Encouraging economic news lifted bank stocks and the broader markets Thursday.
The KBW Bank index rose 2.55%, the Dow Jones industrial average rose 0.37% and the Standard & Poor's 500 rose 0.61%.
The Labor Department said initial unemployment claims for the week that ended June 6 fell 3.8%, to 601,000, from the week before. Economists on average had expected 615,000 in claims.
Also Thursday, the Commerce Department said retail sales rose 0.5% in May, in line with expectations.
Investors were further encouraged by a strong auction for 30-year Treasury bonds, after a weaker auction on Wednesday for 10-year notes.
"Clearly the recession is beginning to ease, and that should be good news for the average bank out there," said James Bradshaw, an analyst at Bridge City Capital LLC in Portland, Ore.
JPMorgan Chase & Co. rose 0.3%, Bank of America Corp. rose 8.3%, Wells Fargo & Co. rose 0.4%, PNC Financial Services Group Inc. rose 1.5% and U.S. Bancorp rose 1.4%.
B of A's chief executive, Kenneth Lewis, testified before House lawmakers that regulators threatened to remove B of A board members if the Charlotte company did not acquire Merrill Lynch.
Goldman Sachs analysts upgraded the stocks of a number of regional companies: BB&T Corp., which rose 1.6%; Fifth Third Bancorp, which rose 5.9%; Regions Financial Corp., which rose 37 cents, to $4.37; and Huntington Bancshares Inc., which rose 10 cents, to $4.13.
Marshall & Ilsley Corp. fell 4.4% after the Milwaukee company announced a $400 million common stock offering in lieu of the $350 million discretionary equity issuance plan it announced May 19.