Wall Street last night sustained its best three-day rise in share for five months, but traders were divided over whether this was the green shoots of recovery or a "sucker's bounce" – the uplift that precedes a nose dive.

The Dow Jones industrial index rose nearly 240 points to close above 7,000 for the first time this month, encouraged by a number of factors.

General Motors, weathering the worst vehicle sales slump in a generation, said it had told the Obama administration it would not need a $2bn government loan it was due this month because its cost-cutting plan was taking hold.

Bank of America CEO Kenneth Lewis said he did not expect his company to need additional financial help from the government. While banks are under pressure, he said, they are not in "nearly as dire shape as some would have us believe".

And the government reported that retail sales, excluding motor vehicles, fell just 0.1% in February, far less than analysts were expecting. The US commerce department also revised January's figures to a gain of 1.8%, the best level in three years.

On the downside, the labor department said the number of people receiving unemployment benefit hit 5.3 million, the worst figure since 1967.

Most market analysts say they want to see many more days of encouraging news before calling an upturn – and do not expect that to happen for some months at best.

"It's way too early to say if this is the bottom," said John Kosar, president of Asbury Research in Chicago. "Over the course of several weeks, you want to see the market build a base. It's more important that the market holds here and maybe even churns here instead of it being something like a rocket shooting up."