Ahh I figured it out!
Instead of using ~/pset1/hello/ $
go back to just the directory pset by using change directory
~/pset1/hello/ $ cd ~/pset1/
then add your ls command
~/pset1/ $ ls
~/pset1/ $ clang hello.c
adds the machine code to your directory and then you can execute!
My only questions now is about the hello/ . ...