Worried investors send stocks lower again Updated at 4:04 p.m. (MoneyWatch) In a whipsaw day on Wall Street, investors headed for the exits early, sending stocks, bonds and commodities plunging, but managed to mitigate some of the losses by the end of the session. Worries over the Federal Reserve's suggestion that it would begin cutting back on some of its monetary stimulus operations were blamed in part, along with news that the People's Bank of China was cracking down on its own banking system's off-balance-sheet lending. The Dow industrials fell 139 points to 14,659, a loss of nearly 1 percent. The S&P 500 shed 19 to close at 1,573, a loss of 1.2 percent, while the Nasdaq composite index lost 36 to end the day at 3,320, a fall of over 1 percent. Big banks were among the worst losers. JPMorgan Chase (JPM), Wells Fargo (WFC) and Morgan Stanley (MS) all lost more than 2 percent. Citigroup (C) lost 3 percent to $45.44. Fears about the banks include exposure to China, removal of Fed stimulus and falling equity prices affecting their own portfolios and balance sheets. In the bond market, the yield on the 10-year Treasury bill rose to 2.57 percent, around a 100 basis-point surge over the last several days.The rise began after comments last week by the Fed's chairman, Ben Bernanke that it may begin cutting back on its bond buying, assuming the economy continues to improve. Worries about a credit bubble in China are nothing new, but recently fears surfaced after interbank lending rates spiked, signaling distrust among the banks there and a deeper fear of market instability. Instead of rescuing the situation, the government has let it continue, essentially using the lack of a liquidity as an opportunity to put the brakes on what is thought to be huge amounts of corrupt lending. It sent not only investors in Asia skittering, but also those around the world, on fears that a disruption in the world's second-largest economy could have huge ripple effects internationally. "The fact that the Chinese government is willing to do this, even with the economy already in a slowdown, implies the seriousness of the problem," said Todd Lee, senior director for global economics at the analytical firm IHS. But it also tells us that the government is relatively comfortable with the degree of the economic slowdown. They don't think it's severe enough to justify not reining in the banks. Lee said that the opacity of the Chinese economy makes it difficult to read whether investors are overreacting to the government's move to stand pat. "There is a possibility that this is really alarming," he said. For the government to behave this way, it shows that it could be a really risky situation.