President Obama's $3.5 trillion budget did not go over well on Wall Street Thursday, especially with health care stocks.

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The

Dow Jones Industrial Average

fell 88.81, or 1.2%, to 7,182.08, while the

S&P 500

dropped 12.07, or 1.58%, to 752.83. The

Nasdaq

lost 33.96, or 2.38%, to 1,391.47.

Karen Finerman said on

CNBC

's "Fast Money" TV show that the markets were disappointed with the budget. "Some of the health care stocks were blasted by the budget," she said, adding there was great concern about the level and extent of spending.

Joe Terranova said he isn't wedded to any particular trading direction. He did say he is long on oil, noting OPEC cuts are finally taking effect.

Tim Seymour said he liked the commodity space, adding China is doing some strategic buying in copper and zinc.

Meanwhile Jeff Macke said he was staying "nimble and loose" while trading within a technical range in the S&P.

Dylan Ratigan invited Peter Orszag, director of the Office of Management and Budget, to talk about the administration's new budget. Orszag said the budget is an honest attempt to build on what Obama campaigned for. He said the budget is allocating a huge sum to improve health care because it is the key to the country's fiscal future.

Orzsag said the administration's plan to provide universal health care will require a move toward universal health care information technology, investing in research on what works and shifting government incentives to pay for better health care.

Ratigan said Obama's health care plans had a negative impact on HMO, biotech and big pharma stocks. Finerman said the impact on HMOs is big because the Medicare HMO funding increases were less than expected. And she said the pressure to keep costs down will hurt the companies.

Seymour said the impact on health care stocks should not have come as a surprise. He said shares of

Unitedhealth Group

(UNH) - Get Report

and

Humana

(HUM) - Get Report

have been down 40% in the past five days.

Seymour said he was more worried about the impact from the reduction of the mortgage interest deduction on the housing market.

Terranova was puzzled that the budget only provided for only a 13% increase in the

SEC

's budget at a time when there is so much talk of a regulatory overhaul and tougher enforcement of the financial sector.

Despite a projected increase in the federal deficit in the budget, Seymour said he doesn't think the demand for Treasurys will be reduced. "The biggest buyers - China and Japan - continue to buy Treasurys," he said.

Ratigan and Rick Santelli had a lively exchange on what the administration is doing about putting the heat on white collar crime. Ratigan said he would like to see the administration up the ante on enforcement and go after the "terrorists" who caused the financial meltdown. He said the bad actors in the housing market and banking sector are still afoot and need to be dealt with.

Santelli said the focus should be on the dollars and what we should be doing to raise the GDP. For starters, Ratigan suggested a tradable $50,000 credit that the military could apply to housing costs.

Ratigan invited Steven Cortez, founder of Vercruz LLC, to talk about his trading strategies in a market that so far as seen year-to-date declines of 35% in financials, 21% in industrials, 11% in energy and 7% in technology.

Cortez said his firm is betting against tech because it believes the recent outperformance of tech is coming to a close. He said he sees tech as a cyclical business, along with the auto industry.

He said his firm is buying the S&P and selling Nasdaq. He went on to say he is buying "quality" financial stocks like

Goldman Sachs

(GS) - Get Report

and

Morgan Stanley

(MS) - Get Report

.

In the final trades, Macke was for Morgan Stanley. Terranova was for

Exxon Mobil

(XOM) - Get Report

, and Finerman reiterated going long on preferred shares of

Wells Fargo

(WB) - Get Report

.

"Check out

"'Fast Money'Portfolios of the Week" on Stockpickr every Thursday.