Banks lead Wall Street’s tepid rebound
June 22nd, 2012 by admin

(Reuters) – Stocks rose on Friday as gains in banking shares helped the S&P 500 index rebound from its second-worst decline of the year.

The index dropped 2.2 percent on Thursday, its biggest drop since a 2.5 percent fall on June 1, as evidence mounted of slowing manufacturing growth worldwide.

“The market oversold yesterday so you’re definitely getting a bounce off an overreaction,” said Janna Sampson, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

Bank shares, among the worst hit Thursday, rose after ratings agency Moody’s lowered credit ratings on the world’s top banks by one to three notches to reflect their risk of losses from volatile capital market activities.

“Banks sold off pretty badly yesterday,” Sampson said. “The market doesn’t think there’s anything new in the Moody’s downgrade. Credit rating agencies are lagging the market in their information.”

Morgan Stanley (MS.N) added 2 percent to $14.25, more than offsetting its 1.7 decline Thursday. The KBW Bank index .BKX gained 0.9 percent.

Equities volume is expected to spike at the close, just before Russell Investments sets the final rebalance of its indexes, to which $3.9 trillion in assets are benchmarked globally.

Facebook shares (FB.O), which Russell named in its preliminary list of additions to the Russell 3000 index .RUI, have rallied more than 21 percent in the last two weeks. They were up 3.2 percent to $32.87 on Friday.

The S&P 500 index is down 0.9 percent for the week, but remains on track for its first monthly gain since March.

The Dow Jones industrial average .DJI rose 54.12 points, or 0.43 percent, at 12,627.69. The Standard & Poor’s 500 Index .SPX was up 4.71 points, or 0.36 percent, at 1,330.22. The Nasdaq Composite Index .IXIC was up 16.39 points, or 0.57 percent, at 2,875.48.

Darden Restaurants Inc (DRI.N) fell 1.5 percent to $49.61 after the operator of Olive Garden and Red Lobster restaurant chains reported sales that missed estimates and forecast weaker-than-expected profits.

Ryder Systems Inc (R.N) slumped 13.1 percent to $35.40 after the logistics company cut its quarterly earnings forecast, amid lower demand for its commercial rental services.

(Editing by Bernadette Baum and Dan Grebler)