OIL DROPS, DOW POPS
Stocks rose in thin trade on Thursday as another decline in the price of oil buoyed hopes that consumer spending will recover. Also financial shares bounced back from a sharp two-day sell-off.
BANKS BOUNCE IN VOLATILE WEEK
The news: Financial shares rebounded from an 8 percent slide over the last two sessions, in part on news that the US government would allow banks to reorganize some of their mortgage exposure.
The trades: Also late government data showed inflation pressures may have peaked, especially in light of the recent sell-off in commodity and energy markets. Some investors believe that could allow the Federal Reserve to at least hold off on rate increases.
Shares of Bank of America and JPMorgan Chase led the banking sector higher with the KBW bank index up nearly 3% mid-day.
I wasn’t surprised by the rally, says Karen Finerman. They had sold-off pretty sharply but I didn’t trade the move.
Goldman Sachs is the concern for me in this sector, says Pete Najarian. Goldman could not trade above $169 even when the market ran higher. I’d be cautious.
As soon as the government stops trying to regulate these banks, that’s when you can buy them says an aggravated Jeff Macke. Not before.
COMMODITIES BACK DOWN
The news: The price of oil fell on Thursday as economic weakness in Europe underscored the threat to global growth. It also fell on hopes that a shaky cease-fire between Russia and Georgia would hold.
The trades: Commodities won’t go down in a straight line down, says Jeff Macke. But they are in the process of re-pricing. I wouldn't touch them either long or short.
I like the late reaction out of the natural gas names, says Pete Najarian. Check out XTO Energy and Devon . I was also impressed by a late day surge in coal. That tells me demand is still there.
DOLLAR HITS 6 MONTH HIGH
The news: Stabilizing U.S. economic growth, falling oil prices and a deteriorating outlook outside the United States have led Goldman Sachs to abandon its ten-year bearish stance on the U.S. dollar.
In a research note on Thursday, the largest U.S. investment bank said the dollar's long-term downtrend has ended and its undervaluation could lead to a substantial improvement in the U.S. balance of payments position.
The trades: I wouldn’t be surprised to see a slight down move in the dollar because it’s climbed considerably, says Karen Finerman. But long term I expect it to go higher.
I’m long the dollar , says Jeff Macke. And keep in mind the strong dollar presents another head-wind for commodities, he adds.
I expect the strong dollar will create a rotation, adds Guy Adami. As a result money could go into Big Pharma and defense stocks.
- STREET YAWNS AT WAL-MART
The news: Wal-Mart second-quarter profit jumped 17 percent, but the discount retailer forecast future results could miss Wall Street estimates as consumers worldwide deal with tough economic times.
Executives at the world's largest retailer said on Thursday that a boost from U.S. tax rebate checks, which spurred shopping in the latest quarter, was mostly over, and sales remain volatile as shoppers run out of money in between paychecks.
-AFTER HOURS ACTION: NORDSTROM'S
The news: Upscale department store chain Nordstrom said on Thursday that July sales at stores open at least a year fell 6.1 percent.
-AFTER HOURS ACTION: KOHLS
The news: Kohl's , a mid-priced retailer of apparel and home goods, posted a lower second-quarter profit on Thursday but beat Wall Street expectations, helped by sales of its private brands and lower inventory levels.
The trades: Retail is just a very hard space right now, says Jeff Macke. And keep in mind that Wal-Mart has been benefitting from a weak dollar.
If you want a retail trade I’d look at Mastercard, says Guy Adami. It seems to me that they’ve made a bottom.
RIM, DELL LEAD TECH
The news: Research in Motion and Dell pulled tech shares higher on Thursday. Also Merrill Lynch reiterated it’s $170 price target on Research In Motion as the BlackBerry maker began shipping their ‘Blackberry Bold’ smartphone to Europe.
The trades: I like RIMM, says Pete Najarian as well as Apple.
Look at Oracle, adds Guy Adami. I think this company integrates acquisitions better than anyone on the planet and because of those acquisitions they have a nice growth rate.
TOPPING THE TAPE: AMGEN
The news: Shares of Amgen enjoyed a nice pop on Thursday after Goldman Sachs added the biotech to its prestigious Conviction Buy List.
The trades: Aggressive action in options tells me that more people are looking for consolidation in the space, says Pete Najarian. Call buying in Onyx suggests to me the company could be a takeover target. It’s my favorite trade right now, he says.
M&A ACTION COMING?
The news: Options traders have alerted us to more potential M&A activity. For insights we turn to Susquehanna Market Strategist, Stacey Gilbert.
On the heels of Sketcher’s $142 million bid for Heely’s I'mseeing increased interest in another specialty retailer, explains Gilbert. Specifically, I've noticed heavy call buying on Lululemon Athletica. There’s chatter that Nike could be interested in LULU.
Meanwhile, Gilbert also tells the Fast Money traders about upside call buying in SanDisk . Based on chatter Seagate could buy all or part of Sandisk, she says.