'Fast Money' Recap: A Resilient Market in U.S. Stocks and Bonds

 

NEW YORK (TheStreet) -- The Shanghai Composite dropped 5.2% and the Greece stock market plunged 12.8%, which weighed on the S&P 500 in the first half of Tuesday's trading session by over 1%. 

However, the market recovered in the second half of the session, closing lower by just 0.02%. To Brian Kelly, founder of Brian Kelly Capital, that means global investors continue to put their capital to work in U.S. assets including stocks and bonds. 

The bond rally seems likely to continue, Guy Adami, managing director of stockmonster.com, said on CNBC's "Fast Money" TV show. For now, the bond rally has been accompanied by a stock market rally, too. However, that relationship is likely to decouple in the future when equities sell off. 

It's suspicious that the utility sector continues to rally since it is generally viewed as a defensive investment, said Steve Grasso, director of institutional sales at Stuart Frankel. He also pointed out that investors are rotating out of technology, and for the moment, into energy. 

Tuesday's rebound in oil prices was important, according to Karen Finerman, president of Metropolitan Capital Advisors. When oil sold off hard in October it pulled the stock market down with it. If it can stabilize and move higher it should help stocks rally even further. 

Adami added that over the past ten years, the Dow Jones Industrial Average has had a very high correlation to oil prices, with the exception of the past two months. 

The U.S. recently reduced its oil demand outlook for 2015, albeit slightly, Kelly said. However, a reduction in demand could signal slower-than-expected economic growth, which would negatively impact GDP. 

Fred Cannon, director of research and chief equity strategist at Keefe, Bruyette & Woods Global, said bank stocks seem to have gotten "a little ahead of themselves" in regards to valuation. Investors are already pricing in a rate hike in 2015. If that doesn't happen, EPS estimates could be too high by about 10%. 

JPMorgan Chase  (JPM) , Bank of America (BAC) and Citigroup (C) are all attractive on the long side, Finerman said. Earnings come out in January and the companies have the potential to boost dividends and buyback programs after that. Grasso advised investors to wait for a pullback in BAC, which continues to stay rangebound between $15 and $18. 

Morgan Stanley's (MS) diversified business is really starting to get some credit, Adami said. The stock now trades with a higher valuation and at a premium to Goldman Sachs (GS) . He also said U.S. Bancorp (USB) will continue higher. 

The trading panel became focused on the tech stocks after Adami rattled off his "Would You Rather" list. He prefers Facebook (FB) over Twitter (TWTR) , Alibaba (BABA) over Amazon (AMZN) , and Google (GOOGL) over Yahoo! (YHOO) . 

Kelly disagreed saying, saying Twitter has "so much upside" compared to Facebook. "Buy Twitter with both hands right here," he said. Amazon has support near $280, so investors should wait for a slightly deeper pullback before getting long, Grasso said. 

Finerman added that Amazon has an amazing platform and customer experience. However, its valuation and the appearance that management seemingly doesn't care about profits or its stock price are reasons why investors should avoid the stock, she said. 

Mark Mahaney, managing director at RBC Capital Markets, has a $420 price target on shares Amazon (AMZN) , along with a buy rating. It's his top pick for 2015 because the company's distribution centers investment comes to an end, which he hopes will save the company some R&D expenses and boost margins. If sales can reaccelerate and margins improve, investors will likely become much more bullish on the stock.

For their final trades, Grasso is buying Twitter and Kelly is a buyer of Tesla Motors (TSLA) . Finerman said to buy call options on Macy's (M) and Adami is buying Lululemon Athletica (LULU) . 

-- Written by Bret Kenwell

Follow @BretKenwell

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

 

More from Jim Cramer

McDonald's, Nucor, Ball Corp.: 'Mad Money' Lightning Round

McDonald's, Nucor, Ball Corp.: 'Mad Money' Lightning Round

Fools Rush In: Cramer's 'Mad Money' Recap (Wednesday 4/25/18)

Fools Rush In: Cramer's 'Mad Money' Recap (Wednesday 4/25/18)

Investors Shouldn't Be Worried About Trump's Trade Tariffs: Ian Bremmer

Investors Shouldn't Be Worried About Trump's Trade Tariffs: Ian Bremmer

Veteran Foreign Affairs Expert Ian Bremmer Reveals How to Price Political Risk

Veteran Foreign Affairs Expert Ian Bremmer Reveals How to Price Political Risk

Jim Cramer: I've Liked Six Flags Entertainment Stock as an Income Producer

Jim Cramer: I've Liked Six Flags Entertainment Stock as an Income Producer