Updated from 2:45 p.m. ET with market close information.

NEW YORK ( TheStreet) -- Bank stocks strengthened and led the broad market much higher on Wednesday, after Senate leaders announced a deal to resume full federal government services and avert a U.S. default on debt payments, at least until Feb. 7.

Following the continued failure of the Republican leadership of the House of Representatives to negotiate an agreement with the Democrat-led Senate and to end the partial shutdown of the federal government and raise the federal debt ceiling above the current limit of $16.7 billion, Senate Majority Leader Harry Reid (D., Nev.) announced on the Senate floor that he and Senate Minority Leader Mitch McConnell (R., Ky.) had agreed on compromise legislation.

"As part of our agreement -- and in order to assure Congress continues the work of setting this country on a path to fiscal sustainability -- this legislation instructs leaders to name conferees to a budget conference committee," Reid said. He went on to say that members of the conference committee " must have open minds willing to consider every option, no matter how painful to their own political party. This conference committee, led by Chairman Murray and Chairman Ryan, which will produce its negotiated budget resolution in December, is the appropriate place to discuss our differing views of the best way to chart a course for economic growth."

Reid went on to say the legislation "also funds the government "through January 15 and averts default through February 7, during which time we can work towards a long-term budget agreement that prevents these frequent crises. And perhaps most importantly, this legislation ends a standoff that ground the work of Washington to a halt this fall."

McConnell also spoke on the Senate floor, saying he was "confident that we'll be able to announce that we're protecting the government spending reductions that both parties agreed to under the Budget Control Act BCA, and that the President signed into law.

"That's been a top priority for me and my Republican colleagues throughout this debate. And it's been worth the effort," McConnell said.

"Throughout this debate, the public has been rightly focused on Obamacare -- for good reason," McConnell said. "This law is ravaging our economy, killing jobs, driving up premiums, and driving people off the health care plans they have and like, in droves. Its disastrous rollout is sign of even worse things to come. And the Democrat refusal to delay it reflects a stubborn ideological obsession that will do untold damage to our country. And Republicans remain determined to repeal this terrible law."

"But for today, the relief we hope for is to reopen the government, avoid default, and protect the historic cuts we achieved under the BCA," McConnell concluded. "This is far less than many of us had hoped for. But it's far better than what some had sought."

The Senate's legislation will next be sent to the House of Representatives, after which it may be sent back to the Senate with demands for changes.

The Dow Jones Industrial Average and S&P 500 ( SPX.X) ended with gains of 1.4%, while the NASDAQ Composite advanced by 1.2%. The KBW Bank Index ( I:BKX) rose over 2% to 64.70, with all 24 index components showing gains, except for Bank of New York Mellon ( BK), which was down slightly to close at $30.78.

BNY Mellon early on Wednesday reported a 7% sequential decline in revenue for the third quarter, although the company also reported operating earnings of 60 cents a share, which came in ahead of the consensus 58-cent estimate among analysts polled by Thomson Reuters.

Shares of JPMorgan Chase ( JPM) rose 3.3% to close at $54.05, after the nation's largest bank entered into a $100 million settlement with the Commodities Futures Trading Commission springing from last year's "London Whale" hedge trading losses.

Bank of America's ( BAC) stock was up over 2% to close at $14.56, after the company reported third-quarter earnings of $2.5 billion, or 20 cents a share, coming in slightly behind the consensus EPS estimate of 21 cents.

Bank of America continued the trend of weak third-quarter trading revenue for major U.S. banks, and also reported a rise in legal expenses.

Please see the links below for extensive coverage of the flurry of bank earnings announcements on Wednesday.


-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.