetoric in wardington. i hhat cited by a number of traders today. they're worried because we'rep bumping against some key deadlines and they're worried that, one, the government, wema have another government shutdown later this week -- >> we may have a debt limit problem sometime later in e year, given that the treasury's borrowing more. >> exactly. how much of a ftor do you think washington is, or not at all? >> well, no, i would say as a background negative, given that we have concerns about a trade warith china, a possible pulling out of nafta, you have political and geopolitical concerns. as the market was falling, the president was speaking publicly, dand he calleocrats who are not applauding or standing during his state of the union speech trsonous. , it's not the most amicable environment in washington right now between parties. and so as a background

negative, i'm sure people are concerned about that insofar as it might affect policy going forward. >> give us historical perspective. we've just come through a couple of years where the marke was a smooth as a lake in the middle of the mmer. >> ye >> like glass. >> like glass. >> it really has been. these kinds of violent moves or corrections are not uncommon. >> they're n uncommon in historical perspective. but again, as you said, this is the longest period we've gone without a 3% correction, the ngest period in history we've gone without a 5% correction. we had a ul10%ack friday to today, peak to trough. there are also strategies use by big institutions that have dampened volatility. big insurers and others are buying the dip and shorting volatility, bettinghat volatility would stay low. the volatility index last week was at 9. itlod at 37 today. it quadrupled. so, whoever hadhat trade on got mauled. and as mike santoli was suggesting eaadier, there to be some forced selling in there for large players who were out ofll position and r had to

unwind some of those complex strategies that they had on the heards. >> and these wereachines taking over, more -- >> and strategies, too, being used by insurance companies that weren't necessarily computer-drivek if you go bo the crash of '87 when we talked about portfolio insurance, which wast anything this was a similar kind of strategy that when unwound can beairly violent. >> ron, great to see you. >> as always, thank you. >>inron. c up what one financial adser is telling his clients after today's sell-off. but first, a look at all 500 stocks in the s&p 500, and there were just a couple m that were higher today. ♪

broadcom makes its final offer for qualcomm. that's where we begin tonight's "marcht focus." thmaker said it would pay more than $120 billion to buy its rival inhat would be the biggest tech deal ever. broadcom's initial offer was rejected by qualcomm, which said it significantly undervalued the company. qualcomm says it will review this revised proposal. qualcomm shares fell 6% to $61.73 and shares of broadcom we t off 2% $28.10. lululemon said its chief imecutive has resigned from the retailer effectivediately. the company said he did not live up to lululemon's standard of conduct regarding integrity and respect for fellow employees. the board is looking for a replacement. dlululemon's shares wern in today's otherwise down trading

day by 1.5% to $77.41. oil and gas producer hess sted a wider-than-expected loss and revenue that missed expectations as higher costs pressured results. third straight quarter hess was in the red. the company says it has launched a restructurg and cost-cutting program, which it anticipates ll save about$150 million a year. hess shares off nearly 7% to $44.49. and c ccast maysider outbidding disney for 21st century fox's media assets. cnbc reports comcast was willing to outspend disney last year for those fox assets, but fox had regulatory concerns. cnbc alsed a that disney has begun preparing itsresponse, if comcast were to present a competing offer. comcast is the parent company of cnbc, which produces this program. shares of fox,disney, and comcast all lower in today's

session. >> and bristol-myers squibb said its immunotherapy treatment when used with another one o its drugs helped patients live longer than conventional chemotherapy without the cancer gettin worse. bristol-myers also reported stronger-than-expected earnings which were helped by stronger drug sales. shes down nearly 4% to $60.96. as an investor, this market sell-off may be a little unnerving, so let's talk about what steps you could take to protect your portfolio, whether ryou're a medium a long-term investor. joining us to offer his insights is douglas bonaparte, president of bona fide wealth. welcome, doug. nice to have you . >> great to be here. >> let's start with what you make of today's trading session. >> there's no question, it's an ugly day, but this is something remind to use to ourselves that making knee-jerk reactions is probably not the way to go. >> so, doug, what should investors be doing with their

money here? what dod they n to be thinking about? i guess it r comes down to their risk tolerance. if a day like this is toons in for you, you need to be somewhere else. >> that's right. if you find that you're he emotional th toll of a day like today, i guess your silver lining is that you need tel get you a plan and have something in place that can help hedge against the emotions making a bad decision. so, let this be your gut check to go ahead and, you know, put that plan together, and obviously, a financial adser, a financial professional is someone qualified to do that. >> all right, so let's talk about what you are clients today. what did you tell them? >> as i began, you know, fir thing i'm telling them is not to panic. what is kind of out of -- well, rather, what is unusual is what we've experienced in 2017, and what's typical is to see something like a pullback, like a correction. so i really think we have it backward if you're looking at

today as the thing that's unusual. so, the first thing i tell th,, of cour is not to panic, keep things in perspective. >> so it really is a point, doug whe you want to consider rebalancing is one of the things you'll look at, if you have t much in stocks. that is really the smart move, right? >> i agree. you're probably still at record highs, despite what you saw on friday and today. so if you still have risk built into your portfolio, now would be a good time to consider rebalancing. >> so, that pretty much says it all there. you need to consider your risk tolerance, your portfolio weightings, and take a look at that and see what's going on there. time we appreciate your tonight. doug is witbonafide wealth. 1,155 e dow was down points. that is the greatest single-day point drop in the dow's history. that's about 4.6%. the nasdaq composite down 273 points or 3.8%.

the s&p 500 down 113. today's action, su puts the s&p and the dow industrials in the red for the year. >> it sure does. and we are only three days into this new trading week and month, so you'll want to stayun to "nightly business report" tomorrow and every night. that does it for us, though. i'm sue herrera. thanks for joining us. >> thanks from me as well. i'm tyler mathisen. rrve a great evening, everybody. we'll see you to.

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