'Fast Money' Recap: Bernanke Delights Markets

NEW YORK ( TheStreet) -- The markets soared after the Fed's decision to maintain the status quo on interest rates and quantitative easing.

The Dow Jones Industrial Average jumped 95.59, or 0.76%, to 12,690.96. The S&P 500 rose 8.42, or 0.62%, to 1355.66. The Nasdaq gained 22.34, or 0.78%, to 2,869.88.

The trading panel on CNBC's "Fast Money" show focused on Bernanke's comments in his first press conference.

Tim Seymour commended Bernanke for his transparency and for not "throwing any curve balls." He said the Fed will do all that it can to get people to invest in the U.S. even though it means living with a weak dollar, a route the markets have endorsed.

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

Karen Finerman said Bernanke obviously wants to continue on the course he's taken and deal with reality later.

Brian Kelly was struck by how much Bernanke said and how he provided the reasoning behind the Fed's moves. He said his comments will move the markets higher because investors have to be in assets that beat inflation.

Zachary Karabell said the market likes the "endless liquidity" the Fed's policy is producing. He said there's no hint yet just when the pullback will occur.

Karabell also noted that a number of Fed governors would like Congress to remove the full employment mandate from the Fed and have it just deal with price stability in the manner that the European Central Bank does.

Melissa Lee, the moderator of the show, said that silver recouped its big loss on Tuesday by surging 6.21% today. Kelly maintained that gold is still the better trade, noting silver is too speculative.

Seymour agreed, saying that the rise of silver is being fueled by the falling dollar. Kelly said that the moves in silver are volatile because it is a small market that is vulnerable to swings in the futures. Karabell said he was comfortable with the silver trade because it is "a pure liquidity trade" and a momentum play.

Commenting on Bernanke's comments and the fall of the dollar index, Rebecca Patterson, chief markets strategist for JPMorgan, said the Fed chairman had to defend the dollar in his comments today.

However, she said nothing has changed and that the dollar is still getting hurt by the differential between low rates in the U.S. and rising rates in the rest of the world. She said American investors want a better yield and are willing to go overseas to get it.

She said the fall in the dollar becomes a real worry when it gets disorderly as the speed of the currency's decline picks up.

Seymour reiterated his belief that the Fed's QE 2 policy is working and is creating a weath effect without an implosion of the Treasury markets. Kelly said the telltale sign of the end of quantitative easing may come when the Treasury auctions weaken, signaling the dollar may have fallen too much.

George Goncalves, Nomura's head of U.S. Rates Strategy, said he did not see any indication from Bernanke's comments of a tightening policy anytime soon.

Lee went to Ron Kruszewski, CEO of Stifel Financial ( SF) to get the financial sector's perspective of Bernanke's comments.

Kruszewski said Bernanke has been consistent in what he has been saying along. He said that Bernanke has been fighting deflation since the financial crisis ended. He said an unfortunate byproduct of that fight has been food and energy inflation.

He said the Fed has been printing money to expand the money supply to compensate for tepid loan demand in the private sector. He said that won't change until short-term interest rates rise.

Commenting on Bernanke's comments and its effect on oil and gas prices, Paul Sankey, an oil analyst with Deutsche Bank, said the weak dollar will drive oil prices higher as he forecast $112 a barrel for the WTI. He told the panel that the conflict in Libya has added $10 to $15 to the price of a barrel of oil.

Lee shifted to eBay ( EBAY), which reversed in afterhours after an initial selloff following its earnings report.

She said the most impressive parts of eBay's report was the expansion of PayPal and growth in mobile payments.

According to CNBC reporter Jon Fortt, eBay CEO John Donahoe said top sellers and users were satisfied with its services and the company was doing well in mobile.

Looking at the earnings of energy companies this week, Sankey said ConocoPhillips ( COP) report was disappointing. He said Occidental ( OXY) and Exxon Mobil ( XOM) were in a good position to beat estimates.

Is QE 2 good for banks? Frederick Cannon, director of research for Keefe, Bruyette & Woods, said the low yield curve environment and weak loan demand have been rough on banks.

Cannon said the banks don't earn much on low rates and the lack of loan demand makes it tough for them to create capital and dividends for their shareholders.

He said he expects consolidation to occur, with the big banks buying non-banks such as asset manager to boost income. His takeout candidate list included Regions Financial ( RF), CSE Capital ( CSE), Synovus Financial ( SNV), Western Alliance Bancorp ( WAL) and Boston Private Financial Holdings ( BPFH).

In a quick, 360-degree analysis of Microsoft ( MSFT) ahead of its earnings, three experts were buyers of the stock.

Colin Gillis, BGC financial analyst, said he was a buyer, adding reports of the death of PCs have been overstated as Intel's ( INTC) results have shown. Oppenheimer chartist Carter Worth predicted Microsoft stock will get the same kind of pop other large-cap tech stocks. Options trader Scott Nations said options traders of Microsoft were bullish on the stock.

The reaction of the panel was a lot less bullish. Karabell said facetiously that he would be interested in the stock only if he "were 20 years older and wanted to be in the market and didn't want my stock to move much." Finerman, who's long the stock, didn't think a good earnings report will move the stock.

In the final trades, Seymour said he liked Turkcell ( TKC). Kelly liked T Rowe Price ( TROW). Finerman again favored Corning ( GLW). And Steve Grasso liked Ford ( F).

--Written by David Tong in San Francisco.

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