U.S. equities close sharply higher on Friday as Deutsche Bank shares rebounded amid a report that the German banking giant was near a settlement with the Justice Department.
The bank's U.S.-listed shares rose 14 percent, recovering all of their losses from Thursday and posted their best day since 2011. AFP, citing a source, reported that the bank may be near a $5.4 billion settlement with the U.S. Department of Justice. CNBC has not independently confirmed the report, but if accurate, that settlement would be well below the reported $14 billion opening bid by the DOJ in its talks with Deutsche.
"The fact that investors are buying Deutsche Bank stock is a big vote of confidence from investors," said Adam Sarhan, CEO at Sarhan Capital.
The Dow Jones industrial average jumped 226.17 points at session highs before closing about 165 points higher, with Goldman Sachs contributing the most gains. The S&P 500 gained 0.8 percent, with financials rising more than 1 percent to lead advancers. The SPDR S&P Bank ETF (KBE) rose nearly 1.5 percent.
"Yesterday's pullback did not damage the chart of the SPX, which still has the support of improved short-term momentum. European markets look like they may be undergoing a shakeout (of weak holders) characterized by strong emotions and heavy volume," said Katie Stockton, chief technical strategist at BTIG.
The S&P also closed the month slightly lower. "You have a market that's restricted to the upside because of high valuations ... and to the downside you're protected by record-low interest rates," said Bruce Bittles, chief investment strategist at Baird. "The market has stayed in the same place."