Updated with market close information.
NEW YORK (
) -- The fallout from "Operation Twist" continued Thursday, as the broad market tanked and the largest U.S. bank holding companies all saw share prices continue to decline.
The sell-off continued after the
announced it would shift its investment strategy to further boost the economy, by purchasing $400 billion in U.S. Treasury securities with maturities of six years to 30 years, while selling $400 billion in short-term Treasuries, by the end of June 2012.
The Fed also said it would reinvest principal payments from agency debt ad agency mortgage-backed securities into more agency-backed MBS. The moves are designed to lower long-term interest rates while keeping short-term rates between 0% and 0.25%, which investors expect to reduce banks' net interest margins, at least over the short term.
The Dow Jones Industrial average trimmed earlier losses but was ended down nearly 400 points, and commodity prices showed continued weakness.
KBW Bank Index
was declined 3% to close at 34.45, with all 24 index components showing declines, except for
, which was up a nickel to close at $22.91.
Contributing to the weakness among the financial names was a bearish comment from Thomas Huertas -- a member of the executive committee at the U.K. Financial Services Authority and alternate chair of the European Banking Authority -- that "the days when banks can aspire to earn a 20% rate of return on equity and remain a AA+ credit are over." Heurtas made the comment at a regulatory conference in Washington, according to an SNL Financial report.
was the loser among major U.S. financials, with shares dropping over 6% to close at $23.96.
American International Group
declined 6% to close at $21.61.
Large banks seeing shares decline 5.5% included
, which closed at $13.06, and
, closing at $3.42.
Bank of America
was down 5% to close at $6.06.
Large financial names seeing 4% declines heading into the last hour of trading included
, which closed at $16.94;
, at $93.98; and JPMorgan Chase, which closed at $29.27.
Written by Philip van Doorn in Jupiter, Fla.
To contact the writer, click here:
To follow the writer on Twitter, go to
Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.