'Fast Money' Recap: Hunting for Bear

A 45-minute rally on benign inflation data at the beginning of Friday's session was quickly reversed on news of a Federal Reserve bailout for Bear Stearns (BSC Quote). The Dow was down 1.6%, the S&P 500 lost 2.1%, and the Nasdaq was off 2.3%.

On CNBC's "Fast Money" TV show, Pete Najarian called Bear's falling price action on the day "unbelievable." He noted that the week had been packed with news, from the Eliot Spitzer scandal to fairly tame inflation data to the Bear Stearns catastrophe. He said the Bear news was at first met calmly, but as volatility reached 700%, the selling reached high levels. Trades in put options on Bear were highly profitable today, he said.

Lehman Brothers (LEH Quote) is experiencing the same kind of put-buying the market saw on Tuesday for Bear. A lot of people are concerned, he said.

Karen Finerman said that it was hard to disconnect a visceral reaction from rationality in this week's market. When things are down in integers, you got to buy, she said. Although her hedge fund is nearly perfectly hedged, she called the environment "scary."

Guy Adami said today's market washed a lot of people out. He said earnings statements from the brokers would be the story of the upcoming week.

CNBC on-air editor Charlie Gasparino joined the show to discuss more news from the banks. He said that UBS had been actively shopping Pain Weber, its brokerage firm, to Barclays and Wells Fargo (WFC Quote), among other banks. Things are getting pretty bad when you're selling major assets like this, he said.

Najarian said the news was not a shock. Adami noted that prime brokerage was a big part of Bear Stearns' business. He noted that that space was a zero-sum game, so someone will have to emerge a winner.

In commodities, gold reached $1,000. Joe Terranova said that it was too late for investors to get into gold. He recommended looking at the CurrencyShares Yen Trust (FXY Quote) ETF as a play on a weak dollar. Adami recommended Nucor (NUE Quote) and U.S. Steel (X Quote) as plays that were proximate to the commodity space.

Shares of Yahoo! (YHOO Quote) lost 8% this week. Finerman said that the Wall Street Journal reported that the company had met with Microsoft (MSFT Quote) on Monday. As a shareholder, she expressed hope that they get a deal together. Adami said investors might want to get long Yahoo! The downside is limited, he said.

Najarian called Yahoo!'s share price a sliding scale levered to Microsoft. If Microsoft shares go down, so do Yahoo!'s, he said.

Health insurers Humana (HUM Quote) and WellPoint (WPT Quote) couldn't catch a break this week, Najarian said. Humana cut 2008 earnings forecasts in half. He said the bottom is probably set in those names. Aetna (AET Quote) reiterated earnings, so that stock should be interesting going forward, he said.

Adami observed that Pfizer (PFE Quote) hit a 52-week low today. He called the CFO's comments about a "seller's market" for potential acquisitions "disheartening."