NEW YORK (TheStreet) -- Wells Fargo was the winner among resurgent large U.S. banks on Thursday, with shares rising more than 2% to close at $40.72.
Bank stocks rebounded from a four-day slide, heading into the Labor Department's monthly non-farm payrolls report on Friday, which will include the U.S. unemployment rate. The KBW Bank Index (I:BKX) rose over 1% to close at 60.64, with all but one of the 24 index components showing gains.
The broad indices all ended with gains to snap a two-day losing streak, after the Department of Labor said initial unemployment claims during the week ended June 1 totaled 346,000, declining by 11,000 from an upwardly revised 357,000 the previous week. Economists polled by Thomson Reuters on average expected new jobless claims to come in at 345,000. The four-week moving average for unemployment claims was 352,000, increasing from a revised figure of 348,000 the previous week.
On a positive note, outplacement consultant Challenger, Gray & Christmas said that job cuts in the United States during May totaled 36,398, which was a decline of 4.5% from April, and the third straight monthly decline. Year-to-date layoffs were down 11%, according to the report.Earlier on Thursday the European Central Bank announced it would leave key "interest rate on the main refinancing operations," unchanged at 0.5%, while keeping its deposit facility rate at 0.00%. ECB president Mario Draghi said during a press conference that a negative bank deposit rate was under consideration, because of "downside risk" for the European labor market. "The accommodative stance of our monetary policy, together with the significant improvements in financial markets since mid-2012, should contribute to support prospects for an economic recovery later in the year," Draghi said. The Bank of England on Thursday also said it would leave its benchmark interest rate unchanged at 0.5%, while maintaining "the stock of asset purchases financed by the issuance of central bank reserves" at 375 billion pounds ($578 billion).
Wells FargoShares of Wells Fargo have returned 21% year to date, following a 27% return during 2012. The shares trade for 1.8 times tangible book value, according to Thomson Reuters Bank Insight, and for 10.4 times the consensus 2014 earnings estimate of $3.90 a share. The consensus 2013 EPS estimate is $3.71.
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