Finance stocks continue to suffer

Geithner's bailout plan and an unfavorable analyst note on regional bank Fifth Third contribute to bank stock plunge.

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By Aaron Smith, staff writer

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NEW YORK ( -- The finance sector suffered on Tuesday, as investors continued to lose confidence in the struggling banks and worried about the haziness in Treasury Secretary Tim Geithner's bailout plan.

Geithner's Financial Stability Plan was panned by analysts and investors after its Feb. 10 unveiling, mainly for its lack of detail, and stocks sold off in force.

Peter Sorrentino, senior portfolio manager for Huntington Financial Advisors, said the Geithner plan is "haunting" finance stocks.

As the markets closed on Tuesday, stocks plunged between 11% and 14% for the following banks: Citigroup (C, Fortune 500), JPMorgan (JPM, Fortune 500), Wells Fargo (WFC, Fortune 500), Bank of America (BAC, Fortune 500), Goldman Sachs (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500).

"I think investors are worried about where the bottom is," said Ken Crawford, senior portfolio manager of Argent Capital Management in St. Louis, noting that each time government officials publicly discuss the finance market, "it's a little bit lower than it was the day before."

The stocks for major regional banks like Key Corp (KEY, Fortune 500). and Fifth Third (FITB, Fortune 500) plunged even further on Tuesday, with Key ending down nearly 14%, and Fifth Third down more than 16%.

Sorrentino of Huntington said the fire was fueled by an analyst note from Kevin St. Pierre of Bernstein Research that referred to Fifth Third as "un-investable." In the note, Geithner's plan was partly blamed:

"With [Fifth Third] in the group of banks required to undergo the Financial Stability Plan's 'stress test,' and with the lack of information around the details of the stress test, we believe [Fifth Third] is essentially 'un-investable' at this point," wrote St. Pierre, in a note published on Friday.

The U.S. markets were closed on Monday for President's Day, so Tuesday is the first full session since St. Pierre released his note.

"You've got a whole list of middle market banks that fall into that category," said Sorrentino, referring to the Fifth Third. "You see weakness across all the banks that fall under that umbrella. The psychology has created a shareholder stampede to get out of these things." To top of page

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