'Fast Money' Recap: Yahoo! Stays Up in Air

A day of record oil prices, a falling dollar and a ho-hum batch of earnings reports left U.S. stocks in negative territory at the close Tuesday. The Dow lost 0.8%, the S&P 500 gave up 0.9%, and the Nasdaq slipped 1.3%.

On CNBC's "Fast Money" TV show, Jeff Macke said McDonald's (MCD Quote) negative same-store sales growth in the U.S. was countered by explosive international growth. He said that Yum! Brands' (YUM Quote) earnings conference call would likely reveal that its China sales are growing fast.

Pete Najarian pointed out a solid earnings report from DuPont (DD Quote). He said the stock had made a big run into earnings, and it's time for investors to take some their position off the table.

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After a modest earnings beat, Yahoo! (YHOO Quote) shares traded slightly lower. Karen Finerman said the Internet company's numbers don't give her a lot of confidence in its power to negotiate with Microsoft (MSFT Quote), which has issued a hostile bid for Yahoo!. She predicted Yahoo! stock will end up between $28 and $32.

Macke said that Microsoft doesn't have to chase Yahoo!, and he said that Microsoft CEO Steve Ballmer might even drop the bid.

Najarian said that as long as the merger stalls, it's wise to sell calls on a Yahoo! position. He agreed with Macke that Microsoft doesn't have to do a deal, and said that Yahoo!'s 2-cent EPS beat is not enough to sweeten the deal for Yahoo!. He predicted that the deal would take months to close.

Finerman said that Microsoft will take some action by Monday morning and pointed out that Yahoo!'s guidance doesn't mean much. Macke agreed with Finerman on Yahoo!'s guidance.

Elsewhere in Tech

VMWare(VMW Quote) shares rose 12% on earnings today. Najarian said he loves the virtualization space. He said VMWare has risen since its IPO. He predicted solid earnings from EMC (EMC Quote) tomorrow.

Adami said Microsoft is still the play. He said that VMWare is a valuation story and that EMC is OK but is "grounded" at $16. He noted a solid price increase in Microsoft and said that given what Intel (INTC Quote) and IBM (IBM Quote) have said in their earnings statements, Microsoft should deliver great numbers.

Energy and the Buck

Crude oil neared $120 a barrel today. Finerman said that oil is trading in step with the dollar's decline. Macke said that it's best to trade oil on the basis of the charts. He said oil is going parabolic here and recommended taking profits even though it's very hard to get short here.

Najarian recommended playing natural gas on oil's rise. He said names such as Apache (APA Quote), Chesapeake Energy (CHK Quote), XTO Energy (XTO Quote) and Devon (DVN Quote) are all exploding through 52-week highs. He said he prefers natural gas as oil approaches $120.

Adami predicted that the dollar would reverse huge in the second half of the year. Because oil has a supply side and a demand side, he said, it wouldn't get hurt as badly when the dollar rallies.

The traders took a minute to talk about McDonald's earnings. Adami said that the fast-food company beat by 11 cents. Stripping out 5 cents of earnings made on currency exchanges, McDonald's still beat by 6 cents, he said. It's cheap on a valuation basis, too, he said.

Macke said that the selloff is to be expected when everyone knows the company is executing very well. He said that in the bad tape, a downward move for the stock is not a big deal.

CME Group (CME Quote), which operates the Chicago Mercantile Exchange, saw shares slip today. Adami said that if the SEC merges with the CFDC, the news won't bode well for CME Group.