Banking stocks continued to get sucked into the broader market's downdraft Wednesday on another uncertain day on Wall Street, even as analysts continued to point out bargains in the financial sector.
The Dow Jones industrial average see-sawed all day before closing up 0.3%. However, the Nasdaq composite was down for the third straight day. It fell 2.04% Wednesday. The American Banker index of the top 225 banks dropped 2.9%, and the index of the top 50 banks 2.8%. 
Wells Fargo & Co. was the biggest loser among large banking companies, falling nearly 6% at one point after its chief financial officer, Ross Kari, said he planned to step down. For the day, the stock declined 6.05% to close at $45.99. Citigroup Inc. also lost 2.29% to $42.70.
Compass Bancshares of Birmingham, Ala., was dragged down by the broader financial chaos despite receiving the latest in a string of upgrades. Its shares fell 0.3% to $20.68 after analyst John Moore of Wachovia Securities Inc. said the stock appeared undervalued and raised his rating to "buy" from "neutral."
Mr. Moore said Compass' shares are trading well below the median for comparable sized companies in the Southeast, and its low price/earnings ratio makes it a good buy. "They are focusing in better growth markets," he said in an interview. "Close to 50% of this company's markets are in Texas, and when you add in Arizona and some other markets, they are predominantly a Southwestern firm."
Keefe, Bruyette & Woods Inc. and J.P. Morgan Chase & Co. also have boosted their ratings on Compass to "buy" in recent weeks. Keefe Bruyette analyst Marni Pont O'Doherty, who raised her rating on Compass March 26, cited the company's presence in high-growth markets as well as earnings performance in an interview.
Though the company missed expectations in the fourth quarter, "they tend to be, over the long term, a pretty consistent earner," Ms. O'Doherty said.
Mr. Moore went the other way on another Birmingham-based company, SouthTrust Corp. He downgraded its stock Wednesday to "neutral" from "buy." Though he said recent discussions with SouthTrust executives lead him to believe the company will have a good first quarter, investors have driven the stock price up about 79% in the past 12 months.
The rating change was driven purely by price, he said. "In my opinion, the stock is fully valued at current prices." SouthTrust shares fell 1.25% on Wednesday to close at $44.43.
Financial services stocks have suffered along with the rest of the market recently, and Mr. Moore said he believes the sector could fluctuate in the near term. How soon the largest U.S. banking companies rebound could depend on the Fed's interest rate moves, he said.
"I think they're going to be bouncing around until we see some clear direction in the economy." Mr. Moore said. "I think these largest ones are going to behave more on interest rate moves by the Fed."
