Smack in the middle of this big earnings-release week, which has thrown the rubbishy results of many a financial-services firm into sharp relief, the sector booked significant late-day gains on some much-needed positive news.

Taking its earnings-issuance turn on Wednesday was New York brokerage JPMorgan Chase ( JPM), which reported that its fourth-quarter profit plunged by 34.4% year over year to $2.97 billion, or 86 cents a share. Analysts polled by Thomson Financial were looking for a less severe drop to 92 cents a share. Weighing down JPMorgan's results, among other things, were $1.3 billion in writedowns from the eroding value of investments in collateralized debt obligations and other subprime-related assets.

This is all in sharp contrast with the modest year-on-year climb JPMorgan had eked out last quarter, since which the firm has been mostly viewed as one of the few clear-eyed survivors of the subprime fallout.

Still, these most recent financials reflect a bank that continues to weather the storm far better than most, especially as foundering firms like Merrill Lynch ( MER) and Citigroup ( C) -- the latter of which just reported a stunning $9.83 billion loss -- continue clambering for foreign cash.

JPMorgan shares were climbing $3.30, or 8.4%, to $42.47. For its part, Citi lost another 1.4% a day after announcing those miserable fourth-quarter results and swaths of new aid from overseas, though Merrill recovered to add 4.2% at $55.24 following yesterday's revelation of another big cash infusion .

Wells Fargo ( WFC) shares were also doing well after fourth-quarter income, at 41 cents a share, met the Wall Street consensus despite representing a 35.9% slide from a year earlier. Factoring in heavily here was a 27-cent credit-loss provision. Shares of the San Francisco bank climbed 2.7% to $27.20.

Elsewhere in positive territory, Northern Trust ( NTRS) lifted 4.1% to $72.61 after the Chicago bank said fourth-quarter operating earnings came to $219.2 million, or 97 cents a share, topping Street targets by 4 cents a share. That excludes 42 cents worth of expenses related to antitrust litigation against Visa, which consists of Northern Trust's share of a related settlement and a large fund for covering any future potential settlement costs.

Knight Capital's ( NITE) average daily trading volume nearly doubled to $15.34 billion worth vs. last year, spurring shares 21.4% higher, and fellow online broker Charles Schwab ( SCHW) eventually got into the green after earnings surged 29.7% to 26 cents a share. That's a penny under Wall Street views, so Schwab stock started out lower. Lately, however, shares were adding 1.9% at $22.89.

On the flip side, struggling financial guarantor Ambac ( ABK) was plummeting 34.5% after it predicted a fourth-quarter operating loss of up to $5.80 a share and said CEO Robert Genader is retiring. He'll be replaced by Michael Callen in the interim. In order to maintain its triple-A rating at Fitch, which demands certain capital levels, the New York-based company also plans on issuing at least $1 billion in equity and equity-linked securities, as well as slashing its dividend by two-thirds to 7 cents a share.

On top of all that, the mortgage-brutalized Ambac may also reinsure or issue debt securities in order to dump further cash into its reserves. Shares of the New York firm were falling $7.30 to $13.84 as a prominent peer, MBIA ( MBI), sank 13.5% to $13.89.

Elsewhere, Dutch bank ING ( ING) was cut to underperform at Bear Stearns, and California's PFF Bancorp ( PFB) got a downgrade to sell at B. Riley & Co. after saying its fiscal third-quarter loan-and-lease loss provision should be "comparable" to the prior quarter's $34 million figure. The former lost 1% to $37.38; the latter surrendered 17.7% to $8.52.

More broadly, however, the NYSE Financial Sector Index was leaping 1.4% to 7,750.25, and the KBW Bank Index was up 2.8% to 83.06.