Bank stocks followed the market higher Tuesday as investors awaited today's interest rate decision by the Federal Open Market Committee.
The Standard & Poor's index of major banks rose 0.84%, while the S&P 500 rose 0.94%. Unexpectedly weak retail sales in December buoyed bonds, because investors think the Fed may cut rates on signs of economic weakness. That same expectation boosted stocks.
Among the top gainers was Norwest Corp., which Monday announced it would buy Prudential Insurance Co.'s mortgage unit. Its shares rose $1.50 Tuesday, to $34.
Crestar Financial Corp. shares rose $1.75, to $57.50, after Morgan Stanley & Co. analyst Dennis Shea initiated coverage on the stock with an "outperform" rating.
He also resumed coverage of Fleet Financial Group with a "neutral" rating. Its stock gained 12.5 cents to $39.625.
Mr. Shea had dropped coverage while Morgan Stanley advised Shawmut National Corp. in its merger with Fleet.
Keefe, Bruyette & Woods Inc. analyst David Berry downgraded Chase Manhattan Corp. and Chemical Banking Corp. to "attractive," from "buy," and Bank of New York Co. to "hold," from "attractive." The downgradings were based on price.
Chase shares finished up $1, at $68.75, and Chemical's finished up 75 cents, at $66.75. Bank of New York Co. finished up 62.5 cents, at $50.875.