Shares of regional banks fell Thursday, amid broad market declines, as investors' fears about the economy were exasperated by an unexpected spike in jobless claims and disappointing sales reports from retailers.
The Labor Department reported that new applications for unemployment benefits rose by 15,000 last week. Wall Street had expected a fourth-straight week of declines.
Additionally, many retailers reported sluggish sales for the month of August, traditionally a big month for retailers as they court back-to-school shoppers.
Among the sector's biggest decliners were KeyCorp, which dropped 77 cents, or 6.1 percent, to $11.94, and East West Bancorp Inc., which lost 88 cents, or 6.2 percent, to $13.24.
Moody's Investors Service on Thursday downgraded the ratings of SunTrust Banks Inc. and its main bank subsidiary on concerns over the company's significant exposure to the troubled Florida housing market.
SunTrust shares slipped 60 cents to $44.40 in afternoon trading.
As the end of the third quarter looms, many investors are worried that banks will report more big losses tied to bad mortgage loans. But some regional banks are faring better than others.
Robert W. Baird & Co. analyst David George reiterated an "Outperform" rating on Fifth Third Bancorp shares on Thursday, noting the bank's relatively stable outlook.
Though credit costs are likely to remain high in the near term, the Cincinnati-based bank has yet to see asset deterioration spread to its core commercial and consumer loan portfolios, George said, following a meeting with the bank's management.
Fifth Third shares fell 62 cents, or 3.8 percent, to $15.79.
Huntington Bancshares Inc. plunged 45 cents, or 5.6 percent, to $7.64. Comerica Inc. shed $1.64, or 5.5 percent, to $28.07.
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