In an otherwise muted market, five bank stocks held their own and even advanced Tuesday on positive initial recommendations from J.P. Morgan Securities analyst Catherine Murray.
CCB Financial Corp. was up 0.60%, to $52.065, while BB&T Corp. was unchanged, at $34. First Tennessee Corp. rose 2.91%, to $38.25; First Virginia Banks 1.84%, to $48.3125; and Union Planters Corp. 2.02%, to $41.125.
Financial stocks were otherwise mixed as investors awaited this morning's release of the May consumer price index, seen as a key factor in a possible interest rate hike by the Federal Reserve.
Ms. Murray rated First Tennessee a "buy," saying it should continue outperforming the S&P regional bank index and the general market, "given its prospects for robust 13% earnings per share growth in 1999 and 2000, led by noninterest income growth of 16%."
Union Planters, also rated a "buy," has "significant upside potential as the company regains its business focus and integrates acquisitions, and its earnings stage a rebound, the analyst said. Both First Tennessee and Union Planters are based in Memphis.
Rating CCB Financial a "market performer," Ms. Murray said the Durham, N.C., company "has an enviable market position in one of the most dynamic areas in the country, with economic growth that exceeds national averages."
BB&T Corp., based in Winston-Salem, N.C., is also rated a "market performer." The analyst said the stock is fully valued in light of earnings prospects and will remain "a buyer not a seller for the next year" in the merger arena.
She also rated First Virginia Banks, based in Falls Church, a "market performer," saying the company has a strong balance sheet with high asset quality and capital levels."
But, she added, First Virginia shares are a bit overvalued because of expected below-sector earnings-per-share growth and an acquisition premium that she feels is unlikely to stick.
For the day, the Standard & Poor's bank index rose 0.80%, and the blue- chip Dow Jones industrial average 0.30%. The Nasdaq bank index added 0.28%, and the broad market S&P 500 index 0.55%.
Buyers returned cautiously to the market after several days of declines. "The stocks look like the market has discounted a 25-basis-point increase" by the Fed when it meets June 29-30, said Anthony J. Polini, research director at Advest Inc.