Bank stocks soared Tuesday as more regional firms announced investments by the Treasury Department and investors bargain-hunted ahead of an anticipated rate cut by the Federal Reserve Board.
The KBW Bank Index rose 13.01% after faltering Monday.
"Bank stocks were the hardest hit during the past couple of weeks, so they're the first to rebound," said Anthony Conroy, the head trader at Bank of New York Mellon Corp.'s BNY ConvergEx Group.
The broader market also soared Tuesday. The Dow Jones industrial average gained 10.88%, to close at 9,065.12, while the Standard & Poor's 500 rose 10.79%.
"People just got tired of the market going down," said Christopher Whalen, managing director at Lord, Whalen LLC's Institutional Risk Analytics.
Tuesday's gain was the Dow average's second-biggest in its history; it gained 936.42 points Oct. 13. Still, the average has declined 16.46% this month and 31.66% this year.
Stocks dipped for a time Tuesday morning after the Conference Board said its consumer confidence index fell to a record low of 38 this month, from 61.4 in September.
The news did not stop bargain-hunting for long, and stocks rose in anticipation of a rate cut by the Fed, which opened a two-day meeting in Washington. A 50-basis-point decline in the federal funds rate, to 1%, would bring the rate to its 2003 and 2004 levels.
Marshall & Ilsley Corp., Zions Bancorp. and Umpqua Holdings Corp. joined the list of companies saying they have received preliminary approval to participate in the Treasury's Capital Purchase Program. (See related
M&I's shares climbed 19.4% Tuesday. Zions gained 7.5%, and Umpqua climbed 21.1%.
Other companies that have reported investments by the federal government also rose Tuesday.
Bank of America Corp. rose 12.1%. Citigroup Inc. rose 14.3%. JPMorgan Chase & Co. rose 10.6%. PNC Financial Services Group Inc. climbed 11.6%. Regions Financial Corp. rose 16.6%. City National Corp. rose 5.8%. KeyCorp rose 19.6%. SunTrust Banks Inc. rose 12.9%. Fifth Third Bancorp jumped 27%. Comerica Inc. gained 10.5%, and Huntington Bancshares Inc. climbed 20%.
