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. 

 

Tracking the bailout

NEW YORK (CNNMoney.com) -- Stocks surged Tuesday, recharging the rally that gave the Dow Jones industrial average its first month of gains after six straight declines. But all three major gauges declined in the first quarter.

On Tuesday, the Dow Jones industrial average (INDU) rose 87 points, or 1.2%. The S&P 500 (SPX) index gained 10 points, or 1.3%. The Nasdaq composite (COMP) rose 27 points, or 1.8%.

All three major gauges had posted bigger gains through the late afternoon, but the advance lost some steam near the close.

Stocks fell for the previous two sessions as worries about the auto and bank sectors caused a selloff. Prior to that, stocks had gained more than 20% as the Dow and S&P 500 bounced off 12-year lows. The gains were sparked by optimism that the economy is closer to stabilizing.

Up until the last few minutes of trade, the Dow had been on track to see its best March since 1928. But some late selling left the blue-chip indicator with a monthly gain of just 7.7% - the best since March 2002. The S&P 500 gained 8.5% in March, its best since March 2000.

The Nasdaq gained 10.9%, its best March ever, going back to its inception in 1971.

Year-to-date, the Dow is down 13.3%, making the first quarter its worst since 1939, according to Dow Jones. For the quarter and year-to-date, the S&P 500 is down 11.7% and the Nasdaq is off 3%.

Part of Tuesday's advance was a certain quarter-end dynamic, which tends to bring in portfolio managers who want to put some cash to work at the end of the three-month period.

But the advance through most of March also reflects a shift in sentiment in Washington and beyond, said Larry Glazer, managing director at Mayflower Advisors.

"The government has become more supportive of the stock market," he said. "It's the idea that what's good for Wall Street is good for Main Street."

He said that Treasury's plan to buy up bad bank assets, announced last week, was significant. Also helping was the fact that the government was at least removing some of the uncertainty around the future of GM and Chrysler, even if investors remain wary of a potential bankruptcy.

But most important for investors recently, Glazer said, has been the Fed move to buy up billions in long-term Treasurys, which is lowering interest rates, as well as the still relatively low energy prices.

Both of these developments are giving consumers "a little more breathing room and allowing them to participate in the economy," Glazer said. "It's a positive for stocks that the alternatives for cash are so negative."

Wednesday preview: The morning brings reports on employment, manufacturing, housing, construction spending and oil inventories. March sales from the nation's automakers are due throughout the day.

Standouts include the February pending home sales index, which is expected to show no change after having fallen 7.7% in the previous month.

Private-sector employers are expected to have cut 663,000 from their payrolls in March after cutting 697,000 jobs in February. The report from payroll services firm ADP is closely watched ahead of Friday's monthly employment report from the government.

On the move: Stock gains were broad-based, with 23 of 30 Dow stocks rising.

Dow gainers included IBM (IBM, Fortune 500), Chevron (CVX, Fortune 500), McDonald's (MCD, Fortune 500), 3M (MMM, Fortune 500), Microsoft (MSFT, Fortune 500) and Alcoa (AA, Fortune 500).

The Dow's financial components spiked too, continuing the recovery off multi-year lows. Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500) and JPMorgan Chase (JPM, Fortune 500) all gained.

General Motors (GM, Fortune 500) slumped 28%. On Monday, the Obama administration rejected turnaround plans from GM and Chrysler, saying a bigger overhaul is needed if they want more taxpayer money. As part of the revamp, GM CEO Rick Wagoner was asked to step down. Late Monday, Obama appointed an auto czar to focus on the industry's woes.

Market breadth was positive. On the New York Stock Exchange, winners topped losers three to one on volume of 1.65 billion shares. On the Nasdaq, advancers beat decliners by over two to one on volume of 2.2 billion shares.

Economy: The S&P/Case-Shiller Home Price index fell a record 19% in January from a year earlier, after falling a record 18.6% in December. The index is a measure of 20 major metropolitan areas.

The March consumer confidence index from the Conference Board rose to 26 from 25.3, missing forecasts for a rise to 28.

The Chicago PMI slipped to 31.4 in March from 34.2 in February, missing forecasts for a slight improvement to 34.3.

President Obama arrived in Europe for Thursday's G-20 meeting of leaders from the world's largest economies. The president is expected to address worries about some of the United States' policies and also push for greater financial regulation.

Bonds: Treasury prices rose, lowering the yield on the benchmark 10-year note to 2.68% from 2.71% Monday. Treasury prices and yields move in opposite directions.

