Swine flu fears rattled the markets Monday. The Dow Jones Industrial Average fell 51.29, or 0.64%, to 8,025, while the S&P 500 dropped 8.72, or 1.01%, to 857.51. The Nasdaq lost 14.88, or 0.88%, to 1,679.41.
Melissa Lee, the moderator of CNBC's "Fast Money" TV show, said the markets shrugged off the sell-off from the fears of the swine flu outbreak. Guy Adami said the S&P held steady at 850, adding that's "where the market wants to be." He said he didn't put too much stock on the emphasis on swine flu and the market reaction to it. Pete Najarian said the swine flu had some influence on the market, especially on airline stocks and commodities. Still, he thought there was an overreaction to the swine flu reports. Karen Finerman agreed with the other panelists, saying the number of swine flu cases is small and that the market was just looking for an excuse to go down. She said it was a good day to get into some Mexican stocks like Grupo Aeroportuar ( PAC), which was down close to 20% today. She said she had been looking at the stock for a while and an entry point to get into it. Adami said it might be a good time to short Marriott International ( MAR). He said its huge PE ratio is unjustified and noted downgrades from Raymond James and UBS ( UBS).
Najarian said it might be great opportunity to get into credit card issuers like Visa ( V) and Mastercard ( MA) if the overselling continues tomorrow. He said Visa would be particularly attractive below $55. Adami said there's been great deal of chatter in Smithfield Foods ( SFD) after reports of an unnamed Chinese company that might be interested in it as a takeover target. He said it would make for an interesting trade because of the huge short interest in it and the possibility of a short squeeze coming. Lee turned to Mike Huckman, CNBC's biotech reporter, to talk about which biotech companies might be good buying opportunities from the swine flu scare. Huckman mentioned two companies that make anti-virals: GlaxoSmithKline ( GKS), which makes Relenza, and Gilead Sciences ( GILD), which gets a 20% royalty for Tamiflu, a drug it makes for Roche. On the vaccine side, companies like GlaxoSmithKline, Baxter ( BAX) and Crucell ( CRXL) stand to benefit, he said. Huckman said all eyes will be on Dendreon ( DNDN) when it provides detailed data Tuesday at the American Urological Association meeting on a first-in-a-kind treatment for prostate cancer. He said the CEO calls the data unambiguous. Huckman said it's difficult to recommend an action on the stock because it has already jumped 250% since the company provided the topline news a couple of weeks ago. Najarian said Dendreon is the kind of attractive name some of the larger pharma companies with plenty of cash might want to pick up. Joseph Greff, a gaming and lodging analyst for JP Morgan, said the swine flu reports gave investors a good reason to take some profits in the markets after a great run. Greff said he sees an increase in the near in cancellations in hotel bookings and travel to Mexico.
Lee asked the panel for their thoughts about General Motors ( GM), which was up 20% on news that it was it was dropping the Pontiac brand and laying out 21,000 workers. Adami called the stock a lottery ticker that investors trade at their own risk. He said the better stock in this space is Borgwarner ( BWA), which has been on a run and closed at $29 today. Finerman said what's going with GM stock is a squeeze, adding the options reflect an enormous premium to be paid in order to lock into a short. Lee touched briefly on the financials which were down today, led by Wells Fargo ( WB). Wells was trading down after an analyst questioned its cash position. Finerman said what would get Wells to $18 would be a big secondary that would give the bank the capital it needs to pay back some of the TARP. Lee brought in Steve Cortes, founder of Vercruz LLC, for his thoughts about the concerns of China's growth, which reportedly was 6.1% in the first quarter. Cortes said he is shorting the iShares FTSE/Xinhua ( FXI) because he believes China is not growing as advertised and is a harbinger for a bear market in global equities. He said if China's growth was all that it was cracked out to be, the price of crude would be significantly higher than it is since China is a smokestack economy. He said he finds Brazil a more captivating story for investors looking for emerging market exposure.
Lee asked the panel for their comments on Obama's first 100 days, especially in energy. Adami told viewers URS Corp ( URS) is a stock they should avoid when it reports earnings next week. The stock is trading at 14 times forward earnings compared to 11 time for the rest of the space. He said investors could go long on the stock on a pullback to the mid-$30's should the company miss earnings. Finerman said nothing is going to move alternative energy except for the price of oil. She said high oil prices will cause more resources to be committed to alternative energy, "policy be damned." Macke said Obama's first order of business has been to deal with the problems of the financials. Najarian said the market for power generation stocks like McDermott ( MDR) have looked attractive, but he said nothing has happened with the solar and wind energy stocks. In the Rising Star segment, Finerman focused on Emulex ( ELX), a company that makes components for data storage devices, which has jumped on news that it might be taken over by Broadcom ( BRCM). In the final trades, Macke said to short the S&P against 870. Adami said he liked Network Appliance ( NTAP). Finerman said to cover short positions in USO ( USO) and Najarian said he liked HESS ( HES). "Check out "'Fast Money' Portfolios of the Week" on Stockpickr every Thursday.