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Dow Closes Below 10,000

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DOW CLOSES BELOW 10,000

The Dow closed below the psychologically important 10,000 level on Monday trading at intra-day levels not seen in almost five years. Fears the global economy was hurtling toward recession and doubts about the government’s ability to contain the spreading crisis fueled the sell-off. But the market cut almost half its losses in the final hour of the session, as traders speculated the sell-off may trigger a coordinated global response to thaw credit markets.

Traders, how did you play the day?

I held onto the regional banks, explains Pete Najarian. They were the most hurt and I think that’s where the most opportunity lies. I would still buy RegentsBancorp. and National City , he says. Or play them via calls in the options market.

If there’s a silver lining here it’s that there’s now value in the market, adds Guy Adami. Burlington Northern and Mastercard both look attractive now.

It seems to me the government is doing anything they can to make it profitable to be in the banking business in an effort to shore up balance sheets, adds Karen Finerman. There are tax changes now that benefit the banks. (That should give the financial services sector a boost.)

I bought two names on Monday, counsels Jeff Macke, Burlington Northern and McDonald’s at $57.

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BREAKING NEWS: FEDERAL RESERVE LENDING

In late breaking news CNBC's Steve Liesman reveals that the Federal Reserve is, "thinking about taking additional measures to secure the unsecured commercial market.”

And the measures are likely to involve the Treasury too. "However it’s currently unclear if these new measures are going to involve direct purchases or access to the discount window. Also, it’s not clear how imminent they may be.”

I think the Fed is trying to return some kind of normal to the markets, muses Karen Finerman.

This is not a long-term solution to the problem, adds an aggrevated Jeff Macke. It’s just another quick fix.

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AFTER HOURS ACTION: BANK OF AMERICA

Shares of Bank of America slid 6% in after-hours trading Monday after the bank cut its dividend, unveiled plans to sell $10 billion of new stock and said third-quarter profit was cut in half from a year ago.

The bank also warned that credit quality continued to weaken during the quarter, and said the economy has moved to a "recessionary environment."

This earnings report was simply hideous, says Jeff Macke. It makes me wonder what their capital structure looks like and whether they’re in control of their ship.

I like that they’re cutting their dividend, adds Karen Finerman, whether or not they need to. That capital is better used elsewhere right now.




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Trader disclosure: On Oct.6, 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 (UUP), (MSFT), (WMT), (MCD), (BNI); Pete Najarian Owns (AAPL) And (AAPL) Puts; Pete Najarian Owns (IYR) Put Spread; Pete Najarian Owns (MS) And (MS) Puts; Pete Najarian Owns (RF) And Is Short (RF) Calls; Pete Najarian Owns (GS) Call Spread, (RIMM) Call Spread, (WB) Call Spread, (XLF) Call Spread, (NCC) Call Spread; Pete Najarian Owns (BIIB) CallsFinerman Owns (GS); Finerman's Firm Owns (MDY), (SPY), (IWM), (MO), (JNJ), (MSFT), (DEO); Finerman's Firm Is Short (BBT), (COF), (IYR), (IJR), (USO), (SPG)

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