Though the unemployment rate hit its highest point in 26 years, bank stocks and the broader markets rose Friday because fewer than expected jobs were cut in August.

The KBW Bank Index rose 1.39% but ended the week down 4.8%. The Dow Jones industrial average rose 1.03% and the Standard & Poor's 500 rose 1.31%.

The Labor Department said the unemployment rate rose to 9.7% in August; economists had expected 9.4%. However, employers cut 216,000 jobs in August, lower than the 225,000 that had economists on average had expected. In July, 276,000 jobs were lost.

Economists at Wells Fargo Securities wrote in a note Friday that there were "two distinct" pictures drawn from July's figures: manufacturing and construction jobs remain weak, while job gains were reported for health care and education.

"The overall unemployment rate now exceeds the peaks of prior cycles and this is increasingly concentrated in less-educated and teenage workers — both with a lack of competitive skills," the economists wrote.

JPMorgan Chase & Co. rose 0.6%, Bank of America Corp. rose 1.5%, PNC Financial Services Group Inc. rose 1.2%, U.S. Bancorp rose 2.4% and Citigroup Inc. rose 8 cents, to $4.85.

Wells Fargo & Co.'s shares were unchanged from Thursday's close of $26.91.

Among the regionals, Comerica Inc. rose 1.1%, Fifth Third Bancorp rose 1.4%, Zions Bancorp. rose 2.1%, Regions Financial Corp. rose 5.7%, SunTrust Banks Inc. rose 0.2%, Capital One Financial Corp. rose 1.1%, BB&T Corp. rose 0.5% and M&T Bank Corp. rose 0.1%.

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