Closing Bell - Closing Bell: Major pain for major averages 5/18/22

Episode Date: May 18, 2022

Stocks fell sharply on Wednesday, driven lower by renewed fears about the consumer after Target missed quarterly earnings results. Mohamed El-Erian from Allianz explains why the selloff represents a new phase in the market downturn. Gene Munster from Loup looks at the pain in big tech, as the Nasdaq sheds more than 4.5%. Bespoke’s Paul Hickey and CFRA’s Arun Sundaram break down the disastrous move for Target and what it says about the rest of retail. Meantime the Dow Transports index turned in its worst day in years. The CEO of transportation and logistics company CH Robinson discusses the challenges in the global supply chain.

Major averages under serious pressure as we head into the close. The Dow down more than 1,100 points right now. The most important hour of trading begins now. Welcome, everyone, to Closing Bell. I'm Sarah Eisen. Take a look at where we stand with an hour left of trading. Down across the board and just about at session lows as we speak. It's the worst day that we've seen for the S&P since back in 2020. And it's a broad-based sell-off. You've got every sector lower right now in the S&P 500, which is down about 4%. The hardest-hit area of the market, consumer discretionary. That sector alone down about 7%. Consumer staples right behind it. It's down about 6%. And technology, the growth names getting hit again, especially the mega caps, which have really been dragged

into the selling late in this process, but are down heavily today. We're talking about Apple and Amazon. Even energy is down again. That's been the strongest performer so far this year. It's still up 45 percent, but heavy selling today. Industrials, materials, communication services withholding up the best defensive groups, ex-consumer staples like utilities and health care. But even they are lower today. Five worst performers in the S&P 500 right now. They're almost exclusively in retail off of that target earnings miss, which is really a big part of the story. Look at Target down 27%. The ripple effect here is large on dollar trade. The dollar stores, the retailers in grocery, Costco, Kroger down sharply, Costco down 12.6%.

Can't remember a day like that lately. Tractor supply, Old Dominion. It gives you a sense of where the brunt of the pain is right now. We just want to tell you for a moment why. I just got off the phone with the head of an equity trading desk at a big hedge fund. What is causing this sort of deep selling today? Well, it's twofold. Number one, What is causing this sort of deep selling today? Well, it's twofold. Number one, there's always this sort of delayed reaction to Fed Chair Powell. He spoke yesterday. He was very hawkish, very tough on inflation. We're going to do what it takes, not too worried about the market selling off here, sort of an anti-growth message. That's percolating in the market today, a day later. And then there was Target, which was a big wake-up

call after Walmart, that we might be later in the cycle than the market previously thought that investors were thinking. You've got pressure on earnings as it relates to inflation. It wasn't just supply chain, which can kind of be brushed off a little bit because it can hopefully get better. It was wages. It was freight. It was issues that they couldn't pass on to the consumer. And that sent a sort of stagflationary message. We've got a great lineup of guests to help you navigate this sell-off throughout the hour. We'll talk to Goldman Sachs former CFO Marty Chavez, who is now the vice chairman of a $60 billion investing firm, Sixth Street. We'll also talk to Allianz chief economic advisor, Mohamed El-Erian, who says today's action marks a new phase in this market

downturn. First up, though, we'll start with the broader market and stocks taking this big hit. Mike Santoli taking a closer look at the recent pain, Mike, that we're seeing in stocks today compared to prior pullbacks. Yes, it might or might not be a new phase, as Mohamed is saying, but we are at familiar levels. Just last Thursday, Sarah, we were right down here in the S&P 500. We actually bottomed intraday last Thursday, more like 3860, that type of range. So here you got 3925, a little more than 1% above that. The closing low, 3930. So the bounce that we got Friday and then again yesterday, I and a lot of other folks thought Friday's rebound rally seemed like it had enough going for it to carry a little bit higher. A lot

of folks agree with that. They also said they'd be selling them above. To go to your point before, Sarah, in terms of what the market's trying to navigate, it goes to what I've been trying to say, which is we're navigating a very narrow path to a soft landing. On one side is a hawkish Fed. On the other side is, are we going to have enough growth to get us through the hawkish Fed? And so that is where you feel it on both sides today. I think you can deal with what Powell said yesterday if growth is going to be OK, if the consumer is fine and vice versa. But maybe both at once becomes a little bit tougher. Also, though, it's continued liquidation in the big mega cap names. It's not really just about the consumer staples, although I will say we were at these levels right back here in the first quarter of last year. Back then, we were about 22 times

earnings. Right now, we're roughly 16.5 times earnings. Of course, the earnings have to hold up. Let's look at some past cycles when you can see the decline in the S&P's price earnings multiple from peak to trough in prior pullbacks. This goes all the way back to the late 60s. And what you'll see is a lot of them in this, OK, the multiple went down 20-plus percent. We're down 25 percent from the peak here, 18 percent here. That was the 2018 sell off. But if you get a devastating recession and earnings fall apart, that's when the multiple really has trouble in the 70s after 2000. So this is what we're trying to actually figure out is which side of this we might land on.

Also, we started at a higher level of absolute valuation this time. So that's why betting on the market because valuation looks better. It's in some respects hoping the pendulum doesn't swing all the way and it just gets back to neutral. But if you are sitting there wondering another four percent down day in the S&P, how does this end? Right. How do we see that? You might want to see a day like today because you want to see that sort of capitulatory selling where everything gets just thrown out no matter what. On a tactical basis, I totally agree. And what's going on today is the market is attacking the areas people thought were relatively safe. Right. That is the consumer staples. Yes. Costco and Walmart are literally in the consumer staple sector, but smucker. And you're seeing the branded goods companies go down with it. So that's one

wave in this process. Yeah, sure. You'd love to have a more comprehensive flush. We didn't really get it fully on Friday. We'll see. Probably today isn't enough to do it if we land right here. Down about 4 percent right now as we speak in the S&P. NASDAQ 100 down 5 percent. Mike, we'll see you soon. Stay close. For more on the markets, let's bring in Mohamed El-Erian. He's an advisor to Allianz and Gramercy, also president of Queens College Cambridge. Joins us now on the CNBC Newsline. Haven't been too optimistic about stocks, Mohamed, so clearly you've been right. What do you see happening today? So today is a new phase as opposed to just a continuation of what we've seen. You know, initially this was a sell-off based on interest rate fears

and based on financial conditions tightening. Today, it has all the elements of also being a growth scare. We talked about Target. We talked about Walmart. We talked about the Fed being late and therefore having to tighten a lot quickly. But just look at the bond market. Unlike the previous sell-off, bond prices are going up. And that just suggests to me that this is a new phase of the sell-off. Here's the problem, though, Mohamed. If you are starting to price in a slowdown or a potential recession, this growth scare that you talk about, you might want to be going into consumer staple stocks like a Walmart or a Target or a Smucker or a Campbell's Soup, right, that are defensive and that hold up during recessionary environments. Definitely not working today. So what do you do? So first, you just got to recognize that we are restoring value. You know, the polite way of

saying that we went too far on liquidity. We went too far on the notion that growth can remain strong even though inflation was out of control. And now we're recognizing that it's a very different macro environment. What you saw in Target today, what you saw in Walmart yesterday, even what you saw in Home Depot yesterday was all about the macro becoming micro. And that's what the marketplace has finally understood. The bond market was, as usual, ahead of the equity market, and now the equity market is playing catch-up. So what does that mean? What are we in for? So, you know, there will be trading opportunities. You know, I put on Twitter on Thursday, I thought that we had sold off locally. And I got out yesterday.

Again, I put it on Twitter. There will be trading opportunities. But this is a market that still is very vulnerable. Growth is slowing in the major economies, not just the U.S., but even more so in China and even more so in Europe. And we've got to respect that. It's a different global macro environment. And inflation is going to remain a problem for a while. So what? So you should be moving to cash if you haven't already done so? Cash and cash equivalent.

What is exactly the strategy? Because a lot of these safe havens just aren't working. Gold is barely working. The defensive stock is not doing too hot. The front end has hardly moved today, two basis points. The long end has moved by a lot more. You know, there is now value in the front end as a safe haven. Yeah, it's not. You're still losing money in real terms, but it's a good place to shelter until this growth storm passes. I think we've mostly priced in interest rate risk. We mostly priced in tightening of financial

conditions. I've been arguing we hadn't priced in yet the growth concerns with pricing them. And there's one other, Sarah, that you've heard me talk about is market functioning. Those of us who are looking at the micro of the markets see pockets of illiquidity. So, you know, this is a tough environment, and you've got to respect that. Where are you seeing pockets of illiquidity, and what would that mean if we saw that expand? So you see it in a very barbell fashion. You see it in sectors like, for example, what we saw in crypto, where liquidity disappears almost instantaneously. And then you see it in these very outsized moves in the Treasury market. Look how much we moved yesterday. On what news did we move that much? Yes, share power was somewhat more hawkish, but not to that extent. So even in the liquidity,

even in the Treasury market, you're seeing outsides move in response to small news. So, you know, to keep an eye on market functioning, because that we really need to contain. That would take us to another world. I don't think we will move there, but something worth watching in terms of a tail risk. You have been saying, Mohamed, you've been saying, you've been using your words carefully, growth scare, slowdown fears. That's what's getting priced into stocks right now. You have not said recession, and I don't think you believe that. Have you changed your mind? I do not. I think the baseline for the U.S. economy, unfortunately, is stagflation. I think recession has become the risk scenario. Stagflation used to be the risk scenario. Now recession is a risk scenario. We get there if we

get another Fed policy mistake, but this one, you know, would be the big policy mistake. The first three policy mistakes were small compared to what this one would be. So, you know, it is a risk scenario because the Fed is so behind. This one would be what, over-tightening, taking us into recession, or would it be under-tightening and not getting rid of inflation? This would be slamming on the brake, being panicked into slamming on the brakes and not understanding how market functions. This is a time when just like in 2008, just like in 2013, it's really important to have people in the Fed that are close to market functioning. Because if you make the policy

mistake, it's because you're going to end up having the financial sector be the tail that wags the dog of the economy. So it is a very, very delicate maneuver, and they've got to understand the market functioning element of it. Well, they have a new Dallas Fed president coming in from the New York Fed Markets Desk, which should be helpful, I president coming in from the New York Fed markets desk, which should be helpful, I guess, in this time period. Mohamed, thank you. Thank you so much, Sarah. It's always good to talk to you. Mohamed Al-Aryan from Allianz. By the way, don't miss another great market voice on this sell-off coming up in overtime. Next hour, Scott Wapner will be talking to Guggenheim's Scott Minard. Let's turn to the stock story of

the day. Target reporting. It's really the whole market story of the day. When Target came out this morning, reported first quarter earnings that sharply missed Wall Street estimates. Its profits were hit by supply chain. Higher fuel costs, though, lower than expected sales of discretionary items and higher wages. Shares are on pace for their worst day since 1987. Same thing we saw yesterday from Walmart, although this is more extreme. And trading at lows now that we haven't seen since November 2020 for Target. Joining us now, Bespoke Investments' Paul Hickey and CFRA Research Senior Analyst Arun Sundaram, who just downgraded Target to hold, slashed his price target. Arun, why were you and the other analysts so shocked, and the whole market so shocked,

by what we got from Target and Walmart? Yeah, I mean, I think we were all caught a bit off guard by Target's really rapid and sudden shift in their outlook. You know, it was just about two months ago when they had their investor day. It was on March 1st and everything was relatively OK then. And fast forward two months later and now we're talking about these big inventory write downs, discretionary spending weakness, higher supply chain costs on top of last year's higher supply chain costs. So, you know, it gets to show how fast things have quickly turned in the market over the

past two months or so. And that's causing a lot of uncertainty right now. And for Target specifically, you know, it looks like a lot of the pressures that they experienced this quarter will flow into Q2, maybe even the back half of the year. So we're expecting a pretty challenging year for Target this year. That's one of the reasons why we downgraded them to a whole new buy. What's your target? The stock is at 157. It's giving back almost 30%. Is there an opportunity there? Is that overkill or no, you're not touching it? We cut our price target to 165. It was $288 before. And the big reason why is we

slashed our EPS estimate. We're about $10 in EPS now. We were around $15. And again, it's because of these margin pressures that we think are going to continue in the Q2 and in the back half of the year. So, Paul, some of the issues that Arun just laid out there, they apply to Target, they apply to a lot of other retailers, which is why you're seeing double-digit declines in that group today, and apply to a lot of other retailers which is why you're seeing double digit declines in that group today and apply to all sorts of other companies which is i guess why you're seeing the market impact extrapolate what this means for overall investors yeah so i mean i think if target and walmart uh can't keep up with the rapidly changing environment who can uh they're some of the you know biggest retailers in the world and they're having these type of issues. So other

