tv Closing Bell CNBC May 7, 2019 3:00pm-5:00pm EDT
is still in that small cap space. they had been outperformers. they'd been playing catch-up for a while over the past couple of weeks. we'll see if that smaum cap trade keeps the relative outperformance that's u.s.-china trade centric as well. >> we're close to a correction in the russell right now thanks for watching "power lunch. >> going to be a busy hour "closing bell's" all over it starts right now >> it is the final hour of trade for a wild day >> major sell-off in stocks today. let's have a look at the markets. down over 2% for the you nasdaq. the russell and the dow. the s&p down just short of 2% in points terms for the dow we are down 550 points. briefly about ten minutes ago we were down over 600 down 607 points at the low of the session. >> worst day for stocks since january. take a look at who's feeling the pain most. all 11 s&p 500 sectors are in the red right now. you're really seeing 2% declines
from technology, information technology, industrials, health care, materials. i mean, really sharp declines in some of the industry groups. financials, wilfred, getting beaten down 1398%. >> but you'd say the other point is it's very broad only one sector knocked down more than one full percent the vix also spiking up five or six points today alone. >> let's get right to it what's driving the sell-off? bob pisani at the nyse frank holland at the nasdaq. matty desner, portfolio manager at jpmorgan. aaron brown, pimco's performing manager and managing director. bob, first to you here on the floor. >> sara, you made a very good point. the whole market is down even companies or sectors that don't really have any direct revenue exposure or buy from china. they're all down the reason everything is down is because the prospects of tariffs, new tariffs for months on end, lowers global growth prospects in general it doesn't matter whether you're getting revenue out of china or not. take a look at some of the commodity stocks, for example. oil is down to $60
that was the lowest level since at one point march bounced a little bit companies like ensco, chesapeake, down 4%, 5% or more. they don't have direct exposure to china but it's global growth that matters right here on my right side lower. you see some of the companies that are out there that have some exposure like las vegas sands. retailers that are buying things from china and importing them, pier one is the classic example we all use also to the down side overall as well as some of the other retailers that might be importing a lot of things. you see kohl's and gap down as well but you don't need to be importing. i keep pointing out the consumer staples names that have very little revenue exposure to china. the molsons and kraft heinzes of the world. conagra, colgate 2% of their revenues from china. they are down because if you have tariff wars that
dramatically increase and go on for months you lower global growth, you lower global earnings and you lower the multiple associated with the stock market because you have lower growth and that affects virtually all multinational companies with or without exposure to china. back to you. >> bob, thanks very much for that frank holland on the nasdaq. >> the nasdaq seeing declines across all industries on pace for its fifth negative session in the past six days also trading below 8,000 for the first time since april 18th. chinese tech names under a lot of pressure as concerns grow that imports could face tariffs starting on friday we're look at netease.com down 6% jd.com down about 5% the chinese tech etf down right around 4%. back here in the u.s. under a lot of pressure. apple having the biggest negative impact on the entire index. the nasdaq 100 t
the. >> intel having the biggest negative impact out of all the chips. all the big names are in there nvidia, universal display as well as qualcomm all of them down right around 3% the nasdaq biotech etf also down right now. and gaming under pressure. wynn which does about 75% of its business in china down right around 4%. penn national gaming down about 3% if you want a bright spot you have to look hard but it's starbucks. having a really good day, hitting a 52-week high back over to you >> nonetheless down as we approach the close joining us, marty desner and aaron brown, pimco managing director very good afternoon to you both. matty, despite the doom and gloom today you remain ultimately constructive about u.s. equities. >> we are. listen, we're expecting a negotiated solution with china at some point. perhaps not friday when the
delegation gets here but we do expect some combination of purchase commitments from china and decreased tariffs from the u.s it make take a longer time frame than we expect the stronger earnings season, we expected to go into earnings season with negative earnings growth and we came out 3%, 4% positive so we're still looking at fundamental strength here which we think will draw stocks for the -- >> what happens to earnings expectations going forward if these trade uncertainties persist as well as higher tariff rates? >> if you look at the way the market is trading right now, clearly disappointment in china was not priced in. so now that uncertainty is starting to become priced in unsefrnt around the fed is also starting to become priced in given powell's comments last week about u.s. potential inflation concerns, we think the fed could be a little more hawkish here some of the concerns, the binary concerns have started to become
priced in. we're going to see more volatility here. but again we focus on fundamental strength with the consumer, with the corporate environment and still feel good about u.s. equities at this point. >> erin, you're more concerned than maddi, is that right? >> we're cautious here it's being driven by a couple of factors. sure the tough talk on tariffs definitely was the cat lits for the most recent sell-off we've seen in markets. but underwinning that we've also started to see softness emerge. stocks up until two days ago were up nearly 15%, 16% year to date in the nasdaq they're up 20% year to date we've seen a significant reversal in terms of multiples as well as price performance and when you look under the surface i think a lot that's priced in is a really strong second half of the year, really strong continuation into 2020. and we aren't really seeing the cyclical pickup in growth that i think the markets extrapolated expecting. and so for that reason we think
it's really prudent right now to take a little bit of a step back, reevaluate the price appreciation that we've seen year to date, and recognize that we're not really seeing a relift or a lift-off in terms of cyclical growth performance as i think much in the market has already priced in. >> but wasn't, erin, the whole first quarter kind of a -- the economy is looking better than where we thought it was at the end of last year and earnings are look better than where the expectations were for an earnings recession and therefore the growth picture for 2019 was shaping up to be better? >> i think the both picture is better than late december last year, absolutely but we're still nan environment where u.s. growth is falling back toward trend gdp. and we're seeing that across the globe. this is not a relevering of global growth higher rather it's a resynchronization of u.s. growth lower to the rest
of the world more back to sort of trend gdp levels. and what we've seen coming out of pmis, you look at the pmi index that was released in april we saw it tick down again. new orders continue to fall lower. by no means do we think we're heading into a recessionary environment where we have to be scared about a potential fall in gdp lower. we're also not seeing an accelerated lift-off in gdp either what we're really normalizing is a low gdp environment across developed market economies right now. and in that environment i think the optimism that was priced into the first quarter was probably overly optimistic remember, even in the u.s. first quarter gdp that came out came out really strong but about .7 of a percentage point of that was attributed to inventory, which is going to reverse as we move into the second quarter of this year. >> where are you putting cash to work if at all during the
pullback >> as i said, we like u.s. equities we also like credit here we think in this environment corporate balance sheets look relatively healthy yes there's a little more leverage than there has been in the past we like the carry that we're getting from credit. we don't think the spreads will narrow from here but certainly as we clip coupons in this environment where we don't think we're headed into a recession and corporate earnings will continue the strength that we saw in the first quarter we'll continue to put those coupons from here -- >> any sectors specifically within the market that you think are better priced? >> we like the defensive nature of the u.s if you look at the way it trades it trades a little more defensively. we like the higher beta markets of japan we're pulling back from areas like emerging markets in europe in particular with the financials that's an area we have not been constructive we continue can be disappointed with earnings there. we won't see lift-off until you get off that negative rate
>> maddi and erin, thank you very much for joining us we'll leave it there up next we'll talk to chris aleman, the chief investment officer about how he's handling market declines. he manages a portfolio of more than $220 billion. also lyft is scheduled to release its first ipo -- post-ipo earnings report after the bell we'll tell you the key metric to watch. coming up on "closing bell." dow down 547 points right now.
welcome back to "the closing bell." we have just over 45 minutes left of trade. a major sell-off here on wall street we are lower on the dow. currently by 526 points. the low was 607 points, about 30 minutes or so ago. but nonetheless still significant. 2% decline you can see every single stock in the red on the dow, bottom of the list, boeing, utx and apple
all down more than 3%. every sector of the s&p is in the red. all three of the major indices down essentially down 2% despite the sell-off today, beyond meat rallying initiated coverage with an outperform rating and target price of $81 the alternative meat industry could be worth $40 billion within a decade. beyond meat trading higher by some 8%. phenomenal run it has had since its ipo. >> it's a plant-based burger safe haven trade >> the classic >> joining us to talk about the sell-off is chris ailman, chief investment officer at the california retirement system oversees a fund of over $200 billion. chris, thank you how do you read the market action, let's say yesterday and into today with more severe reaction to the trade escalation >> well, i look at this as just kind of that choppy momentum of very old bull market so i'm taking this kind of a day
in stride. >> in terms of the recent highs that we've seen, chris, you think the celebration of hitting those highs was a little overgone because we've been sort of rangebound rather than breaking out significantly to the up side. >> well, exactly, wilf if you back up and look at this market all the way back to 2018, what you really see is a market that has gone a little bit higher than the range and lower than the range but we've roughly traded in a 12% range and the highs that we hit last week were not a lot of momentum. just barely clutching to new highs. that didn't signal a lot of strength to me, and i thought the market probably might trade back down. i would hate to see us go all the way back to 25, 50 on the s&p 500. but that could easily happen and it's okay. it's not a recession it's not a bear market just a normal kind of volatility we see in a very old economy >> chris, i guess that means you
expected some form of pullback given the ranges you just mentioned. how much more of a pullback would you want to see before you start to get confident that the next move is more meaningful to the upside and you deploy that cash back into the u.s. equity market >> well, wilfred, i'm going to be like the federal reserve. i'm going to be data dependent so it's not just how the equity market is trading but what kind of information are we getting out of the economy we're very neutral to our assist allocation right now we're not long, we're not short, we're right on the mark. and what i'm really going to watch is employment numbers, which remain strong, gdp numbers. i'm really curious to see if that number behind us in the first quarter gets lower that seemed awfully hot for the first quarter given the weather issues and all the changes going on and then the big question's going to be trade. so i think we're going to be looking for that to be stabilized, established. then we'd probably go back and maybe be a little bit long stocks but we're pretty wary in here.
