Banks and lenders rose after strong new-home sales data. The irony of the recent market selloff, which was motivated by fears, is that it pushed safe-haven Treasurys up, bringing down mortgage yields and likely driving a wave of home buying and refinancing, said Quincy Krosby, market strategist at Prudential Financial.

About 25 euro-zone banks failed the European Central Bank's stress tests, The Wall Street Journal reported. Of these banks, only 11 or 12 still have additional capital needs. While French and German banks have received the all-clear, some banks from the third-largest eurozone economy, Italy, reportedly failed the tests.

First Niagara Financial declined after the bank said an $800 million write-down pushed it into the red for the latest quarter. State Street rose after the trust bank posted quarterly profit ahead of the average analyst target. UniCredit SpA is in exclusive talks with a partnership made up of real estate group Prelios SpA and Fortess Investment to sell its debt-collection unit UCCMB and a portfolio of bad loans.

-Rob Curran, rob.curran@dowjones.com