'Fast Money' Recap: Market Angst

NEW YORK ( TheStreet) -- The markets were mixed Thursday as debt worries deepened.

The The Dow Jones Industrial Average fell 62.44, or 0.51%, to 12,240.11. The S&P 500 dropped 4.22, or 0.32%, to 1300.67. The Nasdaq was up 1.46, or 0.05%, to 2766.25.

Most of CNBC's "Fast Money" TV show focused on the eleventh-hour moves to get the Boehner bill passed in the House to reduce the budget deficit and institute spending cuts.

Guy Adami said he was surprised that the S&P didn't move higher today on expectations of a deal.

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

Steve Grasso said he is certain that a deal is going to get done. "Anyone educated in the markets knows it's going to get done."

Joe Terranova said the problem lies not so much in the credit markets, which he sees performing well, but in the equity markets. He said the markets are pricing in a downgrade in U.S. debt because they don't believe that it's possible to enact legislation to reduce the long-term deficit by $4 trillion over a decade.

Terranova said the prospects of a summer rally from a wave of solid earnings has been negated by the string of press conferences in Washington over the state of the debt crisis.

Najarian said investors are "frustrated," adding they "don't like to watch how sausage is being made" and see "how stupid and argumentative these people can be."

Ron Isana said the markets are not acting like they were in 2008. He said there hasn't been a sharp decline in the markets or a crash in the dollar, adding the level of complacency has been unusual.

Najarian said big players in the options markets have been making huge bets that volatility could double in the next week to 10 days.

Dennis Gartman said he was going to stay away from anything connected with the U.S., including the dollar, bonds and equities. He said there are so many other trades investors can get into such as getting long gold and shorting currencies.

Garman said it's just too difficult to tell what is going to come out of the sausage-making process in Washington. He said the only safe havens are gold and Treasuries.

Ed Groshans, managing director of Height Analytics, said it was imperative that a deal is done by Sunday to meet the Aug. 2 deadline. He said there is a chance the legislators may attach a provision to a military construction bill for a 30- to 60-day extension of the deadline.

He said any downgrade will trigger a repricing of asset classes. He also said it will have an impact on the economy as hiring and capital investment decisions are delayed.

Melissa Lee, the moderator of the show, noted that a Moody's report saying that 177 local government ratings would be in jeopardy if the U.S. debt loses its triple-A rating. Matt Fabian, managing director of Municipal Market Advisors, said that retail investors were holding most of the munis, which he said will be dragged down along by the action on the Treasuries.

Lee interjected to say that a House vote on the Boehner bill had been postponed until later in the evening. She said the announcement caused a drop in the S&P futures.

Isana said the events harkened back to the day of Tarp 2 and its impact on the markets.

George Concalves, head of U.S. interest rate strategy for Nomura Securities, said there was probably a 30% to 40% chance that the U.S. may lose its triple-A rating. He said it would be ideal if Washington could take some action on the matter to prevent uncertainty from lingering into the weekend.

David Greenberg, founder of Greenberg Capital, said commodities haven't reacted much to the swings in debt talks in Washington. He said he hasn't seen any major moves in gold or oil. He said investors are holding on gold because it represents "stability if all hell breaks loose."

Looking at the market action for the day, Najarian said a small-cap company called Vistaprint NV got decimated on an ugly report.

Lee said Starbucks ( SBUX) was up $4.75 on a strong earnings report. Grasso said Starbucks should benefit from a decline in coffee prices. Adami advised investors to be careful with stock at $41 and not go piling in.

For the call of day, Lee noted Goldman Sachs upgrade of Cisco ( CSCO) to a buy. Terranova said Cisco is benefitting from the decline of rivals like Juniper Networks ( JPNR) and Riverbed ( RVB).

Najarian said Cisco was the "tallest midget" in the bunch, while Adami said he didn't see any compelling reason to get into Cisco.

In the final trades, Grasso favored Utilities SPDR ETF ( XLU) as a defensive play. Adami said to sell Starbucks. And Terranova liked Skeechers ( SKX).

--Written by David Tong in San Francisco.

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