Bank stocks rose for most of Monday on a host of encouraging economic news, but they faltered in afternoon trading to close down 0.53%.
The Institute for Supply Management said its index rose to 42.8 in May, from 40.1 in April. The institute concluded that U.S. manufacturing activity shrank at a slower pace last month.
The Commerce Department said Monday that construction spending rose 0.8% in April; economists on average had expected a 1.2% decline. In another report, the department said consumer spending fell by 0.1% in April; economists on average had expected a 0.2% decline.
The department also reported that the national savings rate rose to 5.7%. That increase "was a real positive for bank deposit growth, and it should also help margins," said James Bradshaw, an analyst at Bridge City Capital LLC in Portland, Ore.
Bank stocks fell in the afternoon as investors took profits, Bradshaw said.
JPMorgan Chase & Co. fell 2.1%, while Bank of America Corp. fell 0.5%. Wells Fargo & Co. fell 0.27%. U.S. Bancorp fell 1.6%. PNC Financial Services Group fell 2.7%. KeyCorp fell 5.2%, and Regions Financial Corp. fell 20 cents, to $3.99.
Citigroup Inc. fell 3 cents, to $3.69. Dow Jones said it was dumping the New York company's stock from the Dow Jones industrial average, because the government was set to own more than a third of the New York company. It will be replaced by Travelers Cos. Inc., which Citi spun off in 2002.
SunTrust Banks Inc. rose 4.8%. The Atlanta company said Monday that it would raise $1.4 billion in a stock offering to help it meet the $2.2 billion capital-raising requirement set by the government as a result of its stress test. SunTrust suspended its earlier $1.25 billion "at the market" offer.
Zions Bancorp.'s shares rose 3.9%. The Salt Lake City said it would raise $250 million in an "at the market" offering of common stock. A portion of the proceeds would be used to buy back up to 4 million depository shares. Zions also said it would exchange some outstanding subordinated notes for new notes, with the remaining balance subject to conversion to preferred stock.
The Dow Jones industrial average rose 2.6%, and the Standard & Poor's 500 rose 2.58%.
