The bank-stock juggernaut is on track again. Or is it?

Bank stocks have apparently staged a remarkable comeback since the Federal Reserve began cutting interest rates, reaching levels unseen since mid-August. The Standard & Poor's bank index has risen 30.7% from its Oct. 8 low; the S&P 500, 18.1%.

This suggests that banks have, as analysts put it, "earned their way through" their problems and that after a vicious selloff they have regained their bearings. Thursday, banks continued to rise, with most regionals and money-centers outperforming the broader markets. The S&P bank index rose 3.2%, and the Dow Jones industrial average, 132.33 points, to 8,915.47.

But indexes, even ones as broad and closely watched as the Standard & Poor's, do not reveal all the market's activities.

The S&P indexes are "weighted," which means performance by certain companies' stocks affect them more. If shares of BankAmerica Corp. rise, for example, that changes the index more than if a midsize regional bank rose by a similar or greater amount.

When stocks are treated equally in an unweighted index, banks don't appear so red-hot.

Since Oct. 8 an unweighted index of 6,000 stocks had risen by 21.5% through midday Thursday, while an unweighted index of most bank stocks had risen only 16.4%, according to Ed Nicoski, technical analyst at Piper Jaffray Cos. in Minneapolis. On a weighted basis, Piper Jaffray's index of bank stocks has risen 23.6%.

The numbers demonstrate that the biggest banking companies, the market's hardest-hit sector during the selloff, are bouncing back quickly while smaller banks continue to lag.

Of course, most investors in bank stocks buy the biggest banks, so the lag in small-bank stocks is of relatively less consequence. But a key gauge of a market recovery after a severe downturn is whether share prices rise across the board, not just for a few high-profile names. The greater a recovery's depth, the greater its durability, analysts say.

The overall market is showing general signs of strength, with many small stocks picking up of late, Mr. Nicoski said, but bank stocks have not demonstrated the same depth of recovery.

Terry Maltese, president of Sandler O'Neill Asset Management, the investment arm of Sandler O'Neill, an investment bank that specializes in banks and thrifts, said the recent steepening of the yield curve is a hopeful sign for the smaller banks that have lagged the market all year.

"The yield curve isn't steep, but at least it isn't flat anymore," he said.

A steepening yield curve-meaning the difference between long-term and short-term interests rates is growing-would restore interest rate margin profits at banks. A steepening yield curve also could slow the wave of mortgage refinancings that has played havoc with earnings at many banks and thrifts.

In trading Thursday banks continued to rally. Some companies are starting to reach or exceed their highs for the year.

Shares of Fifth Third Bancorp rose $3.125, to $71.50; Star Banc Corp., 62.5 cents, to $77.9375, setting new highs for both Cincinnati-based companies. Wells Fargo & Co. rose $1.625, to $39.625, just shy of the $40 high set when it was known as Norwest Corp. Money-center banks also posted strong gains.

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