Wall Street was set for a lower open on Wednesday on renewed concern about the health of banks after a source said government stress test results show Bank of America needs as much as $34 billion in capital.

The $34 billion for Bank of America surpasses previous speculation that the bank would need to raise $10 billion. Shares of Bank of America were down 10.4 percent at $9.71 ahead of the open.

Investors fretted about dilution to shareholders or a bigger government stake in the banks if existing government-held preferred shares are converted into common stock. The results are expected to be released on Thursday.

One of the chief pullbacks here is the ongoing concerns about the results of stress tests and how much capital is going to need to be raised in the near term in the financials, said Arthur Hogan, chief market analyst at Jefferies & Co in Boston.

We certainly knew the banks were going to need more capital, it's just the matter of degree.

Additionally the New York Times reported that Citigroup may need to raise between $5 billion and $10 billion. Shares of Citigroup were down 3.6 percent at $3.19.

S&P 500 futures fell 7.30 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures slipped 52 points, and Nasdaq 100 futures were off 11.25 points.

On the economic front, investors will be watching for the ADP report on private-sector employment. This is the first of three reports on the labor market this week, with initial jobless claims expected on Thursday and the key non-farm payroll report due on Friday.

Dow component Walt Disney Co was up 4.3 percent at $24.14 in premarket trade after the No. 1 U.S. entertainment company posted a quarterly profit above Wall Street's forecasts after the bell on Tuesday.

Shares of Dow Chemical fell 4.5 percent to $15.60 after the company on Tuesday said it will sell about $1.63 billion of its common stock in an effort to pay down debt incurred with its acquisition of Rohm and Haas.

Among quarterly results expected for the day, technology bellwether Cisco Systems reports results after the bell as investors look for more signs the economic slump is abating.

Stocks fell on Tuesday as cautious investors fretted about impending bank stress test results and energy shares succumbed to the pressure of lower oil prices.

Tuesday's drop halted a two-day run-up that had propelled the S&P 500 into positive territory for the year-to-date. The benchmark index had risen 34 percent after touching a 12-year lows in early March.

(Editing by Theodore d'Afflisio)

Investment Citigroup Bank of america