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Dow's Worst Week Since Mid-June

Stocks fell for the fourth straight day on Friday as weak jobs data revived worries about the strength of the recovery.

The much bigger-than-forecast drop in non-farm payrolls combined with a decline in factory orders pulled down economically sensitive sectors like industrials and energy.

For the week, all major U.S. indexes declined 1.8% or more; it’s the second straight week of losses.

What’s the trade?

Yes, stocks struggled back to unchanged from a morning plunge but they didn’t close higher, explains Guy Adami. As far as I'm concerned it was not a strong a day.

And weakness could continue. I expect to see mutual funds taking profits, adds Tim Seymour, and it seems to me the hedge fund guys want the market to go lower.

I didn’t think the action was that bad, counters Pete Najarian. Volatility pulled back mid-day. With the Vix closing under 30, I think the market is attractive.

I bought Becton-Dickinson on the pullback, adds Karen Finerman. I think there are values in this market and that's one of them.

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DOLLAR DIVES AGAIN

The dollar slid against most major currencies on Friday, weighed down by fears that a larger-than-expected number of job losses in September could derail a U.S. economic recovery.

Investors initially bought the dollar versus the euro after the release of the jobs data in a flight-to-safety bid. But dollar gains were modest, and analysts suggested caution in buying the U.S. currency amid signs the recovery could stall.

What’s the trade?

If we break above 77.50 on the Dollar Index I think it explodes to the upside, muses Tim Seymour. But with that said, I don’t see a catalyst to make that happen.

And there’s been strength in the long-end of the bond market, adds Karen Finerman. But I don’t think the action is indicative of a long-term trend.

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JOBS REPORT DISAPPOINTS

The latest jobs report left investors worried about the strength of the recovery. A Labor Department report showed that employers cut 263,000 jobs in September, far more than the 180,000 job losses that had been expected.

The data also showed the U.S. unemployment rate rose to 9.8 percent
in September, up from August's 9.7 percent rate.

Unemployment has been one of the market's biggest concerns throughout the recession because lost jobs mean trouble for nearly every part of the economy, from people defaulting on loans, cutting back their spending and getting forced into foreclosure on their homes. Most economists expect the rate to surpass 10 percent by early next year.

What must you know?

I think it’s going to be a pretty bumpy recovery, says Michelle Meyer, Barclays Capital chief economist, but I’m still optimistic. I do think we’re starting to see strength in the economy. Nonetheless, some of the data won’t look that great.

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TOPPING THE TAPE: TECH BATTLES TOUGH TAPE

Technology provided a bright spot in Friday’s market after UBS upgraded Apple to "buy" from "neutral" and pushed its price target on the stock up 56 percent to $265 from $170.

The brokerage expects the growing number of iPhone users, combined with the stickiness of the App Store, to drive a recurring hardware revenue stream.

What’s the tech trade?

Implied volatility is very cheap, says Pete Najarian. If you want to get into Apple I’d also buy puts for protection. And I’m also watching Intel, he says. Oppenheimer has a $28 price target on this stock. I’m not sure it can get there, but I like the chip sector.

It seems to me that Intel wants to go higher, adds Tim Seymour.

In the space I’d look at RIM, adds Guy Adami. It looks interesting here.

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FINANCIALS FIGHT BACK

Bank stocks fought their way higher after tumbling earlier in the session. Negative sentiment stemmed from comments made by widely followed analyst Meredith Whitney.

In an opinion column on the Wall Street Journal’s website, she wrote "Anyone counting on a meaningful economic recovery will be greatly dissappointed. How do I know? I follow credit, and credit is being denied at an accelerating pace...I believe that we are only in the early stages of the second half of the credit cycle. I expect another $1.5 trillion of credit card lines to be removed from the system by the end of 2010."

What’s the bank trade?

I’d listen to Meredith Whitney, says Guy Adami, and make no mistake -- she’s not bullish.

I agree with what Meredith is saying, adds Karen Finerman, but for publicly traded companies a lot of what she’s saying is baked into share price.

And although JPMorgan and Goldman ended higher, adds Tim Seymour, I think it’s more short covering and not investors buying best of breed on dips.

In the space I like Jefferies for the long-term, adds Adami. However in the near-term I wouldn’t chase it. If you’re not in it now you’re probably late to this trade.

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BULL MARKET OR BS?

With a slew of disappointing economic numbers dragging down stocks are we heading into a period of sustained weakness? Possibly not.

Jeff Saut of Raymond James tells Fast Money that although the market could make a sharp correction he expects equities to be higher by year's end.

In fact, he has a price target of 1200 on the S&P! What makes him so bullish? Watch the video now and find out!





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Trader disclosure: On October 2, 2009, 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), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Najarian Owns (C) Calls; Najarian Owns (FFIV) Call Spread; Najarian Owns (GE) Calls; Najarian Owns (JPM) And Is Short (JPM) Calls; Najarian Owns (INTC) And Is Short (INTC) Calls; Najarian Owns (MSFT) And Is Short (MSFT) Calls; Najarian Owns (PEP) Call Spread; Najarian Owns (WFC) Put Spread; Najarian Owns (YHOO) Call Spread; Finerman's Firm Owns (CSCO), (MSFT), (USO); Finerma's Firm And Finerman Own (WFC) Preferred Shares; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (UNG); Finerman's Firm Owns (BDX); Finerman's Firm Is Short (TLT); Finerman's Firm Owns (BAC), (BAC) Calls, (BAC) Preferred; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm Owns (WMT); Finerman's Firm Is Short (XRT); Finerman's Firm Is Short (BWA); Finerman's Firm Is Short (USO); Seymour Owns (ABV); Seygem Asset Management Is Short (PBR); Seymour Owns (EWZ); Seygem Asset Management Owns Lukoil Shares

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