U.S. stocks rose about 5 percent on Tuesday after Citigroup
Citigroup's Chief Executive Vikram Pandit also said in a memo the beleaguered bank was confident about its capital strength.
Shares of Citigroup, in which the government recently took a large common equity stake to help shore it up, jumped 35.2 percent to $1.42. Citi's stock has fallen about 80 percent year to date.
U.S. Rep. Barney Frank, chairman of the House financial services committee, said he expects the uptick rule to be restored in about a month. The rule slows the pace of short selling and could help calm volatile markets.
There's been significant short covering in the financials today as a result of comments from Citi's chairman lending a stronger tone to the financials overall, said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.
The uptick rule possibly going back into effect would also be a significant positive for the financials. It would make it harder to short stocks and you'll probably see further short-covering today.
The Dow Jones industrial average <.DJI> gained 291.91 points, or 4.46 percent, to 6,838.96. The Standard & Poor's 500 Index <.SPX> jumped 35.37 points, or 5.23 percent, to 711.90. The Nasdaq Composite Index <.IXIC> added 72.47 points, or 5.71 percent, to 1,341.11.
Rep. Frank also echoed earlier comments from Federal Reserve Chairman Ben Bernanke, who called for improvements in mark-to-market regulations. Many have blamed these accounting rules for increasing losses and writedowns on bank balance sheets.
Sentiment was also buoyed by comments from U.S. Treasury Secretary Timothy Geithner to Reuters late on Monday that the United States has taken more action in recent weeks to tackle its economic problems than other countries have done in years.
Other bank shares rallied, with Bank of America
The rise in financial shares marks a welcome reversal in investor sentiment after the sector has been hammered recently as banks' credit losses swelled.
Standouts included technology shares, with a jump in bellwethers like Apple Inc
According to Reuters data, the benchmark S&P 500 went into Tuesday's session at its most oversold condition in five months, when measured by its 50-day relative strength index.
(Editing by Jan Paschal)