Halftime Report: Trading In Wake Of Mega-Deal Monday
The Dow & S&P both made sharp moves to the upside on Monday buoyed by a slew of new mergers.
Among the companies announcing large takeover deals; Xerox agreed to buy Affiliated Computer Services for $6.4 billion while Abbott Laboratories said it would pay $6.6 billion for the drugs unit of Solvay .
The purchase gives Abbott full control of its Belgian development partner's cholesterol treatments and exposure to emerging markets.
Also there was a $400 million stock deal between the Dutch biotech firm Crucell and Johnson & Johnson as part of a flu vaccine development deal.
An uptick in mergers and acquisitions is considered a bullish sign as it suggests companies are more optimistic about the economy and see values in the market.
How should you put your money to work, now?
I'm seeing a lot of of bullish action in the secondary markets, meaning those that have a lot of broker business, explains Mike Khouw of Cantor Fitzgerald. Keep your eye on GFI Group and Siebert. They could perform if we see a lot of capital markets activity.
I'm watching Stifel, Broadpoint and Jefferies, adds OptionMonster Jon Najarian. Volumes have been pretty stellar which suggests options investors think they too could benefit.
Clearly the cash is out there, adds Zach Karabell of RiverTwice. The move in asset managers is interesting because as stock prices go up asset managers make more money. If you're looking for a trade I find Jefferies particularly interesting.
TOPPING THE TAPE: TECH
The Nasdaq traded higher on Monday after Barclays Capital upgraded Cisco to "overweight" rating from "equal weight," citing an improved outlook for its business in both Europe and North America.
Apple was another notable advancer with China Unicom saying it would begin selling the iPhone in China, starting in October. France Telecom's Orange also said it would sell the product later this year.
What’s the tech trade?
I'm watching Cisco, says Mike Khouw. If it's a name you want to own I think its okay here at these levels.
I'm watching Micron , Applied Materials and Cypress , adds Jon Najarian, for unusual options action.
SECTOR TRADE: STEEL
Goldman Sachs downgraded the steel space from ‘Attractive’ to ‘Neutral’, citing concerns that prices could recede over coming months.
As part of the sector call, Goldman removed Steel Dynamics from its prestigious Conviction Buy list but maintained a Buy on the stock. It’s worth noting that Nucor remains their favorite pick in the space and in fact Goldman raised their price target from $53 to $55.
What’s the trade?
Goldman was right on steel earlier this year, muses Pete Najarian. If they’re pulling out as an investor, I too, would take pause.
FAST & FURIOUS: THE KEY QUESTIONS INTO THE CLOSE
BUY APPLE? Thomas Weisel raised its Apple price target to $210; should you buy?
I’m a buyer, reveals Joe Terranova.
BUY NKE? With Nike set to report earnings tomorrow, should you buy?
I think they surprise to the upside and I’m long, says Jon Najarian.
BUY SBUX?Starbucks traded higher as William Blair says margins will be robust in next 2 years; should you buy?
I think it’s an interesting name, says Zach Karabell.
BUY CSCO? Cisco traded higher after being upgraded by Barclays; should you buy?
I think it’s okay to buy it here, says Mike Khouw.
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Trader disclosure: On Sept. 28th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Terranova Owns (F), (KCE), (SUN), ABT); Terranova Is Short (CCL), (ESS); Terranova Works For (VRTS); Grasso Owns (AAPL), (ABK), (BAC), (C), (COST), (CSCO), (PFE), (V), (WMT); J. Najarian Owns (AAPL), (ACI), (BAC), (BX), (GHL), (GS), (SF), (TTWO),, (WFC), (MU), (PXP); J. Najarian Is Short (V); J. Najarian Owns (RIMM) & (RIMM) Calls
For Steve Grasso
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Stuart Frankel Owns (GERN)
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Stuart Frankel Owns (MSFT)
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Stuart Frankel Owns (NYX)
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A Member of Porges' Household Owns (EXEL)
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