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Dow Fights Higher Despite Microsoft Plunge

DOW FIGHTS HIGHER DESPITE MICROSOFT PLUNGE

The session ended Friday with mixed results after gains in pharmaceutical and energy shares boosted the Dow and the S&P 500 slightly higher. However, the Nasdaq could not continue its winning ways and closed lower largely due to disappointing results from Microsoft.

For the week all three major indexes scored gains, with the Dow rising 4%, the S&P 500 gaining 4.1% and the Nasdaq climbing 4.2%.

What’s the word on the Street?

It seems to me that investors don’t want to miss this market, says Pete Najarian. On every pullback buyers come rushing in. However I’m concerned that investors are getting the pom-poms out and saying everything is okay when there's likely weakness to come.

I wouldn’t read too much into Friday’s action, says Joe Grasso. Nobody wanted to be short going into the weekend considering the gains we had over the past 5 days. I think the next big catalyst for this market is employment and those numbers come out August 7th.

It’s asset allocation, says Tim Seymour. Investors were short or on the sidelines and they came back into the market.

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CREDIT CARDS HIGHER

The credit card companies traded higher on Friday after investors sifted through the earnings report from American Express and found glimmers of hope that recent trends of lower card use and slow repayment may be improving.

What’s the play?

I’m bullish on American Express, reveals Joe Terranova. I think it’s a world class franchise and the banks are getting support from the government.

If you want to play the space I’d do it with Visa, counters Pete Najarian.

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MICROSOFT PLUNGES

Microsoft ended trading as one of the biggest losers after the company's weaker-than-expected results sent shockwaves up and down the Street.

The software giant, whose operating systems power the vast majority of personal computers, lost about $20 billion of its market value on Friday as its shares fell $2.31 to $23.25. The 9 percent drop was the biggest single-day fall for Microsoft since January.

David Hilal, an analyst at FBR Capital Markets, downgraded the stock to "market perform" from "outperform," citing sharp gains in Microsoft's stock price in recent months and concerns that technology spending may not bounce back this year.

What’s the play?

I jumped into this stock on the pullback, reveals Tim Seymour. Microsoft has been trapped in a Vista vortex but I think it’s breaking out on Windows 7.

And Microsoft still has $30 billion in cash on the balance sheet, reminds Joe Terranova. I wouldn’t be surprised to see a stock buy-back.

I’d trade this stock cautiously, counters Pete Najarian. They have to produce in order for shares to continue their gains.

I’m also cautious, reveals Steve Grasso. My clients did not buy Microsoft on the dip.

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EBAY TROUNCING AMAZON?

Shares of Amazon.com fell on Friday, a day after the world's largest online retailer posted a 10 percent decline in second-quarter profit and gave a modest third-quarter outlook, prompting one brokerage to downgrade the stock.

Collins Stewart, which lowered its rating on the stock to "hold" from "buy," said at current valuation levels it did not see any material upside for Amazon.

Meanwhile, shares of rival eBay soared this week after the online auctioneer posted quarterly results that topped market expectations, leading at least nine analysts to raise their price targets.

Lazard Capital Markets, Broadpoint Amtech and RBC gave their top ratings to the stock, saying eBay's latest results reflected improvements in its fundamentals and also in overall e-commerce trends.

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MORGAN STANLEY CAN’T SHAKE LOSSES

Several Wall Street analysts lowered their 2009 estimates for Morgan Stanley this week to reflect the bank's wider-than-expected quarterly loss, as well as concerns over its commercial real estate exposure and fixed income trading business.

Unlike rival Goldman Sachs, whose quarterly earnings rose on strong gains in trading and profit, Morgan Stanley, after leaning to a more conservative risk management position, appears to have failed to capture its share of equity trading flow on the heels of "pretty strong" equity issuance, analysts at William Blair & Co said.

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WALL STREET CLIMBING ONTO THIS BULL

A bullish outlook on stocks from Goldman Sachs help boost stocks this week with advances coming after strategist David Kostin predicted gains of 13% in the overall market by year’s end.

But are other strategists on board? Find out what Jeremy Zirin of UBS has to say. Watch the video now.





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Trader disclosure: On July 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: Seymour Owns (TSL), (MSFT); Grasso Owns (ASTM), (BAC), (BA), (COST), (FAZ), (OXY), (V), (WMT), (XLF), (T); Terranova Owns (MSFT), (MCD), (GOOG), (AMZN), (AXP); Najarian Owns (CSCO) Call Spread; Najarian Owns (INTC) Call Spread; Najarian Owns (JPM) And Is Short (JPM) Calls; Najarian Owns (MCD) And Is Short (MCD) Calls; Najarian Owns (MS) And Is Short (MS) Calls; Najarian Owns (MSFT) And Is Short (MSFT) Call; Najarian Owns (YHOO) Call Spread; Najarian Owns (V) And Is Short (V) Calls; Najarian Owns (HIG) Calls

For Steve Grasso:
Stuart Frankel And Its Partners Own (ABT)
Stuart Frankel And Its Partners Own (CUBA)
Stuart Frankel And Its Partners Own (GERN)
Stuart Frankel And Its Partners Own (MSFT)
Stuart Frankel And Its Partners Own (NWS.A)
Stuart Frankel And Its Partners Own (NXST)
Stuart Frankel And Its Partners Own (NYX)
Stuart Frankel And Its Partners Own (PDE)
Stuart Frankel And Its Partners Own (PRST)
Stuart Frankel And Its Partners Own (RDC)
Stuart Frankel And Its Partners Own (ROK)
Stuart Frankel And Its Partners Own (TLM)
Stuart Frankel And Its Partners Own (XOM)
Stuart Frankel And Its Partners Own (XRX)
Stuart Frankel And Its Partners Own (SDS)

For Joe Terranova:
Terranova Works For (VRTS)
Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.
Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO
Virtus Diversifier PHOLIO Owns (IGE)
Virtus Diversifier PHOLIO Owns (DBC)
Virtus Diversifier PHOLIO Owns (DBV)
Virtus Investment Partners Owns More Than 1% Of (ABD)
Virtus Investment Partners Owns More Than 1% Of (CBL)
Virtus Investment Partners Owns More Than 1% Of (CAL)
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (MEE)
Virtus Investment Partners Owns More Than 1% Of (DBC)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (DBA)
Virtus Investment Partners Owns More Than 1% Of St Mary Land & Exploration Co
Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights
Virtus Investment Partners Owns More Than 1% Of (SKT)
Virtus Investment Partners Owns More Than 1% Of (TNB)
Virtus Investment Partners Owns More Than 1% Of (UA)
Virtus Investment Partners Owns More Than 1% Of (WBMD)

CNBC.com with wires

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