Stocks bounce back; big banks creep higher
NEW YORK — The stock market is bouncing back, a day after suffering its second-worst loss this year.
The Dow Jones industrial average gained 71 points to close at 12,644 Friday.
JPMorgan Chase and other big banks helped lead indexes higher, even though Moody’s cut the credit ratings on JPMorgan and 14 other large banks after the market closed Thursday.
Moody’s had been warning it would make the move since early this year.
The Standard & Poor’s 500 rose 10 points to 1,335 and the Nasdaq composite climbed 33 points to 2,892. It was the first week of losses for the Dow and S&P 500 since the week of June 1.
Two stocks rose for every one that fell on the New York Stock Exchange. Trading volume was average at 3.8 billion.
Analysts said Moody’s round of downgrades removes one piece of uncertainty that had been weighing on banks.
“It’s been like a cloud over the sector,” said Brian Gendreau, market strategist with the broker Cetera Financial. “And look at who’s going up: bank stocks. There are obviously some people who thought it would be much worse.”
In a note to clients, analysts at the investment bank Keefe Bruyette & Woods called Morgan Stanley “the clear winner” and said JPMorgan took second place. They said some analysts had expected Moody’s to lower Morgan Stanley’s rating by three notches, instead of the two-notch cut it received.
Health care was the strongest industry group among the 10 tracked by the S&P 500 index, followed by information technology and banks. Only two sectors fell, industrial and consumer discretionary companies. The gains were small but widespread. Of the 30 stocks in the Dow, just five fell.
The Dow and S&P remain on track for their first week of losses since June 1. The biggest drop of the week came Thursday, when a trio of weak manufacturing reports stirred fears about the global economy. The stock market took its second-steepest fall this year. The worst was June 1, after a dismal U.S. jobs report rattled markets.
Even with those losses, the S&P 500 is still up 1.5 percent this month. To Gendreau, it looks like investors have been overreacting to recent economic reports. “The market is getting jerked around,” he said. “The economic data point to a softening economy, but we’ve had a softening economy for three years now.”
Among other stocks making big moves:
— Facebook surged 4 percent, rising $1.24 to $33.10. A Nomura analyst started covering the social-networking company with a price target of $40 and a “buy” recommendation. Brian Nowak, the Nomura analyst, said Facebook could make more money through charging companies for pages. He also thinks the stock looks cheap in comparison to what investors paid for Google at the same age.
— Truck leasing company Ryder System plunged 14 percent, the worst decline in the S&P 500 index. The Miami-based company cut its earnings forecast for the second quarter and full year, blaming weak demand for commercial truck rentals and unusually high costs for medical benefits. The stock lost $5.63 to $35.12.
— Darden Restaurants lost 1 percent after the restaurant operator said sales fell nearly 4 percent its Red Lobster locations and 2 percent at Olive Garden, as an earlier Lenten season and Easter holiday affected the quarter. Darden also said national advertising for both chains was “less effective than anticipated.” The stock fell 45 cents to $49.94.