U.S. stocks fell for a third day, the longest losing streak for the Standard & Poor's 500 Index since June, as concern banks will post more losses overshadowed manufacturing and housing data that topped economist estimates.

Wells Fargo & Co. slid the most in two weeks even after saying it will pay back government bailout funds without selling stock. Bank of America Corp. declined 6.4 percent to lead the Dow Jones Industrial Average lower. American International Group Inc. plummeted 21 percent and MetLife Inc. tumbled 7.4 percent after analysts said the insurers¡¯ shares have risen too far, too fast. Europe's benchmark stock index retreated 1.8 percent.

The S&P 500 lost 2.2 percent to 998.04 at 4:04 p.m. in New York, its steepest decline since Aug. 17 and first close below 1,000 since Aug. 19. The Dow industrials fell 185.68 points, or 2 percent, to 9,310.6. The Russell 2000 Index of small companies sank 2.5 percent.

"The future for the banks is not as muddy as it was two quarters ago, but it's still not clear," said Don Wordell, a fund manager for Atlanta-based RidgeWorth Capital Management, which oversees more than $58 billion. "The market can't sustain these huge moves."

Financial companies have led the S&P 500's 48 percent rally since March 9, gaining 123 percent. Today's retreat came at the start of what is historically the worst month for stocks, with the benchmark index losing 1.3 percent on average in September since 1928, according to data compiled by Bloomberg.