Bank stocks fell Tuesday as uncertainty continued to swirl about the federal government's plans for fixing the economy.
The KBW Bank Index dropped 5.15%.
A number of regional bank stocks fell Tuesday.
Late Monday a team of Goldman Sachs Group Inc. analysts released a fourth-quarter earnings wrap-up report, "Capping Off the Worst Year for Banks Since the Depression." The report said the commercial banking industry lost money last year for the first time since 1934.
In the fourth quarter tangible common equity ratios shrank at double-digit rates as a result of poor earnings and securities losses, nonperformers accelerated, and net interest margins contracted for many asset-sensitive regional banking companies, the report said.
The analysts cut their price targets and/or earnings estimates for 12 regional banking companies, including SunTrust Banks Inc., which fell 16.2% Tuesday; Marshall & Ilsley Corp., which fell 17.8%; and Fifth Third Bancorp, which fell 14.4%.
Also Tuesday, PNC Financial Services Group Inc. reported a fourth-quarter net loss of $248 million, or 77 cents a share, and said it would cut 5,800 jobs over the next several years. The shares fell 7.2%.
"There just needs to be something positive reported for bank stocks to move up," said Theodore Kovaleff, the president of Information Sources Group in New York. "Bank is now a four-letter word."
Gary Townsend, the chief executive at Hill-Townsend Capital LLC, said uncertainty about what the Obama administration or Congress will do to shore up the economy, particularly the financial sector, has been very unsettling for bank stock investors.
"There is such a lack of clarity coming out of Washington that bank stocks are having a very difficult time of it," Mr. Townsend said.
The broader markets rose on a surprise report from the National Association of Realtors that home sales increased in December, along with several better-than-expected earnings reports. The Dow Jones industrial average rose 1.78%, and the Standard & Poor's 500 rose 1.58%.
Citigroup Inc. fell 5.2%. In its first quarterly progress report on how it is using the $45 billion it received from the federal government, the New York company said it has approved $36.5 billion of initiatives, including issuing mortgage securities, making more consumer and commercial loans, and conducting more commercial loan securitizations.
Other decliners Tuesday included Bank of America Corp., which fell 11.7%; U.S. Bancorp, which fell 7.7%; Wells Fargo & Co., which fell 3.6%; and Zions Bancorp., which fell 9.3%.