government reports which somewhat eased investor concerns about an interest rate hike.
The Standard & Poor's bank index fell 0.98%, while the Nasdaq bank index rose 0.16%. The Dow Jones industrial average dropped 0.79% and the S&P 500, 0.65.
"Clearly some of last week's euphoria for bank stocks is gone," said Kevin Timmons, a bank analyst at First Albany Corp., referring to last week's rally. "But those who bought into the sector last week are likely to stay there. Concerns about interest rates have diminished, but they have not gone away."
The National Association of Purchasing Management reported Monday that its manufacturing index fell to 56.6 in October from 57.8 in September, which eased some investors' concerns about inflation and a possible interest rate hike. "Manufacturing expanded at a slower pace," said Scott J. Brown, Chief economist at Raymond James & Associates, St. Petersburg, Fla. "There was still an uptick in raw material prices, but it is not too serious."
The index of raw material prices rose to 69.4 in October from 67.6 in September.
Bank stock investors shrugged off construction spending figures, which rose 0.5% in September after a decline of 0.8% in August, according to the Commerce Department.
"These numbers are not earth-shattering news for bonds or bank stocks," said Mr. Brown. "The number likely to get bank stocks moving again will be Friday's employment report, which is likely to set the tone for bank stocks for the next couple of weeks," he said. One of the biggest losers of the day was Chase Manhattan Corp., which fell $3.6875, or 4.23% to $83.5625 on news that the company's pre-tax trading revenue would take a $60 million hit in the fourth quarter because of overstated trades earlier this year. (See story on page 1.)
Other big decliners included Fleet Boston Group, which fell $1.6875, or 3.87% to $41.9375, and Wells Fargo & Co., down $1, or 2.09%, to $46.875.
Chase's troubles had little effect on the stocks of other big banks that have large trading operations.
J.P. Morgan and Bank of America shares surged Monday, when the overall market fell slightly.
The Chase news did not help or hurt bank stocks in general, said Raphael Soifer, an analyst at Brown Brothers Harriman.
The problem with Chase "is not a mountain; it is more like an anthill. This is not a big deal number, it is a couple of pennies per share. "These things happen in trading," he continued. "This is not the first time that things of this nature have happened and it probably won't be the last." ?