The stock market put in a solid day Tuesday as investors bid up stocks in hopes the Fed will cut rates tomorrow. The Dow finished up 96 points and the Nasdaq closed up 8 points.

Guy Adami explained that the bond markets are looking for a 50-basis-point rate cut. Karen Finerman says the Fed will cut 25 basis points, but that she will be paying attention to the Fed's language to see what the central bank says about growth, inflation and guidance.

Pete Najarian says that if the Fed cuts 25 points, the Financial Select Sector SPDR ( XLF) will sell off.

3 Stocks I Saw On TV

Yahoo! ( YHOO) reported a 23% drop in fourth-quarter earnings, and the CFO says the search giant plans to cut 1,000 jobs. Najarian says that could create an opportunity for Microsoft ( MSFT) to buy Yahoo!.

Adami wondered what it means for Google ( GOOG). Macke says it's really hard to make a bullish case for Yahoo!, and he doesn't know what to do with the stock. He disclosed he currently owns YHOO and that it eventually will bounce.

Bank stocks and broker stocks led the market higher Tuesday as traders position for another rate cut. Najarian explained that the president of Goldman Sachs ( GS) sold $6 million in stock, and this could be an indication of which way the stock will go from current levels. Adami likes U.S. Bancorp ( USB) in the financial sector.

Lehman Brothers ( LEH) raised its quarterly dividend by 13% and announced it will buy back 100 million shares. Finerman says she is short the stock, and isn't happy about the news. Najarian was impressed about the direction Lehman is going. Macke speculated that things might not be as bad as they seem at LEH.

Old Economy stocks from sectors such as chemicals, coal, fertilizer and railroads put in a strong day Tuesday. Adami say Buffett name Burlington Northern Santa Fe ( BNI) is a buy, as is agriculture play DuPont ( DD).

Najarian explained that every time BNI goes under $80, Warren Buffett buys more stock. For an agriculture play, he would look at Dow Chemical ( DOW). Adami and Najarian like coal names Peabody ( BTU), Joy Global ( JOYG) and Arch Coal ( ACI).

Refiner Trade

The oil refining sector was a big winner on Tuesday after Valero ( VLO) reported a 52.2% jump in revenue growth. Is it time to take profits in the sector?

Finerman disclosed that she sold 75% of her positions in the refiners over the last couple of days. Najarian believes now is the time to sell into the strength and look to buy on pullbacks. His best pick for the refiners is Marathon ( MRO).

Adami says Tesoro ( TSO) can be bought ahead of its earnings on Feb. 1. He says TSO has room to go higher and has an attractive valuation. Macke advised investors to build positions in the refiners and don't chase them here.

Short-Squeeze Plays

The "Fast Money" crew highlighted some stocks that could be seeing an artificial bounce from a short squeeze. Finerman explained that Ihop ( IHP) has 33% of its float sold short, and any news could send the stock higher. Macke says it's time to get out of Lexmark ( LXK) because the stock went up due only to a short squeeze. He says the pop in the stock won't last long, so investors should use the mechanics of the squeeze to get out. Najarian recommends investors look at buying Crocs ( CROX), which has 16 million of its 70 million shares outstanding short.

JetBlue CEO Interview

JetBlue ( JBLU) shares surged 25% after the airline reported better-than-expected revenue and its first full-year profit in three years.

JetBlue CEO David Barger joined the "Fast Money" crew to discuss his firm's prospects. According to Barger, JetBlue's success comes from the firm learning how to manage the high cost of oil. Barger explained that 35% of his company's fuel costs are hedged, and he plans to keep hedging into the future. Barger also expressed how excited he is that the Lufthansa deal has been completed. He expects to see new synergies from the deal.

Michael Steinhardt Interviewed

Former hedge fund manger Michael Steinhardt joined the "Fast Money" crew to offer his take on the markets. Steinhardt explained that the Federal Reserve has lost a lot of respect in the markets. He says the Fed is now nothing more than a pedestrian group of guys who meet and try to figure out what to do.

Steinhardt explained that there's two ways to look at the market here. Either the market is in a traditional cyclical downturn, or things could be much worse and this time it's different because of the extraordinary amount of lending around the world. He wouldn't disclose which category he believes the current market falls into.

Trader Radar

Phillips-Van Heusen ( PVH) traded double its average daily volume Tuesday.

Pops and Drops

Pops: Sepracor ( SEPR) traded up 3%. Najarian explained that SEPR bought two drugs. Zimmer Holdings ( ZMH) traded up 13% after the firm reported a 13% rise in profits. Najarian mentioned that Morgan Stanley put out a $86 price target on ZMH. Cardinal Health ( CAH) traded up 3% even after the health care provider lowered its full-year guidance. Adami says the stock should have gone down, but if you want to be in the space, buy McKesson ( MCK).

Smurfit-Stone Container ( SSCC) traded up 13% after the firm reported a 76% rise in profits. Finerman thinks this could be interesting for UPS ( UPS) and FedEx ( FDX). Quintana Marine ( QMAR) traded up 30%. Najarian says the entire sector is working.

Drops: EMC ( EMC) fell 6%. Adami says own EMC for a trade. Clear Channel ( CCU) fell 7% as problems in the credit market cast doubts on a possible $20 billion private-equity buyout of the firm. Finerman says she wouldn't own CCU. ( AMZN) traded down 3% ahead of the firm's earnings. Macke thinks that eventually AMZN will be interesting. Disney ( DIS) traded down 2% after Citigroup cut the stock from hold to sell. Macke didn't agree with Citigroup; he thinks DIS is a buy.

Final Trade

Macke says take gains in the Financial Select Sector SPDR ahead of the Fed meeting. Finerman favors buying TIPS (Treasury-Inflation Protected Securities). Najarian recommends Crocs ( CROX). Adami recommended buying Merck ( MRK) after it reports earnings Wednesday.
Stockpickr is a wholly owned subsidiary of

If you liked this article you might like

George Soros' Top 10 Dividend Stock Picks for 2015

George Soros' Top 10 Dividend Stock Picks for 2015

Top 10 New Stocks to Trade Like Hedge Fund Renaissance Technologies

Top 10 New Stocks to Trade Like Hedge Fund Renaissance Technologies

4 Warren Buffett Dividend Stocks Jim Cramer Also Owns

4 Warren Buffett Dividend Stocks Jim Cramer Also Owns

6 Health Care Stocks John Paulson Is Betting On for 2015

6 Health Care Stocks John Paulson Is Betting On for 2015

11 Stocks Warren Buffett Loves for 2015: IBM, Wal-Mart and More

11 Stocks Warren Buffett Loves for 2015: IBM, Wal-Mart and More