Recapping the day's news and newsmakers through the lens of CNBC.
Change is on the horizon at Microsoft. The company, whose PC business declined 14 percent in the first quarter, is expected to shift to devices and services from software. In fact, its shares had been trading up for some time based on the hope of such a shakeup. As part of the shift, CEO Steve Ballmer announced today that Microsoft has entered a partnership with Oracle, which should help with its cloud business.
"This cloud area is particularly important. The legacy Microsoft businesses, Windows and Office, have made up of half of revenue and more than half of profit. Server and Tools is the unit that is showing consistent growth. But at the same time this structure is not really one that is built for the future. For example, Windows phone is in the entertainment and devices business. While the rest of Windows is in the Windows/Windows Live business. That's one of the things we might expect to see them restructure."
—CNBC's Jon Fortt
After the Rein
In case you hadn't noticed, the market fell flat on its face today following a massive global selloff. By mid-afternoon, U.S. indexes had recovered from their big early losses but were still reeling from Fed policy and China worries. And as you'd probably guess, volatility is at nosebleed levels.
The Shanghai Composite gave up over 5 percent on news that China will rein in credit to avoid a financial crisis. It appears that last week's SHIBOR spike was a none-too-subtle warning from the government. Economists are trying to figure out whether there will be some unintended consequences to the policy shift. And speaking of policy, investors are still trying to figure out where to be now that the Fed has signaled it's getting close to taking off the training wheels. Near term, at least, that appears to be cash.
"The problem is that earnings growth is not yet strong enough to offset the effects of rising rates. That's why you're seeing this correction underway. My guess is, especially with mortgage rates backing up and quickly as they have backed up here, the Fed isn't going to do a thing."
—Richard Bernstein, Richard Bernstein Advisors
"I'm more concerned about China than the Fed. I think Bernanke has been dipping his toes in the water, floating the trial balloons. They're not working. I personally do not think the Fed's going to tighten money anytime soon. In order to get there, you knee rosier economic numbers. I don't think they're going to happen. I'm much, much, much more concerned about China collapsing than the Fed."
—Paul Schatz of Heritage Capital
Just in time for the summer, the markets are taking a breather. Nuveen Asset Management's Bob Doll said that pauses are normal and that "spoiled" investors had become too accustomed to daily market gains. Now that the market has had a reality check, investors and strategists are left with need to ask "how low will we go and how long will it last?" Doll's best guess is the S&P 500 touching about 1,550 in the coming weeks and the market regaining its footing toward the end of summer. Why then? No black hole to worry about anymore, and in fact, the economy is doing OK.
"We got overbought, we got complacent. We don't know what the Fed means by what they say. China is a problem, and the U.S. economy is so-so. That's not a recipe for stocks going straight up. They have gone straight up. And we need to pause."
—Nuveen's Bob Doll
"Every client we talked to said give me a pullback. I like the economy. I want to stay out of bonds, I want to stay out of cash. So I think you have that opportunity. The 1,550 level is not that far away. I think you do have to start putting your toes in the water there."
— Doug Sandler of RiverFront Investment Group
Apple shares flirted with $400 (and points below) for much of the day, the lowest the stock has traded in two months and far from its all-time high of $705.07 on Sept. 21, 2012. Further concern over its product pipeline has provided the downward pressure and made it one the Nasdaq's leading losers on the day.
"Employee morale at Apple is low, and recruiters are seeing more and more employees applying for jobs at Google, LinkedIn, Facebook and even Hewlett-Packard."
—CNBC's Seema Mody
Mobius on China, Emerging Markets
Emerging markets pioneer Mark Mobius thinks China will avoid a big correction despite its freewheeling credit market thanks to the gobs of cash it holds. And while protests in places such as Turkey and Brazil will hurt in the short run, they bode well for the long term.
"The fact that [China has] made these moves to correct the errors that have been made in the past is a good sign. It will give confidence to the market."
—Mark Mobius of Templeton Emerging Markets Group
"From a longer-term perspective it's very positive. These developments show that there's an incredible amount of transparency that's coming into play. That's putting pressure on the politicians to act and act now."
—By Doug Cubberley, Special to CNBC.com