Henny Ray Abrams/AP
Is this a rally?
Certainly, the markets' perpetual gloom seems to have brightened. Standard & Poor's cut General Electric's coveted AAA credit rating, but the company's stock soared 13 percent because the downgrade wasn't worse.
Bank of America's CEO, Kenneth Lewis, said the bank was profitable in January and February and wouldn't need more government money. His speech in Boston echoed similar bullish statements from the heads of Citigroup and JPMorgan Chase earlier this week. This time, traders seemed to believe them.
Banks boost market
Shares of the three banks jumped from 8 percent in Citi's case to 19 percent for Bank of America shares. The three companies helped power the overall stock market higher for the third straight day – the first time that's happened for the all three major indexes since January.
The Dow Jones Industrial Index rose 3.5 percent (239.66 points) to close at 7170.06. The S&P 500 index climbed 4.1 percent and closed at 750.74. The NASDAQ closed at 1426.10, up 4.0 percent.
Analysts hesitate to call this a rally because, as they're unfolding, rallies are hard to distinguish from bear-market bounces. But two things are clear: First, for the first time in a while, many traders are willing to discount bad news, like GE's downgrade and a 26-year high in the four-week average of initial claims for unemployment benefits. Second, there's some good news to report.
Bank of America's Mr. Lewis said his company wouldn't need more federal bailout money. General Motors said Thursday it wouldn't take a $2 billion government loan installment that it was scheduled to receive this month. Excluding auto sales, consumer spending rose an unexpected 0.7 percent, the Census Bureau reported.
At the very least, this represents a break from a relentless streak of bad news. The markets have noticed.