Morgan Stanley, Bank of America Rattle Financial ETFs | ETF Trends

Exchange traded funds indexed to the U.S. financial sector recorded fresh 52-week lows Tuesday as Bank of America (NYSE: BAC) and Morgan Stanley (NYSE: MS) were among the notable decliners in the ETFs’ portfolios.

Bank of America’s website was down yet again Tuesday, frustrating online banking customers. B. of A. shares lost more than 3%. [Bank of America Hits ETFs]

Elsewhere in the troubled financial sector, Morgan Stanley shares slipped 1% while the cost of protection against a default by the firm rose. Investors are worried about banks’ exposure to the European debt crisis and complex derivatives, but Chief Executive James Gorman told Morgan Stanley employees to remain focused and not respond to “confusion and misinformation” circulating about the company, TheStreet reported.

Financial Select Sector SPDR Fund (NYSEArca: XLF) was down 1.2% in afternoon trading Tuesday.

Morgan Stanley shares wobbled on speculation over the firm’s exposure to European banks, especially to French banks. The company’s credit default spreads hit 603 Tuesday from 421 a week ago and 584 on Monday after rumors of the firm’s exposure to Eurozone debt spread, signaling the dropping confidence in the U.S. banking system, reports Avi Salzman for Barron’s.