Market Update End of Day

4:30 pm : Pressure in the first few minutes of trade dropped the stock market to a fresh three-month low, but a rally by financials helped swing the broader market to higher ground and put an end to its recent streak of losses.

Global participants reacted to the stock market’s 3% drop in the prior session by trimming risk overnight. That caused steep slides among many foreign markets and sent the S&P 500 down another 1.5% in the first few minutes of Friday’s trade. Such a sharp drop put the benchmark index below the depths that were set during the “flash crash” two weeks ago and at its worst level since early February.

Despite such an ominous start to the week’s final session, financials were able to attract a strong bid that was amplified as short sellers scurried to cover their positions. Given that the financial sector had fallen more than 11% during the course of the previous six sessions, many expected further downside. Instead, financials finished with a 3.6% gain.

Leadership from the financial sector helped lift the broader market to a strong gain, which faded until a late flurry of buying helped stocks settle near session highs and log their best performance in a week.

Also impressive was that the financial sector’s spike came in the face of news that the Senate passed the financial reform bill, which will now go to the House for vote.

Amid a willingness to hold stocks, at least for this afternoon, Treasuries fell under a bout of stiff selling that swung the yield on the benchmark 10-year Note from a multimonth low near 3.10% in the early going to more than 3.20% at the close.