Bank shares moved into a holding pattern Tuesday while the stock market settled down from Monday's stormy session.
The Dow Jones industrial average fell 0.81 point to 3,178.19, with the market anticipating an easing of credit conditions today by the Federal Reserve.
Major bank companies' stocks were narrowly mixed. Analysts said a cut in short-term interest rates by the Fed has been expected since early last week and has been factored into bank share prices.
Aside from a selloff of Citicorp stock after president Richard Braddock's abrupt resignation late Monday, there was little activity in bank shares.
First Fidelity Bancorp. rose $1.25 a share, to $36.75, apparently lifted by its acquisition of Howard Savings Bank from the government Friday. Trading volume of 292,800 shares included a block of 90,000 moved by C.J. Lawrence.
Mellon Bank Corp. also gained $1.25 a share, to $44.125.
"There's some sense that the [bank] group carries very reasonable valuations and carries relative certainty as to near-term earnings prospects," said John A. Heffern of Alex. Brown & Sons.
Although bank stocks underperformed the Dow index in Monday's selloff, Mr. Heffern said the bank stocks he follows fared better than the broader market Monday and Tuesday.
Bank of New York Dips
After closing at a 52-week high of $45 Monday, shares of Bank of New York Co. slipped 50 cents, to $44.50. This had been a hot stock since last week, when Lawrence W. Cohn of Paine-Webber Inc. reiterated a buy recommendation.
After meeting with Bank of New York's management, Mr. Cohn raised his third-quarter earnings estimate to $1.05 per share, from 95 cents. He cited the company's growing processing business, profitable credit card portfolio, and improved credit quality.
Trading was relatively heavy in Chemical Banking Corp. stock, with more than 1.1 million shares changing hands. Chemical rose 12.5 cents a share, to $31.875.
After the summer selloff, several analysts had called Chemical shares a bargain in file $31-$32 price range.
A Sate Play
The most recent endorsement came last week from Christoph M. Kotowski of Oppenheimer & Co., who called Chemical stock a "heads-you-win, tails-you-don't-lose" play on quarterly earnings.
If Chemical shows progress in cutting expenses, the stock price could shoot up to the high $30's, Mr. Kotowski said. And even if earnings follow the second quarter's disappointing pattern, he said, the stock price should remain flat.