U.S. bank stocks are on the verge of falling below key support levels, which would serve as a serious warning to the broader stock market

U.S. banks and financials are on the verge of falling below key support levels, data showed, sending a warning signal to the broader stock market. Weakness in the sector has been driven by a combination of credit problems and traders scaling back bets on the Federal Reserve to cut interest rates, threatening one of the pillars on which the market is pinning hopes for a year-end rally. The KBW Bank Index has fallen 4.5% over the past five trading days, while the S & P 500 Bank Index recorded a 2.9% decline over the same period. "If bank stocks continue to fall sharply over the next week or two, it will send a major warning signal to this all-important group," wrote Matt Maley, chief market strategist at Miller Tabak. Maley believes that the decline in financial stocks indicates that "quite a few cracks are starting to appear in the stock market bullish argument" because the market has high expectations for the sector when investors anticipate an imminent rate cut. Evidence of further deterioration in credit conditions will cause additional volatility in the market, Maley writes. It now appears that some of the'one-off 'issues facing financial firms... may not be as'special' as many experts have told us.