A three-peat for Wall Street's bulls
Stocks continue their advance as investors react to better-than-expected retail sales and GE downgrade.
NEW YORK (CNNMoney.com) -- Stocks jumped Thursday, gaining for the third session in a row, as investors scooped up banks and other shares hit in a selloff that left the Dow at 12-year lows.
The Dow Jones industrial average (INDU) gained 240 points, or 3.5%, managing a three days of back-to-back gains for the first time since late January.
The S&P 500 (SPX) index gained 29 points, or 4%. The Nasdaq composite (COMP) gained 54 points, or 4%.
Although it's too soon to tell where stocks are going to go from here, the rally off the lows is nonetheless encouraging, said Dan Genter, president and CEO at RNC Genter Capital Management.
"The market is showing us that if we get to radically oversold positions and things get really irrational, there is money out there that people are willing to put to work," he said.
The major gauges have been on the rise since the Dow and S&P 500 ended Monday at 12-year lows. Bets that regulators may reinstate a rule that limits short selling and talk that a key accounting rule could be suspended or at least modified helped pace the advance.
"We were very oversold through Monday and the market was looking for any kind of excuse to put on a rally," said Mike Stanfield, CEO of VSR Financial Services. "The question is: Will this be the kind of short-term bounce we've seen since the election or will it be something more substantive?"
Stanfield said it all depends on the behavior of the financial sector.
"The market will never get its footing until the financials make a low and hold it," he said. "The market can't be healthy without a healthy financial system."
Congress held a hearing Thursday on mark-to-market accounting. Critics say the accounting rule has hurt the bank sector by forcing companies to write down bad assets at fire-sale prices. Supporters say it provides a clear picture of the assets banks are holding. (Full story)
Bernard Madoff: The architect of a multi-billion dollar Ponzi scheme was sent to jail to await sentencing after pleading guilty to 11 charges for one of the biggest swindles in Wall Street history. (Full story)
GE and GM: Standard & Poor's downgraded GE and GE Capital's long-term credit ratings to AA+ from AAA, with a "stable" outlook. But Wall Street had been speculating that one of the major ratings agencies might issue a downgrade, and the stock had already slumped in anticipation of an announcement. GE shares rallied 12.7% Thursday.
General Motors (GM, Fortune 500) said it won't have to take $2 billion in additional federal loans this month because its cost-cutting efforts have improved its cash position. The stock jumped more than 17%.
Financials: Bank stocks were mostly higher, with Bank of America (BAC, Fortune 500), Wells Fargo (WFC, Fortune 500), Goldman Sachs (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500) all rising. The KBW Bank (BKW) sector index rose around 11%.
The bank sector drove a bigger stock market advance Tuesday after regulators said they may reinstate the "uptick rule" that stops short sellers from driving a floundering stock lower. Critics say the absence of the rule has played a role in the steep selloff of bank stocks this year.
Stocks also got a boost Tuesday after Citigroup (C, Fortune 500) cooled some worries about its future by saying it was profitable in the first two months of the year.
In other financial news, mortgage lender Freddie Mac, now under federal conservatorship, reported its sixth straight quarterly loss late Wednesday and asked the government for another $30.8 billion. Shares were little changed.
Drugmakers: Swiss company Roche Holding said it's buying the remaining 44% of U.S. biotech Genentech it doesn't already own. The $46.8 billion deal ends an almost 8-month battle in which Genentech (DNA) repeatedly spurned Roche's offer. Genentech shares gained 2%.
Biotech Gilead Sciences (GILD) said it will buy drugmaker CV Therapeutics (CVTX) for $1.4 billion. CV shares jumped 31.5%, while Gilead shares were little changed.
Pfizer (PFE, Fortune 500) said that a late-stage clinical trial of its cancer drug Sutent has been stopped early after the drug produced a significant benefit in patients with a rare form of cancer. Shares of the Dow component jumped 7.5%.
Market breadth was positive. On the New York Stock Exchange, winners topped losers by over ten to one on volume of 1.81 billion shares. On the Nasdaq, advancers beat decliners by over 4 to 1 on volume of 2.42 billion shares.
Economy: February retail sales fell 0.1% after falling a revised 1.8% the previous month, the Commerce Department reported Thursday. Sales were expected to have fallen 0.5%, according to a consensus of economists surveyed by Briefing.com.
Sales excluding volatile autos rose 0.7% versus a revised 1.6% in January. Economists thought sales would fall 0.1%.
Another government report showed that the number of Americans filing new claims for unemployment last week rose to 654,000 from a revised 645,000 the previous week. The number of Americans continuing to receive benefits rose to a record 5.3 million.
A third government report showed that household net worth, the difference between assets and liabilities, fell by $11.2 trillion last year.
Friday brings reports on the January trade balance, February import and export prices and the initial March consumer sentiment index from the University of Michigan.
Bonds: Treasury prices gained, lowering the yield on the benchmark 10-year note to 2.85% from 2.9% Wednesday. Treasury prices and yields move in opposite directions.
Lending rates were little changed. The 3-month Libor rate eased to 1.32% from 1.33%, while the overnight Libor rate held at 0.33%, according to Bloomberg.com. Libor is a bank-to-bank lending rate.
Other markets: In global trading, most Asian and European markets ended higher.
In currency trading, the dollar fell versus the euro and gained against the yen.
U.S. light crude oil for April delivery settled up $4.70 to $45.27 a barrel on the New York Mercantile Exchange, a gain of over 11%.
COMEX gold for April delivery rose $13.30 to settle at $924 an ounce. 
