In a stunning vote that shocked the capital and worldwide markets, the House on Monday defeated a $700 billion emergency rescue for the nation's financial system, ignoring urgent warnings from both parties that the economy could nosedive without it.
The Dow’s plunge began even before the 228-205 vote to reject the bill was officially announced on the House floor. It’s the worst one day point decline ever surpassing the decline after the Sept. 11, 2001, terror attacks, though in percentage terms it was well short of the drops on Black Monday of October 1987 and at the start of the Great Depression.
The S&P 500 and Nasdaq both closed down more than 8 percent.
A Deeply Upsetting Day
Monday was a deeply upsetting day, says an irate Jeff Macke. This is not an issue of Main Street versus Wall Street. It’s about partisan politics. If you’re long stocks in any way, either through a pension fund or an IRA, you should know that you lost money Monday.
We’re seeing old fashioned runs on the bank because people fear that the money is not actually there, he adds. That has to stop. Deposits are walking out the door. Americans are doing things they haven’t done since the 1930’s.
Be careful of gold, counsels Guy Adami. I’m not sure it’s the safe haven that investors think it is. It can go down as quickly as it goes up. If you can stomach a $75 move against you, that’s different. But if you’re playing gold as a trade, be careful.
I’m mildly optimistic, adds Karen Finerman. Seeing the market unravel the way it did on Monday has to be a telling sign to the lawmakers. I think the message is very loud and very clear.
I have no confidence buying stocks in this environment, adds Macke. It seems to me that Washington is making up the rules as they go along.
My immediate concerns are for companies that need short term loans, adds Karen Finerman. That’s where I see a problem. For example, the retailers. They need to take in a lot of inventory ahead of the Holidays. Typically they take out loans and they buy merchandise. This year they might not be able to do that.
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Trader disclosure: On Sept 29, 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 (MSFT), (WMT); Adami Owns (AGU), (BTU), (GS), (INTC), (MSFT), (NUE); Najarian Owns (AAPL) and (AAPL) Puts; Najarian Owns (BIIB) Calls; Najarian Owns (GS) Call Spread; Najarian Owns (MS) and (MS) Puts; Najarian Owns (NCC) Call Spread; Najarian Owns (WB) Put Spread; Najarian Owns (XLF) Straddle; Finerman Owns (GS); Finerman's Firm Owns (MSFT), (DVN); Finerman's Firm Owns (IMCL) Call Spreads; Finerman's Firm is short (IYR), (IJR), (SPY), (MDY), (IWM), (COF), (SPG, (BBT); Finerman's Firm Owns (BIIB) Calls