Bank stocks, which had long been leading the market up, are well behind the pace so far this year and often seem to be the focus of investors' concerns.

The bearishness is evident in the American Banker index of the 225 largest bank stocks, which is down 10.5% since Jan. 1. By contrast, both the Standard & Poor's 500 stock index and Dow Jones industrial average are modestly in positive territory.

Instead of steady valuation gains stemming from the steady economy and flow of mergers, bank stocks now seem weighed down by a laundry list of negatives and uncertainties.

Notes of cautiousness and hesitancy have begun to creep into the views of Wall Street's analysts and professional investors.

"There is no question that there is going to be a lot more head wind for the banks this year. People are nervous," said hedge fund manager Carole S. Berger, of Berger-Jackson, New York.

Investors have backed away from the sector, as worries about an overheated U.S. economy have been put alongside anxieties about the impact of economic downturns in Asia and Latin America.

"There were years when you could rush into the bank group with your eyes closed," said bank analyst Carla D'Arista of Friedman Billings Ramsey, Arlington, Va. "Today you can't do that. Investors have to buy fundamentally sound, high-quality names, and try to gauge opportunities in selloffs."

Investors seemed most concerned about banks' earnings growth, which some analysts say is not likely to be as robust as in years past.

"We have entered a period where double-digit earnings growth is much more difficult to achieve," said analyst Susan Roth of Donaldson, Lufkin & Jenrette, who gives the bank group a modest rating of "market weight."

"Banks are more likely to deliver earnings growth of 8% to 10% over the next several years," Ms. Roth said. "Slower economic growth, normalization of credit losses, and intense competition," she said, will "put pressure on pricing and profit margins."

Since September, when Ms. Roth picked up coverage of the bank group, analysts have been cutting profit projections.

"The average cut in consensus estimates has been 5% in many of the banks that I follow," she said. "I attribute that to bank management and investors being too optimistic about the earnings power of the industry."

Bank analyst Joel Silverstein of Prudential Securities said the dramatic change in earnings estimates since last year has caused "confusion in the investment community about what kind of loan growth banks will produce in 1999."

Still, many analysts continue to be bullish.

"The mood in the investment community is indeed negative, but in our view banks are in better shape than they have been in the last 18 years," said managing director David S. Berry of Keefe, Bruyette & Woods.

Technology stocks are much more attractive than bank stocks now, said analyst Joan T. Goodman of the Pershing division of Donaldson, Lufkin & Jenrette.

"Investors take one look at the Internet stocks and their eyes glaze over," she said. "But that really is misplaced bullish sentiment."

Ms. Goodman believes banks have their work cut out for them but are in good enough shape to handle the challenges.

"Banks are well-reserved and well-capitalized. They are leaner and meaner and in a much stronger position than they were before. Economics, however, are not working in their favor."

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