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'Fast Money' Recap: Bank Bombshell

NEW YORK ( TheStreet) -- The markets ended the first week of the year on a down note as bank stocks took a hit from an adverse state court ruling on foreclosures.

The Dow Jones Industrial Average fell 22.55, or 0.19%, to 11,647.76, while the S&P 500 dropped 2.35, or 0.18%, to 1,271.50. The Nasdaq lost 6.72, or 0.25%, to 2,703.17.

Brian Kelly said on CNBC's "Fast Money" TV show said the foreclosure ruling handed down by a Massachusetts court is a big deal because it goes to the heart of commercial securitization and the transfer of assets that banks didn't own.

He said the decision caused him to sell shares in JPMorgan (JPM - Get Report) and Wells Fargo (WFC) and short the Select Sector SPDR Fund (XLF).

For a breakout of some stocks from a recent "Fast Money" TV show, check out Dan Fitzpatrick's "3 Stocks I Saw on TV."

3 Stocks I Saw on TV

Tim Seymour agreed, saying it puts to question the entire securitization process and could be bad for the economy.

Guy Adami, though, said the bank stocks didn't get crushed as one would have thought. He said he would buy on dips on a tape that wants to go higher.

Melissa Lee, the moderator of the show, said the ruling could have an impact on the economy, the banks' capital and dividends.

Kelly said the ruling could have implications on MBS holders, hedge funds and foreign governments that were exposed to fraudulent foreclosures.

Seymour said the ruling came down in one state, adding a court in Maine had ruled in favor of the banks.

Lee said the old service stocks performed well today, especially Diamond Offshore (DO) and Baker Hughes (BHI).

Terranova said the oil services stocks were benefitting from supply-disruption problems, noting the loss of 100,000 barrels in Canada. He said he would be a buyer on dips in these stocks, even though they have been underperforming their peers in this sector.

Kelly said he liked the deepwater drillers, including Dryships (DRYS) and Rowan (RDC).

Lee said gold suffered the biggest dollar decline in two years this week. Dennis Gartman downplayed the correction, saying it was nothing out of the ordinary. He said he believes the U.S. dollar and commodities will get stronger.

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