Profit taking pushed bank stocks lower Friday, though the broad market gauges rose fairly strongly.

"This is a classic case of pure profit-taking," said Adam Lewis, vice president and trader at Keefe, Bruyette & Woods Inc. "It has been gangbusters" for bank stocks since last week's positive economic reports.

One example of why stocks fell late Friday was a downgrading of Wachovia Corp. by Susan L. Roth, an analyst at Donaldson, Lufkin & Jenrette in New York. Ms. Roth said she downgraded the stock to "market perform" from "buy" because the Winston-Salem, N.C., banking company had reached her $88 price target.

Earlier in the day, banks stocks showed little change, but late in the afternoon they began falling. The American Banker index of the 50 largest banking companies fell 0.4%, and the American Banker 225 was barely changed at down 0.03%.

Meanwhile, the Dow Jones Industrial Average was up 1%, and the Standard & Poor's 500 index rose 1.5%.

Despite the late decline, some analysts remained bullish.

"Strong fundamentals will lift those equities from their current levels," said Catherine Murray, an analyst at J.P. Morgan & Co. "The fundamentals are still solid."

Friday's bank stock performance was especially puzzling because on Thursday evening Alan Greenspan, chairman of the Federal Reserve System, implied that the Fed was unlikely to raise interest rates at the Nov. 16 meeting of the Federal Open Market Committee.

His remarks followed sparkling government reports earlier in the week on employment costs, growth of gross national product, and the GDP price deflator, an inflation gauge. All were positive, showing a vibrant economy with inflation well under control.

Bank stocks soared 10% for the week.

Ms. Murray said she expected bank stocks to pull back some, but predicted that "over the next 12 months we expect them to be above these levels."

Many market watchers echo Ms. Murray's point that technical factors suggest good news for bank stocks down the road. With their price/earnings multiples trading at a 55% discount to the Standard & Poor's 500, banks could move up to a ceiling of 65%, she said. "Banks are moving up from an oversold position."

"The watch lists for banks have very few names on them," Ms. Murray said. But she threw in a caveat: "As long as we are talking high GDP growth, we'll be talking about the Fed" possibly raising rates.

In Friday trading, most big banks declined: Wachovia down $1.50, or 1.7%, to $86.25; Chase Manhattan Corp. down $1.1875, or 1.3%, to $87.375.; J. P. Morgan & Co., down $1.1875, or 0.9%, to $130.875, and Wells Fargo & Co., down $1.1875, or 2.4%, to $47.875.

Also, American Express Co. fell $7, or 4.4%, to $154.

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