Banking stocks rose following the release of a Federal Reserve survey that showed the economy continues to slowly improve despite weak labor and real estate markets.
The KBW Bank Index rose 1.56%, to 46.95, and the KBW Regional Bank Index rose 0.98%, to 47.47.
Financial stocks and other sectors rose after the Fed released its so-called Beige Book, which reported 10 out of 12 districts showed some upturn in economic conditions.
Matthew Shields, a trader at FIG Partners LLC, said investors seem to be striving to make sense of where the market is heading.
"We had a pretty good rally halfway through the day. There was no fundamental news … or reason for it," Shields said. "I think most people are fairly cautious, but they are really curious as to why the markets have held up so well."
Gerald Sparrow, the chief investment officer of Sparrow Capital Management, said financial stocks seem to be trending upward with residential real estate values.
"As long as these home values keep going up, you'll get continuing support on the balance sheets of regional and national banks," he said.
Shares of the largest banks advanced even as more details leaked out about a new fee on banks to help close the deficit and as lawmakers grilled the chiefs of four of the country's largest firms at a hearing of the Financial Crisis Inquiry Commission. The chief executives of Bank of America Corp., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley acknowledged their mistakes during the hearing, while warning that heavy-handed regulation could hurt their industry and the economy.
JPMorgan Chase rose 1.75%, Bank of America rose 1.65% and Wells Fargo & Co. rose 1.78%. Citigroup Inc. fell 2 cents, to $3.50.
In regional banking, Fifth Third Bancorp rose 4.82%; KeyCorp rose 1.25%; BB&T Corp. rose 1.71%; Comerica Inc. rose 2% and M&T Bank Corp. rose 2.64%.