Stocks temporarily pared gains after a much anticipated concept paper on the government stress tests for the 19 biggest U.S. financial institutions was released.
"The concern is that as more information comes to the markets, banks having to raise capital will face more pressure,'' said Blake Howells an analyst at Becker Capital Management in Portland, Oregon. "No one knows how much downside there could be in their stocks, how much capital will be raised and what form that capital will take. Those are the unknowns.''
The Dow Jones Industrial Average slipped off an intraday high of 8106.64 to move as low as 8011.54 after the 2 pm ET release of the stress tests. The Dow has since regained more than half that lost ground.
The S&P 500 was recently up more than 1 percent, while the Nasdaq was nearly 2 percent higher.
US markets had risen earlier Friday as investors shrugged off a dismal durable-good report and were encouraged by Ford's narrower-than-expected loss. This comes after major indexes eked out a slight gainin the previous session with bank shares getting a lift from some better-than-expected earnings.
Ford shares soared 20 percent after the automaker reported a net loss of 60 cents a share, compared with 3 cents per share in the same quarter of 2008. Excluding items, it lost 75 cents a share, beating expectations, which had called for a loss of $1.23 a share.
The company expects to be profitable in 2011, CEO Alan Mulally said.
American Express also topped forecasts, helped by cost cuts. But Moody's cut its credit rating on AmEx, citing weaker assets. Still, AmEx was the top percentage gainer on the Dow, climbing more than 10 percent.
Meanwhile, Microsoftmatched its forecastsand Amazonbeat forecasts.
On the economic front, U.S. Treasury Secretary Timothy Geithner said that the downturn has started to show signs of improving in recent weeks, when speaking at a meeting of G20 officials in Washington.
And March durable-goods orders fell 0.8 percent, half of the drop expected, though February was revised sharply lower to show a 2.1-percent gain. That number was previously reported as a 3.5-percent increase. Excluding the volatile transportation component, orders fell 0.6 percent, after a 2-percent increase last month.
New-home sales dropped 0.6 percent in March after an upwardly revised 8.2-percent jump in February. Inventories of new homes dropped to 311,000 from 328,000, the biggest decline in more than 45 years.
In other earnings news: Dow component 3M said it earned 81 cents a share in first quarter, below analysts' consensus estimates of 86 cents a share. Manufacturer Honeywell matched forecasts with a profit of 54 cents a share, but cut its full-year earnings guidance, citing the slumping economy.
Still to Come:
FRIDAY: G-7 meeting in Washington
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