After the bell, the traders sifted through the latest results from Cisco in an attempt to determine if the strong results could be used as a barometer for the rest of the sector.
"...We believe [the results] provide a clear indication that we are entering the second phase of the economic recovery," CEO John Chambers said in a statement.
Cisco is one of the first major technology companies to report results that include much of January 2010. Its performance and outlook are often an early indicator for the rest of the technology sector, especially in enterprise spending.
By the numbers, the company earned 40 cents a share in its fiscal second quarter, excluding one-time items, up from 32 cents a share on a comparable basis last year.
Profit including items rose to $1.9 billion, or 32 cents a share, from $1.5 billion, or 26 cents a share, in the year-ago quarter, Cisco said.
Sales jumped to $9.8 billion, up 8 percent from $9.089 billion in the same period a year earlier.
What's the trade?
Strategy Session with the Fast Money traders
I think Cisco is trading at valuations where it’s okay to own, says Guy Adami. And I think Juniper and Broadcom see a boost from this.
I agree that Cisco is a name investors should own, adds Joe Terranova. Broadly I want to be in technology but if you're a retail investor it's important to remember that when tech is overonwed by the Street they sell it off. Nonetheless if you have a longer time horizon, stay bullish. The sector has a great underpinning of strength.
It seems to me that Cisco is in the sweet spot, adds Pete Najarian. I think it bodes well going forward. I find their growth numbers to be outstanding.
This is the first large cap tech stocks that opened higher and traded higher, adds Gary Kaminsky. This is a change. I covered my short position in QQQQ last week. Short technology was January's trade.
Elsewhere in tech, I like IBM at current levels, Adami adds.
> For complete coverage of Cisco earnings click here
AFTER HOURS ACTION: AKAMAI
In extended trade Wednesday, shares of Akami dipped slightly despite the fact that the company posted a better-than-expected quarterly report.
Perhaps the pullback stemmed from commentary, which credited aggressive pricing as an important factor in the results.
Akamai, which helps companies deliver Internet content such as video by navigating less-congested routes over the Web, said its fourth-quarter net profit slipped to $40.1 million, or 21 cents a share, from $40.5 million, or 22 cents a share, a year earlier.
Apple and MySpace are among Akamai's top clients.
What's the trade?
The stock has had a tremendous run already, says Guy Adami. It's fine as an investment but Akamai is not a fast money trade.
GLOBAL GROWTH WARNING SIGNS
The Fast Money traders are closely watching the action in commodities, worried that weakness could be a sign that global growth may be stalling.
What should you be watching?
I’m watching the action in copper , says Joe Terranova. The metal pushed below the psychologically important $3 level. Heavy selling pressure has entered the commodity space and as a result the market has lost an underpinning of support from commodities.
In this space, I'm watching US Steel , says Pete Najarian. An unusual volume of upside call buying suggests to me big investors are expecting a little bounce.
I'd play Freeport McMoRan , adds Guy Adami. Sell it into rallies.
TOYOTA TROUBLES DEEPEN
Shares of Toyota tumbled on Wednesday after Transportation Secretary Ray LaHood said drivers of recalled Toyotas should stop driving them – and immediately bring them to a dealer for service.
Over 2 million Toyotas have been recalled due to a potentially defective accelerator pedal.
What’s the trade?
I wouldn't trade Toyota, says Joe Terranova. Sure there's upside but I wonder, how much downside is there?
In the space, I like Ford, counsels Guy Adami.
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Trader disclosure: On February 3rd, 2010, 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), (C), (BTU), (GS), (INTC), (MSFT), (NUE); Kaminsky Owns (LULU) June Puts; Pete Najarian Owns (AAPL) Call Spread; Pete Najarian Owns (AKAM) Call Spread; Pete Najarian Owns (INTC) Calls; Pete Najarian Owns (MGM) Call Spread; Pete Najarian Owns (MS), Is Short (MS) Calls; Pete Najarian Owns (QCOM) Call Spread; Pete Najarian Owns (X) Call Spread; Pete Najarian Owns (XLF) Calls; Pete Najarian Owns (YUM) Call Spread; Terranova Owns (BAC), (JPM), (OIH), (FCX), (GOOG), (EMC), (AAPL), (DELL), (MSFT), (QCOM)
For Joe Terranova:
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
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 (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (SKT)
For Dennis Gartman:
Funds Managed By Gartman Own (SU), Are Short Crude Oil
Funds Managed By Gartman Are Long Australian Dollars, Canadian Dollars; Are Short Euro, Yen, British Pound Sterling
Funds Managed By Gartman Own Gold Futures, (GLD); Are Short British Pound Sterling
Funds Managed By Gartman Own (DRI), (PNRA), (BWLD)
Funds Managed By Gartman Are Short (MT), (NUE)
Funds Managed By Gartman Are Short (MOS)
For Paul Latta:
Latta Owns (SBUX)
Other Relevant Disclosures:
Jon Najarian Owned (KCI) Today
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