The Dow and S&P 500 rose on Wednesday, led by bank shares, after media reports suggesting some major banks, including JP Morgan Chase & Co
But a drag from profit-taking in technology shares pushed the Nasdaq slightly lower.
The broad market rose on energy shares, which reacted to higher oil prices. U.S. crude climbed nearly 5 percent to $56.26 a barrel.
The stress test results are due to be release on Thursday. The rally in bank stocks was widespread, with Citigroup
The KBW Bank index <.BKX> shot up 12 percent, bolstering the broader market's recovery from 12-year lows hit in early March.
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, said Phil Orlando, chief equity market strategist at Federated Investors in New York.
In my mind, at least, it just means we're getting that much closer to a resolution, Orlando said.
The Dow Jones industrial average <.DJI> rose 62 points, or 0.8 percent, to 8,472. The Standard & Poor's 500 Index <.SPX> gained 10 points, or 1.2 percent, to 914. The Nasdaq Composite Index <.IXIC> slipped 4 points, or 0.26 percent, to 1,750.
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.
Bloomberg reported that Citigroup's requirement under the stress tests is about $5 billion, citing people with knowledge of the bank's test results. Wells Fargo & Co
In economic news, the total number of U.S. private-sector job losses were much less than expected in April, hitting the lowest level since November last year, according to a report by ADP Employer Services.
Since hitting a closing low in early March, the S&P 500 has surged 35 percent, driven by optimism about the financial system's condition and hopes the recession may be waning.
(Reporting by Ellis Mnyandu; Editing by Kenneth Barry)