Closing Bell - Closing Bell: Market Meltdown and Kroger's CEO On Inflation 6/16/22

Episode Date: June 16, 2022

Stocks plunging and pushing the Dow below the 30,000 level on increasing fears the Federal Reserve's aggressive rate hikes will spark a recession. Cantor Fitzgerald's Eric Johnston says the Fed is getting aggressive too late and warns the market is not yet pricing in a recession. Bridgewater's Karen Karniol-Tambour reveals whether investors should be buying bonds and commodities to diversify away from stocks. Medley Advisors' Ben Emons says investors should raise their allocation to cash and companies with stable cash flows. And Kroger Chairman & CEO Rodney McMullen on how inflation is impacting consumer spending and whether the grocery chain owner is able to pass higher costs on to customers.

Stocks getting slammed as the post-fed rally evaporates. We are near session lows right now. The Dow's below 30,000, the S&P 500 below 37,000, and the Nasdaq is below 11,000, breaching some round numbers there. The most important hour of trading starts now. Welcome, everyone, to Closing Bell. I'm Sarah Eisen.

Take a look at where we stand in the market. Look at the Nasdaq right in the middle, down 4.5%. Big tech bearing the brunt of the pain, as we've seen lately with these big sell-offs due to higher interest rates. Recession is also a big concern today. The S&P is down 3.7%.

The Dow Jones Industrial Average down almost 3%, 853 points, just around the lows of the session, down a little more than 900 points. Look at the S&P 500 sector heat map, which tells you there's plenty of pain to go around here. Every sector is lower. It's energy that is the worst hit right now, down about 6%. Consumer discretionary also down 5.5%.

Everything tied to the economy, technology, materials, industrials, and banks. Those are among the hardest hit today. What's holding up the best there are consumer staples only down 7 tenths of 1%. You've also got some green in there like Walmart, General Mills, Hormel, Church and Dwight, Procter and Gamble and Colgate. Coming up on today's show, we will ask Bridgewater's Karen Carniel Tambor for her thoughts on the sell off and the market's shaky reaction here to the Fed's big hike. Plus, speaking of staples, Kroger delivering strong earnings this morning, beating across the board, raising its guidance. CEO Rodney McMullin will tell us how he's been able to manage through inflation, supply chain and labor headwinds and what he is seeing from the consumer. That stock is lower today, despite the beat.

Let's start with the sell off. Mike Santoli taking a look at the market fallout after the Fed's three quarters of a percentage point increase yesterday. What do you see in the dashboard? Yeah, the Fed being followed by other central banks. Obviously, big volatile moves in global yields. A lot of things getting piled on this market. Take a look at the S&P. This is a two-year chart.

You've wiped away all of the 2021 gains, actually, at this point. Actually, we're above 3,700 at the start of 2021. We're below that. Where are we headed now? There's a lot of people fixated on this thirty five hundred level, maybe into thirty four hundred. Why is that? It's not specifically clear, except it's exactly halfway between the twenty twenty lows at the covid crash and the all time highs. Right. So you went from twenty two hundred to forty eight hundred.

Halfway back is thirty five. It's also about, you know about 15 times some reduced earnings estimate. It's a 1,000-day or 200-week moving average. All kinds of reasons, whatever the reasons, the market clearly doesn't like credit spreads that are widening out and just a general risk-off tone. Mechanical, systematic liquidation is what it looks like. Take a look at the Russell 2000 going back further, going back three years. This will encapsulate the COVID crash. We're actually into that crash zone right now. It's just below the pre-COVID peak. Now, if you look at the companies in the Russell 2000 that actually have earnings,

they're basically at rock bottom valuations. If you believe the earnings, Sarah, that'll be a conversation we'll be having for a while because the market is starting to look quite reasonably valued based on earnings. But you have to believe that the earnings are somewhat going to hold up growing consensus that those estimates have to come down. Right. Especially if the economy weakens into recession. I just want to highlight what happened in oil prices today, Mike, because I think that is also causing a lot of pain right now. So we started off the day weaker in the price of oil, the losses got wiped out, and now we're actually higher, despite the fact that energy stocks are getting hammered down 6%.

The reason I bring it up, if we're going into recession, that should hurt the price of oil, right? Consumption, demand destruction. The federal government is doing everything it possibly can, meeting with the Saudis, releasing the strategic petroleum reserve, trying to crack down on and pressure refiners to ramp up production, all of it. And yet oil prices continue to go higher. Yes, that's the problem. The Fed can't do anything about that. They're obviously stubborn. It's a supply issue, perceived supply issue, a real supply issue. It's a China reopening issue. And the reason is it boils everything we're worried about down into one number, because if you're worried about inflation being stubborn and the Fed having to target headline inflation, that really means the Fed is targeting gasoline

prices. And, you know, that being the case, that's also why inflation expectations are higher. That's why they're getting more hawkish. And of course, it's also the biggest, you know, downward pressure on the consumer. And therefore, if you're worried more about recession, it also captures what you're afraid of. This is the stagflationary fear. Inflation. They are irrelevant. It'll break one way or the other, but yes. Of all this recession talk, they cannot bring the price of oil down up another two and a quarter.

We'll see. I have to say, if we're not making new highs, all of a sudden, statistically, it's not going to be as bad as you think it is. All right. You know what I mean? Because we're talking about month over month and year over year numbers. I don't know. We're still near 120 on WTI crude. People think we can go to 150. That's a problem. The Fed's biggest, thank you, Mike, stay close, Fed's biggest rate hike in nearly three decades has all of Wall Street buzzing today. Will the aggressive move push the economy into recession?

What do you do with your money? I gathered some key quotes from some people folks listen to on Wall Street, PIMCO CIO, for instance, Dan Iveson, telling me, quote, the global pandemic and unprecedented amounts of fiscal stimulus have dealt the Fed a very challenging hand. They're doing their best to engineer a soft landing, but that is becoming increasingly unlikely. Therefore, Iveson says, near term caution is warranted, especially in the most credit-sensitive areas of the market. UBS today slashing its target on the S&P 500 following the hike. Head of U.S. equities David Lefkowitz lowering his target to 3,900. He says in a downside recession scenario, though, UBS sees the S&P falling to 3,300.

