The equity markets continued their upward momentum into the weekend. The S&P 500 closed Friday 0.81% higher at 1,325.66 points. The Dow Jones Industrial Average managed to gain 0.75%, while the Nasdaq gained 0.97%.
The markets in Europe ended on a mixed note. The Spanish IBEX 35 index rallied another 1.8% on Friday in anticipation of a resolution to be reached this weekend on Spain's troubled banks. The gains came despite the fact that rating agency Fitch lowered its rating for the country by three notches to BBB. The rating is just two notches above junk level, as Fitch expects the country to remain in a recession in 2013.
The German DAX index fell 0.2%, as exports in April fell 1.7% compared to the month before, coming in much worse than the anticipated drop of 0.7%. The EuroStoxx 50 managed to squeeze out a minimal gain of 0.04% ahead of another "crucial" weekend in Europe.
Wall Street Opening
The equity markets opened with modest losses on Friday morning on the back of the Spanish downgrade and investors doubt whether central bank intervention can effectively prevent contagion in Europe. During the day, investors grew more confident that politicians in Europe would finally reach a solution in Spain. Most likely, Germany and Spain will reach a compromise, which will include emergency assistance in an attempt to shore up the Spanish troubled banks.
The major averages in the US continued to gain ground during the day, ending the week at their highest levels. The major indices ended with gains between three-quarter and 1 percent.
McDonald's (MCD) reported global same store sales growth of 3.3% for the month of May, which missed analysts' estimates of 4.6%. Sales in the US rose 4.4% on the year, growth in Europe slowed down to 2.9% on the back of austerity measures, and Asian, Middle East and Africa sales fell 1.7% on the year. Shares opened with losses of over 2%, but narrowed their losses to 0.7% at the close.
Navistar (NAV), commercial truck and engine maker, reversed Thursday's losses in Friday's session. Shares ended 17.6% higher at $28.36, the same level as Wednesday. Friday, reports emerged that activist investor Carl Icahn boost his share in the company from 10% to 12%. Icahn's renewed interest in the company boosts speculation that further consolidation will take place in the industry.
Tempur-Pedix (TPX), manufacturer and distributor of premium mattresses and pillows, rose 14% Friday after suffering a 49% loss on Wednesday when the company published a dramatic update for the second quarter and the entire year of 2012. Investors reacted positively on the news that the company was actively buying back shares under its authorized $200 million share repurchase program.
Alpha Natural Resources (ANR), supplier and exporter of coal announced that it would cut production in its Kentucky business amidst continuous falling coal prices, making operations uneconomical. The plan will cut output by 2 million tons in 2012 and 4 million tons in 2013. Shares in Alpha Natural Resources fell 2.6% on the day.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.