Financials Take a Beating on Mideast War Worries - TheStreet

Financial stocks plunged Thursday on fears that war will erupt in the Mideast.

Major brokerage stocks, including

Lehman Brothers

(LEH)

,

Goldman Sachs

(GS) - Get Report

and

J.P. Morgan

(JPM) - Get Report

, took a heavy beating on the

New York Stock Exchange

. Also getting hammered were big financial names such as

Citigroup

(C) - Get Report

and

Chase Manhattan

(CMB)

.

The

American Stock Exchange Broker/Dealer Index

was down 4.1%, and the

Philadelphia Stock Exchange/KBW Bank Index

was off 4.6%.

"Clearly, with the international events transpiring, it adds another level of uncertainty to the equation," says John Babyak, portfolio manager at

WHB/Wolverine Asset Management

in Stamford, Conn.

"Obviously we're in a very precarious time with the market, and oil spiking" isn't helping matters any, says Babyak.

Lehman was off $8.88, or 7.7%, to $115.13; Goldman Sachs was down $6.75, or 6.5%, to $97.25; J.P. Morgan was down $7.19, or 4.9%, to $139.63; Citigroup was down $2.94, or 5.9%, to $49.56; and Chase was falling $2.06, or 5.1%, to $38.63.

The selling pressure was not as heavy for regional banks.

SunTrust

(STI) - Get Report

was down $2, or 4.4%, to $43, while

KeyCorp

(KEY) - Get Report

was down 50 cents, or 2.5%, to $22.38 and

Wachovia

(WB) - Get Report

was off $1.50, or 2.9%, to $50.75.

The renewed selloff comes just a day after the sector breathed a sigh of relief, says Bill Schneider, head of U.S. equity block trading at

UBS Warburg

. Schneider pointed to

Morgan Stanley Dean Witter's

(MWD)

move Wednesday to clear the rumors of junk-bond trading losses that had dogged the stock and the broader sector in recent days.

One of the few large issues being spared the pain Thursday was Dow Jones Industrial Average component

American Express

(AXP) - Get Report

, which was drawing strength from a

Goldman Sachs

upgrade.