May 19, 2009

Bank stocks rallied Monday after Wall Street analysts issued upbeat reports about the industry.Raymond James analyst Anthony Polini called banks "fundamentally sound" and said the economy has likely reached a bottom. And Rochdale Securities analyst Richard Bove predicted "explosive earnings growth and unusually strong stock price performance" for banks as the economy recovers.Bank of America Corp. surged as Goldman Sachs analyst Richard Ramsden upgraded his rating on the bank to "Buy" and added it to a special list of top picks.

Good news also came from State Street Corp., which said it's returning to the market to raise capital.All the developments point to a continuing recovery in the industry so badly wounded by the housing slump and recession.The KBW Bank Index, which tracks 24 of the nation's largest banks, rose 7.5 percent, as the cost of borrowing in dollars between banks dropped the most in two months, a sign credit markets continue to recover.