companies are obviously having these types of issues. And then, I mean, as an investor, to try and make sense of it all is even just as difficult. As far as the retail specifically, I mean, everything we're talking about Target is, you know, they refer to issues with the back of the store. But at the front of the store, i.e. customers, the outlook doesn't necessarily look good. And the time for retail stocks when they do best is when the consumer looks horrible, but things can get better. Right now, the consumer is in pretty good shape, but you have stimulus is gone. You have inflation eating away at savings. And so you have an issue where

the outlook isn't going to get much better for the consumer here. And that poses risks for the overall economy and the retailers specifically. Arun, but if the problem in a Target and a Walmart and for all the other retailers are issues like freight costs or issues like supply chain and even wages. All of that should be coming down. And I hate to use the word transitory because it's banned now. But those are issues that as the Fed continues to raise rates and the economy softens, should normalize, shouldn't they? I mean, it sounds like these inflationary pressures are going to continue at least over the next several months, especially after what's going on in Russia and Ukraine. Commodity prices are up. Freight is now

a huge headwind for Target. They called out they're expecting about a billion dollars in incremental freight pressures this year. And a lot of these, at least going over the past few years, these retailers have been able to pass these costs to the consumer. But I think now going forward, they're going to have a lot tougher time passing some of these costs to the consumer. Consumers are starting to push back. Inflation is starting to eat into budgets. So that's going to have a ripple effect down the stream to package food companies

and these agricultural product companies. I think going forward, it's going to be harder to pass costs through, and that's going to result in a lot of margin pressure for some retailers. Package food companies among the hardest hit, along with some of these retailers. So, Paul, if this is the market saying consumers slow down, caught a little off guard by the shift from discretionary into more staples that Target mentioned today and some of these pressures, where do you want to be if the U.S.

consumer, which has basically been holding up the global economy, starts to slow? Well, so I think this is going to be a rocky period for the markets, and we're going to continue to see that. You look at a stock like Walmart, it's still trading at above average premium to the S&P 500 that it historically has over the last 10 years. So it's not necessarily cheap, even after the pullback we saw yesterday. Target is trading at a relatively cheaper valuation. But so for the market broadly, and we're looking at different areas of the market, where do we want to invest? We want to invest in stocks that have earnings and stocks that are trading cheaper than they normally do. The tech sector overall still trades at a premium to the S&P 500 and a higher than average premium. But within technology, the semiconductors, which are trading in line with the S&P 500 on a valuation

basis, and historically, they've traded at about a 20% premium. So that's a sector that we're interested in and we like here. And the fact is, they've been outperforming the market for the last six weeks, even as the market has just continued to plunge. They haven't plunged as much, but they've been outperforming. And as I've mentioned several times over the last several years, semis are a great leading indicator for the market when they turn higher and when they turn lower. And the last six weeks, they've been turning higher. So with all this pessimism out there, that's one thing we can try and hang our hat on as something positive to look forward to. Well, you think we may be nearing an end given the signal in semis? Well, you do have that. You have sentiment,

which is just off the charts negative. You have the Nasdaq average or half the stocks in the index are down 50 percent. Sure, we know about geopolitical concerns. We know the Fed has given the finger to the market here saying you're on your own. So we have these issues, but they're somewhat priced in here. We are down in the NASDAQ close to 30 percent. The S&P is down close to 20 percent. So where we are in a month or two from now, I don't know. But I think longer term, these types of periods and the strength that we're seeing in the 70s on a relative basis is something that makes us want to look for opportunities on days like today rather than sell into the weakness. Yeah, and you like that group.

Paul Arun, thank you very much for joining us. We are near session lows. All 11 sectors right now in the S&P 500 are down. The Dow is down more than 1,100 points. We're sort of hovering at this low of the session, down 1,173. Every Dow stock is lower right now, except for Verizon, which is bucking the trend. Let's dig deeper into the sell-off. Christina Partinello up the list. It's here covering the chips, which we just mentioned, some names moving there. And Bertha Coombs following healthcare. Christina, we'll start with you. Yeah, so along with technology, chip stocks, despite what Paul was saying, they're getting hammered today specifically. All constituents of the VanEck Semiconductor ETF are in the red. The SMH right now is down almost 5%. Same story for the SOX ETF, which is a good barometer for the chip sector.

And this is today, though. At least three of the 10 worst tech stocks on the S&P 500 are chip stocks. NVIDIA plunging the worst over 6.5% now. The worst of the group, LAN Research, down over 6%. And then you've got Qualcomm, also above 6%. AMD on a weekly basis, because we're trying to look for some bright spots. The only one in the green, up over 1%. The biggest falls, though, from their grace or their 52-week highs,

you've got Skyworks, Marvell, and ASML. A bright spot earlier today. Early this morning, you happen to be reading CNBC. You saw Analog Devices put out their earnings report. They posted a strong earnings this morning. Top and bottom line beat. Raised their full year guidance. They say demand's going to be good with EV sales, and yet the stock down 2%. I was trying to find something green for you, but couldn't. Sarah? Yeah, well, you got AMD on the week. There's something. Yeah, something. Thank you.

Christina Parts and Adelos. The healthcare sector not turning out to be a safe haven today, although there are a handful of silver linings in there. Bertha Coombs with the details. Bertha, what do you see? You know, the interesting thing is a lot of these healthcare sectors have actually had a fairly good week. Large cap biotech, for example, is up about 5 percent from a week ago. And there are a handful of stocks that are bucking the trend today in biotech. Gilead is the best performer today, has consistently been positive. Company announcing that it's set to present data on several breast cancer targets as well as other cancer trials at ASCO in a couple of weeks. And that big cancer

meeting is normally a seasonal lift for biopharma. We'll see if that continues to be the case this month. And LTC Properties, this is a nursing home rate among the best performers in the Healthcare Real Estate Investment Trust. It's up 11% year to date, and it currently has a 6% dividend yield, which is about two points above the average for the sector, according to Stiefel analysts. The worst performers today in health care, the health tech companies. Cathie Wood favorites Teladoc and Accolade. You can see getting crushed again. Both of those stocks off more than 80 percent from their highs now. And

Sarah, they are among her biggest investments in health care. Right. The stay at home stocks, among the hardest hit, lost half of their value since the pandemic. Bertha, thank you. And speaking of health care, Jim Cramer says he is buying shares of Humana during today's sell off. He just put out that alert. You can get it yourself at CNBC Investing Club to sign up for more of Jim's moves. Do so now. Crypto getting caught up in the selling today as well. Bitcoin is below $30,000. Again, Coinbase is down another 7% or so, down 75% for the year. Joining us is former Goldman Sachs CFO, Gary Chavez, Marty Chavez, excuse me, and currently the vice chairman and partner of Sixth Street Partners.

