Mylin labs. Were watching a broad based selloff in technology, and you wonder, kelly, if this is the beginning of this long awaited correction in the market right now. I can tell you thats a lot of the chatter on the floor down leer. Meanwhile, u. S. Attorney general eric holder telling Congress Today he will look into High Frequency trading, something the new york a. G. Eric snyderman is also pledging to do. Will it effectively be criminalized. Really looking forward to that conversation. And the average congressman makes about 175,000 and works roughly 125 days a year which averages to about 2 1 2 days a week. I know im leading the witness on this, but one prominent member of congress is claiming that lawmakers in washington are underpaid. He said that. You will hear it in his own words just ahead. Now, here is where we stand in the markets as mentioned. The Dow Jones Industrial average only needed a couple points to close at a record high. Instead, its giving up 150 this hour. Thats almost 1 . Take a look at whats happening with the s p 500. That broad market index also under pressure on the order of 1. 2 giving up 22 points to 1866. A lot of talk about heading into next week whether the 1850 level will continue to be an area of support. Finally the nasdaq. Weve been talking about it but its having one of its worst days in some time. Off 2. 6 , 110 points lower. Taking hits on all sides whether its some of the internet names, bill, some of the pharma and biotech names or even some of the discount brokers. 2. 6 decline in dow terms would be about 400point decline on the industrial average but lets focus on the nasdaq where there are very few winners today. Sheila dharmarajan, whats behind this move lower here . Well, look, its been a very ugly day at the nasdaq. Both the nasdaq 100 and composite down more than 2. 5 , very near session lows. We are setting up for the biggest intraday drop since 2012. As for why were dropping, a lot of the culprits we have been talking about, biotech is down more than 4 today. You do have a lot of those high flying momentum names like tesla, priceline, netflix, also taking it on the chin, but i want to point out the selloff were seeing today is broad. 97 of the nasdaq 100 is in the red. Large cap tech is having a big role in this. Amazon, google, apple, all of those stocks are down big today. They have a big influence on the nasdaq 100. Amazon, in fact, were talking about a name thats in bear market territory for the year. A lot of traders telling me they dont like the fact were seeing a lot of these leading groups, a lot of these leading names now pulling back. Never a good sign for the market. I think scott roller put it best. He said we hit new numbers at the open, but inside the engines are rattling and were seeing a lot of rattling right here at the nasdaq, guys. Thanks, sheila. Well be checking back with you as news warrants. Lets talk about the market selloff especially in light of what was a decent jobs report this morning. Joining us for our the closing bell exchange, kim forest, david wright, steven wood, mike gibbs, and weve got the tandem team, of course, of liesman and santelli joining us. Steve, i need to start with you. The jobs report was good but it wasnt great and the market may have been hoping for great. Bill, dont blame me. This one is not on me. I could take a lot of blame, take a lot of blame for what the market does but its hard to look at this jobs report and see what was just being discussed, the idea of the big cap techs going down. This was a pretty good report. 190,000. We got the upgrades up to 37,000 in the prior two months. You have the workweek increase that suggests maybe better earnings ahead. This should have been the report that suggested better earnings ahead with no change in Federal Reserve policy. Its also a report that i think confirmed that at least some of the weakness that weve had has been weather related, so that confirms that story that had been troubling the market. So find another culprit. You have to have eight guys there. We have a girl, too. Kim, what do you think about the markets here . What is responsible . Was it the jobs report this morning, is it just the internals of the market here . I think its a lot of internals at this point. The job report as Steve Liesman pointed out, it was good, not great. Perhaps people were looking for great and that would have kept those momentum stocks going, and i think the earlier report that i was listening to before you came to us indicated that a lot of those really high momentum names are falling today, and it just could be that we didnt get the economy thats hot, hot, hot and hiring, hiring, hiring. Right. David, last time you were with us, we were near alltime highs, but even then you thought this market was fragile, your term. Now were seeing this selloff. Whats going on . Greed is good until is isnt, and what were looking at is rather clearly the end of a cyclical stretch that has lasted over five years where were very confident that this is a top. Just as in 2000 and 2007, the nasdaq performed better and led the final charge. What you need to be looking at today is the s p 600 and the russell 2000. This isnt just about Large Technology stocks. This is about a real turn down, a significant shortterm down trend that is probably very early in the stages of a multimonth decline. Rick santelli, there are people talking about a death cross in the tenyear. What say you . You know, death cross is interesting whether youre talking the treasuries or equities, but i think that the yield curve is your best clue, and i think how things like bund yields and tenyear yields align, some of the biggest differentials since the end of the 90s, these are all better signals. When it comes to stocks, today is one ever your best signals. Just consider that yesterdays low on the dow was 16,500 and change. We had a higher high today than yesterday. Were now below yesterdays low. If we close below yesterdays lows, those key reversal patterns are much more powerful than the death cross moving averages. As far as treasuries, treasuries are just marching weve talked about this, kelly. The one reason you always want to own treasuries and one of the main reasons the yield curve flattened dramatically on the march fed meeting is because the long end is not buying economic growth. They say the jobs number was good. Lets consider good. Since 2007s high water mark, the population is up 13 Million Dollar but we have 1. 