The thickening Asian crisis sent jitters through the market Friday that are expected to continue in the days ahead.
Bank stocks joined broader equity markets in alternating between modest gains and slight losses before a late-day sell-off finally pitched most shares lower. The Dow Jones industrial average lost 214.49 points in four trading days, closing at 8,899.95.
Investors are spooked by the nuclear race between India and Pakistan and lingering economic problems in that part of the world, and they worry how second-quarter earnings will be affected, said Mark Fitzgibbon, a managing director at Sandler O'Neill & Partners.
The tone "will probably carry through for the next couple of weeks as we get closer to the end of the quarter," Mr. Fitzgibbon said.
"Institutional buyers are hesitant to add or shrink their positions until they get a sense of what the numbers look like," he said.
Early in the day traders reported very little of the bulk buying or selling that is the hallmark of such investors as insurance companies, pension funds, and private money managers. "My phone is definitely not ringing the way it was," said one stock dealer.
But then mounting uncertainty from overseas compelled a number of big investors to sell.
Larger banking companies were especially hard hit as investors bet that shares were not due for dramatic gains in coming days.
Bankers Trust fell $2.125, to 123.50; J.P. Morgan & Co. $2.375, to $124.1875; and Wells Fargo & Co. $4.75, to $362.
The Standard & Poor's bank index was down 0.60%, and the Dow Jones industrial average fell 0.75%. The Nasdaq bank index was off 0.26%, and the S&P 500 0.62%.
Market watchers said the impact was cushioned by continued inflows from mutual funds that invest in equities. Investments in stock mutual funds for April were the third-biggest monthly amount ever.
Reports of slowed productivity by factories in the Midwest were taken as a sign the economy may be starting to cool enough to stave off a rate increase by the Federal Reserve.
Among the day's biggest movers, Old Kent Financial rose $1.625, to $39.875, on growing confidence in expanding operations.
Golden State Bancorp, which has an agreement to merge with First Nationwide Holdings, was up $1.4375, to $38.1875.
And Fleet Financial Group gained $1.1875, to $56.75, possibly on the strength of buying by those who continue to believe the company will join institutions that have made Monday morning merger announcements.
Regional brokerage Dain Rauscher Corp. gained 50 cents, to $57.50, after registering to issue up to $200 million of securities.
In a filing with the Securities and Exchange Commission, the Minneapolis firm cited increasingly steep competition from banks as a reason to bulk up, perhaps through acquisitions.
Banks "have brought a new source of capital into the securities industry, resulting in more formidable competitors," the filing said.