Tuesday's Financial Winners & Losers

Out of earnings, CNBC reported that Merrill Lynch (MER Quote) CFO Jeff Edwards will "probably" be ousted from that position within the next few months for making upbeat comments on Merrill's financial health during a July conference call, less than three months before its announcement of enormous third-quarter writedowns.

CNBC cited "senior executives" at the firm. Merrill denied the report. Shares were down 2.46% to $71.79.

Elsewhere in the red, Lehman Brothers (LEH Quote) slipped 2.66% after mortgage-lending unit Aurora Loan Services disclosed it had axed 160 employees in response to housing-market woes, and Navigators Group (NAVG Quote) lost 2.12% to $56.86 on a Friedman Billings downgrade to market perform from outperform.

But Boston bank State Street (STT Quote) climbed 8.34% after third-quarter earnings totaled $1.15 a share, excluding one-time merger costs -- 21 cents better than the average analyst call, and 38.6% higher than last year. Revenue rocketed 47.9% year over year to a better-than-expected $2.24 billion. Shares gained $5.75 to $74.68.

SCPIE (SKP Quote) was one of the sector's biggest price gainers after The Doctors Company agreed to buy it for $28 a share in cash, or roughly $281 million. Shares of the Los Angeles insurer surged 23.09% to $27.19 in light trading.

Finally, Bear Stearns (BSC Quote) gained ground on news that China's Citic Bank is in talks to take a stake in the New York firm, whose pair of troubled subprime mortgage-focused hedge funds made the broker one of the hardest hit by the credit crisis. Shares tacked on $2.36, or 1.96%, to $123.05.