'Fast Money' Recap: Market Fears

NEW YORK ( TheStreet) -- The markets managed to end in the black Tuesday after earlier gains were pared.

The Dow Jones Industrial Average gained 57.14, or 0.59%, to 9,743.62, while the S&P 500 added 5.48, or 0.54%, to 1,028.06. The Nasdaq added 2.09, or 0.10%, to 2,093.88.

Pete Najarian said on CNBC's "Fast Money" TV show that investors should keep an eye on the volatility index, which he says will be rising.

Tim Seymour said he was encouraged by the market's ability to bounce back after an Institute of Supply Management report that was weaker than expected.

Anthony Scaramucci said he expects the market will do well in the back half of the year after digesting a wave of bad news. He said he was impressed with the price action in Europe and the fundamentals of companies.

For a breakout of some stocks from a recent "Fast Money" TV show, check out Dan Fitzpatrick's "3 Stocks I Saw on TV."

3 Stocks I Saw on TV

Najarian said the rise in the chip index should lift the major technology names.

Still, Joe Terranova voiced a cautionary note when he pointed out how the market gave up a large part of its gains from the early part of the trading session..

Brian Kelly agreed, saying he just didn't see all the positives the other panelists were seeing. He said unemployment remains a problem and inventories are too high.

But Doug Kass, founder and president Seabreeze partners Management and a columnist for TheStreet.com, took issue with Kelly, saying that "this business is going to be fun again and it's going to happen sooner than people think."

He said the market has traveled the path of fear that has been disconnected from the fundamentals and other risk assets. He said that the manufacturing and non-manufacturing ISM index is in line with the six-month average and that employment in the June ISM non-manufacturing index dropped marginally.

He said the market is probably discounting a $70-a-share S&P 2011 profit, less than 0.50% economic growth, and monthly job losses, all of which he argued will not occur.

Kelly, though, said he sees a double-dip recession ahead for the markets. "We're going much lower."

Oil prices were heading lower today prompting Terranova to say the situation was not looking good. He said oil is tethered to global demand, adding the challenge will be to see whether there is the political will to stimulate the markets.

Terranova said the heat wave on the East Coast is making natural gas stocks attractive. He said stocks like Southwestern Energy ( SWN) and Apache ( APA) have been working well for him.

Scaramucci said he warming up to BP ( BP). He said the company has more than $14 billion in cash. He was also told that 50% of the spill is evaporating into the air, lessening the size of the cleanup bill. Seymour said BP shares rose today by 8.7 percent because of progress in the drilling of the relief well.

With the weather reaching 103 degrees in Central Park, Najarian said the Utilities Select Sector SPDR ( XLU) and high-yield stocks would be an attractive place to invest. Seymour said he would rather invest in Telefonica ( TEF) and its 8.5% dividend yield.

Is another round of economic stimulus needed? Mark Zandi, chief economist for Moody's, thinks so. He said a $80 billion stimulus, $75 billion of which would go to unemployment benefits and Medicaid obligations, would help the economy just when it needs it the most. He said the aid would help avoid a double-dip recession.

Turning to the tech sector, Dennis Kneale, CNBC media technology editor, said Microsoft ( MSFT) might be better off spinning off its consumer-related products into a separate unit and focus on being an internal software company. Microsoft pulled the plug on its Kin smartphone only two months after its launch.

Melissa Lee, the moderator of the show, brought in Deborah Weinswig, a retail analyst with Citi Investment Research, who cut the price targets of a number of retail stocks today.

She said she was particularly concerned with stocks like Nordstrom ( JWN) that is vulnerable to higher-income consumers with exposure to the market and a heavy reliance of discretionary income. She also was worried about light June sales and an inventory laden second half of the year.

On the other hand, she like Kohl's ( KSS) for the amount of cash it has and its disciplined approach toward inventory. She also liked where Wal-Mart ( WMT) is heading but said it's a large ship to turn around.

In the "Trading the Globe" segment, David Riedel, president of Reidel Research Group, said the successful pricing of the Agricultural Bank of China, potentially the largest IPO in history, reflects the optimistic views that the China's economy is continuing to grow, with the consumer in the forefront.

He said he is seeing positive signs in the sales of autos, durable goods and real estates. He said he would invest in anything related to the Chinese consumer, including mobile and Hong Kong properties.

In the final trades, Seymour liked Wimm Bill Dann Foods ( WBD). Scaramucci liked BP ( BP). Terranova liked Amazon.com ( AMZN) and Najarian liked Cirrus Logic ( CRUS).

-- Written by David Tong in San Francisco

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

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

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