Updated from 2:15 p.m. EDT

Financial stocks turned lower Tuesday, as Goldman Sachs ( GS) failed to inspire investors with a big earnings beat after Monday's closing bell.

Goldman stock closed down 11.6% to $115.11 after the company posted a $1.81 billion profit in the first quarter and sold $5 billion in common equity. While the profit exceeded Wall Street's expectations, the capital raise is dilutive to current shareholders. The company plans to use the money to repay the government's $10 billion preferred equity investment.

The NYSE Financial Sector Index closed off 4.6% to 3,322, as major components were mixed in trading.

Goldman rival Morgan Stanley ( MS), which is expected to post a loss of 10 cents a share next week, according to analysts polled by Thomson Reuters, lost 12% to $23.67. JPMorgan Chase ( JPM) shed 8.9% to $30.70. Wells Fargo ( WFC), which, like Goldman, blew away estimates with a preannouncement last week, fell 7.1% to $18.27. Bank of America ( BAC), which was in positive territory earlier in the day, stumbled 8.4% to $10.09.

On the flip side, Citigroup ( C) jumped 5.5% to $4.01. Traders attributed Citi's outlier status among the financials to short covering connected to a popular arbitrage strategy, as the stock moved above $4.

This article was written by a staff member of TheStreet.com.

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