Looking ahead to the next FOMC meeting on Oct. 29 and 30, Credit Suisse economist Neil Soss believes the next policy statement from the committee may "look a lot like the last one." In note to clients that was published before the disappointing September employment growth numbers were available, Soss wrote, "It will take weeks to learn what, if any, effects the fiscal showdown have had on real economic activity. Moreover, the quality of US economic data for October to be released in November and beyond may be compromised."

The FOMC has a strong preference not to alter policy in the absence of clear data.

Soss added that Credit Suisse's "baseline" for Federal Reserve policy is for a modest tapering of monthly securities purchases of $10 billion in January, "followed by cutbacks of growing intensity through September 2014, when we have penciled in the program's conclusion. If this scenario holds, QE3 would total just over $1.65 trillion ."

The KBW Bank Index was down 0.4% to 65.17, however, all but eight of the 24 index components ending with gains. The winner on Tuesday among major U.S. banks was BB&T ( BBT) of Winston-Salem, N.C., with shares rising 2% to close at $34.75.

In addition to Zions and Regions Financial, investors were displeased with the third-quarter results of State Street ( STT) of Boston, sending the trust and custody bank's shares down over 3% to close at $67.62.

State Street early on Tuesday reported third-quarter earnings of $531 million, or $1.17 a share, which missed by a penny the consensus estimate among analysts polled by Thomson Reuters. The company's total revenue was up year-over-year, however, State Street saw significant declines in trading services revenue and securities finance revenue. On a brighter note, assets under custody and management continued to grow. Please see TheStreet's earnings coverage for more on State Street's results.


-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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