because of the age of this bull market and just the stage of this economy >> so how are you positioned right now within the overall equity market? i know you have certain rules and allocation but what does the portfolio stress at the moment >> well, sara, we're going to be pretty much replicating the market at this point not long growth or value small cap looks a little undervalued relative to large caps, but we're going to stay very neutral within our asset allocation and even within the u.s. equity market we're not going to bet in any one of the particular sectors everything looks fairly valued and that's really a challenge when nothing seems to be discounted in this market. >> chris, can you trade around the china trade headlines themselves do you think it's a key factor or is it just one of many that goes into your consideration as to whether to be relatively risk on or risk off >> wilfred, i'm going to pick on the word you used, the trade we're not traders. we're investors.
so we're not "fast money." i always like to tease -- we're not going to be there on that show talking about individual trade ideas. we're going to be an investor. so for us we're not going to move specifically on that one bit of information we're going to watch it because it's very important. the u.s. largest trading partner back and forth with china, it's really critical, particularly with trade in from china, on how that goes, how it affects things like soybeans. base products that impact the middle of our country. so how this negotiation goes will affect whether we're bullish or a little bit bearish. but it won't dramatically shift our overall portfolio. but it certainly would get traders focused. they were overly optimistic last year on the china deal, and then suddenlycrushed by the tweets on the weekend and overly pessimistic today and going into this week. >> i'm trying to dissect whether you're bulb or bearish right now. you're kind of neutral
>> i am bland and neutral. i hate to say it but literally, i'm not taking a lead off the base. i'm standing right on our base, right on our asset allocation. almost every single asset class spot on our asset allocation not taking any risk in here, just staying very stable with this kind of market. it's tough to figure out it feels trend-bound and so therefore not a lot of momentum for us >> you'll come back and tell us when your new show "slow money" is ready to launch >> i would be happy to put that on if cnbc would show it but it really -- it's thinking long term. and that's the key you've got to step back and look at the forest, not these individual trees >> thank you >> we'll make some introductions, chris not that you need them chris ailman >> 40 minutes before the closing bell take a look at the dow right now. we're down 546 points. not quite at the lows. certainly a broad-based sell-off s&p 500 down about 2%.
nasdaq down more more than a quarter percent. the russell also down 2.3% all 11 sectors still in the red. concerns about a china trade deal reverberating through this market for the second day in a row. up next we'll look at what sectors could get hit the hardest by the latest trump tariff threat. >> and shares of s.a.p. sliding today. coming up an exclusive interview with the software giant's ceo about today's downturn in a couple minutes measure up? a cfa charterholder does. you've worked hard to grow your wealth. make sure you're working with a wealth manager who can grow with you. cfa charterholders have the investment expertise to unlock opportunities other advisors might not see. learn what a cfa charterholdr can do for you at therightquestion.org
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welcome back 38 minutes left of trade for what has been a big down day for the market dow's down right now 566 points or so. the low was down 603 all 30 dow stocks are in the red right now. the biggest loser is boeing. downgrade today. also got some of the china exposure names near the bottom of the list. united technologies, apple, caterpillar. but it clearly spread well beyond any companies with the china exposure with all as i mentioned 30 dow stocks down all sectors lower at the moment. weighing in on president trump's trade threat against china >> lawmakers are urging president trump to hold the line in these trade talks and what's unusual, you're hearing that from both sides of the aisle. a democrat, chuck schumer, one
of the biggest china hawks in
the senate, saying beijing has been ring tpping the u.s. off fr years. >> i believe we ought to hang tough. there ought to be no rush to sign
something that's just a photo op if we hang tough, we can really make progress with china >> you're hearing the same message also from republicans, who have been more conflicted about the president's protectionist stance joni ernst, a republican senator from iowa, made her position very clear this afternoon. >> also with china too, as they are trying to tread backwards a little bit on what they've agreed to, we want to put the pressure on china even more. we want to make sure we get this china deal done soon >> so guys, what you're hearing is that both sides want to make sure that the u.s. is seen as the winner in this fight back over to you >> ylan, was that an incrementally tough stance from schumer against china or more of what we've heard from him of late >> schumer as i said has been one most vocal critics of
china's trade policies so him coming out against this is not new but his voice just adds to the bipartisan consensus that appears to be building on capitol hill that a deal needs to be reached but that the president cannot cave to china's demands. >> i guess on the other side that's why he's scoring political points for being tough on china the market's having a bit of a tantrum and we'll see how the president tolerates that we know he looks at that as sort of a gauge of success. >> right but we also know that in the past republicans have been a little bit wary of speaking too forcefully about china and about the president's trade policy i think what you heard especially from the republicans is different and gives the president important political cover. this may be one of the issues in which he's willing to take that short-term pain because he does believe and because republicans increasingly are coming to the same conclusion that this is a long-term winner for both the party and as they think the economy. >> ylan, thank you very much for
that the dow's down 574 points at the moment china fears are weighing on the casino stocks. contessa brewer's watching those ventures hi, contessa >> wilf, they're all down right now. and pleeshl look at those with exposure in macau. wynn is off right now more than 5% today las vegas sands is also down 4 1/3. mgm resorts, which relies less on its macau revenues but still off 3% melco resorts that's hong kong-based is down 3 1/2%. and back to the regional casinos, el dorado is off as well it's mentioned as a potential buyer of caesars both of those stocks down significantly today. boyd was the big locals market in las vegas penn national gaming off as well and i wanted to mention to you the gaming technology provider scientific games it's down 8.45%. it reports earnings after the bell a big broad look there at how much all of those casinos are struggling today wilf >> contessa, thank you very much for that stocks tumbling of course after
u.s. trade officials confirm plans to increase tariffs on chinese goods from 10% to 25% on friday joining us now with which sectors could get hit hardest is keith bark grer ubs. keith, thanks for joining us >> thank you >> overall, keith, interested on your note you that think there's as much as a 20% spread in terms of the move the s&p 500 could see up or down depending on how trade as an issue is resolved. is that right? >> we saw the range, it would be the difference between the up and down so markets trading i think clearly pricing in either status quo or deal scenario where the down side of the trade war, 25% tariffs across the board on all u.s.-china trade, we saw as a pretty big hit to global growth. 45 basis points. u.s. growth and china growth where s&p earnings could take an incremental 7% hit above and
beyond the 2% that we ascribed for that step up to 25% tariffs on existing goods. >> so we're not quite there yet, right? in terms of all the chinese imports. but we are at the point where we're looking at a potential tariff rate increase on friday of 200 billion from 10% to 25%. so just remind us which stocks or sectors are exposed in that group and how prepared they are for this rate increase >> yeah. i think to your point about the range, just small shifts in assigned probability by the markets and the worry about this escalating i think is having a big impact on markets. and we're seeing that today. in terms of sectors and stocks, we're seeing technology and industrials underperforming the most today and our work shows those two sectors would be hit the hardest by tariffs and step up to 25% across the board tariffs would then hit the consumer sector,
more consumer durables and apparel. what we're seeing on the stock side interestingly enough is that u.s. stocks with the highest china sales exposure had underperformed tremendously in the second half of last year, have rerated where relative valuations are back at the highs. so we do see risks of repricing that discount in those stocks with china exposure. and i think the reporter just mentioned a number of those selling off by quite a bit today. >> yeah, we should mention we're getting back close to the session lows today the dow down 2.2%. keith, what percentage likelihood do you put on the possibility that things fully get sorted this is a temporary versus these incremental paths remain in place for a meaningful amount of time, six months or more >> our baseline is still that there's a path to a positive trade outcome. obviously, the news -- tweet over the weekend and news yesterday increases the risk of further escalation i think in the interest of both parties to come to an agreement
given where the economies are and the impact of tariffs on both sides >> and keith, just quickly, what's the best sector to heiid in at the moment >> as we see today, not many sectors to hide in we've been tilted more toward defensive growth in addition to the laggards select overweights in health care and within technology some of the more service-oriented names that are less exposed to stocks like -- to tariffs such as software and i.p. services. >> hearing on the trading desk, the tweet threats from the president came out over the weekend. yesterday we expected to see this kind of sharp reaction. the dow was down 75 points what's different today >> it's hard to tell we've seen clients more inbound questions from clients doing the work and i think today a bit
surprised at the magnitude of the move after yesterday's rally back but nothing -- seeing orderly markets on the back of these moves. but no real reason that jumps out as to why the stark difference between monday's bounce back and tuesday's slide. >> keith parker, ubs, thanks for joining us >> thank you appreciate your time >> take a moment to look at the s&p sector performance right now. you've got all 11 sectors in the red. it is a pretty broad-based sell-off as far as what's getting hit the hashedest, information technology, those chipmakers getting slammed. down 2.8%. but you've got 2% declines for groups like industrials, health care, materials, consumer discretionary, financials. it is broad and painful. let's get to bob pisani for more on the floor and what's driving this into the close. bob. >> 607 was the low on the dow. we're essentially there. let's not quibble about a few points
we have the usual suspects down. what's the usual suspects, the industrials. boeing, 15% of its revenues over in china 3m, 14%, 15% caterpillar, united technologies, a little less than that but still pretty significant. the issue that's the most important for the markets is you're seeing broad declines overall in the market. so you see consumer names that really don't have a lot of exposure like pepsi. home depot doesn't have any direct revenue exposure in china, down. walgreen's, another one that doesn't have any direct revenue exposure all down. why? because lower global growth overall from higher tariffs that may be on for months and months, lower earnings overall, and a lower multiple for the market, that doesn't matter tough direct exposure to china or you're importing stuff from china if you have any kind of global exposure at all, lower global growth is going to be affecting you, and that's why everything is down today. guys, back to you. >> bob, thank you. let's get more on the plunge in tech stocks. joining us now in a cnbc
exclusive on whether this company is feeling an impact from the trade tensions is bill mcdermott, ceo of s.a.p. bill, welcome. you know, i always like taking your temperature on the strength of the global economy. you've got such a good lens into business spending all around the world. how do you vie it right now in light of the continued uncertainty around trade >> well, thank you very much we're here with 30,000 of our closest friends in orlando, florida for our number one customer event called s.a.p. sapphire and if this event is any judge, the global economy is in really great shape. we have a million people joining us online. so right now our business is looking very strong. we're coming off a great first quarter, and we're highly optimistic about our business. >> and that i guess is helped by some structural growth winds as you were mentioning.
