It was a choppy day for bank stocks Thursday as investors digested mixed economic news, including Chrysler LLC's bankruptcy announcement.
The KBW Bank Index closed down 2.12%.
In the morning, stocks rose on news from the Labor Department that initial unemployment claims in the week that ended April 25 fell 2%, to 631,000, from the week before. Economists on average had expected 640,000 new claims.
However, consumer spending in March fell 0.2% from February, according to the Commerce Department. Economists on average had expected a 0.1% decline.
Bank stocks, like the broader markets, dropped into negative territory in the afternoon after the Obama administration announced that Chrysler would file for bankruptcy protection after lenders refused to reduce the automaker's $6.9 billion of debt.
The Dow Jones industrial average closed down 0.22%, and the Standard & Poor's 500 index, 0.1%.
Investors also took the opportunity Thursday afternoon to pick up bargains in the banking sector, said James Bradshaw, an analyst at Bridge City Capital LLC in Portland, Ore.
"I think it was a market move — there was a nice rally at the start of the day, and so there may have been a bit of profit-taking," he said.
Decliners included JPMorgan Chase & Co., off 4.3%; Bank of New York Mellon Corp., 4.4%; U.S. Bancorp, 3%; SunTrust Banks Inc., 2.6%, and Citigroup Inc., down 7 cents, to $3.05 a share.
Bank of America Corp.'s stock rose 2.9%. On Wednesday, Kenneth D. Lewis was ousted as B of A's chairman but retained his seat on the Charlotte company's board and his titles as president and chief executive.
B of A announced late in the day that a shareholder vote had "narrowly" approved splitting the roles of chairman and CEO, leading to a shake-up that put Walter E. Massey, the president emeritus at Morehouse College in Atlanta, at the head of the table for future board meetings.
Wells Fargo & Co. rose 0.2%. The San Francisco banking company is closing First Place, an internal staffing agency used by the former Wachovia Corp., as part of the $5 billion in cost savings it expects to realize from its integration of Wachovia's operations, according to the Charlotte Observer.