NEW YORK (TheStreet) -- The S&P 500 dropped 1.4% and the Nasdaq fell 2.4% on Wednesday. According to the CNBC "Fast Money" trading panel, the selloff can be attributed to three main catalysts starting with the decline in biotech stocks.
Biotech stocks show the level of investors' risk appetite and, obviously, investors don't want to take on much risk right now, said Brian Kelly, founder of Brian Kelly Capital. He advised taking profits in the sector on Friday and he maintains a cautious tone on the sector.
The $335 level has acted as support in the IBB ETF, said Tim Seymour, managing partner of Triogem Asset Management. He reasoned that many biotech stocks have reasonable valuations and compelling catalysts for investors to stay long, citing stocks like Amgen (AMGN) - Get Report, Celgene (CELG) - Get Report, Gilead Sciences (GILD) - Get Report and Biogen (BIIB) - Get Report as some examples.
Guy Adami, managing director of stockmonster.com, agreed, but added that if the IBB ETF falls below $320, the sector could get "dicey." He likes Celgene on the long side, calling the company "bulletproof."
It's difficult to assess the biotech sector since much of the price action is driven by sentiment, said Karen Finerman, president of Metropolitan Capital Advisors. However, she is staying long the sector, reasoning that each pullback for the past several years has resulted in a good buying opportunity.
The transports are very sensitive to oil and gas prices, Seymour added. Of the group, he likes FedEx (FDX) - Get Report the most for its pricing power and international business. The IYT ETF made its high in November and hasn't been able to break above that level, Adami reasoned. It's now "critical" for it to stay above $155, which has been a "huge support level," he added.
Airline stocks were also hit on Wednesday as crude rallied. Although Hunter Keay, senior airline analysts at Wolfe Research, expects the companies in the industry to return $9.9 billion in cash to shareholders in 2015 -- more than double the $4.4 billion in 2014 -- that alone won't be enough to increase the valuations.
The airlines will have to be more disciplined, as increased capacity has weighed slightly on pricing power, he explained. However, the buybacks will certainly help the stocks, as shareholders have a bullish catalyst to cling to while pricing power comes back. His top pick is Spirit Airlines (SAVE) - Get Report, to which he assigned an outperform rating and $131 price target.
Despite the decline, Hans Mosesmann, managing director at Raymond James, remains bullish on Micron (MU) - Get Report, which should see NAND margins increase by 1,000 to 1,500 basis points. Mobile DRAM chip demand should help bolster pricing power in the second half of 2015. He has a buy rating on the stock with a $45 price target.
Mosesmann also likes Nvidia (NVDA) - Get Report. The company only has about 20% of its business tied to the consumer PC market and the rest is tied to gaming, which is growing at a double-digit rate. He has a strong buy rating on the stock with a $27 price target.
"I feel the most comfortable" owning Intel (INTC) - Get Report, Seymour said. There's big support in the stock at $29 and the negative news is priced in, Kelly added. Adami said Qualcomm (QCOM) - Get Report looks like it's headed back to its recent 52-week low near $62.
For their final trades, Seymour is buying Banco Santander (SAN) - Get Report and Adami is a buyer of the iShares 20+ Year Treasury Bond ETF (TLT) - Get Report. Finerman said to buy the Market Vectors Oil Services ETF (OIH) - Get Report and Kelly is buying the United States Brent Oil ETF (BNO) - Get Report.