Bank stocks, the scourge of Wall Street of late, rallied on Friday, bolstered by a stronger dollar and lower long-term interest rates.
Large capitalization stocks did especially well.
The upswing was spurred in part by a rally of the dollar against the yen and a lower yield on 30-year U.S. Treasury bonds, which fell to 6.05%, from 6.08%.
That sent most money-center and brokerage stocks upward. Chase Manhattan Bank rose 43.75 cents, or 0.6%, to $77.5625; Bank of America Corp., rose 25 cents, or 0.5%, to $55.9375; and Citigroup Inc. rose 50 cents, or 1.2%, to $43.6875.
Among investment banks and brokerages, Merrill Lynch & Co. rose $1.375, or 2%, to $71.9375, and Morgan Stanley Dean Witter & Co. rose $4.3125, or 5%, to $91.4375.
The rally was "not as great as you'd like if you're looking for some good signs of hope," said David Stumpf, an analyst for A.G. Edwards in St. Louis.
Regionals did not fare as well. The decline in interest rates helped stocks with huge amounts of shares outstanding, making them more liquid.
"It's about time," said Michael Laliberte, co-portfolio manager of the Imperial Bank Fund in Providence, R.I. "Bank stocks have been priced as though a couple of more rate hikes" were on the way.
Friday's good feeling seemed to more than offset what might ordinarily be considered bad news on the interest rate front. The Commerce Department reported an unexpected increase in housing starts, which rose 0.4% in August, to 1.68 million units. Analysts had predicted a 2% drop. The market seemed to thirst for good news, and it grabbed at a stronger dollar instead of the housing number. Strong housing starts indicate a buoyant economy, which could prompt the Federal Reserve to raise rates, while a stronger dollar means cheaper imports, which could reduce U. …