Stocks rose for a third straight session on Thursday on optimism the G20 meeting in London will agree on ways to temper the economic crisis and that new U.S. accounting guidance will favor banks.
World leaders will triple the war chest of the IMF to fight the worst economic crisis since the 1930's and impose curbs on financial markets, monetary sources at the G20 summit said.
In the United States, the Financial Accounting Standards Board said new mark-to-market accounting guidance will be effective for the second quarter, with early application allowed for the first quarter, and not be retroactive.
Financial shares, a key driver behind the recent rally, surged on bets for an improving global economy and relaxation of accounting rules that have resulted in sharp hits to their balance sheets.
Relaxing mark-to-market does give the banks a little more flexibility that they can perhaps mark a few things up, said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
It's also the symbolism of the G20 that there will be coordinated efforts to stimulate the world economy.
The news from the leaders of the Group of 20 major developed and emerging economies and the mark-to-market rules adjustment more than offset data which showed the number of U.S. workers filing new claims for jobless benefits rose to the highest in over 26 years in the latest week.
The Dow Jones industrial average <.DJI> gained 194.18 points, or 2.50 percent, to 7,955.78. The Standard & Poor's 500 Index <.SPX> climbed 21.10 points, or 2.60 percent, to 832.18. The Nasdaq Composite Index <.IXIC> rose 41.55 points, or 2.68 percent, to 1,593.15.
Government data showed U.S. factory orders rose in February, breaking a six-month streak of declines and boosting hopes the economy may be starting to climb out of recession.
(Additional reporting by Leah Schnurr; Editing by James Dalgleish)