NEW YORK (MarketWatch) — Shares of U.S. financial stocks fell on Wednesday as the latest data from the government showed that consumer spending continues to fall. Analysts had expected a small boost in consumer spending in April.
Retail sales dropped a seasonally adjusted 0.4%, the eighth decline in the past 10 months, the Commerce Department estimated Wednesday.
The Financial Select Sector SPDR (XLF) shed 3.5% on Wednesday morning.
Rising home foreclosures and a report that the government is looking to take a more active role in regulating financial services firms also spooked investors who have driven up financial stock prices sharply over the last six weeks.
And, a flood of new bank shares headed to the market after the recently concluded stress tests also weighed on the sector.
The KBW Bank ETF (KBE) and the KBW Regional Banking ETF (KRE) both fell.
U.S. foreclosure filings in April rose to a record, affecting one in every 374 housing units, and bank repossessions in particular may spike in the next few months, RealtyTrac reported.
Foreclosure filings — defined as default notices, auction-sale notices, and bank repossessions — were reported on 342,038 U.S. properties in April, up less than 1% from March and up 32% from April 2008, the Irvine, Calif., real-state consulting firm reported.
RealtyTrac began issuing its report on foreclosures in January 2005
Full Story: http://www.marketwatch.com/story/data-and-dilution-weigh-on-sector?siteid=yhoof