What happened

The stock market started the week on a high note. As of 3:30 p.m. EDT Monday, both the Dow Jones Industrial Average and S&P 500 indexes are up by about 6%.

Bank stocks were rising along with the overall market, and in some cases, by even more. JPMorgan Chase (NYSE:JPM) was up by 5%, both Bank of America (NYSE:BAC) and Goldman Sachs (NYSE:GS) were higher by 6%, and Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) were the standouts, both with 8% gains for the day.

Bank teller greeting a customer.

Image source: Getty Images.

So what

The reason for today's market rally is that we're finally starting to get some good news regarding the coronavirus outbreak. We've certainly had some good news in recent weeks on the economic front, such as the CARES Act stimulus package. But the headlines involving the virus itself have been universally bad for some time now.

Over this past weekend, however, the new infection numbers and death rates in European hotspots like Italy started to noticeably trend downward. And on Sunday, New York State reported its first daily decline in COVID-19 deaths since the state's outbreak began. We're far from being out of the woods, but these are the first real indicators that the tide may be starting to turn.

Now what

To be perfectly clear, these bank stocks are still a long way off their highs, and the financial sector has been one of the worst-performing parts of the market in the coronavirus crash. Interest rates are still near all-time lows, which puts pressure on bank profit margins. And a U.S. recession is likely to keep loan demand low and result in elevated loan delinquencies for the time being.

The COVID-19 pandemic and resulting recession are certainly going to be negative catalysts for banks. However, the recent news is giving investors hope that the tough times might not last quite as long as originally feared.