Citi, BofA: Financial Winners and Losers

Updated with thrift bank information and new stock prices

NEW YORK (TheStreet) -- Financial stocks ended mixed Wednesday, shrugging off data suggesting that the root cause of the economic crisis -- the housing market -- has continued to stabilize.

Weekly mortgage applications rose 7.5% (though most of that increase came from refinancings), and new-home sales in July jumped 9.6% (though median home prices were still 11.5% lower than a year ago).

The news did little to lift shares in the financial sector, or equities in general, as investors looked beyond the surface numbers, growing wary of stock values after the huge spring and summer rally. The Dow Jones Industrial Average ended Wednesday at 9,543, up a little more than 4 points on the session, after losing ground for much of the day.

Among the megabanks, Citigroup (C Quote) shares slipped 12 cents, or 2.5%, to $4.63, while JPMorgan(JPM Quote) lost 28 cents, or 0.6%, to $43.30.

But shares of Wells Fargo (WFC Quote) and Bank of America (BAC Quote) endd trading in the green, if slightly, advancing 29 cents to $27.62 and 4 cents to $17.79, respectively.

On Tuesday, the drama over last year's Merrill Lynch bonuses continued. A federal judge ordered U.S. regulators to explain why they hadn't been more rigorous in their investigation of Bank of America's role in those bonus payouts, and whether Bank of America had misled its shareholders after it agreed to buy Merrill Lynch in last September's shotgun deal.

The SEC said that the evidence didn't merit further investigation. The federal judge replied that the SEC's arguments appeared "at war with common sense." The judge also wants Bank of America to tell its side of the story.

Elsewhere Wednesday, another report emerged that Morgan Stanley (MS Quote) was looking to unload its Van Kampen mutual- fund unit. According to a Bloomberg item, the bank has made inquiries with at least three asset-management firms about a sale or link-up. Still, Morgan Stanley shares gave up 66 cents, or 2.2%, to end Wednesday's trading at $29.53.

In a widely anticipated ruling by the FDIC, the regulator softened its stance on the auctioning of troubled banks, making it a bit easier for private-equity firms to acquire those banks. The rules rollback comes as many observers predict a series of failures among small regional banks that, lacking federal bailout money, are still struggling with toxic assets on their balance sheets.

The publicly traded vehicle of private-equity giant Blackstone(BX Quote) gained 23 cents, or 1.8%, to $13.10. Rival Kohlberg Kravis & Roberts's KKR Financial Holdings(KFN Quote) rose 5 cents, or about 2%, to $2.74.

Also Wednesday, the Office of Thrift Supervision said thrift banks barely made a profit in the second quarter, squeaking out total earnings of just $4 million. As small as that number may seem, it marked the first quarter of profit for the industry since the third period of 2007.

But the number of "problem thrifts," a designation applied to institutions with dangerously low capital reserves, rose to 40 from 31 in the first quarter. Just 17 banks were on the list a year ago. The regulator doesn't disclose the names of those banks, for obvious reasons.