Bank stocks have rallied for the last four weeks, but some analysts said investors are missing warning signs of trouble in store.

Economic uncertainty, declining asset quality, and high stock prices have the potential to douse enthusiasm for the financial sector. Rising 7.83% in the past four weeks, the American Banker index of 225 banks was virtually flat Friday, dipping 0.02%, and its index of the top 50 banks rose 0.75% even as the broader market sold off. The Standard & Poor’s 500 index fell 1.89% Friday and is down 3.05% for the last four weeks. The Nasdaq composite lost 5% on weakness in technology shares. An attack on Iraq by U.S. warplanes Friday may have contributed to the slide.

Gerard S. Cassidy, an analyst at Tucker Anthony Capital Markets in Portland, Maine, said he has some doubt that a widely anticipated economic rebound will come as quickly as midsummer. If the economy continues to grow slowly, stocks with high multiples are in particular danger, he said.

PNC Financial Service Group in Pittsburgh and State Street Corp. in Boston are two such stocks, he said. Both are well-run companies with a heavy emphasis on fee-driven businesses. Nevertheless, people are likely to become more cautious not only in buying durable goods but also in allocating parts of their income to mutual funds and stocks, he said, and they are likely to pay down debt instead. This could dampen revenues from processing activities, he argued.

PNC and State Street are currently trading at 16.73 and 29.04 times earnings, respectively. On Friday, PNC was up 2.43%, to $73.88, and State Street fell 0.47%, to $104.90.

Some other analysts are more positive about the outlook for bank stocks. Andrew Collins of ING Barings wrote in a report Friday that earnings per share should grow 10% this year, mainly due to more stable net interest margins, improved efficiency, and a turnaround in capital markets activities. Ruchi Madan at Salomon Smith Barney was also bullish on the sector and predicted a 10% to 15% gain for the group.

Mr. Cassidy said he is also concerned about the southern banking companies, mainly because of their large construction loan portfolios. He said the South may have overestimated demand for commercial real estate and could soon face problems similar to those that slammed New England in the late 1980s.

David Stumpf of A.G. Edwards & Sons published a cautious report Feb. 9. “Quite frankly, the magnitude and breadth of the bank stock recovery have come as a bit of a surprise to us,” he wrote, “as investors have shown an amazing resiliency to bad news.”

“Loan growth has remained relatively robust, but the interest spreads on those new credits have not,” he wrote.

Now loan growth might even slow down as corporations follow consumers and pay down their debt instead of taking out new loans. Lower origination volume would increase the ratio of nonperforming loans to total loans, even if the dollar amount of bad credit is well below historic levels, Mr. Cassidy said. That would put additional pressure on earnings and valuations.

Mr. Cassidy makes Mercantile Bankshares of Baltimore a top pick, and Mr. Stumpf recommends BB&T Corp. On Friday, BB&T was up 1.14%, to $37.18, and Mercantile fell 0.16%, to $40.

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