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American Capital Agency: Financial Winner

NEW YORK ( TheStreet) -- American Capital Agency Corp. (AGNC - Get Report) was the winner among major U.S. financial names on Tuesday, with shares rising 6% to close at $23.08.

The broad indices ended mixed, although there was some support from a 9% gain for Goodyear Tire and Rubber (GT), which closed at $18.56 following better-than-expected second-quarter earnings results.

The KBW Bank Index (I:BKX) was up slightly to close at 65.44, with all but eight of the 24 index components showing gains for the session.

Shares of JPMorgan Chase (JPM - Get Report) were down less than 1% to close at $55.33, after the company's energy trading subsidiary agreed to pay $410 million in fines and "disgorgement to ratepayers," to settle market manipulation charges from the Federal Energy Regulatory Commission.

The Federal Open Market Committee began its two-day meeting on Tuesday, which will be followed on Wednesday afternoon with the release of its statement on monetary policy.

The Federal Reserve has been making monthly purchases of $85 billion in long-term securities since September, in an effort to spur economic growth by holding long-term interest rates down. Investors have pushed the yield on 10-year U.S. Treasury bonds up to 2.61% from 1.70% at the end of April.

Recent comments from Fed Chairman Ben Bernanke have led some investors to expect the central bank's bond-buying to be curtailed as early as September, and the FOMC may issue an update to its principals for quantitative easing the committee laid out two years ago.

The rise in the market yield for the 10-year bond has done little over the short-term to expand banks' net interest margins, but it has had a big effect on market values for mortgage backed securities, which fueled the 31% decline in shares of American Capital Agency Corp. (AGNC) from the end April through Monday's market close.

AGNC late on Monday reported a second-quarter comprehensive loss of $936 million, or $2.37 a share, and a net book value of $25.51 per common share as of June 30. "Economic return" for the second quarter was a negative 8.2% when factoring in the dividends paid on common shares and the book-value decline, which the company said represented an annualized return of negative 32.9%.
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