NEW YORK — Good times have returned to the stock market with a rush.
Share prices thundered higher again Thursday after a blockbuster report from Wells Fargo & Co. about record quarterly earnings stoked mounting optimism that the economy may be stabilizing and the banking crisis may be ebbing.
The Dow Jones industrial average vaulted almost 250 points to its highest level in two months, punctuating a global rally that drove up share prices across Europe and Asia.
Wells Fargo startled investors by saying it expected to post a 50% jump in first-quarter profit to $3 billion. That topped even the most optimistic forecasts and unleashed a powerful rally among beaten-down financial shares.
The rally strengthened the hand of bulls, who believe the market bottomed out a month ago and could be poised for an extended upturn, albeit one that is likely to be spiked with jarring corrections.
"We're knocking on the door of a bull market, which could run a year or two and take us perhaps as high as the old highs," said John Bollinger, head of Bollinger Capital Management in Manhattan Beach.
Analysts at market research firm Bespoke Investment Group said Thursday's rally helped cement the view that "the current uptrend is for real." Still, with the market up for five straight weeks, they advised clients to wait for a pullback before buying in.
The Dow raced ahead 246.27 points, or 3.1%, to 8,083.38, its best close since Feb. 9. The financial markets are closed today in observance of Good Friday.
The Standard & Poor's 500 index leaped 31.40 points, or 3.8%, to 856.46. The S&P is up 26.6% since its March 9 low, though it remains down 5.2% for the year and 45.3% from its record high in October 2007.
The Nasdaq composite index advanced 61.88 points, or 3.9%, to 1,652.54.
Overseas, stocks rose 3.1% in Germany, 3.7% in Japan and 3% in Hong Kong.
In the U.S., banking shares led the way, with the S&P 500's financial index powering ahead 15.5%. Wells Fargo shares rocketed $4.72, or 31.7%, to close at $19.61. The San Francisco bank expects to release full quarterly financial results April 22.
In a press release about its preliminary results, Wells Fargo went out of its way to point out that it "continued to extend significant amounts of credit to U.S. taxpayers in first quarter 2009."
That stirred hope among investors that a loosening of bank-credit spigots would help to propel the economy out of recession.
