'Fast Money' Recap: Bank Bombshell

NEW YORK ( TheStreet) -- The markets ended the first week of the year on a down note as bank stocks took a hit from an adverse state court ruling on foreclosures.

The Dow Jones Industrial Average fell 22.55, or 0.19%, to 11,647.76, while the S&P 500 dropped 2.35, or 0.18%, to 1,271.50. The Nasdaq lost 6.72, or 0.25%, to 2,703.17.

Brian Kelly said on CNBC's "Fast Money" TV show said the foreclosure ruling handed down by a Massachusetts court is a big deal because it goes to the heart of commercial securitization and the transfer of assets that banks didn't own.

He said the decision caused him to sell shares in JPMorgan ( JPM) and Wells Fargo ( WFC) and short the Select Sector SPDR Fund ( XLF).

For a breakout of some stocks from a recent "Fast Money" TV show, check out Dan Fitzpatrick's "3 Stocks I Saw on TV."

3 Stocks I Saw on TV

Tim Seymour agreed, saying it puts to question the entire securitization process and could be bad for the economy.

Guy Adami, though, said the bank stocks didn't get crushed as one would have thought. He said he would buy on dips on a tape that wants to go higher.

Melissa Lee, the moderator of the show, said the ruling could have an impact on the economy, the banks' capital and dividends.

Kelly said the ruling could have implications on MBS holders, hedge funds and foreign governments that were exposed to fraudulent foreclosures.

Seymour said the ruling came down in one state, adding a court in Maine had ruled in favor of the banks.

Lee said the old service stocks performed well today, especially Diamond Offshore ( DO) and Baker Hughes ( BHI).

Terranova said the oil services stocks were benefitting from supply-disruption problems, noting the loss of 100,000 barrels in Canada. He said he would be a buyer on dips in these stocks, even though they have been underperforming their peers in this sector.

Kelly said he liked the deepwater drillers, including Dryships ( DRYS) and Rowan ( RDC).

Lee said gold suffered the biggest dollar decline in two years this week. Dennis Gartman downplayed the correction, saying it was nothing out of the ordinary. He said he believes the U.S. dollar and commodities will get stronger.

Next week is a big earnings week, but Louis Navellier, of the Blue Chip Growth newsletter, said he'll be looking for stocks with tremendous margin expansion and earnings momentum. He particularly liked Borgwarner ( BWA) and F5 Networks ( FFIV).

He also said he liked what is happening in technology. With all the buzz over 4-G, he said he would play close attention to any companies that are working to improve network speed.

What does the price of onions have to do with India? Inflation. Simon Baker said onion prices have doubled in India as flood inflation has hit 18%. He said he is playing that trend by investing in Mosaic ( MOS) and Potash ( POT).

Seymour said he sold his shares of those stocks along with Monsanto ( MON). He said those stocks have become expensive and advised waiting for a pullback to get back into them.

In the wake of today's disappointing jobs report, Zach Karabell, of River Twice Research, said technology and globalization are driving jobs from the U.S. and they won't be coming back. He said he would focus on markets, where earnings are expanding and not tethered to what called "negative unemployment" in the U.S.

He said he would focus on stocks that are oriented to consumers, technology and efficiency.

--Written by David Tong in San Francisco.

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