Bank Stocks Help Rally the Markets

Wall Street’s recent buying spree, interrupted last week, revved up again on Monday.

Traders seized on last week’s stock declines as a chance to get back in at lower prices, and they pushed shares of financial firms sharply higher. Rising oil prices lifted energy producers, and a better than-expected profit at the home improvement chain Lowe’s helped to bolster consumer stocks.

At the close, the Dow Jones industrial average was up 235.44 points or 2.8 percent, at 8,504.08. The broader Standard & Poor’s 500-stock index rose 26.83 points, or 3 percent, to close at 909.71, while the Nasdaq was up 52.22 points, 3.1 percent, at 1,732.36. Last week the Dow fell 3.6 percent and the S.&P. 500 skidded 5 percent.

Shares of Bank of America were up nearly 10 percent at $11.73 after analysts at Goldman Sachs named the company a “conviction buy.” The financial services provider Corporation rose 8.5 percent after announcing that it would raise more than $1 billion in stock and debt not backed up by the government’s liquidity-guarantee program as it seeks to repay its bailout funds.

Bailout recipients like Wells Fargo and Morgan Stanley have been raising new unsecured capital in recent weeks, intending to get out of the government’s Troubled Asset Relief Program.

Weaker retail sales helped to stifle some of the momentum of Wall Street’s recent rally last week, raising concerns that talk of economic hope and “green shoots” of recovery could be overblown. But on Monday, many investors used the market dip as an excuse to buy.

“The pullback last week created a little bit of breathing room, and buyers might be more apt to step in at these levels,” said Todd Salamone, senior vice president of research at Schaeffer’s Investment Research.

Shares of Lowe’s, the home improvement chain, rose 8.1 percent to $19.94 after it reported lower earnings that nevertheless beat analysts’ expectations, and rival Home Depot ended up 6.6 percent at $26.02. The results warmed hopes that wary consumers would come out of hibernation this spring and take on building projects and home renovations, breathing some life into the construction and home-improvement industries.

Also, the National Association of Home Builders said its index of builder confidence in the housing market rose in May, ticking up to 16 points from 14 last month. Shares of large home builders like Toll Brothers, Pulte Homes and Centex paced the broader markets.

Other retailers also gained ground after sliding last week. Shares of Wal-Mart Stores were 3.7 percent higher at $49.92, and department stores including Macy’s, Kohl’s and J. C. Penney were all higher.

Although stock markets have surged more than 30 percent from their 12-year lows set in early March, some analysts warn that investors seem to be betting on a quick economic recovery, one that may not materialize.

“That’s going to be quite difficult,” said John Brady, a senior vice president at MF Global. “Unemployment is going to move higher, and consumers are going to continue to increase savings.”

Interest rates were slightly higher. The Treasury’s benchmark 10-year note fell 26/32, to 99 3/32, and the yield, which moves in the opposite direction from the price, was 3.23 percent, up from 3.13 percent late Friday.

Following are the results of Monday’s Treasury auction of three- and six-month bills: