Bank stocks rose Tuesday, outpacing broader markets on continued satisfaction over the financial reform accord.
"We're continuing the momentum we saw last week when financial legislation was agreed upon," said Erika Hill, a banking analyst at Pacific Crest Securities in Portland, Ore.
The bank group was also helped by strength in the bond market, as yields headed moderately lower, said Andrew Collins, a banking analyst at ING Barings LLC in New York.
The American Banker index of the 50 largest U.S. banks rose 0.41%, and the American Banker 225 added 1.15%. The Dow Jones industrial average was down 0.63%, and the S&P 500 0.47%.
Still, analysts said there were potentially dampening forces in the offing.
There is risk as the Nov. 16 meeting of the Federal Open Market Committee nears, Ms. Hill said. If the policymaking Federal Reserve panel raises interest rates, banks and thrifts "could get knocked down," she added.
To glean hints of what the Federal Reserve might do, equity and credit markets focused on a speech Tuesday morning by Alan Greenspan, the Fed's chairman. But his speech, which focused on the outlook for mortgage lending, gave no indication of his intentions for the coming meeting.
Speaking at a mortgage industry conference, Mr. Greenspan discussed the buildup of wealth from capital gains on home sales.
Among the nation's largest banks, Chase Manhattan Corp. rose 12.5 cents, or 0.15%, to $83.6875; Citigroup Inc., 31.25 cents, or 0.59%, to $53.6875; and J.P. Morgan & Co., 68.75 cents, or 0.52%, to $131.9375.
Regional banking companies also showed strength. First Union Corp. gained 56.25 cents, or 1.33%, to $42.8125, and FleetBoston Financial Corp.,68.75 cents, or 1.64%, to $42.625.