Bank stocks surged Friday on new economic data that pushed down interest rates in the bond market and a strong third-quarter earnings outlook.
September employment data released Friday indicated that the job market wasn't as tight as economists feared and sparked a powerful bond rally. At midday, the yield on the Treasury's 30-year bond was at 6.165 percent - the lowest level in a year."This is an extremely favorable economic backdrop for the banking group," said analyst Michael Mayo of Credit Suisse First Boston Corp.
He said several bank stocks could gain 10 percent over the next couple of weeks, given the favorable interest-rate outlook and expectations for good third-quarter earnings.
Shares of Chase Manhattan Corp. rose $2.18 to close at $122.62 on the New York Stock Exchange. Other bank stocks that showed strong gains were Citicorp, up $2.43 to $137.68, and BankAmerica Corp., up $1.50 at $78.06.