Sector Watch: Financials Flail, Biotech Lone Bright Spot

(Updated from 11:55 a.m.)

Banks and brokerages were leading losses today after concerns were exacerbated overnight about the liquidity and solvency of overseas banks. At a time when Japan's economy and stock market are in dire straits, international rating agency Fitch placed 19 Japanese banks under negative review. And rumors began to circle that the Bank of Japan is in emergency talks with two troubled banks there.

Also hurting sentiment was a cautious note from Goldman Sachs on the European banking sector, particularly in Germany, for which the brokerage slashed its estimates for 2001.

The Philadelphia Stock Exchange/KBW Index was falling 6% and the American Stock Exchange Broker/Dealer Index was losing 4.4%. The brokerage stocks have been hit sharply in the past month on concern that excessive weakness in the market was turning investors away from trading and wiping out brokerage fees.

Airline stocks and transports are also taking their lumps today. The American Stock Exchange Airline Index, which has already seen plenty of trouble this month, continued to travel south, lately off 4.3%. The industry's been plagued with labor problems, most recently at Northwest Airlines(NWAC Quote). Now there are a host of warnings, including one from Northwest and one from Delta(DAL Quote).

Delta this morning announced that it expects to report a loss for the current quarter, and Merrill Lynch subsequently slashed its earnings view and rating on the airline to accumulate from an intermediate-term buy. Delta and Northwest were both off 6%. The Dow Jones Transportation Average, dragged down by the airline stocks, was off 4.5%.

Paper stocks, which have been shredded in the past month, were getting ripped apart again. The Philadelphia Stock Exchange Forest & Paper Product Index was losing 2.8%, partly under the weight of International Paper(IP Quote), which was falling 5.4%, and Weyerhaeuser(WY Quote), down 3.4%.

After a recent brief rebound in chip stocks, the Philadelphia Stock Exchange Semiconductor Index was dipping 2.8% today. The sector's generally been on the decline -- along with the rest of the market -- since last Tuesday. Intel(INTC Quote), for example, was recently off 2.6% to $28.69.

Still, some computer companies were tickling higher. Dell(DELL Quote) was up 2.4% to $24.50 and Compaq(CPQ Quote) was gaining -- wait, hold that, now it's down 0.8% to $18.21. The Philadelphia Stock Exchange Box Maker Index, which tracks the overall performance of the computer sector, was lower by 2.1%.

Biotech was Wall Street's favorite. Shares in Amgen(AMGN Quote) and IDEC Pharmaceuticals(IDPH Quote) were fractionally rising after analysts issued positive notes on the sector. Salomon Smith Barney analyst Elise Wang said that sector fundamentals "continue to support the long-term growth prospects of the industry." It didn't hurt that pharmaceutical Pfizer(PFE Quote) reiterated its plans to invest in research and development this year.