Bank stocks drifted into late summer doldrums Wednesday in the wake of the Federal Reserve's decision to leave interest rates unchanged for now.

"It's a quiet market for the banks," said Sally Pope Davis, an analyst at Goldman, Sachs & Co. "There's some profit taking, but it's generally a buy-the-rumor, sell-the-news reaction to the Fed."

Bank issues turned in very strong performances during the period leading up to Tuesday's meeting of the Federal Open Market Committee, the central bank's monetary policy arm. "They were turning up regularly on the New York Stock Exchange's new-high list," Ms. Davis noted.

That in turn prompted several analysts to reduce their investment ratings as the stocks neared their price targets.

In the latest such move, Keefe, Bruyette & Woods Inc. downgraded six banking companies Wednesday and upgraded two, based on price.

The firm downgraded Banc One Corp., Bancorp Hawaii, National City Corp., and SouthTrust Corp. to "market perform" status, from "attractive." Keefe also cut GBC Bancorp of Los Angeles and Zions Bancorp. to "attractive," from "buy."

At the same time, the firm raised ratings on First Union Corp. and Summit Bancorp. to "attractive," from "market perform." The 1997 earnings estimate for First Union was raised to $7 a share, from $6.85.

But Keefe's president, James J. McDermott Jr., said in an interview Wednesday that the overall outlook for bank equities remains "steady as she goes."

"You don't have the sizzle of takeout speculation supporting the market," he said, "but on the other hand there have been some major stock repurchase programs announced lately by NationsBank, PNC, and First Union."

"I think these programs are going to be very supportive of the larger- capitalization bank stocks," Mr. McDermott said.

Meanwhile, the earnings outlook remains favorable. "The only clouds on the horizon have been consumer-related, and those appear manageable at this point," he said.

"I think you will still be able to outperform the market averages if you pick your stocks carefully and stay with the companies with good revenue expecations and strong capital management," he said.

"The credit quality issue is there and probably will be through the end of 1997, but everybody seems to feel they've got their arms around it," said Nancy A. Bush, a regional bank analyst at Brown Brothers Harriman & Co.

The industry could face a serious problem if rates were to rise, driving the economy into recession and causing serious deterioration of credit quality, Ms. Bush said. But "the chances of that sort of event happening don't appear very strong right now," she added.

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