3 million fewer workers. Rick, here is whats so interesting, its moving in the right direction. Why doesnt the long end believe in the momentum weve seen in the recovery to this point or is it telling us this is as good as it gets . Because most of the momentum that youre talking about really is mostly in the equity markets. The momentum is the committee, the bounce back, yes, theres been a bit of a bounce back, and the economy isnt doing badly, but it isnt running the race fast enough. Sure, were beating europe, sure, were beating asia, but were not running like the u. S. Is supposed to run. Its a threelegged race. Dave zervos had a note out saying this is a goldilocks scenario for equities again and you can understand to some extent why. It suggests the fed wont do anything too hasty to tighten policy. Why isnt the market seeing things in that goldilocks report . It was a good report, not great. The revisions were quite good. Theres nothing that is going to take the fed off center pin. It will be conducive for equities. I think one of the most interesting facts about the markets over the last two years is there has not been a major pullback or correction in the markets. That might be more noteworthy than the fact were getting 2. 5 on the nasdaq or a point on the russell 1,000. Valuations did look full, and this opportunity could be used by active managers to find some valuations where they didnt exist. Real quick any areas where you see obvious opportunity . I think tech after today which would be on the lower end of attractiveness on valuations might have come up. Were looking at health care, Financial Services episodically and some areas of energy. Mike gibbs, what are you going to tell your clients here . Is it time to take some money off the table . Oh, no, no. Most of our clients are longerterm oriented. I think this is a shortterm reaction. The nasdaq was down 5. 5 from early march before today. Now were down 8 from the highs. Its been telling us under the surface the market was not quite as strong are you going to buy this dip . Oh, yes. The down volume was close to 90 . Were closer to find the low. I think you have more risk in the s p coming back in a little bit but i think youre looking at a 3 to 5 downside at the worst and i think by the end of the year we will see prices 6 to 8 higher from where they are. I would buy this dip. I dont know if im genetically predisposed to disagree with rick and im sorry its in your job description. Maybe the market is buying better job growth which means more employment which means some kind of cap in Profit Margins. We have good job growth, even accelerating wages. The fed remains but weve been at historic highs in Profit Margins and you could see some of that coming off as more money goes to labor. Let me just read you it raises a question about whether this is goldilocks. Peter boockvar says its the opposite. Were left with relatively tighter fed policy and still a lackluster economy. Maybe thats the message. Its bronzeilocks. Im happy to go home with 290,000 of job growth. Thats the problem. That people are happy with it. Its not enough. Thats what the long end is telling up. Its double the rate you need to bring down the unemployment. It just feels like a stock market thing as we were joking earlier. Im not sure its responding to the jobs number but you never know. Thank you all for your thoughts on this friday. Appreciate it very much. Were going into what is turning into a critical hour here, kelly. Yeah. We have 50 minutes to go and 150 points lower on the dow is where we stand. But the nasdaq is by far the biggest loser today posting one of the worst days of the year. Well have much more on the wild markets coming up. All right. Plus, the question of the week, does High Frequency trading break the law . Attorney general of new York Attorney general eric holder confirms that a Justice Department investigation is under way. Plus, new York Attorney general iraq schneiderman says his office is looking into it as well. He will join us after the break to look in this issue. Also ahead we have almost 30,000 independent restaurants across the country in 600 cities and theyre all mom and mop shops. Wall street eating up grub hubs ipos. Some analysts say valuations have just climbed too high, too fast. Well talk to them when we come right back. Right back. