Bad day for bank stocks drags down Wall Street

NEW YORK — A bad day for bank stocks pulled the Dow Jones industrial average to its third straight loss Tuesday as many of the patterns that have propelled markets since Election Day last year snapped into reverse.

The main culprit for the weakness was the financial sector, whose 2.3 percent drop was nearly triple that of any of the other 10 sectors that make up the S&P 500. The losses came even though investment bank Morgan Stanley on Tuesday joined the list of banks to report betterthan-expected earnings for the fourth quarter. Morgan Stanley said its fourthquarter profit jumped 83 percent from a year earlier to $1.67 billion.

Part of the reason for the financial sector’s losses was likely Tuesday’s drop in bond yields. Bank stocks have often been trading in the opposite direction of bond yields, and the yield on the 10-year Treasury note fell to 2.32 percent from 2.38 percent Friday. Yields on two-year and 30year Treasurys also sank.

Another reason may lie in how well bank stocks had been performing in the months earlier: Financial stocks in the S&P 500 jumped 17 percent in the two months after Donald Trump’s surprise victory, more than any other sector in the S&P 500.

The biggest gain Tuesday in the S&P 500 came from Houston-based Noble Energy, which rose 7.1 percent to $40.05. The oil and gas company agreed to buy Clayton Williams Energy for $2.7 billion in stock and cash.

Richard Drew / Associated Press file Morgan Stanley, based near New York’s Times Square, had better-than-expected earnings. But the financial sector had an off day in trading Tuesday.