Nasdaq manages to keep win streak

NEW YORK – Investors set aside some of their worries about banks and the economy Friday after the government unveiled its methods for testing the health of banks.

The Federal Reserve report was light on details, but didn’t bring any bad news. Investors were also pleased about quarterly results from Ford Motor Co., American Express Co. and Microsoft Corp.

Those developments cleared the way for a 119-point gain in the Dow Jones industrial average, leaving it down slightly for the week.

The Dow and the S&P 500 broke their six-week winning streak, but the Nasdaq extended its string of weekly gains to seven.

The Fed, in outlining the tests’ methodology, said the 19 companies that hold one-half of the loans in the U.S. banking system won’t be allowed to fail – even if they fared poorly on the stress tests.

Separately, bank executives were being briefed on their test results in meetings across the country. By law, the banks cannot publicize the results without the government’s permission, but Wall Street buzzed with anticipation and most financial stocks rose.

“There are no major shocks in here. That’s why the market’s holding up well,” said Scott Fullman, director of derivatives investment strategy for WJB Capital Group.

“It’s been hanging over the market for the last few days.”

The day was not without volatility, however. After the Fed’s release, the stock market at times gave up huge chunks of gains before finishing solidly higher.

Financial stocks, as they have been all week, were leading the way.

The Dow rose 119.23, or 1.5 percent, to 8,076.29, after rising by as many as 170 points.

Broader market measures also advanced. The Standard & Poor’s 500 index rose 14.31, or 1.7 percent, to 866.23, and the Nasdaq composite index rose 42.08, or 2.6 percent, to 1,694.29.

For the week, the Dow slipped 0.7 percent, the S&P 500 dipped 0.4 percent, and the Nasdaq rose 1.3 percent.

The Russell 2000 index of smaller companies rose 12.12, or 2.6 percent, to 478.74.

About three stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 6.99 billion shares, up from 6.47 billion shares Thursday.

Bond prices fell, pushing the yield on the 10-year Treasury note up to 2.99 percent from 2.93 percent late Thursday.

The Russell 2000 index, which tracks the performance of small company stocks, fell 0.63, or 0.1 percent, for the week to 478.74.

The Dow Jones U.S. Total Stock Market Index – which measures nearly all U.S.-based companies – ended at 8,863.06, down 26.58, or 0.3 percent, for the week. A year ago, the index was at 13,990.52.