Bank stocks endured a broad-based rout Wednesday, led lower by Citigroup Inc., which sank more than 23%.
The KBW Bank Index lost more than 11%, and Christopher Whalen, the managing director at Lord, Whalen LLC's Institutional Risk Analytics, said the downward trend is likely to continue for some time.
"I think everybody knows that we're only about halfway through the adjustment process, and financials are going to be under pressure for at least the next 12 months," Mr. Whalen said.
"Until we have visibility on where the peak on losses will be," he said, "I don't think people are going to jump in anytime soon, just because bank stocks are cheap."
Citigroup's shares closed at $6.40, a 13-year low.
Other decliners included JPMorgan Chase & Co., 11.4%; Bank of America Corp., 14%; and Wells Fargo & Co., 10.3%.
Other bank stocks also suffered. KeyCorp fell 19%; Bank of New York Mellon Corp. fell 11.4%; State Street Corp. fell 15.2%; U.S. Bancorp fell 8.2%; Comerica Inc. fell 9%; and Regions Financial Corp. fell 9.1%.
Downey Financial Corp. fell 32.3%, to close at 21 cents. The Newport Beach, Calif., mortgage lender, which posted its fifth straight quarterly loss last month, said in a regulatory filing Nov. 10 that it faces pressing capital needs. It warned that regulators could soon seize it and said there is "substantial doubt" the company and its thrift will "continue as going concerns for a reasonable period of time."
A Citigroup spokeswoman declined to comment on the banking company's share price decline Wednesday. Earlier, Citi said it would take the remaining $17.4 billion of assets in structured investment vehicles it advises on to its balance sheet. (See related story.) On Monday, Citi had announced another massive round of job cuts in a bid to right itself.
The broader markets also fell Wednesday. The Dow Jones industrial average fell 5.07% and the Standard & Poor's 500 fell 6.12% on mounting bad news.
Talks in Congress on a bailout for the top three U.S. automakers appeared to have stalled.
Meanwhile, the Federal Reserve Board's Federal Open Market Committee said in minutes of its Oct. 29 meeting released Wednesday that it expects the economy to contract further in the rest of 2008 and the first half of 2009.
And according to the Labor Department's Consumer Price Index, consumer prices fell by 1% in October from a month earlier. That was the biggest one-month decline since February 1947.
The Commerce Department reported that construction of new homes fell 4.5% in October.