What a difference a day makes. The bears showed up again on Wednesday as a cascade of bad news unhinged what had been a promising start for 2009.
Dow Jones Industrial Average
plummeted 245.40, or 2.7%, to 8,770.26, while the
lost 28.05, or 3%, to 906.69. The
dropped 53.32, or 3.2%, to 1599.06.
Pete Najarian said on
's "Fast Money" TV show,said it was quite a reversal for the S&P which had been pushing up to 950 the day before, only to fail at that level and later at 912. He said the insurers, one of yesterday's leaders, had a difficult day, giving back all of its gains from the last few days.
Zachary Karabell was not surprised by the spate of bad news. He said the ADP's jobless estimate of 700,000 for December was based on a different methodology. He also said it's been known for sometime that the fourth quarter for some companies were going to be "off the cliff." He said it would be mistake to extrapolate bad news in the fourth quarter into any sort of forecast for 2009.
Tim Seymour added that the markets needed a pullback after a "six-day build."
Guy Adami advised not to take too much stock in the jobless number, which he called a lagging indicator. A better indicator would be the bond markets, which are forward-looking and improving, he said.
Najarian said investors should realize they are a traders' market that is still quite volatile.
There was some give and take between the panelists on the significance of the 12% drop in oil and its role in today's market downturn. Adami thought it was a key factor, and Seymour added that the drop in oil underscores the realities of weak demand for the commodity.
Dylan Ratigan, the moderator of the show, noted some disturbing news from
, which said its fourth-quarter sales would be down 23%. Najarian said the news shouldn't be a surprise, given the falloff in chip demand.
That prompted Adami to interject with a trading idea for the stock, when he told investors that the stock is a buy at $13.87, following what he expects to be a 50% correction.
Ratigan noted a report from Meredith Whitney, an analyst who had a gloomy outlook for the financials. Karabell downplayed the report, saying "it's much easier to say things are going to get worst than it is to say these banks need to put capital in motion."
Najarian also said
have had a big run, up over 30% since Dec. 16.
Ratigan tried to interject some "good" news on the show by talking about the improvement in credit markets and the wheeling and dealing in biotechnology. Seymour agreed, saying the outlook in the credit markets is "all very positive."
Najarian said there's a lot of money floating around for deals in biotechnology. "You are going to see more consolidation," he said.
Ratigan brought in Steve Liesman, CNBC senior economics reporter, to elaborate on the ADP's jobless number. Liesman said he heard of an even bigger number from ING, which said the loss in monthly payrolls could reach 1 million in the months ahead.
Liesman said the jobless data poses two question for the market: the magnitude and the speed. He said it's pretty well established that the jobless figure is heading toward 8% but what the market perhaps hasn't factor in is the speed in which it's getting there. "That's the shocker," he said.
Douglas Kass, founder and president of Seabreeze Partners Management and a columnist for TheStreet.com, said the incoming administration is going to face some heavy lifting with their "massive" policy initiatives. He also said the prospects for corporate profits remains a downward moving target.
Kass said equity investors should expect trading to occur in the range of 850 to 1,020 in the S&P, a level which he said Jim Cramer described as "nothing happening."
He also said he doesn't see any sector standing out. He doesn't expect a "dynamic" recovery to occur until 2010 to 2011. And he said he would stay away from energy, commodity and infrastructure stocks, noting the recent rallies in those sectors can't be sustained.
Moving on to the Consumer Electronics Show, which begins tomorrow in Las Vegas, Ratigan asked Jim Goldman to comment on what to expect. Goldman said
CEO Steve Ballmer is going to deliver a keynote address tonight in which he is expected to talk about Windows 7, which Goldman said needs to do what Vista wasn't able to do - "be a success right out of the door."
He also said
is expect to make a big announcement on a mobile operating system, its first major upgrade since 2002.
Ratigan brought in Joe Duran, CEO of United Capital Financial Partners, to talk about retirement investment strategies. Duran noted that it's important for those nearing retirement to find income streams that do not involve selling the principal. He said it's necessary for these people to find stocks that will pay a dividend and don't need to be sold.
Ratigan asked William Brodsky, CEO of the Chicago Board Options Exchange, to talk about the huge spike in options activity in 2008.
Brodsky said he expects to see a lot of new customers to use options to protect themselves in a volatile market. He said investors should not only be looking for stocks with good dividends but also sell calls on those stocks. He also said a popular investment strategy is covered writing.
In the final trades, Seymour said he was a seller of
SPDR Gold Trust
. Adami liked
. Karabell liked
. And Najarian liked
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