'Fast Money' Recap: Bank Bulls Back

The U.S. stock market rallied Tuesday on bullish earnings from Goldman Sachs GS and Lehman Brothers LEH and a 75-basis-point rate cut from the Federal Reserve. The S&P 500 jumped 4.2%, the Dow rose 3.5%, and the Nasdaq climbed 4.2%.

On CNBC's "Fast Money" TV show, Pete Najarian said steel, coal, and rails all moved. He pointed out that, as in August and January, spikes in the volatility index accompanied today's big rally. He said he likes U.S. stocks at these levels, but after a 750-point rally, he'd be careful.

Jeff Macke broke down the Federal Reserve's action today. He said that the Fed believes growth is getting worse and inflation is accelerating but will moderate. Macke says the central bank will do whatever it takes to prevent a seizure in the credit markets.

Tim Seymour said that stocks responded today. The dollar rallied and Treasury bonds sold off, which were two things that had to happen if the market was going to bottom, he said. He said that the Goldman Sachs and Lehman Brothers earnings were important, and suggested that the Fed meeting looked like an afterthought to what was already taking place in the stock market.

Jeff Macke said that the Fed action over the weekend to orchestrate a buyout of Bear Stearns BSC by JPMorgan Chase JPM was a very bullish signals to investors.

Guy Adami said that investors will no longer make easy money on the short side. He said it's now time to revise strategy and buy on dips, probably for the rest of the year. Liquidity is no longer a problem, and he likes Merrill Lynch MER at these levels. He believes Goldman now trades with a $190 handle.

Seymour said that during Goldman's earnings, the bank indicated that the worst of the market turmoil is over. He said Goldman predicted that the U.S. could be out of recession by the end of 2008 and will see growth by the end of 2009.

Macke said that in a perfect world he would declare victory and take gains off today's large rally. He said he's a dip-buyer in this environment. He reminded viewers that "Fast Money" is a trading show, and that for tomorrow, he would buy financial stocks, but that outlook will likely change soon.

Adami said he was a buyer of the financials here. Seymour said that the group doesn't trade at an asset class, noting that Bear and UBS UBS are very different stories. He said more companies will fall. Najarian said that in the short term he would not buy the banks because they rallied too much today.

On the impending initial public offering by Visa, Adami cautioned viewers against buying the stock on the open. Wait and see how it trades, he said. He still sees some upside in MasterCard MA, but there's no reason to race in to Visa, he said. Macke reminded investors that Visa is a mature company. "This isn't the Netscape IPO," he warned.