Magazine article American Banker

Lower Rates Give Banks a Boost

Magazine article American Banker

Lower Rates Give Banks a Boost

Article excerpt

Bank stocks climbed on Tuesday, boosted by falling interest. rates and bargain hunting.

Wells Fargo & Co., Mellon Bank Corp., and NationsBank Corp. were the top performers.

In late trading, Wells was up $2.625, to $107.375, Mellon rose $3.00, to $57.125, and NationsBank gained $1.625, to $50.625.

Chemical Banking Corp. was up $1.125, to $39.50. J.P. Morgan & Co. rose $1.50, to $69, while Bankers Trust New York Corp. advanced $1.50, to $72.625. First Interstate Bancorp gained $1.375 cents, to $56.875.

Convertibles Popular

Citicorp's $1.21 convertible preferred shares were among the most active securities on the New York Stock Exchange. More than 2.5 million shares changed hands in dividend-related trading.

The preferred shares were down 37.5 cents, to $18.625.

Citicorp's common shares rose 75 cents, to $28.375.

Bank stocks have outperformed blue-chip shares in recent days, reversing the pattern of the last two weeks in April.

For example, in the five trading days that ended on Monday, the American Banker's bank stock index rose about 3%, versus a 1.4% gain for the Dow Jones industrial average.

"The tremendous decline in stocks seems to have run its course, and we seem to be back on a more fundamental basis," said Lawrence Cohn, an analyst with PaineWebber Inc.

Help from Bond Rally

This week's bond market rally has buoyed bank shares. Declining interest rates benefit banks by making it easier for borrowers to repay loans. …

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