Veteran market expert Art Kashin says to watch Apple and Bitcoin. He says if either breaks, it could lead to a spillout. Both are down sharply today. And Mollis Asset Management CEO Eric Felder just writing in, we commend the Fed for taking a more aggressive stance in tightening financial conditions rapidly as we believe increasing the chances of recession, while unpleasant, will be a more palatable outcome than an extended period of stagflation. We are expecting continued elevated volatility as almost all global markets pursue a rapid price discovery process. For more on the sell-off in the Fed, let's bring in Cantor Fitzgerald, Eric Johnston, and Mike Santoli still with us. Eric, you've been bearish for a

while now. I don't suppose anything changed after the Fed meeting, did it? It has not. You know, the Fed is right now in a very, very tough predicament. And if you think about what is going on right now, you know, the economy is clearly slowing down. We saw today the Philly Fed new order number was one of the lowest in the last nine years. It's only lowered during the pandemic. GDP for the first half is probably negative. And while that's going on, we just had the largest Fed hike since 1994. And I think right there, that sort of puts it all into perspective.

And I think that there is a view, my view would be in there, which is that the Fed is getting most aggressive at the time where it's almost too late as inflation is now likely going to start to come down. And while they're getting aggressive, the economy is clearly rolling over. And our view has been that the economy is going to slow very rapidly and that continues to be uh to be the situation that's being reflected in today's market where you're seeing the recession trade being being put on credit spreads are at their wides cyclicals are getting hit hard companies with high leverage that would that would be able to do very poorly in a in a recession are getting hit the hardest

so the market is today for sure putting this trade on. How far are we? How far are we to pricing a recession and what would happen to earnings in that scenario? So one of the things that happens is that as things get worse with asset prices, it tends to have a self-fulfilling effect. And so if you kind of fast forward to a market that continues to move lower, the markets start to freeze up, you can see situations where this can kind of get out of control to the downside. And you don't have any fiscal or monetary support like you've had for at least the last 12 to 15 years. And so because there's going to be no fiscal support, Republicans are likely going to take

Congress in November. And clearly, you don't have any monetary support. It's going in the opposite direction. And so certainly going to the low 3000s seems very reasonable to me. It's unlikely to be a straight line. We will get squeezes. We're going to announcements that people will take as bullish. But when you put it all together, we think earnings estimates, which haven't even started to come down, need to come down. And they're going to start coming down when we see second quarter earnings. And when that happens, even though people look at the multiple having contracted, we don't think it has priced in what is about to happen because you have to remember that the 10-year yield has gone from 50

bps to 3.3. Yes, it's really been moving down with multiple contractions with rates, not because of that estimates are going to come down, which we think they will. Mike, I feel like the bear's best argument is that, that earnings estimates have not come down and that has not been reflected. But the bull's best arguments have to do with the fact that there has already been a ton of pain. The S&P is off 25 percent from the highs. Most stocks are down more than that. We've seen evidence of panic selling. We've seen that. Have we seen forced selling? Have we seen some of the other things on the checklist that make it look like it's in the price? Getting there? Absolutely. I think today will probably be at least the fourth of the last six or seven sessions where you've had basically 90 percent of all volume to the downside.

You've gotten those those characteristics a few times. I don't think it means it stops on a dime at that point. But we're down 12 percent in a week and an hour. So to about two o'clock on Thursday, a week ago, you are forty one hundred on the S&P. It doesn't mean it can't go lower. I was actually just looking in the long bear markets started in 2000 and 2007. If you had bought the market when it went down 23 percent, it was a pretty bad experience for a couple of years. So, you know, I'm not saying the market's getting cut in half high to low, which is what happened those times. But that's what makes it tricky right here. Look, we've I do think the other bullish case is the Fed can acknowledge that financial conditions have tightened a lot. If something seizes up, they all

of a sudden can just whisper that, you know, they they see clear inflation rolling over. I don't think we're there yet. I think it's going to be a high burden of proof on that, obviously. And that's why there's a sense out there that it's a summer of waiting for these things that are not coming in the way you want. Meantime, we got a real stark reminder today of the global impact of all of this. I think the chart of the day has to go to Euro SwissSwiss franc, Euro-Swissy, because that's what caused a lot of the consternation early this morning, Eric. We're seeing a move in that currency that we have not seen in years, almost 2 percent move higher for the Swiss franc after they shocked the market and went 50 basis points following the Fed. Nobody expected a move. And now their entire monetary policy, where they've, you know, had to come in and make

sure that their currency wasn't getting too strong, goes away. They didn't call it overvalued. And now people are worried about them selling their tech stocks because they own a lot of U.S. tech stocks. So just talk about the risk here of the ripple effect of what's happening. Yeah, I think that you're seeing, you know, I think we've seen six central banks in the last 24 hours, you know, raise rates. So this is not a tightening that's clearly not just going on in the U.S., but going on globally. And, you know, outside, you know, you also have what's going on with the yen. You have the Bank of Japan trying to suppress the 10-year there at 25 bps.

And that could, you know, at some point that could break. And that will throw a big, big effect stocks too through the system that's right and so you know one of the things that happens in in bear markets is there's all these ripple effects that you don't necessarily think about in a static market but once things start to to unravel and you get moves like we've seen here in the two year and, you know, it starts to have repercussions and you can't predict. And if that's where it becomes, you know, self-fulfilling, it happens on the upside to the positive. It can happen on the downside. One of the things you mentioned earlier was around, you know, supply. I think the one thing that would be really bullish for this market is something to, and this is maybe stating the

obvious, but it's something to go on with Russia, Ukraine and the supply issue around oil. That's one of the key factors here, because if you can see oil prices come down, that's going to throw a positive ripple effect through the inflation outlook and really through markets. There's no sign of that happening. But of course, I think governments are clearly in Europe and the U.S. are becoming much more sensitive to the sell off, to the rollover in the economy. And they're much more incentivized to try to do things creative, to try to have the war come to an end or something creative around oil supply. So that's something that we're going to be looking at very closely. Eric, given that you mostly focus on equity derivatives as a first step,

short-term, tactically, this big expiration we have tomorrow, people are talking about how it was maybe amplifying some of the action this week. Is that an opportunity for where stuff's going to get kind of swept aside once we get through that expiration, have a cleaner look, or is that just wishful thinking? I think that's somewhat wishful thinking. I think the impact sort of post tomorrow's close going into next week could have a modest positive impact. But I think the bigger impact is going to be just around where overall positioning is and sentiment is, which is very depressed. So, you know, could we get a bounce and could maybe expiration be a little bit of a catalyst to sort of get the momentum to change? It's possible. I just think that, you know, if that happens, the magnitude of the rally would be pretty limited. But, you know, certainly through

conversations I'm having and through looking at a lot of the data and, you know, what's going on in the derivatives market, you know, positioning right now is extremely negative. And so you are ripe for any sort of headline that could come out to get a squeeze. And that's one of the things we've seen in other bear markets, where you get governments that try to do certain things. They make these announcements. They typically don't work out, but it can cause these quick spikes. And I wouldn't be surprised if we, you know, at some point get some of those headlines, whether it's around Saudi Arabia, Russia, Ukraine, or other things that governments are going to try to do. We saw the ECB come out today.

