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By: CNBC.com | 10 Mar 2009 | 02:24 PM ET
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Stocks were still up sharply on renewed confidence about the financial sector as some of the group's most battered names surged.

The rally was sparked by Citigroup [C  Loading...      ()   ] CEO Vikram Pandit, who said that the bank was profitable in the first two months of the year.  He also said he is confident about its capital strength.

Similarly, shares of Bank of America [BAC  Loading...      ()   ] rallied following a report that the company would emerge successfully from the credit crisis.

Major U.S. Indexes
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Stocks are on pace for their biggest gaines since Nov. 24.

Some market pros, however, are skeptical that the banking sector—or the market itself—is turning the corner.

Stocks also gained after Rep. Barney Frank, chairman of the House Financial Services Committee, said the uptick rule would be reimposed soon. The uptick rule bars investors from shorting a stock unless the last price change was higher. The rule helps prevent short-sellers from piling on a stock and driving it lower to make a profit.

HSBC [HBC  Loading...      ()   ] enjoyed a bounce after hitting its lowest level since 1995 on Monday. More volatility was expected as investors position themselves ahead of the bank's $17.7 billion rights issue.

Shares of Capital One [COF  Loading...      ()   ] continued their rise, a day after the credit card company announced it was cutting its dividend 87 percent.

Shares also rose for CNBC.com-parent General Electric [GE  Loading...      ()   ] after the conglomerate said it was selling $8 billion in debt.

Federal Reserve Chairman Ben Bernanke offered some encouraging words to the market.

The Fed chairman said the U.S. and other financial regulators must impose strict rules to help detect and prevent another financial crisis like this one.

"We must have a strategy that regulates the financial system as a whole, in a holistic way, not just its individual components,'' he said in remarks prepared for delivery to the Council on Foreign Relations.

He also laid out some key elements of such an overhaul, including legislation from Congress to spell out how to handle the failure of a large financial institution in an orderly way.

Meanwhile, the SEC has no plans to suspend mark-to-market accounting rules, Reuters reported.

Mark-to-market accounting rules have forced banks to make huge write-downs to assets and there had been some buzz in the market that if the rules were suspended, stocks could explode because it would take a lot of pressure off of banks. A House hearing on the matter is scheduled for Thursday.

But David Lutz, a trader at Stifel Nicolaus, said this was expected.

“This is nothing new from the rhetoric that we had from Fed Governor Lockhart when he said specifically they’re not going to suspend mark to market," Lutz said. Today’s news "does carry some weight obviously. It’s all headline risk out there now because everyone is so underweight and short this sector.”

Of the Dow 30 stocks, only McDonald's [MCD  Loading...      ()   ] was lower after the fast-food giant said the global economic slowdown was catching up to its business.

Outside of financials, DuPont [DD  Loading...      ()   ] led gainers on the index.

Rohm &  Haas [ROH  Loading...      ()   ] gained after a deal was finalized for its acquisition by Dow Chemical [DOW  Loading...      ()   ]. The deal is expected to close by April 1 under terms similar to the $78 a share price agreed to in July. Dow Chemical shares slumped 8.7 percent.

United Technologies [UTX  Loading...      ()   ] announced plans to elminate 11,600 jobs from its payrolls, cut its stock buyback in half and slashed its 2009 outlook.

In tech land, Texas Instruments [TXN  Loading...      ()   ] narrowed its first-quarter forecast as the chip maker looks to tighten its belt with plant closings and inventory reductions to weather the slump in demand.

Asian stocks were mainly higher, except for the Nikkei which closed slightly lower, while in Europe all the major indexes were in the green in morning trading after the Citigroup news.

Market breadth was sharply positive. Advancers beat decliners more than 11 to 1 on the New York Stock Exchange on solid volume of 1.1 billion shares approaching 2 pm.

This Week:

TUESDAY: Fed's Bernanke speaks; wholesale trade; Earnings from J. Crew, Kroger, Hovnanian; Senate hearing on investor protection, market regulation
WEDNESDAY: Weekly mortgage applications; weekly crude inventories; Fed budget; Earnings from American Eagle, Nat Semi, Neiman Marcus, Staples; House panel meets on mortgage-lending reform
THURSDAY: Retail sales; weekly jobless claims; business inventories; Earnings from Smithfield foods
FRIDAY: International trade; import/export prices; consumer sentiment; Geithner to attend G20 meeting in UK.

© 2012 CNBC.com
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