in terms of the cyclical outlook is it fair to say global growth has been hurt significantly by the trade war? i think also of germany. we had some more disappointing factory orders out of germany this morning and of course s.a.p. headquartered there. do you think the china trade issues is weighing significantly on global growth >> i think psychologically it's very important that we work toward a trade deal obviously between the u.s. and china and i think there's going to be some ups and downs to the negotiation but i'm optimistic that we'll get something done. in terms of our company, you know, we support the biggest businesses that support customers all over the world for example, i was with tim cook today from apple on stage talking about new innovations that we're jointly bringing to the marketplace. if companies are pulling back because things are tightening up, they need to digitally transform to do more with less if they see a growth
opportunity, they need to digitally transform to connect with that single view of their consumer so they can upsell, cross-sell, and expand globally. so we're kind of a unique asset, a rarity in the enterprise application software industry because we tend to be strong and down in up times but i seriously do not see an impact in the global economy right now for business software. and i spoke to my colleagues in other companies and they're saying the same thing. so don't be too concerned at this stage about the global economy for businesses like ours >> i like you making the case for your stock as a safe haven and we have seen that with some of the enterprise software names. when you say you don't see a slowdown in the overall business in the economy, are you talking globally or is it u.s. versus other parts of the world >> u.s. is very fast right now you know the gdp numbers just like i do. and if you look at the u.s. and
china on a gdp basis, it's still highly encouraging and europe actually has has some numbers that were better than people had expected. so if i look at the whole economy right now, and we are kind of a bellwether for large companies and how they're spending, they all need to digitally transform. there's a $1.6 trillion gap between selling customers what they expect and then actually getting their feedback and did they actually receive what they expected so we're launching a major move in experience management to close that experience gap. what we're also doing is we basically have the operational systems, the systems of record that run companies so we're giving that intelligent enterprise to businesses that -- so they can digitize and fundamentally change the experience for their customers, employees, products and brands when i think about what's the big move in the economy, it's
experience and it's operations it's x data plus o data. and that's where the money is. that's where the growth is so companies right now that overindex their investment in digitizing their services are going to win and s.a.p. is at the center of that that's probably why i'm quite optimistic about what i'm seeing i've got 14 billion in pipeline at this event in orlando, florida. so we're excited >> bill, thank you very much and great to have you on sorry to cut it short but we have to get back to the broader markets. bill mcdonagh of s.a.p traders out there -- we're down 640 points on the dow. we just hit a fresh session low. 642 points on the dow. down well over 2% for all of the major indices. let's bring in randy frederick, vice president of trading and derivatives at charles schwab. randy, what's your take on the extent of today's sell-off >> well, it was pretty interesting because yesterday we
saw what we've seen many times in the past and that is when the market dipped the dip buyers stepped in but as the day progressed today i think we got a little bit more news and we found out perhaps the differences we have with china are a little deeper than what we thought. and interestingly enough what we saw is extremely heavy call volume on the vix index. even though we saw stock in the vix, you oftentimes will see people start to play strategies that count on the vix to come back down but that's not happening and most of that volume is focused on expirations this week friday and next week's wednesday. it's all about what happens on friday with negotiations with china. >> how vulnerable is this market given the fact, randy, we're coming off record highs, super low volatility basically fourth straight up month. >> yeah. well, so until -- actually on friday we were literally sitting at all-time highs. and frankly the market has priced in a very favorable outcome and i think everyone was caught off guard with president trump's tweets on sunday night and now we realize there's a possibility that maybe they walk away from the table.
if that happens, this is an asymmetric risk. the markets priced in a favorable outcome. in that happens, we may see a couple percent to the upside but to the down side if they walk away from the table we could see a correction in very short order and i think that's what people are starting to get very worried about today >> randy, talk to me a little more about what you said there about the volumes that have driven up the vix. at the moment we're 2180 on the vix, up 6.4 points on the day. more into call volume and put volume does that mean it's less bearish than it could be >> no, if you're buying calls on the vix you're expecting the vix to go up and usually the vix is one of the top ten most active names but it's generally in the 6, 7, 8 range, maybe ninth or tenths today it's number one. not only was the vix the most active trade in the options markets, they were all calls and again, with expirations for pri and next wednesday so pretty much everyone is sort of positioning for the potential for a bad outcome on friday. hopefully that doesn't happen. but a lot of participants are
getting ready for it in case it does >> what if we don't get an outcome on friday? what if the talks just continue, the tensions continue? what about this idea that a lost of traders were telling us about yesterday that they think president trump has to make a deal because he's going into an election year and he can't handle that much of a market meltdown >> i think in the long run that's true. i think in the end president trump wants a deal with china, china wants a deal with the u.s. and i think as much as he likes to cheerlead the market it's going to go down if this doesn't happen so maybe we don't get a deal this week but i do think if that doesn't happen perhaps there's a postponement again which the market will probably take as constructive but i just think people are very worried about the very near term right now i don't think they're going to walk away from the table i think the worst case scenario is probably an extension but in the near term people are just a little bit jittery about this but i agree, in the long run we have to get a resolution because the markets are going to go down if they don't. they're going to suffer in the election that's a long time we've still got 18 months until that happens >> randy, just summarize some
other factors to us, whether it's the fed or earnings or the economy in general are your clients still upbeat about those? is it just the china trade issue that's weighing on minds today >> in general, almost all the economic data looks great. the labor market is the strongest it's been in 50 years. earnings were better than expectations for the most part we're almost 90% done with q1 earnings they've been better than expected most of the economic data while it's not quite as high as it was in q3 of last year, is just barely below that. so overall the economics look great across the board this has been the elephant in the room ever since mid last year and it remains that way. even when people sort of thought things were kaumg down we all see how sensitive the market is just based on what happened based on a few tweets sunday night. until we get thish out of the way people are going to remain jittery, especially now, because now they know that walking away from the table is a distinct possibility. we hope that doesn't happen but people are positioned for it in case it does
>> thank you shares of myelin sinking today >> mylan having their worst day since june 2000 on the back of the company's first quarter earnings report. the maker of generic drugs missed expectations and the ceo says there's not an update on the company's strategic review since last august. the miss was due to continued weakness in generic drugs as well as manufacturing issues even though mylan's bringing new products to the market, its business is eroding. stock down 22% sara, back over to you >> meg tirrell meg, thank you very much let's look at some individual market movers right now. as we look at session lows on the overall market, dow down 620. boeing is the biggest loser right now on the dow it's under pressure on a downgrade at barclays to equal weight from overweight the firm expects the recovery of the 737 max production to take a lot longer than expected it also did this survey where it asked more than 1700 people
about the boeing issues. it found that nearly half of the flyers would not fly on boeing's max aircraft for more than a year it really stood out to me because we talk about some of the pressure on boeing in terms of the legal issues and the costs that are piling up, the regulators everybody wants to know when they knew what and why they didn't expose it sooner. there's also the consumer perception impact and that's the big risk here. barclays saying that risk is bigger than they expected. >> but what's fascinating as well is any other past air disaster i felt like it maybe led tie short-term effect on people's mindset toward the airline. very rarely focused so much on the airplane and the manufacturer and the model and so many people, myself included, now check. not anymore because the max is grounded check to see which plane they're traveling on i think this story has dragged on enough that the 737 max is now known by consumers and it's going to be a difficult thing to change people's perception i think once it gets approved again that will be a key factor to change consumer mindset
but nonetheless, they're clearly up against it. and it's weighed on the stock down 4.3%. we should say as well boeing always has quite a lot of correlation with china issues. but tom specific and it's bottom of the dow highlighting the effects of both those stories. >> really a one-two punch today. we are fully commercial-free into the closing bell as we watch the market down 609 points joe terranova, "fast money" fame >> "halftime report. >> similar thing >> and mike santoli. what stands out to you in the sell-off >> not a one-day event that's for sure. clearly the market had priced out trade tensions we're now tradepricing back in trade tensions eu came out today and downgraded germany's gdp growth from 1.1 --
again from 1.1 to half a percent. that's not good. they used the word major shock when talking about these trade tensions it's problematic when you kind of define this as a binary outco outcome. that's something i have a bigger issue with i would say this is more of a hedging event for the trading community than it is as we look at our allocations toward equities and let's pare back those holdings i don't think that's the right strategy i think you have to focus on the fact that earnings have been incredibly strong. now you have corporation that's are going to have an opportunity here in the next couple of weeks to not have to worry so much about rising private sector borrowing costs and have the ability to buy back some stock at probably cheaper levels than they thought they were going to. >> my question is what exactly is priced in now hard to say exactly. but saying now that the market still expects some turn in the news on friday or do you think the market's
