NEW YORK ( TheStreet) --Financial ETFs sold off on Friday after Bank of America ( BAC) 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) 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) 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) is down 2.3%, but is among the best performers among financial ETFs. The fund counts Goldman Sachs, Morgan Stanley ( MS) and exchanges such as CME ( CME) and NYSE Euronext ( NYX) among its top holdings.

International banking stocks fell as well, with the iShares S&P Global Financial ETF ( IXG) dropping 3.5%. The fund's top holdings include HSBC and Banco Santander ( SAN).

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) was declining 4.5%.

-- Reported by Shanthi Venkataraman in New York.

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