US banks shares fall amid credit concerns

The US market goes further down following a plunge in bank stocks as concerns over worsening credit overshadow a recent string of promising earnings reports. In afternoon trading, Bank of America Corp. shares dropped 19.5 percent as the $13.4 billion the bank set aside to cover loan losses took the shine off the reports announcing the bank's quarterly profit above Wall Street's estimates. Many bank stocks have doubled or tripled in value since some major US banks said in March that they were operating at a profit during the first quarter -- reliving worries of investors following a quarter of massive losses from soured mortgages and other loans. Although the results posted by Wells Fargo & Co., JPMorgan Chase & Co. and Goldman Sachs Group Inc. have all exceeded expectations, investors remain wary that the profits are not sustainable given the growing credit losses amid the unremitting recession. This is while the government's "stress tests", are probing a potential need for more capital for top US banks if the economy worsens. On Monday, investors seized the opportunity to sell off bank stocks and wait in hopes of better days for industry. Citigroup reported a loss of nearly $1 billion on Friday -- an improvement over the $5 billion loss recorded in the year-ago period and a slightly narrower loss than analysts expected. But the New York banking giant set aside $10 billion to cover loan losses. Fox-Pitt Kelton shares tumbled 18.4 percent to $2.98 while Wells Fargo dropped 10.3 percent to $18.16, and US Bancorp fell 10.2 percent to $16.69. Elsewhere, JPMorgan Chase fell 6.5 percent and PNC Financial Services Group Inc. dipped 7.1 percent, to $38.65. Shares of regional banks also fell sharply. Fifth Third Bancorp lost 24.6 percent, Regions Financial Corp. dropped 16.7 percent, Huntington Bancshares Inc. 15.9 percent and KeyCorp lost 13.9 percent.