They're saying they're going to potentially cap spreads, things like that, which in the long term really have no positive effect and could have a negative effect, but in the short term could cause squeezes here and there. The other thing that's happened intraday is the 10-year yield has turned around. It started off higher, and now it's lower, and that hasn't given a lot of support to the market. It's market watching for lower yields, but lower yields could be a sign of the economic slowdown. We'll leave it there, Eric Johnston. Thank you for joining us. A lot to talk about today. Why is the NASDAQ in particular? Thank you. Look at the NASDAQ. It's down 4.3 percent. It's down the most of the big three

averages. 4.35 percent right now. Christina Partsenevalos here with a look at what is dragging down the Nasdaq yet again. Christina. Well, it seems like things are getting worse, but we're not at the session lows, which was 4.81. So negative 4.81. So we're a little bit better than that. The only one positive all day is AstraZeneca. You also have Kraft Heinz that trades on the Nasdaq. That's trying hard to stay in the green right now as well.

But EV maker Luc green right now as well. But EV maker Lucid right now. Lucid Motors, the worst NASDAQ performer, down over 12% now. And then you've got a mix of cloud enterprise and cybersecurity names. Those are some key laggards in the cyber ETF down, which is down about four. Yeah, over 4% right now. You can see that on your screen. And then its constituents like Cloudflare, Zscaler, Okta.

Look at that. All of those almost down 8% or more. And CyberArk as well. We also have fast-growing financial technology stocks that have been among the biggest losers in the market downturn. Take, for example, a firm that you're seeing on your screen. Of course, now it's down 10%, but on a year-to-date basis, 83% lower. Much of that drop coming from this month alone. Every constituent, though, we're talking semiconductors.

In the SMH ETF, down at least 8%. The ones you're seeing on your screen now, Qualcomm, Marvell, AMD, all down over 8%. And these are some of the biggest drags, especially the ones that aren't on your screen, Applied Material and Micron. Those stocks are down over 20% just this month alone. And for a random group of stocks, and we can just move on to the next section, this is a basket of high growth names that we saw move yesterday. That would be Peloton, Uber, Lyft, down more than 10% this week alone. And so what we saw is traders are quick to fade yesterday's post-Fed meeting rally,

especially as other major central banks that you've been talking about are turning very hawkish with their own inflation battles. So a little bit of a reversal in the past 24 hours and definitely a downward trend on the Nasdaq today. Yes, no shortage of losers. Lucid, it looks like, is the worst performer, down 12%. Thank you, Christina. Shares of Kroger are down slightly today, but outperforming the broader markets this year. The Cincinnati-based grocer reported first quarter earnings this morning, beating analysts' estimates on both earnings and revenue, also raising its full-year sales guidance,

but saying margins fell in the quarter as rising costs continued across the supply chain. With us now is Kroger Chairman and CEO Rodney McMullin. Welcome back, Rodney. Good to have you. Hi, Sarah. Thank you. What I keep reading in the analyst notes and talking to investors today, why your stock is down, they say it wasn't good enough. You're clearly doing better than most companies in this environment, but 4% comps, I guess, just didn't do the trick. Talk about what you're seeing. Well, when you look at the quarter overall, toward the end of the quarter, we continue to see progress and momentum.

We had positive household growth. We had positive growth with loyal households. All those things in our identical sales were stronger later in the quarter than they were earlier in the quarter. So, and as we talked about on our conference call, so far in the second quarter, we've continued that momentum. So we feel really good about where we are. I'm so proud of the whole team and we still continue to make progress. And one of the great things about Kroger is we've been able to be successful in every environment. And obviously in the current environment is heavy inflation and the customers are starting to behave differently. So talk us through that because last quarter you came on and you said we're starting to see a shift,

more coupons are being used. It sounds like this quarter you're seeing something even bigger happen with the consumer. Yeah, just a couple of things. If you look at like our fuel rewards program, we had over 600,000 customers that had never engaged in fuel rewards engage in the first quarter. If you look at our brand's products, they grew over 6%. And we're seeing customers in a pretty significant way be more aggressive, engaging in promotions, using our brands, and really managing how to balance their own budget. We're seeing strong growth in things that are food away from home in terms of, if you look at rotisserie chickens, things like that where it's an easy meal for somebody,

strong growth there. So customers are definitely changing their behavior. Yeah, and you said on the call the shift from branded to private labels has been, quote, aggressive. What do you mean? Well, the comment that I just made where identicals on our brands is up over 6%. That's basically about double what the national brand is, not quite.

And that's broad-based. It's all the way from our private selection to our banner brand, which would be Kroger, whichever banner it would be. So it's across the whole spectrum. What's going on with prices, Rodney? Margins were a little bit lower. Are you not able to pass on fully the cost inflation that you're dealing with? For us, we've been investing in pricing for over 15 years, and we invest based as we are able to get costs out of the business.

And this year, we'll be able to take over a billion dollars of cost, and this will be a fifth year in a row that we've been able to take over a billion dollars of cost. We take some of those savings and invest it in our associates. We take some and share it with our customers. So if you look at where we are on margins, we're exactly where we thought we would be. We continue to invest for our customer and trying to help them stretch their budgets where they can. And what about food inflation in general? We saw a surprising tick up last month. Is it still climbing? In terms of where we think it will be, if you look at the second quarter, we would expect the second quarter inflation to be pretty similar to the first quarter. As you get later in the year, we do expect it to slow down a little bit

because you're starting to cycle higher inflation from a year ago. But certainly nothing that would look like deflation. And it still continues to be out in front of us. Why? Why is that? I mean, how much is related to the war in Ukraine and how much to other factors, supply chain and stuff that the Fed can control, like demand? Yeah, I think it's all of those things. because if you look at supply chain, obviously with fuel costs, heavy increases there, wages, heavy increases there. If you look at the raw materials in terms of corn, soybeans, wheat, all of those are inflationary. And everybody is still working on their supply chain and trying to get it back to where it was before COVID. So you see continued pressure across the whole supply chain and trying to get it back to where it was before COVID. So you see continued pressure across the whole supply chain. You see continued pressure and operating costs as well. So all of

those things together, you know, obviously the Fed has its work cut out in front of it. But, you know, I think they're taking aggressive actions. But still, it will be a while based on what we're seeing. So, Rodney, you've been at Kroger, I don't know, how many years? Your entire career, right? Since you were bagging shopping bags when you were young. You've been through cycles. Since high school. You've seen—since high school, exactly. You've seen recessions. Is that what this feels like to you now or what's coming?

