Stocks rallied for a third day on Thursday on relief that a ratings cut by S&P in General Electric was just one notch and no further cuts loomed, while data showed signs of stabilization in consumer spending.
Investors had feared the downgrade would be deeper or the outlook negative.
Adding to the positive tone were comments from Bank of America
Lewis also said the bank was profitable in the first two months, echoing statements by Citigroup
It's real good news from banks, said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York. It indicates they are profitable and they are starting to increase their lending -- you couldn't ask for more than that.
They've all weighed in and given us some real hard evidence that things may not be as bad as we thought.
Wal-Mart Stores Inc
The Dow Jones industrial average <.DJI> rose 181.51 points, or 2.62 percent, to 7,111.91. The Standard & Poor's 500 Index <.SPX> gained 21.59 points, or 2.99 percent, to 742.95. The Nasdaq Composite Index <.IXIC> climbed 37.52 points, or 2.74 percent, to 1,409.16.
Investor sentiment was also lifted by news of a takeover in the biotechnology sector, bolstering shares of healthcare companies. Gilead Sciences Inc
Gilead was off 0.4 percent to $43.86, while CV's shares soared nearly 30 percent to $20.76.
(Additional reporting by Leah Schnurr; Editing by James Dalgleish)