'Fast Money' Recap: Watching Washington

NEW YORK (TheStreet) -- The broader markets initially sold off due to worries over the government shutdown, but closed flat by the end of the day.

On CNBC's "Fast Money" TV show, Guy Adami said the stock market will react in the same manner, regardless of whether the political issues are from Republicans or Democrats. He added that the market's inability to fall has not pressed any urgency on Washington.

When President Obama said, "Wall Street should be worried," Adami admitted those were powerful words that concerned him. He stressed that 1,670 is still an important level for the S&P 500.

Karen Finerman said the shutdown could last for a while, but isn't as important as the upcoming debt ceiling debate.

Tim Seymour said gold finally reacted to what's going on in the world, but he would be a seller of this rally because of the eventual taper by the Federal Reserve. He added that he would buy weakness in the U.S. dollar for the same reason.

Chris Krueger, senior policy analyst at Guggenheim Securities, was a guest on the show and said the shutdown will probably last through the weekend and possibly even until the debt ceiling debate on Oct. 17. He added that there's a 40% chance Congress will fail to raise the debt ceiling, but admitted it will likely end up raising it at the very last minute.

Mike Khouw said there was a huge play put on Microsoft ( MSFT) via options. Specifically, he noted that a buyer sold 50,000 of the Jan. $31 puts (a bullish play), and used those proceeds to buy 50,000 Jan $34 calls (also a bullish play).

Adami said that traders playing this name because of the rumors regarding Ford's ( F) CEO Alan Mulally going to Microsoft, should take profits with the stock near resistance of $34. He added that $31.50 has acted as decent support.

With a 3.5% dividend yield and trading at 3.5 times book value, Seymour said the stock is cheap and that investors should forget about the new CEO for now.

Hedge fund manager Dan Loeb became the largest shareholder of Sotheby's ( BID) and called for the removal of current CEO William Ruprecht.

Finerman said the company's board is non-staggered, meaning its entirety will be up for reelection at the next annual meeting. She added that it will be vulnerable, especially with activist investors owning a 17% stake to insiders' 1% stake.

Seymour added that because the stock is thinly traded, activist investors like Loeb can stir up noise in the name, pushing prices higher.

Wilbur Ross, CEO of WL Ross & Company, was a guest on the show and had a lot to say. He wasn't overly concerned about the government shutdown, noting the government would need to stay closed for 57 days to have a 1% impact on GDP. With respect to bonds, he said that rates are being held artificially low and suggested avoiding long-term fixed rate debt.

With shipping stocks, which have been on fire lately and something he's been behind, he prefers Liquefied Petroleum Gas (LPG), bulk, and petroleum carriers and said the advance is far from over. Going forward, his best picks are European banks and shale gas.

Tesla Motors ( TSLA) was the first stock on the show's "Trending Trades" and Seymour said he wants nothing to do with the stock.

Adami said Tenet Healthcare ( THC) is actually a growth stock he likes and that investors could own it near $40.

Tesoro ( TSO) was upgraded at Citigroup. Panelist John Woods said he would be a buyer, with upside price estimates in the $65 to $70 range.

Adami said he expects Lululemon Athletica ( LULU) to break out over $75.

Regarding Baidu ( BIDU), Seymour said he's leery of the stock's recent run, despite its valuation not being historically high. He added that the company is doing well with mobile, but that he wouldn't be a buyer in the short-term.

Mike Khouw said J.C. Penney ( JCP) shouldn't weigh on other retailers, such as Nordstrom ( JWN), and that its issues are company-specific.

Finerman added that J.C. Penney could hurt other retailers if it was dire enough to liquidate its inventory at whatever price necessary.

Switching gears, she said likes financials at these levels and suggested Citigroup ( C) had the most upside.

For their final trades, Finerman said to buy Foot Locker ( FL), Khouw was a buyer of Macy's ( M) via call options and Adami was buying United Technologies ( UTX). Seymour said to buy Procter & Gamble ( PG) and Woods was a buyer of BP PLC ( BP).

-- Written by Bret Kenwell in Petoskey, Mich.

Follow TheStreet.com on Twitter and become a fan on Facebook.

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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