Stocks fell sharply today after the Labor Department announced that unemployment reached 7.2% in December — the highest level in 16 years. 2.6 million jobs were lost in 2008, with most losses occurring at the end of the year.  The KBW Banking Index fell 4.23% today, and the KBW Regional Banking Index fell 5.01%. The S&P 500 Index was down 2.13%.

The Bank Index was led by Regions Financial Corporation, Fifth Third Bancorp, and M&I, which were down 7.96%, 7.07%, and 6.57%, respectively. Leading the Regional Banking Index lower were Frontier Financial Corporation, Boston Private Financial Holdings, and UCBH Holdings, which were down 14.19%, 10.75%, and 8.50%, respectively.