More banks are likely to fail before the financial sector recovers, market pros say, which is creating a cautionary environment for both investors and consumers.

With the housing rescue package that made its way through Congress last week aimed primarily at mortgage giants Fannie Mae and Freddie Mac, the rest of the industry will essentially be left to fend for itself amid a largely dour outlook for consumers and the economy.

That lesson got sent home in a big way over the weekend, when the Federal Deposit Insurance Corp ordered the closing of two small banks, First National Bank of Nevada and First Heritage Bank of California, and sold them to the Mutual Omaha Bank.

It all creates a difficult environment that has market pros strictly advising caution in the days ahead until the crisis in the financials shake out completely—whenever that might be.

Not Over Yet

"My real concern is that we're not finished," says Kathy Boyle, president of Chapin Hill Advisors in New York. "Wall Street would like to think that the worst is over, but we've been saying that for a while."

More Top Stories

In Wake of Earl, US Eyes Other Potential Storms

Analysis: What Will Prod the US Fed Into Action?

Obama to Propose Permanent Research Tax Credit

IMF's Lipsky Says Moderate World Recovery Underway

Oracle offered job to ex-HP CEO Hurd says source

More Top Stories