Well, it doesn't feel like a recession yet. It feels more in terms of people are being very cautionary. And I think it probably at this point, it can go either way, but it certainly doesn't feel like a recession because customers still have money in their bank accounts, those things, and they're saving where they can save, so they're stretching their budget where they can, but they're still splurging on items as well. When you look at our private selection, when you look at our meal kits, our home chef, all of those things, customers continue to invest there in things that are easy. Murray's Cheese is an example that continues to grow as well. So I would say cautious and being

very careful about how they spend their money. Rodney McMillan, thank you very much. It's great to get that color on the consumer. Thanks, Sarah. Which is outperforming. It's only down a percent. Homebuilder stocks getting crushed after very disappointing housing starts data and, of course, the Fed. Diana Olick with the details. Diana. Yeah, Sarah, I don't want to sound like a broken record, but the homebuilder stocks just can't get a break. Today, the issue, a huge miss on both housing starts and building permits in the May data.

Total starts fell just over 14 percent month to month, down three and a half percent year over year. The street was looking for a two percent decline, and that's the lowest level since the start of the pandemic more than two years ago. If you break out single family, which is, of course, what we're watching closely now, that was down 9% for the month. And building permits, an indicator of future construction, fell 7% for the month and were flat year-over-year. Lowest level, though, since September of 2021. That hit all the builders, as well as the home renovation names. You see the ETF for home construction, ticker symbol ITB, which includes both of those, down over 7% on the day. It is down 41% year to date. Sarah?

Diana, I asked you earlier on Squawk on the Street about pricing and what you expect there. You were saying growth of 2% would be a healthier level. How long is it going to take to get to better levels, which we know the Fed wants to get to, given we're still in a tight supply environment? Well, it seems like it's getting to it faster every single day as we see home sales pull back and we see buyer demand pull back.

But again, as you say, it's that supply and demand issue. We have prices up 20% year over year right now. That is not a healthy housing market. Healthy market, 4% to 6% annual appreciation. Could we get lower than that in this? It's possible, but we want to bring those prices back down. So as we get more supply, we are seeing much more supply come onto the market, both new listings of sellers who still want to get in at the top

and also houses sitting longer on the market, both new listings of sellers who still want to get in at the top and also houses sitting longer on the market. That is increasing the supply, which should help lower the prices a little bit. And we are hearing about homebuilders who have a lot of supply in their construction right now that's going to come to the market soon. They are starting to ease up on prices. So we should see it soon. The big question is when. Right. Certainly the Fed wants to see it. Diana, thank you. Diana Olick, you know, just when you think that the housing slowdown is priced into some of these stocks, Lennar is down 6.6 percent, now 50 percent from its highs. Absolutely. I mean, these are you want to talk about deeply cyclical businesses. You know, they basically can trade down through book value because people feel like, you know like the land value is not as worth the bucks. But what it might mean macro wise, if we assume that the housing starts have peaked, if you look at the chart, it's down sharply, obviously, from the high in April with this latest print. And you say, well, what does that mean for the forecast of recession?

In past cycles, there's a long lead time, typically, from when housing, home building peaks, and you get the official recession, like years sometimes. I mean, it peaked in like 2005. We got the recession two, three years later. The issue is this has been such a strange, compressed, spring-loaded cycle. I feel like I've said that a million times in the past two years. And you didn't really build up the consumer leverage. You didn't build up a lot of the things you would normally see.

But we ran it so hot for a short period of time. You have the inflationary spike. And so maybe all bets are off. But I do think that just home building coming off the boil and struggling for a while with very tough affordability is not in itself saying that means recession. So you're saying there could be a soft landing in housing? Or that housing itself is not going to drag everything down with it, there still is such a tremendous shortage of units that you wonder how that plays into this, too. Maybe it's just the clearing price has to go down. Though Diana said that more is coming.

Yeah, you would think. Let's get to some of the other parts of the market feeling pressure, and there are no shortage of them today. Courtney Reagan is watching retail, as always, and Frank Holland covering the sell-off in cloud stocks. Courtney, what are you focused on? Yeah, look at the XRT, Sarah. It is down more than 5% here, or I guess just it's now taking just a little bit higher, but still off about 5%. So that's worse than the broader market. Walmart, interestingly, the only retailer that is

higher literally across the board when I look at my stock screen. And of course, that is a Dow component. So it is an important one. It is often the focus when we're talking about consumers being stretched or being in an inflationary and or recessionary time. And perhaps we are looking at both of those situations right now. Dollar stores, though, also generally do play well there for investors. But many of those names are lower today. The dollar general is almost positive. We'll see what happens here as we move towards that closing bell. And I think it's also interesting to look at these department stores because for so long in the data, we had seen these sales start to turn around, even just most recently with MasterCard spending pulse newest numbers and

expectations going forward for back to school calling department stores a continued winner but macy's down about 10 here on the session and then i want to wrap up by just talking about higher end retail this higher end consumer higher end investor has been a little bit more insulated than we have seen some other areas we've seen seen LVMH and Caring really turn in strong results. Ralph Lauren doing a lot of work there at that company to sort of improve the way that its company is operating. And it's also getting some nice return there from its shoppers. But even that area is really getting crushed here today. There is just hardly anywhere to hide when it comes to retail, Sarah. If you're worried about a recession, obviously the concern is about the consumer, even though there have been very few areas that have popped up showing us genuine, real points of worry. It's more about what could happen and not

what is happening when we're looking at those indicators for the consumer. One. I see one. I see one retailer higher today. Walmart. Walmart, right? That's it. Yeah, more than a percent. And actually, Courtney, Walmart and Target have been some of the biggest worry spots when it comes to warning about fundamentals changing, which is interesting. Yes, absolutely. Of course. We know how good they are at managing logistics and managing supply chain, and their size often helps them do that. And if they were having trouble in this environment, both sort of operating their

business and figuring out what categories consumers want, then you know that that could be a worry for other players that don't have as strong as logistics teams. They don't have the ability to react to consumers or flex those different areas of the categories. And if you're in the wrong space right now, then I think the worry is even a little bit stronger. So those multi-category players typically feel like a safer bet for investors. But today, I guess it's really only Walmart. Yes. Consumer discretionary as a sector has erased all of its pandemic gains back down to February 2020 levels. Courtney, thank you. Let's get to Frank Holland now on the cloud stocks, which have also been beaten down.

