YAHOO[BRIEFING.COM]: A bit of short-covering helped fuel a relief rally among stocks Wednesday. The S&P 500 closed 4.4% higher, but that still wasn't enough to offset the prior session's 5.3% drop.

Concerted leadership from the financial sector helped drive the rebound. The ascent by financials was partly triggered by the recognition that the sector was looking oversold, having lost more than 35% in the two weeks leading up to the open. Better-than-expected results from Northern Trust (NTRS 57.51, +13.58) and word that insiders were making big purchases at Bank of America (BAC 6.68, +1.58) also provided support.

Northern Trust reported fourth quarter earnings of $1.39 per share, which is $0.47 more than the $0.92 per share consensus estimate. Its shares responded by advancing 31%.

Bank of America saw its stock rebound 31% after regulatory reports revealed company directors purchased the stock in the prior session, which marked a multiyear low. CEO Ken Lewis purchased some 200,000 shares at prices ranging from $5.75 to $6.06 per share.

Shares of Bank of New York Mellon (BK 23.00, +4.24) registered strong gains after disclosing quarterly results that outshined State Street's (STT 17.07, +2.18) latest results, which were announced yesterday. Concerns regarding increased risks at State Street led Moody's to downgrade State Street's credit rating.

U.S. Bancorp (USB 16.09, +0.75) posted earnings of $0.15 per share, which failed to meet the $0.22 per share that Wall Street forecast. The stock traded in the red for much of the session, but managed to close with a gain.

U.S. Bancorp indicated during its conference call that earnings should be able to more than cover its dividend. However, if conditions become increasingly impaired, the company indicated it will not preserve the dividend.

Citigroup (C 3.67, +0.87), meanwhile, cut its quarterly dividend to $0.01 per share in connection with receiving TARP funds. The quarterly dividend was $0.16 per share.

Financials finished the session 14.6% higher. Their leadership helped rebuff a midmorning selling effort that took the broader market back to the neutral line. 

IBM (IBM 91.42, +9.44) provided leadership to all three major indices. IBM reported fourth quarter earnings of $3.28 per share, which is $0.25 better than the consensus estimate of $3.03 per share. IBM also expects 2009 earnings to be at least $9.20 per share, which is more than the $8.75 per share that Wall Street forecast.

IBM's strength helped the tech sector, which is the largest in the S&P 500, advance 5.4% this session.

Health care, currently the second largest sector in the S&P 500, advanced 2.2% with help from Abbott Labs (ABT 52.32, +3.12). Abbott reported in-line quarterly results and reaffirmed its outlook, which is also in-line with expectations.

All 10 economic sectors finished higher. Whether the bounce is sustainable will only be seen in time. Many market participants believe that the broader market will not begin staging a sustainable rally until financials stabilize. DJ30 +279.01 NASDAQ +66.21 NQ100 +4.3% R2K +5.3% SP400 +4.6% SP500 +35.02 NASDAQ Dec/Adv/Vol 693/2037/2.11 bln NYSE Dec/Adv/Vol 632/2462/1.74 bln