Price gains in the stocks of many major banks evaporated Monday as the market endured one of its wildest rides of the year.
The closely watched Dow Jones industrial average first soared 270 points, then plunged into losing territory amid nervous investors and profit takers.
Nevertheless financial companies were "among the strongest groups in the market," said Mark A. Davis, director of research at Bank Stock Group in Columbus, Ohio. "The sector rotation into bank stocks that everyone has been talking about is finally happening."
Though prices of many top banking companies rose early in the session, only J.P. Morgan & Co. closed higher, by $3.50, to $136.625.
BankAmerica Corp. fell $1.25, to $71.75; Chase Manhattan Corp., $1.0625, to $85; and Citigroup Inc. 75 cents, to $70.875.
Regionals banks fared better. National City Corp. of Cleveland advanced $1.125, to $70.875; PNC Bank Corp. $1.50, to $58.75; and Suntrust Banks 81.25 cents, to $70.8125.
As for the general market environment, "we saw a burst of enthusiasm carrying over from last week and now we're seeing some breath catching," said Jeffrey Warantz, an equity strategist for Salomon Smith Barney in New York. Investors held firm with certain industry sectors.
"You're still seeing a lot of strength in the cyclical stocks that had gotten beaten down," Mr. Warantz said. "Investors are moving into the capital goods sector, and financial institutions are continuing to show strength."
Bank stocks were "one of the few segments today that continued to outperform," said Jonathan Hatcher, an equities analyst with Conseco Capital Management of Carmel, Ind. "People were looking for the value that these shares offer."
But analysts split on whether financial institutions' shares would prove to have staying power.
"This could the beginning of a long-term bull market for bank stocks where the financial sector outperforms others," Mr. Davis said. "We're going to have a great year for earnings-per-share growth."
On the other hand, Peter Green, chief technical strategist at Gruntal & Co., predicted solid but unspectacular advances from banks in the months ahead.
"Banks will continue to do well, but they may not do as well as other groups," Mr. Green said. "While investment banking should still do well, trading profits may be a tad more difficult to achieve."
