Reply #59: Wall Street weighed down by financial stocks

[Ghost Dog]

NEW YORK (Reuters) - Stocks fell on Tuesday after a prominent banking analyst warned the sector's fundamentals have yet to improve, and an unexpectedly large drop in wholesale inventories raised worries about an economic recovery.

Financial stocks, which had gained about 25 percent in the last month, tumbled after Rochdale Securities analyst Richard Bove painted a gloomy outlook for the banking industry. He said bank stocks are trading on "fumes," and he expects a short-term pull-back in their stock prices.

"Banks aren't out of the woods yet," said Kevin Kruszenski, Head of Listed Trading at KeyBanc Capital Markets in Cleveland.

"There are some worries about additional equity that needs to be raised. The market is going to have a hard time moving meaningfully higher without them," Kruszenski said.

The drop in wholesale inventories in June, which was nearly double expectations, suggests that businesses remained skeptical about a return in demand.

/... http://www.reuters.com/article/wtUSInvestingNews/idUSTRE57325J20090811