DOW DROPS 293...STOCKS FALL 2%
The headline: Stocks Give Up Early Gains and Keep Dropping After Commodities Plunge, Merrill Declines.
Plunging commodities combined with weakness in energy and basic materials dragged down the Dowas well as the broader stock market, explains Dylan Ratigan. The drop came a day after the S&P 500 rang up its biggest one-day jump in more than five years following stronger-than- expected earnings from investment banks and the Federal Reserve's deep cut in official interest rates.
The market was irrational yesterday, says Pete Najarian.
I think you’re seeing hedge funds de-lever, adds Tim Seymour, from commodities. I’m worried about some of the grain companies such as Potash and Monsanto .
I’d buy the dip in Monsanto and Potash, counters Guy Adami.
The headline: Merrill Lynch Loses 8% As Investment Bank Shares Get Hammered; Goldman Sachs Sinks 5%, While Lehman Plunges 9%.
Speculation that Merrill Lynch may need to take more write-downs deflated growing optimism that the credit crisis was abating, explains Dylan Ratigan.
Almost all the banks moved lower on Wednesday, explains Tim Seymour. There’s only so much the Fed can do.
Options action suggests that MER could go lower, says Pete Najarian and that their write-downs could be large.
The headline: Morgan Stanley Posts 43% Drop In Profit, Takes Additional 2.3 Billion In Writedowns
I like Morgan Stanley , says Guy Adami. I’m a buyer.
Sell it, counters Jeff Macke. Just take profits.
Be careful of financials in general, adds Tim Seymour. I think there’s more downside to come from financials overseas.
COMMODITIES: GOLD PLUNGES MOST SINCE JUNE 2006
The headline: Gold Plummets 6.1% To $942.60, Worst Drop In Nearly 2 Years; Oil Sheds 4.5% To $104.48.
Gold prices slid in their biggest one-day drop in nearly two years and oil posted its worst slide in seven months, weighed down by persistent worries about the U.S. economy's health, explains Dylan Ratigan.
It’s time to sell the streetTRACKS Gold and United States Oil Fund , says Jeff Macke. Just give the commodities a rest.
AFTER HOURS ACTION: NIKE
The headline: Nike Quarterly Income Rises On International Sales
Nike , the world's largest maker of athletic footwear and apparel, said on Wednesday that third-quarter net profit rose, helped by strong international sales of shoes and clothing buoyed by a weak dollar.
I love this stock, says Jeff Macke. I think the company is hitting on all cylinders.
V IS FOR VICTORY
The headline: Visa Skyrockets In Trading Debut After Biggest IPO In U.S. History.
Visa shares soared in their stock market debut Wednesday as investors snapped up shares of the largest initial public offering in U.S. history. The enthusiastic response is considered a signal that Wall Street believes the world's largest processor of credit and debit cards is well positioned to profit as more as people rely on its electronic network.
I think Visa goes lower from here, counsels Guy Adami. Sell this stock and Mastercard , too. I think you’ll see MA below $200, he speculates.
The headline: Roche Agrees To Judge's Conditions For Selling Anemia Drug Mircera
Rochesaid Tuesday it has accepted conditions including higher royalty payments that a judge suggested for the company to begin U.S. sales of an anemia drug that violates patents held by Amgen Inc., explains Pete Najarian.
If the Boston-based federal judge grants final approval to the terms Roche accepted, Amgen would face a new rival to its top-selling anemia treatments, Aranesp and Epogen, whose sales already are sagging amid recent safety concerns.
SCHULTZ SEES 'VENTI' PROBLEMS
The headline: Starbucks CEO Howard Schultz Says U.S. Economy 'Really In A Tailspin.'
Starbucks Corp outlined long-awaited plans to turn around its business on Wednesday, but a new coffee roast and loyalty program for frequent customers failed to excite investors, who sent shares down nearly 3 percent.