And the drubbing continues today, Frank. Yeah, absolutely. Sarah, you know, cloud stocks getting hit harder than the broader market. Look at a stock like Twilio down almost 25 percent right now. Workday and Datadog also down double digits. Interesting to note that Salesforce and some other of the legacy tech names with cloud exposure, like an Oracle, a strong report earlier this week, not as much impacted. We continue to see, however, the impact of rising yields and inflation as well as the rising dollar. We showed this chart a number of times over the last few weeks. Got to show it again. You see that inverse relation between the rise of the 10-year and the performance of the WCLD ETF that represents

a lot of the biggest names in cloud computing as the yield on the 10-year and the performance of the WCLD ETF that represents a lot of the biggest names in cloud computing. As the yield on the 10-year goes up, those cloud stocks go down. Obviously, a lot of investors are seeing that their potential for future revenues and earnings being diminished by that rising interest rate right there. One area that's been seen as defensive is cyber stocks. They've been seen by a lot of analysts as a defensive play in tech, reports from cyber and other data intelligence stocks, not quite seeing the same impact from currency and inflation as other cloud names, especially overseas, where a lot of people are impacted by the stronger dollar.

CrowdStrike also reporting pretty good earnings not too long ago and also saying demand was very strong. But however, those stocks also hit harder than the broader market right now as investors really try to figure out the valuation of these companies and also their future prospects going forward again with inflation, the prospects of recession and other headwinds. Back over to you. Absolutely. Frank Holland. Frank, thank you. Mike, I mean, sorry to pick on data, dog, but what should the correct valuation be for a high growth cloud name, whether profitable or unprofitable? Because it feels like every time they get super cheap, they continue to go lower.

Well, super cheap. I mean, if you wanted to compare it to the price to sales where they got to, I mean, they're way cheaper than they were on a price to sales basis, you know, even six months ago. So I think, you know, a lot of that has been done. It's really about is this the right idea for this moment in time when you have high nominal growth in the economy? You know, the stuff that's really working is stuff that has current earnings, current cash flow.

They can share. There are basically shareholder capital return that can be done. So it's a tough spot to be in. What's interesting, too, is a lot of attention is now on the very largest Nasdaq stocks, Apple, Microsoft, because the game is how high are they still relative to their pre-pandemic peaks? You have so many parts of this market that have actually unwound that entire gain. And those are two tremendous stocks that absolutely have not. I mean, Apple in the high 120s, almost 130. It was around 80 in February of 2020. Microsoft was at about 185. So plenty of room to go to the downside. It doesn't mean they have to get there.

Their earnings are much higher. They obviously also provide safety in a tough market. But that is the situation, I think, that a lot of investors find themselves in, which is that you're not really anchoring on much of anything, you know, in terms of next quarter's earnings or anything like that. It's all about where are we relative to some various bad case scenarios, if not worst case scenarios. And maybe that's bullish in itself, Sarah, that we're now talking that way. And everybody focused on further downside. At some point, you get these washout days. Some people feel like you buy them and close your eyes. Yeah, it certainly does feel that way. I just want to show you where we are on the broad market. The Dow's down a little more than 700

points right now. At the session lows, which came just at the top of the hour, we were down more than 900 points. You've got three Dow stocks higher, Walmart, P&G, and Boeing, which tells you about some of the fears on the economic slowdown. The Nasdaq's down 4.3 percent. As Christina said, the low is down 4.8 percent. So it's still pretty painful, but off the lows. The S&P down 3.5 percent. Energy's still the hardest hit area, despite the fact that crude oil turned higher in the session, is now popping at 2 or more percent. painful, but off the lows. The S&P down 3.5%. Energy is still the hardest hit area, despite the fact that crude oil turned higher in the session, is now popping a 2 or more percent. Energy stocks down 6. Staples doing the best. The other thing that happened during the session is Treasury yields turned around. At least the 10-year and the 30-year are now lower.

There's buying of bonds, which is a maybe safe haven bid, reflecting some of the broader economic concerns. Let's bring in Karen, Karen Carniel Tambor. She's Bridgewater Portfolio Manager, Head of Sustainability. Karen, have your thoughts about the economy and the markets changed after the Fed meeting yesterday? Well, I think that the market action today represents what's been happening in people's minds, which is the realization that until now, you've basically had a lot of tightening priced in, a lot more expected Fed catching up. But actually, the sell-off in stocks and in risky assets is pretty much was just pricing in higher discount rates, higher interest rates, and basically not at all pricing in that economy

will actually reasonably slow. So if you think about a stock, as you know, it's a forward series of cash flows discounted today, only the discount had changed, only the discounting. And then today's market action actually looks like what I'd expect would happen from here, which is the realization the Fed is now going to tighten a lot. There's a lot of tightening now priced in. You now had a big contraction in stocks. Something is the economy has to start slowing from here. So now you have a day where treasury yields don't move. Stocks actually fall. That's telling you that actually the path of earnings is being discounted to change. There's actually an economic slowdown starting to be priced in. But it's maybe the first day of that move. And I think there's a long way to go with how much the economy will have to fall getting priced into the market. So you see a lot more market pain from here, even though we're already off about 25% on the S&P, about 35 almost percent on the NASDAQ.

Yeah, I would say without the Fed blinking, without the Fed saying, you know what, I'm just going to tolerate higher inflation, the amount of tightening they're going to do is going to cause a lot more economic pain than what's priced into stocks. That decline in stocks is pretty much just a reflection of higher interest rates, doesn't really have any pricing for a worse economy, for more volatile inflation, for the risk premium associated with that. So unless the Fed blinks and says, I'm going to live with higher inflation, which they might do, it is really painful to tighten into a falling economy. You're going to have to have more pain and risky assets to reflect that. So that it's so it's clear what you think about where stocks

are headed. What what about bonds, though, and if we have moved on to the pricing in of the economic slowdown from the rate hikes all being starting to be priced in. Should you buy bonds? You know, I think that the front of bonds is kind of uninteresting on the margin. Maybe I buy a touch. There's a lot of tightening priced in. It could kind of go either way. We went from a place where bonds were extremely unattractive because there was no tightening priced in to saying, look, a lot's already priced in. The Fed could go a little faster than that, but they could also blink and go a little bit slower. Long end, I still think, is a sell because you're still in a situation where all the QE money is coming out, where you just have such a liquidity hole, and there isn't that much tightening priced in past a year or so from now. And inflation's

