STOCKS CLOSE ON HIGHS
The Dow closed higher for the second consecutive day as investors flocked to shares of Coke and other companies that hold up well in recessions following another round of disappointing economic data.
Large biotechnology stocks, also seen as a defensive hedge against the weakening economy, were another hot spot. The American Stock Exchange's Biotechnology Index rose almost 3 percent.
Besides a boost from biotech shares, the Nasdaq also got a lift from shares of big-cap technology companies after Cisco Systems said it did not plan layoffs at this point.
The rise in defensive stocks helped offset concerns sparked by gloomy corporate outlooks from companies, including mining company Freeport-McMoRan , which suspended its dividend, cut its 2009 capital expenditure budget and reduced its copper output.
Meanwhile, late in the session word surfaced that the U.S. Treasury Department is considering a plan to halt sliding home prices by lowering mortgage rates through home-finance powerhouses Fannie Mae and Freddie Mac.
Citing unnamed people familiar with the matter, the Wall Street Journal said in an online report that the still-developing plan would aim to bring mortgage rates down to as low as 4.5 percent -- roughly 1 percentage point lower than their current level.
Strategy Session with the Fast Money traders
The housing market is what got us into the problem and it’s what will lead us out, counsels Pete Najarian. And it could bode well for commodities because things like copper and steel go into making houses. If you’re looking for a trade, look at the steel names, he says.
There are people waiting on the sidelines to buy a house so I like the plan, adds Guy Adami. And 4 ½ mortgage rates could really spark demand.
I don’t really feel better than I did a week ago, counters Karen Finerman. Anytime the government comes out with a plan the market initially goes higher but then it settles lower. And this does nothing for homebuilders with too much debt on the balance sheet. If you want to make a complete leap of faith, look at US Gyp she adds . But it’s risky.
Sell the news, exclaims Jeff Macke. We change the rules every single day! Right now you can’t make investors buy stocks because government policies change so much.
And looking at the broad stock market…
I thought the market action was very encouraging, says Adami. If the S&P closes above 897 I think we could see another 100 points higher, on a technical basis.
If you’re looking for a dividend play look at Philip Morris and Altria , counsels Finerman. They have steady cash flow. But be careful of companies that pay dividends that have huge amounts of debt and plummeting cash flows. Those are the ones to be afraid of.
When you start seeing double digit dividend yields, I’d forget about it, counsels Pete Najarian. But I like drug stocks for their dividends.
GM, FORD HIGHER ON UNION CONCESSIONS
All options were on the table on Wednesday as congressional committees scrutinized auto company restructuring proposals and an urgent appeal for $34 billion in aid ahead of make-or-break hearings.
Meanwhile, United Auto Workers President Ron Gettelfinger said the union would surrender job security protections and delay payments into a retiree healthcare trust to help U.S. automakers clinch government aid to survive a sales downturn.
Be careful trading General Motors, says Guy Adami. I think common equity in GM could go to zero, he warns.
The UAW making deals with the automakers is much like a terminal patient making a deal with God, bristles Jeff Macke. It’s over!
TOPPING THE TAPE: AMAZON.COM
Shares of Amazon.com soared on Wednesday after results showed the sales were strong this past Cyber Monday.
On a fundamental basis I don’t think you can touch this stock, says Jeff Macke. And if you’re long Sears get out now.
RIM SURGES DESPITE WARNING
The weak U.S. economy has finally caught up with Research In Motion, forcing the maker of the BlackBerry smartphone to cut its quarterly profit estimate as sales slow, margins narrow and a stronger U.S. dollar compresses revenue.
Despite the negative news shares of the firm closed higher.
The stock has been getting beaten up every day but be careful of this name, counsels Pete Najarian. You’ll have time to get in.
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Trader disclosure: On Dec. 3rd, 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 (MGM), (MSFT), (UUP), (WMT), (MCD); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Finerman's Firm Owns (PM), (MO), (IBB), (PPH), (CSCO), (MSFT); Finerman's Firm Is Short (IYR), (IJR), (MDY), (IWM), (SPY), (BBT), (COF), (USO); Finerman's Firm Owns (DNA) And (DNA) Calls; Najarian Owns (NUE); Najarian Owns (UYG) Calls; Najarian Owns (SNDK) Calls
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CNBC.com with wires