Bank stocks struggled to hold onto gains in early morning trading Tuesday and picked up steam in the afternoon to close on a strong note.
The KBW Bank Index closed up 6.11%. Bank stocks retreated both Friday and Monday, after posting their best performance in weeks through four straight days of gains last week.
"I think there's still a little bit of a tailwind because they had been down so much before and they are just so oversold," said Jeff Davis, the director of research at Howe Barnes Hoefer & Arnett Inc. "But give it a week, and maybe stocks will go down again, as a lot of investors are going to start thinking about first-quarter earnings, asset quality deterioration and capital levels."
Bank stocks were buoyed Tuesday when the Financial Accounting Standards Board released proposals designed to reduce the scale of other-than-temporary impairment charges and help institutions comply with mark-to-market accounting rules for illiquid assets.
The broader markets also struggled to remain in positive territory in the morning but rose in the afternoon. The Dow Jones industrial average closed up 2.48%, and the Standard & Poor's 500 index, 3.21%.
Gainers included Bank of America Corp., 1.5%; Citigroup Inc., up 18 cents, to $2.51; JPMorgan Chase & Co., 8.9%; Wells Fargo & Co., 7%; U.S. Bancorp, 5.4%; KeyCorp, 4.9%; PNC Financial Services Group Inc., 4.4%, and Zions Bancorp., 8.7%.
UCBH Holdings Inc.'s stock rose 9 cents, to $1.60. The $13.5 billion-asset San Francisco company revised its fourth-quarter earnings late Monday because of an additional $40 million provision for loan losses. The company's quarterly loss nearly doubled, to $82.9 million.
Members of Congress said Tuesday that they were urging the Internal Revenue Service to tax the $165 million in bonuses paid recently to managers in the London-based financial products division of American International Group Inc., which has accepted more than $170 billion in government bailout money, according to news reports. The White House shied away from endorsing any congressional proposal but reiterated that it is exploring "all remedies." AIG rose 13 cents, to 96 cents a share.
