Bank stocks and the broader markets fell Thursday after more bad economic news surfaced and investors worried about a possible nationalization of U.S. banks.
The KBW Bank Index fell 6.79%, the Dow Jones industrial average 1.19%, and the Standard & Poor's 500 index 1.2%.
In addition to negative unemployment news and inflation reports from the Labor Department, investors remained concerned that the government programs designed to kick-start the economy and fix the financial sector would not work fast enough, said Jacqueline Reeves, the managing director of Bell Rock Capital LLC.
"It has a lot to do with sentiment," she said. "It's going to take a while to work through everything, and as the Obama administration said, 'There's no silver bullet, no magic wand, no fairy dust.' "
Renewed fears of bank nationalization also drove down a number of bank stocks, Ms. Reeves said, particularly Bank of America Corp, which fell 64 cents, to $3.93 a share, and Citigroup Inc., off 40 cents, to $2.51.
Other decliners Thursday included JPMorgan Chase & Co., off 4.2%; Wells Fargo & Co., 8%; and U.S. Bancorp, 1.3%.
Among the regional banks, PNC Financial Services Group Inc. declined 5.9%; SunTrust Banks Inc., 10.2%; and Comerica Inc., 8.8%. Regions Financial Corp. fell 35 cents, to $2.64 a share; Fifth Third Bancorp, 26 cents, to $1.21; and Colonial BancGroup Inc., 8 cents, to 40 cents.
On Thursday, the Labor Department said that the number of people claiming unemployment benefits rose by 170,000 in the week ended Feb. 7, to 4.99 million, an all-time high. Initial claims of 627,000 were the same as in the preceding week, but this was 7,000 more than economists had expected.
The Labor Department also reported that wholesale prices rose 0.8% in January, far more than the 0.2% increase economists had estimated. The surge was led by a 3.7% increase in energy prices; gasoline prices were up 15%.