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Fast Money HomeFast Money Rapid RecapAbout Fast MoneyFast Money BiosFast Money Web ExtraFast Money Disclaimer
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Jul.02
5:47 PM ET
Wednesday, 2 Jul 2008
Dow Drops Into Bear Embrace
Posted By:Lee Brodie
Sectors:Oil and Gas

DOW DROPS INTO BEAR EMBRACE

Stocks tumbled Wednesday with the Dow Jones Industrial Average [.DJIA  Loading...      ()   ]closing in bear market territory. The two biggest drags were oil prices and a warning from Merrill that the bankruptcy of General Motors is "not impossible."

The Fast Money traders have wide ranging views on what influenced the market Wednesday.

I think the market move is about the weak economy, says Tim Seymour. I don’t think traders really care about the actual numbers in the Dow

Anyone who had anything on their books got out because they’re afraid Thursday could be messy ahead of the holiday, adds Guy Adami.

The late end of day spike in oil is what really dragged down the stock market, says Pete Najarian.

-----------------------------


IS GLOBAL GROWTH STORY DEAD?

Raw materials and industrial stocks were slammed by traders Wednesday after concerns surfaced over slowing global growth. The fear is that higher interest rates and a weak consumer could finally tip the globe into recession.

I heard speculation that BHP [BHP  Loading...      ()   ] and Rio Tinto [RTP  Loading...      ()   ]were pushing up coal prices in anticipation of their renegotiation of price, says Karen Finerman. After that was done coal took a licking. And I don’t think it stops there, she adds, I think the rotation has started.

These are crowded trades, adds Tim Seymour. It could well be profit taking. And if you think the global growth story is ending then also look at ag names including Potash[POT  Loading...      ()   ], Syngenta [SYT  Loading...      ()   ], Mosaic [MOS  Loading...      ()   ] and Agrium [AGU  Loading...      ()   ]. I think their charts look terrible.


But it's not all doom and gloom. The trade also have some "Buy" recommendations.

One name I do like is Empresas ICA [ICA  Loading...      ()   ], adds Tim.

Or look at Caterpillar [CAT  Loading...      ()   ], adds Guy. I like the stock long-term but that doesn’t mean it can’t continue to go down.

If you want to play the space make sure to include protection with put buying, counsels Pete Najarian.

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IS GM GOING BANKRUPT?

General Motors [GM  Loading...      ()   ] could need to raise as much as $15 billion in cash to shore up liquidity and bankruptcy is "not impossible" if the U.S. auto market continues to slump, Merrill Lynch said on Wednesday.

Although other analysts have suggested GM needs to raise funds to ride out the downturn in the U.S. auto market through 2009, Merrill's estimate of GM's financing needs was the highest yet. It also carried the most stark warning of the bankruptcy risk for the largest U.S. automaker.

I don’t think GM will go bankrupt, says Guy Adami. Personally, I think it sets up for a long-side move.

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NASDAQ FALLS INTO BEAR MARKET

The Nasdaq [.NCOMP  Loading...      ()   ] dropped 2% Wednesday bringing the decline from its October high past 20%, the criteria for a bear market. Google [GOOG  Loading...      ()   ]and Microsoft [MSFT  Loading...      ()   ]led the day’s drop.

There’s real pressure in tech right now, says Pete Najarian. Investors are taking profits. It’s all part of the rotation. If you’re looking for a tech trade look at SanDisk [SNDK  Loading...      ()