NEW YORK (TheStreet) -- Crude oil prices dropped another 2.9%, closing below $60 per barrel. The drop weighed on equity prices, with the S&P 500 rallying 0.45% but closing well off its highs from earlier in Thursday's session.
Perhaps investors are interpreting lower oil prices as lower demand, meaning the economy is weaker than previously thought, Karen Finerman, president of Metropolitan Capital Advisors, said on CNBC's "Fast Money" TV show. If oil prices stabilize, then perhaps investors will feel more confident.
The stock market's rally was "feeble," said Guy Adami, managing director of stockmonster.com. While oversupply is certainly not helping matters, a lack of demand is certainly weighing on oil prices. He continued to stress that bond yields are headed lower.
The next big support level for crude oil may not come until $42 to $45 per barrel, according to Steve Grasso, director of institutional sales at Stuart Frankel. However, buyers will likely come in throughout the $50 range.
Maybe oil is the asset that was overly inflated from the Federal Reserve's multi-year stimulus programs, said Dan Nathan, co-founder and editor of riskreversal.com. The iShares High Yield Corporate Bond ETF (HYG - Get Report) continues to make 52-week lows, he added. Investors continue to buy put options in fear of systemic risk related to the junk credit U.S. energy companies.
Investors looking for a trade in oil can attempt to buy Seadrill (SDRL - Get Report) if and when Transocean (RIG - Get Report) cuts its dividend, Adami said. Finerman added that she is long call options in Seadrill looking for a bounce. The beauty of call options is that the risk is limited, Finerman said.
Oil could decline to $45 per barrel, but that's unlikely to be sustained, according to Tom Kloza, co-founder of Oil Price Information Service. It's unlikely that oil has found a bottom and will likely continue lower. The refining companies will ultimately benefit in the longer term, but tend to underperform in December and January. Gasoline retailers continue be a huge beneficiary of lower prices at the pump, as consumers have more disposable income, he concluded.
The conversation shifted to Apple (AAPL - Get Report) when David Seaburg, head of trading at Cowen & Company, laid out the bull case. "I'm not looking for another 35% to 40% return on Apple next year," he said. But the company's Apple Pay service can be a huge driver of iPhone sales, which would be more significant than transaction revenues.
Furthermore, if the company can innovate its iPad devices, sales could increase. The company can also increase its presence in the services business, which will help drive gross margins higher, Seaburg said.
"I'm not a bear, I'm a skeptic," Nathan said, arguing that investor enthusiasm is too high for Apple. The stock up 40% on the year and over the last five years has averaged a gain of 32%. A similar gain in 2015 would put the company's market cap near $900 billion. The risk/reward just isn't attractive, he said, as the company is forecasted to do $210 billion in sales this year.
With a strong upgrade cycle driving impressive first- and second-quarter results, what's the next catalyst to fuel the stock higher? he asked. iPad growth is slowing and the company will likely see an increase in competition from companies like Google (GOOGL - Get Report) and Amazon (AMZN - Get Report) .
The stock may struggle in the second half of 2015, as it faces tough comparable sales figures to this year, Adami said. However, Apple Pay could be a huge future growth driver.
Turning to the shippers, Adami said he likes both United Parcel Service (UPS - Get Report) and FedEx (FDX - Get Report) on the long side. However, investors should wait for a pullback before getting long. Nathan agreed.
Grasso added that between UPS and FedEx, he is a buyer of FedEx because it executes better.
For their final trades, Nathan is selling Costco Wholesale (COST - Get Report) and Adami is buying Spirit Airlines (SAVE - Get Report) . Finerman is a buyer of Rentech Nitrogen Partners (RNF) and Grasso said to buy NXP Semiconductors (NXPI - Get Report) .
-- Written by Bret Kenwell