Bank stocks advanced in a powerful market rally Monday as the Dow Jones industrial average finally cleared the 10,000 hurdle.

Investors apparently cast off worries about today's meeting of Federal Reserve policymakers or the economic impact of the widening conflict in the Balkans.

The Dow closed at 10,006.78, a gain of 184.54 points, or 1.88%, with both bank components of the blue-chip index registering gains. Citigroup Inc. rose 87.5 cents, to finish at $64.25, while J.P. Morgan & Co. was up 93.75 cents, to $125.8125.

Meanwhile, the Standard & Poor's bank stock index advanced 2.01%. Among other major bank stocks, BankAmerica Corp. gained $1.375, to $71.25, while Wells Fargo & Co. improved $1.125, to $37.5625.

Also tallying major gains were SunTrust Banks Inc., $2.5625, to $65.6875, and Bank of New York Co. $1.125, to $37.125.

The market was powered by merger fever-a rumored $25 billion deal between BP Amoco and Arco in the energy sector-and the nearly universal Wall Street sentiment is that Fed is not going to raise interest rates today.

Just as important for Wall Street players, the central bank today is also unlikely to telegraph an increase.

That outlook was bolstered Monday by news that the red-hot housing sector has begun to cool because of the winter's rise in mortgage rates. That may slow the economy to a more sustainable growth rate and keep the Fed on hold.

New home sales slipped an unexpected 2% in February to an 881,000 unit annual rate, according to Commerce Department figures. January figures were revised downward.

It was the first time in more than year that sales, down 0.7%, have fallen on a year-over-year basis, and some economists believe it means housing market activity has peaked.

Market interest rates rose Monday as the surge in stocks lured investors away from bonds. The benchmark 30-year Treasury bond gave up early price gains Monday, and its yield was up to 5.64% by the afternoon, a three-week high.

A bank analyst said Monday's gains among banks may be the latest version of "buy on the rumor, sell on the news" syndrome. The "stocks run up until the Fed takes a 'no action' and then tend to sell off," said Michael L. Mayo of Credit Suisse First Boston Corp.

This time the trading pattern is occurring ahead of both the Fed's meeting and first-quarter earnings reports of banks, which are expected in about two weeks.

Mr. Mayo has questioned the durability of bank earnings growth rates and said the stocks are vulnerable to second-half price declines on disappointing results.

"A lot of one-time items are padding earnings, which raises questions about the sustainability of earnings growth," he said Monday.

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