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The Dow [.DJIA
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] plummeted on Wednesday, a day after Barack Obama's historic victory, as a fresh batch of dismal economic data underscored the massive challenges awaiting his administration.
The drop marked Wall Street's biggest loss ever on the day after a presidential election, coming immediately on the heels of its biggest Election Day rally on record in the previous session.
Year Winner Dow Selloff
1) 2008 Obama -5.05%
2) 1940 F.D.R -2.39%
3) 1976 Ford -0.99%
4) 1992 H.W. Bush -0.91%
5) 1984 Reagan -0.84%
Selling hit across the board, with shares of big manufacturers, including Boeing [BA
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], as well as banks, technology companies, home builders, retailers and energy companies among the biggest casualties.
Investors worried the new administration won't be in a position to act fast enough to avert a deep economic downturn.
Strategy Session with the Fast Money Traders
This was a bad day on a fundamental and technical basis, exclaims Jeff Macke. It’s never good when the head of ArcelorMittal [MT
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] the world's largest steelmaker says global demand is falling off a cliff.
The Wolf also noticed that the market took a notable turn lower when House Speaker Nancy Pelosi told a news conference additional economic stimulus may be needed once Obama takes office in January.
The Dow is trading in a range, says Guy Adami. It’s between 7500 and 9600. After Wednesday's sell-off I think it heads back down
The market action on Wednesday was all profit taking, adds Pete Najarian. Stocks such as First Solar [FSLR
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] had quite a run over the last 5 days and they led us lower on Wednesday. However I’m hopeful the next rally will be sustainable because the VIX [VIX
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] is coming down.
The only way to play this market is take profits fast or not play at all, adds Macke.
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AFTER HOURS ACTION: WELLS FARGO
After hours shares of Wells Fargo [WFC
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] fell about 3% after the bank announced a proposed offering of $10 billion of common stock to the public. Meanwhile financial services stocks led Wednesday's sell-off with Goldman [GS
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] and Morgan Stanley [MS
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] taking a late day hit.
Wells had said they would do the raise, explains Karen Finerman. However I thought they would do it when they closed the Wachovia deal. The timing seems strange.
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AFTER HOURS ACTION: CISCO
Cisco Systems [CSCO
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], which posted essentially flat earnings for its latest quarter, saw its stock plunge after-hours after forecasting a sharp decline in revenue for the current quarter.
CNBC’s Jim Goldman explains that Cisco saw a 9% decrease 'year over year' in orders. And CEO John Chambers said this is a difficult time in which to forecast, however he expects a decrease in revenue.
That’s grim, says Jeff Macke. He usually so optimistic.
If there’s a decrease in revenue expect a hit to future earnings, adds Karen Finerman.
On Tuesday Credit Suisse cut their forecast on Cisco, reminds Pete Najarian. These results shouldn't be a huge surprise.
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GLOBAL RECESSION FEARS BUILDING
Oil [US@CL.1
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] dropped 7 percent to below $66 a barrel on Wednesday after a U.S. government report showed fuel stockpiles growing as demand slowed further.
Another negative sign came from ArcelorMittal the world's largest steelmaker which said third-quarter results missed forecasts, and that it’s put growth plans on hold.
The global growth story is bad, says Guy Adami. I’m sorry to say it, but it’s a real issue.
I’m not bearish on equity prices in this sector, adds Karen Finerman. They’re already pricing in recession. I’d get long the OIH [OIH
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] and hedge the best with short the USO [USO
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] because if global demand is dropping the price of oil should head lower.
- Your First Move For Wednesday November 10th
- Web Extra: The Best Trades In Tech
- Pops & Drops: UPS, Electronic Arts...
- Take Your Position: Retail Earnings
- The Return of Dividend Investing?
- Should You Believe in this Rally?
- Trading in this Technicals-Driven Market
- HALFTIME REPORT: How to Trade Senator Dodd's Financial Reforms
- Your First Move For Tuesday November 9th
- Web Extra: The Dow's Only Loser
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Trader disclosure: On Nov.5, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (BTU), (GS), (MSFT), (INTC), (NUE); Macke Owns (WMT), (MSFT), (DIS), (UUP), (SDS); Pete Najarian Owns (BNI) Puts: Pete Najarian Owns (CHK) Call Spread; Pete Najarian Owns (YHOO) And Is Short (YHOO) Calls; Finerman's Firm Owns (UFS), (MSFT); Finerman's Firm Owns (OIH) Puts; Finerman's Firm Is Short (WFC), (IYR), (IJR), (IWM), (SPY), (USO), (MDY), (GNK)
CNBC.com with wires
Data is a real-time snapshot *Data is delayed at least 15 minutes