Probability an october fed rate to 90 Technology Leading todays come back nasdaq is higher up about 1 . We got our team of reporters standing by. They will break down todays whipsaw Market Action. First joining us is stephanie link interesting day weve had here we were on together at 10 00 market immediately went down i called almost a percent. Here we are back up. What do you make of it its a wild day its not over. I think its bad news is good news the data was soft. Both ism reports were soft well have to see what the nonfarm payroll will be tomorrow it will be on the softer side. What does that mean . Does the fed cut 60 chance for december cut, and speculation that maybe trump gets more desperate to get a deal done, trade deal done thats why we rallied. This is a pepsi market pepsi i like that it really is. Truly. They reported a good number, inline revenues. Market wants 4. 5 steady organic growth a steady yield paying 25 times. I cant do that because its too rich for me. Thats what this market is its been that way all year long we have seen the sell off since the start of the move october are there opportunities in places where youve been buying we talked about barbell cant be all in on cyclicals if you werent in cyclicals and in growth you lagged i am starting to buy some of the Growth Stocks that have pulled back im looking at facebook, at google im looking at some names on the growth side that have pulled back enough because i own a lot of cyclicals we got a lot more with stephanie. Lets drill one on todays big moves. Bob pisani are tracking it and Bertha Coombs has more bob, well start with more a 400point move in a short period of time therl morning three factors moved. Number one oversold conditions that was down 1,200 points at one point. Rate cut odds improve. 80 rate cut chances this mop 50 for the move december. Finally some trade talk from the president. He was saying president xi wants to make a deal just take a look at the dow. A rare thing when you see the dow move 1,200 points in three days thats what happened were well off those lows. Those are oversold conditions. We have sectors here on a short term basis havent been this oversold in many months. Transportation stocks. Metals and mining stocks bank stocks. Parts of the communication sector way oversold finally i keep watching the big consumer winners this year watch all those names, home depots, mcdonalds, costcos and nikes for how they are holding up today a good day for them. Guys, back to you. Lets turn to the nasdaq the leader among the major averages up almost 1 . Bertha coombs has a look were seeing a broad base rebound. Software names are leading that sector but its still down 1 for the week communications in biotech were off 1 while chips have broken even for the week. As far as large cap tech that was whats really moving things higher today facebook not with standing all of the headlines got that new threads that some people say might be a snap copier or killer and the call from the attorney general barr not to encrypt across all of their messages, its a stand out today and really helping to move things higher meantime you take a look at some of the ipos that have been hit so hard. They are bouncing today. Crowd strike is a real stand out. For livongo they are moving higher we got a key reading of the Services Sector that came in at a three year low Steve Liesman has more Service Index came in weaker than expected prompting more fears of an economic slow down the Service Sector have surprised to the down side they both now been declining since late last year and both now have mitt multiyear loss with no sense of a bottom. Neither survey in the range where we signal a recession. Jobs compartment of both surveys has been weakening some have taken into account jobs report. Americans picking up on this weakness attitude towards the economy take a shortstop downturn cnbc, all American Economic survey 41 pessimistic about the state of economy and the future. Other key indicators are down 36 believe their wages will go up lowest since 2016. 35 say now is a good time to invest in stocks lowest in three years. 22 say the economy will improve. First time, foshlgs in the polls conducted during Trump Presidency pessimist out number optimists. Stephanie, when you see an ism nonmanufacturing number coming week, last time we saw contraction data back in 2016 does this feel similar or does it feel different like it could actually settle in and become something that hits the broader economy more deeply im disappointed in it for sure but i go back to the retail sales number that we got in the beginning of september that was almost at 7 core number on an annualized basis that is a that was the best number since 2014 and the consumer is what is so important. Im concerned that the services ism coming down, its not a contraction and you have housing, auto sales. So the consumer is still fine. Theres a rush to say the consumer will roll over and die and i dont see that as long as this data points come in especially jobs, initial claims not nonfarm payroll because thats backward look and initial claims are flat. For me to get worried about the consumer that number has to go up 15 to 20 and were nowhere near that. Im betting on the consumer. I have a pause on the data but positive on the consumer which is the bulk of the economy lets talk more about todays Market Action. Joining me now is jeremy segal and richard bern tstein. Fundamentals are deteriorating right now. Has this market already accounted for it i dont the think so, david i think if you look at analyst estimate, bottom up estimates for s p 500 youll find that