Bank stocks helped lead a marketwide dive of nearly 300 points on Tuesday.
Near the close, the Standard & Poor's bank index was off a whopping 5.4%-far worse than the 3.4% loss in the high-profile Dow Jones industrial average.
Nearly every major bank surrendered substantial value. Chase Manhattan Corp. was down 6.9%, Citicorp 5.9%, NationsBank Corp. 5.2%, Banc One Corp. 7.5%, and First Union Corp. 6.6%.
The Dow lost 299.43, with the market seemingly overwhelmed by concerns about Asian economic turmoil dampening U.S. corporate earnings, a factor cited increasingly by analysts and traders in recent weeks. In a little more than two weeks, the much-watched blue chip Dow industrials have fallen 10% from their July 17 peak.
The recent pronounced market weakness has some of Wall Street's most bullish analysts rethinking their positions.
In a striking shift of direction, Ralph J. Acampora, director of technical research at Prudential Securities, who last year gained notice for predicting the Dow would hit 10,000 in 1999, said it might fall 20% in the coming months.
"After being bullish for three and a half years, I'm in the bear camp," he told Bloomberg News. "That's a big change."
The Standard & Poor's bank index has fallen 15% from its July 14 peak.
As bad as the news is for the biggest banking companies, it's been even worse for the smaller ones, whose valuations have suffered during much of the year.
Stocks of regional banks such as Regions Financial Corp. and Mercantile Bancorp. have been sluggish since the year began, despite sound earnings reports.
Late last year the stocks of these companies benefited from the wave of mergermania that engulfed the sector after NationsBank agreed to buy Barnett Banks Inc. and First Union targeted CoreStates Financial Corp.
"It may be that there were more momentum players in the sector than we thought," said Thomas Lefebvre, portfolio manager at Phoenix Duff & Phelps, Chicago. "When the momentum in these stocks changes, these people could be deciding to get out, no matter what the earnings or fundamentals are."
Bank investors desperate for some good news might have found it in Provident Financial Group. The Cincinnati banking company said it would repurchase up to 2.3% of its shares. Its stock price fell Tuesday only 3.8%.
