Financial Stocks Send Warning, Threaten to Tumble Below Support

Weakness in the sector, driven by a combination of credit problems and traders trimming bets on interest rate cuts from the Federal Reserve, threatens to take out one of the pillars of the market’s hoped-for-advance through the end of the year. The KBW Bank Index has fallen 4.5% over the last five trading sessions, badly underperforming the S&P 500 Index’s 2.9% drop over the same period, despite Tuesday’s 1.1% bounce. “If the bank stocks fall much more at all over the next week or two, it’s going to raise a significant warning flag on this all-important group,” Matt Maley, chief market strategist at Miller Tabak + Co., wrote in a note to clients Tuesday.