taking back that data? >> i hate to apply too much false precision to exactly what outcome the market is handicapping right now mostly because if i look at today's action it is so comprehensive. this is a washout. this is almost 90% of stocks down this is the software sector down 2 1/2% or 3%, which means that trade was a trigger for a general risk off move with another layer of the fed not really saying what the market wants to hear with the vice chair today also reiterating it's a lot of things we're not isolating on just exactly how is it going it tack according to trade i still think the market e. defaults to the idea some kind of trade gets done or at least we don't get newly imposed tariffs on friday. i believe further tariffs would still not really please this market >> today is the theme, sort of a confirmation of two of the market's fears inflation trends, this is what
we think and we also have lighthizer and mnuchin speaking hawkishly what was in the president's tweet >> i keep going back to why does that matter because as of friday's close people were feeling pretty good. the market was at its highs. we got the straight unemployment number we thought we'd dodged a lot of these bullets, whether it be a slowdown in the u.s. or even the fed to some degree i think that's why the market had a fair bit of pent up selling potential. and that's what we're seeing in the market right now >> sara has a great point because i think this is not so much about economic numbers that are potentially going to contract significantly because of this. this is about this quick pivot in sentiment to mike's point, last week it seemed as though we finally had the embracement of okay, earnings came out much better than we expected, not negative earnings growth but actually some positive earnings growth. and it seemed as though we had positive momentum on the basis of sentiment going into the
weekend. now we're basically extracting that in the case of 48 hours based on a presidential tweeted on sunday. it's a difficult place for investors to be in right now but you have to understand it. you have to be very thoughtful and patient. look at the credit markets the credit markets so far they're conducting themselves in a very benign way. they're trading okay i don't think that's cause to ring the alarm bells but clearly as i said when i began this, this is not going to be that one-day event. like 48 hours. china's still down significantly anymore. germany and the u.s. down about the same amount. china's down double. which again does bring back the point that perhaps the u.s. economy is more resilient in place of these threats from china. >> there's no doubt about it if that's how we decide to keep score, then you're going to win. because we're less trade dependent than china is. it's a lower data market this is the quality market in the world. the united states is multinational companies shares
morel yent stock margins higher yes, you're going to win a relative rate. but that's not necessarily the outcome we were priced for in terms of the levels of the market >> do you make any moves or do you wait how long it ticks up? >> if you have the ability to hedge, then you are hedging. you are utilizing the marketplace. to mike's point i think you're leveraging your beta exposure in the last couple weeks. i think having exposure to high beta equity names has been something you that wanted to look at very prudently and say okay, is that a place that i really want to be as the market is accelerating toward new highs? i also think mike brings up a very solid point when looking globally and you look at consumers in europe, you look at consumers in the emerging markets and you look at the u.s. consumer the u.s. consumer is not going to change their behavior based on the last 48 hours or the presidential tweet or the
possibility that these trade tensions are going to stay with us throughout 2019 into 2020 and there's a very high likelihood that even if there's a perceived deal the enforcement headlines are still going to be giving the market moments of pause like we're witnessing now into the election there has to be the enforceability component so i think the investors -- again, you have to understand that this is going to be with us for an extended period of time >> where we're seeing the weakness across the board. energy stocks have been one of the worst performing groups today. that sector now in danger of falling into bear market territory once again sitting roughly 19% off its 52-week high in late may of last year and it's been far and away the worst-performing sector over the last 12 months also notable, material stocks. meanwhile re-entering correction territory. down about 10% from recent highs in late september.
and these are companies sensitive to global growth concerns that rely on strong demand out of china. mosaic is the worst performing following that downbeat outlook earlier today. look at the other names trading today. dow du pont, linde and pbg industries for now back to you. >> dramatic day on wall street just moments away from lyft's first earnings report ever let's get the key metrics to watch. deirdre. >> what a day for its first report losses of course are expected. the key is just how large will they be? the street is expecting a loss of $1.81 per share. and while investors aren't looking for lyft to be profitable anytime soon, any hint of a path toward making money would be encouraging, especially if the company has had a very rough introduction to public markets shares are still down some 25% since its first day peak other metrics that investors will be looking for include
market share and active users. lyft and uber spending a lot of money to retain drivers and riders through incentives and discounts. we want to know is lyft spend winning them any share i'm told lyft will be issuing second quarter and full-year guidance analysts expert company to narrow losses next quarter while still growing revenues these numbers are going to be important as well. and keep in mind we do have preliminary numbers for uber's first quarter when it updated its prospectus its losses are growing while its revenue growth slowing a disappointing report from lyft could reflect badly, or the flip side, a good report could reflect well on these ride-sharing companies ointds just as they're becoming available to public market investors. gu gu guys >> we have full team coverage of the earnings after the bell. in addition to deirdre and lyft we're going to hear from ea, trip advisor and sprint. we'll break the numbers coming up joe, i'll start with you after hours earnings at this point from not the biggest
companies in the world, could they change sentiment? >> is apple or amazon going to recourt again? i don't think that's going to be the el ix ir >> and you're encouraged by what you've seen so far in earnings >> you have to be. >> low quality beats >> i don't know if i would necessarily agree with that. david does a great job i'm a fan of david and is a friend of david's. but i also think you have to give consideration to profit margins can expand in this environment where the 10-year in a 2018 averaged 2.90 you've got a 10-year that's basically below 2.50 you have atability to expand the margins. that was the concern coming into '19, was the contraction profit margin so i am optimist i can >> thanks. good luck. i know you're going o'ring the closing bell and you're going to come back. >> i'll come back.
>> thank you >> i'd say this sector is a great example of what's happening in the market today. yes those with more international ex-poeshsz are suffering a bit more but in general this is much more a sector that's affected by what does this mean overall for global growth for u.s. growth and the fed as opposed to is this individual company going to be hit hard by the china trade war. let's start with the first point. yes, internationally exposed banks suffering the most citigroup down 3%. wells fargo. the regionals, smaller caps which are focused more on the u.s. is down at least 1.8% you'll ee citigroup's overseas exposure is 20% asia, 50% or so to north america whereas wells fargo is 9% now. that's meant to be 95% exposed to the u.s citi, internationally exposed, down a bit more. but in general the sector really reacting because of what it does to outlook for yield curve let's have a look at that.
yield curve is suffering today seeing a bit more of a flattening -- they like a steeper yield curve. but if we snapshot this now one year to five years currently inverted but that's not in fact as bad as it was earlier in the year we saw one to ten-year inverted. again in fact relative to two or three months ago slightly more improved let's have a look at what they've done since earnings season snapshot of jpmorgan versus the s&p 500 since the start of april roughly when banks started reporting. and you can see jpmorgan significantly outperforming the s&p 500 over the last five or six weeks there. so overall here mike the point is it's really what it does to overall sfimt. these are big link to gdp companies and what it does to fed expectations specifically earnings in china or earnings overseas >> down 465. gained back 150 points in the last few moments see what happens in the final minutes to the close >> pretty oversold in a short
period of time pi. i don't want to make too much of these moves at this point. in fact, if anything a lot of people would want to see it close on the lows and carry over overnight if you really wanted to see a better setup for a bounce we'll see how it goes. but to the banks i agree it's kind of the sell the global, buy domestic they also were sort of cheap they weren't the high flyers going into will th element episode. when you have market volatility levels going up the can't market sensitive banks tend to as a knee-jerk reaction sell off just a bit. >> i think coming into this just a bit over the last month they've run up a little bit better than they have previously kbw's down 2% at the moment. the bank index it's a little less than the market but not -- >> you mentioned the yield curve but just in terms of the move in bonds there's nothing extreme. there's no massive flight to safety we're seeing yields come down a little bit which corresponds with the whole lower growth sell-off on wall street but again less than half a percent move in the japanese yen nothing quite severe panic you
would say with the market sell-off >> a lot of what we've seen in the past two days is just an equities positioning reset ha was pretty violent because folks have been used to the calm for a while. >> let's go to frank holland gosh, what a volatile day on wall street. frank has the biggest movers at the nasdaq frank, what are you watching >> the sell-off continues. the nasdaq now on pace for its fifth negative session in the past six days. chinese tech under a lot of pressure on those concerns that tariffs could increase on friday net ease down about 6% jd.com down just about 5%. and the roller coaster ride for chips just continues every stock in the smh etf is in the negative intel having the biggest negative impact on the nasdaq 100 out of all of them following some weaker than expected pharma earnings the nasdaq biotech etf down more than 3%. regeneron down more than 6% after a miss on earnings mylan with mixed earnings but still having its worst day since 2000 partly due to weaker than expected sales in north america.
