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Dow Drops Almost 200

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DOW DROPS ALMOST 200

The Dow sank on Monday after the prospect of more losses from the mortgage crisis spooked the Street. Investors sent financials plunging with bank stocks dragging down the whole market.


FANNIE DRAGS DOWN MARKET

The news: Fannie Mae and Freddie Mac shed more than 20 percent each after Barron's reported that the U.S. Treasury may need to bail out the home finance giants, which could wipe out shareholders and effectively nationalize the government-sponsored enterprises.

The Treasury Department responded by saying it had no plans to use its authority to backstop either of the two companies, which own or guarantee about half of outstanding U.S. mortgages.

All that happened is Fannie and Freddie got dissed in Barron’s and they fell harder than a Chinese gymnast, exclaims Jeff Macke.

“There’s nothing new Monday, (on Fannie or Freddie) that made me worry,“ adds FPK senior analyst Howard Shaprio on Fast Money. “The Barron’s argument simply rehashed old arguments and did not offer numbers to support what they were saying."

Shaprio thinks Monday's market action was propelled by fear and nothing more. "We’ve crunched the numbers and we think Fannie and Freddie have sufficient capital to make it though.”

Shaprio suggests that Fannie and Freddie might be raging buys on the dip. Karen Finerman and Pete Najarian think you should stay away. "Not yet," Najarian says.

I think Freddie and Fannie are lottery tickets if you want to play the game, adds Guy Adami.

What do you think? Answer the Charles Schwab Question of the Day!










OTHER FINANCIALS

The news: Meanwhile, more analysts downgraded their views on Goldman Sachs Monday sending shares lower. Fox Pitt cited “weaker-than-expected results across the board and bigger write-downs than we had projected.”

Also, the Wall Street Journal reported that some analysts are bracing for investment bank Lehman Brothers to report a third-quarter loss of $1.8 billion or more.

I don't like the disconnect between the debt market and the stock market, says Karen Finerman. One or the other is due for a correction and personally I think equities are hanging in much higher than they should be. (Read more “Spreads Don’t Lie)


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GREENBACK TAKES A BREATHER

The news: Despite recent strength, the dollar fell on Monday ahead of housing and inflation data to be released on Tuesday.

I think the dollar is fine, says Guy Adami.

It’s just a pause, adds Jeff Macke. I think it’s still going higher.

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OIL KEEPS FALLING

The news: Oil continued it’s retreat on Monday as fears eased that Tropical Storm Fay would damage major oil and gas infrastructure in the Gulf of Mexico.

Oil has been one of the major drivers of the market, explains Pete Najarian. I think the Oil Service HLDRS is interesting; it seems to be over-beaten.

I’d put casino stocks on the radar, adds Jeff Macke. They are giving back all the gains they made a few weeks ago.


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H-P LEADS TECH SHARES LOWER

The news:Hewlett-Packard, the world’s largest computer maker traded lower ahead of earnings Tuesday.

It’s dollar related, exclaims Pete Najarian. If you think the dollar has bottomed it could make you hesitate. They have a great deal of international exposure.

I just think investors were taking profits ahead of the quarter, counters Guy Adami. Nothing more.


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LOWE'S GIVES UP EARNINGS GAIN

The news: Shares of Lowe's opened higher Monday but then fell as traders feared that rival Home Depot would offer a lackluster forecast when they report Tuesday.

I don’t expect anything great out of Home Depot on Tuesday, says Karen Finerman.

I think you’d have to be a silly-heart to get long, says Jeff Macke.

If it pulls back 5% ,I think it’s a buying opportunity, counters Guy Adami.

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TOPPING THE TAPE: AG OUTPERFORMING

The news: Beaten down ag names such as Mosaic, Agrium , and Potash all traded higher despite falling significantly last month.

I don’t think the ag story is over, says Pete Najarian. However I also don’t think the current unwind is over, either.

If John Deere pulls back to $63 I think it’s buy with a tight stop, adds Jeff Macke.

I think ag stocks will get interesting, says Jeff Macke, but not yet.







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Trader disclosure: On Aug 18, 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), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Najarian Owns (AAPL) And Is Short (AAPL) Calls; Najarian Owns (CSCO) Call Spread, (SNDK) Call Spread, (ZMH) Call Spread; Macke Owns (MSFT), (UUP), (WMT), (COST), (DIS), (ATVID); Finerman Owns (GS)

Finerman's Firm And Finerman Own (GLNG); Finerman's Firm And Finerman Own (C) Leaps; Finerman's Firm Owns (MSFT), (SUN), (TSO), (VLO), (VCLK); Finerman's Firm Is Short (IYR), (IJR), (MDY), (IWM), (SPY), (BBT), (COF): NBC Universal Is The Parent Company Of CNBC

FPK Or Affiliates May Seek Investment Banking Compensation From (FRE) In Next 3 Months; FPK Or Affiliates May Seek Investment Banking Compensation From (FNM) In Next 3 Months