A bleak employment report hurt many bank stocks Friday, but Wells Fargo & Co. rose 6% on news that it plans to slash its dividend.
The KBW Bank Index and the broader markets rose in early trading but fell after the Labor Department said the February unemployment rate rose 40 basis points from January, to 8.1%.
"The jobs report wasn't much of a surprise, but there's more uncertainty in the market," said Matthew Shields, a trader at FIG Partners LLC.
In late afternoon trading, stocks began to rebound as investors picked up bargains.
The KBW Bank Index closed down 1.85% for the day and 22.93% for the week. The Dow Jones industrial average gained 0.49% Friday, and the Standard & Poor's 500 rose 0.12%.
Wells Fargo & Co. slashed its dividend 85%, to 5 cents a share, so it could save $5 billion of capital annually.
"People were happy about the dividend cut — it's one layer of uncertainty removed from the stock, finally," Shields said.
During Thursday's session Wells' stock fell as low as $7.80 a share, its lowest level since January 1997, but on Friday it closed at $8.61.
Wells also said that the integration of Wachovia Corp.'s operations is on track, and that it expects $2 billion of additional cost savings this year.
Citigroup Inc. rose in early trading but hovered around its Thursday closing price of $1.02 for most of the day. The stock rose a penny Friday, to $1.03.
Decliners included JPMorgan Chase & Co., which fell 4%, and Bank of America Corp., which fell 3 cents to $3.14. U.S. Bancorp fell 2.1%. State Street Corp. fell 6.9%, and Bank of New York Mellon Corp. fell 7.1%.
Zions Bancorp. fell 4.3%. James Abbott, an analyst at Friedman, Billings, Ramsey & Co. Inc., increased his full-year loss estimate Friday for the Salt Lake City company by nearly $4, to $6.60. He cut his earnings forecast for next year in half, to 80 cents. He cited higher securities impairment charges in Zions' trust-preferred securities portfolio.
SunTrust Banks Inc. fell 4.6%. The San Diego law firm Coughlin Stoia Geller Rudman & Robbins LLP said it had filed a class action accusing SunTrust and its directors of making false and misleading statements about the company's results and conditions from July 22 to Jan. 21.
As the Atlanta company's "true condition slowly came to light" after a number of writedowns, reserve increases and capital raises, SunTrust's stock price dropped from $59 to $14, the suit says.
Barry Koling, a SunTrust spokesman, said the lawsuit has no merit. "It looks like it's a predictable marketing ploy in this economic and stock market environment."
Hanmi Financial Corp. rose 7 cents, to 83 cents. The Los Angeles company said late Thursday that a March 2 article in the Los Angeles Business Journal was incorrect in saying regulators had issued a cease-and-desist order on Hanmi in recent months.