Bank stocks fell Tuesday as investors gave up some gains from previous rallies.

The KBW Bank Index fell 8.14% while the Dow Jones industrial average fell 1.71%, and the Standard & Poor's 500 was off 2.01%.

Bank stocks were up in early trading in response to the better-than-expected first-quarter results Goldman Sachs Group released Monday. However, stocks began to slide after the Commerce Department reported that retail sales fell last month by 1.1%, versus the average analyst forecast of a 0.3% increase.

"When there is a bit of bad news, profit taking is going to be exacerbated," said Theodore Kovaleff, the president of Informed Sources Service Group in New York. "Those institutions that had the healthiest rises over the past few days are the ones that got the biggest haircut."

Wells Fargo & Co.'s stock declined 7.1%. The San Francisco company's stock rose 31.7% Thursday, after it announced it expected to post a first-quarter profit of $3 billion, or 55 cents a share.

First Niagara Financial Group Inc. fell 9.2% Tuesday after rising 3.9% Monday. The Lockport, N.Y., company said Monday that its first-quarter net income was relatively flat from a year earlier, at $18.7 million. It also announced a $300 million stock offering, which it will use in part to repay the $184 million of capital it received this year from the Treasury Department's Capital Purchase Program.

Scott Anderson, a senior economist at Wells, wrote in a note Tuesday that retail sales were buoyed in January and February by a decline in gas prices and tax refunds, but that both of those catalysts should fade and may even reverse themselves this quarter.

"Income trends remain negative overall," Anderson wrote. "Rising slack in the labor market will lead to further significant declines in aggregate wage and salary growth."

Bank of America Corp. fell 8.4%. Wells' Wachovia Capital Markets said in a report issued Monday that B of A is not as well capitalized as most other large banking companies and has "precious little wiggle room" before it may be forced to sell new stock.

The Charlotte company retains "sizable exposures to what we would deem are worrisome assets," including $9.9 billion of residential construction and development loans and $111.5 billion of card and other revolving loans, Matthew Burnell, an analyst at Wachovia Capital Markets, wrote in the report.

Fifth Third Bancorp fell 17.1%. Moody's Investors Service Inc. downgraded the Cincinnati company's senior debt to Baa1, from A2, because of concerns over loan losses. Additionally, the Financial Industry Regulatory Authority fined Fifth Third $1.75 million Tuesday for violations related to variable annuity sales and exchanges.

Citigroup Inc. rose 21 cents, to $4.01. Tatyana Hube, a B of A analyst, said Citi is more likely to cut the conversion ratio for its preferred shares now that the common stock is trading above $3.25.

In February, Citi announced plans to exchange up to $52.5 billion of preferred shares for common stock to replenish its equity capital. Shares of the New York company closed above the planned conversion price of $3.25 on Monday for the first time since the plans were announced.

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