Wells Fargo & Co. (NYSE:WFC), the San Francisco-based banking giant that is the fourth-largest U.S. bank by assets, slashed its fourth-quarter earnings estimates for its bank peers Monday, citing "generally unfavorable capital market trends."

In a research note, banking industry analyst Matthew Burnell reduced fourth-quarter earnings estimates for JPMorgan Chase, Citigroup, Goldman Sachs and Morgan Stanley. Burnell reduced the earning estimates for JPMorgan and Citi by about four percent, but sounded a much more pessimistic note on Goldman and Morgan Stanley, reducing estimates for these latter banks by 27.4 and 15.3 percent, respectively.

Burnell's dimmer view of the investment bank's earnings possibilities for the current quarter put him solidly on the lower-end of the spectrum in terms of earnings estimates issued for these institutions. His estimates of $1.80 per share for Goldman Sachs and 18 cents per share for Morgan Stanley means he is forecasting profits more than 35 percent below the consensus of all analysts following those companies.

The forecast downgrade came, oddly enough, on a day when the lack of bad news from Europe has extended a surging rally in financial stocks. The KBW Bank Index, a benchmark index of U.S. banks, is up 3.16 percent for the day, having surged 10.57 percent last week. The large U.S. banks are outperforming that index, with Citigroup (NYSE:C) leading the rally with a gain of 6.11 percent in early-morning trading.

The report is also probably causing some in the Wells Fargo corporate treasury to grind their teeth, since, as reported by the Dow Jones Newswires, the bank is hoping to sell over $500 million in 5-year bonds today.