Updated from 4:22 p.m. EDT

Stocks in New York enjoyed outsized gains Tuesday, rocketing ahead more than 5%, with financials leading the ascent.

The Dow Jones Industrial Average rose 379.44 points, or 5.8%, to 6926.49, and the S&P 500 moved higher by 43.07 points, or 6.4%, to 719.60. The Nasdaq was up 89.64 points, or 7.1%, to 1358.28.

"Of course we're in an oversold condition, but it's too early to say this is a bottom," says Peter Cardillo, chief market economist at Avalon Partners. "We can say it's a breath of fresh air."

All of the Dow's components gained. Shares of Bank of America ( BAC) and Citigroup ( C) added 27.7% and 38.1%, respectively, while JP Morgan Chase ( JPM) rose 22.6%. Financials in general got a bounce, with the KBW Banking Index rising 15.6%.

Citigroup chief Vikram Pandit offered some early reassurance to investors and the market, saying the bank has had a strong start to 2009. Nonetheless, U.S. officials are reportedly examining what new steps they might need to take to stabilize Citi if conditions worsen for the bank, according to a Wall Street Journal report, which called the talks "contingency planning."

The Treasury Department already has a 36% stake in the troubled U.S. bank, which dipped below $1 a share briefly last week.

"Pandit's comments are very encouraging," says Kenneth Roberts, a principal at Harbor Lights Financial. "But we're still in for a long, hard road."

The remarks came just before Federal Reserve Chairman Ben Bernanke spoke before the Council on Foreign Relations on the oversight of U.S. banks. Bernanke said the financial regulatory system on the whole must be overhauled, rather than simply focusing on individual troubled companies.

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