Financial stocks rose Wednesday as investors scooped up regional banking shares on mounting speculation that Barclays PLC is looking to acquire a U.S. retail bank.
The KBW Bank Index rose 2.16%, to 50.06.
The closely watched index of 24 large and midsize banks had not closed above 50 since November 2008. It has gained nearly 15% on optimism that the industry's lending problems are stabilizing. It bottomed at 18.62 last March.
That sentiment continued this week as The Wall Street Journal reported Tuesday that Barclays, one of Britain's largest banks, was considering buying a consumer bank to complement its U.S. investment bank. Shares of regional banks that analysts pegged as potential takeover targets — including PNC Financial Services Group Inc., SunTrust Banks Inc. and Fifth Third Bancorp — surged Wednesday.
PNC's shares rose 2.15%, SunTrust rose 2.56% and Fifth Third rose 2.69%.
The sector also benefited from bank executives' comments at a banking conference in New York. The heads of Marshall & Ilsley Corp. and Regions Financial Corp. indicated their companies have turned the corner on problem loans.
Regions President O.B. Grayson Hall Jr. said the company's nonperforming loan growth is slowing and that it is effectively done building reserves. Its shares rose 5.5%.
M&I Chief Executive Mark Furlong said the lender's level of nonperforming loans likely peaked in 2009. Its shares rose 2.42%.
Shares of Bank of America Corp., which said it would eliminate overdraft fees on debit card purchases rose 1.85%.
The broader markets rose after the Commerce Department said sales at U.S. wholesalers rose in January as inventories unexpectedly dipped. That's not all bad news, since it indicates businesses cannot keep enough inventory to meet rising demand. Inventories will rise if sales keep climbing.
The Dow Jones industrial average rose 0.03% and the Standard & Poor's 500 index rose 0.45%.
JPMorgan Chase & Co. rose 1.2%, Wells Fargo & Co. rose 2.04% and Citigroup Inc. rose 14 cents, to $3.96.
Zions Bancorp. rose 6.39%; U.S. Bancorp, 1.18%; KeyCorp, 4.13%; and M&T Bank Corp., 0.98%.