'Fast Money' Recap: M&A Boost

NEW YORK ( TheStreet) -- The markets surged Wednesday as signs of deal-making picked up.

The Dow Jones Industrial Average added 37.71, or 0.27%, to 11,722.89, while the S&P 500 rose 6.36, or 0.50%, to 1,276.56. The Nasdaq jumped 20.95, or 0.78%, to 2,702.20.

Guy Adami said on CNBC's "Fast Money" TV show said he was impressed with today's strong trading action and sees the market heading higher.

Tim Seymour said the market is shifting away from easy speculative trades onto firmer footing, as the dollar and commodities move higher.

Karen Finerman said deal-making contributed to the market rise, citing Community Health's ( CYC) interest in Tenet Healthcare ( THC) and the pickup in bidding for JCrew ( JCG). She said she sees deals brewing in retail, health care and thrifts.

Terranova commented on the smart move by Qualcomm ( QCOM) for Atheros Communications ( ATHR) as a way to get into wifi semiconductivity.

Terranova said other tech companies loaded with cash will be hunting for deals, adding the easiest target might be Skyworks Solution ( SWKS).

Shifting to the financials, Pete Najarian said the sector is a "raging bull" with the Financial Select Sector SPDR ETF ( XLF) at its highest level since April. He noted unusually strong options activity in Bank of America ( BAC).

Finerman said she likes the space, noting Bank of America's recent settlement over bad loans, rising loan activity and the spread between the 2- and 10-year bonds.

Adami said his pick in the space in U.S. Bancorp ( USB), while Brian Kelly liked the mortgage REIT play in Annaly Capital ( NLY) and its 14% dividend.

Not to be outdone, Tim Seymour said JPMorgan Chase ( JPM) is moving closer to a golden cross, a sure bullish sign.

Simon Hobbs, the moderator of the show, said Research In Motion ( RIMM) spiked at the end of the day as the introduction of its new playbook tablet nears. Kelly was high on RIM's ONX, saying it can be used to connect to cars.

Adami said it was difficult for him to accept the notion that everyone could win in the tablet space without encountering margin compression problems. Finerman countered that the tablet space is still at a stage where it is still growing rapidly so that everyone wins.

Seymour said RIM's Blackberry is still stuck on the hardware side, while Google ( GOOG) gains traction with its Android and Honeycomb operating system. Terranova said Apple ( AAPL) will still rein as king this year and see its market share grow.

Tonight's Street Fight focused on Citigroup's downgrade of Alcoa ( AA) to a hold from a buy.

Citigroup analyst Brian Yu said he doesn't seen any meaningful upside movement in the price of aluminum, noting the industry is seeing record inventory and excess capacity. He also said the weaker dollar will increase production costs in Europe, Australia and Brazil. And he said the stock has enjoyed a good run.

Seymour, though, was more optimistic about Alcoa, saying it has become a much better run company.

Yu said a better pick in this space would be Cliffs Natural Resources ( CLF).

Hobbs noted that the stronger dollar was pressuring commodities. Seymour, though, felt the commodities fared well, especially oil where there is evidence of real demand.

Terranova said copper and oil continue to benefit from the demand-recovery story, while gold remains vulnerable in the reallocation trade. He said he continues to short gold and silver and buy puts in Freeport McMoRan ( FCX).

Seymour said the weakening yen is going to benefit Toyota ( TM). Adami said Ford continues to do everything right and should move higher. Terranova said the dollar is approaching its 200-day moving average and should get a lift from a favorable jobs report.

Are rating agencies still having problems? New York Times business columnist Jesse Eisinger said they do, as evidenced in a recent move by S&P to downgrade 1,200 repackaged mortgage-backed bonds. Kelly found it difficult to believe institutional investors are still relying on information from the rating agencies given their sullied involvement in the subprime loan mess.

For the first hedge fund pick of the year, Anthony Scaramucci chose Aeropostale ( ARO), a retailer that specializes selling apparel to teenagers. He said the company offers fantastic margins, a great return on equity and invested capital and a free cash flow yield of 12.4%. "It's a very cheap stock," he said.

In the tweet section, Najarian said Molycorp ( MCP) traded in a tight $3 dollar range today and looked very volatile. He said it would be wise to take some profits. Finerman agreed, saying the valuation is "insane."

With the prospects of a weaker yen as Japan takes on a huge debt problem, Kelly said he likes Toyota ( TY) because he believes the automaker will benefit from a weak-yen tailwind. If the stock breaks through $80, it has the potential to go up 20% to 30%, he said.

In the final trades, Kelly liked Yingli Green Energy ( YGE). Seymour liked Vimpel ( VIP). Adami said the selling in Family Dollar ( FDO) was overdone and advised getting into it on Thursday. Finerman liked BMW ( BMW) and Terranova liked Salesforce.com ( CRM).

--Written by David Tong in San Francisco.

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