Bank stocks fell Tuesday, with investors once again taking their cues from a downturn in the U.S. bond market, a signal of market fears that interest rates will rise.

The Standard & Poor's index of 31 banks fell 1.5%, and the Nasdaq index of 721 banks, 0.7%.

Market watchers said they were not surprised about the declines.

"These banks have enjoyed a nice little run for the last couple of weeks," said Adam Lewis, a senior vice president and trader at Keefe, Bruyette & Woods Inc. in New York. "It doesn't take much to sell them off."

Though Tuesday marked the beginning of third-quarter earnings reports, the good news reported was overshadowed by falling prices on 30-year Treasury bonds, which drove up the yield. In response, bank stocks were down across the board.

"The bond market and some of the stocks are skittish that there is increasing evidence the Fed will raise rates in November," said Scott Edgar, director of research for the $1.1 billion-asset Sife Trust Fund of Walnut Creek, Calif.

Even banks reporting solid earnings lost ground. Shares of SunTrust Banks Inc. fell $2.1875, or 3.1%, to $67.625, despite the Atlanta company's announcement Tuesday of a 16% increase in earnings per share, to $1.01, for the third quarter. Though loan growth at the company was strong, SunTrust reported a 2.9% decline in fee income, to $447 million.

So-called high-quality regional banks lost their recent luster, with stock of Wells Fargo & Co. down 81.25 cents, or 1.9%, to $41.6875; PNC Bank Corp. $2.125, or 3.8%, to $53.9375; and Comerica Inc. $1.1875, or 2.2%, to $53.8125.

Credit card company stocks, rebounding strongly this month, were off Tuesday as well. American Express Co. fell $3.625, or 2.4%, to $145.25, and Capital One Financial $1.125, or 2.4%, to $45.

The shakiness of bank stocks boils down to continued investor concern that interest rates will rise. Michael Granger, an analyst at J.P. Morgan Securities in New York, said, "We all know from the past that when the Fed tightens, it usually leads to a recession."

That is why all eyes will be watching the next report on the consumer price index, due for release by the Commerce Department on Friday. The CPI is a key indicator of inflation.

A growing skepticism about banks' ability to sustain earnings growth also is worrying the markets. "There is concern out there that the cycle for bank earnings might be at an inflection point," Mr. Granger said.

But he still saw room for growth of 10% to 11% in earnings per share, on the basis of his projections of average industry revenue growth of 6% to 7%, expense growth of 4% to 5%, and continued share buybacks.

Mr. Granger said he sees a silver lining in federal regulators' forecasts of rising nonperforming assets. "Hopefully," he said, "that will lead to a more risk-averse stance by all banks so that we don't create another credit crisis situation."

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