Magazine article American Banker

Stocks: Good Economic News, Views of Fed Chief Buoy Banks

Magazine article American Banker

Stocks: Good Economic News, Views of Fed Chief Buoy Banks

Article excerpt

Bank stocks rallied Wednesday on positive economic news and favorable comments from the Federal Reserve's chairman.

Investors essentially shrugged off cautionary remarks by Federal Reserve Chairman Alan Greenspan, who suggested that the Fed was not likely to cut interest rates.

Instead, Wall Street watchers said bank stocks rose on the Fed leader's favorable comments regarding Asia during his semiannual Humphrey-Hawkins testimony.

Mr. Greenspan said the U.S. economy is capable of withstanding the tremors that might arise from further deterioration in Asia.

At the same time, however, he cautioned that Asia's most important economy, Japan, is still mired in difficulties.

The Standard & Poor's bank index climbed 1.60%, outstripping the Dow Jones industrial average, which rose 1.05%. The Nasdaq Bank index rose 0.68%; the S&P 500, 1.20%.

Some of the biggest gainers of the day were BankAmerica Corp., which gained $2.6875, to $77.50; Bankers Trust New York Corp., $4.0625, to $117.75; and NationsBank Corp., $2.50, to $68.875.

Treasury bond prices rose on news that home resales rose less than expected in January, according to the National Association of Realtors.

Home resales increased 0.7% in January, to an annual rate of 4.4 million, economists said. In December home resales had fallen 0.5%.

Bank analyst Lawrence J. Cohn of Ryan, Beck & Co., Livingston, N.J., said bank stocks also got a boost because "there is no bad news" to prompt investors to sell.

He added that the continuing theme of virtually no inflation and continuing economic growth is also causing bank stocks to climb. …

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