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Dow Loses 1.2%, Biggest Drop Since March 9th

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DOW LOSES 1.2%, BIGGEST DROP SINCE MARCH 9

The Dow fell on Thursday largely due to concerns that the Federal Reserve's latest efforts to battle the recession are too costly and untested, prompting investors to book profits on bank shares after the recent sharp rally.

Big investors felt unsettled by the implications of the Fed's action to pump another $1 trillion into the financial system by purchasing long-term Treasuries. They fear the move could stir up inflation in the long term.

Meanwhile, the U.S. House of Representatives passed legislation to recoup most of the $165 million in retention bonuses paid to AIG employees, as outrage mounted in government and among the public.

It seems to me they’re coming after us and the rich guys are going to pay, bristles Jeff Macke.

I think the market will continue to run and we should see 900 on the S&P, adds Guy Adami.

FED SPARKS 'REFLATION' TRADE

Commodities surged across the board Thursday after recent Fed action sent the dollar sliding. What’s the trade as the Fed buys Treasuries and floods the world with dollars?

I also think we’re seeing demand return to commodities, says Pete Najarian. Some of it is due to the decline in the dollar but not all of it.

I think the reflation trade is back on, echoes Tim Seymour, but I don’t think there’s a whole lot to get excited about.

If you want to play commodities I’d look at copper and nat gas, says Guy Adami. I would not race into gold and I’d take a powder on oil.

And if you like commodities wwhy not look at the commodities currencies, adds Seymour. You can play it through the WisdomTree Dreyfus Chinese Yuan or the WisdomTree Dreyfus Brazilian Real.

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FINANCIALS LOSE MOMENTUM

Banks stocks paused on Thursday as investors took profits after the recent run up. Shares of Citigroup, Bank of America and Morgan Stanley all closed in negative territory.

The banks are trading on momentum and nothing more, says Jeff Macke.

The financials moved 50% in a week - how could you not take profits, counters Pete Najarian. And in this space I’d keep an eye on Blackstone, he adds. They have cash and seem to want to spend it.

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TOPPING THE TAPE: TECH

The Nasdaq performed better than the other two main indexes Thursday with its declines offset by a rise in shares of Oracle after the business software maker reported results that beat forecasts.

I think the Oracle trade is over for the short-term, counsels Guy Adami. The trade happened and it’s over.

Meanwhile Yahoo shares closed higher on hopes that the Internet firm may resume talks with Microsoft on a search engine deal. "Unless I'm fooling myself, over time I would expect a there's a good opportunity for a deal," Microsoft CEO Steve Ballmer said.

In tech I'm watch Nvidia adds Pete Najarian. The options action suggests this stock could go higher.

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PHARMA FALTERS

Shares of large pharmaceuticals, including Pfizer and Merck , fell more than 4 percent, making the sector the top drag on the Dow industrials. A report said 2008 growth of U.S. prescription drug sales was only about one third of the growth in 2007

My concerns now are with the pipelines, says Pete Najarian. The big names have 2011 on their foreheads.

I’d keep an eye on Abbott Labs, says Guy Adami. I’d be long; their patents don’t expire for quite a while.




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Trader disclosure: On Mar. 19th, 2009, 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 (AA), (BAC), (EEM), (FXI), (VIP), (TS); Seymour's Firm Owns (PBR); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Macke Owns (GE), (SDS), (MOS); Macke Is Short (BRK.b); Najarian Owns (C) Call Spread; Najarian Owns (GDX); Najarian Owns (GD) Call Spread; Najarian Owns (GLD) Put Spread; Najarian Owns (MS) & (MS) Calls; Najarian Owns (MSFT) & (MSFT) Calls; Najarian Owns (TGT) Call Spread; Najarian Owns (WFC) & (WFC) Puts; Najarian Owns (XHB) Call Spread; Najarian Owns (MCD) Calls

CNBC.com with wires