Wednesday's Financial Winners & Losers

Financial stocks rocketed on Wednesday, taking even sharper benefit from Federal Reserve Vice Chairman Donald Kohn's hope-stoking comments than did the rest of the market.

Kohn said policymakers need to be "flexible and pragmatic" in dealing with the ongoing market calamities, and that the Fed should be "nimble" in its responses to new developments. That worked to encourage those who pine for another rate cut.

The NYSE Financial Sector Index careened higher by 340.81 points, or 4.2%, to 8,558.49. The KBW Bank Index soared 5.3% to 95.18.

Citigroup (C Quote), which had a lackluster day yesterday despite getting a $7.5 billion cash infusion from the Abu Dhabi Investment Authority, today blasted 6.5% higher at $32.29.

Joining it in positive territory, together with the vast majority of financial stocks, was Lehman Brothers (LEH Quote). The Financial Times reported that the New York brokerage is expected to take over the floor-trading operations of Van der Moolen's (VDM Quote) shuttered U.S. specialist business at the New York Stock Exchange.

VDM announced earlier this month that it would shut down the unit. Lehman jumped $4.95, or 8.3%, to $64.85.

Bear Stearns (BSC Quote), meanwhile, gained ground after The Associated Press reported that the beleaguered broker will cut 650 jobs, in addition to the 310 mortgage-business positions it eliminated in October. An internal company memo was cited. Shares tacked on 4.3% to $99.50.

And a Fox Pitt, Kelton analyst said E*Trade (ETFC Quote) will probably garner a buyout offer of between $10 and $11 a share, according to Reuters. That's down substantially from the analyst's prior $18 estimate, which was issued before recent upheaval at the online broker, but shares still leapt 7.5% to $5.28.