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Fast Money HomeFast Money Rapid RecapAbout Fast MoneyFast Money BiosFast Money Web ExtraFast Money Disclaimer
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Aug.21
8:49 PM ET
Thursday, 21 Aug 2008
Oil Surge Weighs On Stocks
Posted By:Lee Brodie

OIL SURGE WEIGHS ON STOCKS

The Dow [.DJIA  Loading...      ()   ]and S&P 500 [.SPX  Loading...      ()   ]rose on Thursday as surging oil prices drove up energy shares, though fresh fears of more credit losses on Wall Street kept gains modest.

CRUDE OIL SURGES

U.S. crude oil [US@CL.1  Loading...      ()   ] jumped more than $5 a barrel on rising tensions between the United States and energy behemoth Russia and the weaker dollar. Shares of Exxon Mobil [XOM  Loading...      ()   ] rose 2  percent and were one of the biggest boosts on the Dow and S&P.

The shorts got squeezed, says Joe Terranova. That’s the bottom line. My feeling is that oil will run higher and then fail about $4 or $5 higher.

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LEHMAN REBOUNDS AFTER UPGRADE

Bank shares [XLF  Loading...      ()   ] struggled for much of the session as analysts predicted more mortgage-related write-downs on Wall Street.

However, shares of Lehman [LEH  Loading...      ()   ] recouped most of their losses after word of a Lehman upgrade hit the Street and CNBC brought you the first live interview with analyst Dick Bove in a First on Fast exclusive.

Bove said, “If you take a look at Neuberger Bergman (the asset management arm of Lehman that’s likely up for sale) and you make the assumption that at its low point it’s worth $9 billion and you subtract that from the market cap of Lehman, it means the rest of the company is worth less than zero. That suggests you get all the rest of Lehman for nothing.”

I disagree with Bove, says Pete Najarian. I think they get $5 billion for Neuberger Bergman.

Read the entire interview:

> Lehman Upgraded By Bove


Meanwhile, heightened expectations for a government bailout of U.S. home-funding giants Fannie Mae [FNM  Loading...      ()   ] and Freddie Mac [FRE  Loading...      ()   ] drove their debt prices higher on Thursday as investors bet the securities will be guaranteed by the U.S. government even if shareholders are wiped out.

Despite gains in Fannie, shares in both government-sponsored enterprises, which own or guarantee almost half of all outstanding U.S. mortgages, remain near their lowest levels in nearly two decades.

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What do you think? Answer the Charles Schwab Question of the Day.









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BEST WEEK IN 33 YEARS?

Led by the surge in oil the commodities sector is headed for it’s best week in 33 years according to the Reuters/Jefferies Index.

I would buy stocks in the oil services sector [OIH  Loading...      ()   ], says Joe Terranova. I think what we’ve seen recently was a modest correction and the oil bull will start running again.

That’s a large load of bull something, counters Jeff Macke. The trend is broken!

I don’t think the trend is broken, Terranova adds. The fundamental supply story remains in tact.

Forget oil. If you want a commodities trade, play copper with Freeport McMoRan [FCX  Loading...      ()   ], counsels Guy Adami.

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SURPRISING RETAIL REBOUND

Despite high oil (which suggests higher gas prices) the Consumer Discretionary SPDR [XLY  Loading...      ()   ] stayed positive for the day. Home Depot [HD  Loading...      ()   ], Target