It's good to have you here, Marty. Nice to see you again. You know, I did want to start with Bitcoin because our cash-in veteran floor operations manager from UBS was just on before saying that that instability that we're seeing in crypto is part of the story here. And I'm wondering if you see that as we're trying to just figure out how much money has flowed in there and to which parts of the market as it unravels. How do you view it? Well, I guess I would step back from what's happening today and I would just look at a very big trend, which is the dematerialization of assets, assets becoming digital. When's the last time you saw a share certificate for a listed stock or a paper certificate for a treasury? So that that is just going to happen. I would view all of these things that we're looking at, Bitcoin,

the stable coins, DeFi, as fascinating, necessary research, as experiments. I'm not sure how investable it is. And there I would say a little bit of the right regulation will make a big difference and will really accelerate this trend of dematerialization, digitization of everything. But until that happens, I'd be wary. Wary of getting into what? Bitcoin, Coinbase, some of these stocks, some of these assets have been really beaten down. Well, Sarah, let's put it this way. I own three Bitcoin. I received them at the end of a meeting with a crypto CEO about 10 years ago, back in the early days. And I transferred them to a Coinbase wallet, and they're still there. And of course, I pay a lot of attention to all these developments. I think as a matter of computer science, the paper, the white paper, the famous white paper announcing Bitcoin is just an amazing piece of work. I think a lot of people have leapt into saying it's digital gold or it's a currency, and it's neither. It's a fascinating, necessary experiment. I myself

wouldn't invest in it today, don't invest in it today, see huge opportunities and think the sector is incredibly important. But it needs some regulation. I've been saying for a long time, as you know, stable coins are anything but. And the name there, stable, is meant to be a distraction from the inherent instability. To me, they're just currency pegs. And it's hard to name a successful currency peg. They were successful until they stopped being successful. And of course, as we saw last week, there are many kinds of stablecoins. On the one hand, I would say, for instance, USDC is on its way to being the kind of stablecoin that makes sense. If it were

regulated as a narrow bank and it had Fed funds and a master account in treasuries on one side and some digital asset on the other side, in this case it would be their liability, that would be amazing. And USDC is most of the way there. The other stable coins, not so much. And the algorithmic stable coins are systematic structured products. And as we know, the markets will explore the weaknesses of systematic structured products and find them. And we certainly saw that last week. And I wonder how much more of that we're going to see,

that where those structured products and where that how many billions have gone into propping up some of these these stable coins. But Marty, I want to ask you broadly about more. Yeah, we're going to see more. That's what you think. I think the question actually, no, just to draw on that is how much of that deleveraging impacts the equity market, what that link is. Well, of course, deleveraging is the right term, right? We always read about wealth destruction and really it's a transfer from tech stocks to treasuries, basically. And when someone's talking about losing money, I'm always interested in the other side of the trade. For someone else who was the seller, it was a good trade.

So it all depends on your point of view. I don't make market calls, as you know. And we can all look at trends. We can all look at comparisons to points in the past. And we can say the NASDAQ is getting pretty close to its pre-pandemic levels. The S&P is still pretty far away from its pre-pandemic levels. And if you look at very long trend lines, we might be returning to some trend line. That doesn't mean we won't go way below it.

So I just won't make that prediction. I think there are a lot of long-term trends, dematerialization of assets, the convergence of data science, computer science, and biological or life science. These are huge and important trends that aren't going anywhere. They're only going to compound. And so you've got to look through all of the present noise to find what's investable in those very long-term trends. What about fintech that that's always been your thing that was your thing at Goldman it was a you know it's been what you're what

you're interested in right now some of the stocks and that clearly the markets not in the mood for an unprofitable. Company but there are also real concerns here about the change in the credit cycle what that's going to mean for. A PayPal or

a block or in a firm or so fi which were once so sexy not too long ago? Well, Sarah, look, again, I think these companies are doing brilliant and interesting, innovative things. But I'll go back to something that I've said on here before. It was the tagline in a class I taught at the Stanford GSB during the pandemic. And I meant it to be slightly provocative and maybe oracular and maybe just not so clear. Or I said the future of fintech is banks. And what do I mean by that? Well, you can mean a bunch of things.

One of them, which I stand by, is that banks that aren't really great at making software, which, by the way, banks have been doing for decades, the banks that aren't really great at that software, which, by the way, banks have been doing for decades, the banks that aren't really great at that are going to be roadkill. And then on the other hand, when you look at the fintech side, look at a lot of things that they're doing, and I think that's what banks do. And there is a reason that when it comes to storing money, you want to store it in a place that's got some regulation,

at least I certainly do, that's got some attestations, not people just saying things like, oh, we're going to try real hard to get an attestation on those reserves soon, or we're not going to tell you about the reserves because it's our special sauce. That to me is crazy. And so that kind of regulation that we've applied to banking needs to open up and accommodate the fintechs. And there's going to be a great convergence between fintechs and banks. And they really are just one and the same thing. We're exploring different parts of that search space right now. But the idea that you could just write some software and say, hey, I'm a fintech,

not a bank, so don't regulate me like a bank because I've given myself a different name. Not going to fly. That doesn't make too much sense, does it? Well, Marty, thank you. The banks are getting dragged into the selling today, down 3%. Appreciate it. Marty Chavez, former CFO of Goldman Sachs, which is a bank. Amazon, one of the weaker links in the S&P 500 today in the tech sector, which is overall getting hit hard. Look at Amazon down 7.6 percent. It's been an especially rough year for Amazon.

Shares down now more than 30 percent in 2022. But the stock still very expensive based on its price to earnings ratio. Our dear Drabosa here with a look at whether Amazon's best days are behind it or still ahead. Something we're asking about a lot of the tech stocks like Netflix and Facebook, but Amazon too, Deirdre. Absolutely. Are we at peak Amazon? Today's, you called it, 7.5% drop brings its year-to-date losses to more than 35%. And to put that in perspective, that's far more than the other mega caps in that trillion dollar club that we're looking at today. And that still makes it the most expensive on a PE basis by a long shot. Here you're looking at 71 versus 23, 26.

