June 22 - Summary of business headlines: Bank stocks rally with investors not disheartened by a Moody's downgrade, but Wall Street was down for the week; Profits sink at Carnival; Darden forecast lacks heat; South America gets airline powerhouse. Conway G. Gittens reports.
It was all about the banks one day after a Moody's downgrade, but the reaction may be surprising. Bank stocks rallied on relief the downgrades were not severe. But the industry still faces lower revenues, increased regulation and possible fallout from Europe. Fred Cannon of Keefe, Bruyette & Woods: SOUNDBITE: FRED CANNON, DIRECTOR OF RESEARCH, KEEFE, BRUYETTE & WOODS (ENGLISH) SAYING: "These are big challenges for the U.S. banks. I think one of the things we can look at though is the U.S. Fed in particular has been active addressing these things for a long period of time, continues to provide liquidity and there is a lot of capital debt banked, so we don't see any crisis in U.S. banking." Strength from the banks helped Wall Street recover from its second-worst drop of the year. Blue chips end a winning streak at two weeks, but Nasdaq is up three weeks in a row. Profits at Carnival are still sinking following a deadly accident with its Costa Concordia cruise ship at the beginning of the year. But the tide may be turning. The world's largest cruise operator is lifting its outlook as bookings come back. The world has a new number two air carrier by market cap. Chile's LAN Airlines completed its takeover of Brazil's TAM, creating a South American aviation powerhouse. The new carrier, to be called LATAM Airlines Group, already faces turbulence as a slowing economy in Brazil means empty seats on the plane. Americans are dining out less and cutting back on menu items, according to quarterly results from Darden Restaurants. The parent of Olive Garden and Red Lobster is hoping to stop a slide in sales with value meals used by casual dining competitors. Leaders from the euro zone's four biggest economies agree to boost growth, but fail at tackling the debt crisis. European shares finished lower as Germany, France, Italy, and Spain met in Rome. Conway Gittens, Reuters