Bank stocks and the broader markets rose Thursday on encouraging economic news.
The KBW Bank Index rose 1.33%, the Dow Jones industrial average 0.39% and the Standard & Poor's 500 index 0.28%.
The Commerce Department said that the nation's gross domestic product shrank at a 1% annual rate in the second quarter. Economists on average had expected a 1.5% drop.
Economists at Wells Fargo Securities said that the GDP numbers "generally reinforce the view that economic activity will snap back in the current quarter."
"Final demand was not as weak as first reported, and federal stimulus spending is finally flowing through to the rest of the economy," the economists wrote.
Citigroup Inc.'s shares rose 9.1%, to $5.05, after the New York company disclosed on its Web site that hedge fund manager John Paulson had bought about a 2% stake in the company. It was the first time since Jan. 14 that Citi's shares had risen above $5.
Other gainers included JPMorgan Chase & Co., up 0.4%; Bank of America Corp., 0.7%; Wells Fargo & Co., 0.4%; PNC Financial Services Group Inc., 0.5%, and U.S. Bancorp, 0.6%.
Among the regional banking companies, SunTrust Banks Inc. rose 3.9%, Capital One Financial Corp., 0.4%; BB&T Corp., 1.3%; Regions Financial Corp., 1.4%; KeyCorp, 2.8%, and Zions Bancorp., 0.1%.
