Thursday's Financial Winners & Losers

The financial sector's uncanny Wednesday climb faded into memory Thursday as Federal Reserve Chairman Ben Bernanke helped confirm some of the corrosive fears that have been plaguing the market of late, even as he voiced a bit of optimism on the U.S. economy's future.

In prepared testimony to the Senate Banking Committee, Bernanke said that his outlook "envisions an improving picture" -- gathering economic strength on the heels of "a period of sluggish growth" -- in contrast to the recession forecasts being issued by a number of analysts. Still, he warned, the possibility remains that "the housing market or the labor market may deteriorate to an extent beyond that currently anticipated, or that credit conditions may tighten substantially further." He also implied that, if necessary, the Fed would cut interest rates even further following the 225-point slashing it has already employed since September.

Treasury Secretary Hank Paulson agreed that this "difficult transition period" will entail slowing growth, not contraction, amid a torrent of hopeful intonations on the country's economic future. He particularly talked up the rebate plan that President Bush signed into law yesterday, which will bestow on individual taxpayers at least $300 each, as well as measures taken by federal government to stem the tide of foreclosures resulting from subprime-mortgage borrowers who have been unable to keep up with their payments. ...