Banking stocks continued to rebound from one of their rockiest weeks in months on Monday, rallying with the overall markets on positive news in the health-care and metals industries.
The KBW Bank Index rose 1.52%, to 43.31.
Gerald Sparrow, the chief investment officer of the Sparrow Growth Fund in St. Louis, said investor confidence in banks seems to be returning after a big selloff last week after Bank of America Corp. and Citigroup Inc. raised capital.
The KBW index dipped to 41.70 on Thursday as investors worried about which company would be next to raise money in order repay their federal aid.
"It appears that the nervousness that was occurring last week is starting to subside a little bit," Sparrow said. "Most financial services stocks traded up today. It's been my experience that the last 10 trading days of the year have been positive for the markets."
Relatively little news pertained to the financial services industry Monday, which may have been an advantage for banking stocks, he said.
Meanwhile, shares in major health-care companies rose after Congress decided to delay a new tax by a year in its health-care overhaul legislation. The overall markets were buoyed after Morgan Stanley recommended investors buy the blue-chip aluminum producer Alcoa Inc. on speculation that metals prices will rise.
The Dow Jones Industrial Average rose 0.83%, and the S&P 500 Index 1.05%.
Large banks had a good day.
JPMorgan Chase & Co. rose 2.32%; Bank of America Corp., 1.66%; Wells Fargo & Co., 2.09%, and Citigroup Inc. 2 cents a share, to close at $3.42.
Among regional banks M&T Bank Corp. rose 1.39%; BB&T Corp., 1.37%; Fifth Third Bancorp, 3.67%; KeyCorp, 2.88%; U.S. Bancorp, 2.96%, and PNC Financial Services Group Inc., 0.48%.