Stocks jumped on Thursday after Wells Fargo said it expects to report a record quarterly profit, providing a ray of hope for the struggling financial sector and adding fuel to the month-long rally.
This is another step in that they are about to report earnings that are not a disaster and are creeping into the black, said Bruce Zaro, chief technical strategist at Delta Global Advisors in Boston.
It's another piece of gathering evidence that banks can very likely weather and probably pass the worst operating results that they've seen.
In addition, a source familiar with talks told Reuters U.S. officials will not look to close any banks based on the results of stress tests being conducted to determine how the largest U.S. banks would fare under more adverse economic conditions.
The Dow Jones industrial average <.DJI> gained 219.90 points, or 2.81 percent, to 8,057.01. The Standard & Poor's 500 Index rose 26.26 points, or 3.18 percent, to 851.42. The Nasdaq Composite Index <.IXIC> jumped 55.77 points, or 3.51 percent, to 1,646.43.
The state of the banks has been a key factor behind the stock market's sentiment and are at the heart of the global economic crisis. The current rally first took off in early March when several major banks said they had made money in the first two months of the year.
Shares of JP Morgan Chase
However, analysts cautioned that the news from Wells Fargo was not an all clear signal for the sector.
It is still going to remain a bank-to-bank issue, said Fred Dickson, market strategist and director of retail research at D.A. Davidson & Co in Lake Oswego, Oregon.
I don't think one can generalize and make a blanket statement that all the bank results are going to be slightly better than what is currently expected.
But on the downside, Wal-Mart Stores Inc
The S&P 500 was on pace for its fifth consecutive weekly advance and is up more than 25 percent since the 12-year closing low reached on March 9.
(Additional reporting by Edward Krudy)
(Editing by Theodore d'Afflisio)