they basically havent come down very much at all and thats an important point because analysts have never, never forecasted a profit recession from a bottom up point of view what youre starting to see is youre starting to see small cap stocks, earning estimates s ero. Thats been reflected in small and mids but analysts believe that large caps are immune and i think well find thats a mistake. Professor segal what do you think about this market right now . First, it shows that the fed has to do more work. You know, inversion has come back i look at the 90day Treasury Bill and the 10 year bond. Its inverted. The fed funds rate in the ten year is inverted again even if the fed drops 25 basis points, the fed funds rate is above the ten year it should not be that high so i think its sort of a strange market, the data is bad enough so now people think the fed will come to our rescue, hooray im going to buy stocks. You know, this quarter looks like one and a half percent. Some analysts are marking this quarter down, and i say, im talking the Third Quarter that we just finished down to just 1 so we have suffered a slow down. The fed does have to move. I thought it should move 50 basis points before and even though theres a lot of counting down thomass on the fomc saying everything is fine, i think a lot of this underlying data doesnt say so i also will be awaiting tomorrows payroll data. So, richard what to make of a market where you have fundamentals deteriorating and as jeremy just sort of pointed out you got a lot of people anticipating a fed move is the reason why you want to buy is that typically a good time to actually think about buying . David, you get a little tugofwar here between the deterioration of fundamentals and the fed easing generally in the very late stages of a cycle or the very, very early stages, the fundamentals deteriorate too rapidly relative to the fed and i think thats kind of what jeremy was just describing you got some fundamentals that are deteriorating but you got hesitancy on the fed to still ease thats perfectly normal. Thats what the fed goes through every cycle. Its one of the reasons i would argue the fed is a lagging indicator way behind the markets and yield curve. The yield curve is telling you that theres still more weakness ahead. Stephanie, weve had so many people come on our air and say oh, theres no alternative thats what is categorizing this market that will fuel stocks. Our fundamentals even though were growing slower, 1. 5 , sub2 growth theres still some earnings power there i still believe that their margin story still has upside. Thats pretty controversial. Most people think margins especially in the states why do you believe that these companies have done an amazing job of restructuring and will dont restructure they are faster at making change and adapting change. They are much more focused on profitability as opposed to European Companies oh, my gosh their margins are half of ours but they cant get them up that much and not as active in doing so so i still think that theres good earnings power. Might be slower but i dont see a profits recession here professor, how much is all of the drama thats playing out in d. C. Right now starting to weigh on this market if at all i dont think the impeachment proceedings are weighing on the market i think what market want from the Trump Administration is a trade deal and actually theres some analysts that think there might be more likely now with the data coming in weaker, he wants to rescue the stock market he might go in for a trade deal. The market want as trade deal number one number two, they dont want the fed to lag too far behind so they want an october 30 rate cut at least once. I think with those two features we can stabilize this market the dividend yield popped above two. You cant get two any more in the fixed income market. I think equities really look for the long run attractive but certainly have these challenges in the short run coming up there is no alternative again, morgan. Guys, thanks to you both Jeremy Siegel and richard bernstein. Netflix down 30 yeah in the last three months and barely up for the year new note from bank of america says upcoming earns could be a makeorbreak moment for the company. Well take a closer look at those expectations next. Important read on the consumer hitting after the bell when costco reports results. Well tell you what you need to tcfrhat release. Stay with us closing bell will be right back and experience adventure in unexpected places. Who were inspired by different cultures and found that the past can create new memories. Leading them to discover were woven together by the moments we share. For everywhere you go, expedia has everything you need, all in one place. Expedia has erything you need, all in one place. Welcome back you can see there is the dow your favorite my favorite up 65 points with 44 minutes to go in the trading session. Lets get a check on some individual Market Movers shares of go proare plunging the company cutting its second half Sales Forecast due the to production delays with the hero 8 cameras. That stock taking it on the chin right now. Its down 19. 5 . Kroger is laying off hundreds of employees. Grocer says job cuts are part of valuation of middle management roles and Team Structure shares of kroger are down around 10 yeartodate as it faces increased competition from discount growsers like aldi and walmart. We have 43 minutes or so left in the trading day lets sends it over to mike santoli. 