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Oil Drags Down Dow

Monday, 5 May 2008 | 5:54 PM ET

OIL DRAGS DOWN BLUE CHIPS

The headline: Stocks Lose Ground

Another record for crude oil dragged down the Dow Monday despite word from the Institute for Supply Management that the service sector of the economy was no longer contracting in April.

Your oil trades are only a few stories down.

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BALLMER BALKS, YAHOO PLUNGES

The headline: Yahoo Shares Plummet 15% After Microsoft Withdraws Bid.

Yahoo's shares tumbled as much as 20 percent after Microsoft withdrew its $47.5 billion takeover offer, wiping about $7.6 billion off the Internet company's market capitalization and piling pressure on its leadership.

I think Microsoft is where you want to be, says Jeff Macke. I wouldn’t touch Yahoo!

Goldman has a $38 price target on Microsoft, adds Guy Adami. I agree with that.


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COUNTRY FRIED

The headline: Countrywide Tumbles After Friedman, Billings, Ramsey Analyst Says Bank Of America Should Abandon Deal.

Bank of America will likely lower its purchase price for Countrywide Financial Corp at least two analysts said, with Friedman, Billings Ramsey or even walk away from the deal.

I still see downside in Countrywide, says Guy Adami.


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SPRINT AHEAD

The headline: Sprint Considering Spinning Off Or Selling Nextel: WSJ.

Deutsche Telekom AG is considering a bid for Sprint Nextel , according to a media report Monday. Bonn-based Deutsche Telekom did not immediately comment on the report in The Wall Street Journal. Were it to make such a deal, it would catapult its T-Mobile wireless unit to the top spot in the U.S. market.

Walk away, says Jeff Macke. There’s nothing to see here. If you’re looking for a stock, check out AT&T or Verizon .


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MILE-HIGH CLUB?

The headline: US Airways, United Parent UAL May Announce Merger Within Next 10 Days: WSJ.

United Airlines spurned last month by Continental , is intensifying merger talks with US Airways and a deal could emerge in as soon as 10 days, the Wall Street Journal reported citing people familiar with the matter.

I like the mergers because the airlines need less competition in the space, says Pete Najarian. But I wouldn’t touch the stocks right now.


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CRUDE CROSSES $120

The headline: Crude Oil Closes Up 3.1% To $119.97, New Record, After Climbing As High As $120.36.

Prices of crude oil and copper, two of the world's most vital raw materials, hit new record highs on Monday before ending off their peaks as more investors turned their focus to commodities after a slump in the stock market.

Addison Armstrong, Tradition Energy Director of Market Research joins the panel for this conversation. Following is a summary of his main points.

I’m cautious, says Armstrong. Based on the light volume it could be a sucker’s rally. I think Monday was all about speculative money flying into the crude oil market and taking advantage of some bank holidays in the UK and Japan to force some shorts out of the market.

If you’re looking for a trade I would short the refiners, he says.

Or if you believe oil will go higher you might want to short the airlines, says Pete Najarian.

I like the United States Oil Fund, says Jeff Macke.


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HOT COALS

The headline: Coal Producers Rally After Alpha Natural Resources Crushes Earnings Estimates; Apache, Devon Energy, Natural Gas Producers Post Strong Gains Today

Appalachian coal producer Alpha Natural Resources Inc reported a surge in first-quarter earnings, beating analysts' expectations, on rising metallurgical coal exports and higher prices. For the latest quarter, the company's net income more than tripled to $25.5 million or 39 cents a share, compared with $8.3 million or 13 cents, a year earlier.

I sold into the strength, says Pete Najarian. Wait for the pullbacks.

I like Joy Global into earnings as well as Bucyrus , adds Guy Adami.


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SURGE OF STEEL

The headline: Nucor, U.S. Steel, AK Steel, Steel Dynamics Finish Session Sharply Higher

The price of heavy melting steel surged 43 percent in April at a regular monthly auction for automakers scraps, and another 37 percent this month. The steel now costs $690 a ton, more than double from a year ago. Since 2002, the price has risen almost 600 percent, according to ISRI.

Higher prices have been a boon to once-struggling North American companies like U.S. Steel , Nurcor and Steel Dynamics.

Goldman Sachs just raised their estimates on US Steel, says Guy Adami. I like this stock on a valuation basis.

Or keep your eye on Cleveland Cliffs , says Pete Najarian.


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MAKING OUT LIKE A PANDIT

The headline: Citigroup Reportedly Restructuring CEO Vikram Pandit’s Fund Old Lane Partners

Citigroup Inc said it is looking at restructuring Old Lane, a hedge fund co-founded by Vikram Pandit, the bank's chief executive. Citi bought Old Lane last year for more than $600 million, but the fund's performance has since been disappointing. Citi wrote down $200 million of intangible assets linked to the acquisition in the first quarter.

I think it undermines Pandit's credibility all together, says Karen Finerman.


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TAKE YOUR POSITION: CISCO

The headline: Cisco Systems To Report Earnings Tuesday After The Bell

Cisco Systems reports earnings for the fiscal third quarter on Tuesday. Analysts, on average, are expecting a profit of 36 cents per share on sales of $9.75 billion, according to a poll by Thomson Financial.

I’m bullish, says Pete Najarian.

I think it’s a sell, counters Jeff Macke. Wait for a dip.


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A MARVEL TO BEHOLD

The headline: Marvel's 'Iron Man' Takes In $100.7M This Weekend For 2nd-Best Non-Sequel Opening Ever.

This weekend was just the beginning of Hollywood's Iron age. Marvel Studios announced Monday it will release "Iron Man 2" on April 30, 2010, following the success of the first in the comic-book franchise, which pulled in $104.2 million domestically since opening last Thursday and $201 million worldwide.

I think Hasbro is the winner, says Jeff Macke. They make the Iron Man toys.

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

Find out how Pete Najarian recommends trading it in"A Marvel-ous Outlook”




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Trader disclosure: On May 2, 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 (MSFT), (DIS), (INTC), (HAS); Adami Owns (AGU), (NUE), (BTU), (C), (GS), (INTC), (MSFT); Najarian Owns (AAPL), (TSO), (XLF); Najarian Owns (C) Calls, (MSFT) Calls, (POT) Calls, (BUD) Calls; Najarian Owns (YHOO) And Is Short (YHOO) Calls; Finerman Owns (GS); Finerman's Firm And Finerman Own (HD); Finerman's Firm Owns (MSFT), (TSO), (VLO), (VCLK); Finerman's Firm Owns (YHOO) And (YHOO) Call Spreads; Finerman's Firm Owns S&P 500 Puts; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM); Finerman's Firm Is Short The British Pound; Finerman's Firm And Finerman Own (C) And (C) Leaps; Finerman's Firm Owns (FNM) Calls; GE Is The Parent Company Of CNBC; NBC Universal Is The Parent Company Of CNBC

Armstrong Owns (NE)

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DJIA
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ANR
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BAC
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C
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CPT
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CLF
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CSCO
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DTE
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HAS
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USG1
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MSFT
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NUE
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S
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STLD
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T
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USO
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VZ
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X
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YHOO
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