if you are looking for a bright spot in the health care space, that would be henry schein their shares up more than 5% after better than expected earnings back to you. >> frank, thanks very much another bright spot in the relative sense is the last 15 minutes or so of this trading session because we're only currently down 477 poichbnts. that's why i said in the relative sense 37 on the dow was 650 or so. so we have improved in the last 15 minutes or so of trade which i'm sure bob pisani will tell me in a moment is important there are the four indices down 1.7 on the s&p. russell down 2%. dow down 1.8 all of them still in the red wills your less positive point utilities closest to being flat but it's still down itself and in general as we said lo throughout the session it's broad. only utilities not down more than 1% for the rest of the session. energy in that bracket as well tech, industrials, health care down more than 2%. the dow 30 as i bring in bob pisani, all of those stocks still in the red as well
boeing picks up the run-down over 3 1/2%. >> ten minutes we've been standing here and wilf noted we moved 180 its own on the dow the answer is there's no news out there. i went over to art and said everything is just lifting it's just a buy program that's kind of going through. and his quip was beware of the danger of overnight tweets just like you can send you a tweet out that's going to send the market down you can send a tweet out that's going to send the market up overnight. that's the most likely explanation. that's the one i would go with art's had some great quips in the last week. your point is very well taken. we've been emphasizing it. it's a broad decline and why? because when you were dealing with higher tariffs for as you said months on end you were dealing with the prospects of lower growth overall and then it doesn't matter if you have revenues in china or you're importing furniture from china it matters the overall markets are going to come down because economic growth is lower, earnings if you're a
multinational are going to be lower and the earnings you assign the market are going to be lower as well >> removing the likelihood of that insurance capped interest rate disappointing day oust germany as well. but definitely trade the main factor leading to that broad sale bob pisani thank you very much we're down 1.7% on the s&p 480 points on the dow. well off the session low of 650. just 15 minutes ago. but nonetheless, significant declines for all of the major indices, all of the sectors, all of the stocks on the dow that does it for the first hour of "the closing bell." sara, back to you. >> a volatile down day on wall street welcome to "closing bell." ienl sara eisen. wilfred frost rejoining me in a moment along with mike santoli, cnbc senior markets commentator. here is how we finished up that wild day on wall street. dow closing lower yee yeer 472. that was well off the lowest
points of the session. at one point last hour we were down 648 points. that was the low s&p 500 closing lower. 1.65%. again, earlier today we were down 2.4% at the lows of the session. still it was a broad-based sell-off every dow stock did close lower. boeing biggest loser united technologies and am also doing pretty poorly. as far as the s&p sectors all closing in the red technology information technology, that is. industrials and health care the worst-performing sectors in the s&p. the nasdaq composite closing down just below 2% the russell 2000 just at 2%. worst day for the nasdaq and the s&p since march 22nd worst day for the dow since back in january we are on earnings watch this hour lyft, trip advisor, electronic arts, sprint and more all set to report any minute. we've got full team coverage of those reports. we'll bring you the numbers as soon as they cross
all over this sell-off mike, what's your take on the fact we didn't close at the lows but still got a pretty broad sell-off >> i guess a faint buy the dip reaction it was pretty dramatic brought us back to about 1:00 levels three hours of selling in the interim was reversed toward the end the market got pretty oversold on a very short-term basis the vix went above 20, closed below 20 it seems as if i think people are saying we don't really know if 2 1/2% decline over two days pretty much priced in whatever uncertainty we're immediately worried about. i don't naezly think we can say gee, that was it, we're past all of this. we're still going to be in suspense about trade on friday some of the leading stocks like fang, like software, got pulled into the selling vortex a little bit today. got to see if they find their footing or not >> let's dive more into today's major sell-off bob pisani joins me with some of the movers he's watching >> that was a lot of fun 180 points in ten minutes or so. as art cashen said, beware
overnight tweets market can go up on an overnight tweet as well as down on an overnight tweet. much heavier volume today, much heavier volatility 20 on the vix. 16 or so here. let's just take a look at some of the usual suspect boeing, they get about 15% of their revenues over china down about 4% you see that, 357, that's the lowest price for boeing since the middle of january. look at that volume there, 9.4 million shares that is twice the normal volume that we see. other sectors affected, we talked a lot about the retailers and how they're impacted here's gaap. here of course gap big importer of a lot of chinese goods over there. that was down throughout the day. other ones, pier one, best buy, electronic importer from china kohl's as well also to the down side. then there are companies that have very significant exposure to china semiconductors, micron for example. 60% of micron's revenues are in china. that stock's been under pressure notably down again today along with all of the other big semiconductor stocks
a lot of companies, 50% of their revenues out of china in the semiconductor area very tough day for the transports overall they had earnings below expectation and they specifically said international air freight business was challenged due to lower export volumes ou volume out of china. i wanted to point out the companies that are not so exposed to china that were all still down today here's home depot. what kind of revenue exposure to d do they have to china? down 2 1/2%. you saw this with many, many companies that don't have any obvious big direct revenue exposures. pepsi, walgreen's, colgate all were down roughly 1 1/2% to 2% and the point about all of this, if you take a look here, about why the markets are worried. higher tariffs for months on end mean lower global growth in general. it doesn't matter whether you're importing from china or you have revenue exposure in china.
that means lower global earnings and it means a lower multiple for the market and that's why everything came down today guys, back to you. >> joining us to talk more about the market today and what to do next is courtney gibson, luke capital president. kourtney, how worried are you about these trade talks with china later this week? and what are you doing with your positions? >> it's very interesting i've said for a very long time that this is the catalyst. what happens, what's coming out of d.c. is going to really make our break what could be a market that could create a slow meltup. the economy is doing better. you can't debate that at this point. consumer sentiment is at all-time highs still then you have this wonderful tweet that comes out and what does it do it throws uncertainty into this marketplace. but i found very interesting today, though, at loop capital on our desk was that we didn't see a whole lot of movement. we cover institutional investors from a trading perspective, and we did not see a lot of
movement even if you look at the volumes on the new york going into the close, before i popped on the channel here we were down almost 25% versus yesterday in volume on the new york, which leads me to believe it's not the institutional investors that were really driving this catastrophe ha we saw today in the market they did probably, however, come in on the close, some of the larger index funds and comp managers to pick up on some of this carnage >> mike, what's your take on the point kourtney made, that perhaps this was overdone by retail investors and some institutional investors? hard to say but either way important where we picked up at the end of the session >> e. are mains to be seen where it's overdone. i do think the selling was very orderly and mechanical most of the day. it was kind of like a 2% across the board haircut. so it didn't seem like panic why would it be pan snik we're 2 1/2% off all-time highs. this is just a knick yes, is it a concern the s&p was not able to get escape
velocities off the highs from last des september maybe that might turn out to be a concern. but right now i don't think it's thatch of a shock and i think on a net basis it's probably a good thing somebody came in and decided to do? buying at the close. nothing is to me decisive about the short term it seems like the market might be just a little bit less stable than it was last week. >> we're going to talk so much more about the broader markets and the bill segoff we saw but let's just interrupt that discussion because we have lyft numbers for the first time as a public company >> digging lu thethrough these r a beat on the top line unclear on the bottom line revenue of $779 million. better than the $739 million that is double from last year. lif lyft is keeping that up very fast pace of growth. justed eps of negative $9.02 unclear if it's equivalent to the con sesus of $1.81 per
share. adjusted ebidta loss this came in at $216 million that is flat from a year ago keep in mind for all of 2018 it was 9$944 million lyft issuing guidance in terms of in adjusted ebidta, not eps mind you where wall street usually has its estimates. negative 280 to 270 million dollars for the second quarter and guiding pull-year net adjusted loss of 1.8 to -- that is substantially bigger than last year's number which was $144 million suggesting of course it should come as no surprise to anyone that lyft is still investing, it's still spending to get more growth in terms of revenue guidance that is better than the street was expecting here we have an apples to ams comparison 800 to $810 million is a range shares popped at the beginning they were up more than 5%. they've really come down from there. now they're trading higher by less than 3% perhaps as investors digest this first quarter and figure out what those flat losses this quarter
mean versus last year but also what they're projecting for the year ahead and i think that's going to be really key, guys, especially as we look forward to uber >> it's all over the place the stock was up it was down. it's now up a little bit deirdre, thank you let's bring in head of research at manhattan venture partners, airlift shareholder who we've spoken to many times for reaction joe terranova also back sharing the party with us. >> you rang the bell >> we did. that's a lot of fun. >> have you done that before >> never done that >> 95% revenue growth with some questions about profitability. we always knew this was right where investors were going to go with this. >> i think it's a fantastic quarter right off the gate that's what we wanted to see revenues are growing, which is very important ebidta and net loss, that was expected i think they can control that down the road. they're investing like deirdre
said overall very good quarter. i want to see what active riders were and revenue per rider i don't know if they'll disclose that but if they can come up, i'm sure it was higher than before so i think that's good 37. >> well, the active riders was 20.5 million the forecast i had was for 19.7. >> up 46%. >> forecast was up 40% year over year that was a little better than expected you just mentioned the loss they made was expected. but this is a much bigger loss than forecast. so how many quarters can you stomach of those losses? >> quite a few quarters. at least till 2022 based on my numbers. it's a land grab situation they're going all out. they have a big competitor coming out this week so i think they need to be out there with full guns blazing
>> can i ask you, 1.9 billion in spending in the quarter? it's up from 643 million a year prior. is that something we're going see consistently overt coming quarter? >> the revenues went up too quite a bit. so i think in terms of percentage of revenues i have to see how much that is but i'm sure it's pretty reasonable that was within the expected ran range. it's not very unreasonable there. they are spending like i said. down the road what we are expecting is the driver incentives get more targeted, much better, they get more utilization from the drivers and the rider incentives get better, much better. so i think overall they're going to rationalize their operations but right now they need to grow the top line, which is what they're doing, which is a good story right here >> are you tempted to take part in the ipo >> well, i think uber is also a good company, but we are not we are staying true to lyft because we like their defined patch to profitability we like their pure play strategy so i think that's why we invested here.
