Brokers Wilt in Debt Market's Heat

Worries about the health of U.S. credit markets are making it an uncomfortably hot summer for financial stocks.

With a record-low default rate, generally healthy corporate balance sheets and strong earnings growth, the financial stocks should by all rights be enjoying healthy gains.

But ever since low-quality debt in the subprime mortgage market hit the skids this spring, the flow of cheap financing that bolstered the buyout boom has started to slow. That slowdown -- and some high-profile scares like the near collapse of two highly leveraged Bear Stearns(BSC Quote) hedge funds -- has pressured the sector even as the Dow Jones Industrial Average soars to new records and big mergers continue to be announced. ...