Stocks rose on Thursday as a brokerage's upgrade drove banks' shares higher, while soaring prices of oil and other commodities lifted natural resource companies on bets the economic slump is waning.
The KBW bank index <.BKX> added 4.3 percent, while the S&P financial index <.GSPF> rose 3.5 percent after RBC Capital Markets upgraded the banking sector, saying it is poised for a multiyear bull market.
A 4 percent rise in crude oil prices was a crucial underpinning to the broader market after Goldman Sachs raised its year-end oil price forecast to $85 a barrel, saying economic stabilization and tight supplies should bode well for prices.
The bigger gain in oil, not just today, is encouraging on the macro level. It's indicative of demand, said Cleveland Rueckert, market analyst at Birinyi Associates Inc in Stamford, Connecticut.
But for me, I would like to see oil hold maybe a little bit closer to $60. You don't want to have the same thing that happened last year, when it gets so expensive and becomes a burden to a lot of the consumers who are supposed to drive economic growth.
The Dow Jones industrial average <.DJI> rose 63.23 points, or 0.73 percent, to 8,738.51. The Standard & Poor's 500 Index <.SPX> gained 9.15 points, or 0.98 percent, to 940.91. The Nasdaq Composite Index <.IXIC> jumped 20.44 points, or 1.12 percent, to 1,846.36.
A broad run-up in prices of other commodities, including gold and copper, lifted shares of basic material companies, with Alcoa Inc
The S&P materials index <.GSPM> gained 2.3 percent.
Among bank stocks, shares of Bank of America
Shares of JPMorgan Chase
Plane maker Boeing
Thursday's economic reports generally supported expectations that the recession-hit economy is starting to improve.
Government data showed U.S. non-farm productivity rose more strongly than initially estimated, while the number of workers filing new claims for jobless benefits fell last week.
Investors, however, are cautious about Friday's report on monthly unemployment and what it will reveal about the outlook.
On the Nasdaq, Apple Inc
(Editing by Kenneth Barry)