The prospects of a second China stimulus helped Wall Street snap a five-day losing streak Wednesday.
The Dow Jones Industrial Average rose 149.82, or 2.23%, to 6,785.84, while the S&P 500 added 16.54, or 2.38, 712.87. The Nasdaq rose 32.73, or 2.48%, to 1,353.75. Dylan Ratigan, the moderator of CNBC's "Fast Money" TV show, said the market rally was fueled by talk of the China stimulus, the Obama administration's mortgage subsidy plan and the oversold condition in the markets. Guy Adami wasn't impressed with the rally, calling it a "meaningless day." He said it would have meant something if the S&P closed above the 741-level. Tim Seymour said the China stimulus will mean investment opportunities in industrial metals and certainly in crude oil. As for trading opportunities in China, he mentioned Baidu.com ( BIDU) and Sohu.com ( SOHU). He said the Chinese government has much more power than the Obama administration to stimulate growth, noting it does not have a black hole in his banking sector. Karen Finerman said there is still so much fear and uncertainty in the U.S. market. However, she added that if investors do some digging, they will find "mispriced" stocks. Adami suggested one such stock might be Aecom Technology ( ACM), which had a nice run today after a good showing on a secondary offering. He said the engineering construction company's backlog is up 32% year over year. Ratigan asked Adami to comment on gold, which has drifted downward 10% in the past two weeks and ended today at $906 a troy ounce. Adami said gold is declining after hitting the classic double top and will be testing the $880 to $885 level.
Ratigan shifted the discussion to an upcoming hearing of the House Financial Services Committee on mark-to-market rules on toxic assets. Jeff Macke said trying to get rid of mark-to-market rules now would be a concession that there is no market for these troubled assets. Finerman took a middle position, suggesting a hiatus on mark-to-market rules to give some breathing space to banks to recapitalize. General Electric ( GE) sank again today over concerns of its capital levels and dividend cut. That prompted Macke to say it's the "classic case" of a company saying "trust me, trust me over and over again - the more they say it, the less you do." Ratigan asked William Fleckenstein, president of Fleckenstein Capital, whether Obama's proposed tax changes will have a negative effect on capital formation. Fleckenstein said the Obama administration needs to realize capital is the engine that is going to create jobs. Thus far, he added, the administration has moved in the opposite direction and created an unfriendly climate for capital. "We can't get the rich mad. We need to put their money at risk," he said. "If you kill the golden goose, you are not going to have any money to make changes." Ratigan brought in Deborah Weinswig, a Citigroup retail analyst, who believes the retail sector has stabilized despite growing unemployment, housing turnover, and a higher personal savings rate. As evidence, she said Nordstrom ( JWN) has done well year to date and outperformed the retail group. In the Rising Star segment, Finerman singled out American Eagle ( AEO) as one of her retail favorites. She said it has significant scale, contained operating costs, and has tons of cash to survive the retail slowdown. "The expectations are so low that even a slight miss will be a positive for the stock (which is up 7% in 2009), she said.
Sen. Ted Kaufman (D., Del.), appeared on the show to talk about a bill he and other senators are sponsoring that will beef up the number of FBI agents to go after white-collar crime. He said there are only 250 FBI agents working on these cases now compared with 1,000 during the savings and loan crisis. In the final trades, Macke said to take profits on Morgan Stanley ( MS). Adami reaffirmed his preference for Aecom Technology; Finerman liked Flowserve ( FLS); and Seymour liked Campanhia Vale ( RIO). "Check out
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