Bank stocks rallied Tuesday as investors bought shares to shore up their portfolios on the last day of the first quarter.
The KBW Bank Index rose 7.61% after sinking 10.29% Monday.
"There's trading in the names as the quarter closes, and there's some bargain hunting from the overreaction from the sell-off Monday," said Jacqueline Reeves, the managing director of Bell Rock Capital LLC.
The Financial Accounting Standards Board's scheduled vote Thursday to ease mark-to-market accounting rules was another factor in the rebound, Reeves said.
Gainers included Bank of America Corp., 13.1%; JPMorgan Chase & Co., 7%; Bank of New York Mellon Corp., 9%; State Street Corp., 10%; Wells Fargo & Co., 6.5%; U.S. Bancorp, 6%; and Citigroup Inc., up 22 cents, to $2.53. Among the regionals, KeyCorp rose 8.1%, PNC Financial Services Group Inc. rose 9.6%, Cullen/Frost Bankers Inc. rose 3.4% and UCBH Holdings Corp. in San Francisco rose 15 cents, to $1.51.
Colonial BancGroup Inc.'s stock rose for most of the day but closed down 9 cents, at 90 cents a share, on news the Montgomery, Ala., company was close to getting a $300 million capital infusion from the wholesale lender Taylor, Bean & Whitaker Mortgage Corp. of Ocala, Fla. Sources close to the deal said it would give Taylor, Bean majority control of Colonial.
The California Department of Corporations said Tuesday that Wachovia Securities LLC and Citigroup Global Markets Inc. have agreed to buy back more than $4.7 billion in auction-rate securities from California customers.
The broader markets also rallied: the Dow Jones industrial average rose 1.16% and the Standard & Poor's 500 rose 1.31%.
The Conference Board said Tuesday that its Consumer Confidence Index rose to 26 in March, from 25.3 in February.
Meanwhile, average home prices in 20 U.S. cities fell a record 2.8% in January, according to the Case-Shiller index reported by Standard & Poor's.