JPMorgan Chase helped lead the Dow Jones industrial average up on Friday. The gains for banks came even though Moody's cut the credit ratings on JPMorgan and 14 other large banks after the market closed Thursday.
The Dow climbed 59 points to 12,632 as of 2:30 p.m. Eastern.
Moody's had been warning that it would make the move since early this year. Analysts said the 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.
Morgan Stanley rose 1 percent, gaining 14 cents to $14.11. JPMorgan Chase jumped 2 percent, adding 70 cents to $36.19. Bank of America edged a penny to $7.83.
The Standard & Poor's 500 index rose 7 points to 1,332 and the Nasdaq composite index climbed 22 points to 2,881. The gains turned the Nasdaq positive for the week.
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.
