Stocks recharge rally

After a brief sputter at the open, stocks recharged the two-day rally Thursday, with a smaller-than-expected drop in retail sales and strength in bank and drugmaker shares fueling the run.

Investors also sent GE higher, despite news that it lost its top credit rating in a S&P downgrade.

The Dow Jones industrial average (INDU) gained 103 points, added 12 points, or 1.6%. The Nasdaq composite (COMP) gained 14 points, or 1%

The Nasdaq rallied Wednesday and the Dow eked out a gain, managing a two-day win streak for the first time in five weeks. Stocks initially slipped Thursday morning, before making a move higher in the late morning.

Also in the mix: Bernard Madoff, one of Wall Street's biggest swindlers, entered a guilty plea on 11 charges. (Full story)

Economy: February retail sales fell 0.1% after falling a revised 1.8% in the previous month, the Commerce Department reported Thursday. Sales were expected to have fallen 0.5%, according to a consensus of economists surveyed by Briefing.com.

Sales excluding volatile autos rose 0.7% versus a revised 1.6% in January. Economists thought sales would fall 0.1%.

Another government report showed that the number of Americans filing new claims for unemployment last week rose to 654,000 from a revised 645,000 the previous week. The number of Americans continuing to receive benefits rose to a record 5.3 million.

General Electric: Standard & Poor's downgraded GE and GE Capital's long-term credit ratings to AA+ from AAA, with a "stable" outlook. But Wall Street had been speculating that one of the major ratings agencies might issue a downgrade, and the stock had already slumped in anticipation of an announcement. GE shares rallied 8% Thursday.
0:00 /5:32Turn banks into utilities

Financials: Bank stocks were mostly higher, with Bank of America (BAC, Fortune 500), Wells Fargo (WFC, Fortune 500) and Morgan Stanley (MS, Fortune 500) all rising. The KBW Bank (BKW) sector index rose 3%.

The bank sector drove a bigger stock market advance Tuesday after regulators said they may reinstate the "uptick rule" that stops short sellers from driving a floundering stock lower. Critics say the absence of the rule has played a role in the steep selloff of bank stocks this year.

Stocks also got a boost Tuesday after Citigroup (C, Fortune 500) cooled some worries about its future by saying it was profitable in the first two months of the year.

Also in focus: Thursday's congressional hearing on mark-to-market accounting. Critics say the accounting rule has hurt the bank sector by forcing companies to write down bad assets at fire sale prices. Supporters say it provides a clear picture of the assets banks are holding.

In other financial news, mortgage lender Freddie Mac, now under federal conservatorship, reported its sixth straight quarterly loss late Wednesday and asked the government for another $30.8 billion.

Drugmakers: Swiss company Roche Holding said it's buying the remaining 44% of U.S. biotech Genentech it doesn't already own. The $46.8 billion deal ends an almost 8-month battle in which Genentech (DNA) repeatedly spurned Roche's offer.

Biotech Gilead Sciences (GILD) said it will buy drugmaker CV Therapeutics (CVTX) for $1.4 billion. CV shares jumped 28%, while Gilead shares fell 2%.

Pfizer (PFE, Fortune 500) said that a late-stage clinical trial of its cancer drug Sutent has been stopped early after the drug produced a significant benefit in patients with a rare form of cancer. Shares of the Dow component jumped 4.5%.

Bonds: Treasury prices inched higher, lowering the yield on the benchmark 10-year note to 3.01% from 3.02% Wednesday. Treasury prices and yields move in opposite directions.

Lending rates were little changed. The 3-month Libor rate eased to 1.32% from 1.33%, while the overnight Libor rate held at 0.33%, according to Bloomberg.com. Libor is a bank-to-bank lending rate.

Other markets: In global trading, most Asian markets ended higher, with the exception of the Japanese Nikkei. European markets were mixed in afternoon trading.

In currency trading, the dollar gained versus the euro and fell against the yen.

U.S. light crude oil for April delivery gained $1.73 to $44.06 a barrel on the New York Mercantile Exchange.

COMEX gold for April delivery rose $14.30 to $925 an ounce.