Gains in the largest bank stocks helped pull the KBW Bank Index up 3.11% Thursday after the hedge fund manager John Paulson disclosed late Wednesday that he had bought stakes in a number of companies, including Bank of America Corp.
"That got people excited about some of the very large banks," said James Bradshaw, an analyst at Bridge City Capital LLC in Portland, Ore.
B of A rose 6.7%. Other gainers included JPMorgan Chase & Co., which rose 1.6%, Wells Fargo & Co., 2.6%, PNC Financial Services Group Inc., 3.4%, U.S. Bancorp, 2.4% and Citigroup Inc., 8 cents, to $4.06.
Among the regionals, SunTrust Banks Inc. rose 6%, BB&T Corp., 0.4%, Capital One Financial Corp., 4.5%, Marshall & Ilsley Corp., 5.9% and Regions Financial Corp., 38 cents, to $5.20.
However, a host of community bank stocks fell after a congressional panel overseeing the government's bailout program Wednesday raised further capital concerns for the industry should credit quality worsen, particularly in commercial real estate, Bradshaw said.
The broader markets struggled to stay in positive territory Thursday because of mixed economic reports. The Dow Jones industrial average closed up 0.39% and the Standard & Poor's 500 closed up 0.69%.
The Commerce Department said businesses reduced their inventories by 1.1% in June; economists on average had expected had expected a decline of 0.9%. Meanwhile, the Labor Department said initial unemployment claims for the week that ended Aug. 8 rose 0.7% from the prior week, to 558,000. Analysts on average had expected new claims to drop to 545,000.
