'Fast Money' Recap: Tech's Winning Hand

The markets finished mixed Wednesday, although the Nasdaq continued its winning ways.

The Dow Jones Industrial Average fell 34.68, or 0.39%, to 8,881.26, while the S&P 500 dropped 0.51, or 0.05%, to 954.07. The Nasdaq was up 10.18, or 0.53%, to 1,926.38.

Jim Goldman, a CNBC reporter said on the network's "Fast Money" TV show that eBay ( EBAY) posted a good report with a lot less bad news that Wall Street expected. He said the online retail giant beat earnings and revenue estimates and offered some pretty good guidance.

(For an analysis of stocks from a recent "Fast Money" show, take a look at Dan Fitzpatrick's "3 Stocks I Saw On TV.")

3 Stocks I Saw on TV

He said the good news is that eBay sees the situation bottoming, with prospects improving for the balance for rest of the year. He said its challenge remains finding some way to compete with Amazon.com ( AMZN).

Joe Terranova said investors are starting to see some stabilization at eBay but he said the stock he wants to own is Amazon, which he expects to post "phenomenal numbers" in its earnings report.

Checking in on Qualcomm ( QCOM), which was down 4% in after-hours trading, Goldman said the real problem for the wireless chipmaker was its average selling prices and softer-than-expected guidance.

Melissa Lee, the moderator of the show, said stocks were losing momentum in today's trading session except for tech stocks. Terranova said a modest recovery in PC demand is driving tech. Steve Grasso said pharma might be the next leader after tech.

Shifting to the financials, Karen Finerman said the numbers from Wells Fargo ( WFC) were not bad at all. She said the real question is its decision not to issue any additional equity. "That's the key," she said.

Terranova said he liked US Bancorp ( USB) and Bank of America ( BAC) more than Wells Fargo because they are struggling less with non-performing asset growth, which he said is in the teens.

Lee shifted to Yahoo! ( YHOO) which was up in after-hours trading on a Wall Street Journal report that a search deal with Microsoft is imminent, perhaps as early as Thursday.

Terranova was adamant about the importance of the search deal for Microsoft, saying it will give them 30% market share in its battle with Google. Seymour disagreed, saying what's far more important for Microsoft is the rest of its business, including the launch of Windows 7, which is now pegged for Oct. 22, and the XBox.

Apple ( AAPL)shares were up 3% today after nine brokerages raised their price targets for the stock. Finerman found it difficult to get excited with so many brokerages involved.

Grasso agreed but sees Apple as a long-term buy. "No will argue about that," he said.

In the "Bull Market or BS" segment, Danielle Park, president of Venable Park Investment Counsel president, took issue with commonly held notion that the emerging markets are the place to be.

She said it is a "fantasy" to believe that the rest of the world is doing better than the U.S., where the tech rally is leading the next cyclical expansion. She said Japan is in shambles and European banks are struggling with reckless lending. She sees the U.S. coming out of the recession, though it will hit a rough patch in the fall.

Seymour took issue with the analysis, arguing there is plenty evidence of growth in the rest of world, especially in China and India.

Lee brought on Brendan Barnicle, an analyst with Pacific Crest Securities, for a preview of Microsoft's earnings. He said its earnings should be better than expected. He said the software giant is seeing a nice recovery in the PC business and some upside in its enterprise data and email businesses. He expects Microsoft to continue its cost-cutting.

Barnicle agreed with Terranova that Microsoft is taking a more aggressive approach these days. He sensed this after attending a recent partners conference in which he came away with the impression that Microsoft is getting more aggressive about virtualization and its competition against Google.

Shifting to the industrial sector, Deane Dray, an analyst with FBR Capital, said Illinois Tool Works ( ITW) has shown some incremental growth between the first and second quarters.

Looking ahead to Thursday, he said he is looking for organic growth from the industrial stocks. He especially likes 3M ( MMM) as a defensive early cycle name. He also said Danaher ( DHR) was his favorite market performer, calling it the "best cash-flow generator in the sector."

Lee invited Patricia Edwards, founder of Storehouse Partners founder, to talk about Amazon.com's proposed acquisition of Zappos in a deal valued at $900 million.

Edwards said Amazon CEO Jeff Bezos is doing a lot to enhance the brand and doing it at a time when other retailers are weak. She said it's developing its own line of goods and is rumored to being going after Netflix ( NFLX).

She said Amazon can go on the buying spree because it has the money. She said consumers are resonating with its consolidating strategy of offering price comparison shopping, single-transaction buying and one shipping charage. She said there's no need to rush to buy the stock, which is up 73% year to date, noting it can be bought at a lower price.

For the stock of the day, Finerman picked Pepsico ( PEP), which beat earnings estimates and reaffirmed guidance. She said the company is seeing more customers in Europe and the rest of the world. She said the company has a huge cash flow and trades only at 15 times earnings.

The trade? Finerman would buy Pepisco right here or buy Pepsi Bottling Group ( PBG), which Pepsico wants to acquire.

In the final trades, Seymour was long United States Natural Gas ( UNG) while Grasso was long Amazon.com . Finerman was short Moody's ( MCO). Terranova liked McDonald's ( MCD).

"Check out "'Fast Money' Portfolios of the Week" on Stockpickr every Thursday.