Bank stocks were caught up Friday in market reaction to the NATO allies' renewed attacks in Yugoslavia.
"The market is reacting to what's going on in Kosovo," said Charles W. Johnson, head equity trader for Blaylock & Partners in New York. "In many cases, you're seeing folks moving away from stocks and into more stable assets like money markets and the long bond."
Among the large banks, Citigroup gained 43.75 cents to $63.4375 and J.P. Morgan & Co. 75 cents, to $122.875. Chase Manhattan Corp. dipped $1, to $80.50.
The Standard & Poor's bank index lost 1.27% and the Dow Jones industrial average 0.14%. The S&P 500 was off 0.56% and the Nasdaq bank index 0.92%.
Mr. Johnson said the market could "very quickly reverse if we get this situation in Europe resolved. Interest rates are fairly benign, which has acted to remove concern about the Fed taking action."
Now is the opportunity for investors to get into bank stocks, said Benjamin C. Bishop, a banking analyst with Allen C. Ewing & Co. of Jacksonville, Fla.
"As people realize earnings will improve nicely in 1999, bank stocks should be looked upon with favor," Mr. Bishop said.
Shares of First Union Corp. were off 43.75 cents, to $53.75, despite an upbeat report from Richard X. Bove, a banking analyst at Raymond James Associates.
Mr. Bove raised his rating on the shares from "accumulate" to "buy" and increased his earnings per share estimate to $4, from $3.85.
One of the drivers is the Charlotte, N.C., banking company's capital management division, which Mr. Bove said "continues to demonstrate its ability to expand its market position."
That unit has $153 billion of assets under management, making it the sixth largest asset manager in the United States.
Mr. Bove said he was impressed by the unit's approach to the trust business. By using unbundled pricing and selling multiple products as well as its standard investment array, "First Union is unique in its pricing and market strategy," Mr. Bove said.
"With stronger earnings and a higher multiple in prospect, purchase of the stock is strongly advocated," Mr. Bove said.
Among other stocks of banks based in the South, Amsouth was off 43.75 cents, to $46.9375. But the Birmingham, Ala., company gets high marks from analysts.
"Management has done an excellent job in the past few years of setting aggressive performance goals and hitting the numbers," said Kenneth Hemauer, a banking analyst at Robert W. Baird & Co. of Milwaukee. He noted loan growth and fee income.
Amsouth will benefit from its solid footing in Florida, a state that is one of the nation's fastest-growing markets, Mr. Hemauer said.
Amsouth has been "thrown on the takeover candidate list, Mr. Hemauer said, "but right now with the fundamental strength they have, I don't see that as the scenario."