Stocks rise as fears ebb about bank stress tests

NEW YORK -- Financial stocks pulled the market higher Wednesday as media reports trickled out that indicated balance sheets at the nation's biggest banks might not be as frayed as some traders had feared.

The word came a day ahead of the formal release of results from government stress tests aimed at determining which banks need to raise more capital. Investors relieved to have assembled an initial scorecard scooped up shares of most banks, even those expected to have to come up with new money.

The Dow Jones industrial average jumped 100 points in heavy trading volume, while the technology-heavy Nasdaq composite index posted a more modest gain.

"To me, this rally has been more a recognition that maybe the end of the world is not at hand," said Philip Dow, managing director of equity strategy at RBC Wealth Management.

The news on banks and a surprise drop in a private reading on unemployment provided the latest shots of confidence in a market that has barreled higher in the past two months amid signs that the economy is stabilizing, if not yet recovering. Major stock indicators have surged more than 30% from the 12-year lows hit on March 9.

Financial stocks that sent the market plunging from its peak in October 2007 led the advance again as worries about the government's report cards eased.

American Express, JPMorgan Chase and Bank of New York Mellon will not be asked to raise more capital when federal officials announce the test results Thursday afternoon, but Regions Financial . will need to bolster its reserves, according to people briefed on the results. Those people requested anonymity because they were not authorized to discuss the tests.

Citigroup will need to raise about $5 billion, according to a government official who requested anonymity because he was not authorized to discuss the matter. Earlier news reports put that number closer to $10 billion.

Bank of America . and Wells Fargo also will be asked to raise capital, people familiar with the matter said earlier this week.