Updated from 3:25 p.m. EST

Financial stocks were sliding early Thursday, fueled by warnings from Moody's Investors Service that it could downgrade Bank of America ( BAC) and Wells Fargo ( WFC).

The rating agency expressed concern about how credit portfolios amid the deepening recession might after the capital ratios at the two companies. Moody's expects to complete reviews of ratings at both companies by the end of the month, which could result in multi-notch downgrades for their financial strength ratings.

Moody's separately changed its ratings outlook for JPMorgan Chase ( JPM) to negative from stable, reflecting higher credit costs and an expected difficult time raising new capital in the coming quarters.

BofA shares fell 11.4% to $3.17. Wells Fargo shares were off 15.9% to $8.12. JPMorgan shares lost 14% to $16.60.

Battered Citigroup ( C) was taken along for the ride. The stock dipped under $1 to 97 cents in midday trading, but closed down 9.7% to $1.02.

Goldman Sachs ( GS) lost 4.4% to $81.72. Morgan Stanley ( MS) shares were off 7.3% to $17.98.

The NYSE Financial Sector Index recently dropped 8.3% to 2,147.85.

Aon ( AOC) was one of the few winners among financial stocks Thursday, rising 0.6% to $38.31.
This article was written by a staff member of TheStreet.com.

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