NEW YORK — Stocks surged Thursday to their highest levels in two months after banking giant Wells Fargo surprised the market with an early profit report. Thanks to a strong pickup in its lending business, the performance blew past analysts' expectations.
The Dow Jones industrial average jumped nearly 250 points, and major market indexes logged their fifth straight week of gains. Markets are closed today for Good Friday.
Investors have been grasping at any sign of improvement in the crippled banking industry, and Wells Fargo's report Thursday that it expects first-quarter earnings of $3 billion provided an encouraging sign that a deep freeze in borrowing activity may finally be thawing. Wells Fargo said it benefited from its January acquisition of Wachovia and an increase in mortgage applications.
"The fact that Wells Fargo can have record profits despite the troubles facing the banking system tells you something," said Rick Campagna, chief investment officer at 300 North Capital in Pasadena, Calif. "It's very good news."
The Dow and the Standard & Poor's 500 index ended at their highest levels since Feb. 9. The Nasdaq posted its highest finish of the year. The Dow rose 246.27, or 3.1 percent, on Thursday to 8,083.38. Broader stock indicators also put up big gains. The S&P 500 index rose 3.8 percent. The Nasdaq composite index rose 3.9 percent.
For the week, the Dow rose 0.8 percent. The blue chips hadn't logged five straight weekly gains since Oct. 2007. The S&P 500 rose 1.7 percent for the week, while the Nasdaq added 1.9 percent.
Wells Fargo's announcement injected a decisively upbeat tone into the market after three days of choppy trading. For most of the week, stocks appeared to be taking a breather after barreling ahead more than 20 percent in March. Analysts see occasional pullbacks as signs of a healthy market as investors allocate money carefully instead of just following a frenzied crowd.
Despite the rapid rise in the past month, the Dow is still down by 42.9 percent from its Oct. 9, 2007 high.
Bank shares had been sluggish this week after worrisome forecasts from key analysts about the bad loans they still carry on their balance sheets and other long-term woes. Major banks begin reporting first-quarter results next week.
Ted Aronson, a partner at Aronson-Johnson-Ortiz in Philadelphia, said Wells Fargo's upbeat preview into its earnings could place a greater burden on banks reporting results next week. Wells Fargo doesn't report its full results until April 22.
"I'm not sure everyone will be as successful, but we'd like to hope that the success will spill over," Aronson said.
Light, sweet crude rose $2.86 to settle at $52.24 in New York.
Overseas, Japan's Nikkei stock average rose 3.7 percent after reports that the country's ruling party is seeking a stimulus package bigger than originally announced. Britain's FTSE 100 gained 1.5 percent, Germany's DAX index rose 3 percent, and France's CAC-40 rose 1.8 percent.