US stocks drop; Citi and other big banks fall hard

By The Associated Press
Posted: 1:11 am Tue, December 20, 2011

NEW YORK — U.S. stocks edged lower in afternoon trading with bank stocks leading the way down.

Stocks opened higher Monday but soon fell after an hour of trading. Cautious comments from the head of the European Central bank soured any hopes the ECB would find a resolution to Europe’s debt crisis anytime soon.

Morgan Stanley fell 5 percent and Citigroup dropped 4 percent. Bank of America Corp. sank 3.6 percent, the biggest fall among the 30 stocks in the Dow Jones Industrial average.

“If Europe is going to be bring us down it’s going to come through the financial firms,” said J.J. Kinahan, chief derivatives strategist at TD Ameritrade.

A report in The Wall Street Journal also said U.S. regulators will likely force U.S. banks to follow stricter rules to shore up their finances. The rules are aimed at keeping banks from failing but would pinch profits.

The Dow fell 51 points, or 0.4 percent to 11,815 as of 2:50 p.m. Eastern time. Pfizer Inc. was the Dow’s leading stock, rising 1 percent.

The Standard & Poor’s 500 index fell 8 points, or 0.6 percent, to 1,212. The Nasdaq composite index fell 16, or 0.6 percent, to 2,539.