S&P 500’s Top Losses: Carnival Fell Due to Weak Guidance



Top losses

The S&P 500’s top losses on June 25 were:

  • Carnival (CCL) fell 7.9%.
  • Micron Technology (MU) fell 6.9%.
  • Netflix (NFLX) fell 6.5%.
  • Norwegian Cruise Line (NCLH) fell 6.1%.
  • IPG Photonics (IPGP) fell 6.1%.
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Carnival (CCL), which is a US-based cruise company and the world’s largest travel leisure company, was the S&P 500’s top loss on June 25. After declining last week, Carnival opened lower on June 25 and declined to the lowest levels traded in nine weeks.

Second-quarter earnings

Carnival released its stronger-than-expected fiscal second-quarter earnings report before the market opened on June 25. The announcement of the weaker-than-expected fiscal outlook weakened the market sentiment and triggered a sell-off on Monday. Carnival’s revenues rose 10.4% to $4.36 billion in the fiscal second-quarter—higher than the forecast of $4.32 billion. According to management, the EPS in the fiscal second quarter was $0.68—better than analysts’ forecast of $0.56–$0.63. The second-quarter EPS was 30% higher than the EPS of $0.52 recorded in the same period last year.

Fiscal outlook

Carnival’s management downgraded the fiscal 2018 EPS forecast from $4.15–$4.25 to $4.20–$4.40. Management downgraded the EPS forecast due to changes in fuel prices and currency exchange rates. The downgrade disappointed the market early on June 25 and sent the stock lower as the day progressed. On June 25, Carnival declined 7.9% and closed the day at $58.54. Carnival is part of the S&P 500 Consumer Discretionary sector, which declined 2.2% on June 25.

Next, we’ll discuss how the US Dollar Index and Treasury yields performed in the early hours on June 26.


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