Stocks tumbled Thursday on continued economic worries, sparked by reports showing sluggish retail sales, higher consumer borrowing costs and more problems for the financial sector.
Slumping oil prices and a rising dollar fired
up a big stock market rally Friday, enabling investors to look beyond
mortgage finance firm Fannie Mae's steep quarterly loss.
The decline in oil prices gave a lift to a
variety of stocks, with 29 out of 30 Dow components rising.
The financial sector remained in focus Friday,
after Fannie Mae reported a big quarterly loss that was more than triple what
analysts were expecting, reflecting ongoing deterioration in housing market
conditions. Fannie swung to a loss of $2.3 billion, or $2.54 per share, due to
big reserves for credit losses in the quarter, versus a profit of $1.86 a year
ago. Analysts had thought Fannie would lose 68 cents per share. The mortgage
finance behemoth also slashed its quarterly dividend. Fannie shares slumped 10%
in active trade.
Merrill Lynch said late Thursday that it will
buy back around $12 billion over a one-year period starting in January.
On Thursday, Citigroup agreed to buy back over
$7 billion.