The broad market rallied on Friday as market participants shook off jitters from yesterday's discount rate hike.

The S&P 500 Index is up 3.22 points, or 0.29 percent, to trade at 1,109.97 at 1:33 pm in New York.  The Dow Jones Industrial Average is up 18.14 points, or 0.17 percent, to trade at 10,411.04.

Shares of big banks found buyers and pared morning declines, while metals stocks soared. Retailers were boosted by J.C. Penney (NYSE:JCP). 

While JPMorgan (NYSE:JPM) is down 0.89 percent, Goldman Sachs (NYSE:GS) is up 0.35 percent. Citigroup (NYSE:C) is up 0.22 percent and Bank of America (NYSE:BAC) is up 0.38 percent.

J.C. Penney soared 6.63 percent after it announced fourth quarter earnings of $0.84 per share, beating estimates of $0.82.  Although its earnings and revenues fell compared to the previous year, its upbeat first quarter was in-line with expectations and full year guidance was above expectations.

Macy's (NYSE:M) is up 1.98 percent and Saks, Inc. (NYSE:SKS) is up 1.85 percent.

Since the opening of U.S. stock markets today, the dollar has fallen 44 pips against the euro and March Comex copper has gained 2.18 percent.

U.S. Steel (NYSE:X) up 4.89 percent and Nucor (NYSE:NUE) is up 2.89 percent.

The Federal Reserve announced at 4:30 pm on Thursday that it would raise the discount rate to 0.75 percent from 0.50 percent, citing continued improvement in financial market conditions.  The Fed discount window is deemed to be the lender of last resort for banks, or a source for emergency funds.  

Most stocks immediately traded lower in after-hours trading following the announcement and bank shares were particularly hard hit.

However, with the notable exception of JPMorgan, big banks have generally pared their morning losses.

While the timing of the discount rate hike surprised Scott Redler, Chief Strategic Officer of T3Live, the rebound in bank shares did not, according to comments he made Thursday evening.

I think, if the financials sell off, that there will be buyers tomorrow morning as this signals that the industry is healthier than some believe and this will bring in some more buyers, he said.

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