The markets staged a late rally Thursday on the strength of financial and tech stocks.
The Dow Jones Industrial Average rose 95.81, or 1.19%, to 8,125.43, while the S&P 500 was up 13.24, or 1.55%, to 865.30. The Nasdaq jumped 43.64, or 2.68%, to 1,670.44. Guy Adami said on CNBC's "Fast Money" TV show that it may be late to get in with the S&P at 865, but he said there may still be time because he doesn't think anyone believes in this rally. "This rally is at the sixth or seventh inning, at best," he said. Melissa Lee, the moderator of the show, switched to Jim Goldman, a CNBC reporter who was listening to the conference call for Google ( GOOG). The stock was rolling over in after-hours trading. Goldman said Google suffered its first sequential revenue and profit decline in the first quarter. However, he said that CEO Eric Schmidt said the company's "good" quarter demonstrated that its business model is strong and works. Pete Najarian said that while it will be a bit of a struggle for the company in the short term, it stands to grow in the long term because growth is to be had in online advertising. Guy Adami said the stock is fairly priced now and investors should look to get in on a dip. Tim Seymour said investors should be getting out of Baidu ( BIDU) which has jumped 100% in the last couple of months. Lee said the chipmakers got a lift from Nokia ( NOK), which reported signs of stability in the cellphone market. Najarian said Nokia still has to do more to make money on in the high-end portion of the market now dominated by Research In Motion ( RIMM) and Palm ( PALM) with their smartphones. Lee asked the panel what they would do if tech stocks dip Friday. Adami said he would look at Oracle ( ORCL) on a pullback, Intel ( INTC) at $15, and take profits on HP ( HPQ) at $36. Karen Finerman said she liked Cisco ( CSCO) at its current valuation. Will JPMorgan Chase's profit beat set the tone for the financials? "You clearly want to buy JPM," said Richard Bove, financial strategist for Rochdale Securities. He said the company actually understated its earnings today because it socked far too much money in its reserves. In particular, he referred to JPMorgan's non-performing assets and outstanding loans. Bove said things are looking good for the banking industry, with record deposits flowing in the fourth quarter, high margins on its deposits, the mortgage refi boom and increased trading activity. As for Citigroup's ( C) earnings Friday, he expects it to make a small profit, primarily from trading and investment banking. He said it's difficult to play the stock until the arbitrage between the preferred and common is settled.
He said the IPO calendar is going to be sizable with Goldman Sachs ( GS) and JPMorgan Chase in the best position to profit from it. He also said Goldman is doing well handling corporate debt offerings. Adami said he would look at a stock like Greenhill ( GHL) on a pullback in the financials. Finerman said people believe the bottom is in the financials, which she said can make a "ton of money once their asset quality becomes less of an issue." Najarian was enthusiastic about the 33% jump in Regions Financial ( RF). He said 60,000 contracts traded today compared to 5,000 on a normal day. "They're talking about returning money to TARP. They're talking about a profit," he said, adding there is still more upside to the stock. Lee noted that consumer discretionary stocks ticked higher, turning positive for 2009. Adam said he sees a short trade in Harley-Davidson ( HOG), which is not in a good shape but has been performing because of a short squeeze. Najarian noted a 18% short squeeze in Tiffany ( TIF). Katie Stockton, market technician for MKM Partners, said she was encouraged by a possible breakout in the S&P 500 Retail Index, which she said is close to an upside target of 430. Adami said investors might be getting in a little late on retail stocks, although he thinks some are fairly priced such as Home Depot ( HD) and Gap ( GPS). Stockton said the move in retail will be broad-based and likes Wal-Mart ( WMT) and some of its peers.
Finerman told shareholders of Cox Radio ( CFX) to take a closer look at the fine print of a $3.80 tender offer by the company for the rest of the shares it doesn't own. She said the company, which has not been doing well the past couple of months, recently reported to the board how bad business was while it continued to buy back stock. She said the company bought back shares in March for an average of $4.50 and in one instance, the CFO bought back stock at $3.99 on March 6. She also said the stock was valued at slightly over $6 in an appraisal in December, 2008. Asked to respond, the company said the actions weren't inconsistent, she said. She called the tender "ridiculous" and a move "to take advantage of the shareholders." "Investing is not a spectator sport. You have to read the fine print," she asserted. In the final trades, Seymour suggesting take profits on Barclays ( BCS). Adami recommended going long on Yum! Brands ( YUM) and Finerman liked Cisco ( CSCO). "Check out
"'Fast Money'Portfolios of the Week" on Stockpickr every Thursday.