Bank stocks rose Monday on positive economic news and analyst upgrades.
The KBW Bank Index fell into negative territory in the afternoon as investors took profits, but rebounded to close up 0.90%.
The Institute for Supply Management said its manufacturing index was 55.7 in October, higher than the 53 that economists on average had predicted.
Meanwhile, the National Association of Realtors' index of pending home sales in September rose 6.1% from August, to 110.1. Economists on average had expected the index to remain at 103.8.
The Commerce Department said construction spending rose 0.8% in September. Economists on average had expected a gain of 0.3%.
James Bradshaw, an analyst at Bridge City Capital LLC in Portland, Ore., said bank stocks benefited most from the positive home sales data. They may be finally able to unload property they received after foreclosure on loans, or work through real estate loans that have not yet defaulted, he said.
"The real estate pending sales suggests that the miserable inventory that banks have may be starting to ease," Bradshaw said.
Sandler O'Neill & Partners LP analysts upgraded U.S. Bancorp's stock to "buy," from "hold," BB&T Corp.'s stock to "hold," from "sell" and SunTrust Banks Inc.'s stock to "buy," from "hold." U.S. Bancorp's shares rose 2.7%, BB&T's shares rose 4.8% and SunTrust's shares rose 4%.
Other gainers included JPMorgan Chase & Co., which rose 1.9%, Bank of America Corp., 0.3%, Wells Fargo & Co., 0.3, PNC Financial Services Group Inc., 4%, KeyCorp., 3%, Capital One Financial Corp., 4.6% and Fifth Third Bancorp, 3%.
Decliners included Comerica Inc., which fell 0.4%, Zions Bancorp., 0.8%, Marshall & Ilsley Corp., 1.9% and Regions Financial Corp., which fell 6 cents, to $4.78.
Citigroup Inc.'s shares fell 10 cents, to $3.99, dropping below $4 for the first time since August. Rochdale Securities analyst Richard Bove said news media reports casting the New York banking company as "too big to fail" persist. "It is no longer in that rarified group," he wrote. "In reality, Citigroup does not exist any longer."
The Dow Jones industrial average rose 0.79%, and the Standard & Poor's 500 rose 0.65%.