Countrywide's ( CFC) sanguine outlook helped lift the mood Friday, both in the financial sector and in the broader market. Despite reporting a big third-quarter loss, the mortgage-lending giant catapulted nearly 23% after saying it will likely book a profit in the current quarter -- pegged at between 25 cents and 75 cents a share -- and in 2008, as well. Countrywide also kept its 15-cent dividend, contrary to some prior speculation that it would be suspended. Its third-quarter loss totaled $1.2 billion, or $2.85 a share, vs. last year's per-share income of $1.03. Analysts were looking for a loss of $1.28 a share, less special items. Still, shares soared $2.96 to $16.03 to take back all of this week's massive losses and then some. Merrill Lynch ( MER), meanwhile, had its own heavily traded recovery after The New York Times reported that CEO Stan O'Neal put his job in jeopardy , following Wednesday's abysmal earnings report , by suggesting a merger with Wachovia ( WB) without first consulting the company board. O'Neal called Wachovia Chief Kennedy Thomson to broach the idea late last week, The Times reported. Merrill shares added 4% to $63.31 -- a move which, together with Countrywide's gains, helped boost the NYSE Financial Sector Index. The tracker jumped 195.5 points, or 2.2%, to about 9,223. The KBW Bank Index was up 1.3%. Fellow component Radian ( RDN), whose stock has taken a severe beating lately, was also bouncing back after the firm said it has a "strong capital position and balance sheet" and pointed to liquidity-boosting measures taken this quarter.