NEW YORK (Reuters) - Stocks rose on Thursday on investor hopes that the Obama administration's plan to shore up the financial system would include a measure that would help banks stem losses and revive lending.
An advance in financial shares underpinned a broad market recovery, reversing earlier losses that had driven the Dow to its lowest level since the bear market low of November 21. JPMorgan (NYSE:JPM - News) gained more than 2 percent, while the S&P financial index (^GSPF - News) rose 2.9 percent.
Expectations that the loosening up of lending would boost consumer and business spending also propelled technology shares. Apple (NasdaqGS:AAPL - News) was the top boost on the Nasdaq, rising 3 percent.
On the Dow, Wal-Mart Stores (NYSE:WMT - News) was the top boost, jumping 4 after the discounter posted solid January sales.
Traders said investor sentiment was buoyed by talk that Washington would suspend an accounting requirement on the recognition of losses that has resulted in billions of write-downs for banks.
"The notion that you can suspend this mark-to-market provision, which was established after Enron, as way of halting the slide in the value of financials is at the fundamental core of putting on the brakes," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.
"The market reaction is a barometer how well (the suspension) could impact market psychology and market value."
The Dow Jones industrial average (^DJI - News) added 101.71 points, or 1.28 percent, to 8,058.37. The Standard & Poor's 500 Index (^SPX - News) rose 13.62 points, or 1.64 percent, to 845.85. The Nasdaq Composite Index (^IXIC - News) gained 26.90 points, or 1.78 percent, to 1,541.95.
Companies in the basic materials sector rose on higher metals prices, with aluminum producer Alcoa Inc (NYSE:AA - News)up 3.6 percent at $8.10. Miner Freeport McMoRan (FCX - News) jumped 4.6 percent to $28.51.
Among bank stocks, JPMorgan shares rose 2 percent to $24.54. Bank of America (NYSE:BAC - News) , which earlier had fallen more than 10 percent to its lowest level since 1984, was unchanged at $4.70.
The KBW bank index (^BKX - News) was up 2 percent, after earlier having been as much as 6.8 percent lower.
On Nasdaq, Apple (NasdaqGS:AAPL - News) shares were up 3 percent to $96.36.
Akamai Technologies Inc (NasdaqGS:AKAM - News) jumped 17.6 percent to $16.66, following upbeat quarterly results.
(Additional reporting by Ellis Mnyandu; Editing by Leslie Adler)