Stocks shot out of the gate Thursday as investors cheered a surprise earnings forecast from Wells Fargo.
Wells Fargo now expects earnings of 55 cents a share, including items, which is far higher that previous estimates of 26 cents a share.
Art Cashin, director of floor operations for UBS, said the market's response to the Wells Fargo forecast could be a good sign.
"[M]aybe we're beginning to turn the corner in the financials. Maybe things are getting better. Maybe some of the various government programs added some stability," Cashin told CNBC.
Still, Cashin remained cautious about the market outlook.
"I tend to think we might have a little bit of a false spring here," he said. "I'm going to remain a little bit skeptical on this particular leg of the move."
March chain-store sales were trickling in this morning and, while most reported a drop in sales as consumers focused on necessities, 54 percent beat expectations.
Wal-Mart delivered mixed results: Same-store sales rose 1.4 percent, excluding fuel costs, missing the 3.2-percent increase expected. But the discount giant surprised with its outlook, saying it expects sales for the quarter ending May 1 will be "around the high end" of its forecast of a 1 percent to 3 percent rise.
It also predicted earnings will be "toward the high end" of its February guidance of 72 cents a share to 77 cents a share.
Wal-Mart shares dropped about 5 percent.
Warehouse chain Costco missed expectations. Investors are hoping to see signs of improvement from the beleaguered retail market that has been hit hard as consumers retreat from spending.
Stocks eked out a slight gainin the previous session, with technology stocks leading the way, as speculation mounted that the government would extend TARP funds to insurers as well as banks.
Banking shares were mostly higher Thursday following a New York Times report that the nation's largest financial institutions will probably pass their government stress tests, but could still need bailout money.
Citigroup and Bank of America gained.
Asian stocks ended their trading week with strong gains across the board, with technology shares leading the rally. The positive sentiment continued into European trading.
Also in Asia, Japan unveiled its stimulus package to the tune of $154 billion, or 3.1 percent of the country’s GDP. The bulk of the package is expected to be funded by new government debt.
Meanwhile, the earnings outlook for Morgan Stanley came under question by a report from the Wall Street Journal. The investment bank is expected to suffer a writedown of between $1.2 billion and $1.7 billion on the value of its bonds, the paper said citing people familiar with the matter.
Warren Buffett's Berkshire Hathaway also received a potential blow, but in the form of a ratings downgrade from Moody's. Buffett’s company no longer has the top level of investment grade rating.
In economic news, jobless claims dropped by 20,000 to 654,000 last week, though continuing claims hit another record.
"It does appear ever so slightly that we have hit a peak. The numbers are stabilizing around 650,000, but things are still really bad," T.J. Marta, chief market strategist of Marta on the Markets, told Reuters. "I'm still very pessimistic about the prospects of any enduring recovery," he said.
Meanwhile, the trade deficit shrank 28 percent to $25.97 billion in February, the smallest deficit since 1999. Import prices rose 0.5 percent in March, the first increase in eight months. Export prices fell 0.6 percent.
And in the U.K, the Bank of England held its key lending rate steady as it contemplates more quantitative easing.
Still to Come:
THURSDAY: Chain-store sales; Lawrence Summers speaks; Bond market closes at 2pm; Preliminary results from Chevron after the bell
FRIDAY: All U.S. financial markets closed for Good Friday
Send comments to email@example.com.