Stocks rose on Wednesday, with the benchmark S&P 500 index attempting the first two-day advance in a month, as investors held out hope that Washington would restore confidence in banks by relieving them of money-losing assets.
Banks again drove a broad run-up, with Bank of America
After the market close on Tuesday, U.S. Treasury Secretary Timothy Geithner said he wanted to make it compelling for banks to cleanse balance sheets of 'toxic' assets and would quickly work out details for financing bad asset sales.
Geithner's comments, in a television interview, were a huge help, said John O'Brien, senior vice president at MKM Partners LLC in Cleveland.
There's still so much uncertainty as to what the real game plan is that people continue to look to Washington for guidance as to what the rules are going to be. The more clarity there is around that, the more the market can hopefully put in some sort of bottom.
The Dow Jones industrial average <.DJI> gained 52.97 points, or 0.76 percent, to 6,979.46. The Standard & Poor's 500 Index <.SPX> climbed 8.60 points, or 1.20 percent, to 728.20. The Nasdaq Composite Index <.IXIC> shot up 22.04 points, or 1.62 percent, to 1,380.32.
The S&P financial index <.GSPF> gained 3.2 percent while the KBW Bank index <.BKX> climbed nearly 5 percent. Bank of America shares rose to $5.27 and Citigroup stock rose to $1.60.
Geithner, who has faced criticism for not spelling out details of a proposed public-private fund for buying bad assets from banks, promised action within weeks and said he was moving deliberately to minimize risks of losses for taxpayers.
Relieving banks of toxic, hard-to-sell assets could help stem a wave of writedowns that has fueled unease about banks' stability. Geithner will hold a briefing at 1 p.m. EDT ahead of a weekend meeting of Group of 20 rich nations finance ministers and central bank governors.
On Nasdaq, shares of computers makers, including Apple Inc
HP was up almost 5 percent to $28.39 on the New York Stock Exchange after UBS raised it to a buy. The stock was the top Dow boost.
However profit-taking after Tuesday's surge and a brokerage's bearish view on American Express
(Editing by James Dalgleish)