Banking stocks rose sharply Friday as better-than-expected unemployment numbers signaled that the industry's ample credit problems may ease.
The KBW Bank Index rose 2.49%.
The overall markets were buoyed by the Labor Department's report that the February unemployment rate held steady at 9.7%, with just 36,000 jobs lost. Economists contacted by Thomson Reuters had been expecting 50,000 jobs to have disappeared.
Unemployment trends figure strongly into determining how much money banks are likely to lose on delinquent consumer and business loans.
"A lot of the cyclical stocks, which include the banking space, have responded nicely today," said Gerald Sparrow, the president and chief investment officer of Sparrow Capital Management Inc. "People will be able to pay back their loans — the certainty of getting your money back increases when people have a job."
Growth in temporary workers last month was a good sign, he said, that employers will start adding full-time employees soon.
The Dow Jones industrial average rose 1.17%, and the S&P 500 index 1.4%.
Most large and midsize bank stocks closed higher.
Bank of America Corp. rose 1.83%; JPMorgan Chase & Co., 2.12%; Wells Fargo & Co., 2.53%, and Citigroup Inc., 7 cents a share, to $3.50.
Among regional banking companies, PNC Financial Services Group Inc. was up 2.53%; Regions Financial Corp., 2.55%; U.S. Bancorp, 1.86%; Fifth Third Bancorp, 2.24%, and SunTrust Banks Inc., 2.79%.