but uber is a good play too. it's a global play it's a proxy for the global ride sharing business pretty much so i think they will do their best and they will have their own set of investors but right now i think lyft is on track. >> you seem skeptical about these lyft numbers >> i'm skeptical i think i'd be more inclined respectfully to invest in uber and i'd like to hear the earnings before i actually invest in a lot of these ipos. i think that's important i also think the placement, and i know mike, you've watched this closely, but the placement of these two as industrial names is intriguing i think they would have been better off being sleeved into what they probably is, which is more of technology companies >> i think size matters in the long run so i think uber will do well but lyft is more targeted. if you want profitability, if you want a lean and profitable company you'll get it faster with lyft rather than uber >> you're talking about the spending numbers
to what degree can on a short-term basis this company buy revenue? they have to make a good showing in the first three months out of the gate uber's on the way. you can spread the money around and goose ridership, can't you >> yeah. how can they grow their revenues >> direct marketing, subsidizing drivers, getting drivers out there. >> they will get out there but you know the market is still untapped there's a huge market out there. less than 3% penetration and it's growing the addressable market is growing every year so they have a long way to go. they will do everything to get out there. they have enough room to grow their top line i think that's what they'll do >> their spending went up 63% offering rider discounts and the like san tosh, thank you. more earnings out. electronic arts numbers are hitting the tape eric chemi with those reports. >> if you look at ea stock it's been up about 17% this year and then the stock again popping a good 3% after the earnings on very solid earnings. you can see the beat on the top line numbers they're also giving out very
strong guidance for the rest of the fiscal year. as we all know, e sports that's been taking off. video games are becoming a big part of the culture and ea as the biggest video game company out there is really taking advantage of that. so that stock as you can see a big revenue beat for sure. the earnings right now we don't have comparable numbers because of some adjustments. we won't focus on that right now. bay very strong report for ea. back to you guys >> thanks very much for that other earnings out from trip advisor. seema mody's got the details >> trip advisor beating on it bottom line. 36 cents adjusted. that is five cents above analysts' expectations but it's the miss on revenue that seems to be concerning the street $376 million in the first quarter. analysts were estimating 387 and if you break out where it's seeing revenue growth, hotels medium platform, 254 million looking at just hotels analysts were expecting 291. looking at experiences and dining, 80 million is also weaker than expected
it still represents growth of nearly 30% year over year. but important to know that its non-hotel revenue last quarter saw growth of 38% year over year it is seeing a slowdown in that component where it has been trying to put more money to work experiences, which includes tours and activities cooking classes, you name it that has really been a hot trend within the travel sector and it's certainly helped trip advisor's earnings in past quarters stock though currently down 7% sara, back to you. >> all right, seema, thank you very much. we'll keep an eye on those after-hours movers talking about the overall market, which had its worst day, the dow, since january worst day for the s&p since march. how on edge is this market going to be heading into those trade talks on friday? what's the expectation >> first of all, it tells you something that a day like this down less than 2% is the worst day we've had in four months because it has been this kind of calm pretty much ratcheting up of stock prices.
that means to me you're due for a little best a gut check if that's all this is yes, i do think we're going to stay on edge i just think due to the very fact the market is no longer going up like clockwork is in itself a reason for people to say maybe the character of the market has changed we don't know that necessarily but we're going to refocus on trade. and you're going to refocus on i guess the potential that a lot of the things you thought were going right for a few months maybe had some challenges or hurdles. >> i just think the investors -- i don't want to use the complacency but the degree of expectation had gotten so high based on the performance we've seen in this quarter, i think it's right to kind of temper that expectation and whether it be may, june, into the next earnings season if we have to kind of deal with a sideways market or sideways to lower market i think you'll take that as an investor i think that's part of the overall marketplace. i don't think it's necessarily bad. at today's lows we were back to
the end of the first quarter levels, which was the end of the best first quarter since 1998. we'd have to go down another 5% or 6% to go down to the end of january levels which was the end of the best january since 1987 in other words, you're kind of eating into some relatively extraordinary gains admittedly off our low base >> what's the most important macro factor for stocks? is it the fed or is it trade >> it's trade. it's trade i mean, our fed, whether you like jerome powell or not, whether you think he pivoted, whatever you think, they've sid that they're going to remain data dependent i know everyone's tired of hearing that phrase and ha turn, but they are trying to signal at least to the market you're not waking up on a sunday morning or sunday afternoon and reading a tweet that will take our market down that night several hundred points so i think the number one thing right now outside of the market itself and earnings and how well the economy's actually doing are these trade concerns, and it's
not just trade concerns per se you have other geopolitical issues with venezuela. you have issues in iran. you have issues potentially in korea. so the macro picture also poses some substantial we'll call them whammies into the marketplace that are causing some of this volatility, that are causing the market to be uncertain and that is the number one concern and the number one thing you don't like to see in the market, is uncertainty and we're seeing that right now. hence why you're seeing volatility rising the way you're seeing, currently with the vix up 20-ish right now. >> can i just bring up iran quickly, mike and joe, because that was certainly out there but it's interesting that oil prices slid today i wonder if the sort of slower -- >> saudi arabia indicated, though, that they will be putting more supply out onto the market i think there's two separate issues there there's the fundamental supply-demand issue and there's what kourtney is speaking, to which she's correctly
identifying a macro environment that feels as inflamed as it has felt in the 2 1/2 years of president trump's administration it's venezuela it's iran. it's the trade tensions. and even to a certain extent i think it has an impact on north korea. now, north korea probably doesn't have a market impact but it does have a sentiment impact. there is this geopolitical flare-up that's been presented that right now feels as strong as it's been >> quo >> kourtney gibson, thank you. >> thank you so much good to see you all as always. >> you too earnings on sprint courtney reagan has the results. >> here for sprint's fourth quarter, we have a gaap loss of 53 cents that's not going to be comparable to estimates. but we have a beat on revenue of 3.44 billion the street was looking for $2.81 billion. net wireless subscribers also down 8,000 that's one metric to note.
and sprint shares after hours here are up just about 1%. back over to you >> kourtney, thank you we'll keep an eye on that one as well the other after hours movers still ahead stocks tanking on more china trade fears coming up, "mad money's" jim cramer tells us whether he thinks there's more selling to come from this market. >> later former treasury secretary larry summers tells us whether president trump's new tariff threats against china coned up backfiring and hurting the economy. and as we head to break let's have a look at the biggest percentage losers in the s&p 500 today. we're back in a couple of minutes. this is not a bed... it's a revolution in sleep. the sleep number 360 smart bed, from $999...
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stocks getting slammed today. our frank holland joins us now with the action at the nasdaq. hi, frank. >> good afternoon, sara. some of these stocks on the nasdaq 100 were seeing some turnaround in after hours trading but before they closed we saw a sell-off across all industries the tech heavy industry seeing its fifth close -- apple having its worst day since january 3rd. the phone maker and other fang names all in the red
again, though, making some turnaround in after hours trades just to give you a sense of how bad it was 98 of the stocks in the nasdaq 100 finishing in the negatives. chips also continuing their roller coaster road the etf smh finishing down 2%. and nvidia shares down making it the worst performer out of all the chips. but intel and universal having a bad day. just bad day overall for the nasdaq but had some gmts g. moments for just a few stocks paychecks krintas and starbucks hitting 52-week highs before closing lower. henry schein the best performer in the nasdaq 100 after better than expected earnings back over to you >> okay frank thanks very much for that joerks at this point what do you feel is priced into stocks like apple for the rest of this week and trade talks? is it already expecting we don't get progress on friday >> i don't think i could say with any degree of confidence i have that answer what i can say is this is going to stay with us.
it's prudent at this point and to mike's point how far off the highs are we really? there's still time to be actionable to look at an equity portfolio and say what's my beta exposure is the single most important thing at this moment i believe. look at the beta exposure. do you have those hyper tech high beta momentum type of names? if you have concern about that then you pare back your beta exposure, you look at names that have less. starbucks traded well today. mcdonald's traded well disney traded well today walmart traded well today. those may not be the momentum names we've enjoyed the upper trajectory over the last three months but given your question and the environment we're in maybe that's the right allocation to have and still having the allocation to equities >> defensive >> i don't know if i'd call them defensive.
