Tuesday's Financial Winners & Losers

Tuesday was a particularly gloomy day for financial stocks as the sector got pelted from all sides by downgrades and credit-market fears.

One of the biggest losers was Fremont General (FMT Quote), which surrendered 12% to $4.06 after Moody's cut the subprime-mortgage lender's senior-debt rating to Caa2 from B3.

Also sliding on negative analyst research were brokers Lehman Brothers (LEH Quote), down 5.8%, and Bear Stearns (BSC Quote), down 2.5%, along with banking behemoth Citigroup (C Quote), down 2.5%.

All were cut to neutral from buy at Merrill Lynch, which pointed to the brokers' dependence on the debt markets and slowdowns in Citi's securitization businesses and leveraged financial obligations. The three stocks weighed on the plunging NYSE Financial Sector Index. The tracker lately lost 169.7 points, or 1.9%, to 8,894.

State Street (STT Quote), meanwhile, fell 3.9% in heavy trading after British paper The Times reported that the Boston-based bank has $22 billion in exposure to asset-backed commercial paper conduits -- off-balance-sheet investment vehicles backed by short-term debt that have become risky amid the deteriorating credit market. That represents 17% of the bank's total assets, says the paper, or the highest proportion among its American and European peers.

State Street helped pressure both the NYSE financial tracker and the red-drenched KBW Bank Index, which was down 1.9 points, or 1.7%, to around 106.