Banking stocks rose early Wednesday on news of Bank of America Corp.'s capital-raising stock sale, but they dropped soon afterward as investors cashed in gains.

The KBW Bank Index fell 2.81%.

B of A said it raised $13.47 billion through the sale of 1.25 billion shares. Its shares rose 2.1% for the day.

"The recapitalization of banks is a huge positive that got the group moving, but then there was a little bit more profit taking," said Greg Gersack, managing principal with FIG Partners LLC. "I also just get the sense that some investors are on a pause mode, given the strong run we've had, and the concerns regarding credit quality continue to be omnipresent."

Regions Financial Corp.'s shares rose in the morning but closed down 35 cents, at $4.89. The $142 billion-asset Birmingham, Ala., company said it plans to raise $1.25 billion of capital by offering $1 billion of common shares and $250 million of new mandatory convertible preferred shares.

JPMorgan Chase & Co. fell 3.5%, while Wells Fargo & Co. fell 3.9%. PNC Financial Services Group Inc. dropped 2.8%. U.S. Bancorp fell 2%, and Citigroup Inc. fell 8 cents, to $3.69.

Among regionals, SunTrust Banks Inc. fell 1.1%. M&T Bank Corp. dropped 6.8%. Zions Bancorp. fell 3.7%, and Fifth Third Bancorp fell 1.3%.

The Dow Jones industrial average fell 0.62%, and the Standard & Poor's 500 fell 0.51%.

Also Wednesday, the Federal Reserve Board released the minutes from the April meeting of the Federal Open Market Committee, which downgraded its full-year economic forecast. The committee now expects the economy to contract 1.3% to 2% and the unemployment rate to approach 10% this year.

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