Bank Stocks Strong Following Thursday Unemployment Report

NEW YORK (TheStreet) -- Regions Financial (RF) was the sector winner on a very strong Thursday for bank stocks, with shares rising 3.7% to close at $10.27.

The broad indices all ended with gains of over 1%, and the KBW Bank Index (I:BKX) was up 1.7% to 67.26. Thursday's action brought the KBW Bank Index close to the level it was at before Monday's big market drop, caused in part by investors' reaction to disappointing manufacturing numbers at home and in China.

The Department of Labor on Thursday said first-time unemployment claims for the week ended Feb. 1 totaled 331,000, down 20,000 from an upwardly revised 351,000 the previous week. Economists polled by Thomson Reuters on average had expected the figure for the week ended Feb. 1 to decline to 334,000.

The four-week average for initial unemployment claims rose slightly from the previous week to 334,000.

Thursday's upbeat labor report, followed by a report on Wednesday from Automatic Data Processing that the U.S. economy added 175,000 nonfarm private-sector jobs during January, leads investors to this week's most important employment report, which will be the January Employment Situation report from the Bureau of Labor Statistics.

Investors were disappointed with the December numbers, even though the U.S. unemployment rate declined to 6.7% from 7.0% the previous month, because the U.S. economy only added 74,000 nonfarm jobs during the month. The improved unemployment rate during December was driven by a 0.2% decline in the labor participation rate to 62.8%. The labor participation rate was down 0.8% during 2013 from 2012, as a large number of people left the work force.

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