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The year in bank stocks got off to a rough start. It turned worse still in the second half amid high volatility and repeated rallies inspired by euro zone rescue attempts that failed to sustain investor confidence.

Key Events:

  • Libya spillover - Turmoil in Libya appeared to trigger the KBW Bank Index's first one-day decline of more than 3% in 2011.
  • Bad economic news - A cluster of negative reports catalyzed worries about the faltering recovery, and the KBW Bank Index notched its first one-day loss of more than 4%.
  • Debt-ceiling deadline - After weeks of gut-wrenching partisan brinksmanship, President Obama signed the Budget Control Act of 2011.
  • Ratings cut - The KBW Bank Index plummeted 11% in the first trading day after S&P cut its rating of the U.S.
  • Currency swap expansion - The Fed joined with other central banks to expand currency swap arrangements, driving the KBW Bank Index to a 7% one-day jump.