Updated from 12:17 p.m. EDTBanks traded to the downside after a report that government stress tests have shown Bank of America ( BAC) and Citigroup ( C) may need more capital. The Financial Select Sector SPDR, which tracks the financial stocks in the S&P 500, and the KBW Bank index were down 1.7% and 1%, respectively. BofA and Citigroup were alerted by the government that they may need to raise more capital in light of the preliminary results of the so-called stress tests, The Wall Street Journal reported. BofA came up billions of dollars short, and both banks plan to contest the early results, according to the report.
"If on average the financial system is in pretty decent shape, let's get that news out," he said. CIT Group ( CIT) spent another day in descent, losing 7.5%, or 18 cents, on higher than average volume. JP Morgan Chase ( JPM) shares were rising 2.4%, and Goldman Sachs ( GS) was adding about 0.6%, recently. Deutsche Securities initiated coverage on a handful of banks, including Wells Fargo, U.S. Bancorp ( USB), Fifth Third ( FITB) and First Horizon ( FHN), among others, with hold ratings.