Banking stocks rebounded along with the rest of the market Monday from last week's sharp selloff.

The KBW Bank Index closed up 2.84%, at 47.43.

The index slid about 3.29% last week as investors reacted to some negative financial reports concerning home sales and durable goods orders.

William D. Rutherford, who runs a private investment firm in Portland, Ore., described the lull as "healthy and constructive."

"It's good for the markets to have a little realism once in a while because we had such a run," he said. Monday's gains indicated "renewed optimism" about next month's earnings reports.

"I can't tell you whether the optimism is well-founded," he said. "The financials should be doing well. My Lord, they had so much help from the government and extremely low interest rates."

Investors may also have been heartened by steps world leaders said last weekend during the Group of 20 meeting in Pittsburgh that they would take to head off another financial crisis.

The Dow Jones Industrial average rose 1.28%, and the S&P 500 index 1.78%.

The largest banking companies ended the day on a high note. JPMorgan Chase & Co. rose 2.66%; Bank of America Corp., 3.73%; Wells Fargo & Co., 2.52%, and Citigroup Inc., 19 cents a share, to $4.57.

Gainers among the regional banking companies included U.S. Bancorp., up 1%; Northern Trust Corp., 1.86%; PNC Financial Services Group Inc., 2.78%, and BB&T Corp., 2.94%.

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