Sector Snap: Shares of credit-card firms gain

Capital One shares gained $2.04, or 6 percent, to $37.58 in midday trading. Its shares have fallen nearly 37 percent in the past three weeks.

Keefe Bruyette & Woods analyst Robert Hughes on Monday upgraded Capital One to "Market Perform" from "Underperform" due to a recent selloff in shares.

"We still believe consumer credit concerns are likely to weigh on the shares given the weakening economic outlook," Hughes said.

However, while the increase in unemployment and other weakening economic indicators will likely result in higher cumulative loss expectations, Hughes believes deteriorating credit is already factored into the share price. He reiterated a 12-month price target of $36.

Hughes decision to upgrade Capital One came as Wall Street snapped back from last week's devastating losses after major governments around the world announced further steps to support the global banking system, including plans by the U.S. Treasury to buy stocks of some banks. All the major indexes rose well over 6 percent, and the Dow Jones industrials gained more than 500 points.

Elsewhere in the sector, Discover Financial Services rose 83 cents, or 9 percent, to $10.40. American Express Co. gained $2.61, or 11 percent, to $25.79. Visa Inc. rose $2.47, or 5 percent, to $54.47. MasterCard Inc. gained $16.29, or 11 percent, to $168.