Bank Results Weigh on Financial ETFs

Financial ETFs were among the worst performers on Friday.
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NEW YORK (

TheStreet

) --Financial ETFs sold off on Friday after

Bank of America

(BAC) - Get Report

reported a decline in revenues across businesses, suggesting that loan demand is yet to rise and that the recovery was further away.

Uncertainty surrounding the impact of financial regulation on the large banks also weighed on the stocks. In addition, fresh data showed consumer sentiment took another step back in July, suggesting, once again, that economic recovery could be delayed.

Financial stocks were closing the day deeply in the red, with a few exceptions. Goldman Sachs

(GS) - Get Report

rose close to 5% on Friday morning bit gave up most of its gains by the end of the day, trading 0.9% higher at $146.50 towards the close. The stock gained on the back of news that the company had reached a $550-million settlement with the Securities and Exchange Commission.

Charles Schwab

(SCHW) - Get Report

was among the day's biggest gainers, rising 4.9% to $15.3. Brokerages and trading companies are faring better relative to large and regional banks.

The

iShares Dow Jones US Brokers-Dealers

(IAI) - Get Report

is down 2.3%, but is among the best performers among financial ETFs. The fund counts Goldman Sachs,

Morgan Stanley

(MS) - Get Report

and exchanges such as

CME

(CME) - Get Report

and

NYSE Euronext

(NYX)

among its top holdings.

International banking stocks fell as well, with the

iShares S&P Global Financial ETF

(IXG) - Get Report

dropping 3.5%. The fund's top holdings include

HSBC

and

Banco Santander

(SAN) - Get Report

.

The worst performers are ETFs tracking the KBW Banking Index and the KBW regional banking index. The

Regional Bank HOLDRS

(RKH)

was shedding 4.2% on Friday afternoon, while the

SPDR KBW Bank

(KBE) - Get Report

was declining 4.5%.

-- Reported by Shanthi Venkataraman in New York.

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