Bank of America Corp. and Citigroup Inc. posted new declines as U.S. lenders resumed their slide, pushed lower by concern about Europe’s debt crisis and a weak domestic economy.
Citigroup was the worst performer in the 24-company KBW Bank Index, falling $3.31, or 10 percent, to $28.51 at 10:47 a.m. in New York Stock Exchange composite trading. The index dropped 6.3 percent with Bank of America, the nation’s largest lender by assets, declining 8.4 percent, and Regions Financial Corp., Comerica Inc. and SunTrust Banks Inc. each down more than 8 percent.
Banks had rallied yesterday, regaining some of the ground lost in Monday’s 11 percent rout, after the Federal Reserve eased concern that the economy might fall back into recession. Those fears returned at the start of today’s trading, fed by doubt about Europe’s ability to solve its debt crisis.
“People will probably have concluded that despite the Fed’s comments, the fundamentals haven’t actually changed compared with two days ago,” said Richard Staite, an analyst at Atlantic Equities LLC. “The concern is that central banks and governments are running out of ammunition to stimulate the economy.”
Federal Reserve Chairman Ben S. Bernanke vowed yesterday to keep borrowing costs at an all-time low to revive a recovery that’s “considerably slower” than expected.
“There are more uncertainties in Europe still,” Staite said. “Although banks there have raised a lot of capital, the overall political uncertainties in Europe still make it a more risky environment for banks to operate in than in the U.S.”
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