Bank stocks fall on fears about industry's health

Bank stocks plunged Tuesday, extending last week's big losses on unrelenting concerns about the stability of the financial system.

Bank of America Corp. was among the biggest decliners, falling 51 cents, or 9.2 percent, to $5.06 in early afternoon trading. JPMorgan Chase & Co. dropped $2.09, or 8.5 percent, to $22.60, while Citigroup Inc. tumbled 31 cents, or 8.9 percent, to $3.18.

Investors fear the financial sector may not be able to withstand further losses tied to bad mortgage-related assets, despite unprecedented government intervention to prop up the troubled industry. The government's overhaul of the $700 billion financial bailout package has done little to pacify the market's concerns. Last week, bank stocks sank sharply as investors criticized U.S. Treasury Secretary Timothy Geithner for failing to provide enough details on how the administration will beef up efforts to spur lending and remove toxic assets from banks' books.

Investors still don't know how the government plans to price the bad assets or how it will conduct its "stress test" to determine whether a financial institution is worth saving.

The declines among bank stocks mirrored huge losses in the broader market Tuesday. The Dow Jones industrials dropped more than 250 points in afternoon trading, while the broader stock indexes fell more than 3.5 percent. The drop comes as President Barack Obama prepares to sign a $787 billion stimulus package into law on Tuesday. He will also outline a plan to help stem mortgage foreclosures on Wednesday. Investors have eagerly awaited assistance from the government to help the economy, but now that the programs are becoming a reality, many question whether the efforts will be enough to lift the country out of recession.

Morgan Stanley shares declined $2.31, or 10.1 percent, to $20.62. Goldman Sachs Group Inc. shed $8.15, or 8.5 percent, to $88.30.

Wells Fargo & Co. dropped $1.17, or 7.4 percent, to $14.59. PNC Financial Services Group Inc. lost $2.30, or 8.2 percent, to $25.90 and U.S. Bancorp fell $1.30, or 10.5 percent, to $11.10.

Among regional bank stocks that suffered Tuesday, Huntington Bancshares Inc. dove 35 cents, or 20.7 percent, to $1.34. SunTrust Banks Inc. tumbled $1.58, or 18.1 percent, to $7.14, while Fifth Third Bancorp lost 27 cents, or 13.5 percent, to $1.73.