Bank stocks roared back to life on Tuesday fueled by benign economic statistics and strong earnings reports.

The Standard & Poor's Bank index rose 1.46%, while the Dow Jones industrial average gained 2.10%. The S&P 500 jumped 1.48%, and the Nasdaq bank index rose 0.81%.

The biggest gainers of the day included J.P. Morgan & Co., which rose $2.375, to $97.25; BankAmerica Corp., up $2.25, to $106.125; and Chase Manhattan Corp., up $2.125, to $92.625.

Investors stampeded into the stocks after the Labor Department released a lower-than-expected consumer price index-which helped quell inflation fears-and a flurry of strong earnings reports.

The overall consumer price index rose 0.1% and 0.2%, excluding food and energy. Economists were expecting 0.3% and 0.2%, respectively.

Strong earnings reports from banks such as Citicorp, and Chase Manhattan also boosted the rally. One glaring exception, however, was Wells Fargo & Co., whose stock price fell 2.60% in Tuesday trading, after announcing that its earnings per share would fall below consensus numbers. (See story on page 1.)

James Ellman, portfolio manager of the GT Global Financial Services Fund, said that he expects banks to continue to rise, but pointed out that anxieties over interest rates are still a factor.

"Earnings have alleviated some of the concerns, but bank stocks are climbing the wall of worry," said Mr. Ellman, who manages a $40 million portfolio. In fact, "because of interest rates, I think it will be a choppier market on the way up." Mr. Ellman said that he continues to be bullish on banks.

"Banks have stronger earning per share growth and higher dividend yield and significantly lower valuation than the overall market," he said. "Some of the big industrial companies have already reported that they are falling short of their earnings estimates."

But economist Scott Brown of Raymond James & Associates, St. Petersburg, Fla., said interest rate fears could erupt again if the measure of resource utilization-a group of statistics issued by the Federal Reserve-suggests inflation.

One trader who declined to be identified said that anxieties over future interest rate hikes have only tapered off for the day.

"This rally is short-lived," said the trader. "Because the market is oversold, people are looking for a reason to buy. I would need more evidence before I was convinced that inflation was under control. I would be a seller in this rally."

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