Bank of America: Bank Stock Winner

NEW YORK ( TheStreet) - Bank of America ( BAC) was the top-performing bank stock in the S&P 500 as financials led a third consecutive day of index gains.

All 17 banks in the S&P 500 gained on Thursday amid comments from New York Federal Reserve president William Dudley that the central bank will only end an aggressive bond buying program when the U.S. economy shows strong evidence of growth and that a rise in short term interest rates is not an imminent matter of Fed discussion.

Hudson City Bancorp ( HCBK), Keycorp ( KEY), Regions Financial ( RF) and Citigroup ( C) also outperformed broader markets with gains in excess of 1.5%, while U.S. Bancorp ( USB) lagged the sector rising just 0.39% to $36.08.

Stocks also benefitted from falling U.S. jobless claims and comments from Chinese banking authorities that they have the tools to quell a liquidity crisis in some short-term funding markets.

The S&P 500 was gaining 0.8% to 1,614.18. The gauge has risen 2.1% since Monday though it remains poised to decline 1% for June, making it the S&P's first monthly decline since October.

Investors bought shares as Federal Reserve governor Jerome Powell told an audience at the Bipartisan Policy Center in Washington that the economy was showing signs of finally turning-around after more than a few head fakes.

"The first reduction in purchases, when it comes, will be an acknowledgement of the economy's progress and a sign of the Committee's confidence in the path to full recovery," said Powell, a member of the Fed's all-important policy-setting panel, the Federal Open Market Committee.

Separately, New York Fed President Bill Dudley, in a speech before some recent college graduates, reiterated that the Fed's timeline for curbing its bond-buying program depended on the strength or weakness of economic data over the coming months.

Office real estate investment trusts (REITs) Vornado ( VNO), Boston Properties ( BXP) and Prologis ( PLD) were among the top performers in the financial sector, on signs of a cooling to surging interest rates. Insurance companies were the worst performers in the financial sector.

Data released earlier today showed consumer spending had increased in May while pending home sales spiked as buyers rushed to take advantage of favorable financing conditions before they tighten.

The Department of Labor Thursday reported that initial jobless claims in the week ended June 22 decreased 9,000 to 346,000. Economists on average were expecting jobless claims of 345,000. The four-week moving average was 345,750, a decline of 2,750.

"The latest reading brings claims back below the 350,000 line-in-the-sand beneath which the economy should translate into payroll gains," Andrew Wilkinson, New York-based chief economist strategist at Miller Tabak said in a note.

Continuing claims in the week ended June 15 fell 1,000 to 2.965 million, according the Department of Labor. Economists were expecting continuing claims of 2.95 million.

The Bureau of Economic Analysis said that personal income increased by a greater-than-expected $69.4 billion, or 0.5% in May. A 0.2% gain in personal income was expected. Personal spending rose $29 billion, or 0.3%, in line with estimates.

The National Association of Realtors said Thursday that its Pending Home Sales Index, a forward-looking indicator based on contract signings, increased by a much greater than expected 6.7% to 112.3 in May, its highest level since late 2006 as buyers appeared to want to take advantage of favorable financing conditions before mortgage interest rates move higher, according to Lawrence Yun, the chief economist at the Chicago-based NAR. A May rise of 1% was expected.

"This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand," Yun said in a statement.

Yields on the benchmark 10-year Treasury fell to 2.508%.

-- Written by Antoine Gara and Andrea Tse in New York.

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