'Fast Money' Recap: Big Blue's Big Beat

The trading panel says IBM's earnings report could help Microsoft but not many others.
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The U.S. stock market closed higher Wednesday as a solid earnings report from chipmaker Intel (INTC) - Get Report helped stocks jump higher. The Dow was up 2%, the S&P 500 climbed 2.3%, and the Nasdaq added 2.8%. After the close, IBM (IBM) - Get Report followed Intel's lead by reporting solid earnings.



"Fast Money" TV show, Tim Seymour said Intel and IBM share strong international sales and sales growth. IBM is a leader in global services, and its software business is primed to take advantage of growth in emerging markets, he said.

Guy Adami cautioned against extrapolating IBM's strong report to the broader tech sector, but he said that the news is good for


(MSFT) - Get Report


Pete Najarian said that he wasn't surprised by IBM's earnings. He said the company raised first-quarter guidance. The billions of dollars the company has spent on acquisitions are "coming to roost," forming a bullish sign for the company, he said.

Carter Worth said that the chart has been consolidating for a while and that the resolution should be massive. He said that a $128 to $132 price target for IBM would be fair. He said that other names in the sector like


(DELL) - Get Report



(HPQ) - Get Report

don't have such good prospects. IBM is basically a consulting business, not a PC story, he said.

Seymour said that the positive news doesn't support a broader rally across the tech space or across all stocks.

Najarian said that


(AAPL) - Get Report

stands to expand its market share in the PC space.


(EBAY) - Get Report

delivered an earnings beat. Najarian said he liked the stock going into the earnings. He said he likes the long-term prospects for the stock.

Carter worth said the earnings news doesn't say much for the market, and he still believes stocks will trade in a range. Adami said he was bullish, because expectations have been lowered and the market was beaten down to the downside. Nothing indicates the market will go lower from here, he said.

In the financial space,


(JPM) - Get Report


Wells Fargo

(WFC) - Get Report

reported solid earnings.

Seymour said that he thought the positive stock action was largely short-covering. He said he's skeptical of the financials, but that Wells Fargo is better positioned than other banks.

Najarian said that the

Financial Select SPDR

(XLF) - Get Report

ETF rallied today but remained in the $24 to $27 range, where it's been for a while. Worth agreed, saying that the financials are in a channel. Najarian said that if the financials break out of the range one way or the other, the move will be substantial.


(C) - Get Report

reports earnings before the opening bell Friday. Adami said that Punk Ziegel analyst Dick Bove said that Citigroup is a compelling buying opportunity. He said he'd rather own


(USB) - Get Report

, but Citi is interesting.

Seymour said that Libor rates, or the price of loans between banks, is undervalued right now. He predicted that Libor would reprice 10% higher, which means that there is probably more balance-sheet trouble ahead for the financials. Worth agreed.


(KO) - Get Report

shares remained flat despite better-than-expected earnings. Seymour said Coke is a global story and noted that the Coke Zero brand is growing in the U.S. Worth said that Coke is a currency story.

Stocks of Steel

Adami said that

U.S. Steel

(X) - Get Report

will benefit from a projected doubling in steel prices in 2008.

Najarian said that


(NUE) - Get Report

is a good commercial metals play and


(ATI) - Get Report

is undervalued and shows good upside potential.

Seymour said

Arcelor Mittal

(MT) - Get Report

has pricing power.

Worth said that

AK Steel


is a little extended. He said he's long


(RS) - Get Report

and Nucor.

Crude oil reached $115 a barrel. Dennis Gartman, author of

The Gartman Letter

, joined "Fast Money" to discuss commodities. He said oil keeps going higher on strong demand for energy. He said that on the supply side, Russian production is declining and problems in Mexico are also affecting the price. He said that more broadly, energy is poised for price increases. That space also includes coal and natural gas. He said he prefers natural gas, but investors should own energy names.

Gartman also said that failure by U.S. companies like


(XOM) - Get Report

to spend money on capital expenditures may hurt them. He said that


(PBR) - Get Report

, on the other hand, continues to find new oil and is a good play on sugar-based ethanol.

Seymour said that Petrobras recently made an "enormous" discovery that will substantially increase Brazilian oil output over the next 10 years. He also advised viewers to keep an eye on


(PTR) - Get Report


Najarian said he would be long both oil and natural gas. Gartman said he had tried a pairs trade, long natural gas and short crude, but that the market didn't like the idea.

Worth asked Gartman about the direction of rough rice. Gartman advised getting out of the commodity.

More Earnings on the Way


(GOOG) - Get Report

reports earnings tomorrow after the close. The traders welcomed Adam Johnson of MLH Capital to the show to talk about the Internet behemoth.

Johnson said Google is the cheapest large-cap tech stock on the basis of its forward price-over-earnings-to-growth (PEG) ratio. Worth expressed skepticism, saying that it's very hard to predict growth going forward, making the measurement a difficult valuation tool. He pointed out that Google shares have fluctuated wildly.

Najarian said that the market is pricing in a very large move in the stock's price, but he said it hasn't forecast a direction.


(PFE) - Get Report

also reports earnings tomorrow. The company announced that a deal with



to expand its pipeline.

Najarian said that there are plenty more moves for the company to make. This latest deal is just the tip of the iceberg, he said. Adami agreed that the deal was a step in the right direction. He said that the company should do about 10 more deals like the one announced today.

Najarian said that



could be on the buy list for a big pharmaceutical company. He said

Eli Lilly

(LLY) - Get Report

may be considering a buyout of the company.

Worth said that the chart on



is a "beauty."

The traders discussed the state of the U.S. recession, given positive earnings from a slew of companies today. Adami said the U.S. is in a recession and it's a mistake to think that stocks can't go higher in a recession. He said that early cycle names like


(ETN) - Get Report


Illinois Tool Works

(ITW) - Get Report

look attractive here, but if investors wait for a recovery, they'll be too late.

Seymour pointed out that many of the 52-week highs have been in commodities names. He said that these names are trading on new valuations, and that's the reason for the stocks' rise. Najarian argued that valuations on names like


(MOS) - Get Report

aren't as high as people think because the companies are due for strong earnings going forward.

Adami said he also likes


(DD) - Get Report

as an agriculture play.

Trader Radar



traded on unusual volume today.

For the "Fast Money" hedge fund favorite, the traders looked at


(GLW) - Get Report

. The maker of LCD glass for flat-panel TVs is also a "green" trade and is making good overseas sales.

Adami said that the company has global telecom exposure and benefits on demand for improved Internet bandwidth. He said the company is basically a monopoly in the LCD space. Worth said stock looks quite good. Najarian agreed, as did Seymour.

Worth introduced several pairs trades he was putting on. A pairs trade is long one name and short another. Worth said the current market environment will benefit investors who can pick stocks. Seymour agreed. He said he is long IBM and short Hewlett-Packard, for example.

Adami said he likes H-P, and he'd be long both names.

Worth said he'd also be long ExxonMobil and a seller of


(APA) - Get Report

. Seymour said he'd be long ExxonMobil and short Petrobras.

Worth also said he'd be long

Procter & Gamble

(PG) - Get Report

and short


(CLX) - Get Report

. He said Procter is doing a lot of business overseas, but Clorox isn't.

Seymour advised viewers to watch the time frame for pairs trades very closely.

Final Trade

Seymour said he would be short Petrobras for the next four or five sessions. Adami chose Microsoft on the long side. Worth said he likes

International Coal


. Najarian selected