Bank stocks and the broader markets rallied Wednesday on various reports that the government's stress tests results will show Thursday that most of the country's 19 largest banks are not in such dire straits as once feared.

The KBW Bank Index rose 11.47%, the Dow Jones industrial average 1.21% and the Standard & Poor's 500 index 1.74%.

"Investors are reacting to the stress tests results, that many of the banks will not need as much capital as originally thought," said Matthew Shields, a trader at FIG Partners LLC.

Bank of America Corp.'s shares rose 17.1% on reports that the Charlotte company needs about $34 billion of capital and that its executives contend it has plenty of ways to raise the money.

JPMorgan Chase & Co. rose 6.9%, Wells Fargo & Co. 15.6%, U.S. Bancorp 5.8%, PNC Financial Services Group Inc. 11.9% and Citigroup Inc., 55 cents, to $3.86 a share.

Among the regional banking companies, SunTrust Banks Inc. was up 15%, Marshall & Ilsley Corp. 23.3%, Comerica Inc. 7.8%, M&T Bank Corp. 5%, Zions Bancorp. 26.1% and Fifth Third Bancorp 15.5%.

Investors were also encouraged by the release Wednesday of the ADP National Employment Report, which said that 491,000 private-sector jobs were lost in April, a 31% decline from the 708,000 jobs lost in March.

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.