Stocks rose on Friday after the government's bank stress tests fueled hopes that the worst is over for the financial sector, while news of fewer-than-expected April job cuts suggested the economic slump was easing.
Shares of several major banks rose, with No. 2 U.S. bank JPMorgan Chase Inc
The market's other boost was a rally in the shares of energy companies, in concert with higher oil prices.
The release of the stress test results has given people a little bit of confidence that the government can help to solve this part of the financial crisis, said Richard Sparks, senior equities analyst and options trader at Schaeffer's Investment Research in Cincinnati.
There's a sense that the government actually has a logical plan, (that they) are holding the companies to a certain standard (so) even if things got worse these companies will be able to survive. That helps bolster confidence in the administration.
The Dow Jones industrial average <.DJI> rose 116.77 points, or 1.39 percent, to 8,526.62. The Standard & Poor's 500 Index <.SPX> gained 15.50 points, or 1.71 percent, to 922.89. The Nasdaq Composite Index <.IXIC> shot up 9.52 points, or 0.55 percent, to 1,725.76.
Shares of Wells Fargo
U.S. regulators told top banks after the close on Thursday to raise $74.6 billion to build a capital cushion that officials hope will restore faith in financial companies and set a course out of the deepest recession in decades.
Several of the large banks have announced equity and debt offerings in an attempt to raise capital.
Bank of America Chief Executive Kenneth Lewis said in an interview on CNBC that he anticipates about $10 billion in asset sales and that he is pretty confident the bank will do better than the stress test results indicate.
The 539,000 jobs cut by employers in April was the smallest reduction since October, and hinted at some improvement in the labor market, but the unemployment rate soared to 8.9 percent, the highest since September 1983.
Web search leader Google Inc
Sanford C. Bernstein boosted its price target on Google to $600. Activision, the video-game maker, posted quarterly results that topped Wall Street's estimates and raised its 2009 forecast.
Crude oil futures prices jumped 2.1 percent to $57.93 a barrel, and bolstered energy shares, as Chevron
The Nasdaq is on track for its ninth straight weekly advance, the longest such streak for the index since an 11-week climb in December 1999.
Since hitting a 12-year closing low in March, the S&P has surged 36.3 percent, driven by optimism about the financial systems's condition and hopes the recession may be waning.
(Additional reporting by Chuck Mikolajczak; Editing by Jan Paschal and Padraic Cassidy)