Bank stocks rebounded Tuesday, a day after the House rejection of the government's bailout proposal sparked the sector's steepest one-day decline ever.

"Buyers came in today," said Joseph C. Morrissey, managing director of bank and thrift stock trading at Boenning & Scattergood Inc. of West Conshohocken, Pa. Following Monday's negative sentiment, bank investors appeared hopeful "of a deal getting done on Capitol Hill by Friday."

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