Visa Inc. off on U.S. data; Spain saps financials

SAN FRANCISCO (MarketWatch) � Financial stocks helped lead the broader market lower as European fears spurred a flight to safe havens and U.S. housing data showed a decline in pending sales.

Dow components Bank of America Corp. BAC and J.P. Morgan Chase & Co. JPM closed down 3.1% and 2%, respectively, while Citigroup Inc. C �led big banks lower with a 3.8% share-price decline.

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Broadly, the Financial Select Sector SPDR ETF XLF , which tracks the financial stocks in the S&P 500 Index SPX , fell 2.3%. The KBW Bank Index BKX , which tracks the 24 leading U.S. banks, closed down 2.5%.

Shares of Morgan Stanley MS �fell 4%. On Wednesday, Morgan Stanley Chief Executive James Gorman told employees the firm worked �100% within the rules� in its lead-underwriting role in the Facebook Inc. FB �initial public offering. Read more on Morgan Stanley.

Shares of rival Goldman Sachs Group Inc. GS �shed 3.3%.

U.S. stocks as a whole were pressured by continuing fears over Spain, as well as a decline in pending home sales for April. Read more on pending home sales.

Economists and analysts are asking just how long Spain can hold out before it needs a bailout for its banks, jitters that sent the Spanish government�s borrowing costs soaring to nearly the highest levels since the euro�s inception. Read more on Spain.

Not surprisingly, U.S. Treasury prices rose, pushing yields on 10-year benchmark notes 10_YEAR �to a record low, as the increasing worries about Spain�s fiscal health and its banks weighed on riskier asset classes. Read more on 10-year Treasury yield.

�Ten-year Treasury yields hit 1.68% and a break of the 1.67% low will take us to new territory, most likely seeing calls for a test of the 1.5% area,� said Richard Gilhooly, U.S. director of interest-rate strategy at TD Securities.

Among the other financial components of the Dow Jones Industrial Average DJIA , shares of American Express Co. AXP �fell 1.9% and Travelers Cos. TRV shares declined 1.6%.

Other notable decliners with losses of 4% or more were E-Trade Financial Corp.ETFC , First Horizon National Corp. FHN , Hartford Financial Services Group Inc. HIG ,�and Lincoln National Corp. LNC �

The only S&P 500 financial stock to close in positive territory Wednesday was SLM Corp. SLM , better known as Sallie Mae. The shares rose 2.7% after the firm said late Tuesday it plans to buy back an additional $400 million in stock.