Wall Street Recap And Corporate Update For These 5 Companies

Includes: CCL, FB, FSLR, R, SPLK
by: The Value Investor

The markets ended the week on a positive note. Major averages opened with modest gains which they extended throughout the session. The S&P 500 gained 0.72%, the Dow Jones Industrial Average rose 0.53% while the Nasdaq ended the day 1.17% higher.


Stocks in Europe ended on a mixed note again. The German DAX-30 fell 1.26% underperforming the wider European markets. The IFO institute announced that the business climate index for the month of May fell 1.6 points to 105.3, coming in below expectations of 105.6 points. In Italy, consumer confidence fell another 1.2 points to 85.3 for the month of June, the lowest reading since 1996. The Italian MIB index fell 0.65% on the day. The Spanish IBEX-35 outperformed European markets closing with gains of 1.52%. A formal request from Spain for aid in the form of a bailout package is to be expected for Monday. Last week the European authorities already announced that it had 100 billion euro in credit facilities readily available for the country.

The German Bundesbank furthermore fiercely criticized the European Central Bank's plan to relax the quality standards for collateral in a new effort to help European ailing banks. On Thursday, the ECB Governing Council announced that it will now accept residential mortgage backed securities, with a rating of at least BBB minus. The latest news highlights the difference between Germany, which favors austerity, and the remainder of the eurozone, which favors spending to get out of the crisis.

Wall Street Opening

U.S. markets opened with modest gains of around a third of a percent after the much anticipated rating downgrades of Moody's, Thursday after the close. The rating cuts were less drastic than previously thought. Bank shares did reasonably well in the opening hours, and the wider market continued to expand its gains during the session, despite some hawkish comments from St. Louis Federal Reserve Bank President James Bullard. Bullard said that a third round of quantitative easing would face a "pretty big hurdle". Engaging in another round of easing would put the Federal Reserve further into uncharted territory and impose more risks on the bank's balance sheet. The Fed's balance sheet has already expanded to $2.3 trillion after the first two rounds of monetary easing. On the real economy he said that "modest improvements in the labor market are expected for the remainder of the year".

Corporate News

FirstSolar (FSLR) rose more than 9% in Friday's trading session. Shares of the solar module manufacturer surged after Los Angeles County approved a solar panel installation. The project was at risk after a dispute arose between both parties in April of this year. Now some 230 workers will start construction on the 230 megawatt installation which is expected to be finished in 2013. The project will provide electricity for 75,000 homes.

Facebook (FB) the social networking website ended in the black again. Shares have erased most of its losses since the firm went public about a month ago. Shares in the social network rose 3.8% in Friday's trading session to $33.05 as the stock will be included in the Russell indices. Besides Facebook, software producer Splunk (SPLK) is also included in the wide-range Russell 3000 index. Shares of Splunk fell 0.9% in the session.

Ryder System (R) the transportation and supply chain service solution provider fell more than 13% in Friday's trading session after the company cut its current second quarter earnings forecast. Ryder now expects to earn between $0.90 and $0.95 per share vs. an earlier guidance of $1.07-$1.12 per share as a result of a slowdown in commercial vehicle rentals and efforts of the company to downsize its transportation fleet. The slow environment is expected to last throughout 2012, consequently the company cut its full year 2012 earnings forecast from $4.02-$4.12 to $3.65-$3.85 per share. So far shares have lost 33% in 2012.

Carnival Corporation (CCL) the operator of holiday cruises ended the day 2.7% lower despite the fact that the company raised its full year earnings outlook to $1.80-$1.90 per share. Lower fuel prices will boost profitability for Carnival during the second half of the year. In the second quarter, Carnival reported a small profit of $0.02 as a result of losses in fuel hedges and lower pricing. Carnival lowered its prices in order to induce demand for its cruises as customers stayed away after the Costa Concordia disaster in January of this year. Investors could not appreciate the "quality" of the earnings and they sold of their shares.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.