>> walmart, mcdonald's you mentioned. >> i don't know that i'd call starbucks and mcdonald's defensive -- >> disney probably isn't defensive but it's quality it's quality you're not riding the lip of the wave but in terms of expecting a lot of growth. i do keep coming back to software selling off facebook's not down 2.2% because of china it's down because people had to sell big obvious stuff because they're reducing risk levels that kind of activity, all else being equal, is not negative because it shows you peep people were just kind of stepping back, let's wait and see, it's not handicapping a particular outcome on trade >> software has been the resiliency it's been where the capex has been because it's asset light in this economy right now that's what rolled over in q4. and you're finally seeing it roll over a little bit now but that's probably the first area of opportunity. >> it's a strong up trend. it's probably the way to go. >> we have some ceo comments on
the tariff wars. and they're from the pillorus ceo. morgan brennan has them. >> i would say some of the bluntest, most pressing comments we've gotten from a ceo of a manufacturer to date regarding these tariffs on chinese imports and whether they go up to 25% at the end of the week. this is polaris ceo chairman scott wine i just spoke to him on the phone just a short while ago and what he told me was first of all polaris's supply chain, a significant portion of it is based in china they import quite a bit of their components from that country for final assembly here in the u.s we said it's 25% downright catastrophic in terms of impact on the company and employees, adding that through no fault of our own, meaning polaris, really basically due to government policies, 1/3 of the company's net income could go away and that ultimately if this is not resolved polaris would have no choice but to move production to mexico where the company does have a monterrey facility this would essentially be
forcing, wine told me, to push jobs outside of the u.s. just for a little bit of background here, polaris, which makes snowmobiles, atvs, motorcycles, did invest 150 million tods build that new final assembly plant in huntsville at the same time they did have a competitor that built one in mexico. and the way wine explained it to me is their competitors who have production in these other companies aren't paying tariffs and polaris is so they take this very seriously and much like harley-davidson, they have been impacted by tariffs on a number of different fronts and they are seeking exemptions from these tariffs from the u.s. government but in the meantime really coming out in full force to talk about what this impact would be. stock's down 3% today. >> morgan, thank you very much for that some strong comments we should say as well he's made strong comments before but this certainly the strongest -- >> this industry in particular has gotten hit hard. >> up next here on "the closing bell" is this trade-related sell-off a buying opportunity or
a sign the rally may be running out of steam we'll discuss. >> plus "mad money's" jim cramer weighing in on the market meltdown whether he's worried about a riefd for stocks from here and as we head to break here's a w toy.onhee biggest drags t doda boeing by far the biggest loser, down almost 4% will it feel like the wheend of a journey?p working, or the beginning of something even better? when you prepare for retirement with pacific life, you can create a lifelong income... so you have the freedom to keep doing whatever is most meaningful to you.
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dow down 1.8 s&p down 1.6 dow down 470 points. the low of the session was 644, which was about 15 to 20 minutes before the close so a rally into the close did flatten the close, only down 1.8% on the dow. let's get more on that massive sell-off and where the market is heading next joined by "mad money's" jim cramer jim, as always, great to see you wp what do you make of the selling today? >> i think people recognize that the president is willing to sacrifice some companies on the altar of a greater good in order to be able to make it so that the chinese are not going to be able to let's just say do all the belt and road initiative, also challenge our own hegemony worldwide. these are the big issues, wilf and sara it's not just soybeans and it's not just machine parts and i think that the president recognizes and feels with a 3.6% unemployment and 3.2% gdp when can we take them on if not now
>> i know you've been supportive of that view, jim, and also just on the market action you've been warning i think -- >> i've been so negative i mean, this weekend people are saying jim, i never heard you this negative. >> process time, right the question is how long did this go? >> i'm sorry i didn't mean to interrupt i think what's happening is we've got two touch points and they could be a one-two pun punch. had to if the uber deal fails, if it's like what happened to lyft, and the president continues to tweet it's going to happen at 12:01 a.m. on friday, we've got to get past this maybe it's going to take till monday but if the president has a nice tweet and says you know what, i'm going to put it off for a couple months, then we can rally. but we've got to get through this week, and that's why i wanted people to raise cash. i know this week a lot of people came and said jim, you are so bearish, you're so negative. i said no, i hate this week. i've been saying this week is going to be a problem for two months and here it is and wow, it's a problem.
>> and jim, if people want to raise cash, do they do it across their whole portfolio or pick some individual china-exposed stocks because there was some odd movement starbucks one of the relative outperformers and they've got a significant play in china. >> yeah, that was interesting because their chief competitor is actually raising money. i don't know, wilf, i wanted people to take profits down 2% as it goes down 2% you're going to have to start looking for things soon. remember, you're a tweet away from a rout. which is kind of amazing but one tweet and you're going to have to say you know what, why did i sell after being down 2%, 3% i'd want to watch it now the time to take something off the table aggressively was yesterday or earlier this morning. but now i've got to wait and see just because i feel like the president watches the dow just like you and i >> sector specific, jim. any groups to be more cautious of giving a ratcheting up of trade tensions as you say, goldman sachs
warning on hard-line retail stocks they're next in line -- >> yeah, i was in touch with a bunch of retailers today and they all have the same problem they all import a lot of stuff from china so that group could be trouble but then again it is domestic. so i mean, if it goes down it's got a good yield, there's something i'd actually want to buy because i don't think the worries are -- i think the worries are somewhat overblown but i listened to polaris ceo and i know scott and that was earth-shaking that he said that. that's not what you want to hear i do feel that there are a lot of areas in health care that are going to come back in vogue and the consumer product goods stories, i don't know, they held up pretty well would you want pepsico at 118? it's not going to get there. >> we'll see what happens. jim, thank you we'll be watching the show tonight. >> what do you mean? i have more to say >> i was teasing your show 6:00 p.m you have more to say >> i want to be in for a dollar. let's go there for a second. wait a second. >> okay, you want to do quick reaction on lyft earnings --
>> i thought -- that's not cuervo that's corvo electronic arts was good i thought that would be bad. papa john's is good. i thought that would be bad. that's not bad let's contain this to a, b, c. to apple, to boeing, and to cat. because that's what the president's looking at i actually know that isn't that crazy >> jim, isn't it fair to say tonight's earnings aren't going to change the sentiment from today? >> but you've got to keep your eye on everything, right lyft wasn't a complete sxand ute disaster we saw it's entirely possible that they do uber right, that morgan stanley does a great job. there's things now we'll look at down 2% after being down 1% that make me want to say listen, maybe we don't have to be so precipitous but we do need to see something that says that the uber deal's going to work or that the president's less hard line and i don't think we're going to get the latter but we could get the former i'm sorry i took more time >> thank you >> can you handle i took more time >> we love having you on the show
jim cramer, watch him tonight, "mad money," 6:00 p.m., looking forward to his advice after this big sell-off let's get more now joining us is richard bernstein, ceo of richard bernstein advisers, a cnbc contributor and also on the cnbc newsline is russ costrich, performance manager at blackrock global allocation fund. thank you both for joining us. russ, what are you guys saying at blackrock about today's selling? >> i think people came into this week pretty optimistic there was going to be a deal they were comfortable about the fed and central banks. they were encouraged by the gdp numbers. and there was a very bullish narrative. and obviously this weekend's tweets in addition to the comments yesterday from the white house changed that narrative. so now you're going to have? volatility as people discount either a prolonged negotiation or a greater possibility this deal's not going to happen our own view is the deal's likely to happen, it may not come as quickly and cleanly as people would like but at the end of the day you may have a deal
although you may have a lot more volatility in the interim. >> richard, what's your take on the size of the sell-off today >> it's obviously big will because i think there's a number of things going on here. i think it's easy to say that it's related to tweets and we could tweet again and everything will be fine but that misses the point. what we're entering into the marketplace here is more uncertainty in a backdrop of slowing profits growth i know everybody's saying this quarter was great. but profits are slowing. they're going to slow through the rest of this year. the last thing a ceo wants is more uncertainty coupled with slowing profits growth and that's the big hurdle. that's the elephant in the room right now is that combination. rather than trying to comfort ceos in a bad situation we're making things worse. and that's why you're seeing the big sell-off >> how do we recalibrate expectations for global growth, wes? we were just starting to think that china was turning a corner, that the stimulus was actually
working. and then you've got this eu forecast for germany down to half a percent growth and worries about china again. >> global growth is slowing. people understood that coming into the year. i do think there was some optimism around the chinese stimulus and part of that is sort of a knee-jerk reaction to the impact that had in 2008, it had in 2016 the composition and the magnitude of the chinese stimulus is different this this time so my own view is not that it doesn't matter but you're talking more about stabilizing growth rather than reaccelerating growth. the good news is the u.s. economy is not in a bad position we're unlikely to sustain the pace we've seen over the past call it nine to twelve months, but we're probably going to decelerate toward trend. not some of the more dire scenarios people are talking about back in december but make no mistake, the global economy is decelerating. >> russ, richard bernstein, russ
koesterich, thank you, both weighing in on the sell-off. up next we'll have much more on what to do with the market plus former treasury secretary larry summers will be here to tell us whether escalating trade fears will end up hurting the u.s. and the global economy. >> and as we head to break here's a look at o aerurft hours earnings movers. we're back in a couple minutes what do you see? we see breakthrough medicines getting to patients in record time. we see harnessing natural gas unleashing the promise of clean energy. we see engineers simulating the future to improve today. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility. emerson. consider it solved.
