Bank stocks and the broader markets rose Wednesday as investors picked up bargains after Tuesday's selloff.
The KBW Bank Index rose 1.86%, the Dow Jones industrial average 1.3%, and the Standard & Poor's 500 index 1.15%.
Economists at Wells Fargo Securities asserted in a note Wednesday that the recession ended around the middle of the year but that economic recovery would be sluggish, in part because of constrained consumer spending due to rising unemployment.
"The sluggish start to the economic recovery should allow the Federal Reserve to keep short-term interest rates on hold through the middle of next year," the economists wrote. "Once the risks of the economy backsliding have passed, the Fed will move quickly to bring the federal funds rate back to a neutral level."
On Wednesday afternoon, the Fed's Open Market Committee voted to keep the federal funds rate between zero and 0.25%, stating that economic activity is "leveling out."
Gainers were across the board.
JPMorgan Chase & Co. rose 2.4%, Bank of America Corp., 0.5%; Wells Fargo & Co., 1%; PNC Financial Services Group Inc., 0.9%, and Citigroup Inc., 29 cents a share, to $3.98.
Bank of New York Mellon Corp. rose 2.3% after it said it would buy Insight Investment Management Ltd. from Lloyds Banking Group PLC in London.
Among the regional banking companies, KeyCorp rose 4.6%, Fifth Third Bancorp, 4.6%; First Horizon National Corp., 1.4%; Marshall & Ilsley Corp., 1.6%, and Regions Financial Corp., 6 cents, to $4.82 a share.
Decliners included U.S. Bancorp, off 0.4%; SunTrust Banks Inc., 1.3%, and Zions Bancorp., 1.2%.
