Stocks rebounded Friday, led by financials after lawmakers agreed on an overhaul of regulations. Research In Motion tumbled after the BlackBerry maker's earnings report disappointed.
Stocks struggled earlier as investors digested some mixed economic signals: Consumer sentiment rose to its highest level since January 2008, while first-quarter GDP was revised lower.
The Dow Jones Industrial Average was higher, after losing 1.4 percenton Thursday.
Both the S&P 500 and the Nasdaq were also higher. The CBOE volatility index, widely considered the best gauge of fear in the market, climbed near 30.
Banks rallied after Congress reached a deal on financial reform, with Bank of America , JPMorgan and Goldman Sachs all higher.
"In the short term, there is not a lot of impact at all," Anton Schutz president of Mendon Capital Advisors, told CNBC. "But in the longer term, some (banks) are going to reshape themselves somewhat."
However, earnings are not going to be dramatically affected and some of the banks stocks are "very cheap," said Schutz.
The legislation, now called the Dodd-Frank bill, now goes to the full House and Senate for a vote and could be signed into law by President Obama by July 4.
The bill waters down Dem. Sen. Blanche Lincoln's proposal to make banks spin off their swaps-trading desks after several lawmakers threatened to vote against the legislation on the grounds that such a provision would force trading overseas. The compromise allows banks to
The compromise allows banks to stay involved in foreign-exchange and interest-rate swaps dealing, which account for the bulk of the $615 billion over-the-counter derivatives market.
In the day's economic news: A gauge of consumer sentiment rose to 76, the highest since January 2008,in the final June reading from 75.5 at mid-month and 73.6 in May, according to the latest Reuters and University of Michigan survey.
GDP was revised to show the economy grew at 2.7 percent annual rate, down from the prior estimate of 3 percent and 5.6 percent in the fourth quarter. Business spending was also revised lower to a 2.2 percent rate from the prior estimate of 3.1 percent.
Corporate profits, meanwhile, were more than double the prior estimate, rising 5 percent.
Retailers were mixed as the consumer sentiment data improved, but Rochdale analyst Dick Bove warned that the financial-reform bill will likely hurt consumers.
With earnings season approaching, some pros warned that companies are more likely to disappoint.
“We see some further growth, but that growth will decelerate as the easy comparison period is starting to go away,” said Alan Gayle, senior investment strategist at Ridgeworth Investments. “The economic environment ahead appears to be more challenging so we might be losing some momentum as we go into the second half of the year.”
Tech stocks were weak after a disappointing earnings report from Research In Motion.
Research In Motion skidded more than 8 percent after the BlackBerry maker missed its sales target amid increased competition from rivals like Apple.
Apple slipped despite an upgrade: Oppenheimer raised its price target on the stock to $345 from $320, with an "outperform" rating.
Oracle, however, rose after the company beat earnings expectationsas sales of new software rose. S&P Equity raised its rating on Oracle to "strong buy" from "buy."