Stocks' comeback rally gains momentum with the Dow jumping more than 400 points

The major averages rose on Friday, rebounding from the previous session's losses amid concerns of a slowdown in global economic growth.

The Dow Jones Industrial Average rose about 400 points, or 1.2%, bringing the average into positive territory for the week. The S&P 500 bounced by 0.8%, also putting the index in the green for the week. The technology-heavy Nasdaq Composite rose 0.4%.

The stocks that led the losses on Thursday, reopening plays and banks, led the gains on Friday. Bank of America jumped 2.5%, leading a bounce in financial shares. Royal Caribbean and Wynn Resorts each popped 2%. American Airlines and United Airlines gained about 2%.

Shares of GM gained 3.5% after Wedbush said the stock is a buy and could jump more than 50% as investors realize the extent of its tech and electric vehicle evolution.

Big Tech stocks were weaker on Friday as President Biden was set to sign a new executive order aimed at the competitive practices by the sector's giants. Amazon was down about 0.7% after hitting a new all-time high on Thursday.

The yield on the 10-year Treasury rebounded 5 basis points to 1.34%, easing concerns about an economic slowdown (1 basis point is 0.01%). Falling yields have mystified investors lately, with the 10-year yield falling to 1.25% at its low on Thursday.

Thursday's losses came as the proliferation of the highly infectious delta Covid variant also fueled worries about the global economic comeback. The Olympics announced a ban of spectators at Tokyo's summer games as Japan declared a state of emergency to curb the spread of coronavirus. Plus, the latest jobless claims report released Thursday also indicated a potential slowdown in the labor sector.

"Our central case has been for a choppy July" with the S&P 500 falling as low as 4,100, wrote Tom Lee, Fundstrat's head of research, in a note to clients Thursday night. "While this is a possibility, we think there is a chance [Thursday] marked the peak of [the] 'growth scare' and if this is correct, equities might be shifting towards a broader risk on."

The Dow closed Thursday's regular session lower by nearly 260 points. The S&P 500 dipped 0.86%, while the Nasdaq broke a four-day win streak by falling 0.72%.

"The market is solidly mid-cycle and with that typically comes a 10-15% index level correction. We expect such a correction will create buying opportunities given a still strong growth backdrop," Mike Wilson, Morgan Stanley's chief U.S. equity strategist, told clients. Wilson favors financials, healthcare and materials.

"Our economic growth forecasts remain positive, but bigger bulls continue to talk about 'pent up demand'," Wilson added. "We agree there is pent up demand for services consumption. We also think the degree of overconsumption in goods and the ensuing payback is under-appreciated as the positive effects on income from stimulus checks and the surge in asset prices fade."