Investors showed new concern about the extent of the global banking crisis by fleeing U.S. bank stocks Tuesday.
The KBW Bank Index sank 19.7% as more U.S. banking companies lined up to report bleak results and investors here digested news that the British government had bailed out its banks again.
"People are just looking at this and saying, 'If it happened over there again, then it can happen over here again,' " said Theodore Kovaleff, the president of Informed Sources Service Group.
Bank stocks helped depress the broader markets.
The Dow Jones industrial average fell 4.01%, and the Standard & Poor's 500 index 5.28%.
Decliners included Regions Financial Corp. in Birmingham, Ala., which on Tuesday reported a staggering loss for the fourth quarter. (See
Boston-based State Street Corp., which reported a substantial decline in net income from a year earlier, lost 59% of its market value. (See
Losses were widespread.
Bank of America Corp., which reported a loss last week and said it would take an additional $20 billion from the U.S. government (bringing its total to $45 billion) to address losses inherited in its purchase of Merrill Lynch & Co. Inc., shed 29%, to close at $5.10 a share.
B of A, which until recently had the biggest market capitalization in the banking industry, ended Tuesday's session with a market cap of $25.59 billion, below U.S. Bancorp's $26.92 billion, making the Minneapolis company the third-biggest U.S. bank by market cap. JPMorgan Chase & Co., with $67.53 billion, and Wells Fargo & Co., with $47.32 billion ranked first and second, respectively.
Both JPMorgan Chase and Wells also suffered Tuesday. The former shed 20%, and the latter nearly 24%.
Earlier Tuesday, Friedman, Billings, Ramsey & Co. analyst Paul Miller cited concern about the two companies' tangible common equity ratios. Wells' ratio of 3.6% and B of A's of 2.6%, raise questions about their capital levels, he wrote. Other decliners Tuesday included Citigroup Inc., off 20% to close at $2.80.
