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Bank of America Bounces Back: Financial Winner


Story updated to include closing prices.

NEW YORK ( TheStreet) -- Shares of Bank of America (BAC) rose 17% Tuesday to close at $7.60 as bank stocks pared the preceding week's losses.

The Dow Jones Industrial Average was back over 11,000, as investors reacted to the Federal Reserve's open market committee's statement that short-term rates would likely remain at their historically low levels through the middle of 2013 and financial names pared losses, following Monday's market slide in the wake of S&P's downgrade of its long-term debt rating for the United States, along with additional downgrades of government-sponsored enterprises and insurers.

The KBW Bank Index (I:BKX) rose 7% to close at 39.58, with all 24 index components rising for the session.

Citigroup (C) also saw a significant recovery, with shares rising 14% to close at $31.82, following Monday's 16% decline.

Also rising 8% were Regions Financial (RF), which closed at $4.78; SunTrust (STI), closing at $19.98; U.S. Bancorp (USB), at $23.37; New York Community Bancorp (NYB), at $12.42; and Wells Fargo (WFC), which closed at $24.78, following a ratings upgrade to "Outperform" from FBR analyst Paul Miller.

Large banks seeing shares rise 8% on Tuesday included Capital One (COF), which closed at $40.82, after the Wall Street Journal reported that the company was nearing a deal to purchase HSBC's (HBC) U.S. credit card portfolio.

Shares of JPMorgan Chase (JPM) rose 7% to close at $36.40, recovering some of Monday's 9% decline.

Large banks seeing shares rise 6% on Tuesday included Cullen/Frost Bankers (CFR), which closed at $49.99; Fifth Third Bancorp (FITB), at $10.55; KeyCorp (KEY), at $6.92; and Huntington Bancshares (HBAN), which closed at $5.23.

Huntington was among three bank dividend names recommended by Oppenheimer analyst Terry McEvoy.

The private mortgage insurers also saw significant recoveries, with PMI Group (PMI) up 12% to close at 3 cents, following Monday's 16% gain. The shares tanked 75% last week on word that its main private mortgage subsidiary was undercapitalized.

MGIC (MTG) rose 24% to close at $2.35, recovering a bit from Monday's 41% decline. The shares dropped 20% last week.

Radian (RDN) was up 29% to close at $2.56, recovering from Monday's 28% decline. The shares sank 13% last week.

American International Group (AIG) -- which also operates in the private mortgage insurance space -- was up 6% to close at $23.98, following Monday's 10% decline. AIG's shares were down 13% last week.



-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

To follow the writer on Twitter, go to

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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