Financial Winners and Losers: JPMorgan

Updated from 1:14 p.m. EDT

Financial stocks traded mostly lower Wednesday along with the major U.S. indices, with JPMorgan Chase (JPM Quote) one of the many weak spots after a report that it was breaking up a hedge fund unit.

The Wall Street Journal said JPMorgan is shuttering an investment banking unit that focuses on areas like hedge funds, leveraged buyouts and real estate. The report said most of the estimated 150 bankers within the group will be disbursed elsewhere in the bank.

JPMorgan will retain the group's Asian private-equity team, but effectively close operations in Europe and the U.S., the report added. JPMorgan shares gave up early gains and finished down 1.5% to $33.98.

Other bank stocks were in the red as well. Citigroup (C Quote) shares shed 3.4%, Wells Fargo (WFC Quote) was lower by 1.1%, and Bank of America (BAC Quote) slid 1.7%.

BofA's decline can be explained by a research note from Rochdale Securities analyst Dick Bove, who cut his 2009 and 2010 estimates for the bank to reflect the company's ongoing capital raising. Bove reduced his 2009 estimate to 71 cents a share from 74 cents, and he lowered the 2010 estimate to $1.38 a share from $1.79. Bove did, however, raise his 2011 estimate for BofA to $3.16 a share from $3.10.

"Since the capital raise was so quick, it is now assumed that the bank will step up its reserving in 2009," Bove said in the research note. "This will lower results this year but increase results, I believe in 2011 when reserve builds will drop off meaningfully."

Elsewhere, BB&T (BBT Quote) was one of few winners after shares were upgraded at Keefe Bruyette & Woods to market perform from underperform after the bank's capital raise and dividend cut. Shares rose 0.6% to close at $21.65.