U.S. stocks fell on Thursday after the European Central Bank dashed hopes that policymakers were preparing a financial "bazooka" to contain the region’s sovereign debt crisis, and Germany rejected some proposals to add power to the euro zone's bailout fund.
U.S. markets have been on edge all week in anticipation of a summit deal that would come to grips with the euro zone's growing debt crisis, and pave the way for greater action by the ECB to hold down bond yields. But actions from Europe — both early and late in the day — were a stark disappointment.
Trader Joe Terranova said he lost a lot of money in Thursday’s “lousy” market. Terranova pared down his exposure and got out of many names, particularly in the energy space. He completely got out of Hess , a stock he’s long held.
This market is trading in a range, Terranova said, so investors should be “extremely defensive” for the remainder of the year. Drakon Capital’s Guy Adami agreed, noting the “defined range” in the S&P is between the 1,225 and 1,265 level. Everything could change, Adami added, depending upon what happens with Europe’s debt problems.
The financials largely led the decline Thursday. There were sharp losses in European banks’ shares, too, following a report the European Banking Authority saw the capital shortfall at European banks at 114.7 billion euros ($154 billion). Shares of Morgan Stanley , a barometer of risk aversion due to its perceived exposure to Europe's crisis, fell 8.4 percent to $15.88. In turn, Adami thinks all bank stocks are a sell. Terranova dumped all shares of American Express , another stock he’s held for some time.
Trader Karen Finerman, however, takes a different view on the banks. Finerman thinks policymakers will eventually solve the debt crisis and is willing to hold onto her position in JPMorgan Chase . She thinks the stock has a lot of value.
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CNBC.com with wires.