A rally in Citigroup Inc.'s shares lifted bank stocks overall Thursday.
Citi's shares rose 35 cents, to $4.48, after Richard Bove, a Rochdale Securities analyst, wrote in a note that investors are betting the value of Citi's shares will triple in three years, after the company unloads its troubled assets and becomes more profitable.
"People are buying it now in expectation of the triple because they made the decision that all of the negatives that could happen don't mean anything," Bove wrote.
The KBW Bank Index rose 2.87%.
Gainers went across the board. JPMorgan Chase & Co. rose 2.4%, Bank of America Corp., 2.3%; Wells Fargo & Co., 3.3%; PNC Financial Services Group Inc., 4.4%, and U.S. Bancorp, 2.3%.
Among the regional banking companies, SunTrust Banks Inc. rose 4.1%, Capital One Financial Corp., 1.7%; BB&T Corp., 1.1%; KeyCorp, 1.7%; Fifth Third Bancorp, 3%; Comerica Inc., 0.5%; Marshall & Ilsley Corp., 4.2%; First Horizon National Corp., 2.6%; Zions Bancorp., 5.4%, and Huntington Bancshares Inc., 16 cents, to $4.52 a share.
Regions Financial Corp.'s shares fell 0.4%, after Matthew O'Connor, a Deutsche Bank North America analyst, downgraded the Birmingham, Ala., company's stock to "hold" from "buy."
The Dow Jones industrial average rose 0.76%, and the Standard & Poor's 500 index 1.09%.
The Federal Reserve Bank of Philadelphia said Thursday that its general activity index rose to 4.2 in August — a positive reading for the first time in nearly a year.
This news was offset, however, by the Labor Department's report that initial unemployment claims for the week that ended Aug. 15 rose unexpectedly, to 576,000. Economists on average had expected a decline in new claims.