likely to be pretty sticky past that. What about commodities? I feel like that has been one of your favorite parts, one of your favorite diversifiers in this environment with stocks and bonds not really working that well. Is that still a safe place to be with the Fed tightening so much, trying to crush demand? I think commodities are a lot less attractive than they were, you know, in recent months because commodities are a mix of inflationary pressures and growth pressures, right? You need actual growth and demand to want more of the commodities. So when you knew you were going to have just strong nominal growth, commodities are perfect because you're saying whether growth is

stronger, inflation is stronger, I want my commodities, I want my best inflation hedges. If you know you're in a stagflationary environment with growth slowing and inflation high, you know, commodities are better than some other things you can hold, but it's not as exciting. And then you really get to idiosyncratic issues around, you know, for example, what will China do in its stimulus package? They buy a lot of commodities and it depends how much they'll do in infrastructure. So it's less of a slam dunk than it was before having this much tightening in the system that's going to slow the economy. So not a fan of stocks, not too much a fan of bonds, and now less convinced on commodities. Cash? It's a really hard time to be an investor. Cash has been the

best asset this year except for oil, which obviously is pretty idiosyncratic and you don't necessarily want to bet on what the idiosyncratic moves are going to be. Because the reality is, when you have the kind of inflationary environment we're in and you need to have tightening to slow it, that basically says we have to make cash more attractive than all these other assets. And you had such a big run up in financial assets relative to the economy prior to this, you know, kind of round that there's a lot of room for financial assets to be worse than the rest of the economy for quite a while. And we're just living through the beginning of that. So very hard time to be an investor and probably the hardest time in 40 years to be the Fed, to be honest.

No, I totally agree with that and the ECB and the Bank of Japan and everybody else. So Karen, is Bridgewater officially in the recession camp now? You know, we definitely think you're going to get a significant slowing in the second half of the year, whether it'll be called a technical recession, you know, not sure, but absolutely it's going to slow. When you look at the last few months already, consumers were basically spending from doing less savings from borrowing, credit card borrowing exploded. You had household housing borrowing, and that's obviously unsustainable. You know, when you have mortgage rates just rose 3%, the fastest they've risen in decades, you know, rates are rising very quickly. A lot of consumers were invested in

things like, you know, retail popular stocks and crypto have seen their wealth fall. And so it's not a good time to continue spending off of your savings. And while the employment market's extremely strong and wage growth is strong, you've had inflation in areas like food, like oil and, you know, kind of transportation costs that you can't take those out. So actually real wage growth is negative for most people. And so all the tightening that's been in the system has to slow spending from where it's been. And whether it goes to literal recession levels and how harsh it is really depends on where the Fed blinks. If the Fed is serious about getting inflation back to its target, the economy is going to crack in a very serious way. But there's a good chance that it'll slow but not get quite

to terrible levels because the Fed will blink and say, you know, let's let this run longer. Right. So that's something you're watching, whether the Fed blinks. Anything else that would make you change your mind and say, hey, got to step in here when it comes to the market and stocks. It's just too much have been done. What would you be watching? Well, you know, I think that seeing how fast does the consumer turn, does it prove more resilient than I would sort of expect, given the fact that they're already spending down savings and already in a situation where so much tightening is coming at them. But that can be proven wrong. That's definitely a thing to watch very carefully, what the consumer sort of does. And then part of the inflation pressures

have been somewhat idiosyncratic. So you could get a surprise in geopolitical developments and whatnot that suddenly eases some of it. But I would expect that inflation is going to be a lot stickier than people expect. So any data pointing in the other direction would be very useful. Well, you guys have been warning of that for a while. Karen, thank you. Karen Carniel-Tambor, updated thoughts post-Fed from Bridgewater. We're going to go straight here into the closing bell markets, and we're commercial break free for you with a heavy sell-off here on Wall Street.

CNBC Senior Markets Commentator Mike Santoli here to break down these crucial moments of the trading day, as always. Plus, we've got Steve Kovach on big tech tumbling. Pippa Stevens on energy stocks getting crushed. We'll start off with the broader market. Stocks are plunging, but we are off the worst levels. The Dow was down 928 points at the session low. Got that in the final hour of trade. We've recovered a little bit, but boy, is it still painful.

There's the Dow. S&P down 3.5%. Mike, Nasdaq down more than 4%. Just one quote that also sticks with me today. I thought Peter Scheer, who is really smart on credit from Academy Securities, writing, the market got what it wished for, but maybe, just maybe, hiking 75 basis points into a rapidly weakening economy isn't the best idea. Whether it was the right idea or not, we're certainly feeling the fallout today. Yeah, I mean, obviously, it wasn't the optimal

decision. Nobody wanted to have to make that call, most likely. But given the circumstances, that's where we are. And I do think that that does shadow the credit market right now. Right. Even if you're talking about, oh, it's only 75 basis points off a low base credit doesn't look quite as stressed as it has, you know, a couple of times in the in the recent past. It does mean you're raising the cost of capital across the board. You have an illiquid market. You have people very unwilling to sort of step in

and be a buffer for these moves. Revlon declared Chapter 11 today. Not unexpected. This is a company that was kind of skirting that place for a while, but it doesn't help when you have that. So I agree, you have to be alert to the possibility of some kind of financial mishap out there that's caused. That being said, a lot of extremes being

registered today just in terms of the urgency of the selling, the lopsidedness. I've been saying this for a while. It's been true for a while. It's just true more so right now, given the action today. It does make you wonder if we're going to see more defaults. I mean, Revlon was always under pressure. They missed a lot of the key trends in makeup, like digital, and they just haven't grown as fast. But are we going to see more pain like this? It's also just a completely awful capital structure, and it was not run well.

So that's one situation. But I think if there's a silver lining on that front, it's that we've spent the last couple of years allowing almost every company to term out their debt. And there's not a massive amount of maturities coming due. Obviously, you want to reopen the market so people can refinance and roll over their bonds. And so I don't think it's critical, but it's definitely one of those things that people place on the screen and say, does this tell me to take more risk or less risk if you're in stocks? And it's not telling you to take more. So in addition to don't fight the Fed and don't fight the tape, which are telling you to be cautious, you have those signals. Again, at some point it becomes so bad, it's good. And it's up to everyone to decide when we might hit that point.

Yeah, we're all wondering that. Let's hit technology. Mega cap tech stocks remain under heavy pressure. Steve Kovach joins us. Steve, why is meta getting hit especially hard, reaching multi-year lows here? Yeah, Sarah, it's hitting a two-year low, actually. So it hasn't seen a price like this since back in 2020. It's down 5% now. And again, like I've been saying all week, meta is facing so many headwinds from competition with TikTok to this kind of scaling back of its ambitions to spend billions and billions and billions of dollars in the metaverse. So, yeah, it's the worst of the group here today, falling way more than 5%.