So shares, they are getting killed along with the rest of tech. But cracks in the fundamental story, they have also begun to emerge this year. You've got slowing e-commerce growth, its core overcapacity, overhiring, the biggest labor battle in the company's history. That's brewing. You've got stiffer than ever cloud competition. And today, more worries about the inflationary pressures and consumer demand on the back of those Walmart

and Target earnings. All of this happening under a still untested CEO in Andy Jassy. Now, Amazon, of course, has been here before, and it remains that go-to success story out of the dot-com crash. Then it emerged stronger, and it went on to earn a lot of money for shareholders that did stick by the company's side. Jeff Bezos may be reminding investors of that with a tweet just a few minutes ago that risky bets made amid uncertainty can pay big dividends. Here,

you're looking at this tweet. He posted a cover of Businessweek back in 2006 and says, Wall Street hated AWS back then, but it went on to generate revenue of more than $62 billion last year. We call it Amazon's profit engine. This time, though, Amazon is bigger, perhaps maybe less nimble. Wall Street, for now, though, is willing to give it the benefit of the doubt. It remains overwhelmingly positive on the stock with just one sell rating and a price target of over $1,000 where it is today, Sarah. Just thinking, you know, Amazon is just so many businesses. What would happen to an Amazon during a growth scare or a recessionary period? Because they do sell a lot of staples, right? And they've become such a mainstream part, but they also are very connected with IT spending and the web services business. So what is the thought on what to do with a stock like Amazon in a slowdown?

I think that's what investors are trying to figure out. Its core is still e-commerce. We know that that is facing more competition. We know that that overcapacity problem is weighing on that business, but they've also got advertising, which is higher margin. But if we're going into a downturn, we talked about this with Alphabet, advertising spend is going to get hit. Also streaming, streaming isn't looking

like the greatest business right now. AWS remains sort of that North star, which is why Bezos probably tweeted that out a few minutes ago, because that is what's going to most likely hold up best. Remember though, this is a different story. That that out a few minutes ago, because that is what's going to most likely hold up best. Remember, though, this is a different story. That business had a seven-year head start on the likes of Microsoft and Google.

No longer. They're becoming more and more competitive, and that growth rate is decelerating. Deirdre Bosa, Deirdre, thank you. Check out what is happening in the Dow Transportation Index today. Right now, that key economic bellwether down about 7% or so, and a lot of the names right in there down sharply. On pace for its worst day on the Dow Transports in nearly two years.

Big names, big losses. J.B. Hunt, the trucking company, down almost 9%. FedEx down almost 8%. Let's bring in Bob Besterfield, his CEO of transportation and logistics company, C.H. Robinson, another one of those big shippers in that index. Bob, question of the day, are you seeing a slowdown, something materially changing in the economic outlook? Yeah, good afternoon, Sarah. It's good to be with you today. As we look across our portfolio

of global services, we really see different trends emerging. You know, part of our business is having this great integrated service from, you know, global forwarding to having one of the largest franchises of surface transportation here domestically. Globally, we're really not seeing much of a slowdown in our business. Demand continues to be extremely strong for our ocean and air services. Domestically, in our trucking business, we have started to see the market slow a little bit there, but we still feel very confident in our ability to leverage our non-asset-based business model to emerge through this part of the cycle. You were a big problem in the Target quarter and the Walmart quarter, those increased freight costs weighing on profitability for some of the big retailers, and really we're hearing it across corporate America. What's happening on prices? Has it calmed down at all?

Well, if we look at some of the domestic benchmarks around cost of purchase transportation in the truckload sector, the encouraging news for shippers and receivers is we are starting to see pricing decline from the peaks that we experienced earlier this year. The challenge that sits in front of us, however, is really the rising and record costs of diesel fuel, which have such a huge impact to overall freight pricing. If you consider that on a year-over-year basis today, diesel fuel is up over 70% year-over-year, and to put that in practical application,

if you're gonna move a shipment from Los Angeles to the East Coast, a carrier is gonna pay close to $1,000 more today for fuel than they would in this time last year. And that's a real pressure on inflationary costs. Bob, thank you for joining us. Sorry to keep it short. We've got a 1,200-point sell-off here in the Dow, but really interesting comments, especially on inflation coming down a little bit when it comes to freight. Just want to show you what is happening in the markets. We continue to sink lower here into the close down now, 1250 on the Dow. Every Dow stock is lower. United

Healthcare is the biggest drag. Verizon has now dipped negative. It was positive for most of the day. Home Depot also taken 114 points off the Dow. Remember, they actually had a good quarter yesterday, beat on profitability and on sales. Microsoft, McDonald's, Walmart, Procter & Gamble and Apple. Those are the biggest losers in the Dow right now. The S&P 500 down about 4 percent. Let's get a closer look at the sell off. Bob Bassani here to break down the big movers at the NYC. Frank Holland is at the Nasdaq. Plenty of carnage there as well. We'll start with you, Bob. What do you see? Well, the startling thing is so-called safe sectors are not so safe anymore.

So I just want to show you some of the Dow laggards. And there are essentially consumer staples and even some consumer discretionaries. Walmart's at a new 52-week low. But I want to point out Coke's still up on the year, about 4%. But you look at some of these consumer names, Campbell Soup, Kimberly Clark, rather remarkable. Procter & Gamble, I want to point this out. You can go many down 6% today. You can go many years without seeing Procter & Gamble down 6%. That is a very low beta stock. It has very low volatility, never moves 6%. So that's a rather remarkable move to the downside.

In terms of Dow outperformers, Merck is at a new high today. And some of the pharma stocks have become the new consumer staples in the sense that they are safer names and are trying to replace the safe names that were consumer staples before. Verizon, Travelers, also not down as much, somewhat higher dividend yield for those. The key thing here is we broke through the old low, the 52-week low, which was last Thursday, 39.30. You see we are eight points below that. We'll see if we still maintain that. Again, that's a closing low. People ask me about where is their bottom.