30 chance of rain. Thats pretty much what wall street is saying about one very Popular Consumer stock then clouds and silver lienver. Low pressure system. The market is showing pressure is being let out of the earnings expectations then the butterfly effect. Look at global and u. S. Interplay there of economic force. First of all 30 chance of rain. Take a look at chart of netflix against other media peers in the last year. Netflix, walt disney, come kacht our Parent Company as well as viacom chose the one year view netflix and viacom they are remotely same parts of the industry viacom traditional cable company. Netflix is just exactly how much of its specialness, its premium, whats the valve its head start in the streaming world obviously disney and comcast a hybrid play on broadband as well as media looking over five years, same four stocks over five years. You see exactly how much of a lead in commit netflix built up over everybody how much is the head start, how much did wall street give it credit foirn advance look at the analysts consensus now on netflix so the 30 refers to 30 of analysts do not currently recommend it thats actually relatively steady over the last year. What has happened is in red this is the consees sues price target implies 50 upside what that suggests to me theres a lot of room for that to start coming down if you have sentiment moderate depending how they report earnings arguably a little bit of air underneath those expectations. On the other hand, look at this other time you had 50 implied netflix did catch up, guys mike, first of all, i got the theme with your charts today and i appreciate it given the fact you should explain it to david in the break but i appreciate the fact in the past 24 hours youve gone from 90 fahrenheit here in new york city down to 60 i wonder what it will look like after the next couple of months and more Services Come online and how pricing will factor into this especially when you see that netflix has to cut Prices Market is implying price is capped at best for netflix right now. Perhaps domestic subgroup is closer to saturation maybe a little early to make that call. This was a cold stock growing double digits for many years. Easy to like it and ignore the valuation. Now growth is questioned you have tons of competition you have pricing questions if you look at comcast and disney, theyve rolled over too. Numbers are coming down because these companies have to aggressively invest. Some of the multiples are very low comcast had a pretty nice move recently still around 44. Comcast and disney did well the larger issue is everybody owns their contents. How much more do they have to spend. They have done a good job creating their orjs. When disney came out in april that was a key moment and were still waiting to hear from warner brothers, hbo max where that will be priced and Everything Else. Tough space yes suddenly more difficult space moments ago President Trump suggested Big Pharmaceutical Companies could be behind the house impeachment probe. They come at you from all different sides. I wouldnt be surprised if the hoax didnt come a little bit from some of the people that were taking on. They are very powerful spend a lot of money spend more money than any other group in the world, actually, in terms of lob jig and lob jig abilities, i wouldnt be surprised if some of the nonsense that we have to go through, i go through, wouldnt be surprised if was from some of these Industries Like pharmaceuticals. Wow meg terrell is here. Pharma is the larger spending wise they spent 27. 5 million in 2018 its an incredibly powerful lobby. Its interesting he is suggesting pharma may have something to do with this. Last week the impeachment inquiry heated up analysts talked about how investors were saying maybe this will take some attention off the pressure to lower drug prices. Maybe the administration wont be able to push things through on drug prices as theyve been talking about doing just because everybodys attention will be elsewhere. Interestingly later in that same sort of thought trump talked about how everything they do on big pharma results in pharma stock going up stocks going up. We have a chart here looking back to trumps election, pharma has underformed. Bo tech is up 13 compared with s p 36 . Since november 2016. The stock has gone up but not as much as the Broader Market the Trump Administration hasnt been successful in pushing through pricing reforms. People are talking about the impeachment inquiry will take pressure off the space pfizer never recovered from the mylan deal as Elizabeth Warrens potential for becoming the democratic nominee has increased one would expect pharma would not be getting stronger either given her proposals. Thats a great point. Jeffries has tracked how Elizabeth Warren has done versus the performance of the xlv they perform inversely as Elizabeth Warren seems to do better against joe biden, drug stocks and Health Care Stocks do worse because the industry is afraid of what she might do if shes elected. Thank you is there anything in health care you do find attractive right now wean all this political its hard i own a little bit of United Health care. I would love to bit. I want to buy quality on sale. With this overhang you have time in terms of pharma and biotech its very difficult. They should have been buying companies for so long. They have the cash flow. They just havent. They dont have the growth now they are just yield plays if you well nothing wrong with that. You have to know what you own. I dont want to own something library that up next Airline Stocks getting hit hard over the past 24 hours really weighing on the dow transports now one firm is out with a bearish note on delta. 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