NEW YORK (AP) -- Bank stocks led the market lower after the Federal Reserve cut its economic forecast and said unemployment could get worse.
The Fed's prediction Wednesday that the jobless rate could approach 9.6 percent -- worse than its previous forecast of 8.8 percent -- was especially ominous for banks since that data is a component of the government's recent "stress tests" designed to determine how healthy banks are.
The Fed also now expects the gross domestic product, the broadest measure of the nation's economic activity, to post a drop of between 1.3% and 2% this year. It had previously expected only a 0.5% to 1.3% decline. Read more