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Dow Falls Below 8,000

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DOW FALLS BELOW 8,000

The Dow and S&P 500fell on Monday as uncertainty about the Obama administration's plan to stem bank losses dragged down financial shares.

"Nobody is sure what solution is going to be put in place, how long it's going to take, or what the cost is going to be," says Kurt Brunner, portfolio manager at Swarthmore Group in Philadelphia.

Also Macy's bleak outlook fueled worries the recession is worsening.

However, there was a bright spot. A growing belief that technology stocks might be among early beneficiaries of a likely economic stimulus helped propel the Nasdaq higher.

Strategy Session with the Fast Money Traders

I’m keeping an eye on tech companies, says Pete Najarian. They seem to be performing in a difficult environment. I like Juniper , Cisco and SanDisk.

To me I think it’s an issue of relative performance, adds Karen Finerman. Tech might not do well, but better than many other firms.

I don’t see how technology can stage a sustainable rally, bristles Jeff Macke. Monday’s action doesn’t mean anything.

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BANKS DROP AS TARP II STILL IN PLANNING STAGE

Shares of the financials closed lower after CNBC reported that the framework for a bailout won’t come until next week. According to a report by Sr. Economics Reporter Steve Liesman, the new plan could curb executive compensation and require banks to lend.

I like that they’re taking their time, says Karen Finerman. We’ve seen what happens when lawmakers rush major legislation that hasn’t been thought out.

It seems to me that the government wants to play god, adds Jeff Macke. I mean they’ll decide which banks survive and which don’t.

If you’re looking for a trade, I think the banks are too murky, adds Pete Najarian. But I like what I see in Goldman and Morgan Stanley. And you can also look at Visa and Mastercard.

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MACY’S WARNING DROPS RETAIL

Macy's said on Monday it would slash about 7,000 jobs and cut its quarterly dividend as it forecast earnings for fiscal 2009 that fell far below Wall Street expectations, sending its shares down 4 percent.

The department store operator said it took the steps to counter what it expects will be a very tough retail market this year, and that it would plan conservatively despite efforts by the U.S. government to build an economic stimulus package.

I found what they said to be encouraging, muses Tim Seymour. At least they’ll be saving money.

This is a tough space, adds Karen Finberman, but the retailers who have good balance sheets should survive.

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TOPPING THE TAPE: BIOTECH & HEALTH CARE

French drug maker Sanofi-Aventis's new Chief Executive Chris Viehbacher has told staff he plans to make acquisitions and wants to diversify the group's product range. According to the Financial Times the firm may be looking at Bristol-Myers Squibb, Amgen, and/or Biogen as a possible takeover target.

There seems to be consolidation in the space, explains Pete Najarian. There was an incredible amount of call buying in Amgen , he adds, though I don’t think it’s a takeover target. And keep an eye on the SPDR S&P Biotech .

I think it’s human nature, adds Karen Finerman, people are pairing up at the dance.




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Trader disclosure: On Feb. 2nd, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (BAC), (EEM), (FXI); Macke Owns (DIS), (MS), (SDS), (MCD); Finerman's Firm Owns (DNA) & (DNA) Call Spread; Finerman's Firm Owns (MSFT), (XBI), (IBB); Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO); Najarian Owns (AMGN) Call Spread; Najarian Owns (BMY) Calls; Najarian Owns (DRYS) Stock & (DRYS) Puts; Najarian Owns (EEM) Call Spread; Najarian Owns (FCX) & (FCX) Short Calls; Najarian Owns (GDX) Call Spread; Najarian Owns (MSFT) & (MSFT) Short Calls; Najarian Owns (MS) & (MS) Short Calls/Put Spread; Najarian Owns (V) Call Spread

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