Late Rally Saves Wall Street

Bond insurer MBIA (MBI Quote) also traded lower after the company said it will take a $3.3 billion writedown in the fourth quarter. MBIA also slashed its dividend to 13 cents a share from 34 cents in order to save $80 million a year and maintain its AAA rating. Shares slid 58 cents, or 4.2%, to $13.40.

Still, financial-related subsector indices staged a late-session rally to finish higher. The Amex Securities Broker/Dealer Index rose 1.4%, the NYSE Financial Sector Index was 1.3%, and the Nasdaq Financial Index added 0.9%.

Among the best individual performers, E*Trade Financial (ETFC Quote) rebounded from the previous day's decline to add 6.7%, and Bear Stearns (BSC Quote) finished 5.1% higher.

Several other sector measures also closed the day with gains. The Philadelphia Semiconductor Sector Index added 0.3% and the Philadelphia Housing Sector Index rose 0.2%. Both had started the day deep in the red.

Also on the bright side, DuPont hiked its 2007 and 2008 profit forecast, citing better-than-expected fourth-quarter sales. DuPont was higher by $2.03 at $44.78.

Fellow Dow member Alcoa (AA Quote) marked the unofficial start of the earnings reporting season shortly after the closing bell, beating both earnings and revenue targets set by Thomson First Call. The stock finished with a 0.8% gain at $31.25 and was up more than 4% in the after-hours session.