Standard & Poor's helped stocks rebound by saying that an end to subprime mortgage writedowns is in sight for large financial institutions.
The market also was cheered by new legislation unveiled in the House that would facilitate the buying up of distressed mortgages with the help of the Federal Housing Administration.
S&P said subprime writedowns could reach $285 billion, though it added that some writedowns are larger than any reasonable estimate of actual losses. A company typically takes a writedown when it expects to post a loss from a particular line of business, though the amount is often just an estimate.
"We believe that the largest players, such as Merrill Lynch & Co Inc and Citigroup have rigorously and conservatively valued their exposures to subprime asset-backed securities such that most of the damage should be behind them,'' S&P said in a statement.
This is the same Standard and Poor's that give AAA ratings to a bunch a crap.