Weakness in the sector, driven by a combination of credit problems and traders trimming bets on interest rate cuts from the Federal Reserve, threatens to take out one of the pillars of the market’s hoped-for-advance through the end of the year. The KBW Bank Index has fallen 4.5% over the last five trading sessions, badly underperforming the S&P 500 Index’s 2.9% drop over the same period, despite Tuesday’s 1.1% bounce.

“If the bank stocks fall much more at all over the next week or two, it’s going to raise a significant warning flag on this all-important group,” Matt Maley, chief market strategist at Miller Tabak + Co., wrote in a note to clients Tuesday.

The closely followed State Street SPDR S&P Bank ETF (ticker KBE) is testing lows at $55 in a head-and-shoulders trading pattern, putting it on the “cusp” of a further move lower, Maley noted. The exchange-traded fund has fallen almost 10% since the middle of September and was at $55.93 as of 1:37 p.m. in New York Tuesday.

The declines in financial stocks show “there are quite a few cracks starting to show up in the bullish argument for the stock market,” given that market expectations were high for the sector when investors assumed interest rate cuts were imminent, according to Maley.

Further evidence of credit conditions deteriorating further lead to additional volatility in the market, Maley wrote. “It’s starting to look like some of these ‘one-off’ issues facing financial companies... might not be as ‘idiosyncratic’ as many of the experts have been telling us.”

Shares of some of the biggest US credit card lenders extended losses on Tuesday after Capital One Financial Corp. reported a steep increase in write-offs, the latest harbinger that consumers are having trouble keeping up with their loan payments.

Capital One’s net charge-off rate — the percentage of loans it has decided it’ll never be able to collect — climbed to 4.77% for its domestic credit card portfolio last month, a 42 basis point increase from the month before, according to regulatory filings. Rival American Express’s write-off rates for its consumer products worsened by 30 basis points to 2.2%, a separate filing shows.