Washington Mutual shares rise sharply

Washington Mutual shares rose 92 cents, or 25.5 percent, to close at $4.53.

On Wednesday, national bank Wells Fargo reported second-quarter earnings that beat analysts' average estimate by 3 cents per share, according to a Thomson Financial poll.

Wells Fargo was the first of the large national banks to report second-quarter results. Washington Mutual is scheduled to release results next Tuesday.

Banks across the country have faced widening losses tied to a spike in mortgage defaults over the past year. With the housing market still weak, analysts widely expect those losses to continue to grow for the foreseeable future. But Wells Fargo's results have soothed some investor fears, at least for now.

Washington Mutual has been among those banks hit hardest by the mortgage mess. It recently raised $7.2 billion in cash to shore up its capital base. Late Monday, Washington Mutual reassured investors it had enough cash to cover future losses, while maintaining sufficient capital levels.

Also Wednesday, the Dow Jones Industrials average rose 276.74 to 11,239.28, helping boost the financial services sector after steady declines in recent weeks. The Dow rose in part because of the strong results at Wells Fargo, and because oil prices slid for the second straight day.

Wells Fargo shares climbed $6.72, or 32.8 percent, to $27.23 Wednesday.