Earnings jitters spooked the markets Tuesday as they sank for the second day. The Dow Jones Industrial Average fell 186.29, or 2.34%, to 7,789.56, while the S&P 500 lost 19.93, or 2.39%, to 815.55. The Nasdaq dropped 45.10, or 2.81%, to 1,561.61.
Jeff Macke said on CNBC's "Fast Money" TV show, said that it seemed very buyer left in the last 12 minutes of trading, with a huge rollover in names like Goldman Sachs ( GS). He said the trading action was bizarre and trading volume thin, with people running out "out of reasons to buy." Joe Terranova said the market is consolidating. "It looks like we are taking a pause in the recovery rally." Melissa Lee, the moderator of the show, noted that the VIX didn't budge from 40 for the entire session. Karen Finerman said she didn't know what to make of the VIX these days. She said she didn't know whether it might be due to a disconnect between the equities, which have enjoyed a big run, and the debt markets, which haven't. Finerman said the first quarter earnings are not as important as what guidance companies offer going forward. Terranova said he thinks the VIX was elevated on concerns of how much capital banks will need. Shares of Mosaic ( MOS) sank in after-hours trading after it misses sales and profits estimates. Tim Seymour said the price action on Mosaic shows the space is under pressure for growth. He said global demand is not where it is. He said Mosaic was hurt by a year-over-year comparison in which it was coming off a "tremendous" year-ago quarter.
Terranova said the underlying commodity prices of corn, wheat and soy have to rise in order to help companies like Mosaic and Potash ( POT). Lee said the transportation index was down, along with airline and shipping stocks. Seymour said steel capacity utilization is at 40% versus 90% last year. "That tells you all you need to know," he said. Seymour said he likes gold here and sees SPDR Gold Shares ( GLD) headed back up to $90. Lee brought in Toni Sacconaghi, senior research analyst for Sanford Bernstein, to talk about the failed IBM ( IBM)- Sun Microsystems ( JAVA) talks. Sacconaghi cited two reasons for the failure to reach a deal: one, it appears there is a dissension in senior management as to whether this is the right deal, and two, there is a belief they can create more value in the long term on its own. The analyst agreed with the panel that Sun should take the deal after seeing its stock fall from $250 to $2.50 before the holidays. Now, he said, Sun is a real bind with its customers because of the uncertainty generated by the chatter about a deal. Moving on to managed care, Lee noted that Humana ( HUM) was up 7%. Finerman said the Obama administration had come out with Medicare rates that were not as bad as expected. She also said the stock is up on persistent rumors that Aetna ( AET) wants to take it over. Lee invited Dennis Gartman to talk about the battered commodities markets. Gartman, who owns Alcoa ( AA), said its earnings were not dramatically off. He said it he will hold on it as long as it is above $7.50. He also said there doesn't seem to be a bottom in natural gas. Seymour said he still likes US Steel ( X), while Finerman said she liked the oil service names. Shawn Matthews, CEO of Cantor Capital Markets, came on the show to talk about how his firm has been on a hiring spree despite the troubles on Wall Street. He told Lee it's not so much poaching other companies as it is about talented workers "going to a company that is growing." He said he has added 100 employees in fixed income in the past nine months to a year.
Lee brought in Jon Najarian to talk about the possible restoration of the "uptick rule." Najarian said he liked the idea of the uptick rule but said it would need some sort of "tick" rule that makes sense in today's world where program trading has greatly increased the speed of trading. Lee asked Gene Munster, an analyst for Piper Jaffray, if he would buy at earnings for a number of tech companies. Munster said he would be long on Google ( GOOG) going into its earnings report because of its Internet search advertising business. He expects Apple ( AAPL) to pull back after its earnings report. And he said Microsoft ( MSFT) will have a "fine" first quarter but noted that the company is going to face major pricing pressures from "all these netbooks." Munster sees some improvement in the chip sector in the first part of the year, but he said the question remains whether it can be sustained. In the final trades, Macke suggested covering ProShares UltraShort S&P500 ( SDS). Finerman was long American Express ( AXP), while Terranova liked Bed, Bath & Beyond ( BBBY). "Check out "'Fast Money' Portfolios of the Week" on Stockpickr every Thursday.