The Dow Jones Industrial Average edged past 8,000 Wednesday after a spirited late-hour rally.
The Dow added 109.20, or 1.38%, to 8,029.20, while the S&P 500 was up 10.56, or 1.25%, to 852.06. The Nasdaq rose 1.08, or 0.07%, to 1,626.80. Jeff Macke commented on CNBC's "Fast Money" TV show on the strength of the financials in that rally, saying "you want to buy them "because the government is on your side." Pete Najarian said Goldman Sachs ( GS) made an impressive run and dragged along the insurers. Karen Finerman said the markets turned after American Express ( AXP) came in with charge-offs that were not as bad as the Street had expected. She said that's good news for JPMorgan Chase and Bank of America ( BAC), which have large credit card portfolios. "If that is a trend that is forming, that is very good news." Guy Adami said the rally continues because no one really believes it will continue. Najarian said the earnings are starting to provide some clarity, showing where companies are making money and where they aren't. Melissa Lee, the moderator of the show, asked the panel to comment on the "explosive" run in regional bank shares such as Huntington Bancshares ( HBAN), which soared 18%, and Fifth Third Bancorp ( FITB), which was up 12%. Adami said the yield curve sets up "fantastically" for these guys. "If they're solvent banks, the next three to five years could be the best years they'll potentially ever have." Najarian observed a lot of upside call buying on Huntington and Fifth Third. "They don't have the toxic assets that the big banks do," he said.
Lee moved on to some stocks that made some unusual moves. First up was Simon Property ( SPG), which jumped 14% in a sector that was pounded the day before. Finerman said the company is the "cream of the crop" with a good management team. Macke said he picked up shares of Gannett ( GCI) despite the horrible state of the newspaper industry. Although the stock has been beatened down 90%, he was heartened by statements from the company that it's staying solvent until Christmas, which he interpreted as "tantamount to a victory." Lee noted that Burger King ( BKC) was down 17% on disappointing earnings. Najarian said the franchise hasn't lived up to its potential and hasn't been aggressive enough in the marketplace. Joe Terranova appeared on the show to talk about why investors should be in this market despite persistent pessimism. He said the markets could be lifted again tomorrow if JPMorgan and Google ( GOOG) turn in good earnings. Najarian added the volatility index, which settled at 36 today, can't get back up to 40, a sign that "people are getting more comfortable" with the market conditions. Can Google turn around the tech stocks tomorrow when it reports its earnings? Lee turned to Mark Mahaney, an Internet analyst with Citigroup ( C) for an assessment. Mahaney was cautious about the stock. He said he thinks Google can beat the Street's estimates, which he said have been on the aggressive side, but he sees no evidence of an upside, particularly on the revenue side.
The analyst said search was weak for Google in January and February before rebounding in March, a move that triggered the recent pickup in the stock. He thinks Google can sustain a 20% earnings growth rate over the next three years, and he told Finerman that he would give it a PE ratio of 20. He said the Internet search giant continues to perform well in its ad space despite a 10% drop in advertising in the U.S. and a 20% drop in newspapers. He said Google can reaccelerate its growth rate if can click on its growth drivers --- mobile, video and display advertising. Adami said the next trade on Google is to short it at some point. He said he would put in a short position after the stock moves over 400. Najarian said one item to check out in its earnings reports will be its revenues in North America. If they are down significantly, that could be huge, he said. Finerman said she was lukewarm about the stock, though she found it difficult to short the "best in the class." Lee brought in Eric Schmidt, an analyst for Cowen & Co., to talk about the run-up in Biogen Idec ( BIIB). Schmidt said Biogen is deserving of some of the run-up premium because it is a solid company fundamentally. He sees it posting a good first quarter and has pegged the stock at $65. With homebuilding stocks rising, Adami said the best way to play it is with Home Depot ( HD). He said the company has a great balance sheet and is set to fly when economic conditions improve. He said the stock is a "tad rich" now and would wait for a pullback.
Macke discussed two stocks that should benefit from the boom in used car sales: Carmax ( KMX) and AutoZone ( AZO), which has "never stopped working." Najarian said he has seen strong options activity in King Pharmaceuticals ( KG) and Varian Medical ( VAR). "Check out "'Fast Money' Portfolios of the Week" on Stockpickr every Thursday.