GO
Loading...

Halftime: Is the Market a Prisoner to Oil Prices?

The S&P tumbled on Friday and the Dow dropped by triple digits with negative catalysts in energy trumping positive economic data.

The bulls just couldn’t gain a foothold despite a strong jobs number. U.S. payrolls rose by 192,000 in February, slightly above expectations, and the jobless rate unexpectedly dipped to 8.9 percent from 9 percent

Instead investors were more influenced by unrest in the Middle East and North Africa with forces loyal to Libya’s Muammar Gaddafi increasing their attacks on rebel held areas.

The uprising has knocked out nearly 50 percent of the nation’s 1.6 million barrels of oil per day output.

The potential of further supply disruptions has driven oil sharply higher; on Friday it traded at its highest level since September 2008.

With the fate of the bull market in fuel’s hands where does this market stand?

Instant Insights with the Fast Money traders

Jon Najarian thinks the market is a prisoner to oil prices. He’s afraid that over the week-end pictures could come out of Libya that show oil fields burning and that could spook investors.

Going forward, Najarian thinks the market could be challenged. “If oil stays between $105 - $110 the market has topped out,” he says.

Steve Grasso largely agrees and suggests that the path of least resistance in the S&P is lower. He thinks investors will lock in profits, while they can. “Guys are saying let me take my chips off the table; why not lock in profits?”

Joe Terranova agrees that oil will be the X factor. Despite better than expected economic data, he concedes that the market is currently driven by headlines and some of those headlines are scary.

”We’re seeing foreign workers that have left production facilities in Libya. That oil will be offline for a significant period of time. The rest of the world now has to make up the shortfall of sweet oil, which is what Libya produces. Not the heavier stuff, which is what the Saudi’s have.”

Deutsche economist and CNBC contributor Joe LaVorgna is on the other side of the argument.

Although $100 oil has a psychological impact LaVorgna doesn't think oil presents a major drag on the economy unless it rises another $40-$50. "It's going to take a lot bigger move in oil with persistent duration to really derail this expansion," he says. "If I had to give you a range of where to worry, it's closer to the '08 highs of $147," he says.

------

CALL OF THE DAY: BANKS

Financials were among the hardest hit sectors on Friday after Bank Of America Merrill Lynch downgraded both Citi and Goldman Sachs.

BoA's Guy Moszkowski said the big concern is cash flow, especially as regulations take effect and customer risk appetite falls.

Is the sell-off a buying opportunity?

Vote
Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.

Jon Najarian is skeptical. "Regulations are a headwind not only for these banks but for the entire space," he says. "I don’t think they’re going anywhere fast. I see little upside potential in the short–term."

If you're looking for a long idea Joe Terranova suggests putting JPMorgan on the radar. He says "it's a name you can own on a bet they’ll be among the first to raise the dividend."

What do you think? We want to know!


------

GRAIN TRADE, COTTON HIGHER

With cotton making new record highs on Friday, the traders are again looking at the trade in soft commodities.

How should you play it?

Joe Terranova is somewhat cautious of the space. "If we’re moving into a a risk-off environment it could be pressured", he says.

"I’m holding Syngenta and Potash ," says Patty Edwards. "In the short run there may be a pull back but I’d stay with the trade."





______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On Mar. 4, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Joe Terranova owns (VRTS), (C), (UPL), (ABT), (MS), (PBR), (BAX), (TEVA), (CVI), (RSX), (SU) and (CNQ). Steve Grasso owns (ASTM), (BA), (BAC), (BWC), (C), (CSCO), (JPM), (LIT), (LPX), (MT), (MHY), (NDAQ), (PFE), (PRST) and (S). Jon Najarian owns (CSTR), is short (CSTR) calls. Jon Najarian owns (CBOE), is short (CBOE) calls. Jon Najarian owns (CME), is short (CME) calls. Jon Najarian owns (NYX), is short (NYX) calls. Jon Najarian owns (BP), is short (BP) calls. Jon Najarian owns (CHK), is short (CHK) calls. Jon Najarian owns (XOM), is short (XOM) calls. Jon Najarian owns (WMT), is short (WMT) calls. Jon Najarian owns (AAPL), is short (AAPL) calls. Jon Najarian owns (SLW), is short (SLW) calls. Jon Najarian owns (PAAS), is short (PAAS) calls. Jon Najarian owns (ONNN), is short (ONNN) calls.

Comcast Is The Parent Company Of CNBC
Comcast Is The Parent Company Of NBCUniversal
GE Owns 49% Of NBCUniversal
GE Owns 49% Of CNBC

JOE TERRANOVA
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LPHI)
Virtus Investment Partners Owns More Than 1% Of (NCRI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of (DOM)

PATTY EDWARDS
Edwards owns (SPY) for clients
Edwards owns (XLB) for clients
Edwards owns (GLD) for clients
Edwards owns (SLV) for clients
Edwards owns (AMZN) for clients
Edwards owns (V) for clients
Edwards owns (JNJ) for clients
Edwards owns (AAPL) for clients
Edwards owns (MSFT) for clients
Edwards owns (QCOM) for clients
Edwards owns (SYT) for clients
Edwards owns (POT) for clients
Edwards owns (GE) for clients
Edwards owns (TGT) for clients
Edwards owns (CME) for clients
Edwards owns (BKCC) for clients
Edwards owns (FXI) for clients

STEVE GRASSO
Stuart Frankel & Co and it’s partners own (AMGN)
Stuart Frankel & Co and it’s partners own (CSCO)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HPQ)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (MSFT)
Stuart Frankel & Co and it’s partners own (NEM)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners are short (QQQQ)
Stuart Frankel & Co and it’s partners own (AAPL)

JOE LAVORGNA
LaVorgna has no disclosures

CNBC.com with wires.

Symbol
Price
 
Change
%Change
DJIA
---
S&P 500
---
C
---
GS
---
JPM MLP ETN
---
POT
---
SYNN
---
SPDR FIN SEL
---

Contact Halftime Report

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET