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'Fast Money' Recap: Off to a Rousing Start

David Tong

Wall Street got off to a rousing start in 2009.

The Dow Jones Industrial Average surged Friday 258.30, or 2.9%, to 9035, while the S&P jumped 28.5, or 3.2%, to 931.8. The Nasdaq rose 55.18, or 3.5%, to 1632.21.

Jeff Macke said on CNBC's "Fast Money" TV show that "people were buying on news that 2008 ended."

Joe Terranova said the Dow finally broke out of a range where it was trading sideways for 27 days. He said the critical question now is whether the rally can be sustained above the 9,000-level.

Guy Adami expects the market to go higher the next two weeks because no one had expected it to go higher. He sees the S&P easily going to 1,000, if not 1,100.

Joe Kinahan said the excitement over Obama's inauguration is going to take the markets higher until the spring when things start getting sorted out.

Dylan Ratigan, the show's moderator, asked the trading panel which stocks they would buy under the circumstances. Macke favored the usual suspects, including infrastructure stocks such as US Steel(X Quote). Adami said he liked Bristow Group(BRS Quote).

Ratigan shifted the attention to the big jump in crude oil, up 5.28% for the day and 31% over the past five days. Terranova said the bounce reflects a nice recovery off extreme lows. He still believes it's a broken asset bubble that will allow you to get a bounce on some names.

Macke says he doesn't want to go long on energy stocks because he doesn't believe in the global comeback story.

Kinahan said he is a buyer of oil in the short term, adding he doesn't see anywhere near the influence of hedge funds had on this commodity last year.

Terranova agreed, saying Goldman Sachs (GS Quote), the "world's largest hedge fund," is going to scale down a lot this year and take less risk.

Among the consumer stocks that were also up today, Wal-Mart(WMT Quote) made a lot of sense, Macke said.

Adami touted Gap(GPS Quote), noting its higher operating margins in the third quarter and its reduction in inventory. "They're doing a lot of things right and are up 50% since its November low," he said.

Kinahan said he likes Macy's(M Quote), which he said has almost doubled since the CEO came on the show the day after Thanksgiving to say they were going to have a great holiday season.

Terranova said the dollar's gains today should be viewed as the "best of a bad lot." He said the global central banks are devaluing their currencies and the U.S. remains the world's economic superpower.

As for investing in the financial stocks, Adami said he has liked US Bancorp (USB Quote) for some time because it stayed away from the toxic assets, carries a nice dividend, and has the best management in the industry.

Terranova said he would stay away from the financials for a little longer and invest instead in a sector like health care.

Ratigan asked the panel what they thought of Jeremy Gratham's gloomy prediction that the S&P could head lower this year, possibly to 600.

Terranova said it's not surprising because after 2008, you have to "expect the unexpected."

Kinahan said Gratham has been "saying this" since 2002, and he's missed a lot of good up moves.

Taking a more bullish view, Noah Blackstein, portfolio manager for Dynamics Funds, was optimistic about the chances for a "significant rally" because governments are slashing rates and putting liquidity into the system.

He said government spending will be the only source of demand for the next six months for GDP. He also said real wages have hiked with the collapse of the commodities.

He said to be careful of infrastructure plays. "A lot of them have huge exposure to oil and mining," he said.

He said he likes the prospects of healthcare IT under Obama, adding Cerner(CERN Quote) should do well as a stimulus play.

Will next week's unemployment report have an impact on the market? Ratigan brought in Michael Darda, chief economist for MKM Partners, for his observations.

Darda said he doesn't think the jobless report will have much of an impact because it's backward looking, while the markets are forward-looking. He said he is encouraged by the collapse of LIBOR and the declines in other spread indicators.

Still, he sees the economy going through a period of "tough sledding" in the first three quarters. What worries Darda the most is the "ton" of household debt and the continued decline in home prices. "There may be a rally but (the home price decline) takes a huge upswing off the table," he said.

"It's going to be a sloppy year," in which the lows will be retested and there will be a struggle to move higher than where the markets ended up at the close of 2008, he said.

Ratigan brought on Stacey Gilbert, a market strategist for Susquehanna Capital Group, to talk about options activity and dividend plays. She mentioned three stocks with decent dividend yields that she liked: Bristol Myers(BMY Quote) with a dividend of 4.6%; Home Depot(HD Quote) at 4.0%; and Nucor(NUE Quote)at 3.0%.

In the final trades, Macke said to sell agriculture and steel. Adami said to get out of Rohm & Hass(ROH Quote). Kinaha liked the banks. Terranova liked CurrencyShares Australian Dollar Trust(FXA Quote) and CurrencyShares Canadian Dollar Trust(FXC Quote).

"Check out "'Fast Money' Portfolios of the Week" on Stockpickr every Thursday.