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Bank stocks jump 2%

Michael Nagle | Bloomberg | Getty Images

Bank stocks continued to build on Tuesday's gains and saw their best daily performance since August 5.

The SPDR S&P Bank ETF (KBE) and Regional Bank ETF (KRE) each gained nearly 2 percent on Wednesday.

SVB Financial Group continued to push the KBE higher, climbing 5 percent. Voya Financial and Texas Capital Bancshares also made large gains, surging nearly 5 percent and more than 3 percent, respectively.

Other large gainers pushing the KRE higher included Puerto Rico-based First Bancorp and California-based East West Bancorp, gaining 3.3 percent and 3.9 percent, respectively.

The Institute for Supply Management released encouraging data on economic activity in the services sector Wednesday. Its non-manufacturing index jumped to 57.1 in September from the previous month's 51.4. Earlier in the week, the institute released its manufacturing index of 51.5, signaling expansion, and beating estimates after the previous month's index of 49.4.

Analysts told CNBC the better-than-expected September data increases expectations for a rate hike by the Federal Reserve before the end of the year.

"I still don't think the Fed is going to move in November, but I think it does raise the odds for December," said David Kelly, chief global strategist at JPMorgan Funds.

Also supporting bank stocks was a Tuesday report from Bloomberg, citing unidentified euro zone central bank officials, that the European Central Bank will likely wind down bond purchases before the end of its asset purchase program. The ECB told CNBC, "The Governing Council has not discussed these topics, as President Mario Draghi said at the last press conference and during his recent testimony at the European Parliament."

— CNBC's Christine Wang, Fred Imbert and Gina Francolla contributed to this report.