Bank stocks fell on inflationary fears, overshadowing a strong earnings report from Goldman Sachs Group Inc.
The KBW Bank Index fell 0.3% after the Department of Labor reported a 1.8% increase in June of the producer price index, which measures prices at the wholesale, or producer level. Economists on average had expected the increase to be half of that percentage, causing investors to worry about inflation.
"Inflation is not viewed positively for the financials," said Theodore Kovaleff, a bank and thrift analyst based in New York for Horowitz & Associates of Chicago.
Kovaleff said the Labor Department's report upstaged Goldman Sachs' second-quarter earnings report, which cited strong trading and underwriting revenues. Goldman's net income rose 65% from a year earlier, to $3.44 billion, or $4.93 a share, before payment of dividends to the government. Analysts on average had expected Goldman Sachs to earn $3.48 a share.
"Had there not been the economic numbers out there, I think you have would seen green rather than red" in the KBW index, Kovaleff said.
Decliners included JPMorgan Chase & Co., which fell 0.03%, Bank of America Corp., which fell 0.6%, Wells Fargo & Co., which fell 1.6%, PNC Financial Services Group Inc., which fell 3.3% and U.S. Bancorp, which fell 1.5%.
Among the regionals, SunTrust Banks Inc. fell 1.6%, KeyCorp fell 3.4%, Fifth Third Bancorp fell 1.4%, BB&T Corp. fell 1% and M&T Bank Corp. fell 2.1%.
There were some gainers Tuesday.
Dime Community Bancshares Inc. rose 7.8% after the Brooklyn, N.Y., company said it expects to report second-quarter earnings of $6.9 million, or 21 cents a share, 3 cents above the most recent analyst consensus estimate, according to Thomson Reuters. Dime will report final results July 27.
Colonial BancGroup Inc. rose 9 cents, to 72 cents, after the Montgomery, Ala., company said it had agreed to sell 21 branches in Nevada to Global Consumer Acquisition Corp.
Other gainers included Citigroup Inc., which rose 14 cents, to $2.92, Regions Financial Corp., which rose 2 cents, to $4.09 and Capital One Financial Corp., which rose 5.7%.
The Dow Jones industrial average rose 0.33% and the Standard & Poor's 500 rose 0.53%.