WORST DROP IN 11 MONTHS
The headline: Weak Economic Report Sends S&P 500 Down 3.2%, Worst Drop Since Feb. '07.
Tuesday was a dizzying day on Wall Street with the Dow plunging lower. In fact, it was the blue-chip index's largest one-day point drop since it fell 387 points on August 9, 2007, explains Dylan Ratigan. What happened? Investors interpreted an unexpected contraction in the service sector as evidence the economy is sinking into recession.
“Buy when things seem horrible,” says Jeff Macke. Sell the rips and buy the dips.
I think investors should seriously look at early recovery names now, says Guy Adami. Check out the railroads such as Kansas City Southern or Celanese which is a chemical company.
I’m going to wait and watch, says Karen Finerman. There are stocks I want to buy, but not yet.
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BANKS BOMBARDED
The headline: Financial ETF Sheds 4% On Recession Fears, Goldman Sachs Downgrade.
Banks and other financial services stocks fell particularly hard Tuesday after S&P said any loss of a top credit rating by a major bond insurer could force banks to put hobbled bonds back on their balance sheets, curtailing funds available for basic lending, Dyaln Ratigan explains.
We’re in a collar for the XLF – which is being long the financials with downside protection. Specifically, I’m long the XLF and long puts but short calls above the market, says Jon Najarian.
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BHP BIDS FOR RIO TINTO
The headline: BHP Billiton Formally Launched A $147.4 Billion Takeover Bid For Rival Rio Tinto .
If successful it would be the biggest ever takeover in the mining sector, explains Jeff Macke.
I own Rio and am short BHP in anticipation of this offer, explains Karen Finerman. But I don’t think I’m going to sell into this bid, instead I’ll wait a while.
Also, look at Alcoa (AA) or Freeport McMoRan (FCX) says Guy Adami. And don’t forget US Steel . I expect to see more M&A in the space and all these mining stocks could be in play
I prefer Commercial Metals (CMC), says Jon Najarian.
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AFTER HOURS ACTION: DISNEY MAGIC FOR MARKET?
The headline: Disney May Save the Market Wednesday After Earnings Beat The Street.
Disneyreported a drop in quarterly profit on Tuesday, but its shares rose 2.6% as the No. 2 U.S. entertainment company beat Wall Street expectations and reported strong results at theme parks and its television business, says Dylan Ratigan.
I’m long this stock, says Jeff Macke. I think it should trade around $40 by the end of the year.
>See the exclusive interview with Disney CEO Bob Iger
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NEW IPHONE CAN'T SAVE TECH
The headline: Nasdaq Plunges As Broad Sell-Off Sweeps Tech Shares.
Wall Street thinks technology stocks are particularly vulnerable to a downturn in both business and consumer spending, explains Jon Najarian. Apple fell 1% Wednesday as the new iPhone and iPod models failed to excite investors. I’m not trading these names aggressively, right now.
I think Apple at this price looks interesting, says Karen Finerman. Or you might want to pick up Microsoft on any dip.
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AFTER HOURS ACTION: JDS UNIPHASE
The headline:JDS UniphaseBlows Past Consensus
Communications test and fiber-optic network equipment maker JDS Uniphase Corp. said Tuesday its fiscal second-quarter earnings dipped slightly year-over-year, but beat Wall Street estimates by a wide margin, explains Dylan Ratigan.
I like this stock, but recommend taking profits, says Jon Najarian.
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NOT SO NYSE
The headline: NYSE Euronext (NYX) Shares Plummet 12% On Delay In Merger-Related Cost Savings.
Shares of NYSE Euronext tumbled in Tuesday afternoon trading after it said cost savings from an integration will occur later than previously anticipated. That happened despite the fact NYX reported quarterly profits which met analysts' expectations.
I felt NYSE CEO Duncan L. Niederauer lowered the bar for himself, says Karen Finerman. That’s good long term, but it dragged down the stock.
I'd recommend buying the dip, adds Guy Adami,
Or you might even want to buy the Nasdaq , counsels Jeff Macke.
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Trader disclosure: On Feb.5, 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 (YHOO), (DIS), (INTC); Finerman Owns (GS); Finerman's Firm Owns (NMX), (RTP), (SKS), (TSO), (TYC), (VLO), (WMT), (SUN); Finerman's Firm Owns (YHOO) And (YHOO) Calls; Finerman's Firm Is Short (SPY), (IJR), (IYR), (IWM), (MDY), (CME), (COF), (BHP); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; Jon Najarian Owns (CME), (DIS), (MRK), (CMC), (YRCW); Jon Najarian Is Short (AIG), (XOM); Jon Najarian Has A Protected Long Position In (XLF) Through Options