U.S. stocks bounced back Friday, one day after fears of slow growth and bank downgrades sent them spiraling downward.
The Dow Jones industrial average rose 67 points, or 0.5%, to end at 12,641. The S&P 500 added 10 points, or 0.7%, to 1,335. The Nasdaq edged up by 33 points, or 1.2%, to close at 2,892.
The Dow and S&P 500 both ended the week lower, while the Nasdaq rose for a third straight week. The Dow lost 1%, the S&P 500 eased 0.6% for the week. The Nasdaq advanced 0.7% over the last five trading days.
Moody's downgraded 15 global banks after the market closed Thursday. The move included five major U.S. banks -- Citigroup, Morgan Stanley, Goldman Sachs, Bank of America and JPMorgan Chase.
"Investors were holding their breath with these downgrades looming," said Jack Ablin, chief investment officer at Harris Private Bank. "But once the downgrades came out, they rallied through the news."
Despite Friday's bounce, Ablin said the market lacks a strong catalyst to move higher or lower. "We're moving from headline to headline," he said.
Investors continue to monitor events in Europe ahead of a key meeting of European Union leaders next week.
At a meeting in Rome, the leaders of Germany, France, Italy and Spain said they agreed on a set of growth-enhancing policies equal to about €125 billion, or 1% of eurozone gross domestic product.
In Spain, an independent audit released on Thursday found that Spanish banks need up to €62 billion to restore stability to the country's financial sector.
Spain's Economy Minister Luis de Guindos said Friday that Spain will formally request the bank aid on Monday.
Meanwhile, Germany, the healthiest and largest eurozone economy, may start to draw some attention. The German Ifo business confidence index fell to its lowest level in more than two years, which was worse than expected.
The news comes one day after a purchasing managers index showed conditions deteriorating for the second month, with output declining at the fastest rate in three years.
CNNMoney's Fear & Greed index still showed fear but was moving closer to extreme fear compared to Monday.
U.S. stocks closed sharply down on Thursday, as investors fretted over slowing global growth and the impending Moody's downgrades. The Dow suffered its second worst day of the year.
World markets: European stocks closed lower. Britain's FTSE 100 fell 0.9% and the DAX sank 1.3%, while France's CAC 40 decreased by 0.7%.
Most of the major European banks that were downgraded, including Deutsche Bank, Barclays and BNP Paribas, rebounded Friday.
Asian markets ended in the red. The Hang Seng in Hong Kong dropped 1.4%, and Japan's Nikkei edged lower 0.3%. The Shanghai Composite was closed for a holiday.
Economy: There are no major economic reports scheduled for Friday.
Companies: Shares of transportation company Ryder Systems slid 13% after the company lowered its earnings outlook for the second quarter and fiscal year 2012, citing declining demand for its commercial rental vehicles.
Shares of Darden Restaurants fell after the operator of Red Lobster and Olive Garden warned that earnings and revenue in the current fiscal year will fall short of estimates.
Cruise line operator Carnival reported earnings that topped estimates and issued an upbeat outlook for the year.
Shares of Facebook rallied 3.8% to end the day at $33.05 after languishing in its post-IPO funk for several weeks.
Currencies and commodities: The dollar fell versus the euro and the British pound, but edged higher against the Japanese yen.
Oil for August delivery rose $1.56 cents to end at $79.76 a barrel.
Gold futures for August delivery rose $1.40 to end at $1,566.90 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury fell slightly, pushing the yield up to 1.67% from 1.62% late Thursday.