Bank stocks and the broader markets rallied Thursday after better-than-expected news about jobless claims and worker productivity.

The KBW Bank Index rose 2.95%, the Dow Jones industrial average rose 2.08% and the Standard & Poor's 500 index rose 1.92%.

The Labor Department said that unemployment claims fell to 512,000 for the week that ended Oct. 31. Economists on average had expected 523,000 in claims.

Meanwhile, the amount of output per hour worked rose at a 9.5% annual rate in the July-September quarter.

Mark Vitner, a senior economist at Wells Fargo Securities, said that the encouraging economic news bodes well for bank stocks.

"Banks are benefitting from the idea that the recovery is taking hold and that they are going to improve their credit problems and move into more profit opportunities," he said in an interview Thursday.

Gainers were across the board.

JPMorgan Chase & Co. rose 3.9%, Bank of America Corp., 2.9%, Wells Fargo & Co., 1.8%, PNC Financial Services Group Inc., 3.6%, U.S. Bancorp, 3.9%, and Citigroup Inc., 9 cents, to $4.06.

Among the regionals, SunTrust Banks Inc. rose 4.3%, BB&T Corp., 2.3%, Capital One Financial Corp., 3.4%, KeyCorp, 3.8%, Fifth Third Bancorp, 4%, Comerica Inc., 0.7%, Zions Bancorp., 2.9%, Regions Financial Corp., 14 cents, to $4.81, and Huntington Bancshares, 8 cents, to $3.77.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.