S&P 500 JUMPS 5% ON WEEK
The Dow rallied for a second day on Friday on hopes Washington's stimulus package and a bank rescue plan will bolster the ailing economy, even as data showed the biggest one-month job losses in 34 years.
Bank shares led the march higher with Bank of America , Citigroupand JP Morganall making sizable gains.
For the week, the S&P 500 was up 5.2 percent, the Dow rose 3.5 percent and the Nasdaq saw its best week since early December, up 7.8 percent.
Strategy Session with the Fast Money Trades
Data just released by the Labor Department shows employers slashed 598,000 jobs in January, the most since late 1974. The unemployment rate rose to 7.6 percent, the highest since late 1992.
Everyone knew unemployment would be awful, says Pete Najarian. It’s a backward looking indicator. Looking forward, I like that the S&P broke out above 850.
That's right, unemployment is a lagging indicator, reminds Guy Adami. We shouldn't be surprised that the market rallied. And, frankly I think next week could be a very big week to the upside.
Leading indicators such as the transportation index are also up, reminds Tim Seymour, and it gave investors optimism.
There’s an assumption that we’ve entered a new baseline, adds Zach Karabell.
BANKS RALLY AHEAD OF MONDAY RESCUE
Bank stocks rallied ahead of Monday’s expected announcement from Treasury Secretary Timothy Geithner in which he will spell out a "comprehensive plan" to stabilize the financial system.
TECH PUSHES NASDAQ POSITIVE FOR 2009
Shares of bellwether technology firms powered through the difficult economy to lift the Nasdaq into positive territory year to date. The Technology SPDR ETF jumped 3% today, alone.
The tech sector was completely decimated in 2000 and 2001, explains Zach Karabell. And since then they’ve been run with immense capital discipline. So they’re positioned well to weather the downturn and they should bounce back well.
I’d keep an eye on Cisco , muses Guy Adami. Don’t chase it but it’s a good company.
Taiwan Semiconductor is worth a look too, adds Tim Seymour. Their inventories are way down.
I like Apple , RIMM , and IBM , says Pete Najarian. But whatever stock you play, make sure to be selective in this space.
COMMODITY STOCKS ON FIRE THIS WEEK
Commodity stocks continue to roll this week signaling the reflation trade may be back on. The Materials SPDR ETF climbed almost 8% this week.
In this space, I love Vale as well as Potash and Agrium, says Tim Seymour. And be careful of ArcelorMittel . That stock is up about 20% over the last 5 days.
It seems to me money is coming out of Treasuries and going into the commodity world, speculates Guy Adami.
Pete Najarian is also very excited about this sector.
I’m watching the price of copper. It’s sustaining above $1.50 and that’s good for Freeport McMoRan . Also keep an eye on BHP Billiton , they say steel demand is coming back to China. And because of that keep an eye on the rail stocks such as CSX and BNI . And while I'm at it, the ag names are talking off too!
I only have three words about this space, adds Zach Karabel. China, China, China.
HEALTH CARE STILL GOING STRONG
Health Care is also still going strong with the Health Care SPDR ETF up almost 4% this week.
Meanwhile, activist investor Carl Icahn made another power play for Biogen Idec Friday as the company reported its fourth-quarter profit. The billionaire nominated four people for the board and proposed relocating the company's headquarters; the moves suggest he wants to take control.
Icahn wants a bigger position on the board of Amylin too, explains Pete Najarian. I’d keep an eye on AMLN and BIIB. And I’d play the whole space with the XBI .
I’d keep an eye on Amgen , adds Guy Adami. It’s possible they could be a takeover target, he speculates.
I’d be careful of HMOs and big cap Pharma, counters Zach Karabell. Fundamentally there could be a lot of head winds.
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Trader disclosure: On Feb. 6th, 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); Najarian Owns (CAT) Call Spread; Najarian Owns (EEM) Call Spread; Najarian Owns (FCX) & (FCX) Calls; Najarian Owns (GS) Calls; Najarian Owns (MWW) Calls; Najarian Owns (GDX) Call Spread;Najarian Owns (MSFT) & (MSFT) Short Calls; Najarian Owns (MS) & (MS) Short Calls; Najarian Owns (MOS) Call Spread; Karabell Owns (BHP), (CSCO), (FCX), (GE), (JPM), (NVDA), (NOK); Seymour Owns (BAC), (EEM), (FXI), (TM); Seymour's Firm Owns (TKC)
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