Moving on to Apple, though, it's down more than 4%. And looking back, it's lost more than a quarter of its value so far this year, Sarah, and that's $900 billion off its market cap since it hit that $3 trillion market cap high back in January. So some ugly things there. And again, what we're looking for in Apple is anything, any signs out of China that those COVID lockdowns are easing. And they are, but there are still like certain areas that are getting locked down. Then we have Microsoft off 3%. Again, foreign exchange headwinds, a big problem there. Amazon off 4%, still managing inventory in their warehouse. And then Alphabet, the best of the group, down a little over 3%.

So what are the analysts saying? Are they taking down numbers in a material way for earnings on some of these mega caps with the outlook deteriorating? So we've seen something. So for Apple, for example, Katie Huberty, who is one of the best analysts on Apple, she has thrown some caution about their services business and saying it looks like it's slowing down

and the App Store sales might not have been as good as before. But again, the story, as we've watched the sell-off among MagiCaps like all year or last several months, people still have buy ratings on a lot of these. So analysts are still long-term, you know, optimistic about most of these companies. Yeah, well, we'll see how long they can stick with that. Tesla, thank you, Steve.

Steve Kovac, Tesla is one of the weaker performers in the S&P 500 after raising prices across its EV lineup by as much as $6,000 to offset those higher raw material costs and ongoing supply chain issues, our Phil LeBeau joins us. Phil, what do we know about the Tesla price hike, and what have we seen before when they've done this? Well, this is not the first one. In fact, I think we've seen four, at least four, have been documented within the last year. And in this case,

they're talking about the long-range Model Y, which is a popular vehicle. They are raising the price about 5%, bringing it up to $65,990. Now you might be saying to yourself, well, is it just that one model? No, anything that's green these days, not just with Tesla, but across the board. Look at the price increases that J.D. Power has seen in the last year. Plug in hybrid electric vehicles. That means you power them with gas, but you can also plug them in to charge them up, 27% increase. Pure electric, 24%. Bottom line is this, Sarah. We are seeing these price increases, A, because there's far greater demand than supply,

and B, when it comes to EVs, the components, those costs have gone up so much that the automakers have to increase the cost or the price of these vehicles. Otherwise, they're going to lose even the price of these vehicles. Otherwise, they're going to lose even more money on these vehicles. What about the earnings estimates for Tesla? Have they changed lately? No, they have generally been staying in the same area. Now, they were brought down, I would say, three to four weeks ago considerably because of what's been happening in China. That really has been driving any of the action in terms of what analysts are expecting when it comes to Tesla's earnings for the second quarter. Tesla, Mike, down 9.4 percent. A lot of people look at this stock as a poster child for

the high liquidity environment that we've had just over the last, not just a few years from COVID, but really over the last decade or so. And it is starting to unwind, but not as hard as some of the other, I don't know, high growth tech stocks. How do you view Tesla? Well, it's exactly that. It's always been a barometer for, you know, risk appetite, willingness to put capital behind a very long term idea and essentially to ride momentum, too. The momentum is completely broken. This stock is by now almost been cut in half from the high. So it's certainly not really resisted the undertow of the overall market, but it just had built up such a tremendous gain that it's just, you know, left its pre-pandemic levels in the dust. And, you know, I agree with Phil. I mean, the last little

while, I mean, you've seen some trimming on the earnings estimates. The question is just all the other attendant issues with, you know, the Twitter bid by Elon Musk and the overhang of potential sales of the stock and, you know, lawsuits and whatever else you want to name are not helping in a market where, you know, there's a certain meme aspect to Tesla and those things are all been unwound. Phil, while we have you, all of your areas of coverage have the distinction of being at the very bottom of the market today. It's auto parts, equipment, automobile manufacturers, and then not too far behind the airlines getting absolutely crushed despite everything bullish that we continue to hear about travel. Well, remember, Sarah, the bullishness on travel is what's happening right now. And when did most people who were flying this summer book their tickets? Back in April, maybe in March, when people said, I got to get out, I got to fly.

People who are looking at buying tickets right now are generally speaking, they're looking for late August, going into September, even October. And the question right now is, are you willing to pay what the airlines are asking? And B, are you comfortable with your financial situation? I think that's why we've seen a slight downtick in terms of domestic airfares. And we may see fewer people flying this fall than the airlines originally expected just a couple of months ago. Yeah, and it'll be interesting to see whether the lower airfares factor into CPI, because last month it was, what, 37 percent increase over last year in terms of airfares, Phil. We've also got oil prices rising, which is not a comfortable thing for the airlines, especially if we see demand weaken. No, it is not a good setup going into the third quarter for the airlines.

They're doing great for the summer. God bless them. I think that's what they've been waiting for. They're swinging to profitability, but the fall is going to be not as robust as originally promised. Phil LeBeau, Phil, thank you. Look at some of those declines, 9, 8 percent lower right now, just today on the airlines. Speaking of oil, energy stocks are the worst performing group right now in the S&P 500, despite that turnaround and rally that we're seeing in oil prices. Pippa Stevens joins us. Pippa, why such a disconnect today? Are you hearing between oil and those

energy stocks down more than 6 percent? Yeah, as you said, the war sector today, despite that rise in oil and energy stocks, are now down about 14 percent over the last week. And, you know, oil and energy stocks often trade together, but not all the time. And energy stocks are certainly not immune to selling going on in the broader market. And we've talked about this before, but you know, it's still the only sector in the green for the year. And it hit a multi-year high last week when basically everything else was sinking. And its RSI topped 70, meaning it was in overbought territory. And given how much it's outperformed this year, it is one of the only areas where it makes sense in some cases to lock in those gains. And those gains can be

used to cover losses in other areas of the market. And I think BTIG summed up this point well, saying that energy is a vulnerable last man standing. Also quickly wanted to note that Morgan Stanley took a look at how energy equities have performed during prior recessions, finding that it has been a mixed performance and probably not surprisingly, the setup for commodities is key here. And they say that right now the backdrop remains supportive for oil, for gas, and that should ultimately continue to boost energy stocks, even despite the slowing growth fears and the recession fears. Now, there's just such extreme supply shortages. Pippa, also the Biden administration continues to intensify rhetoric against the oil companies, trying to force them to produce more and refine more. Any of these new orders have teeth?

