Bank One Corp.'s stock was downgraded Tuesday by Goldman Sachs & Co. on a day when stock prices throughout the financial services sector fell.

Goldman Sachs dropped its "market outperform" rating on Bank One to "market perform," citing slower growth in receivables and rising losses at the Chicago company. The bank's shares fell more than 5%, to $35.13, after closing Friday at $37, and were down as much as 6% during the day.

In a research report, Goldman Sachs equity analyst Lori Appelbaum wrote that Bank One has higher exposure to the credit card industry and subprime consumer lending business - around 25% in its 2001 forecast. Other banks on Goldman's radar are less exposed in this area - up to 5% of their business covers unsecured and subprime sectors, the report said.

"Moreover," Ms. Appelbaum wrote, "Bank One is less beneficially positioned for lower rates relative to other banks given that a 100-basis-point decline in interest rates has only a $29 million benefit to pretax earnings."

Goldman Sachs lowered its 2001 estimate on Bank One to $2.65 a share, from $2.75.

"While Bank One seems to be successfully integrating a growth strategy through its business lines, we view the optimism as largely priced into the stock at current levels," Ms. Appelbaum wrote.

Several other banks' shares tumbled Tuesday, including Bank of New York and Northern Trust. Bank of New York shares ended the day at $50.66, down 6.19%. Northern Trust dropped 3.37% to close at $73.875.

The American Banker index of the top 50 banks' stocks fell 3.38%, while its 225-bank stock index drop 3.80%.

"As you look across the whole board, the entire financial services sector is down," said Adam J. Lewis, senior vice president of equity trading at Keefe, Bruyette & Woods Inc. "We are getting hit pretty hard today."

Observers pointed to plummeting public confidence. The University of Michigan's consumer sentiment index has dropped 13 points in the last two months and the Conference Board's Consumer Confidence Index 18 points. The last time the indexes fell that much was during the 1990-91 recession.

"Consumer sentiment is really far down," Mr. Lewis said. On top of that, investors are skittish, uncertain whether the Federal Reserve Board will cut interest rates again.

"There are so many crosscurrents," Mr. Lewis said. "It is leaving investors wondering where to go. We are in between periods."

But Ms. Appelbaum said confidence will rise with the passing of such temporary factors as higher prices for natural gas and excess motor vehicle inventories.

And although there is a slowdown in consumption and investment spending, other developments - such as aggressive interest rate cuts by the Fed, tax cuts, and an upswing in disposable income - could help consumer confidence still more, Ms. Appelbaum wrote.

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