Stocks make it a 3-day rally
Wall Street surges to two-month high after key accounting rule that has impact on banks is changed. G-20 also in focus.
NEW YORK (CNNMoney.com) -- Stocks rallied Thursday afternoon after regulators changed an accounting rule that critics say exacerbated the financial sector crisis, and by extension, the recession.
The G-20 meeting of the world's leading economies was also on the radar.
The Dow Jones industrial average (INDU) closed with a jump of 216 points or 2.8%. The Dow had risen as much as 314 points during the afternoon, topping 8,000 for the first time during a session since Feb. 9.
The S&P 500 (SPX) index gained 23 points, or 2.9%. The Nasdaq composite (COMP) added 51 points, or 3.3%.
Stocks surged Thursday after the Financial Accounting Standards Board (FASB) voted to change the "mark-to-market" accounting rule.
The rule requires banks to value so-called bad debt on their balance sheets based on the fire sales of similar assets at other banks and critics say it exacerbated the financial crisis. Supporters say it is the only way to fairly account for the bad debt. (Full story)
J. Stephen Lauck, president and CEO at Ashfield Capital Partners, said that the change in the accounting rule had been expected, but it was still a big positive for sentiment.
"The change in the rule is driving the advance today, along with the continuation of data points that show things are getting less bad and in some ways stabilizing," Lauck said.
Equities have been rising on bets that the worst has already happened and that some of the government's efforts to stimulate the economy and aid the financial sector will help.
Stocks rallied Wednesday on the first day of the new quarter, building on the big March run-up. Since hitting a 12-1/2 year low on March 9, the S&P 500 has rallied 23% as of Thursday's close.
After several attempts at "bottoming" failed last autumn, analysts remain wary of saying that the recent advance is more substantial than a rally within a longer bear market.
"It's hard to say whether it's a bear market rally or the real thing," said Mike Stanfield, CEO at VSR Financial Services. "But what's encouraging is the fact that the financials have led us off the bottom this time."
He said that this factor was critical because the stock market can't make a strong comeback without the financial sector taking the lead.
On Friday, investors will take their cue from the government's March jobs report, due out before the start of trade. Employers are expected to have cut 658,000 jobs from their payrolls after cutting 651,000 in February. The unemployment rate, generated by a separate survey, is expected to have risen to 8.5% from 8.1% in February.
The Institute for Supply Management releases its services sector index for March after the start of trade. Also, Federal Reserve Chairman Ben Bernanke speaks in the afternoon about the Fed's balance sheet at a symposium in North Carolina.
G-20: Investors also kept an eye Thursday on the G-20 meeting in London, which brought together leaders from the world's largest economies. The group pledged more than $1 trillion to boost the International Monetary Fund and also agreed to more closely monitor the global financial system. (Full story)
Stock movers: A variety of stocks gained, including financial shares such as Bank of America (BAC, Fortune 500), Wells Fargo (WFC, Fortune 500) and Goldman Sachs (GS, Fortune 500).
But the gains were broad-based, with all but three of the Dow 30 rising, led by IBM (IBM, Fortune 500), McDonald's (MCD, Fortune 500), 3M (MMM, Fortune 500), Procter & Gamble (PG, Fortune 500) and United Technologies (UTX, Fortune 500).
A nearly 9% spike in oil prices gave a boost to the Dow's oil components, Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500).
Market breadth was positive. On the New York Stock Exchange, winners beat losers by more than 7 to 1 on volume of 1.87 billion shares. On the Nasdaq, advancers topped decliners by more than three to one on volume of 2.83 billion shares.
Economy: The number of Americans filing new claims for unemployment rose to 669,000 last week from a revised 657,000 in the previous week, topping economists' forecasts.
Continuing claims, a measure of Americans receiving benefits for a week or more, rose 161,000 to 5.7 million, the highest reading since the Labor Department started keeping records in 1967.
February factory orders rose 1.8%, the Commerce Department said, versus expectations for a rise of 1.5%. Orders fell 3.5% in January.
Bonds: Treasury prices tumbled, raising the yield on the benchmark 10-year note to 2.77% from 2.65% Wednesday. Treasury prices and yields move in opposite directions.
Lending rates mostly dropped. The 3-month Libor rate dipped to 1.17% from 1.18% Wednesday, according to Bloomberg.com. The overnight Libor rate fell to 0.29% from 0.3% Wednesday. Libor is a bank-to-bank lending rate.
Other markets: In global trading, Asian and European markets rallied.
In currency trading, the dollar fell versus the euro and the yen.
U.S. light crude oil for May delivery jumped $4.25 to settle at $62.54 a barrel on the New York Mercantile Exchange, a jump of 8.8%.
COMEX gold for June delivery fell $18.80 to settle at $908.90 an ounce. 