This is very hard to figure out, but I look at the VIX here. When I see the VIX go above 35 and particularly towards 40, that's usually a short-term bottom. That happened before. I hope it happened in January, February 24th, and May 9th. And we'll see. We're not there yet, as you can see. Let's go over to Frank standing over, standing by over at the NASDAQ. Frank. All right. Thanks a lot, Bob. Well, the QQQ representing the NASDAQ 100 falling more than 4%, rivaling its worst day of the year on Cinco de Mayo. I think we all remember that crash. Mega cap tech names caught up in the sell-off, also facing some of that interest rate pressure we've been talking about all day. Some of them, including Apple, also selling on news. Apple, the biggest drag on the

index, falling after reports have reduced iPhone SE orders by 4 million. Microsoft also bowing to EU pressure to make it easier for European cloud companies to host Office and other of their products, but not really clear on a day like this how much of an impact that is. Cloud stocks, especially sensitive to that interest rate pressure falling even harder. The 10-year yield popping above 3% has really been a persistent headwind for these stocks. Also, concerns about consumer spending slowing down,

also morphing into IT spending concerns, according to analysts I talked to. Cybersecurity names among the hardest hit. Zscaler and Okta, both down 10%. Sarah, back over to you. Frank Holland. Frank, thank you. Joining us by phone now is Ben Ammons,

Medley Global Advisors, head of global macro strategy. Ben, you put out a note a few hours ago trying to help people figure out how to construct a portfolio right now that can deal with rising inflation and also slowing economic growth. How do you do that?

Hi, Sarah. Yeah, it's obviously not an easy one, but, you know, I was thinking of, you've got to look at sectors that correlate, let's say, positively with the expectation for inflation, but have not such a high correlation to growth, right? Because what we're seeing out today playing out is really all about growth. If you think of consumer discretionary stables down so much, your colleagues saying that, you know, stable stock like Procter & Gamble having their volatility, that's all I think about economic growth. So I was thinking of a portfolio of, okay, this is an energy portfolio, obviously,

that's correlated with inflation. Some more conservative technology in, say, the IBM mainframe type of stocks stocks as well as airlines or even like as a manager so we'll probably pick up some activities all this trading is happening and as you and i've talked in the previous show you know like telecom services like at&t have actually done fairly okay in an environment of higher inflation so i think a combination like that at least at the end of the day shows a positive return you know and i think it's an alternative to be completely in cash which i think you think will be your last option to take if this gets really worse.

So you still you put the airlines in there, which is which is often considered discretionary. But we are in this weird period where we're sort of out of COVID, but we're still we're still dealing with these waves of COVID. And there's a war still in Europe. You still like the airlines? Yeah, the reason I like it is because it seems that as much as airfares are really high and, you know, there's a lot of inflation, that that yet has to impact airline earnings so far. I mean, it's all been really good reporting. Now, I do predict that airlines will go through something that a target went through today, right? We will see in a few months that also their inflation will impact their bottom line. At the moment, this is the momentum of the economy on that side. The reopening economy continues.

So that's, I think, your bright light. Airline index is down today, but it's flat for the year compared to any of the other indices that we talked so much about on the show today. So Target is clearly a big spark today the stock is down 26 on top of walmart yesterday both of them having their worst day since 1987. we remember what happened during that that year what are there any portfolio moves you should be making based on what we learned from walmart and target which took everybody's surprise by surprise yeah i think i echo somewhat of of muhammad's comments earlier

i do have to embrace the idea that there is some form of stagflation developing in the economy and on that basis again you have to think about what does well with inflation goes along with inflation and what is really not working in terms of growth you avoid that i think these are the moves you have to make. Put that in a global context, too, because it's not just U.S. issue. You see the inflation in the U.K. and Europe, too, really high. You could play this also globally. I think that would be another way to do it. Ben Emmons, thanks for jumping on the phone with some of your recommendations. Appreciate it. From Medley, we're going to go straight into the closing bell market zone, commercial-free for you all hour long as we look at a more than 1100 point slide on the Dow Jones Industrial Average CNBC Senior

Markets commentator Mike Santoli here as always to break down these crucial moments of the trading day Diana Olick is also here on a rough day for housing stocks with some new data to tell us about and Luke Ventures Gene Munster on the tech sell-off we'll kick it off with the broader market stocks are under intense selling pressure into the close. The major averages are near recession lows. The Dow and the S&P now on track for their worst daily performance since June 2020. Mike, even Jim Cramer, who says, he says, this has to be one of the worst days I can recall in years, and I have been around the block. It's ugly. Absolutely. And I mean, obviously, it's because of what corners, all corners of the market, pretty much, that are getting hit and hit hard it's very illiquid tape we've been talking

about this for a little while things like s p futures have been moved on relatively low volume so it's a it's a market under some stress it's a little bit soon uh in terms of time to have a retest of the lows that we just hit last th. You know, classically, you'd want to see this kind of develop over a longer period and see if, in fact, there's any buying interest down there. The same general zone I think people have been watching, I talked about from a week and a half ago, 3,800 to 3,900 on the S&P. A lot of things seem to come together in there that would suggest a rallying point or at least an area where maybe you'd have a little bit of the selling slowdown.

But right now, you know, stuff is overshooting. We don't really have a market in the mood to look through the challenges because they're coming from both sides. But if you ask me, you know, having the retail sector absorb a lot of the freight and logistics costs that are affecting the economy rather than having it flow through to goods prices, that's not an absolute negative. But the market just can't look beyond what's right in front of it right now. But did you hear what the C.H. Robinson CEO just told us? He said that those prices are starting to come down on freight costs. And he actually said that demand is holding up very well. They see maybe a bit slower demand on truckloads, but overall not so much. To me,

that's a message of demand is still strong. And guess what? Some of these extreme inflationary pressures that are hurting profits are starting to come down. Yeah, it's fascinating because you remember a couple of months ago, was it, when we saw the freight waves report that, you know, trucking prices were coming down hard and people took hard in that. And then we get the reports from Walmart and Target for quarters that began, you know, February 1st. And we're suddenly thinking that this is a present issue. Now, them having too much inventory, having those margin challenges, having overstaffing issues, that's a problem for the valuation of those stocks.

Is it a new problem for the overall economy? That's not clear. But also, this is a market that is quick to sell. You've not been rewarded by trying to be a hero so far. There is less selling intensity today, though, in terms of overall volumes. There's a number of stocks making new lows. We'll see if that holds up. It's just the magnitude of these declines that we are seeing in some of these stocks, which is which is just shocking. You know, if you wake up, if you wake up and you're, you know, one of the dollar stores, for instance, seeing your stock going down 15 percent off Target's news. But, Mike, when I talk to people about, OK, what, what could put in a bottom, what could turn us around,

one thing I keep hearing is we need to see the estimates come down on the numbers because earnings have been broadly, I would say, a disappointment, right? We had a number of sectors where we've seen these kind of sell-offs. Have we seen analysts capitulate in any way at this point to reflect the fundamentals that the market is seeing here, which is weaker? I would say you've seen it in pockets, right? I mean, if you stripped out energy and materials from the overall S&P earnings forecast, they are trending a little bit lower for the coming quarters. So it's not as if people are oblivious. But, you know, it's not clear to me that what you actually need is for earnings forecasts to start plunging because then you kind of lose some of the

