Stocks rallied Friday afternoon, with the Dow briefly hitting highs for the year, after a report showed that most of Europe's big banks passed their stress tests, easing investor concerns about the strength of the global recovery. Better-than-expected quarterly profits from Microsoft, Ford, and others, and some biotechnology deal news added to the session's gains. Stocks struggled in the morning, but the release of the stress-test results-which showed that major European banks are sufficiently capitalized in case of a double-dip recession-seemed to soothe investors, allowing for the afternoon rally. The test of 91 banks showed all but 7 would be able to survive during a downturn and emerge in good shape. In Washington, pay czar Kenneth Feinberg's latest review of pay practices at banks that received government rescue funds showed 17 firms overpaid executives by $1.6 billion during the financial crisis. In company news, shares of Genzyme jumped 18 percent on a Wall Street Journal report that French biotechnology company Sanofi-Aventis has informally approached the firm about a potential buyout. The U.S. dollar rose versus the euro and the yen. Light sweet crude oil for September delivery fell 25 cents to $79.05 a barrel on the New York Mercantile Exchange. Gold fell $5.50 to $1,190.10 an ounce. The Dow Jones industrial average rose 102.32, or 1 percent, to 10,424.62. Verizon Communications posted a quarterly loss related to a buyout of 11,000 workers, but it recorded profits that beat estimates, sending shares 4 percent higher. American Express reported higher quarterly sales and profits, and its shares gained 3.7 percent. McDonald's reported higher profits but weaker-than-expected sales, sending its shares 2 percent lower. The broader Standard & Poor's 500 index rose 8.99, or 0.8 percent, to 1,102.66. Ford Motor reported better-than-expected quarterly sales and profits that reversed its operating loss from a year ago, building on its return to profitability following several years of weakness. Shares rose 5 percent. The technology-heavy Nasdaq composite index rose 23.58, or 1.05 percent, to 2,269.47. Microsoft reported higher quarterly sales and profits due to strong sales of its Windows 7 operating system, but its shares fell 0.8 percent. Amazon.com reported quarterly sales and profits that rose from a year ago but missed analysts' projections. Shares fell as much as 11 percent in pre-market trading and 9 percent in the morning, but the online retailer reduced losses to 2 percent in the afternoon.
