U.S. stocks rose on Wednesday after a private sector reading on the labor market signaled unemployment may be receding and leaked bank stress test results suggested most banks are healthier than thought.

The total number of U.S. private-sector job losses touched the lowest level since November, according to a report by ADP Employer Services, in the latest piece of data suggesting the worst of the recession has passed.

The government is due to release stress test results on Thursday. Several media reports on the capital needs for 10 of the 19 banks under the government's microscope have revealed how well the industry will cope with perhaps the most severe recession since World War II.

The rally in bank stocks was widespread, with Citigroup jumping more than 16 percent to $3.86, Bank of America up 17.07 percent to $12.69 and JPMorgan gaining 7 percent to $37.22.

Concerns about the health of the banks were among the factors that pushed the market to 12-year lows in early March when many thought the government might be forced to nationalize several big banks.

In my mind, at least, it just means we're getting that much closer to a resolution, said Phil Orlando, chief equity market strategist at Federated Investors in New York.

What this does is that it begins to give investors some clarity that we are starting to separate the wheat from the chaff. We know who's performing well and is potentially able to (repay government bailout funds) and who still needs a little bit of help and a little more restructuring.

If three-fourths or even half of the banks pass the test, then the government can focus on the few remaining banks that need federal help, Orlando added.

The Dow Jones industrial average <.DJI> rose 101.63 points, or 1.21 percent, to 8,512.28. The Standard & Poor's 500 Index <.SPX> climbed 15.73 points, or 1.74 percent, to 919.53. The Nasdaq Composite Index <.IXIC> added 4.98 points, or 0.28 percent, to 1,759.10.

Since hitting a closing low in early March, the S&P 500 has surged 36 percent, driven by optimism about the financial system's condition and hopes the recession may be waning.

The KBW Bank index <.BKX> shot up 11.5 percent, while the S&P financial index <.GSPF> climbed 8.1 percent.

The test results will cover 19 major U.S. financial institutions. The Wall Street Journal reported that JPMorgan, the No. 2 U.S. bank, does not need more capital under the U.S. government stress test.

Other news reports suggested the capital shortfalls for Citigroup and others might be less than expected.

The broad market also got a boost from energy shares, which reacted to higher oil prices. U.S. crude settled up $2.50, or 4.64 percent, at $56.34 a barrel on the New York Mercantile Exchange, the highest close since November 14, 2008.

Among energy shares, Exxon Mobil rose 1.4 percent to $68.58, while Chevron Corp climbed 3.6 percent to $68.11.

On Nasdaq, Research In Motion was the top boost, rising 2.2 percent to $77.05, after JP Morgan upgraded the BlackBerry maker's stock to neutral from underweight.

Walt Disney Co gave the Dow its biggest boost, jumping 11.8 percent to $25.87, a day after the No. 1 U.S. entertainment company posted a quarterly profit above Wall Street's forecasts. Disney's results gave more support to views that the economy may be stabilizing and consumers may be regaining some confidence.

The ADP data fueled more hopes that the U.S. economy has seen the worst, coming two days before the government's release of the April nonfarm payrolls report.

(Reporting by Ellis Mnyandu; Editing by Kenneth Barry)