The market was up Monday, but bank stocks were mixed.
Shares of trust and processing banking companies and consumer finance firms rose, but thrifts and many regional banks fell because of concerns about rising interest rates.
"The group lost momentum," said Brian D. Bertonazzi, the head of sales and trading at Sandler O'Neill & Partners LP.
Though investors sold shares of small and midcap banks, they snapped up certain large-cap banks with significant market-related business. The American Banker index of 225 banks closed up 0.8%, and most bank stock indexes also rose. The American Banker thrift index, however, fell 1.1%. The Standard & Poor's 500 was up 0.5%.
Mellon Financial Corp. rose 2.5%, State Street Corp. 2%, and Bank of New York Co. Inc. 1.8%. Capital One Financial Corp. of McLean, Va., rose 2.8%, and Metris Cos. Inc. of Minnetonka, Minn., slipped only 0.3% even though it disclosed Monday that it was subject to additional regulatory scrutiny.
Among the biggest losers were Riggs National Corp. of Washington (2.9%); New Century Financial Corp. of Irvine, Calif., (5.1%); and New York Community Bancorp Inc. of Westbury (2.4%).
Real estate investment trusts had a tough day. Keith Mills of UBS Securities LLC wrote that the group could decline as much as 15% during the next 12 months because of rising interest rates.
That pulled down the boutique investment bank Friedman, Billings, Ramsey Group Inc. of Arlington, Va. The firm has a sizable exposure to REITs, though analyst Richard Erin Caddell of Blaylock & Partners LP said investors tend to overemphasize that and overlook its fast-growing investment banking business.
Another worry for FBR investors was a Wall Street Journal report about a big underwriting customer, the subprime mortgage lender Novastar Financial Inc. The Journal said Novastar allegedly failed to comply with state licensing rules. FBR shares fell more than 11% Monday.
