Worries over consumer demand were reflected in falling energy prices as US light, sweet crude
earlier dropped below $59 a barrel before settling at $59.59, down 20 cents.
Speaking during a live interview on CNBC, Whitney said legislative changes to the banking industry will lead to the "mother of all mortgage quarters" and boost stocks of some of the sector's biggest names.
"You don't want to be short these names," she said, mentioning Goldman Sachs specifically as a bank likely to post huge numbers.
Besides Goldman, the sector was led by Bank of America , which Whitney said was "bar none" the cheapest of banks compared to tangible market value.
Whitney's comments came as a slew of banking giants prepare to report earnings. Among those on tap this week include Golman, BofA, JPMorgan Chase and Citigroup.
The positive mood in the sector was not universal; CIT Group shares tumbled more than 20 percent as the commercial lender said it remains in discussions with regulators to improve its capital position.
Tech stocks also rebounded after a sluggish start that saw the Nasdaq fall more than 1 percent at one point. Dell and other computer stocks were laggards, but online marketplaces Amazon and eBay pushed the index higher.
Trading was volatile, but postive stocks momentum after rough early going looked to change the market's losing streak that has seen the major averages lose about 5 percent since the official start of summer.
The Dow Jones US Banks Index was about 3.4 percent higher at 11 am, but it was insurers who were benefitting even more. The Dow Full Line Insurance index rose nearly 8 percent.
Also in banking, UBS shares rose on word that the Swiss bank and the U.S. are negotiating on a possible settlement of their tax dispute. The U.S. has been seeking to force UBS to reveal the identities of 52,000 U.S. account holders suspected of using Swiss bank accounts to dodge taxes.
As talk of a possible second stimulus package continues to circulate, President Obama is urging patience with the one already in place. In a weekend op-ed in the Washington Post, the president said the plan must be given time to work, and that it was always designed as a two-year program.