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. We know were not the center of your life, but well do our best to help you connect to what is. High frequency trading has been under the microscope. Attorney general eric holder confirming a Justice Department investigation into it. Eamon javers joins us now with a story from washington. Where do things stand here, eamon . Thats right. Earlier in the week we learned that the fbi in new york was looking into this, but todays comments from eric holder raise the stakes on this. It makes it clear now that this issue of High Frequency trading is on the agenda of the attorney general here in washington. Thats a little bit of a different level than what we heard earlier in the week. Take a listen to holder testifying on capitol hill earlier today. This practice which consists of Financial Brokers and trading firms using advanced computer algorithms and ultra High Speed Data Networks to execute trades has rightly received scrutiny from regulators. I can confirm that we at the United States department of justice are investigating this practice to determine whether it violates Insider Trading laws. And that question of violation of Insider Trading laws is the interesting legal issue here because one of the questions is going to be, is it Insider Trading if you have advanced knowledge of somebody elses activity in the market but only by a few milliseconds . We know you can trade the millisecond level now or even faster, but can you insider trade at that speed . And that seems to be the issue that the department of justice here in washington is now going after, and as you guys have said, the new York Attorney general is looking into this one as well. A lot of investigations brewing into High Frequency trading, guys. Thats right, eamon. Eric holder isnt the only regulator questioning if High Frequency trade is being used in an illegal fashion. New York Attorney general Eric Schneiderman is also veging the practice. Hes gone on record saying high speed traiting is Insider Trading 2. 0. Mr. Schneiderman always good to see you. Thank you for joining us. Good to be here. There are people who say this is nothing more than very smart people who have figured out a way to use technology to remove risk from the market for their benefit. How is that Insider Trading . Well, the reason we call it Insider Trading 2. 0 is there is some activity that probably does violate existing laws, and theres some activity that doesnt fall within the traditional categories of Insider Trading that probably should be made illegal. The laws and regulations have to be updated, but i think theres been a lot of hyperbole in recent weeks about this issue. There are some firms and some exchanges that are essentially creating a twotier system of information flow so that most people are relying on consolidated feed and thats the slow lane but exchanges are selling access to direct feeds to Certain Companies so they can front run the markets. This is something that has to be evaluated. There may be some violation of existing laws but theres no question we have to take action to prevent there from being a fast lane and a slow lane, to put some speed bumps in the way. The technology is there to fix the problem caused by the expanding and advancing technology and the lack of regulation to keep up to it. You have been looking into this for at least a year. Where is the s. E. C. On all of this . I have spoken with the s. E. C. Our office started looking at this over a year ago, and we reached some early agreements. The s. E. C. Sent out questionnaires and they have been looking into the matter and i think you should look for them to take action in the very near future. What kind of action . Well, there obviously has to be an adjustment to regulations. When we started looking at this a year ago, no one was talking about it. People were complaining about it, but no one was really doing anything. In the last few weeks, everybody is talking about it, and theres a very robust conversation going on, not just complaining about things but coming up with ideas and proposals for solutions. You have raised a couple. Theres one a university of chicago economist has suggested which involves frequent batch auctions for the stock market instead of continuous trading. In your order of priorities, what would be the first thing you would do to correct some of the abuses you see . I think the most important thing is to address the issue of latency are a arbitrage. And that can be done by exchanges. At the very beginning of this we started when we learned that Thompson Reuters was giving a two second edge to some High Frequency traders who were paying a little bit more just for the release of the survey of Consumer Confidence, and, you know, there are rules and laws that say you have to release information to all customers at once, they cant have multiple tiers. That twosecond edge 10, 15 years ago would have been irrelevant. But in the universe of High Frequency trading, thats a lifetime. Thats an easy one to crack down on but what would be the next step . The question then is if you are providing information youre an exchange and youre providing information to most of your customers through the consolidated feed, through the slow lane but youre charging High Frequency traders to directly connect to your computer so they have access to that information ahead of time, it has the same equivalent effect. They essentially are able to front run the market, to know what the price is going to be before people are able to execute their trades, and thats an advantage we dont want. The markets have lost a lot of credibility and i dont like hearing that people dont trust the markets. Our markets have been the fairest, most transparent markets in the world. Its a great product of the american way of doing business and i think this is an area we need to restore confidence but i think all of my colleagues and a lot of the folks who do business on the street are speaking up now about their own concerns which they have been voicing to me and to my office privately for some time, but no one really wanted to do anything about it and now it appears we are going to get some things done. And a lot of that is now obviously because of the Michael Lewis book and that famous phrase that he uttered earlier this week, that he believes the stock market is rigged. It had been going on all week now, and our viewers have asked me have heard me ask this question repeatedly this week and i will ask you as well. First of all, do you believe the stock market is rigged in that context and more importantly, for average viewers watching out there who are inv