Markets finish week on upbeat note

Worries over bank woes ease though borrowing stays high

A late-afternoon turnaround on Wall Street left stocks higher Friday as the market shook off a weak start amid worries about banks on both sides of the Atlantic.

The S&P 500 rose 0.6 percent after slipping for most of the morning. The benchmark index marked its second straight weekly gain. The Dow Jones Industrial Average rose 0.4 percent, while the Nasdaq composite ended 0.3 percent higher.

The upbeat close to the week came as markets have been turbulent on worries that banks are weakening under the pressure of much higher interest rates. That has led to rising concerns about a possible recession and uncertainty about what the Federal Reserve and other central banks will do with interest rates.

“There are concerns out there about, obviously, a more severe bank crisis, both domestically and in Europe, and yet somehow markets are looking past that,” said Randy Frederick, managing director of trading & derivatives at Charles Schwab.

Bank stocks ended mixed on Wall Street. Jpmorgan Chase fell 1.5 percent, while Bank of America rose 0.6 percent.

Cash-short banks were still lining up this week to borrow money from the Fed. The Fed said Thursday that emergency lending to banks fell slightly in the past week — to $164 billion — but remained high.

A worry is that all of the pressure on banks will cause a pullback in lending to small and midsized businesses. That could lead to less hiring, a weaker economy and a higher potential for a recession that many economists already saw as likely.

Federal Reserve Chair Jerome Powell said worries about a pullback in lending helped push the Fed to raise rates by only a quarter of a percentage point this week, instead of a more aggressive half point, in its campaign to battle inflation.

Investors have been piling into anything seen as safe, which has caused swings in the bond market.

On Friday, yields fell further. The 10-year yield fell to 3.38 percent from 3.42 percent late Thursday. It was above 4 percent this month.

The drop has been even more dramatic for the two-year Treasury yield. It sank to 3.77 percent from 3.83 percent late Thursday and from more than 5 percent this month.

All told, the S&P 500 rose 22.27 points to 3,970.99. The Dow added 132.28 points to 32,237.53. The Nasdaq gained 36.56 points to close at 11,823.96.