Updated from 3:28 p.m. EDT

Banks and brokerages enjoyed a rally even as one insurer took a nosedive.

The overall market jumped while the NYSE Financial Sector index popped more than 6.3% to 2,582.16. The Dow Jones Industrial Index advanced 208.91 to 7,139.31.

It became official that the country's biggest bank, based on assets, is now Bank of America ( BAC). BofA jumped 15% in afternoon trading to $5.67. It also benefited from its Merrill Lynch brokerage arm's agreeing to a $7 million settlement with the SEC over charges that it gave day-traders access to confidential information, thus removing the uncertainty of the situation.

BofA CEO Ken Lewis said his bank was in better shape than Citigroup ( C), which is now the third-largest bank according to the report issued by SNL Financial. Citi shares gained 13 cents to sell at $1.67.

JPMorgan Chase ( JPM)came in at the No. 2 position on the report, although it is No. 1 in deposits. Shares of JPM increased 13.7% to $23.20.

Elsewhere, regional banks joined in the rally even though ratings agency Moody's said it was reviewing the bank financial strength ratings for 23 regional banks for a possible downgrade. It is also looking at the deposit and debt ratings of 17 banks in this group for downgrades. The KBW Bank Index ticked up 11.2% to 25.96.

The big winners in this group included KeyCorp ( KEY), which was up 13.23% to $7.96; SunTrust Banks ( STI), up 16.4% to $13.06; and Marshall & Ilsley ( MI), up 10.6% to $4.80.

Online broker E*Trade ( ETFC) tumbled 10% in early trading after a Citigroup analyst initiated coverage with a sell rating. It was recently flat at 66 cents.

This analysis comes on the heels of a Fox-Pitt Kelton analyst that suggested on Wednesday that his stress test revealed that E*Trade would need more capital.

Skittish investors initially took down the major online brokers with both TD Ameritrade ( AMTD)and Charles Schwab ( SCHW) losing slightly in early trading even though Citigroup initiating coverage on Schwab at buy and TD Ameritrade at hold. The stocks managed to reverse course and gain value in the afternoon. TD Ameritrade added 64 cents to trade at $12.79, and Schwab rose 71 cents to sell at $13.89.

But it wasn't all good for the financials.

Mortgage insurer MGIC ( MTG) plunged 30.7% to 86 cents after it filed an 8K with the SEC post-market close on Wednesday. In the filing, the company stated it was deferring interest payments that were due to paid on April 1. This triggered concern about the company's capital position, resulting in the selloff.

Fortunately, the rest of the insurers, with the exception of AIG ( AIG), managed to stay in positive territory for the day.