Investing.com - U.S. stocks opened higher Friday, as financial shares shrugged off Moody’s downgrade of 15 global banks as the bad news turned out to be not as bad as expected.
During early U.S. trade, the Dow Jones Industrial Average added 0.43%, the S&P 500 index gained 0.33%, while the Nasdaq Composite index gained 0.35%.
Stocks scoffed at downgrades of Morgan Stanley, Credit Suisse Group AG and 13 other global banks, announced by Moody’s Investors Service after months of speculation about dire fallout, were met instead by rallies in stocks and bonds, as they were not as bad as expected.
The cost to protect Morgan Stanley’s debt against losses dropped, and the shares rallied as much as 4.6 percent in extended trading yesterday after the ratings firm cut the bank by two levels rather than a threatened three grades. Credit- default swaps tied to Bank of America Corp., which was lowered to within two levels of junk along with Citigroup Inc, also improved, along with those of Goldman Sachs Group Inc.
None of the downgraded banks were lowered more than forecasted therefore the news was bought by traders who saw the downgrades as buying opportunities in the financial sector.
Meanwhile, German business confidence plunged to the lowest level in more than two years weighing on euro zone equity markets.
Monster Beverage will replace Sara Lee in the S&P 500 sending shares of the energy drink maker rallying 2.9%.
Facebook firmed 1.9% after being upgraded to buy at Nomura Holdings.
Across the Atlantic, European stock markets traded lower.
The EURO STOXX 50 fell 0.16%%, France’s CAC 40 gave back 0.58%, Germany's DAX dropped 0.58%, while Britain's FTSE 100 retreated 0.86%.
Investors are awaiting the possibility of Spain submitting a formal request for bank aid today.
During early U.S. trade, the Dow Jones Industrial Average added 0.43%, the S&P 500 index gained 0.33%, while the Nasdaq Composite index gained 0.35%.
Stocks scoffed at downgrades of Morgan Stanley, Credit Suisse Group AG and 13 other global banks, announced by Moody’s Investors Service after months of speculation about dire fallout, were met instead by rallies in stocks and bonds, as they were not as bad as expected.
The cost to protect Morgan Stanley’s debt against losses dropped, and the shares rallied as much as 4.6 percent in extended trading yesterday after the ratings firm cut the bank by two levels rather than a threatened three grades. Credit- default swaps tied to Bank of America Corp., which was lowered to within two levels of junk along with Citigroup Inc, also improved, along with those of Goldman Sachs Group Inc.
None of the downgraded banks were lowered more than forecasted therefore the news was bought by traders who saw the downgrades as buying opportunities in the financial sector.
Meanwhile, German business confidence plunged to the lowest level in more than two years weighing on euro zone equity markets.
Monster Beverage will replace Sara Lee in the S&P 500 sending shares of the energy drink maker rallying 2.9%.
Facebook firmed 1.9% after being upgraded to buy at Nomura Holdings.
Across the Atlantic, European stock markets traded lower.
The EURO STOXX 50 fell 0.16%%, France’s CAC 40 gave back 0.58%, Germany's DAX dropped 0.58%, while Britain's FTSE 100 retreated 0.86%.
Investors are awaiting the possibility of Spain submitting a formal request for bank aid today.