Bank stocks fell Tuesday as investors cashed in gains from Monday's rally.
The KBW Bank Index fell 1.6% after soaring 14.69% the day before.
"It seems that every time we have a big upward move, it's a recipe for profit-taking the next day," said Theodore Kovaleff, the president of Informed Sources Service Group in New York.
The sector's decline Tuesday could have been worsened by fresh news reports that 10 of the 19 largest U.S. banks may need more capital, per the government's stress test results, Kovaleff said. However, these rumors had first surfaced over the weekend and did not thwart Monday's rally, he said.
Bank stocks, like the broader markets, got a brief lift in the early afternoon when Federal Reserve Chairman Ben Bernanke told members of Congress' Joint Economic Committee that the economy should improve this year. But the news was not enough to sustain upward movement for the remainder of the day.
The Dow Jones industrial average fell 0.19%, and the Standard & Poor's 500 index, 0.38%.
Decliners included JPMorgan Chase & Co., off 2.7%; Wells Fargo & Co., 4%; U.S. Bancorp, 1.1%; PNC Financial Services Group Inc., 2%; KeyCorp, 6.1%, and M&T Bank Corp., 3.6%.
Wells will have laid off 548 former Wachovia Corp. employees in North Carolina by July, according to the Charlotte Observer. The San Francisco banking company told the state's Department of Commerce of the staff cuts on May 1; they are part of its planned 10% expense reduction as it integrates Charlotte-based Wachovia.
There were some gainers. Bank of America Corp. was up 4.4%; Citigroup Inc., 11 cents a share, to $3.31; Huntington Bancshares Inc., 8 cents, to $3, and Synovus Financial Corp., 30 cents, to $4.06.
