Manufacturing data this morning. Weve got full Team Coverage of todays selloff bob pisani is covering the markets reaction to that weak manufacturing data Bertha Coombs is watching the movers at the nasdaq Rick Santelli is looking at todays action in the bond market lets check in, though, where we stand. We are down 281, the low of the session on the dow was down 347. A slight improvement in the last 30 or 40 minutes or so but a significant fall from where we opened up 129 points or so lets check in with steve grasso from Stuart Frankel whos joining for the full hour. Steve, what is this . Recession fears again or is it justified to see this slippage you know, its funny, you know, im tempted to just jump onboard and say its all recession fears. And then you have the first day of the month and then you have impeachment. And then you have trade. But definitely, this is recession fears, but i wouldnt read into it as much as Everyone Wants to you have the first day of the trading month, theres a lot of different rotation things at work energy, materials, industrials are the three worstperforming sectors theyre all down more than 2 . All cyclical. Cyclical manufacturing. It makes sense should you be buying some of the nonmanufacturing sectors today . I think you have to wait until the Market Action clears just a bit, but i know theres a train of thought that you want to buy those cyclicalbased companies that have been beaten up already, to deep, deep, deep valuation discounts. Well, we have a lot more with steve coming up. But lets get over to bob pisani now for a closer look at whats driving todays drop it was a big miss on september manufacturing. I think thats a problem for the markets. The s p moved in a 50point range lower since the ism report came out at 10 00 a. M. Eastern time that is a huge outside reaction, and partly responsible for the size of the miss, was just the amount of the miss, but despite all the turmoil around global trade and a weaker economy, the other big problem is where the market is. The s p is still 3 from historic highs so you put those two together, you got a problem. So this dropped cyclicals like industrials, materials, energy, and bank stocks, they fell as the bond yields dropped. We know manufacturing is weak globally, but will it impact u. S. Consumer spending thats holding up the Global Economy . Thats whats got people talking. This jobs report friday now becomes very important keep an eye on defensive consumer stocks, that have had risen dramatically this year small group, home depot, starbucks, mcdomdnalcdonalds, all weaker today bob, thanks very much lets get to the nasdaq. Also kicking off the Fourth Quarter with a big four. Bertha coombs is having a look for us there reporter the nasdaq biotech sector, part of the reason why the sector falling back into bear market, falling 20 from its high just one year ago, with no lows in both large and smallcap names. Meantime, in large cap tech, apple today has been extending gains after jpmorgan raised its iphone estimates yesterday, but were not seeing any followthrough on yesterdays rallies when it comes to chip or other subsectors the nasdaqs best performer today, its in consumer names, ulta with its biggest gains since last christmas the director disclosing he bought 330,000 shares. Bear in mind, both those stocks are in bear market, well deep into bear market, morgan bertha, thank you the bond market has also seen some big moves today its been a volatile day following developments in japan and of course that weak ism manufacturing number here in the u. S. Lets send it over to Rick Santelli our look at todays bond report. Rick well, thank you you know, whether it was a Government Pension Investment Fund in japan or the bank of japan, both arent buying as many japanese government bonds so the futures dropped, the biggest drop in three and a half years. Look at a oneweek chart of jgb tenyear yields. You can see theyre on the rise. Ism, weakest since june of 09, and finally, an intraday of twoyear notes, down seven basis points huge range when you see the curve steepening, as it has done today, with rates dropping, thats usually not good Economic News wilf, back to you. Rick, thanks very much for that now the dow swinging more than 50 points in todays session joining us to break down the volatility, art cashin from ubs. Art, good to see you whats your take on how volatile this is. At the lows of the day, we wiped out all of q3s gains. Yeah, weve i dont want to be too fltechnical here, but weve had four days in a row, inside positive rotation and outside negative rotation. Then an inside positive and right now a negative outside that tells me that the market is building up a real head of steam here and when it breaks out, its going to be more than just a few pun points in which direction . We dont know yet . Were not entirely sure trade is where were concerned that when they came today and broke below 26. 6, that it might begin to spiral. We didnt get a trap door selloff in fact, we spent a great deal of the afternoon trading between 26580 and 26650. Its been a narrow band. Were testing that low as long as we stay within that, the bulls have some hope if you break down below the earlier lows, we could have a big problem. Yeah, grasso, to that point, youve got the s p on pace to close below the 50day the dow is in danger of falling below the 50day how much of this is technical from your perspective. Were about 30 handles lower than that now. So if you look at the recent highs, or alltime highs, then you look at the august lows, you bounce back from there, 2979 is your First Support so breaking that is a bear setup Going Forward so im not happy about it. But i dont think we are doomed, unless we start to break down, as art said, below another 20 handles lower from here. Then im going to start to get very concerned off yields for broad sentiment indices levels japan had an absolutely dreadful