Weak global economic conditions and a downgrade of Well Fargo by prominent banking analyst Richard Bove spooked investors even as Morgan Stanley and Yahoo reported better-than-expected earnings.  The Dow Jones industrial average slipped below the 10,000 level yesterday as markets pulled back in the final hour of trading.

Bove of Rochdale Securities said earnings at Well Fargo (NYSE:WFC) were helped by mortgage-servicing fees rather than improving business trends, and trimmed his rating on the bank to “sell" from “hold."  However, Well Fargo and Morgan Stanley (NYSE:MS), which reported its first quarterly profit in a year, were behind the market’s strength earlier in the session.  Bove also cited accelerating loan losses at the firm for the downgrade.  After Bove’s cut, FBR slashed its rating on the firm to "underperform," questioning Well Fargo's earnings quality.

The Dow Jones industrial average fell below the psychologically important 10,000 level, declining 92.12 points, or

With U.S. employers cutting fewer jobs in April and banks' stress test results throwing up less-than-expected surprises, U.S. stocks advanced helping S&P 500 erase this year's losses and tech-heavy Nasdaq recorded its ninth straight weekly gain.  Reassuring signs emerging from the employment front indicated the economy is starting to find its footing as even a $75 billion deficit in capital failed to deter investors.  Stock buyers helped broad-based S&P 500 end the week 5.9% higher - the index is up 37% from a 12-year low hit on March 9. During the week, the Dow Jones Industrial Average added 362.24 points, or 4.4%, to 8,574.65. The Chicago Board Options Exchange Volatility Index, a measure of market volatility, declined 9.2% to 32.05. Volume on the NYSE was a heavy 1.9 billion as advancing issues outpacing declining stocks by a five-to-one margin. Among S&P sector groupings, financials were the leading gainers

U.S. markets closed modestly lower Monday paring losses recorded earlier in the day amid banking worries and investor concerns that gloomy earnings and outlook will hurt technology, commodities and industrial shares.  The KBW Banking index slipped 3.8% after a prominent banking analyst advised selling banking stocks.  Calyon Securities analyst Mike Mayo in a report titled "Seven Deadly Sins of Banking" warned bank losses could exceed levels seen during the Great Depression.  Stocks advanced in the late afternoon session paring some losses but the rally was checked after reports emerged that talks for IBM Corp.'s (NYSE: IBM) $7 billion deal to buy Sun Microsystems (NASDAQ: JAVA) had hit a roadblock. Sun Microsystems (NASDAQ: JAVA) shares plunged 23%.

Mayo started coverage on several banking stocks with an "underperform" or "sell" rating.  Among securities initiated with a sell rating were: BB&T Corp (NYSE:BBT), Fifth Third Bancorp (NASDAQ:FITB), KeyCorp (NYSE:KEY), SunTrust Banks