NEW YORK (TheStreet) - Bank stocks were losing steam on Tuesday, as the threat of higher oil prices dimmed market enthusiasm about the economic recovery and legal issues continued to mount.
The KBW Bank Index of large-cap stocks lost 2.3% by the close of trading, off significantly more than broader market indexes, which shed just 1.3% to 1.6%. Stocks wavered as chaos continued in or near oil-producing countries in the Middle East, and crude prices were again approaching $100 a barrel.
Bank's ongoing legal woes were adding pressure to financial sector stock prices. Fifth Third (FITB) was among the worst performers on Tuesday after the regional lender disclosed a Securities and Exchange Commission subpoena regarding commercial loans.
Goldman Sachs (GS), which disclosed $4.3 billion in legal liabilities on Monday evening, fell 1.5% to $161.33 after the SEC filed insider trading charges against ex-director Rajat Gupta. Goldman hasn't commented on the issue.The four biggest U.S. lenders, Bank of America (BAC), Wells Fargo (WFC), JPMorgan Chase (JPM) and Citigroup (C), have disclosed in regulatory filings a potential $11.2 billion cumulative shortfall in reserves to cover legal losses over the past week. JPMorgan alone is the subject of 10,000 lawsuits, which vary in nature, size and seriousness. Big banks' legal woes have been exacerbated as the housing crisis crawls toward a close, with widespread investigations into problems with their mortgage and foreclosure practices. BofA closed down 2.5% to $13.93, Citi lost 2.4% to close at $4.57, JPMorgan lost 2.3% to close at $45.60 and Wells Fargo lost 1.9% to close at $31.65. News of Fifth Third's potential commercial mortgage problems seemed to affect share prices of regional competitors as well. Huntington Bancshares (HBAN) fell 4.1% to close at $6.56 while Capital One (COF) closed down 3% at $48.26. Regions Financial (RF) declined 2.8% to $7.43 and SunTrust (STI) shed 2.5% to $29.41. -- Written by Lauren Tara LaCapra in New York.
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