'Fast Money' Recap: Apple a Tech Bellwether?

NEW YORK ( TheStreet) -- The markets recovered from an early slump and closed with a rally Tuesday.

The Dow Jones Industrial Average jumped 75.53, or 0.74%, to 10,229.96, while the S&P 500 gained 12.23, or 1.14%, to 1,083.48. The Nasdaq was up 24.26, or 1.10%, to 2,222.49.

In afterhours trading, Apple ( AAPL)reported fiscal third-quarter earnings that blew past analyst estimates. The stock was more than 5% in afterhours.

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

Pete Najarian said on CNBC's "Fast Money" TV show that Apple posted strong iPad and iMac sales, which he noted were significant because it showed that the two product lines weren't cannibalizing each other. He also said the iPhone sales were strong as expected, as the company put another $4 billion in its cash reserves.

Melissa Lee, the moderator of the show, said the gross margins were impressive at 39.1% vs. the consensus estimate of 38.9%.

Karen Finerman said Apple's earnings report was "truly an impressive display." She said the stock is extraordinary because Apple is a premier name that still has a lot of value, despite its size.

Joe Terranova said Apple once again demonstrated it can grow organically. More importantly, he said the earnings were an important tell on consumer behavorial trends. He mentioned two derivative plays off the earnings: Best Buy ( BBY) and Broadcom ( BRCM).

Najarian noted Altera ( ALTR) was also impressive as it beat estimates in its earnings report.

Terranova sees Apple heading north of $300 because money managers will feel compelled to own it, going into the fourth quarter.

Lee noted that Yahoo ( YHOO) was down 5% in afterhours after it came in a little short in display ad and search revenues. Najarian was disappointed in Yahoo, saying it hadn't shown any signs of growth. Grasso said he was on buy side on Apple and Google ( GOOG) and the sell side on Yahoo.

Brian Kelly acknowledged Apple's impressive earnings, but cautioned the panel about extrapolating the earnings to make a general statement about retail. He said consumers are "buying what they need" and "not necessarily buying what they want." He said a lot of retailers, including Gap ( GPS) are cutting prices to attract sales. Grasso agreed, saying a lot of the retail space is still under pressure.

Lee noted that BP ( BP) shares were more than 1% on reports that it is selling $7 billion worth of its assets in Egypt and Canada to Apache ( APA).

Grasso said that although he liked Apache, he preferred integrated names like Exxon Mobil ( XOM) and Chevron ( CVX) that are away from the "BP mess."

Najarian added he liked the oil service names like Halliburton ( HAL) and Weatherford ( WFT).

Terranova added ConocoPhillips ( COP) to the list of energy names he would go after. He said ConocoPhillips has the blend of natural gas, oil and gasoline going for it in an environment of higher energy prices.

CNBC reporter Mary Thompson, citing a source, said in a report that the federal government's pay czar will be going after a number of firms that received TARP money for providing egregious pay to top executives. She said the pay czar wants these firms to strengthen their clawback provisions in the contracts with these executives.

Lee noted that the market sagged early on after Goldman Sachs ( GS) reported a 49% drop in trading revenue.

But Douglas Sipkin, an analyst with Ticonderoga Securities, thought the "coast was clear" for both Goldman and Morgan Stanley ( MS), which reports earnings Wednesday.

Sipkin said it isn't important if Morgan beats or misses earnings. Of the two, he said he would rather own Goldman because it is investable after the SEC settlement. Morgan, on the other hand, is still in the midst of implementing its retail brokerage business at a time when the SEC is imposing tougher fiduciary standards.

Lee noted that VMware ( VMW) was up 4%. Kelly said the company is doing well because server virtualization is hot. He said Vmware is a richly valued stock and that investors might look at Oracle ( ORCL) and Microsoft ( MSFT) for better value.

Dennis Kneale, CNBC media and tech editor, said Apple shouldn't be considered a bellwether for tech. He said it has become a consumer company in the past three years and a bellwether for how consumers feel and what they are willing to spend.

Extending that logic further, he considered Amazon.com ( AMZN) a retailer; IBM ( IBM), a corporate customer computer maker; and Google ( GOOG), an advertising company.

Peter Boockvar, a strategist with Miller Tabak, told Lee that he doubted whether Fed Chairman Ben Bernanke would go so far in his testimony before Congress on Wednesday to say that the Fed would halt paying interests on reserves. He said Bernanke would probably wind up having the Fed do nothing and allow the economy to deleverage.

Grasso said the next catalyst for the market is the Novemember elections, while Terranova said another stimulus is needed to get the economy moving.

Lee brought in Steve Cortes, founder of Veracruz, who commented on the tension between earnings and macro economic data. He said earnings, for the most part, have been good, while the macro data has been bad. As a result, he said large- cap stocks with overseas exposure are benefitting, while small-cap stocks, which are more oriented to the U.S. economy, are not faring well.

He also said he is long commodities, short the dollar and buying crude and grains.

In the final trades, Terranova said 1,055 looks like the new support line for the S&P. Grasso liked Altria Group ( MO). Finerman liked Covidien ( COV), while Najarian liked Cirrus Logic ( CRUS). Brian

-- Written by David Tong in San Francisco

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

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