Stocks Struggle; Banks Get Relief Rally

Stocks struggled Friday as investors digested some mixed economic signals: Consumer sentiment rose to its highest level since January 2008, while first-quarter GDP was revised lower.

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.

Banks rallied after Congress reached a deal on financial reform, with Bank of America , JPMorgan and Goldman Sachs all higher.

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.

The financial-reform bill will likely hurt consumers more than banks because Wall Street will find a way to get around it, Rochdale analyst Dick Bove told CNBC.

Apple slipped despite an upgrade: Oppenheimer raised its price target on the stock to $345 from $320, with an "outperform" rating.

Research In Motion skidded more than 5 percent after the BlackBerry maker missed its sales target amid increased competition from rivals like Apple.

Oracle, however, rose after the company beat earnings expectations as sales of new software rose.

S&P Equity raised its rating on Oracle to "strong buy" from "buy."

KBHome fell more than 5 percent after the homebuilder reported reported a wider-than-expected loss.

BP shares fell amid worries about the rising cost of the oil spill.

Asian stocks struggled on Friday, after fresh signs of consumer weakness and worries about stringent financial regulation sent Wall Street lower. The Nikkei fell 1.9 percent to mark its biggest weekly loss in a month, closing below a key support level in what market players said could signal still more losses to come.

European markets fell in morning trading after European Commission President Jose Manuel Barroso said Europe has no more room to spend through increased budget deficits, stressing fiscal consolidation was necessary to rebuild confidence for growth.

Reports indicate that Greece is pushing for some creative revenue-generating measures by placing state-owned property up for saleon its picturesque islands.

Greece was forced to embark on harsh austerity measures after being pushed into a €110 billion ($135 billion) bailout by the European Union and the International Monetary Fund last month On Friday, U.S. lawmakers neared a breakthrough in their historic rewrite of financial regulations as they agreed to tough new limits on banks' trading activity and floated a compromise on derivatives.

On Tap for Next Week:
MONDAY: Personal income and spending
TUESDAY: Case-Shiller home-price index; consumer confidence; Tesla IPO expected
WEDNESDAY: FCIC hearing; weekly mortgage apps; ADP employment survey; weekly crude inventories; Fed's Lockhart speaks
THURSDAY: Weekly jobless claims; ISM manufacturing index; construction spending; pending-home sales; June auto sales
FRIDAY: June jobs report; factory orders

More From