The Dow Jones Industrial Average shot up 246.11 points (3.14 percent) to finish at 8,083.22, breaching the psychological 8,000 level.

The tech-heavy Nasdaq composite leapt 61.88 points (3.89 percent) to 1,652.54 and the broad-market Standard & Poor's 500 index advanced 31.40 points (3.81 percent) to 856.56.

An hour before trading began, Wells Fargo said it expected a "record" net income of some US$3 billion for the first quarter, setting the pace for the rally on a holiday-shortened week. Yesterday was a market holiday.

Wells Fargo's projection widely topped market expectations, thanks in part to a better-than-expected performance by its newly acquired bank, Wachovia.

The news also came as a relief to investors looking for signs of improvement in the credit and lending markets.

It is "a hopeful sign that the (banking) sector is turning the corner from the worst of times," said Patrick O'Hare of Briefing.com.

"Investors, always concerned about the banks and whether they are beginning to recover, should get a boost today from Wells Fargo," said Frederic Dickson, chief market strategist of DA Davidson & Co.

Fresh economic data released Thursday also provided some market relief.

The U.S. trade deficit fell more than expected in February to a nine-year low as a prolonged recession sliced imports, the Commerce Department said Thursday.

The deficit dropped for the seventh consecutive month - by 28.3 percent to US$26 billion from a revised US$36.2 billion in January, the department said in its monthly trade report.

It was the lowest level since November 1999 and surprised most analysts who had expected the gap to shrink just to US$36.5 billion.

In addition, the government said Thursday that new jobless claims fell more than expected by three percent last week but still remained at a 26-year high amid the recession.

The Labor Department said initial claims for unemployment benefits fell to a seasonally adjusted 654,000 in the week ending April 4. The analyst consensus forecast was for 660,000 new claims.

Wells Fargo's rosy projections also seem to have diverted the market's broad attention from the less-than-expected sales increase by Wal-Mart, the world's largest retailer, which has been largely seen as recession-proof.

Its sales were up 1.4 percent versus expectations of most analysts of a 3.3 percent gain.

Wells Fargo jumped 31.70 percent to US$19.61 while Bank of America was up 35.27 percent to 9.55 and Citigroup by 12.59 percent to 3.04.

Wal-Mart was down 3.71 percent to US$50.66.