NEW YORK (AP) — U.S. stocks climbed Friday as banks made a rapid recovery following a steep fall a day ago. Investors hoped Deutsche Bank and the financial system in general were in better shape than they had feared.
Banks made the biggest gains Friday as Germany's largest bank tried to reassure investors about its financial health. Investors hope Deutsche Bank will be able to negotiate down the massive cost of settling a U.S. investigation into mortgage securities. Energy companies rose as the price of oil continued to move higher, and strong earnings from Costco sent consumer stocks higher.
Deutsche Bank is the largest lender in Germany, and investors are concerned about not only its plunging stock price, but the potential effect on the financial system if Deutsche Bank gets into serious trouble and the German government does not help it. Those fears faded on Friday.
"People came to the realization that this isn't likely to be a big systemic risk that ripples through the financial sector," said Nate Thooft, head of global asset allocation for Manulife Asset Management.
The Dow Jones industrial average jumped 164.70 points, or 0.9 percent, to 18,308.15. The Standard & Poor's 500 index rebounded 17.14 points, or 0.8 percent, to 2,168.27. The Nasdaq composite rose 42.85 points, or 0.8 percent, to 5,312.
The Department of Justice wants Deutsche Bank to pay $14 billion to end an investigation into mortgage-backed securities, and the stock jumped Friday after a report that the bank could settle the case with a smaller payment. Deutsche Bank's U.S.-listed stock rose $1.61, or 14 percent, to $13.09. The stock has been pummeled this year and is trading near all-time lows.
Financial stocks tumbled Thursday afternoon following reports that some hedge funds were moving their business out of Deutsche Bank. On Friday, bank stocks and the broader market regained almost all of those losses.
Thooft said he does not think banks are in great danger, but he said there are causes for concern, including the health of Italy's banks. Meanwhile, with interest rates so low and regulation getting tighter, there are plenty of reasons for investors to avoid bank stocks.
That didn't stop the financial sector, the weakest sector in the market this year, from rallying on Friday. Among U.S. banks, JPMorgan Chase added 94 cents, or 1.4 percent, to $66.59 and Citigroup gained $1.43, or 3.1 percent, to $47.23.
Benchmark U.S. crude oil rose 41 cents to $48.24 a barrel in New York, and it rose 8 percent over the last three days. Brent crude, the international standard, slipped 18 cents to $49.06 a barrel in London.
Oil prices surged this week after the nations of OPEC, which collectively produce more than one-third of the world's oil, surprised investors with an agreement on a small cut in production. Investors hope energy companies will book larger profits as a result. Chevron jumped $1.65, or 1.6 percent, to $102.92 and EOG Resources rose $1.66, or 1.7 percent, to $96.71.
Warehouse club operator Costco Wholesale jumped $5.02, or 3.4 percent, to $152.51 after it reported a profit that was larger than analysts expected. Companies that make and sell household necessities also climbed. Procter & Gamble gained $1.52, or 1.7 percent, to $89.75 and Wal-Mart rose $1.39, or 2 percent, to $72.12.
Cognizant Technology Solutions tumbled after the information technology consulting and outsourcing firm said it's investigating possible bribes paid to officials in India. Cognizant said it's looking into potential violations of the Foreign Corrupt Practices Act and has informed the Department of Justice and the Securities and Exchange Commission.
Cognizant also said its president Gordon Coburn resigned. The stock fell $7.37, or 13.4 percent, to $47.63.
Major stock indexes set records this quarter thanks mostly to tech stocks. The S&P 500 technology index climbed 12 percent over the last three months. Apple, the most valuable company in the S&P 500, surged 18 percent, partly on indications of strong sales for the newest iPhones. Microsoft, the next-largest company, rose 13 percent and another tech giant, Google parent Alphabet, leaped 14 percent.
Bond prices sank. The yield on the 10-year Treasury note rose to 1.60 percent from 1.56 percent. Stocks that pay high dividends, like utilities and real estate and phone companies, traded lower.
In other energy trading, wholesale gasoline picked up 2 cents to $1.49 a gallon. Heating oil rose 2 cents to $1.53 a gallon. Natural gas slipped 5 cents to $2.91 per 1,000 cubic feet.
Gold fell $8.90 to $1,317.10 an ounce. Silver rose 3 cents to $19.21 an ounce. Copper gained 2 cents to $2.21 a pound.
The dollar rose to 101.41 yen from 101.07 yen. The euro rose to $1.1237 from $1.1216.
Germany's DAX climbed 1 percent and France's CAC 40 added 0.1 percent. The FTSE 100 in Britain lost 0.3 percent. Major indexes in Asia slumped on concerns about the banking industry. Japan's Nikkei 225 slumped 1.5 percent and South Korea's Kospi fell 1.2 percent. Hong Kong's Hang Seng index sank 1.9 percent.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at http://bigstory.ap.org/journalist/marley-jay