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Halftime: Is Wall Street Turning its Back on Yahoo! and Google?

Is the Street about to turn its back on both Yahoo!andGoogle?

We know that sounds a tad dramatic but that's the chatter on the floor after widely followed hedge fund manager David Einhorn bailed out of Yahoo! and Morgan Stanley downgraded Google.

Yahoo!

Looking at Yahoo! shares tumbled Friday after Einhorn’s hedge fund firm Greenlight Capital sold its stake in the Internet search giant.

Einhorn had thought Yahoo! was attractive due to its businesses in Asia and purchased a significant stake back in April.

But with the feud between Yahoo! and Alibaba calling China's business practices into question, Einhorn decided to hit the road.

And that could be a serious problem for investors holding Yahoo! shares. "Einhorn is so well respected in the marketplace," said Fast trader Steve Grasso. If he's not interested, "I wouldn't touch it."

Fast trader Patty Edwards agreed. She thinks Einhorn's move shows that "the thesis is broken" and she expects investors to put money to work elsewhere.

"Long-term investors should not be in old US internet names," added Zach Karabell. If you want to go long he says to look at new Internet names such as Netease , Sina and Baidu.

Google

As we mentioned above, the news wasn’t good for Google Friday, either. Morgan Stanley downgraded the Internet search giant to “equal-weight” from “overweight,” saying Google’s margins will shrink as it undertakes aggressive new hiring and ramps up advertising for new products.

Pete Najarian can't get behind Google either. "I'd rather be in Baidu than Google," he said. "I think there is more downside to Google."

Patty Edwards is turning her back on this stock too. "If you're a long term Google bull more power to you but don't use my money."

Trader Zach Karabell took issue with the downgrade. “I don’t agree with a call to downgrade a company that is wisely panning for its long term future.” And Karabell is putting his money where his mouth is - he holds the stock now.


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Trader disclosure: On July 8, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Karabell owns (GS); Karabell owns (GE); Karabell owns (BIDU); Karabell owns (AAPL); Karabell owns (POT); Edwards owns (XLK); Edwards owns (PM); Edwards owns (FXC); Pete Najarian owns (AAPL); Pete Najarian owns (AKAM); Pete Najarian owns (C); Pete Najarian owns (MS); Pete Najarian owns (MOS); Pete Najarian owns (MRVL); Pete Najarian owns (MRK); Pete Najarian owns (TEVA); Pete Najarian is long (F) bonds; Pete Najarian is long (V) calls; Pete Najarian is long (HAL) calls

For Zachary Karabell
River Twice Capital is short (XLF)
River Twice Capital owns (BIDU)
River Twice Capital owns (POT)

For Patty Edwards
Edwards owns (AGNC) for clients
Edwards owns (AKAM) for clients
Edwards owns (ARW) for clients
Edwards owns (COP) for clients
Edwards owns (CTSH) for clients
Edwards owns (ED) for clients
Edwards owns (ES) for clients
Edwards owns (GLW) for clients
Edwards owns (HLF) for clients
Edwards owns (LECO) for clients
Edwards owns (MAT) for clients
Edwards owns (MCD) for clients
Edwards owns (NKE) for clients
Edwards owns (ORCL) for clients
Edwards owns (PCL) for clients
Edwards owns (PM) for clients
Edwards owns (POT) for clients
Edwards owns (QCOM) for clients
Edwards owns (SLB) for clients
Edwards owns (SLV) for clients
Edwards owns (SYT) for clients
Edwards owns (TAL) for clients
Edwards owns (TGT) for clients
Edwards owns (TTM) for clients
Edwards owns (UAN) for clients
Edwards owns (XLB) for clients
Edwards owns (BMY) for clients
Edwards owns (BMO) for clients
Edwards owns (ERF) for clients
Edwards owns (EXC) for clients
Edwards owns (HNZ) for clients
Edwards owns (HSY) for clients
Edwards owns (JNJ) for clients
Edwards owns (BKCC) for clients
Edwards owns (KMB) for clients
Edwards owns (KMP) for clients
Edwards owns (KO) for clients
Edwards owns (GLD) for clients
Edwards owns (LEG) for clients
Edwards owns (WDFC) for clients
Edwards owns (QQQ) for clients

Joseph Lavorgna
*No Disclosures

CNBC.com with wires.