Wednesday's Financial Winners & Losers
Financial stocks started the day in the red as the market digested data pointing to higher inflation and fewer mortgage applications, but ultimately clawed their way back.
Investors were greeted Wednesday morning with the Labor Department reporting that the Consumer Price Index rose 0.4%, while analysts had expected the rise to be 0.3%. Food prices jumped the largest amount in eleven months. Not surprisingly, applications for new mortgages dropped 22.6% during the week ending Feb. 15 as most interest rates moved higher, according to the Mortgage Bankers Association's weekly application survey.
A plan to buoy some bond insurers, at the center of the credit and housing storms of late, may have helped lift financial stocks and the wider market. MBIA (MBI - Get Report) and Ambac (ABK) were enjoying gains after hedge fund activist Bill Ackman floated a plan to New York state Insurance Superintendent Eric Dinallo that would keep large bond insurers businesses intact. MBIA closed up 4.1% to $12.18, while Ambac's price ended flat at $9.94.
SWS Group (SWS) also was up on the news, as well as a report of a new contract. Shares gained 10.2% after RTTNews also reported that the Dallas-based regional brokerage firm inked a 1.7 billion British pound contract to support ProcServe's customer base and international growth expansion plans.In the shadow of Societé Generale's rogue trader scandal and Credit Suisse's (CS - Get Report) mispriced portfolio, ING (ING - Get Report) managed to report an 18% gain in profit for the fourth quarter. While the company did mark down some assets, the exposure was limited and the market rewarded the effort by sending the stock up 2.2% to $32.71. The NYSE Financial Sector Index closed up 75.54 to 7,510.69. On the flip side, KKR Financial Holdings (KFN), a unit of one of Kohlberg Kravis Roberts, one the world's largest private-equity firms, saying it has delayed payment on billions in loans and opened debt restructuring talks with creditors. Instead of borrowing from banks, KKR raised money through secured liquidity notes. The payments were to begin on Feb. 15; instead they have pushed that payback date to March 3. The stock closed down 1.9% and once again heightened credit fears. Also suffering was Stewart Information Services (STC - Get Report) which sank 6.8% after it reported a fourth-quarter loss of $31.3 million, or $1.74 a share, down from a year-ago profit of $10.7 million, or 59 cents a share. The Houston-based insurance and real estate information company attributed the lower results to the "sudden collapse" of the subprime mortgage market and a tightening of available credit. The latest results include charges of 72 cents a share related to the company's decision to increase reserves for nine large title claims and an additional reserve adjustment of $5 million to its incurred but not reported reserves because of an increase in the frequency of large claims. HCC Insurance (HCC - Get Report) tumbled 7% the morning after it reported its earnings after the close Tuesday, even though the profits were record-setting. The Houston-based specialty insurance company held its conference call Wednesday morning and while the current numbers beat analyst's forecasts, the projected earnings range of $2.90 to $3.20 per share was below the $3.38 they were expecting.
Check Out Our Best Services for Investors
Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
Check Out Our Best Services for Investors
Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
Every recommendation goes through 3 layers of intense scrutinyquantitative, fundamental and technical analysisto maximize profit potential and minimize risk.
Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.