Investors have been grasping at any sign of improvement in the crippled banking industry, and Wells Fargo's report Thursday that it expects first-quarter earnings of $3 billion provided an encouraging sign that a deep freeze in borrowing activity may finally be thawing. Wells Fargo said it benefited from its January acquisition of Wachovia and an increase in mortgage applications.
"It certainly tends to indicate that maybe we've gotten through the worst of the financial debacle in terms of the earnings and the worst fears," Eugene Peroni, senior vice president at Advisors Asset Management, told CBS News.
The Dow rose 246.27, or 3.1 percent, to 8,083.38. It was the blue chips' first close above the 8,000 mark in nearly a week and the highest finish since Feb. 9. The Dow hadn't logged five straight weekly gains since Oct. 2007, the stock market's peak.
Broader stock indicators also rose sharply. The Standard & Poor's 500 index rose 31.40, or 3.8 percent, to 856.56. Like the Dow, it was the highest close for the S&P 500 since Feb. 9.
The Nasdaq composite index rose 61.88, or 3.9 percent, to 1,652.54, its highest finish of the year. In 2009, the index is up 4.8 percent.
For the week, the Dow rose 0.8 percent, the S&P 500 rose 1.7 percent and the Nasdaq added 1.9 percent.
The report from Wells Fargo injected a decisively upbeat tone into the market after three days of choppy trading earlier this week, when the market appeared to be taking a breather after barreling ahead more than 20 percent in March. Analysts see occasional pullbacks as signs of a healthy market as investors allocate money carefully instead of just following a frenzied crowd.
"We are seeing some improvement in investor confidence and in turn, we're also seeing some improvement in consumer confidence. So I think that will probably be reflected more in the numbers as we go forward," Peroni told CBS News.
Bank shares had been sluggish this week following worrisome forecasts from key analysts about the bad loans they still carry on their balance sheets and other long-term woes. Major banks begin reporting first-quarter profits next week.
Wells Fargo jumped 31.7 percent Thursday and several other major banks also barreled higher, including Bank of America Corp. up 35.3 percent; JPMorgan Chase & Co. up 19.4 percent, and Citigroup Inc., up 12.6 percent.
Investors appeared unfazed by uneven monthly sales reports from retailers and mixed economic news.
Wal-Mart Stores Inc. reported lower-than-expected sales in March, sending its shares down 3.7 percent, making it one of only three stocks to fall among the 30 companies that make up the Dow.
Target Corp. rose 6.1 percent after posting results that topped expectations, while teen clothing retailer Abercrombie & Fitch Co. slid 3.5 percent after its numbers came in weaker than expected.
In economic news, more than expected last week, but those continuing to receive unemployment benefits set another high. The total number of laid-off Americans receiving unemployment rose to 5.84 million from 5.75 million, the most on record since 1967 and more than analysts expected.
The jump in stocks comes at the end of a relatively quiet holiday week, when markets will be closed for Good Friday. Investors grew more upbeat Wednesday on reports the government will provide support for battered life insurers and as two major homebuilders, Pulte Homes Inc. and Centex Corp., announced plans to combine.
Ted Aronson, a partner at Aronson-Johnson-Ortiz in Philadelphia, said Wells Fargo's upbeat preview into its earnings could place a greater burden on banks reporting results next week. Wells Fargo doesn't report its full results until April 22.
"I'm not sure everyone will be as successful, but we'd like to hope that the success will spill over," Aronson said.
In other trading, the Russell 2000 index of smaller companies jumped 20.46, or 4.6 percent, to 462.58.
About six stocks rose for every one that fell on the New York Stock Exchange. Volume came to 783.8 million shares.
Treasury prices fell as the stock rally damped demand for safe-haven investments. The yield on the 10-year Treasury note rose to 2.93 percent from 2.86 percent late Wednesday.
The dollar was mixed against other major currencies, while gold prices fell.
Overseas, Japan's Nikkei stock average rose 3.7 percent following reports that the country's ruling party is seeking a stimulus package bigger than originally announced.
Britain's FTSE 100 gained 1.5 percent, Germany's DAX index rose 3 percent, and France's CAC-40 rose 1.8 percent.