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Best Rally Since 1933

Monday, 13 Oct 2008 | 5:33 PM ET

BEST RALLY SINCE 1933

Wall Street roared back from its worst week ever with one of its best single days ever on Monday, as governments pledged to pour cash into struggling banks to restore confidence in a rocky global financial system.

Bargain-hunting investors scoured the wreckage from eight days of losses that had whacked more than 20 percent off the value of the benchmark S&P 500.

Word on the Street
The Fast Money traders take a look at today's top business stories.

Health care, utility and energy stocks rose the most in what was the first day of gains this month for the Dow and S&P 500 .

Investors probably made more money on Monday than they have in recent memory, says Dylan Ratigan. But it’s important to note that the credit markets were closed in the US for Columbus Day.

I expect the credit markets will be as euphoric on Tuesday as the stock market was on Monday, says Karen Finerman.

The biggest buy imbalances at the end of the day were in energy and financials, explains Tim Seymour. But I think they’ve thrown all the meat on the grill. Now we need to see follow through and I expect that to take a while.

I think we saw capitulation in United States Steel and Freeport McMoRan , adds Guy Adami.

If you were smart you bought the pull back early Monday morning and by the end of the day you sold your position, counsels Jeff Macke. An 11.6% rally shouldn’t happen in one day if this was a normal and healthy market. World leaders got together and sent an electric volt up the market’s backside and she jumped. But it won’t last.

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MORGAN STANLEY CLIMBS 87%

Morgan Stanley drove the rally in financial shares, soaring 87 percent, after Mitsubishi UFJ Financial Group completed its $9 billion investment in the U.S. bank as U.S. government support helped nail down a critical deal many investors had feared could fall apart.

Terms Of The Mitsubishi & Morgan Stanley Deal

- $9B Equity Investment in Morgan Stanley (21% ownership)
- $7.8B Convertible Preferred Stock With 10% Dividend (Convertible at $25.25)
- $1.2B Non-Convertible Preferred Stock With 10% Dividend

This could be the bellwether event that investors have been waiting for, says Guy Adami. John Mack said forget being acquired, we’re looking to make acquisitions.

I got long Morgan Stanley January leaps on Monday, reveals Karen Finerman.

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APPLE, GOOGLE LEAD TECH HIGHER

Investor optimism was clearly prevalent in Monday’s Nasdaq where shares of Apple and Google led the tech heavy index higher.

The tech trade I like is Western Digital, explains Guy Adami. This stock on a valuation basis looks “stupid cheap” to me. It was a $42 stock just a few months ago.

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IS THE GOLD RUSH OVER?

After gaining 3.2% last week gold fell on Monday.

If governments pump trillions of dollars into the system there will eventually be some inflationary impact. So I think the long-term trend for gold is bullish, says Tim Seymour. But I wouldn’t buy it for a short-term trade.

If this isn’t the environment to get long gold than what is, counters Karen Finerman.




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Trader disclosure: On Oct.13, 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 (C), (WMT), (MCD), (BNI), (MSFT); Adami Owns (AGU), (C), (BTU), (GS), (INTC), (MSFT), (NUE); Finerman Owns (GS); Finerman's Firm Owns (DELL), (MSFT); Finerman's Firm Owns (MS) Calls; Finerman's Firm Is Short (USO), (IJR), (MDY), (SPY), (IWM), (USO), (BBT), t (COF); Seymour Owns (AAPL), (F), (GE), (MER); Seygem Asset Management Owns (EEM); GE Is The Parent Company Of CNBC; NBC Universal Is The Parent Company Of CNBC; Finerman's firm owns (MRK); Seygem Asset Management Owns (MER)

CNBC.com with wires

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MS
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WDC
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SPDR NRG SEL
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SPDR UTL SEL
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  • Founder of EmergingMoney.com

  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

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