Banks pulled back broadly as investors booked gains from Monday's run- up on merger plans by Citicorp and Travelers Group.
Citicorp was off $14.75, to $165.75, after its $39.125 increase, and Travelers dipped $4.625, to $68.375, from its $11.375 gain on the merger news.
Chase Manhattan Corp. dropped $3.625 to $143.375; Bankers Trust was off $2.1875, to $125.0625; and J.P. Morgan & Co. shed $4.8125, to $139.9375.
"Investors realize they may have acted a bit too quickly and bought indiscriminately," said trader Adam Lewis at Keefe, Bruyette & Woods Inc. "Now, they're doing some profit-taking."
Among regional banks, BB&T Corp. was off $1.1825, to $66.50; Mellon Bank Corp. dipped 75 cents, to $65.50; and First Tennessee National Corp. dropped 62.5 cents, to $33.125.
Broader markets fell as well, as some industrial and technology companies came in with disappointing first-quarter earnings.
The Standard & Poor's bank index was off 1.66% and the Dow Jones industrial average dipped 0.85%. The Nasdaq bank index was off 0.34% and the S&P 500 fell 1.06%.
Investors, in taking what Mr. Lewis described as a "rifle shot approach," lifted a few shares.
NationsBank Corp. was up 12.5 cents, to $73.375; and Norwest rose 18.75 cents, to $42.5265. BankBoston Corp., up $1, to $112, and First Chicago NBD Corp., up 81.25 cents, to $93.125, warrant continued attention for their attraction as takeover targets, analysts said.
Among other banks with purchase appeal, Fleet Financial Group increased 81.25 cents, to $85.50; PNC Bank Corp. was up 25 cents, to $65.25; and Summit Bancorp gained 56.25 cents, to $50.4375.
Each institution has a "uniqueness" that could attract a foreign or super regional banking company, said Frank Barkocy, banking analyst at Josephthal & Co.
BankBoston, for instance, has a growing Latin American operation, and Summit is the last independent bank in New Jersey.
The hunt for takeouts is in the forefront of investors' minds on the heels of Monday's stunning announcement of merger plans by Citicorp and Travelers Group.
With that proposed deal, "you're looking at a bigger universe of consolidation," Mr. Barkocy said. "The combination could serve to accelerate takeover activity in the financial services sector."
BankAmerica Corp. fell back 12.5 cents, to $86.625; following a downgrade to "long-term buy" from "strong buy" and a 4 cent reduction, to $4.92, in 1998 earnings per share by John J. Mason at Interstate/Johnson Lane.
Increased expense growth in the form of higher funding costs will slightly squeeze BankAmerica's net interest margin this year, Mr. Mason said.
Astoria Financial Corp. was down 81.25 cents, to $57.875; despite an upgrade to "strong buy" from "outperform" by James M. Ackor at Tucker Anthony Inc.
The recommendation, including expectations for shares to hit $72 within 12 months, is an endorsement for Astoria's plan to acquire Long Island Bancorp.
The combination will place Astoria "on radar screens of potential suitors" outside the New York region, Mr. Ackor said.
