Bailout Blueprint: Bank Rescue Plan Undecided (Update)

"We need to do something for the American people and we can't do it alone," Reid said late Friday morning on Capitol Hill. "House Republicans have to join us."

The markets wavered as investors interpreted fast-changing and sometimes conflicting accounts of where negotiations stood. Early in the day, the Dow Jones Industrial Average was down as much as 135 points as it seemed the impasse with Republicans could not be overcome. Investors worried that the deal might be further delayed or restructured dramatically in a way that would not adequately support the financial sector.

As it became clearer that both sides were working toward a compromise, and were focused on reaching a resolution by Monday morning, the blue-chip index moved back into positive territory. Financial stocks also trimmed some of their losses, with the NYSE Financial Sector Index moving from a decline of nearly 3% early in the day to a nearly 1% gain.

Rahm Emanuel, (D-Ill.), chairman of the Democratic Caucus, issued a message to Wall Street during an appearance on CNBC: "Let me communicate this directly to the market: We are making progress."

Still, it was evident which companies the market sees as winners and losers amid recent events.

WaMu was unsurprisingly down more than 90% at 16 cents, while former competitor Wachovia (WB) was recently down 31% at $9.43. Morgan Stanley (MS) also dropped 6.4% to $25.37.

However, the stocks of at least two banks that have benefited from competitors' demise were gaining ground. WaMu's new owner, JPMorgan, which also bought out Bear Stearns in March's rescue deal, was up 10% at $47.82. Bank of America (BAC), which acquired Countrywide and Merrill Lynch on the cheap this year, was gained 9% at $37.49.

Also rising was Citigroup (C), which gained 4.6% to $20.30, after a late-breaking afternoon report suggested Wachovia is in talks to merge with Citi.

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