valuation support. You don't want people to be artificially optimistic about what profits are going to do. But I don't think there's one magic thing that happens. You know, the market has to find its right level in terms of valuation, in terms of, you know, people's risk appetite and also, you know, what it expects out of the Fed. We have 100 basis points of tightening coming by the end of July, almost certainly. That's good news if you thought it was going to be more, but still it's 100 basis points oblivious to whatever incremental data comes out in the meantime. And no Fed put. And every few weeks we get into this period where I feel like people are talking about, well, the Fed's not going to tolerate this much pain or this is too much or they don't want to

shock. And yet and then we have Powell come out yesterday and say the market's pricing, pricing it pretty well. No, it is. I mean, I think he means probably the bond market is priced it in pretty well. The stock market, again, you know, you're at 16 times earnings. You're not at panic levels in terms of absolute levels. We are still above the pre-pandemic highs, which was down, you know, 3,400 or something like that in the S&P. So it's, you know, you're not cutting into muscle in any significant way just yet, even though you've given up, you know, the past year's upside. It certainly feels like you are cutting into muscle a day like today and some of these days we've had. Turns out, though, not all red arrows on Wall Street today and not all red arrows in retail. TJX, parent company of TJ Maxx and Marshalls and HomeGoods, is the best performing stock right now in the S&P 500. It beat

earnings estimates and forecast improving margins. Courtney Reagan joins us. Courtney, is it executing better or is it just because it's a different business model when it comes to the supply chain? Yeah, Sarah, this one, I think you have to say it's a different business model when it comes to the supply chain? Yeah, Sarah, this one, I think you have to say it's execution. They also, of course, experienced these really high freight prices, but they said we actually planned for it. Yeah, it was higher,

220 merchandise margin basis points worth of freight, but that's what we planned for. Yes, we had higher wages, but you know what? We can figure it out. Yes, inflation is around, but hey, we've got this pricing initiative. And for the most part, it's working. They said there's no pushback on 90 plus percent of their pricing initiative and that their regular pricing, their retail price out the door on many items is still actually below

where other retailers are pricing marked down goods. So TJX is actually performing pretty well here. And they said when they looked at their comparable sales performance month by month, they actually saw it accelerate. And that trend has continued here into May. The tone on this conference call, Sarah, was just so very different from what we heard from TJX and from Walmart, even though you might look at all of them and say, hey, aren't all of these retailers considered in that discount bucket? Shouldn't all of them be beneficiaries right now in an inflationary environment? But that's just not been the case the last three days from what we've heard between the lines of the

executive commentary. Yeah, sort of an alternate universe to be on that call today. Courtney, inventory markdowns, that seemed to be a big negative point out of the Target quarter. Also, maybe Walmart. What's happening with inventories? Because they were so lean on all these supply chain issues. Just take us through what the problem here is. Yeah, exactly, Sarah. So I think a lot of it is, frankly, dislocation. I think that word sort of sums it all up. They were lean for a while because they had a backlog. So then they tried to get ahead of it, right? They placed their orders for a lot of different product, and then maybe it came in too fast or at the wrong time. But then all of a sudden, you've got these lockdowns starting again in China. So Target's inventory was up 43%. They also said customers are buying, but they're buying differently. So they're buying

in different categories. Maybe they just had too much of the wrong item at any given time. And then you look at TJX just to continue that thought, their inventory was up too of 37%. But they said on the call that their in-store inventories is exactly where they want them to be to get to a more normalized level, to get back to where they were before the pandemic started. So, again, it comes down to management. Did the supply chain work out in your favor when you had to work through these workarounds? And it didn't for Target and Walmart as much as it did for TJX this time around. What a juxtaposition, Courtney. Thank you. Courtney Riggin, look at the homebuilders,

also big underperformers today after the Commerce Department reported housing starts fell for the second month in a row in April. Building permits also declining and mortgage applications falling 12 percent last week as rates for 30-year fixed mortgages are hovering around five and a half percent. Diana Olick joins us. Diana, what a difference a day makes. Yesterday we got a big drop in builder sentiment, but home builder stocks rallied today. I mean, it's pretty negative all around, but I guess some of this weaker housing data is catching up.

Yeah, the weaker data. I called this data palooza week for housing because we got so much and we're going to get existing home sales for April tomorrow morning, which we're not expecting to be particularly good either. So what you saw yesterday was you have these home builder stocks that are so beaten down. I mean, the ITB, which

is the homebuilding ETF, is off almost 30 percent year to date. And I say year to date because year to date is when mortgage rates started their rise and really shot up in the past month. So they were so beaten that they had nowhere to go but up during a market rally yesterday. But today, with this bad data that we're seeing from the mortgage applications to the housing starts, and especially that permit data on single-family homes, permit, of course, an indicator of future construction. And seeing that come down, that's a big indicator that the builders are in for a rough road ahead, Sarah. So what are the forecasters saying, Diana, about what is ahead for housing? Because we know that

the Fed, it's in the crosshairs, right, with these higher mortgage rates, and it's going to slow down. But then there's also the supply shortages, which might keep things a little bit better than normal. So what do you hear? Well, not that great for the builders. And I keep hearing the same two words, inflection point. Housing is now as an inflection point. We know it was a darling of the pandemic. We know there was huge demand. We saw home prices up 34 percent since the start of the pandemic because they had so much demand and so little supply. Now we are starting to see more

homes come onto the market. The builders are not doing as much. They actually have a record number of homes that have been permitted but not yet started. Part of that is because of inflation. Builder costs are up 19% from a year ago. They don't want to build when their prices are so high right now. They're also concerned about delivering those homes on time. And, you know, back at the beginning of the year, D.R. Horton was actually raising its revenue forecast, very bullish on the coming year.

But now when you have 5.5% on the 30-year fix and you were at around 3% at the beginning of the year, that is going to change the picture big time for housing. It's just affordability, plain and simple. No, no. And don't fight the Fed. Diana, thank you. Mike, how much bad news is already in these housing stocks? Well, plenty of them if you just look at valuations. But that's the whole problem, because you don't buy deeply cyclical stocks when they look cheap on a PE basis, because usually the market's saying, you know, housing is is peaking. The overall activity levels probably are peaking. There's a tremendous amount of homes under construction. We talk about this a lot. And that's going to mitigate some of the supply issues.

