Bank stocks and the broader markets fluctuated during most of Friday's trading session on mixed economic news but ended the week on a positive note.
The KBW Bank Index climbed 1.91% for the day and 4.88% for the week.
The Dow Jones industrial average rose 1.15% Friday, and the Standard & Poor's 500 rose 1.36%.
The Commerce Department said Friday that the gross domestic product dropped at an annual rate of 5.7% in the first quarter; economists on average had expected a 6.1% decline.
Also Friday, the Institute for Supply Management-Chicago Inc. said its index of Midwest manufacturing activity dropped to 34.9 in May, from 40.1 in April.
Investors were encouraged by a positive report from the Reuters/University of Michigan Surveys of Consumers, whose index rose to 68.7 in May, from 65.1 in April. Economists on average had expected a May reading of 68.0.
Scott Anderson, a senior economist at Wells Fargo & Co., wrote in a note Friday that stocks have been soaring in recent weeks, because the economy seems to be improving and the banking crisis has eased. However, he also expressed concern that the rise in 10-year Treasury note yields could signal the end of the recovery party.
"Certainly, rising long-term Treasury yields have the potential to wilt the green shoots that have emerged in many corners of the economy, housing and credit markets," Anderson wrote. "Most importantly, it has the potential to cancel out the Fed's effort to lower the cost of borrowing for consumers and businesses across a broad spectrum of loans and bonds."
JPMorgan Chase & Co. rose 0.7%, while Wells Fargo rose 3%. PNC Financial Services Group Inc. rose 4.3%. U.S. Bancorp increased 1.5%. M&T Bank Corp. rose 3.6%. Comerica Inc. rose 3.7%. Marshall & Ilsley Corp. rose 3.6%. Regions Financial Corp. climbed 17 cents, to $4.19, and Citigroup Inc. rose 5 cents, to $3.72.
Bank of America Corp. fell 0.3%, while KeyCorp fell 0.4%. Huntington Bancshares Inc. dropped 11 cents, to $3.92, and Colonial BancGroup Inc. dropped 5 cents, to $1.30.