Bank stocks and the broader markets rose Monday on positive manufacturing news.

The KBW Bank Index rose 2.27%, the Dow Jones industrial average 1.25% and the Standard & Poor's 500 index 1.53%.

The Institute for Supply Management said its index of U.S. manufacturing activity rose to 48.9 in July, its highest level since August 2008 and higher than analysts on average had expected.

Anthony Polini, an analyst at Raymond James & Associates, wrote in a note Monday that the economic outlook continues to improve as second-quarter results indicate "we are moving toward the light."

"Although we expect the initial stages of recovery to be weak (particularly given persistently high levels of unemployment and a soft housing market), the environment could prove to be very opportunistic for the nation's healthier financial institutions," Polini wrote. "A pickup in economic activity, low competition, a steep yield curve and declining credit costs all bode well for banks that have their offensive games intact."

Bank of America Corp.'s shares rose 3.6% after the Charlotte company said that it had reshuffled its senior management team.

Separately, the Securities and Exchange Commission said Monday that it charged B of A with misleading investors about billions of dollars in bonuses that were being paid to Merrill Lynch & Co. executives at the time of B of A's purchase of the New York brokerage giant. B of A agreed to settle the SEC's charges and pay a penalty of $33 million.

Gainers went across the board. JPMorgan Chase & Co. rose 2.5%, Wells Fargo & Co. 5.5%, PNC Financial Services Group Inc. 3.6%, U.S. Bancorp 2.6% and Citigroup Inc. 1 cent, to $3.18 a share.

Among the regional banking companies, SunTrust Banks Inc. was up 2%, Capital One Financial Corp. 2.3%, BB&T Corp. 0.1%, Fifth Third Bancorp 1.4%, KeyCorp 11.3%, Comerica Inc. 5.4% and Zions Bancorp. 4.2%.

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