Lending rates were mostly higher. The 3-month Libor rate dipped to 1.19% from 1.21% Monday, according to Bloomberg.com. The overnight Libor rate rose to 0.51% from 0.29% Monday. Libor is a bank-to-bank lending rate.

Other markets: In global trading, Asian markets ended higher with the exception of the Nikkei. European markets ended higher.

In currency trading, the dollar fell versus the euro and gained against the yen.

U.S. light crude oil for May delivery settled up $1.25 to $49.66 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery rose $7.30 to settle at $925 an ounce.

The Dow Jones industrial average (INDU) fell 254 points, or 3.3%. It was the biggest one-day point loss since March 5. The S&P 500 (SPX) index lost 28 points, or 3.5%. The Nasdaq composite (COMP) lost 43 points, or 2.8%.

"I think we would have had a selloff anyway, and it was made worse by the autos," said Scott Armiger, portfolio manager at Christiana Bank & Trust Company

The three major gauges had surged over 20% in less than three weeks on optimism that the economy is closer to stabilizing. After such a run, a retreat was not unexpected, analysts said.

"We had a nice 23% rally, a classic bear market rally, and then we hit resistance," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams.

He said stocks are bound to continue retreating when the earnings reporting period gets underway.

"Everyone knows the earnings will be terrible, but they want to hear from companies things are starting to look less terrible going forward," Rovelli said. "The problem is I don't think they are going to hear it."

Tuesday brings reports on consumer confidence, home prices and manufacturing in the Midwest.

Investors were also gearing up for the G-20 meeting of the world's biggest economies Thursday in London. President Obama is expected to address worries about some of the United States' policies and also push for greater financial regulation.

Autos: The Obama administration rejected General Motors' and Chrysler's turnaround plans, saying that a massive overhaul is needed for the companies to become viable and get more taxpayer money.

As part of the directive, GM CEO Rick Wagoner stepped down at the behest of the White House.

Armiger said that the firing of Wagoner was probably unnerving investors more than anything else.

"I don't think the market is reacting to the administration rejecting the recovery plans, but rather to the intrusion of the government into the private sector," Armiger said. "The government firing CEOs is concerning."

GM was given 60 days to come up with a better turnaround plan if it wants to receive more taxpayer money.

Chrysler was given 30 days to finish a deal with Fiat in order for the government to lend the company another $6 billion. On Monday afternoon, the automaker said that it now has a "framework" for a global alliance with Fiat, with the help of the U.S. Treasury.

Speaking Monday, President Obama said both companies need a fresh start to put their restructuring plans into play. "That may mean using our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger," he said.

GM said it has a strong preference to completing restructuring out of bankruptcy, Reuters reported. But worries that one of the two might have to declare bankruptcy dragged on the auto sector and broader market.

GM (GM, Fortune 500) shares fell 25%, Ford Motor (F, Fortune 500) lost 2.8%, Toyota Motor (TM) lost 3%. Chrysler is privately held.

President Obama also announced that the federal government will honor new warranties on cars bought from GM or Chrysler.

Financials: Treasury Secretary Tim Geithner said Sunday that the government has about $135 billion left to bail out banks. He left the door open on whether he'll ask Congress for more money.

Shares of Citigroup (C, Fortune 500), Bank of America (BAC, Fortune 500), Wells Fargo (WFC, Fortune 500) and JPMorgan Chase (JPM, Fortune 500) were among decliners.

An exception was Fifth Third Bancorp (FITB, Fortune 500), which rallied 5% on news that it is selling its payments processing business to Advent International for $561 million. Shares gained 5%.

Market breadth was negative. On the New York Stock Exchange, losers topped winners by almost 8 to 1 on volume of 1.51 billion shares. On the Nasdaq, decliners topped advancers by over 3 to 1 on volume of 2.06 billion shares.

Bonds: Treasury prices rallied, lowering the yield on the benchmark 10-year note to 2.71% from 2.76% Friday. Treasury prices and yields move in opposite directions.

Lending rates were little changed. The 3-month Libor rate fell to 1.21% from 1.22% Friday, according to Bloomberg.com. The overnight Libor rate rose to 0.29% from 0.28%. Libor is a bank-to-bank lending rate.

Other markets: In global trading, Asian markets ended lower and European markets tumbled in afternoon trading.

In currency trading, the dollar gained against the euro and fell against the yen.

U.S. light crude oil for May delivery settled down $3.97 to settle at $48.41 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $7.60 to settle at $917.70 an ounce.