Banks make rapid recovery

U.S. investigation of Deutsche Bank’s mortgage-backed securities could be settled for less than $14 billion.

U.S. stocks climbed Friday as banks made a rapid recovery following a steep fall a day ago.

Banks made the biggest gains Friday as Germany’s largest bank tried to reassure investors about its financial health. Investors hope Deutsche Bank will be able to negotiate down the massive cost of settling a U.S. investigation into mortgage-backed securities. Energy companies rose as the price of oil continued to move higher, and strong earnings from Costco sent consumer stocks higher.

Deutsche Bank is the largest lender in Germany, and investors are concerned about not only its plunging stock price, but the potential effect on the financial system if Deutsche Bank gets into serious trouble and the German government does not help it. Those fears faded on Friday.

“People came to the realization that this isn’t likely to be a big systemic risk that ripples through the financial sector,” said Nate Thooft, head of global asset allocation for Manulife Asset Management.

The Dow Jones industrial average jumped 164.70 points, or 0.9 percent, to 18,308.15. The Standard & Poor’s 500 index rebounded 17.14 points, or 0.8 percent, to 2,168.27. The Nasdaq composite rose 42.85 points, or 0.8 percent, to 5,312.

The Department of Justice wants Deutsche Bank to pay $14 billion to end the investigation, and the stock jumped Friday after a report that the bank could settle the case with a smaller payment. Deutsche Bank’s U.S.-listed stock rose $1.61, or 14 percent, to $13.09.

Among U.S. banks, JPMorgan Chase added 94 cents, or 1.4 percent, to $66.59 and Citigroup gained $1.43, or 3.1 percent, to $47.23.

Benchmark U.S. crude oil rose 41 cents to $48.24 a barrel in New York, and it rose 8 percent over the last three days. Brent crude, the international standard, slipped 18 cents to $49.06 a barrel in London.

Oil prices surged this week after the nations of OPEC surprised investors with an agreement on a small cut in production. Investors hope energy companies will book larger profits as a result. Chevron jumped $1.65, or 1.6 percent, to $102.92 and EOG Resources rose $1.66, or 1.7 percent, to $96.71.