BIGGEST RALLY IN SIX YEARS
The Dow roared back Tuesday, a day after its worst sell-off in 21 years. Investors bet Washington would revive a plan to stabilize the U.S. financial sector after Monday's surprise defeat on Capitol Hill.
Senate Banking Committee Chairman Christopher Dodd, D-Conn., told reporters, "I'm told a number of people who voted 'no' yesterday are having serious second thoughts about it." He added, however, "There's no game plan that's been decided."
Senate Republican Leader Mitch McConnell of Kentucky said it was time for all lawmakers to "act like grown-ups, if you will, and get this done for all of the people." He predicted a bill would pass this week, although the House, not the Senate, is the focus of the dispute.
If anyone sees the glass has half full, it’s Guy Adami. I think we’re entering an environment where strong banks are at a huge advantage, he says. Wells Fargo , JP Morgan and US Bancorp look like they’re setting up for a huge rally.
Joe Terranova doesn’t share Guy’s optimism. It didn’t feel like the market was up that much to me, he says Joe Terranova.
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CREDIT MARKET STILL IN SHAMBLES
Despite a widely held belief that Congress will pass some kind of bailout credit markets are still frozen, more of less. Libor, the rate which banks charge each other hit a 7 year high while the Libor-OIS spread, a measure of availability of cash among banks has grown wider.
It’s going to be bleak Christmas, says Jeff Macke. (Retailers are having trouble borrowing money to increase their inventory ahead of the Holidays.) But this separates the retailers who can pay their bills from those who can’t and that’s why I like Wal-Mart.
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DOLLAR SETS RECORD GAIN VS EURO
The dollar jumped against major foreign currencies on Tuesday including the euro and yen as investors rushed into the greenback on concerns that Europe is going to take a turn for the worse.
I still believe the trade for the second half of '08 is long the US dollar, adds Guy Adami. And think twice about running into gold.
I’m long the PowerShares DB US Dollar Index Bullish , adds Jeff Macke.
I think Europe is behind the curve, adds Joe Terranova.
I expect the other economies of the world will fall in line, counters Karen Finerman. Look at what happened in Ireland on Tuesday. (The government intervened in the banking crisis) I’m no longer short the pound because I think they're starting to get it.
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NASDAQ JUMPS 5%
Tech stocks along with the broad market surged higher on Tuesday as investors went bargain shopping in the sector.
I would rather wait for tech stocks such as Apple to prove themselves, says Jeff Macke. Apple works for me if it gets over $120 which has been a point of resistance.
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GOOGLE MANIPULATION
The Nasdaq Stock Market said it will cancel some of the late trades in Google , whose shares appeared to plunge as low as 1 cent at the close of North American markets on Tuesday.
Bethany Sherman, a Nasdaq spokeswoman, said the exchange was investigating trades that took place after 3:57 p.m. EST – three minutes before close.
There was a tremendous amount of volatility in Google adds CNBC’s Scott Wopner. Turns out they busted some erroneous trades. They cancelled trades that were deemed to be erroneous at or above $429.25 or at or below $400.52.
The exchange set Google's closing price at $400.52, up 5.12 percent.
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HOME PRICES FALL AGAIN
Prices of single-family homes plunged a record 16.3 percent in July extending declines that have plagued the housing market for two years, according to the Standard & Poor's/Case-Shiller Home Price Indexes.
It’s important to remember that the number met expectations, adds Karen Finerman, although that’s a big move down.
I’d keep an eye on lumber, adds Joe Terranova. When prices rise I think it could signal a turn in the housing market.
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Trader disclosure: On Sept 30, 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), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Macke Owns (MSFT), (UUP), (WMT); Finerman's Firm is short (IYR), (IJR), (SPY), (MDY), (IWM); Finerman's Firm is short (BBT); Finerman's Firm Owns (DELL); Finerman Owns (GS); Finerman's Firm Owns (IMCL) Call Spreads; Finerman's Firm Owns (MSFT)
Terranova Owns (AAPL), (EOG), (FCX), (FTD), (X), (GS), (KOL), (NOV), (POT), (VLO), (YHOO);
Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Virtus Investment Partners Owns More Than 1% Of (ABD), (ARE), (BIG), (BRE), (CNTY), (CNW), (CLB), (OFC), (DLM), (DRH), (DLR), (EPR), (ESS), (EXR), (AGM), (FL), (GBL), (GNET), (IGE), (LNET), (MAC), (OIIM), (PSPT), (DBC), (DBV), (SLB), (GWX), (SSYS), (SKT), (UA), (BIV), (VV), (BLV); Virtus Investment Partners Owns More Than 1% Of Goldman Sachs Financial Square Fund - Money Market Fund; Virtus Investment Partners Owns More Than 1% Of Seagate Technology Tax Refund Rights
Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV)
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