Bank stock analysts are jumping on the bullish bandwagon, with most predicting a rising market.
And the market for bank stocks was rising Tuesday. The Standard & Poor's bank index gained 0.33% and the Nasdaq bank index 0.9%, against dips of 0.04% for the Dow Jones industrial average and 0.22% for the S&P 500.
Among the gainers were Bank of America Corp., up 0.92% to $75.25; Chase Manhattan Corp., 1.18% to $86.625; and J.P. Morgan & Co., 2.25% to $145.0625.
Among regionals, KeyCorp was rose 0.19% to $32.50; Fifth Third Bancorp, 2.20% to $66.8125; and Firstar Corp, 0.43% to $28.9375.
Joseph Battipaglia, chairman of investment policy at Gruntal & Co., said he expects banks to report strong performance for the second quarter. He includes them among companies that will see a 15% or greater increase in profits.
But the market is expected to remain choppy despite such increases.
"We may see financial companies' stocks go up, but it won't be in a straight line," said Michael J. Schroeder, principal at Wasmer, Schroeder in Naples, Fla.
"Right now the market is feeling around for a leader," with bank stocks possibly taking that role because they are undervalued compared with other sectors, he said.
Union Planters Corp. had a solid day, rising 3.94% to $46.125. The Memphis banking company is finally being recognized by investors as a worthy addition to their portfolios, said Alan F. Morel, a banking analyst at J.J. Hilliard, W.L. Lyons.
"Everyone is starting to see the deeper story," Mr. Morel said. "People are trading on expected earnings."
Union Planters, using acquisitions as a strategy, has increased assets in the past couple of years to $30 billion from $18 billion, Mr. Morel said.
The company should show a solid gain in earnings when it reports this month, Mr. Morel said, and the share price should increase further, to around $44.
Indeed, Union Planters chairman Benjamin Rawlins has stated to analysts that each successive quarter in 1999 will show earnings are increasing.
Mr. Morel described Union Planters as a low-cost operator without a lot of administrative layers.
Management, he said, keeps a long term view of the company and "looks across the valleys" created when the stock price falls to the next upswing.
Tuesday did not start on upside. In early trading decliners out-paced gainers. Bank stocks snapped back in the afternoon and posted increases on positive growth expectations.
Those expectations stemmed from strong performance by the National Association of Purchasing Management index, a key measure that tracks nonmanufacturing companies. The report, released Tuesday, reported that the index rose to 61, from 60.
Analysts said the index may inch up toward 64, the record set in March of this year. Anything over 50 is a sign that more companies are reporting growth than are seeing declines.