Stocks Gained to Cap Wild Week

Published on Friday, 22 June 2012 17:32 Written by Christopher Lynn

New York, June 22^nd (TradersHuddle.com) – Stocks ended a volatile week with on a positive tone, with the major benchmark indices able to recoup some of the sharp decline from the prior session. Participants shrugged off a bank downgrade from Moody’s and data showing that business sentiment in Germany fell to a 2-year low.

The Dow Jones Industrial Average gained 67.21 points, or 0.53%. The S&P 500 index climbed 9.51 points or 0.72%, while the NASDAQ jumped 33.33 points, or 1.17%.

For the week, the Dow lost 0.99%, while the S&P 500 slid 0.11% and the NASDAQ gained 1.25%.

The market started with modest gains, recouping some of the steep loss from the prior session, which followed disappointing economic data in the U.S. and around the world. Participants seemed to have a delayed reaction to the Fed and its lack of aggressive stimulus. Overseas action was negative; with European markets trading lower ahead of the weekend and after German business sentiment fell to a 2-year low.

Moody’s downgrade of 15 major global banks was a non-event, as participants shrugged-off the news, as it was largely priced in, since the credit rating agency announced a possible downgrade in February. The week saw increased volatility with stocks gaining ahead of the Fed on hopes of further stimulus measures to jump-start the sluggish U.S. economy. However, the market reacted negatively after the Fed disappointed and a new string of weak data in the U.S., Europe, and China spurred renewed fears over a slowdown in the global economy.

The upside move in the session was broad based, as all of the S&P 500 sectors ended in positive ground. Technology, healthcare, and financials were the best performers in the session, while utilities, industrials, and consumer staples logged the smallest gains. In the technology sector, First Solar (NASDAQ: FSLR) surged 9.2% to $15.88, posting the biggest gain in the S&P 500 on news that the company was resuming construction at a giant California solar project site.

Visa (NYSE: V) and MasterCard (NYSE: MA) were among the top performers in the sector after Telsey Advisory Group initiated coverage on the space with a Positive Outlook. The firm set its target price on Visa at $133 and on MasterCard at $457. Visa rallied 4.6%, while MasterCard jumped 3.3%.

Apple (NASDAQ: AAPL) gained 0.77% to $582.10, rebounding from yesterday’s loss in which the company closed near its 50day moving average, which is acting as support.  The stock gained 1.94% for the week.

Elsewhere in the space, Facebook (NASDAQ: FB) rallied 3.8% to $33.05 after Nomura initiated coverage with a Buy and a target price of $40. According to reports, Facebook began running ads and sponsored stories on Zynga (NASDAQ: ZNGA), with both companies forming a revenue partnership. Shares of Zynga jumped 4.8% on the news. Facebook has surge 29.5% from its all-time low of $25.52 on June 6^th.

Financials received a boost from a rally in bank stocks, as the Moody’s downgrade was shrugged-off. Bank of America (NYSE: BAC) jumped 1.53% to $7.94 after closing near its 50day moving average in the prior session. JPMorgan (NYSE: JPM) gained 1.4%, and Citigroup (NYSE: C) gained 0.57% amid news that it was buying a portion of Societe Generale portfolio of shipping loans.

In the earnings and guidance front, Darden Restaurants (NYSE: DRI), the owner and operator of the Red Lobster and Olive Garden restaurant chains, lost 0.69% to $50.04 after it reported earnings that were inline with consensus on revenues that missed expectations. Also, Darden issued downside guidance for fiscal 2013, while it increased its quarterly dividend by 16% to $0.50 per share.

Carnival (NYSE: CCL), the cruise line operator, lost 2.7% to $33.66 in the session after the company reported quarterly EPS and revenue above and in line with expectations; GAAP net income was only $14 million due to $145 million in unrealized losses on fuel derivatives.

Meanwhile, Ryder System (NYSE: R) plunged to the bottom of the S&P 500 after the company cut its earnings guidance for fiscal second quarter below consensus, and fiscal 2012 below consensus. Shares of Ryder were hit hard, tumbling 13%.