U.S. stocks rose on Wednesday, with the benchmark S&P 500 index attempting its first two-day advance in a month, as investors bet Washington would restore confidence in banks by relieving them of money-losing assets.
Banks again drove a broad run-up, with Bank of America (BAC.N: Quote, Profile, Research, Stock Buzz) rising more than 10 percent and Citigroup (C.N: Quote, Profile, Research, Stock Buzz) up 14 percent, a day after the market notched its biggest one-day rally since late November.
After the market close on Tuesday, U.S. Treasury Secretary Timothy Geithner said on the Public Broadcasting Corp's Charlie Rose Show he wanted to make it compelling for banks to cleanse balance sheets of toxic assets and in coming weeks would set up details for financing bad asset sales.
Geithner's comments were a huge help, said John O'Brien, senior vice president at MKM Partners LLC in Cleveland.
There's still so much uncertainty as to what the real game plan is that people continue to look to Washington for guidance as to what the rules are going to be. The more clarity there is around that, the more the market can hopefully put in some sort of bottom.
The Dow Jones industrial average .DJI rose 64.04 points, or 0.92 percent, to 6,990.53. The Standard & Poor's 500 Index .SPX climbed 9.51 points, or 1.32 percent, to 729.11. The Nasdaq Composite Index .IXIC shot up 20.29 points, or 1.49 percent, to 1,378.57.
The S&P financial index .GSPF gained 3.3 percent while the KBW Bank index .BKX climbed almost 5 percent.
Geithner, who has faced criticism for not spelling out details of a proposed public-private fund for buying bad assets from banks, promised action within weeks and said he was moving deliberately to minimize risks of losses for taxpayers.
Relieving banks of toxic, hard-to-sell assets could help stem a wave of writedowns that has fueled unease about banks' stability. Geithner will hold a briefing at 1 p.m. (1700 GMT) ahead of a weekend meeting of Group of 20 rich nations finance ministers and central bank governors.
A brokerage's bearish view on American Express (AXP.N: Quote, Profile, Research, Stock Buzz), down 5 percent, however, kept the market's advance in check. Goldman Sachs added the credit card company to its conviction sell list. (Editing by James Dalgleish)