JPMorgan fell $1.46, or 2.7 percent, to $51.83 while Bank of America fell 27 cents, or 1.9 percent, to $14.15. Morgan Stanley fell 66 cents, or 2.5 percent, to $25.81.
Banks have faced intense regulatory pressure to increase their capital ratios - the amount of money they hold in reserve - since the financial crisis five years ago. Several banks that failed, including Washington Mutual, Lehman Brothers and Bear Stearns, were criticized for not holding enough capital to protect their balance sheets from the losses stemming from bad mortgages.
Investors should expect more focus on the Fed this week. On Wednesday the Federal Reserve will publish the minutes of its July policy meeting, and on Thursday the Fed starts its annual conference in Jackson Hole, Wyo.
The Fed minutes will be the most important item for investors this week, said Kristina Hooper, head of investment and client strategies for the U.S. at Allianz Global Investors.
"It will give us insight into what the Fed is looking at to decide," Hooper said. "I don't think the Fed has made up its mind on what it's going to do in September yet."
A sell-off in retailers continued Monday. Saks, the luxury retailer, reported a wider loss two weeks after agreeing to be bought by the Canadian retailer Hudson's Bay, the parent company of Lord & Taylor, for $2.4 billion.
The retail sector got off to a dismal start last week after Wal-Mart, Macy's and Nordstrom cut their sales outlooks for the year. This week, J.C. Penney, Target, the Gap, Home Depot, Sears and others report quarterly earnings. The retail industry is often closely watched by investors because consumer spending makes up a large chunk of the U.S. economy.
Gap fell 53 cents, or 1.2 percent, to $42.59. Staples lost 43 cents, or 2.55 percent, to $16.41.
One bright spot in Monday's sea of red were technology stocks. Intel was biggest gainer in the 30-member Dow after getting an upgrade from PiperJaffray. The investment bank predicted strong sales for chips used in tablet computers and mobile devices. Intel rose 37 cents, or 1.7 percent, to $22.28.
Other major tech stocks also rose. Apple rose $5.41, or 1.1 percent, to $507.70 and Google rose $8.74, or 1 percent, to $865.60.
Among other stocks making big moves: