By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks rose Friday, rebounding from the second-worst hit this year, as the European Central Bank said it would take further steps to ease loans collateral for banks.
"I think we're coming off yesterday's plunge. We didn't know what we didn't know, and now that we know who was downgraded, it wasn't so bad," Jack Ablin, chief investment officer at Harris Private Bank, said of the downgrade late Thursday by Moody's Investors Service of 15 global banks. None were cut more than the ratings agency had projected.
The Dow Jones Industrial Average (DJI) rose 54.14 points, or 0.4%, to 12,627.69.
The S&P 500 index (SPX) rose 4.45 points, or 0.3%, to 1,329.96, with financial companies leading the gains and natural-resource companies hardest hit.
Morgan Stanley (MS) rose 1.7% after Moody's cut its rating by two levels, less than the three threatened. Also rising were Bank of America Corp. (BAC) and Citigroup Inc. (C), both of which were cut to within two notches of junk.
The Nasdaq Composite (RIXF) advanced 13.24 points, or 0.5%, to 2,872.33.
Shares of Facebook Inc. (FB) rose 2.7% after Nomura Holdings Inc. advised buying the social-networking company.
For every two stocks falling nearly three rose on the New York Stock Exchange. As of 10:55 a.m. Eastern time, 168 million shares had traded.
The ECB said it would ease rules on the collateral banks can offer for central bank funds. And, Bloomberg News cited a person familiar with the plan as saying Spain was considering making investors holding bank equity and debt to take the losses in a restructuring.
"First you hear a lot of good strong talk, until the market doesn't want to hear it anymore, then you get a lot of monetary policy, until the market doesn't want to hear it anymore," said Ablin, who likens the scenario in the European Union to the U.S.
"In Europe, it's up to Germany, here's it's up to Congress," said Ablin of the longer-term fixes needed to bolster the global economy.
Spain's finance minister on Friday confirmed the government would formally ask for aid for its banks on Monday. An independent audit of Spain's banking sector released Thursday found Spain could need as much as $80 billion to recapitalize its banks.
On Thursday, U.S. equities took their second-hardest knock so far this year on signs of a slowdown in global manufacturing.