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Strong Rally Evaporates

Monday, 7 Apr 2008 | 6:20 PM ET

STRONG RALLY EVAPORATES

The headline: Stocks Little Changed

The Dowwas little changed on Monday as rising oil prices stoked fears that corporate profits could suffer, overshadowing optimism about the easing of the credit crisis on news that Washington Mutual Inc was close to securing a $5 billion investment.

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WHOO-HOO FOR WAMU

The headline: Washington Mutual Soars 28% On Reports It's Close To $5B Infusion From TPG-Led Group.

Washington Mutual , the nation's largest thrift, is in talks with buyout shop TPG Inc. and other investors about selling a stake in itself in return for cash, according to The Wall Street Journal. The company, which has suffered big losses tied to subprime mortgages, would become the latest U.S. financial institution to reach such a deal.

$5 billion is a lot of money, says Karen Finerman, and it’s coming from private equity. It shows me that there is capital out there.

These are smart people putting money to work, says Jeff Macke. Maybe the bottom is in.

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AFTER HOURS ACTION: ALCOA

The headline: Alcoa Quarterly Profit Falls

Aluminum producer Alcoa said on Monday that first-quarter profit was cut in half from a year ago because of higher energy and raw material costs and a weak dollar, which offset a surge in the metal's price, explains Dylan Ratigan.

I still like Alcoa, says Guy Adami. I think it’s a buy.

It could also be a takeover target, adds Karen Finerman.

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AFTER HOURS ACTION: ADVANCED MICRO DEVICES

The headline: AMD To Cut 10 Percent Of Staff As Sales Fall

Advanced Micro Devices Inc on Monday said it will cut 10 percent of its work force after first-quarter sales fell more than it had expected.

I think it’s a real problem, says Pete Najarian

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GASOLINE HITS RECORD; OIL UP 5$ IN 2 DAYS

The headline: Crude Oil Jumps 2.7% To $109.09 After OPEC Signals It Won't Raise Production; Gasoline Prices Traded on NYMEX Hit Yet Another Record.

Oil prices rose to within striking distance of a new record as several refineries prepared for the U.S. summer driving season, boosting supply concerns, explains Dylan Ratigan.

I think it’s good for Mastercard , says Guy Adami, because gas is so expensive people will pay for it with plastic.

I like Chesapeakein the energy sector, says Pete Najarian. Also watch for news out of the Howard Weil energy conference this week, he adds. I’m curious to see what they say about potash, the commodity.

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COAL IN INVESTORS STOCKING

The headline: Arch Coal Midday Forecast Release Disappoints Some Investors Causing Materials Stocks to Give Up Gains.

Arch Coal reiterated its forecast for 2008 earnings of $2 to $2.50 a share, dragging down stocks. Investors were expecting stronger numbers, explains Dylan Ratigan.

I’m concerned for the short term, says Guy Adami. Some of the names are starting to top out.

It’s a pause that refreshes, exclaims Jeff Macke. I think it’s okay to add on the dips.

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WHALE WATCHING: ICAHN-MOTO TRUCE

The headline: Motorola Reaches Truce With Billionaire Activist Investor Carl Icahn.

Motorola made peace with Carl Icahn on Monday, heading off a proxy battle with the billionaire investor by agreeing to seat four of his nominees on its board of directors.

I don’t think it changes anything, says Karen Finerman.

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NO MORE MR. SOFTEE

The headline: Sweeter Bid For Yahoo!?

Two executives at Yahoo! reiterated their belief that Microsoft's takeover bid "substantially undervalues" the company, but they said they remain open to a deal with the software giant if it "is superior to our other alternatives."

The letter to Microsoft Chief Executive Steve Ballmer came two days after Ballmer sent a letter to Yahoo's board in which he threatened a hostile takeover of the company if it doesn't agree to a merger within the next three weeks.

I think Yahao! should just sell and be done, exclaims Jeff Macke.

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WHALE WATCHING: BILL ACKMAN

The headline: Borders Surges After Revising Financing Deal With Bill Ackman's Pershing Square Capital.

Borders announced terms to its financing agreement with Pershing Square Capital Management LP - its biggest shareholder - that costs the ailing bookseller less and potentially gives the hedge fund a smaller stake in the company than first proposed.

Word on the Street
The Fast Money traders take a look at today's top business stories.

I think you can trade alongside Ackman, counsels Jeff Macke.



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Trader disclosure: On Apr .7, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (YHOO), (MSFT); Pete Najarian Owns (AAPL), (NOK), (YHOO), (NVS), (XLF); Pete Najarian Owns (AA) Calls, (CHK) Calls, (MSFT) Calls, (BHI) Calls; Finerman Owns (GS); Finerman's Firm And Finerman Own (CROX); Finerman's Firm Owns (FLS), (MSFT), (YHOO); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM)

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DJIA
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AA
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ACI
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AMD
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CHK
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MA
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MSFT
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WM
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YHOO
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MCD
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