STOCKS RALLY TO END WEEK
Stocks rallied on Friday as earnings showed companies have weathered the recession and economic data raised hopes the economic cycle may have hit a bottom.
American Express provided the most fuel to the Dow's rise after it reported results that topped analysts' expectations. Ford also provided a tailwind after it posted a smaller-than-expected first-quarter loss and said it was on track to at least break even in 2011 and did not expect to seek U.S. government loans.
Economic data also fed the buying frenzy after durable goods orders slipped in March, but fell far less than Wall Street expected. Meanwhile after hours Treasury Secretary Tim Geithner made mostly positive comments about the economy saying the economic downturn appeared to be easing.
Unfortunately the positive momentum wasn’t enough to turn either the Dow or S&P positive for the week. Instead, for the week, the Dow fell 0.7 percent and the S&P slid 0.4 percent, while the Nasdaq rose 1.3 percent. The declines for the blue-chip Dow average and the broad S&P 500 snapped a six-week streak of gains.
Strategy Session With The Fast Money Traders
I’m amazed that the market didn’t pull back more this week, says Karen Finerman. Considering some of the negative news, that’s pretty impressive.
Everything we’ve heard from the Fed and from Mr. Geithner suggests that banks are in better shape, says Tim Seymour. But it seems to me that the S&P fails at 870 every time.
What I’m hearing from Geithner as well as the earnings reports is stabilization, adds Pete Najarian. That's not to say things are getting better but maybe they're not getting worse.
It’s right to be encouraged, muses Jeff Macke. The market had every excuse to sell-off this week, and it didn’t.
TOPPING THE TAPE: MICROSOFT LEADS TECH HIGHER
Unlike the Dow and S&P, the Nasdaq extended its winning streak to seven straight weeks, its longest string of gains since early May 2007. Software giant Microsoft provided the biggest boost as investors cheered cost-cutting efforts and the fact that the release of Microsoft's Windows 7 was on schedule.
Nobody would have seen the action in Microsoft, chuckles Karen Finerman. But I sold some because the report wasn’t that great.
THE OBAMA TRADE: STRESS TESTS
On the financial front, investors sent bank shares higher as they await results of the bank stress tests. Although results won’t be public for another week, the Federal Reserve did release them privately. They also provided some context by publicly saying the top 19 U.S. banks need to hold a "substantial" amount of capital above regulatory requirements to weather a potential worsening of the economic recession.
"This is very, very basic. You come out of this knowing that the banks have to build up a buffer (for) a tighter, more challenging credit market. But they do that anyway," says Peter Kenny, managing director at Knight Equity Markets.
The release was a whole lot of nothing, bristles Jeff Macke. I got long Wells because they pulled back.
There seems to be some perception out there that the government doesn't want the TARP money repaid until 2011, adds Tim Seymour. If that's the case, Wells Fargo and Bank of America could have some upside.
TOPPING THE TAPE: COMMODITY STOCKS
Oil prices rose above $51 a barrel on Friday, with the gains linked to better than expected earnings and relatively robust U.S. durable goods orders figures.
"Our market's been strong and taking direction from equities," explain's Addison Armstrong, analyst at Tradition Energy in Stamford Connecticut.
Oil prices have been tracking equities closely in recent weeks as investors look to stocks for signs of an economic recovery that could revive demand for fuel.
If you’re looking for a trade I think the valuations in the OIH are cheap, muses Karen Finerman.
I like Halliburton, adds Tim Seymour. And I expect to see pressure on the dollar which should benefit commodities in general. Or take a look at Exxon , he says, I think it’s undervalued.
In commodities, I’d keep an eye on the XLB , adds Pete Najarian. A lot of the names in this ETF are performing well. And in terms of undervalued, I like BP .
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Trader disclosure: On Apr 24th, 2009, 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 (SDS), (AGN), (WYNN), (GE), (LVS), (WFC); Seymour Owns (BAC), (EEM), (FXI); Seymour Is Short (AAPL); Finerman's Firm Owns (AXP), (RIG), (UNH), (TBT); Finerman's Firm Owns (BAC) Preferred; Finerman's Firm Owns (C) Preferred; Finerman's Firm Owns(MSFT) & (MSFT) Put Spread; Finerman's Firm Owns (WFC) Preferred; Finermans Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO); Najarian Owns (ANR) CAll Sprad; Najarian Owns (BX) Call Spread; Najarian Owns (MS) & (MS) Calls; Najarian Owns (PCU) Call Spread; Najarian Owns (PALM); Najarian Owns (RIO) Calls; Najarian Owns (XHB) Cal Spread; Najarian Owns (XLB) Call Spread
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