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welcome back to "the closing bell." a reminder how we closed on wall street significantly lower by 473 points on the dow down 1.8% albeit off the lows of the session a little rebound in the final half hour of trade or so we had been down 644 points on the dow. s&p down 1.6%. nasdaq and russell both down 2%. all the stocks on the dow, all of the sectors on the s&p were lower. meanwhile it's been a busy afterhours session for earnings. lifrkt lyft, ea and sprint all beating on revenue but none of their bottom line results were comparable to estimates. however, trip advisor did beat profit expectations and missed on the top line. president trump has moved the market several times now with his tweets. mike santoli at the telestrator today to look at the volatility index since president trump was
elected. >> yes set against the s&p 500, sara. this is what, just over 2 1/2 years' worth of the market plus the volatility index here at the bottom. that green line, horizontally is drawn at the 20 level. so you see for most of that year and a half, that real glorious, very steady rally we had in 2017 all through here, volatility stayed very, very tame this was that spike last january and february that was a volatility shock. and a couple things i would observe. we nosed back above 20 here for the first time since the kind of mini bear market of the fourth quarter right there. it sort of says that maybe it's a warning sign that we remain in a little bit more of a choppy environment or maybe entering another choppy environment and does refute the idea that a lost folks talk about this, that maybe we were in for another 2017 type year a lot of sector rotation a lot of very steady and low drama gains. doesn't seem to be the case. one other thing i'd mention is this is the top in january of
2018 not a lot of net progress but a lot of moving around it seems like late cycle type action it doesn't mean like the markets capped out but it does show you there's been a lot of churn within that phase after you had this really great run-up that cull minlted rig culminated right after the tax cut was passed >> it seems as though to mike's point since january of 2018 the market's gone to a lot of different places and it's ultimately ended up back in the same place so i think today we approached 20 in the vix once again it settled slightly below that but i think the jump we're seeing in the vix right now in the introduction of backwardation, which means the front month is priced more than the second or third month, i think that's consistent with that thesis that this is going to kind of stick around with us fire little bit longer i think it is. i think again it alerts the investor that there's a
possibility that the duration of this might not be as short as prior incidents were and what we've grown accustomed to the last couple of years. >> okay. joe, thanks. mike, thanks as always still to come former treasury secretary larry summers tells us what's at stake for the economy if president trump continues on this trade war path. woman: my reputation was trashed online,
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listen to your mom, knuckleheads. hand em over. hand what over? video games, whatever you got. let's go. you can watch videos of people playing video games in the morning. is that everything? i can see who's online. i'm gonna sweep the sofa fort. well, look what i found. take control of your wifi with xfinity xfi. let's roll! now that's simple, easy, awesome. xfinity xfi gives you the speed, coverage and control you need. manage your wifi network from anywhere when you download the xfi app today. welcome back a look at today's s&p losers there were no shortage of them mylan pharmaceuticals at the bottom of the list down 24% on earnings had some other biotechs in there as well. really it was a mix. all sectors in the s&p 500 ended the day lower. information technology the hardest hit. >> overall stocks of course sinking after u.s. trade officials confirmed plans to
raise tariffs on chinese goods later this week. joining us now on what these escalated trade tensions mean for the broader economy by phone is former treasury secretary larry summers. mr. secretary, thanks for joining us how important -- >> glad to be with you >> -- given that we've gone through this whole process that the deal at the end of it is the right one? >> i don't think the deal's likely to be the right one i think there's a lot of focus on the cosmetics of the bilateral deficit. i think we're trying to -- instead of trying to mobilize the world together to work to address china's many problems we're launching trade attacks on virtually every part of the world and therefore in a sense strengthening china's position so i'm not very optimistic about where this is going to -- where this is going to lead.
and we're obviously seeing the very substantial uncertainty here finding their way into the market and we see this each time the president time the president moi ways that is designed to disrupt the negotiations so i am concerned about what this will mean for the large number of u.s. firms that depend on inputs for chinese sorts. >> are you surprised that thus far, secretary summers, that the impact hasn't been as feared i mean, the u.s. economy printing a three handle in the quarter and coming off a good year of growth despite the fact that we did see tariffs from a number of countries and also including on china >> the first quarter number was
stronger than i probably would have expected, but i think that all the experiences that the tariffs and the like are gradually corrosive to the economy rather than the kind of thing that causes a sudden slowdown so i'm not hugely surprised that in an economy as large as ours these tariffs haven't yet had major consequences i would certainly be quite surprised if growth didn't slow this year particularly given the fiscal stimulus that was present before and working through the economy of the increases in rates that the fed engineered during 2018. so i certainly expect it to slow
during the first quarter >> larry, former secretary summers, when you see the way that say german growth has significantly slowed down in the face of the global macro environment and the trade wars, whatever you want to put it down to has downgraded the growth to 0.5% today is it not impressive in the way that the u.s. has not slowed down in light of the same threats of the global environment? >> it is impressive and it's a tribute to the underlying strength of u.s. companies, a tribute to their substantial competitiveness and yes, we put some extra sugar in the mix with the tax cuts, but those produce the one time increase and they're not likely to produce a
continuing, permanent increase in the break, so my bet is that the economy will slow from here and i think the risks of recession some time in the next few years remains substantial, and one thing we know is that market breaks and recessions don't happen when everybody is worrying about them. they happen when people were worrying about them and then they sort of throw in the towel on their worries because of some good times so my sense is it's still right to be quite cautious >> secretary summers, thank you for weighing in on the trade front today. >> thank you bye-bye. >> bye-bye up next, lyft gearing up for its first earnings call as a public company. what we will be listening for straight ahead >> plus more on the other stocks hiving on earnings ts afternoon and what to watch for tomorrow feel that?
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day since march on continued fears and tensions over president trump's threat to raise the tariff rate by friday on china's imports s&p 500 closing lower by 1.65% and the dow lower by 473 points and that was off the worst levels of the session. at one point toward the close the dow was down as much as 648 points. >> let's check in on the headlines making news after hours. lyft shares have been volatile after reporting a revenue beat reporting a 46% year over year jump the riders are down 2% at the moment and the focus there on a widening profit loss overall even if revenue and writers were strong and the match group, and the company beat wall street estimates on the top and bottom line up 6%. >> also shares of papa john's higher after posting better than expected earnings and revenue growth up 3.5% after hours. joe and mike it's been fun having you
what will you be watching tomorrow >> thank you for having me first and foremost i'll be looking at the european market and see what comes in overnight and that will be important and i would say no overreaction to anything right now that's the prudent strategy and just let things evolve and play out. >> mike, we've been debating how much of this was trade and i guess the fact that the week to day, china was down and it was flat today or slightly higher and it does point to the other factors that weighed on the u.s. market as the session went on. no way to doubt the trade and the exclagz ahead of this friday deadline was the tricker and it definitely reset sentiment and got people thinking about the potential downside and how things might not turn out well, but the way that the broad market sold off today and it was so mechanical and people were stepping back and reducing equity exposures and this action in the volatility index and the volatility futures, it does show you that the market is bracing for storminess it doesn't mean it's always
correct, but it does mean that the ground underneath the market's feet is slippier. >> what will you be looking at the lyft conference call and very strong revenue growth and big losses >> the spending. i understand earnings are growing, but i don't like the spending is approaching the levels that are uncomfortable. >> how hard is it for uber to ipo or is it locked in >> i do think it's interesting i do think the deal gets off because it is a bellwether in this entire fast-growing area and the public investors don't have access to, but how it trades is probably going to be interesting and i do think how the market absorbs it and treats the stock once it's out and free to trade will be a sentiment and a risk appetite. >> does this lyft reaction and the fact that it's down 25% now from the ipo >> it might inform the pricing of uber and the willingness tor
toefrn have a pop. >> everyone is in beyond meat? >> are you in beyond meat? >> it went up today in a down market. >> pleasure to have you with us. thanks very much for joining us here on set. a wild day in the markets. that does it for "closing bell". >> "fast money" picks up the coverage right now "fast money" starts right now with a major market sell-off the trade war fears grip wall street and the white house gets rid toe increase tariffs every index down today with the tech-heavy nasdaq getting hit the worst down 2%. are the stakes of the trade war with china get higher and higher what do you do now pete >> you can tell by the elevation of the vix and we're up about 30% and add another