* Banks jump on relief about stress test results
* Private-sector job losses lower than expected
* Dow up 1.2 pct; S&P 500 up 1.7 pct; Nasdaq up 0.3 pct
* For up-to-the-minute market news click []
(Adds Cisco's quarterly results, volume)
By Ellis Mnyandu
NEW YORK, May 6 (Reuters) - U.S. stocks rose on Wednesday
after a private-sector reading on the labor market signaled
unemployment may be receding and leaked bank stress test
results suggested most banks are healthier than previously
thought.
The number of U.S. private sector job losses in April
touched the lowest level since November, according to a report
by ADP Employer Services, the latest data suggesting the worst
of the recession may have passed.
The government is due to release stress test results on
Thursday. Several reports on the capital needs for 10 of the 19
banks under the government's microscope have revealed how well
the industry will cope with perhaps the most severe recession
since World War Two. For details, see []
The rally in bank stocks was widespread, with Citigroup
<C.N> jumping more than 16 percent to $3.86, Bank of America
<BAC.N> up 17.07 percent to $12.69 and JPMorgan <JPM.N>
gaining 7 percent to $37.22.
Concerns about the health of the banks were among the
factors that pushed the market to 12-year lows in early March
when many thought the government might be forced to nationalize
several big banks.
"In my mind, at least, it just means we're getting that
much closer to a resolution," said Phil Orlando, chief equity
market strategist at Federated Investors in New York.
"What this does is that it begins to give investors some
clarity that we are starting to separate the wheat from the
chaff. We know who's performing well and is potentially able to
(repay government bailout funds) and who still needs a little
bit of help and a little more restructuring," he said.
If three-fourths or even half of the banks pass the test,
then the government can focus on the few remaining banks that
need federal help, Orlando added.
The Dow Jones industrial average <> rose 101.63 points,
or 1.21 percent, to 8,512.28. The Standard & Poor's 500 Index
<.SPX> climbed 15.73 points, or 1.74 percent, to 919.53. The
Nasdaq Composite Index <> added 4.98 points, or 0.28
percent, to 1,759.10.
Since hitting a closing low in early March, the S&P 500 has
surged 36 percent, driven by optimism about the financial
system's condition and hopes the recession may be waning.
The S&P 500, however, is still down more than 41 percent
since its all-time high of 1,576.09 set on Oct. 11, 2007.
The KBW Bank index <.BKX> shot up 11.5 percent, while the
S&P financial index <.GSPF> climbed 8.1 percent.
The test results will cover 19 major U.S. financial
institutions. The Wall Street Journal reported that JPMorgan,
the No. 2 U.S. bank, does not need more capital under the U.S.
government stress test.
Other news reports suggested the capital shortfalls for
Citigroup and others might be less than expected.
The broader market also got a boost from energy shares,
which reacted to higher oil prices. U.S. crude <CLc1> soared
$2.50, or 4.64 percent, to settle at $56.34 a barrel, the
highest close since Nov. 14, 2008.
Among energy shares, Exxon Mobil <XOM.N> rose 1.4 percent
to $68.58, while Chevron Corp <CVX.N> climbed 3.6 percent to
$68.11.
On Nasdaq, Research In Motion <RIM.TO> <RIMM.O> was the top
gainer, rising 2.2 percent to $77.05, after JP Morgan upgraded
the BlackBerry maker's stock to "neutral" from "underweight."
After the bell, network equipment maker Cisco Systems Inc
<CSCO.O>, a tech bellwether, posted a smaller-than-expected
drop in quarterly revenue and profit beat Wall Street
forecasts, sending the stock up 4 percent in after-hours
trading.
The stock had ended in the regular session at $19.61.
Walt Disney Co <DIS.N> gave the Dow its biggest boost,
jumping 11.8 percent to $25.87, a day after the No. 1 U.S.
entertainment company posted a quarterly profit above Wall
Street's forecasts. Disney's results gave more support to views
that the economy may be stabilizing and consumers may be
regaining some confidence.
The ADP data fueled more hopes that the U.S. economy has
seen the worst, coming two days before the government's release
of the April nonfarm payrolls report.
Trading volume was active on the New York Stock Exchange,
with about 1.87 billion shares changing hands, above last
year's estimated daily average volume of 1.49 billion, while on
Nasdaq, about 3.01 billion shares traded, also above last
year's daily average of 2.28 billion.
Advancing stocks outnumbered declining ones by a ratio of
more than 7 to 3 on the NYSE, and by a ratio of about 5 to 4 on
Nasdaq.
