MARKET FREAK: NYSE CLOSES LATE
The Dow closed down by triple digits on Thursday as a weaker-than-expected jobs report brought the bulls to their knees. The widespread selling continued for an extra 15 minutes on the NYSE, which made good for a technical glitch by closing slightly later than usual -- at 4:15pm ET .
Negative sentiment swept across the market before the bell, when Labor Department data showed employers slashed 467,000 jobs bringing the unemployment rate to 9.5%, a 26-year high.
For the holiday shortened week, the US major stock indexes closed down more than 1.5% and all ended near the lows of the session.
How should you position yourself?
Strategy Session with the Fast Money Traders
We didn’t need a freak event at the NYSE on a day like this when we have such low volume, says Tim Seymour. It exacerbated the nervousness. But the bottom line was that the market saw very bad data. It said the consumer is struggling to recover.
I still think the S&P 500 trades down to 870, muses Guy Adami. The oil reversal isn’t good because it was the energy trade that had been boosting up stocks.
The reflation trade is over; its dead, says Joe Terranova emphatically. It’s all about earnings now. And July 14th is going to be a big day – that’s when Goldman Sachs reports and it should speak volumes.
We talked about commodities boosting the S&P from 900 to 950 and now they’re pulling back, reminds Pete Najarian. The market needs momentum from somewhere and I think it must come from tech or the financials if it's to keep going.
THE SELLOFF: OIL
U.S. crude oil futures closed sharply lower due to swelling gasoline stocks and a jobs number that sparked fresh worries about the recession.
Gulf Oil CEO Joe Petrowski tells CNBC, “The fundamental supply side has never been more bearish, we have almost a 29-year high in total oil stocks.”
What’s the oil trade now?
The drive higher in oil has not been about fundamentals, explains Joe Terranova, it’s about paper demand for the asset. But this week we saw a dramatic and bearish reversal. My trade is to be flat.
I think the OIH trades down to $90, says Guy Adami. That’s your entry point. And wait for Schlumberger until it trades down to $48. Also be careful of integrated oil companies such as Exxon, adds Adami. I wouldn’t be surprised to hear that their earnings are not up to snuff.
Hess seems like it’s broken, adds Pete Najarian. I’m seeing massive put buying in this stock. If oil continues lower look out for Hess.
Strategic investor Dennis Gartman tells Fast Money that the chart of oil made a head and shoulders pattern – a technical pattern that’s notoriously bearish.
THE SELLOFF: RETAILERS
Concerns that rising unemployment will make shoppers think twice about spending sent the retail sector plunging with shares of Macy’s and Lowe’s among the hardest hit.
How should you trade retail?
We’ve been talking about JC Penney, reminds Guy Adami. I like this stock, but I’d wait for it to hit $25 before initiating a position.
For me the best way to trade the consumer is with Visa, adds Pete Najarian.
THE SELLOFF: FINANCIALS
Bank stocks sold off broadly despite a bullish note from Keefe, Bruyette & Woods which said Wells Fargo may post strong second-quarter results driven by continued high mortgage revenue. The firm also raised their quarterly and full-year earnings estimates.
What’s the bank trade?
JPMorgan keeps bumping against $35.25 and failing, reminds Guy Adami. On a bounce I’d be a seller.
THE SELLOFF: TECH
The technology sector also lost ground despite the fact that Deutsche Bank started coverage of Cisco Systems with a 'buy' rating and cited a growing use of mobile broadband. The analyst gave the stock a $26 price target.
How should you trade tech?
The tape forced me out of Teradyne and Microsoft , reveals Joe Terranova. However, I think tech is still the place to be for the long-term.
STORY OF THE DAY: JOBS REPORT
As we said above, the day's bearish sentiment was largely triggered by a worse than expected jobs report. The latest data from the Labor Department showed employers shed nearly half a million jobs last month sending the unemployment rate to 9.5% - its highest level in 26 years!
The median of forecasts from 25 economists surveyed by Reuters was for 393,000 jobs lost in June. Ironically, June's job loss was the smallest since October 2008.
What’s next for the economy. Find out from Chris Thornberg Of Beacon Economics. Watch the video below!
You'll find our interview with Chris Thornberg at the end of the Word of the Street video.
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Trader disclosure: On July 2nd, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Seymour Owns (AA), (AAPL), (BAC), (BX), (EEM), (FCX), (FXI), (FITB); Seymour's Firm Owns (NOK); Seymour's Firm Is Short (PBR); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Terranova Owns (XBI), (ABT), (MSFT), (UUP), (RIMM); Najarian Owns (F) Call Spread; Najarian Owns (GS) Call Spread; Najarian Owns (INTC) Call Spread; Najarian Owns (V) & Short (V) Calls; Najarian Owns (PALM) call Spread; Najarian Owns (YHOO) Call Spread; Najarian Owns (WNR) & Short (WNR) Calls
CNBC.com with wires