Bank stocks continued their September swoon Thursday as the euphoria of the summer rally faded.

Analysts said optimism that the Federal Reserve policymakers had ended its round of interest rate hikes has been replaced by worry that bank earnings the rest of this year and next year will be weaker than had been expected. "The market is still coming to terms with the core earning perspective for banks in 2001, and this is adversely affecting bank stocks," said Catherine Murray, a banking analyst at J.P. Morgan & Co.

The American Banker index of the 50 largest banks slipped 1.16%, and the index of 225 banks fell 1.96%.

Some banks have already reduced the amount of guidance they give analysts in anticipation of a Securities and Exchange Commission rule barring selective information disclosure that is due to take effect Oct. 23. That is contributing to the uncertainty about bank earnings, Ms. Murray said.

Though macroeconomic concerns have been less of a factor than in the past, they have not helped bank stocks, she said.

Some investors had hoped the Fed would not only keep interest rates stable in the near future, but lower them early next year, Ms. Murray said. With the price of crude oil rising, the prospect of a rate cuts looks dimmer - another short-term negative for banks, she said.

Interest rate expectations will continue to send bank stocks up or down, depending on the news of the day, but slower earnings will force the sector to "generally give ground," Ms. Murray said.

Kate Blecher, a managing director of research at Sandler O'Neill & Partners agreed that earnings for the third quarter will be lower than expected, but also said the slowdown "won't make headlines."

A slower economy could hurt banks in 2001, and "fee income might not carry the boat forever in this economy," she said.

Bruce E. Simmons, a principal who heads Sandler's equity trading, said this week's market reaction was more a correction than a change in the market potential for financial firms. Oil prices affect the economy less in the United States than in Europe or Asia, because American consumers are more flexible in adjusting demand, he said.

September has historically been a poor month, "particularly in an election year, and we don't know how hard the soft landing will be," Mr. Simmons said.

However, he predicted banks would prove to be less vulnerable than other industries. "Let's say the Dow goes down 5%, then banks will go down only 3%," he said.

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