Financial stocks had a turnaround Friday, and while it was just a partial recovery from a dismal week, some strategists were encouraged.

The American Banker index of the top 50 banks rose 5%, after falling 5.3% the previous week, and its 225-bank index rose 6.16%. The Standard & Poor’s 500 was also up 3.33%, as was the Nasdaq, 7.87%.

“We did see signs of panic selling,” said Francois Trahan, a sector strategist at Brown Brothers Harriman. He pointed out, however, that major banks’ stocks probably will not face a sustained threat from lower-than-expected earnings mainly in the technology and retail sectors — which precipitated stock slides in almost all sectors in recent past weeks.

“Financials are led by long-term interest rates,” Mr. Trahan said, and because his firm expects a cut in interest rates this year, “financials are the place to be.”

Charles H. Blood, director of financial market strategies at Brown Brothers, wrote that a major recovery — not just for financials — is at hand: “The stock market is on the verge of making an important low,” he wrote on Wednesday. He raised his six-month outlook on the market to “strongly bullish” from “moderately bullish.”

Lawrence Kudlow, chief U.S. strategist and chief U.S. economist ING Barings, offered a similar outlook for the market as a whole Wednesday, saying there is no recession in sight. In a conference call Wednesday he said he expects interest rates as well as inflation to hold steady.

Not everyone was so upbeat. Sung Won Sohn, chief economist at Wells Fargo & Co., said that “the recent setbacks in equities might dampen retail sales in the future” and that falling share prices could contribute to slow economic growth.

Retail prices had jumped 0.9% in September, and on Friday the Labor Department said prices paid to U.S. producers rose by that same amount. Under normal conditions such information would weaken stocks, Mr. Sohn said, because it indicates stronger-than-expected economic growth and runs counter to the soft-landing scenario. But Friday’s investors were bargain-hunting, he said, and that gave the market a brief break.

“We will see the correction continue,” Mr. Sohn said.

Meanwhile, F&M National Corp. of Winchester, Va., and Fort Worth-based Americredit benefited from new “buy” ratings.

Bryce Rowe, an analyst at Anderson & Strudwick Inc., wrote in his research report that F&M “has the ability to produce a diversified stream of income through its trust subsidiary, its financial service subsidiary, its mortgage subsidiaries, and its insurance services subsidiaries.” He expects F&M to post earnings per share of $1.90 this year and $2 for 2001. F&M rose 6.25 cents, or 0.27%, to $23.375 Friday.

Joel J. Houck, an analyst at A.G. Edwards & Sons Inc., gave Americredit his top rating because the bank’s “information-based approach and proprietary risk management tools are sustainable competitive advantages,” he wrote in his report. “We find the valuation of [Americredit] compelling.” Americredit rose $3.0625, or 12.93%, to $26.75.

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