The markets finished on upside Wednesday aided by a boost from consumer stocks. The Dow Jones Industrial Average rose 47.55, or 0.61%, to 7,837.11, while the S&P 500 added 9.61, or 1.18%, to 825.16. The Nasdaq jumped 29.05, or 1.86%, to 1,590.66.
Tim Seymour said on CNBC's "Fast Money" TV show that the market traded great with 815 being a "very good support level." He said the Fed expressed concerns about a difficult economy in the second half, but that sentiment didn't come as a surprise. Jeff Macke was pleasantly surprised by the buying of consumer names despite retail news that wasn't that strong. Zachary Karabell said the first-quarter numbers for consumer spending did not fall off the cliff to the degree that was expected. Jon Najarian said the anticipation for bad news has gotten a little lower, making for a "better outlook going ahead." Melissa Lee, the moderator of the show, noted the volatility index broke below 40 to settle at 39, a sign perhaps of market stability. So, is there a recovery in the cards for retail stocks? Charles Grom, a retail analyst for JP Morgan, thinks so. After five head fakes in the past 14 months, he believes the latest move is signaling that retail stocks could be going higher. "The consumer seems to be stabilizing," he said. He said the home category is starting to rebound as evidence in the bounce today from Bed, Bath & Beyond ( BBBY). He agreed with Macke that Family Dollar ( FDO) has done well, up 6.4% today and 33% for the year.
He said the apparel category is starting to rebound. His favorite picks? They are Big Lots ( BIG) and Wal-Mart ( WMT). Lee asked the panel for their thoughts on whether the auto stocks are rebounding following the surge in the shares of Toyota ( TM) and Daimler ( DAI). Seymour said he expects auto sales, which bounced off a low in January, to hit 10.5 million units by next year. He said Toyota will benefit because it has cut costs faster than anybody. He also likes Tata Motors ( TTM) and its Nano, which is "seeing more demand than people thought." Najarian said investors shouldn't forget the opportunities in auto supply firms, especially O'Reilly Automotive ( ORLY), up 19.7% for the year. Lee invited Greg Troccoli, director of technical research for Opalesque, to get the pulse of the market. Troccoli said he thinks the low is in. "I put out a sound bite to all my customers on March 6," he said, adding he was "lucky enough" to buy the low that day. He said he sees no reason to retest that low. "You're not to to see lows that fall below 725 to 750," he said. Lee brought in Nish Sood, a Deutsche Bank analyst, to comment on the $1.3 billion merger of Pulte Homes ( PHM) and Centex ( CTM) to create the largest homebuilder in the U.S. Sood was cool to the merger. "By the time the stocks closed, the combined entity lost 4% of its value from yesterday," he said. Sood said the housing market is going to continue to decline for the rest of the year.
Lee then brought in Brad Hintz, a brokerage analyst with Sanford Bernstein, to comment on whether there might be trouble brewing in the banking sector. Hintz regarded Morgan Stanley ( MS) as a "safe stock." He was skeptical of the speculation going around that Goldman Sachs ( GS) was going to knock the cover off the ball in terms of trading. He said it's going to difficult for Goldman, Morgan Stanley and JP Morgan Chase ( JPM) to do well in trading when "you have the government wandering around the trading floor." Hintz said the restoration of the uptick rule will have a major impact on credit default swaps by forcing them to be used to hedge credit instead of attacking weak stocks. Carl Icahn appeared on the show to discuss a variety of issues. Lee asked him whether a buyout is in the works at Biogen Idec ( BIIB) where he has a large position. Icahn hopes a buyout is the future if "we can get a good enough price." He believes that big pharma is going to take over these "large molecule" companies and that the only obstacle holding them back is the ego of the biotech companies. Icahn declined to mention a price for Biogen, except to say it should be a large premium over where it is selling today. As for corporate governance, Icahn believes the federal government should pass an addendum to the law that would allow shareholders to have the right to move a company from one state to another state.
He said Delaware is too friendly to companies, allowing CEOs and boards to hold on to their power by installing poison pills and staggered boards. He would be more inclined to move these companies to shareholder-friendly North Dakota. Taking a question from Seymour on his involvement with board of companies in Las Vegas, Icahn said he believes the some of the senior debt of these companies is "very cheap" and anyone holding them can do very well, "looking ahead three, four and five years." "People are still going to gamble, and it's going to be a cycle," he said. In a lighter moment, Lee asked him whether he has his sights on Apple ( AAPL). "I'll give you a freebie. I'm not," he replied. Icahn reiterated his belief that Yahoo! ( YHOO) be sold to Microsoft ( MSFT). Such a deal would allow Yahoo! to build on content and display and allow Microsoft to handle the "back-end" stuff, he said. In the final trades, Macke was for Wal-Mart ( WMT), Seymour for Millicom International Cellular ( MICC), Karabell for SPDR S&P Retail ( XRT) and Najarian for NetApp ( NTAP). "Check out
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