Bolstered by a strengthening dollar, bank stocks staged a late rally Wednesday.
After slumping for most of the day, 14 of the top 25 banks wound up on the plus side, though some of the gains were narrow.
"It's mostly a nickel-and-dime scenario," said Frank Barkocy of Advest Inc.
The overall market also rallied late, with the Dow Jones industrial average closing at 3,290.3 1, up 24.05 points.
Big Block of Fleet Traded
A block of 6.25 million shares of Fleet Financial Group Inc. changed hands late in the day, as the Providence, R.I., bank company topped the New York Stock Exchange's most active list.
A spokesman for Fleet said the sale of the block, equal to 5.1 % of Fleet's outstanding shares, appeared to be related to a dividend play. Today is the record date to be eligible for Fleet's quarterly dividend, and investors were buying shares. Fleet closed at $28, up 75 cents.
Analysts and traders said little market support is expected in advance of the long Labor Day weekend, particularly with the federal government's report on employment in August due out on Friday.
Performance Tied to Dollar
Banks have recently behaved as highly interest-rate-sensitive stocks tied to the fortunes of the dollar. Many observers believe the greenback's recent decline rules out further interest rate cuts by the Federal Reserve to stimulate the U.S. economy.
The dollar gained strength late Wednesday after setting another new postwar low against the mark. In late afternoon trading, the greenback was at 1.3915 marks in New York.
Among money-center banks, J.P. Morgan & Co. was unchanged at $59.50, while Citicorp was up 12.5 cents to $17 and Chemical Banking Corp. was ahead 37.5 cents to $33.625.
Among superregionals, Nationsbank Corp., a weak performer in recent sessions, was up $1.25 to $44.75. But nearly all banks in this group were down, including Norwest Corp., which fell 50 cents to $36.625, among the largest losses among big banks on Wednesday.
Budget Crisis Eased
California's two biggest banks got a boost from news that the long state budget crisis has been solved - at least temporarily. Bankamerica Corp. was up 87.5 cents to $44.125, while Wells Fargo & Co. was up $1.125 to $69.50.
Gov. Pete Wilson signed a compromise $57.6 billion state financing plan, ending a 64-day deadlock. The measure slashed school spending and made deep cuts across state government to close a $10.7 billion shortfall.
Lacking reserve funds, the state issued promissory notes to employees and some vendors during the nonbudget period. BankAmerica and Welis Fargo first accepted the scrip but later declined.
First Interstate Bancorp, the state's third-largest bank, made a point of accepting the notes and used them as a marketing ploy to snare business from competitors. With that effort now over, its stock slipped 25 cents to $37 on Wednesday.
Analysts warn that California business climate remains poor. "By most measures, California continues to be in deep recession" said Campbell K. Chaney of Sutro & Co., San Francisco.