Is that what could be behind some of the selling in the stocks? Yes, certainly a little bit of an overhang there and a headwind as traders try to assess exactly what can be done. And of course, that's the key question. What can be done? At this point, we have the Biden administration urging these companies to drill more, to refine more. The companies are saying, look, we can't. Plus, your policies have not been supportive for us. So we had a bunch of companies respond, outlining what the administration can do in terms of friendlier policy, pointing to things like leasing, opening up some of the federal lands and waters. And so there is certainly a disconnect

there between what the administration is claiming and what the oil executives are claiming, but definitely can act as a headwind here with policy uncertainty. No question about it, Pippa. Thank you. Mike, some of the names getting hit the hardest, Valero Energy down 7.6, Marathon Diamondback. So some of the refiners actually are under a lot of pressure. Feels like this group of stocks may be starting to worry about a slowdown, but I don't know, oil prices continue to remain high. Well, part of it is these are stocks. People are selling stocks. They're part of the indexes. And so there's that bit of pressure. And definitely what Pippa mentioned about that margin of outperformance

that that group has had versus the rest of the market, usually that's not something that can be sustained very long. Bear markets typically don't leave you an easy place to hide like that. But on the other hand, I think there probably is some concern that with the commodities at these levels, demand destruction is now a growing risk. And so therefore, you don't want to extrapolate the earnings and cash flows that they've had. It still looks like a correction in a very strong trend, though, for the stock. Does it mean it's been that we've seen the top for these stocks? No, I don't think so. I think it's too early to say that you have. It's a very stiff correction, but they did get, you know, just super stretched to the upside.

So at this point, I wouldn't call it over. All right. Stocks are down sharply here into the close. Let's show you what's happening right now. Low of the day was down 928 on the Dow. We're down a little more than 700 points, 800 points now, 833 right now. Ben Emmons joins us, Medley Advisors, Managing Director of Global Macro Strategy. It's felt painful pretty much all day, Ben, whether it's the hangover from the Fed, the surprise,

I would say shock announcement from the Swiss National Bank. What are you hearing? What are you seeing as far as the selling today? I think you summarized it, Sarah. It's definitely a worry about that central banks have to time a lot more than was thought. I think what the Fed yesterday revealed was such a steep path of rate hikes ahead of us, plus the ambiguity how high the Fed funds actually may have to end up. That was really clearly answered when Steve Leisman asked about that. So coming into today, getting a surprise from the Swiss Central Bank of a country that's been in deflation for so long. They, too, come off the sidelines.

Tonight, we're getting the Bank of Japan. They may not do anything, but there's focus there too of eventually getting out of that policy. So it just all adds to the uncertainty about what monetary policy is going to do from here, how high of rates to go up. And then we're in an environment of then slowing growth with sticky inflation. So I think the market embraces more and more the view, this is really a stagflationary environment. And that makes a lot of asset classes struggle, no matter what the fundamental backdrop of those asset classes is. What, if anything, works in this stagflationary environment? Yeah, you and I have talked a lot about this over the last several months.

You can see offense to an extent, although I listened to your previous conversation. The airlines clearly is the trade. Not anymore. That has, I think, faded. You've loved it. So you're giving up on it? I have taken profit. Yeah, because, you know, the fuel hedge is an issue. And that's, I think, really binding in. Plus, you do deal with airline inflation. I think consumers are picking up on. So there's going to be a saturation of demand there. But you can stay in these high cash flow generating companies, as they say. Take Cows

as the broad ETF for that. There's a lot of energy companies in there. Also a lot of technology type companies that, yes, they get affected by the market, but they're pretty stable in their balance sheet and cash flows. I think that's one way to do it. On the other hand, you're going to sit on the sidelines. You can't really engage here much until we're getting a better sense of the direction of policy. That's pretty difficult at this moment. Well, two things I just want to note. What makes today's sell-off a little different flavor-wise than what we've seen lately,

which is treasury yields are lower, so there's buying of bonds. They're working today as a safe haven, as an alternative. And the dollar's weaker. And both of those things have been part of the tightening of financial conditions and the higher interest rate story that have pressured stocks. So what does that tell you? Have we moved on to the slowdown? There's definitely a slowdown story building in treasuries. That I would concur, because if you do have to raise rates with that much, then it's going to slow down the economy. The housing data today showed

it clearly. That's where high rates are really impacting activity. So I think that that's one reason. But is it all out clear to be in treasuries? No, because until we have truly slayed inflation really down or materially down, I don't think it's an all-out buy. The dollar, I think, was affected by the Swiss central bank's surprise. I still think the dollar has a lot of upside because the Fed has to fulfill this tightening path. It cannot back away from that tightening path. So the dollar will continue to benefit from a widening interest rate difference with other countries. Yep, which hurts stocks and earnings. Ben, thank you. Ben Emmons with the dollar down 1.3 percent and the overall and earnings. Ben, thank you. Ben Emmons with the dollar down

one point three percent and the overall market getting slammed pretty much all day. Two minutes to go. Mike, what do you see in the internals right now? Yeah, it's pretty much a wipeout, Sarah. Take a look at the volume split on the New York Stock Exchange in terms of downside volume versus upside. It's well over 90 percent in declining stocks right now, as I said, like the fourth day in the last week or so that we've had that lopsided view. Eventually, that becomes super oversold, but it also tells you a ton of supply still getting liquidated. Take a look at gasoline prices, wholesale gasoline prices. This is on the exchange coming off their highs pretty sharply recently. Now, that's still an uptrend, but they peaked around 429 just about a week or so ago. And so that does tell you

maybe some relief is coming to the pump. We'll see if that continues. Not clear. The VIX up below 34 still. So we're bumping up against the highs of this recent little run. Been between the mid-20s and the mid-30s. People continue to say it has to go higher. It doesn't have to do anything, but certainly it would sort of put an exclamation point on this sort of give up type action if it did really spike from here, Sarah. Down 3.4 percent on the S&P as we head into the close right now. We've got every sector in the red. Staples hold up the best. They're down about three quarters of one percent. Energy getting hit the hardest, down about six percent. Down there with consumer discretionary, which I said wiped out all of its pandemic gains at the lowest level for that sector since February 2020. If you look

inside the S&P 500, you see what Mike is talking about, which is a sea of red. What is at the bottom? Norwegian Cruise, Royal Caribbean Carnival Cruise. So economically sensitive cruise lines, but pretty much all S&P 500 stocks are getting hit except for Newmont Corporation on gold, Walmart, Church & Dwight, and a few other staples. That's going to do it for me on another ugly day here on Wall Street. I'm closing now.