Financial Winners & Losers: Wachovia

Financial stocks rebounded after several straight days of declines Tuesday, as rate cut fears ebbed and merger talk increased in the space.

Consumer confidence fell in June to its lowest level in 16 years, giving investors some hope that the Fed will back off its recent hawkish stance on interest rates as the economy remains in the doldrums.

Wachovia(WB Quote - Cramer on WB - Stock Picks) also provided a spark to the sector, as reports emerged that the Charlotte, N.C.-based bank hired investment bank Goldman Sachs(GS Quote - Cramer on GS - Stock Picks) to advise it of its options on its decimated loan portfolio. Wachovia said that Goldman will "perform analytics on our loans to evaluate various alternatives." Wachovia jumped 5.3% to $17.82 and Goldman rose 2.2% to $182.47.

Overall, the NYSE Financial Sector Index advanced 61.12 to 6,555.43.

NYSE Euronext(NYX Quote - Cramer on NYX - Stock Picks) saw its shares tick up fractionally to $56.63 after it said it was acquiring a 25% stake in Qatar's Doha Stock Market. The deal is expected to close in the fourth quarter and will cost roughly $250 million.

Merrill Lynch(MER Quote - Cramer on MER - Stock Picks) also made an international play with the acquisition of Chile's oldest stock brokerage, Ureta y Bianchi Corredores de Bolsa. Shares of Merrill rose 1.8% to $35.15.

UBS(UBS Quote - Cramer on UBS - Stock Picks) shares enjoyed a boost from takeover rumors on Tuesday. The stock gained 6.7% in heavy volume to $21.98 on unconfirmed reports that HSBC Holdings(HBC Quote - Cramer on HBC - Stock Picks) would make a bid for the bank. HSBC was only up 10 cents to $79.14 on the news.

Washington Mutual (WM Quote - Cramer on WM - Stock Picks) was experiencing mixed trading after a Lehman Brothers report said the beaten down bank may have to set aside as much as $30 billion for credit losses through 2011. On a positive note, ratings agency Fitch reaffirmed its ratings for the bank. WaMu began the day with positive movement then slid to negative territory. Recently it was only down 16 cents to $5.80.

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