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US stocks bounce back; big banks move higher

  • Photo by associated press •
Trader Stephen Guilfoyle, center, works on the floor of the New York Stock Exchange. Stocks are bouncing back in early trading, a day after suffering their second-worst loss this year. The unlikely leaders: banks.
  • Originally published June 22, 2012 at 4:36 p.m., updated June 22, 2012 at 9:40 p.m.

NEW YORK (AP) - The stock market bounced back Friday, a day after suffering its second-worst loss this year. Bank of America, JPMorgan Chase and other big lenders posted solid gains even though many of them had their credit ratings cut the day before.

Analysts said the downgrades from Moody's Investor Service late Thursday had been expected for months and removed some of the uncertainty that had been weighing on bank stocks.

"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."

The Dow Jones industrial average gained 67.21 to close at 12,640.78. Bank of America gained 1.5 percent, or 12 cents, to $7.94, one of the best showings of the 30 stocks in the Dow.

In a note to clients, analysts at the investment bank Keefe Bruyette & Woods called Morgan Stanley "the clear winner." Some analysts had expected Moody's to lower Morgan Stanley's rating by three notches, instead of the two-notch cut it received.

Bank stocks rose across the board. Morgan Stanley rose 18 cents to $14.14. JPMorgan Chase climbed 48 cents to $35.99.

The Standard & Poor's 500 index rose 9.51 points to 1,335.02 and the Nasdaq composite index climbed 33.33 points to 2,892.42. The gains turned the Nasdaq positive for the week.

Information technology stocks had the strongest gains of the 10 industry groups tracked by the S&P 500 index, followed by health care stocks and banks. The gains were small but widespread. All 10 sectors rose. Of the 30 stocks in the Dow, just two fell.

Even with two days of deep losses, the S&P 500 is still up 1.9 percent this month.