Wall Street closed out a tumultuous, historic trading week with the biggest two day rally since 1987. The Dow surged as investors sent financials sharply higher on news of a government rescue plan for the sector.
Ironically the key averages ended little changed from a week ago, but navigating the past seven days took investors and Wall Street on one wild journey.
Sept.12 Close Sept. 19 Close
S&P 500 1252 1253
Dow 11422 11388
2 Yr. Treasury 2.21% 2.16%
10 Yr Treasury 3.72% 3.78%
WALL STREET STOCKS JUMP 11%
The Financial Select Sector SPDR jumped on Friday as investors signaled their approval of the government's financial rescue plan.
As you probably know by now, the government launched several multibillion-dollar programs to guarantee holdings in money-market mutual funds and curb short-selling while developing a more sweeping plan to mop up toxic mortgage debt.
Speaking Friday, Treasury Secretary Henry Paulson said the latest rescue plan was aimed at removing troubled assets from the books of banking institutions and restoring calm to panicky financial markets after a week of intense volatility.
In breaking news CNBC’S Steve Liesman reveals late details of the plan. He says:
- Hedge funds will not have access to the bad debt fund.
- The Treasury will have the authority to buy whole loans, CDOs (Collateralized Debt Obligations) and MBSs (Mortgage-backed securities) over a two year period.
- Only U.S. institutions will be eligible, none from overseas.
Earlier the SEC said it would temporarily ban the short-selling of 799 stocks.
As you can imagine, Dylan and the gang have a lot to say about the situation.
The government is stepping in and taking the liabilities away from the banks to free their ability to lend, explains Dylan Ratigan. At the same time they’ve taken short sellers or speculators on the short side and pushed them to the sidelines.
We can still do defensive shorts such as shorting large indexes, explains Karen Finerman. Specific shorts however such as shorting BB&T , however, are off the table.
When asked how she's currently trading, Finerman said, I’m not going to cover. However, I did take off some trades on the long side.
The government took a sledgehammer to everyone who might be against the market, says Jeff Macke. To me this market is a little like a carnival game where they say come on in.. you can win a prize. Have you really ever won?
I think it could be the best trade in the history of trading, counters Guy Adami. The government has basically become the biggest hedge fund on the planet.
I think the government did what they had to do under the circumstances, adds Pete Najarian. If they hadn’t, I can’t imagine what would have happened.
What happened today is this. I thought I was in a fist fight and then the other guy kicked me in the privates, adds a very aggravated Jeff Macke. The only thing to do here is back-up.
I did buy one financial on Friday, reveals Karen Finerman. I bought Washington Mutual. With JP Morgan , Citigroup and Wells Fargo interested, I think $3 and change is a fantastic price.
I see opportunity in Target , adds Adami as well as Lockheed Martin . Investors are rotating out of these stocks and into financials. These dips look appealing to me.
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Trader disclosure: On Sept 19, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (MSFT), (WMT); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Finerman Owns (GS); Finerman's Firm Owns (MSFT), (NOK); Finerman's Firm Owns (WFC) Puts; Finerman's Firm Owns (BIIB) Calls, (DNA) Calls; Finerman's Firm Is Short (BBT), (IYR), (IJR), (MDY), (SPY), (IWM); Najarian Owns (AAPL) And (AAPL) Collar; Najarian Owns (ETFC); Najarian Owns (NOK) And Is Short (NOK) Call; Najarian Owns (RIMM) Call Spread
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