U.S. stocks and exchange traded funds (ETFs) opened the morning in negative territory on news that several l major banks will be selling shares of common stock to repay funds borrowed from the federal government.

US Bancorp (USB) plans on selling $2.5 billion of stock, Capital One Financial (COF) plans on selling $1.55 billion, BB&T Corp (BBT) plans on selling $1.5 billion and KeyCorp (KEY) plans on selling $750 million, states Jonathan Stempel of the Associated Press.

This news comes after the federal government released the stress test results indicating that several financial institutions will need to raise extra capital to comply with regulations. In addition to this, regulations in executive pay are convincing to view TARP as a negative thing and want to pay back borrowed funds and cut all ties with the program. This sent the Financial Select SPDR (XLF) down nearly 3% in morning trading.

On a different note, the White House announced that its forecast for the U.S. budget deficit for the current year has increased by $89 billion because of skyrocketing unemployment claims and corporate bailouts. The estimate puts the deficit at $1.84 trillion, a whopping 12.9% of GDP.

More negative news has come out of Detroit. General Motors (GM) states that the tasks that need to be completed to avoid bankruptcy are large and daunting. With this in mind, bankruptcy is becoming more probable.

From the technology sector, Microsoft (MSFT) has announced that, for the first time in its history, it will take advantage of its stellar credit ratings and sell five-, 10-, and 30-year debt. The largest software maker plans to sell this debt to raise capital for a massive capital restructuring program which includes a stock repurchase program, states Gabrielle Coppola and Dina Bass of Bloomberg. The Vanguard Information Technology ETF (VGT) was up nearly 0.5% in intraday trading and is up 15.9% for the year; MSFT is 10.8%.

The Dow Jones Industrial Average dropped 1.2%, the S&P 500 was down nearly 1.5% and the Nasdaq dipped about 0.05% in morning trading.

Kevin Grewal contributed to this article.

Tags: Financial, Sector ETFs, Technology, VGT, XLF