NEW YORK — Shares of large banks were falling Wednesday faster than much of the broad market retreat ahead of the second-quarter earnings season, as investors worried that losses would still be high and that sentiment had gotten too bullish.

Bank of America Corp., which is expected to report late next week, was one of the worst decliners, falling 3.8% to $11.68 in recent trading. Recently there has been increasing concern about how much the giant bank will have to put aside for loan losses this quarter and in particular charges related to its shotgun wedding to Merrill Lynch.

Overall, the sentiment is weak at this point for the industry after stocks climbed above lows from March.

"The bottom line is it's still going to be another sloppy quarter in the industry," Raymond James analyst Anthony Polini said. "There is a negative aspect that is not unusual heading into earnings."

Polini noted that he is expecting higher loan losses and credit card losses in the quarter and that recent data on mortgages and real-estate haven't been too helpful.

The financial sector of the S&P 500 Index was recently down 2.4%, heavier than the 0.5% fall for the index as a whole and the second-worst industry behind telecommunications.

Citigroup Inc. dropped 3.4% to $2.60, Morgan Stanley fell 2.8% to $25.41 and Goldman Sachs Group Inc. lost 3.1% to $138.12. JPMorgan Chase & Co. slipped 0.2% and Wells Fargo & Co. lost 1.9%.

Stifel Nicolaus analyst Christopher Mutascio noted that since last Thursday's disappointing news on June's jobless reports, the banks have been underperforming since the data "threw cold water on this whole theory of green shoots."

"We are now in a 'show me state,' " Mutascio said. "We've had this nice little rally on the belief and hopes things are going to approve. Now management has to show me that."

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