Wednesday's Financial Winners & Losers
Shares of
KeyCorp
(KEY) - Get Report
jumped on talk of a deal with fellow beleaguered regional bank
National City
(NCC)
on what was an overall mixed day of trading for financial stocks.
National City had said Tuesday that it hired New York investment bank Goldman Sachs to look into strategic alternatives. National City has been shopping itself over the last six months as it struggles to address its exposure to the subprime crisis.
The Wall Street Journal
reported that KeyCorp was the latest name to have surfaced as a potential acquirer. Key shares were up 3.6% to $24.34, while Nat City plunged 7.7% to $9.22.
After Tuesday's rally, the market largely shrugged off
Federal Reserve
Chairman Ben Bernanke's pessimistic testimony before the Joint Economic Committee of Congress. The chairman warned Congress that a recession was possible. The
NYSE
Financial Sector Index closed down less than a point to 7,678.20.
Bond insurers seemed to be reacting positively to Bernanke's testimony, with both
Ambac Financial
(ABK)
and
MBIA
(MBI) - Get Report
moving up. Ambac shares climbed as much as 5.1%, but then settled up 8 cents at the close to $6.19, while MBIA stock was climbing 2.1% to $13.76.
Shares of
Fifth Third Bancorp
(FITB) - Get Report
initially jumped higher Wednesday after a Morgan Keegan analyst upgraded the stock, saying the bank has shored up its balance sheet and the shares do not have much more to fall. The analyst pointed out that Fifth Third had sold $1 billion in bonds, cashed in on a stake in
Visa
(V) - Get Report
and packed $815 million in car loans into bonds, thus freeing up a lot of money. The bank climbed as high as $1.15, but closed up 14 cents to $22.63.
Credit company
CIT Group
(CIT) - Get Report
soared as various rumors surfaced about the company ranging from a potential buyout to asset sales. The stock jumped to $15.49 at one point, but pulled back to $14.15, a move of 9.1%.
Elsewhere, a Friedman Billings Ramsey analyst wrote in a research note that banks with a rapidly increasing non-performing asset to risk-based capital ratio will likely experience the scrutiny of regulators. His comments sent banks like
Bank of New York Mellon
(BK) - Get Report
sliding 4.8% to $42 and
Bank of America
(BAC) - Get Report
down 56 cents to $40.30.
Also dropping in afternoon trading was
Merrill Lynch
(MER)
after
CNBC
reported that the company was planning to layoff 10% to 15% of its workforce. The investment bank was declining 56 cents to $45.34, while fellow broker
Lehman Brothers
(LEH)
ticked down 27 cents to $44.07. Lehman is expected to cut 10% of its workforce instead of the 5% that was initially expected.