Investors remained cautious about bank stocks in the wake of Friday's dramatic selloff, although a strong market rally late Monday afternoon helped banking indexes post a gain for the day.

"The volume is pretty anemic today," Andy Vissicchio, bank stock trader, UBS Securities, said Monday morning. "It seems that any type of rally brings out the sellers." Investors wait for stocks to "pop up a little," then quickly move to unload, he said.

"People don't want to own bank stocks right now," said Thomas Lefebvre, portfolio manager, Phoenix Duff & Phelps in Chicago. "It looks like there's a shift to the insurance sector. Banks have had a nice run this year, but since the end of the second quarter they've been plodding along."

Even so, the Standard & Poor's bank index rose 5.89 points to 574.97 by the day's end, erasing afternoon losses. The S&P 500 gained 11.68 to 912.49. The Dow Jones industrial average, after falling 247 points on Friday, recovered 108.71 points on Monday, rising to 7,803.36.

The market peaked on Aug. 6, when the Dow Jones hit 8,259.31. Since then many bank stocks have slipped with the rest of the market, but analysts said only a few could be called bargains at their current prices.

Mr. Lefebvre said the bank sector looks "fairly valued." He did note exceptions-Banc One Corp., NationsBank Corp. and Fleet Financial Group Inc.-which he considers "cheap." He also said Chase Manhattan Corp. and Banc One Corp. have been "performing nicely."

David Corkins, portfolio manager, Janus Capital Corp., said he was using the downdraft as "an opportunity to selectively buy banks." He mentioned Bank of New York Co. and BankAmerica Corp. as two that are attractive right now.

"All in all banks are holding up pretty well relative to the market. In the last couple of days they've done better than the Gilletes and Coca Colas," he said. "As long as the bond market hangs in, banks should do just fine."

The bond market rose on Monday, with the yield on the benchmark 30-year Treasury bond dropping 3 basis points, to 6.52%.

Investors may have been cautious in advance of Tuesday's meeting of Federal Open Market Committee, which will decide whether or not to raise interest rates. The majority, however, sees a boost as unlikely, with inflation seemingly in check, which is good news for banks.

"Our general view is that banks will show stronger results toward the end of the year," said Mr. Vissicchio. "We've had some profit taking, but it's only been two days of selling, compared to last 100 days of buying."

Washington Mutual Corp., hit hard by the selloff, got an upgrade from Goldman Sachs, to "priority list" from "recommend list."

"We boosted our rating on confidence in the company's growth outlook and its valuation," said Michael Hodes, bank analyst for the Wall Street firm. "We have the expectation of 20% upside over next 12 months." The rating equals a "very, very strong buy," said Mr. Hodes.

Washington Mutual gained 68 cents, to $63.06.

In other market news, People's Holding Co., Tupelo, Miss., switched to the American Stock Exchange from the Nasdaq. Its shares gained 25 cents to $40.

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