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Exchange traded funds tracking the financial sector were in the limelight Wednesday after Standard & Poor’s downgraded its ratings on a half-dozen major U.S. banks. Meanwhile, key component Bank of America (BAC) was in danger of seeing its shares fall below $5, which could trigger additional selling from institutional investors.

S&P downgraded Bank of America, Citigroup (C), Goldman Sachs (GS), JP Morgan (JPM), Morgan Stanley (MS), Wells Fargo (WFC) and several other of the world’s largest banks.

Financial Select Sector SPDR (XLF) was set for a higher open Wednesday as markets got a boost after China cut the reserve requirement ratio for its banks.

The financial sector ETF has lagged the market this year, losing 23.6% versus a 3.1% decline for the S&P 500, according to Morningstar.

Some analysts say the banking sector needs to stabilize before the broader market can enjoy a sustainable rally.

Bank of America shares are struggling to hold the key $5 level. Some institutional investors are prohibited from owning stocks under $5 a share.

“Beyond the S&P downgrade, trading could become even more complicated in Bank of America’s stock, if it falls below $5. Under that threshold, many broker-dealers will not allow investors to buy or short a stock on margin,” CNNMoney reported.

Financial Select Sector SPDR

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Bank of America

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Source: Financial ETFs Active On S&P Downgrade, BofA $5 Threshold