KeyCorp, SunTrust: Jobs Report Winners

Bank stocks rallied as a stronger-than-expected jobs report boosted confidence about the economy.
By Shanthi Bharatwaj ,

NEW YORK (

TheStreet

) -- Bank stocks surged Friday as a stronger-than-expected jobs report fueled a rally across major U.S. equity markets.

The Bureau of Labor Statistics reported non-farm payrolls rose by 195,000 in June as the unemployment rate remained unchanged at 7.6%. Economists polled by Thomson Reuters anticipated non-farm payrolls to have added 165,000 jobs.

The report upwardly revised May employment numbers to 195,000 from 175,000. The 12-month average sits at 182,000 jobs added per month.

The strong labor numbers suggested that the Fed could begin to taper its quantitative easing efforts as early as September, as indicated by the central bank Chairman last month. Yields on the 10-year Treasury rose to 2.726%

Concerns that June's encouraging jobs report could prompt the Fed to curb its stimulus measures were offset by prospects that the U.S. economic recovery may be gaining sufficient strength to survive on its own.

Financials were among the biggest winners on Friday. Shares of the biggest four banks --

Bank of America

(BAC) - Get Report

JPMorgan Chase

(JPM) - Get Report

,

Citigroup

(C) - Get Report

and

Wells Fargo

(WFC) - Get Report

rose by 1.8%, 2.3%, 1.8% and 2% respectively.

Regional banks, which given their domestic focus are more levered to the economy than universal banks, outperformed on Friday. Shares of

KeyCorp

(KEY) - Get Report

and

SunTrust

(STI) - Get Report

and

Zions

(ZION) - Get Report

rose more than 4%.

Banks had a strong week, with the KBW Bank Index rising 6%. Earlier this week, the Federal Reserve finalized capital rules under Basel III, but warned that too-big-to-fail banks can expect more rules that would raise their capital requirements as early as next week.

However,

analysts at Fitch Ratings

said Friday that the big banks can meet tougher capital requirements.

Banks also kick off earnings next week, with JPMorgan Chase as usual opening the season with its results announcement on Friday.

-- Written by Shanthi Bharatwaj in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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