The Dow soared triple digits and settled at four-month highs on Wednesday as Wall Street's biggest fears were soothed by new details about bank stress tests and another "less bad" economic report.

Today’s Markets

The Dow Jones Industrial Average jumped 101.63 points, or 1.21%, to 8512.28, the S&P 500 added 15.73 points, or 1.74%, to 919.53 and the Nasdaq Composite picked up 4.98 points, or 0.28%, to 1759.10. The consumer-friendly FOX 50 rose 11.35 points, or 1.71%, to 674.20.

“It’s a continuation of the strength that we’ve seen. The market has been able to shake off bad news when it occurs and rally on good news,” said Richard Sparks, senior equities analyst at Schaeffer’s Investment Research. “It’s a really good sign for the markets to be able to keep building on the current momentum.”

Wednesday's performance was powered by the financial sector, which rallied 8% as information about the results of the government's stress tests continued to seep out, easing insolvency fears. Bank stocks rose no matter if the reports indicated they need to raise a few billion dollars, $34 billion (see: Bank of America) or no money at all. 

“What everyone is clamoring for is information; good, bad or indifferent. We just want to take that uncertainty out,” said Anthony Conroy, head trader at BNY ConvergEx. “A lot of people think the banks don’t have as big of an issue as they once thought.”

Underscoring that point, the Dow was led higher by double-digit surges from Bank of America (BAC) and Citigroup (C). Disney (DIS) also rose 12% on its better-than-expected earnings report. On the downside, General Motors (GM) was the biggest loser on the Dow, sinking 10% on its plans to issue 60 billion new shares. 

The Nasdaq Composite, which has outperformed the broader indexes in 2009, lagged behind its sister indexes but managed to turn green thanks to a last second push.

Wednesday's rally is the latest in a string of gains that has sent the Dow 30% above its 12-year lows of March. In contrast to the doom and gloom that dominated the beginning of the year, the markets have been buoyed by economic reports that have been "less bad," offering signs of hope. 

Wall Street received another reason to be optimistic on Wednesday when the ADP private sector jobs report showed the U.S. lost 491,000 jobs in April, far less than the 650,000 jobs expected by economists and a big improvement from March's 708,000 job losses.

"We’ll take less bad as it’s the new good," Peter Boockvar, equity strategist at Miller Tabak, wrote in a note.

Traders hoping the report is a preview of Friday's Labor Department jobs report should note the ADP data has a mixed track record in predicting the more widely-followed government report.

Not Stressed

Banking stocks soared higher on Wednesday amid a string of reports about the stress tests results, which have been among Wall Street's worst kept secrets ahead of their official release Thursday afternoon.

The stress test results are “taking out some of the insolvency risk,” said Art Hogan, chief market strategist at Jefferies & Co. “We kind of know they’re not going out of business.”

BofA saw some of the strongest gains even though financial industry sources said regulators have told the nation's largest bank it needs to raise $34 billion, significantly more than the Street expected. If true, BofA must either tap the struggling private market or convert the government's preferred shares into common equity, a move that will increase U.S. ownership.

(Read Liz MacDonald's blog to learn more about what the shortfall means for BofA)

Meanwhile, Wells Fargo (WFC) requires $15 billion in new capital and Citigroup (C) needs $5 billion as a result of the stress tests, according to Bloomberg News. However, the tests reportedly show several financial companies have sufficient capital, including American Express (AXP), JPMorgan Chase (JPM), Goldman Sachs (GS), Morgan Stanley (MS) and MetLife (MET). 

In the commodity markets, crude oil jumped to a fresh 2009 high after the government said crude stockpiles rose last week by less than analysts expected. Crude settled at $56.34 per barrel, up $2.50. 

The rally in the energy market sent oil-related stocks like XTO Energy (XTO) and Occidental Petroleum (OXY) sharply higher. 

Corporate Movers

General Motors (GM) unveiled plans to swap up to 60 billion new shares with debt and do a 1-100 reverse stock split. Under the plan, the U.S. would be the majority shareholder in a new company, putting its membership in the Dow in serious jeopardy. Separately, French auto maker Renault is in talks about buying GM’s Saturn unit, The Wall Street Journal reported.

Ford Motor (F) said it will spend $550 million to convert an SUV plant in Michigan to produce a new generation of the Ford Focus that will be available globally next year and a battery-electric version by 2011.

Walt Disney (DIS) saw its shares jump a day after the entertainment giant beat the Street with an adjusted-profit of 43 cents per share. Disney said its quarterly profit slid 46% as attendance at its resorts fell by 50% from a year ago.

The New York Times Co. (NYT) has reached a tentative agreement with the largest union of the Boston Globe in an effort to avert the closure of New England’s largest daily paper, the Journal reported.

Amazon.com (AMZN) unveiled a new Kindle e-reader with a larger screen and a deal with three major textbook publishers. The online retailer also announced a test project with The New York Times, Boston Globe and Washington Post.

PepsiCo (PEP) raised its quarterly dividend by 6% to 45 cents a share.

Global Markets

European stocks also rallied as London's FTSE 100 jumped 1.37% to 4396.49 while Paris' CAC 40 rose 1.81% to 3283.51 and Germany's DAX gained 0.57% to 4880.71. 

In Asia, Hong Kong's Hang Seng jumped 2.46% to 16834.57 and China's Shanghai Composite rose 0.98% to 2592.52. Japan's stock exchange was closed for a national holiday.