Most big banks were pummeled by investors on Friday, but Comerica Inc. bucked the trend and sailed higher.
The Detroit banking company's stock jumped $2.187 to $71.562 on an announced buyback of 12 million shares.
"There's no company like Comerica in the market," said Anthony J. Polini, banking industry analyst at Advest Inc. "With below average valuation and growth prospects twice as good as the industry, this story shines on all fronts. It's our No. 1 pick."
Comerica, with second-quarter earnings per share of $1.16, bested analysts' consensus by 3 cents. It tallied a record revenue-to-expense ratio, and has attractive stock repurchase programs.
"Banks shouldn't lose sight of what investors are paying up for," said Michael T. Mayo of Credit Suisse First Boston Corp. "If banks don't find their own stock attractive then neither will investors."
Generally, however, banks and other stocks plunged on Friday in tandem with a weaker bond market. The wider-than-expected trade deficit and anticipation of Federal Reserve Chairman Alan Greenspan's semi-annual testimony before Congress on Tuesday were blamed for the jitters.
"If Mr. Greenspan said 1,500 points ago that the market had 'irrational exuberance,' then what do you have when the market is at 8,000 points?" asked Jay Suskind, head trader at Ryan, Beck & Co., West Orange, N.J., referring to the Dow Jones industrial average, which topped the 8,000 mark on Wednesday. "I would guess he wants to cool the market off."
The economy might be "purring" with low inflation, low interest rates and stable growth, "but many are fearful of huge market blow-off which could have implications for the rest of the economy," said Mr. Suskind.
Mr. Greenspan's comments on Tuesday before the Senate Banking Committee may give investors a tip as to his outlook on the economy and interest rates. Any hint of a rate increase could prompt a huge selloff of bank stocks.
On Friday the Commerce Department said the trade deficit widened more than expected to $10.23 billion in May from a revised $8.75 billion in April.
Bond prices dipped, with yields on the benchmark 30-year Treasury bond rising three basis points to 6.52%. They were still far lower, though, than the 6.7% of one month ago.
Though the Standard & Poor's bank index fell 9.34 points, or 1.65%, to 554.94, it fared slightly better than the S&P 500, which dropped 16.31 points, or 1.75%, to 915.30. The Dow Jones industrial average of 30 blue chip stocks skidded 130.31 points, or 1.62%, to 7,890.
"The banks are one of the leading performers in the market this year," said James Schutz, bank analyst, ABN AMRO First Chicago. "If the market comes down a little, so do the banks. We call that profit taking."
