The much-awaited 10,000 milestone reached this week by the Dow Jones industrial average did not raise the pulse rate of veteran bank stock investors.

Though bank stocks mostly fare better in a rising market, they do not necessarily follow the lead of the blue chips in the Dow index.

This year offers a dramatic illustration. The Dow is up 8.9% while the American Banker index of the nation's 225 largest bank stocks is nearly unchanged.

"So far, 1999 has not been a great year for investors unless you've been in the right half-dozen stocks," said Miles P.H. Seifert, chief investment officer of Gray, Seifert & Co., a unit of Legg Mason Inc.

"The banks have mostly been flat, but history has taught me that the first quarter is normally the worst part of any year for these stocks, while the second and fourth quarters are often quite good," he said.

"This year, many analysts seem not to have believed bank managements who say they have no earnings problems in 1999," he said. "As a result, a lot of fund managers are waiting for a look at first-quarter earnings results."

Stephen Berman of Stein Roe & Farnham, the investment adviser and manager, said banks have been off investors' radar screens during the recent run-up. "The market overall has been a narrow market, focused on a few of the bigger stocks, and that has hurt banks."

Mr. Seifert thinks bank stocks will again follow the typical pattern and do better as the year moves along, "assuming no major changes in the level of interest rates."

A longtime bull on the banking sector, he has stakes in 60 banks on behalf of clients, including Zions Bancorp., State Street Corp., SunTrust Banks Inc. and Marshall & Ilsley Corp.

Mr. Berman expects bank stocks to regain some momentum with the help of good second-half earnings and a resumption of stock repurchase efforts. An early, upside surprise could be better-than-anticipated first-quarter results from BankAmerica Corp., he said.

Over this decade, as the economy's record-setting expansion has continued, banks have tended to move upward along with the market in general and the Dow, but with notably more volatility.

Early in the decade banks often outperformed the Dow as their stock valuations snapped back from deep lows after the industry's credit quality crisis in 1989-90, the worst since the Great Depression.

In the second half of 1994, banks underperformed blue chips and the market overall as the Federal Reserve doubled short-term interest rates in a campaign to head off a resurgence of inflation.

Then, from 1995 through 1997, both banks and blue chips enjoyed huge gains in what some observers believe was the stock market's golden era.

Over the past year, banks have not tracked the Dow as closely. Indeed the valuation shifts of the two banks among the Dow's 30 average's "industrial" stocks-Citigroup Inc. and J.P. Morgan & Co.-show the different course the industry has taken.

After bouncing back impressively from last fall's lows, the Dow advanced 16.1% last year. It surely would have done even better had not Citigroup fallen 7.8% in value and Morgan dropped 6.9%.

But, notably, the Dow average's final push above the historic 10,000 mark is probably due in no small part to this year's catch-up gains by its banking components. So far this year, Citigroup is up 30% and Morgan is ahead 20%.

Morgan joined the Dow in June 1991. Citigroup gained membership through its predecessor company, Travelers Group, which was included in the list of 30 companies in March 1997.

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