government auction and that has sent yields ticking up all around the world and we would probably be higher in yields, except with that dreadful number that we got in the ism. So things are changing i would keep my eye on yields. I personal think that yield are probably going to go lower here. The pileup on the repos may be a little deeper than people think. Im sorry to jump in, but what does that really mean when you start to look at powell being back in play when you start to see his whats negative for the market is actually positive when the powell angle comes back into play unless you think were heading to a recession thats driven by trade and affecting manufacturing. But if its driven by trade but its driven by trade. If youre a short seller, do you want to get in front of that Freight Train with possible headlines coming out in the next 10, 11, 12 days, or so even if its less negative, theyre still going to be negative compared to the environment were in just now. Art, the fact that october has been the most volatile month of the year, how does that play into this . I think the first couple of weeks probably look like they will be volatile but remember one other thing, and that is, octobers notorious for forming bottoms. And many of the great bottoms weve had come in the month of october. So i would be very wary of the first two weeks. And then see what we can build as we start to go out of the month. Steve, in terms of Sector Performance at the moment, as we said earlier, the cyclical ones at the bottom, that includes the likes of financials, even though thats not so linked to manufacturing. Is that an opportunity it should be. At face value, it should be. The problem is ask him about the banks the problem is that the xlf to me, if you look on a longterm chart, theres an extreme double top going back to the financial crisis its almost down to the penny. I need to see a breakout of that 31 range in the xlf to really prove the point. Because if you go back there, no one knows better than you, you had less regulation back then, and you had high leverage. You had 301 leverage. We have less regulation now, but not to the level we had back then, and were never going back to 301 leverage, correct . So why would it be a rosy scenario for the banks arthur, just quickly, were off the lows as we stand, down 260 on the dow what are you kind of expecting for the final 50 minutes of trade. Do you think we retest those intraday lows . I think you might what i want to watch is that band that i discussed before if they can cut the loss and rally back above 26650, that will be at least a moral triumph for the bulls. And, you know, theyll say, okay, we escaped without a trap door selloff and that was very good volumes today volume today, hard to compare, because you had the end of quarter, which helps swell the volume a little bit at the close. You had nearly 2 billion to sell on balance late yesterday, so i would watch, i think the market is going to be looking offshore, particularly at japan and what happens in europe tomorrow arthur, as always, thanks very much for joining us great to see you still to come here on closing bell, recent ipos getting hit hard in todays selloff, and some of silicon valleys top venture capitalists are holding a meeting. And well dive into the announcement from Charles Schwab today thats sending the Online Brokers tumbling take a look at those stocks right there. Stay with us closing bell will be right back welcome back weve got 47 minutes left to go after starting the day up triple digits, the dow is currently down 299 points lets get a check on some individual market movers, though mall owners are getting hit today after forever 21 announced that its filing for chapter 11 bankruptcy the average forever 21 store spans 40,000 square feet, some are even larger, larger than 100,000 square feet, which is the size of a Traditional Department store analysts say filling those spaces could be a burden on the malls. You see that right there with names like simon down about 2 and shares of spice maker mccormick on pace for its best day since june 2018 after reporting earnings this morning. That stock is up about 6. 5 . The company cited Strong Demand for products in both the u. S. And china. Sales in asia pacific were up 11 year over year as well and you can see those shares are bucking the trend in the Broader Market today were down 300 points on the dow, with 45 minutes left of trade. Lets get over to mike santoli for todays market dashboard hi, mike hey, wilf heres what weve got ahead. A new wild card has been played by one of the big brokerage players. And hitandrun, one big style trade in the market has gotten hit, but now its still running a little bit playing in shadows a little look at the macro here based on todays data and whether, in fact, we are seeing the shadows of a downturn ahead. And a highleverage situation. Corporations really taking advantage of an easy debt market first, to this news today about Charles Schwab deciding to go to zero commissions on most trades for customers, following Interactive Brokers in an effort last week. Heres a timeline going back more than 20 years to 1997 its the progression of standard commissions at Charles Schwab. Of course, Charles Schwab, a pioneering discount brokerage from the mid70s but this was a trade, 80 around 1997 for a live broker or by phone. 2999, went to a big deal in 1998, set the standard and you can see the stairstep down, weve got this deceleration recently all the way towards zero clearly, the market saying the rest of the industry might have to get there so i do want to look at the breakdown of revenue for schwab. Its actually not very leveraged to trading commissions this is commissions are in there. That 6. 