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Midwest Banks Lead as Unemployment Drops

Stocks in this article: FITB RF USB I:BKX

NEW YORK ( TheStreet) -- Midwest regional Bank stocks on Friday had a very strong showing, as investors cheered stronger-than-expected November employment numbers.

The Dow Jones Industrial Average was up 1.3%, while the S&P 500 added 1.1% and the NASDAQ Composite  rose 0.7% after the Department of Labor announced that the U.S. unemployment rate for November improved to 7.0% from 7.3% in October.  Economists polled by Reuters on average had estimated the unemployment rate would only improve slightly, to 7.2%.

The Labor Department also said the U.S. economy had added 203,000 nonfarm jobs during November, coming in ahead of the consensus estimate of 182,000.

The November unemployment rate is the lowest in five years.  Here's the unemployment picture over the last decade:

The Labor Department also revised revised previous nonfarm job-growth numbers upward, to 174,000 from 153,000 for September and to 204,000 from 200,000 for October.

The KBW Bank Index (I:BKX) rose 1.4% to 67.41, with all 24 index component showing gains.  U.S. Bancorp (USB) of Minneapolis was the leader among large-cap banks, with shares rising 2.7% to close at $39.65.  Other major Midwest players showing strong gains included Fifth Third Bancorp (FITB) of Cincinnati, which was up 2.6% to $20.34, and Huntington Bancshares (HBAN) of Columbus, Ohio, which rose 2.6% to $9.24.

All eyes this week were on the Friday unemployment figure, however, there's been plenty of other good news this week.  The Bureau of Economic Statistics on Thursday made a major upward revision of its estimate for third-quarter U.S. gross domestic product growth to an annual rate of 3.6% from the previous estimate of 2.8%. 

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