Stocks rebound from biggest drop in weeks

By msnbc.com news services

Stocks rebounded Friday, led by gains in bank shares, as the S&P 500 index bounced back from its second-worst decline of the year.

The benchmark index slid 2.2 percent on Thursday, its biggest drop since June 1, on signs of a global slowdown in manufacturing growth.

The Dow Jones industrial average closed Friday up 71 points.

Bank shares, among the worst hit on Thursday, rose after Moody's Investors Service announced credit downgrades, ranging from one to three notches, for 15 of the world's largest banks. The downgrades reflected the banks' risk of losses from volatile capital market activities.

"It was such a hard sell-off yesterday, a relentless sell-off with a lot of downside volume at the close. Coming out of that, you usually get at least some kind of a rebound," said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.

"As for Moody's downgrade, it was pretty much expected. The focus continues to be Europe at this point."

Boosting market sentiment, leaders of Germany, France, Italy and Spain agreed on a 130 billion euros ($156 billion) package to revive growth in the region.

Merck & Co was the top points gainer on the S&P 500.

Facebook shares, which Russell named in its preliminary list of additions to the Russell 3000 index, have rallied over 25 percent since June 5. The shares rose again Friday, but were still off from the $38 initial public offering price.

Darden Restaurants Inc fell after the operator of Olive Garden and Red Lobster restaurant chains reported sales that missed estimates and forecast weaker-than-expected profits.

Reuters contributed to this report.

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