8 of estimated 2019 revenue. Thats split there you can see net interest, its kind of a bank on the back end thats the biggest chunk and Asset Management fees are also a huge and important area thats why schwab can afford to do this. And finally, look at the stocks of the Online Brokers, compared to the s p 500 over the last couple of years. Theyve now pretty much all overperformed. As of today, the market saying, look, this is going to be tougher for these guys, some more than others i would point out, this period here, the fed was raising Interest Rates and the markets were strong. Thats a great combination for these guys who earn a spread and earn commissions, but that has been undone right now, guys. Mike, fascinating story and analysis there i guess the other offset to that clearly falling chart of the price of commissions for a company like schwab is that the aum has gone in the opposite direction over that time net net, though, the effect, of course, has been fee compression across the industry. And i would just bring up, as well, for the banks and the banks that have more of this exposure in terms of Asset Management, theyre all down today, but not quite as much, because, of course, when theres discretionary management, the fees have held up a little bit better theres not quite such a price war. But nonetheless, its the same trend, which is a bit more automation, much less fees across the space thats exactly right. They want to gather the assets and for schwab, a lot of those are portfolios of etfs and things like that their relationships with many investor advisers. Steve, major moves lower in these broker stocks today. I mean, is the takeaway here that because it seems to me that it was inevitable that we were moving closer and closer towards zero especially when you see startups like robin hood getting in the game and helping to push prices lower. The move in the stock, is it because it happened faster than everyone expected . I think thats as good a reason as any. But its about services. And as mike pointed out, net interests, they are banks when you look at it you want to be in a rising rate environment so they can clip some type of a fee or some type of a, im borrowing from you and paying you this. And its just a Net Interest Margin is with where theyre going to make their money. But its about services. What other services can these brokerage houses provide, other than the Straight Commission because theyre dealing with a lot of retail membership and a lot of retail clientele, not constitutional clientele weve got 42 minutes left of trading here today the dow is currently down 281 points the s p is down 31, 2945 is your level there. For more, lets bring in chris johnson, ceo and cio of Johnson Research group chris, what do you make of the selloff today i think its a little bit of a reaction, obviously, to the production numbers this market is on edge were playing around with a lot of technicals. When you look, the s p 500s 50day is right where were trading. The technicals are a little more enhanced now when we break these levels, youll see more volume and a little more volatility come in. A lot of expectations going into october, though. And i think thats what additionally is putting investors on edge right now. Talk to us about the seasonality. What should we expect normally for an october and for a q4 . Sure, wilf. When you look at seasonality, october is known as this i call it the comeback kid it is the month that we best associate with volatility, because if you ask somebody when the markets crashed, typically theyll pull out october those are the ones theyll remember thats why you see indicators like the volatility index start to spike when you look at the vix, the vix readings on average over the last 20 years hit their highest levels of the year in october, but they quickly subside and start to come down and as that negativesentiment unwinds, it turns into a rally that carries us through stronger november and into december you always have your exceptions. I mean, think of it this way, wilf it is a its almost a selffulfilling prophesy when we see that bottom, we know people want to go in and buy the dip here if they dont buy the dip, though, now it turns into a loathing situation, where the market if we dont finish october in positive territory, if we dont come back, typically we see that november and the december trade sideways to even down if you look at last year, the vix made another two spikes after the spike in october this really is where the market needs to kind of set into that volatility trend get through it, and have investors feel a little better about buying the market, either earnings, a trade war resolution, or maybe even that infrastructure bill are going to help to do that. But we need something right now to help fuel that optimism so how would you be investing for this october, given the fact that there are all of those headline risks and uncertainties . What sectors do you like, if any . Right now, looking at oh, there are some sectors out there that you can play, morgan. When you look at the sectors, utilities have been a safe Harbor Investors have been putting money into that. Thats one of the areas weve seen a lot of cash migrating to. Also, when you look at it, believe it or not, retail is still gaining some traction right now, and thats because were in a strong seasonality pattern for retail that goes from labor day until thanksgiving the other group that im looking at, like everybody else, consumer products. When you look at Companies Like campbells, hormel, et cetera, theyre going to do well, because theyre safe harbor, theyre giving dividends that are better than what youre going to get on the tenyear, and oddly, the one that stands out are the Technology Stocks. If you start to see october actually bottom out and run into a higher november, Technology Stocks are going to become in favor, because a lot of those Portfolio Managers want to have the good tech names on their yearend statements. So provided we have a good october and we come out on the other end in the plus category, november and