Bank Stocks, Treasuries Down on Data Showing Strength in Economy

Bank stocks and Treasury bonds tumbled Tuesday, amid optimism over the economy.

The index in the monthly report of the National Association of Purchasing Management rose from 45.7% to 50.5%, much higher than analysts had expected. Economists say the 50% level suggests a "vibrant economy."

The rise lent strength to the view that the Federal Reserve will not lower interest rates again to revive the economy - a sentiment that depressed the price of Treasury bonds. Treasury bonds perform well in a low-rate environment.

Stock prices of banks, which are also considered rate-sensitive, also sank. The Standard & Poor's index of major banks slumped 0.62%, while the overall S&P declined 0.43%.

Chase Manhattan Corp. fell 75 cents to $52.875, after dropping $1.375 Monday. Rumors of an impending merger with Chemical Banking Corp. appeared to have cooled, at least temporarily.

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