Bank stocks surged Thursday, buoyed by a positive consumer price index report for June and solid earnings announcements.

The Labor Department announced in the morning that the consumer price index for June was unchanged from May, at 166.2-the second consecutive month it was unchanged.

Though most bank stocks were pulled into the upward stampede, there were exceptions. State Street Bank, which lost more than 7% of its value Wednesday, dropped another 3.1% on Thursday. And credit card issuer Capital One Corp. dropped 7.3%.

But most banks fared very well. When the market opened, bank stocks charged out the gate and never looked back. The Standard & Poor's bank stock index rose 1.1%, to 700.76, while the Dow Jones industrial average rose 0.3%, to 11,186.41.

The consumer price index number "was great news and took a lot of concerns of inflation away," said Katrina Blecher, an analyst for Brown Brothers Harriman Inc. in New York. "It's just what the bank stocks love."

While the inflationary demons of June had been subdued by the Federal Reserve's rate hike and its announced shift from an anti-inflation to a neutral bias, Thursday's release gave investors a clearer picture of the future.

"The CPI report indicates that inflation is tamed for now and nowhere to be found," said Sung Won Sohn, senior vice president and chief economist at Wells Fargo & Co.

With the consumer price index news, Mr. Sohn said the worst possible outcome from the next meeting of the Federal Reserve Open Market Committee in August would be a switch to a tightening bias, from neutral. But that probably won't happen, he added.

Mr. Greenspan "would need at least a couple of months of higher inflation numbers to justify higher interest rates," Mr. Sohn said.

Also helping many bank stocks were a number of solid earnings announcements. For instance, the stock of BankBoston Corp. surged 3.7%, to $50.8125, on reported earnings of $250 million for the quarter, or 83 cents a share, up 10.7% from a year earlier. Similarly, shares of Cincinnati- based Fifth Third Bancorp rose 3.1%, to $67.6875, on its earnings report- net income was $162 million, or 59 cents a share, a 18% increase.

Still, banks not meeting expectations felt the pain. Shares of State Street Corp. continued their slide in the wake of its earnings announcement on Tuesday that missed analyst estimates. The Boston-based provider of record-keeping and other services for institutional investors fell 3.1%, to $73.25, making for a two-day fall of 10%.

Stocks of the credit card specialists were dragged down by news from Capital One Corp. that it would scale back its cellular telephone investments.

Shares of the Falls Church, Va., company plunged 7.3%, to $48.9375, despite meeting First Call's analyst consensus estimates of 41 cents a share. But news that the company would trim spending in its cellular telephone business venture unnerved the markets. The company, citing stiff competition in the mobile telephone market, said it would shift spending to business lines with better profit potential.

The news led Gary Gordon, an analyst for PaineWebber Inc. in New York, to downgrade the stock to "neutral," from "attractive." Though Mr. Gordon said he likes the long-term prospects of Capital One, he questioned its ability to sustain a 20% annual growth rate.

"My personal guess would be this miserable competition persists indefinitely," Mr. Gordon said. "That takes away an opportunity for Capital One."

In a ripple effect, shares of some other credit card specialists also fell Thursday. MBNA Corp. of Wilmington, Del., were down 0.2%, to $30, while Metris Cos. of Minneapolis fell 4.9%, to $43.875. Stock in San Francisco-based Providian Financial Corp. dropped 4.3%, to $96, stunted by news of a lawsuit filed by NextCard Inc., the Internet credit card company. NextCard, also based in San Francisco, has accused Providian of mimicking its on-line banner advertisements.

The fall of the credit card stocks "has more to do with weakness of Capital One, which I think is overdone," said David Hochstim, an analyst for Bear, Stearns & Co. in New York. That "is creating a buying opportunity" for those stocks.

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