So, you know, I don't know that it's really the epicenter from whatever wave we get down from here in the markets. I doubt there'll be the downside leader, but it does show you that there is more of a macro element to parts of this market as opposed to just, you know, what yields are doing or, you know, people paid too much for some Nasdaq stocks. Just want to show you what's happening in the market. We're down more than 4% on the S&P. We've got about seven minutes left of trading. No relief here into the close, down 1,200 right now on the Dow Jones Industrial Average and the Nasdaq getting slammed. It's down almost 5 percent. Mega cap tech names among the biggest losers today. Tesla, Amazon, Apple, Netflix. Joining us, Gene Munster, managing

partner at Loop Ventures. A total rethink of this group, Gene. They had been holding up better than some of the more speculative, unprofitable tech names and now they're just selling off pretty hard. Why do you think that is? Well, Sarah, I think it's actually a healthy dynamic related to investing in tech. I think a lot of investors that I spoke to and myself included have been waiting for some of these companies to come in. It just has been a disconnect from what we've seen with some of the small cap tech performance over the last three months versus large cap. And when it comes to investors impairing risk and buttoning

down the hatches, they're going to look to companies that they've had some gains in. And I think some of these large cap companies coming off, I've heard repeatedly that until Microsoft, Apple and Tesla break, the market is not going to be able to get back up and running again. I don't agree with that, but I think that that is what we're seeing today. Keep in mind, even with today's drawdown of 5%, we'll call it 5%, the NASDAQ is still up 28% over the past two years, and much of that has been driven by large cap tech. And so I think this actually is a very healthy piece.

It doesn't answer the question of the day, of course, Sarah, which is when will all of this end? Well, of course. But when it does. So if you're a long term investor, Gene, are you getting a real opportunity here with some of these names? And if so, which ones? So we're still 50 percent in cash and we were 70 percent in cash a month and a half ago. I wish we would have stayed at 70 percent in cash. But we believe that one of the X factors here to quickly answer the question of when is to look at the commodity pricing. That is effectively what the Fed, what Chairman Powell needs to batten down. Those

commodity prices, if you look at the seven key commodities in the U.S. oats, orange juice, natural gas, lumber, oil, those are still up 100% from December of 2019. Now, they're not going to come all the way back down, but they do play into the inflation piece. And I'm going to get to your answer against the question about what we're buying. But I will say I do want to answer the question about when does the bottom get put into this? My belief is just look no further than these commodity pricing. The beauty, we don't have to wait for a monthly CPI number. Those numbers are mark to market every minute on those future contracts. And until those come down, we're starting to see some in the last month,

but until those commodity pricing comes down, I think investors are generally going to have uneasiness, some fear about what's going to happen with inflation. Food and energy keep going up. So what are you buying, Gene? We actually bought some Amazon today. It's the first time ever that our fund has owned Amazon. We have a starter position, which is a quarter position. The quick take, the reason why we bought Amazon today is if you look at their AWS business and their advertising business, assume they continue to grow a little bit slower than they're growing right now. Their retail business right now is being priced for no

growth for the next decade based on our model. I think that's a conservative assumption. And I think that was a company that we look to add more, potentially lower here over the next few months. You also have Take-Two on there, which I noticed is, I think, is actually up today, or it was up. Some of these video, EA and Take-Two were higher. Hard to find some winners in this environment. What's the story there? It is. So Take-Two is a content play. We've owned Take-Two for a long time. It's nice to have a couple good days here. Ultimately, what's exciting about Take-Two is it's a play on the metaverse. It's a play on content. Grand Theft Auto is an iconic franchise

and it's going to be upgraded in 2025. I did not misspeak there, but that is going to be the mother of mother of all gaming upgrade cycles. And I think investors, that's why it gives us confidence to own this in the midst of all this chaos, is that one thing I've learned in doing this is that you want to own ahead of product cycles, big product cycles, and take two's got a big one coming. Speaking of, Apple's down almost 6% today, Gene. What are you doing with that stock? So I think that Apple's going to be able to generally buck this trend I mentioned before. Investors are looking for this to come down. I don't think we're going to see that.

Ultimately, it's coming down because people are taking profits, but what's important is the fundamentals. The reporting today that they're cutting iPhone production is misleading. It is a statement of fact they are cutting iPhone production. What's misleading is this is what happens

at this time of any cycle, is they typically expand the build plans going into a cycle and they contract it right after. And so I'm a believer in Apple. I think they're going to get into other markets. I think that this is a steady, I think it's a really a rock steady company and don't overthink it. I would continue to own Apple here. All right. You have been, you've been a believer for a long time. Gene Munster, thank you very much with some of your picks. Thank you. We've got two minutes to go in the trading day with the Dow down 1200 points. Mike, what do you see in the internals?

It's pretty nasty. It's pretty indiscriminate. If you look at the volume breakdown, it's more than 90 percent to the downside. Talked about the upside volume 90 percent last Friday. This kind of undoes that. It gets a little bit closer to saying maybe there's been a bit of a give up trade here. You never know when that's a moment in time, but it's part of the process. Take a look at what one time very closely linked defensive sectors, the pharmaceutical index against consumer staples year to date. They've been in the lockstep pretty much. And then you see this huge air pocket in consumer staples today. Yes, it's Costco and Walmart, but it's everything else, too. It seemed like quite a little bit of a blow up trade and a pretty wide blast zone in that area.

Volatility index, it's above 30, back to 31. Not really showing a lot of intense panic in the short term. It's not really showing that kind of stress. You could read that as a net positive because we've been here before in these index levels. Nothing so much is alien about it. On the other hand, it doesn't show you any kind of crescendo of panic, if that's what you were looking for here. So there's two ways to read it, Sarah. Well, it also speaks to what's happening today.

It's a sort of a nowhere to hide kind of day in the market, even the safest spots in the market. Mike, thank you. As we head into the bell, take a look at the Dow. It's down 1,178 points. Every Dow stock is lower. We're sort of hovering at these lows for the final hour of trade. UnitedHealthcare is the biggest drag on the Dow. The S&P 500, every sector lower,

nothing as much as consumer discretionary. That is the hardest hit sector, and that is Target down 25%. Dollar Tree down 14.5%. Tractor Supply, Dollar General, Ulta Beauty, all of these names getting hit by double digits. Growth names also selling off across the board, especially the mega cap tech.

The NASdaq is down about 4.75 percent into the close. Nasdaq down about 30 percent off the highs after today's sellout, about 29.5 percent. There goes the bell. S&P down 4 percent and the Dow closing lower, more than 1,100 points.