STOCKS PLUNGE TO 5 1/2 YEAR LOWS
The Dow tumbled on Wednesday closing below the psychologically important 8,000 level for the first time since March 2003.
With the details of an auto industry bailout having yet to come together, worries about the health of GM , Ford and Chrysler overshadowed any optimism that might have been in the market.
Adding to the gloom, the Federal Reserve slashed its economic growth forecasts through 2009 and minutes from the Fed's most recent policy meeting showed officials believed more interest rate cuts may be needed as the economy falters.
Strategy Session with the Fast Money Traders
We sold off for a score of reasons, says Jeff Macke. But the biggest of which is that we have some deflationarypressure. It’s not bullish.
There has been no leadership from the financials, adds Pete Najarian. There’s nothing but turmoil in the sector and it’s making investors nervous. There’s a big bear in front of us.
There’s nothing that suggests to me that oil is going to turn around, says Karen Finerman. Until there’s a big decrease in production oil shouldn’t go higher.
The technicals concern me, adds Guy Adami. If the Dow trades at 7,800 it could easily slide down to 6,000.
Also, the VIX is holding at 70, adds Najarian. It seems investors are growing more comfortable with so much fear in the market.
CITI, BANK OF AMERICA, JPMORGAN ALL PLUNGE TO NEW LOWS.
Financials slumped on persistent worries about the fallout that worsening credit and a contracting economy will have on banks. Bank of America, JPMorgan Chase and Citigroup all slid to multiyear lows.
Adding to concerns, spreads on bonds with exposure to commercial real estate surged on worries that the ailing economy could lead to a round of defaults on loans for office buildings, retail stores and hotels.
Citi is the stock that led the downward plunge on Wednesday, explains Pete Najarian. They’ve got some issues on the home front and the credit front.
Even the good ones were down on Wednesday, adds Guy Adami. I was surprised to see JP Morgan and USB lower.
Melissa Lee, who’s filling in for Dylan Ratigan, explains that Goldman Sachs is now trading near the same levels as its IPO price of $53.
Options action in the November Merrill10 puts suggest this stock could go lower, adds Pete Najarian.
When the TARP gives money there’s no provision on the dividend other than you can’t raise it, says Karen Finerman. That’s absurd.
GM, FORD TUMBLING
Auto executives were on Capitol Hill for a second day to plead their case for a $25 billion aid package. Prospects for a bailout have been uncertain but legislators have begun to talk about crafting some sort of deal.
Meanwhile, investors are concerned about how a possible bankruptcy for U.S. automakers could further hurt an already fragile economy
Economic Toll of Big 3 Bankruptcy
Growth: GDP shrinks at least 4% in Q1 2009
Jobs: Unemployment rate jumps to 8.00 - 8.25%
Vehicle Output: 60-70% of domestic production wiped out
Source: Deutsche Bank Global Markets Research
The testimony of the Big 3 was embarrassing, says Jeff Macke. They didn’t have a plan for anything! I’m short Toyota.
If you give the (U.S.) automakers $25 billion you’re only buying time, adds Guy Adami. It’s a bet that their business will improve. Nothing more.
The car makers are reducing their ad spending. That will probably hurt on-line ad revenues and I think Google is going lower because of it, speculates Pete Najarian.
CONSUMER NAMES PLUNGE
U.S. consumer prices plummeted at the sharpest rate on record in October as a slowing economy caused energy costs to drop for a third straight month, according to a Labor Department report on Wednesday.
Fearing a decline in prices will hurt the bottom line of big name retailers investors took down shares of Wal-Mart, Costco , Target and many others.
If you’re looking at Target, Wednesday might have been capitulation, says Guy Adami. (In case you're wondering Bill Ackman laid out revised plan for a target REIT spinoff, but all the traders find his plan ridiculous.)
I’d keep an eye on Church & Dwight, adds Guy Adami. They’re firing on all cylinders.
MICROSOFT HITS 10 YR. LOW
Microsoft CEO Steve Ballmer ruled out an acquisition of Yahoo on Wednesday but said his company was interested in resuming talks on a Web search partnership.
Let me be as clear as I think I've tried to be publicly. We are done with all acquisition discussions with Yahoo," Ballmer told Microsoft's annual shareholders meeting.
Investors were hoping the recent decision by Yahoo! CEO Jerry Yang to resign from his position might re-ignite talks between the two companies. Yang had been considered the main opponent to a merger.
Founders on Their Second Run
Company Founder & CEO Performance Since Return
Yahoo! Jerry Yang -64%
Dell Michael Dell -56%
Starbucks Howard Schultz -55%
Apple Steve Jobs +1521%
Everyone that has a brain is at Google , says and annoyed Jeff Macke who was once a Yahoo! shareholder. There’s about 4 guys and a dog left at Yahoo! and that’s about where I’d value the company.
Not merging with Microsoft was certainly a bad call by Jerry Yang, adds Pete Najarian.
Also the meeting Ballmer told shareholders that while the world's biggest software maker is seeing growth in all of its business groups, it is "not immune" to the tough economic climate.
He repeated that Microsoft is looking for areas to cut costs, including hiring, which "points to much, much slower growth...in head count for the remainder of this financial year and I suspect into next financial year."
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Trader disclosure: On Nov.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; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Macke Owns (SDS), (UUP), (DIS), (MCD), (WMT), (MSFT); Macke Is Short (YHOO), (TM); Najarian Owns (IYR) Puts; Najarian Owns (MER) Put Spread; Najarian Owns (CVX) Put Spread; Finerman's Firm Owns (OIH) Puts; Finerman's Firm Owns (MSFT), (SUN); Finerman's Firm Is Short (USO), (IYR), (IJR), (MDY), (SPY), (IWM), (RTH), (BBT), (VNO), (COF), (IYR)
GE Is The Parent Company Of CNBC
CNBC.com with wires