Shares of Summit Bancorp of Princeton, N.J., got a lift Wednesday amid speculation about a possible takeover by FleetBoston Financial Corp.
Summit's stock rose $3.50, or 11.36%, to close at $34.3125, and FleetBoston, after falling to $37.125 in morning trading, climbed 31.25 cents, or 0.81%, to close at $39. Elsewhere, the stock market got mixed signals Wednesday. Oil prices rose again, and orders for durable goods increased, showing sustained strength in the U.S. economy and hinting at the possibility of inflation.
News that consumer prices actually rose faster than expected contributed to the uncertainty. The Labor Department said Wednesday that the consumer price index rose a seasonally adjusted 2.7% for the eight months through August, compared with a previously reported 2.6%. The department blamed the discrepancy on a software glitch.
The Commerce Department announced that orders placed with U.S. factories for durable goods rose 2.9% in August, after a 13.1% drop in July.
"Durable goods orders have been exceptionally volatile in the last few months," wrote Scott J. Brown, senior economist at Raymond James & Associates in St. Petersburg, Fla.
Even with the revision, the price index is consistent with the Federal Reserve's assumptions about the condition of the economy and the decision to keep interest rates stable, Mr. Brown said.
Overall, financial stocks took the news positively. The American Banker index of the top 50 banks rose 0.39%, and the index of 225 banks increased 0.71%.
Meanwhile, analyst Richard X. Bove initiated coverage of Old Kent Financial Corp. of Grand Rapids, Mich., with a "buy" rating.
In his report on the bank holding company, Mr. Bove pointed out that the company has increased earnings for 41 consecutive years and has benefited from the banking industry's consolidation. Old Kent reported per-share earnings of 59 cents for the second quarter, and Mr. Bove said he expects earnings to grow 8.5% over the next 12 months.
"Old Kent makes strategic acquisitions that add to shareholder value," he wrote. "The deals expanded the company's geographic footprint in Illinois, where it has one-third of its deposits."
The company has "produced good returns" and has "superior credit quality" and a good marketing system, Mr. Bove wrote. His target price of $33 for the stock "is based on the assumption that the stock will achieve a multiple of 14.1 times our 2000 earnings per share estimate of $2.34."
Old Kent closed at $29.375, up 31.25 cents, or 1.08%.