Bank stocks bounced back Thursday in a market surge that took the Dow closer to a record 9,000.
BankAmerica Corp. gained $2, to $85.75, Chase Manhattan Corp. rose $4.0625, to $139.3125, and Republic New York Corp. was up $3.50, to $135.6875.
Smaller banks joined the exuberance, with Bank of Oklahoma Corp. up $1.25, to $50.125, First Hawaiian rising 75 cents, to $40.25, and First Virginia Bancshares increasing $1.375, to $57.4375.
One exception was Astoria Financial Corp., whose shares plunged $2.0625 in the last half hour of trading on rumors that the thrift is close to acquiring Long Island Bancorp. Long Island shares rose $1.5625, also mostly in the last half hour of trading.
"The market is upbeat" on sustained strength in the economy and indications that first-quarter results will meet or exceed expectations, said Marni Pont, banking analyst at Keefe, Bruyette & Woods.
Banks are playing a solid role in the process and should continue to do so, Ms. Pont said.
The Dow Jones industrial average rose 1.33%, or 118.32 points, to 8,986.64. The Standard & Poor's bank index was up 1.27%, the Nasdaq bank index gained 0.54%, and the S&P 500 climbed 1.07%.
Star Banc rose $1.5625, to $61.125, after Lori Appelbaum, a bank analyst at Goldman, Sachs & Co., reaffirmed a "recommended list" rating and forecast a 24% surge in share value over the coming year.
Star Banc has a "stellar growth strategy" that should deliver superior growth and profitability, Ms. Appelbaum said.
The Cincinnati banking company differentiates itself through its "state- of-the-art image and marketing of technological capabilities and products," Ms. Appelbaum said.
Personalized service and guarantees and employee accountability and financial incentives add to the attraction, she said. "Star's objective is to provide convenient access to the bank while at home, work, or while shopping via traditional or alternative delivery means."
In fact, the alternative channel-ranging from sites at restaurants to voice banking-is nearly as good at gathering deposits and loans as traditional means, at three-quarters of the cost, she said.
But not all banks were up. Triangle Bancorp was fell 37.5 cents, to $30.9375, after being reinstated to "outperform" by Charles Wittmann at Wheat First Union Corp. Mr. Wittmann sees shares of the company reaching $35 within 12 months.
Hubco shares dipped 12.5 cents, to $37.3125, despite a reiterated "buy" recommendation from John B. Wimsatt at Friedman, Billings, Ramsey & Co. The endorsement follows Hub-co's announcements earlier this week to buy Connecticut's Dime Financial Corp. and New Jersey's IBS Financial.
The deals will expand Hubco's book value by 20%, to $12.59, and could lead to other revenue-enhancement activities through expanded small- business lending, asset-based lending, and cash-management services, Mr. Wimsatt said.
