Friday's Financial Winners & Losers

Countrywide's (CFC Quote) sanguine outlook helped lift the mood Friday, both in the financial sector and in the broader market.

Despite reporting a big third-quarter loss, the mortgage-lending giant catapulted nearly 23% after saying it will likely book a profit in the current quarter -- pegged at between 25 cents and 75 cents a share -- and in 2008, as well. Countrywide also kept its 15-cent dividend, contrary to some prior speculation that it would be suspended.

Its third-quarter loss totaled $1.2 billion, or $2.85 a share, vs. last year's per-share income of $1.03. Analysts were looking for a loss of $1.28 a share, less special items. Still, shares soared $2.96 to $16.03 to take back all of this week's massive losses and then some.

Merrill Lynch (MER Quote), meanwhile, had its own heavily traded recovery after The New York Times reported that CEO Stan O'Neal put his job in jeopardy, following Wednesday's abysmal earnings report, by suggesting a merger with Wachovia (WB Quote) without first consulting the company board.

O'Neal called Wachovia Chief Kennedy Thomson to broach the idea late last week, The Times reported. Merrill shares added 4% to $63.31 -- a move which, together with Countrywide's gains, helped boost the NYSE Financial Sector Index. The tracker jumped 195.5 points, or 2.2%, to about 9,223. The KBW Bank Index was up 1.3%.

Fellow component Radian (RDN Quote), whose stock has taken a severe beating lately, was also bouncing back after the firm said it has a "strong capital position and balance sheet" and pointed to liquidity-boosting measures taken this quarter.