NEW YORK (MarketWatch) -- Stocks finally broke out of their doldrums Tuesday as hopes that banks were finding their feet took the Dow Jones Industrial Average up more than 375 points for its biggest gain since November.

Investors were encouraged on multiple fronts: assurances that the financial system was under improvement from U.S. Federal Reserve Board Chairman Ben Bernanke, word that Citigroup was profitable by one measure in the first two months of 2009 and hints at reinstatement of a short-selling restriction.

Still, similar sharp rallies in September, October and November turned out to be fleeting, and the market has still not had two gaining sessions since Feb. 5 and Feb. 6.

"This kind of broad-based move is encouraging, but the question becomes, will it be sustained? At this point, it certainly feels that way," said Gordon Charlop, managing director at Rosenblatt Securities.

Traders pointed to comments from U.S. Rep. Barney Frank, D-Mass., chairman of the House of Representatives' Financial Services Committee, who said he expects the "uptick rule" - used to require investors to wait until a company's stock rises before it could be sold short - to be restored within about one month.

If reintroduced, the rule will serve as a stabilizer of the market "because people can't pile on a stock all at once," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams. Still, the rule isn't going to prevent failing companies from going down under, Rovelli noted.

The Dow industrials closed up 379.44 points, or 5.8%, at 6926.49, marking its biggest percentage gain since Nov. 21 and closing at its highest level since Feb. 27.

Gains were paced by shares of Citigroup, which jumped 38% to $1.45 after Chief Executive Vikram Pandit, in an internal memo, said the company was profitable during the first two months of the year, before taxes and set-aside for problem loans. Also, Bank of America rose 28% to $4.79.

Fellow Dow component General Electric tacked on 20% to $8.87 as its finance arm sold $8 billion of guaranteed bank notes via the Federal Deposit Insurance Corp.'s Temporary Liquidity Guarantee Program, which helped reduce the cost of insuring debt.

Still, some uncertainty was showing in the credit markets as the cost to insure General Electric Capital Corp.'s senior bonds swung right back into distressed territory almost immediately after moving to more reasonable levels.

Fred Dickson, market strategist at D.A. Davidson, said that "until we get stability in the credit markets, I think we'll see little relief rallies and short-covering (in stocks), but don't see a sustainable rally."

Setting the tone for the session was Bernanke's speech to the Council on Foreign Relations, in which he said it was important to address the valuation of illiquid assets. He said he wouldn't support suspension of "mark to market" rules. Still, banks are looking for any leeway in accounting for illiquid - often called toxic - assets such as mortgage bonds, and investors in banks were encouraged by Bernanke's statement.

"Bernanke said the magic words, that the Fed was considering looking at accounting standards," Dickson said.

The Fed chairman also signaled it isn't too early to consider longer-term reforms including - in the U.S. - putting responsibility for addressing possible systemic risks with one authority, such as the Fed.

"The systemic risk regulator probably was not a surprise but it was the first time we heard that explicitly stated. I think the market was waiting for some kind of comprehensive policy statement from the Fed, and this is the closest we've come," Dickson said.

The broad Standard & Poor's 500 rose 43.07 points, or 6.37%, to 719.6, its highest close of the month and biggest gain since November. The Nasdaq Composite gained 89.64, or 7.07%, to 1358.28, its biggest gain since Oct. 28. The Financial Select Sector SPDR Fund, a basket of banks and lenders, closed up nearly 15% at 7.19.

On the economic data front, U.S. wholesalers cut inventories in January, but sales are falling faster than stock levels, suggesting a further drawdown is needed, perhaps weighing on the slumping economy even more.

Those economic fears weighed on some commodities: Oil futures closed 2.9% lower at $45.71 a barrel.