Financial stocks bounced back Wednesday from a sharp sell-off earlier in the week after the Federal Reserve said it would maintain exceptionally low bank lending rates.

The KBW Bank Index rose 2.91%, to 46.70, after the Fed's Open Market Committee released a policy statement saying it would keep short-term rates near zero to support an economic recovery.

Banks and the broader markets also got a lift from a Conference Board report showing that consumer confidence in January rose to its highest point in nearly a year and a half.

The Dow Jones industrial average rose 0.41%; the Standard & Poor's 500 index rose 0.49%.

Banking stocks have been volatile in recent weeks as investors fretted over new proposals in Washington that could tax or limit growth at large banks.

But most banks had a good day.

JPMorgan Chase & Co. rose 2.32%; Bank of America Corp., 2.84%; Wells Fargo & Co., 4.48%; and Citigroup Inc. rose a nickel to $3.20.

Among regional banks, BB&T Corp. rose 5.52%; Fifth Third Bancorp, 4.01%; KeyCorp, 3.77%; and Regions Financial Corp., 1.48%.

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.