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Discover: Financial Winners & Losers

Discover Financial led financials after posting strong third quarter results.
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) -- Financial stocks were mostly stronger Monday, leading the broader market. The

Financial Select Sector SPDR

(XLF) - Get Financial Select Sector SPDR Fund Report

, a widely-followed exchange-traded fund was up 1.16% to $14.78 in early afternoon trading, leading most of the major indices.

One of the best performers was

Discover Financial Services

(DFS) - Get Discover Financial Services Report

, which saw its stock price jump after

it reported earnings

of 47 cents per share, beating the

Thomson Reuters

analyst consensus of 38 cents.

Discover shares were up 3.53% to $16.12 on Monday afternoon, while shares of up-market rival

American Express

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were higher by 3.60% to $42.86.

"Once again this quarter, the most significant factor in our performance was the improvement in credit," said Chairman and CEO David Nelms during a conference call with analysts.

Nonetheless, Discover CFO Roy Guthrie said during the call the company "continue

s to be a bit pessimistic on the economy as a whole and the unemployment rate in particular."

Among the weaker financial names Monday were securities giants

Goldman Sachs

(GS) - Get Goldman Sachs Group, Inc. Report


Morgan Stanley

(MS) - Get Morgan Stanley Report

. A report from Barclays Capital analyst Roger Freeman argues meeting Basel 3 capital framework will not likely leave either company with enough excess capital to buy back shares until 2012.

"We believe many investors (including ourselves) had hoped the companies would be in a position

to buy back shares once the capital framework had been worked out and they had been given the green light by the Fed to realign their capital structures as appropriate within the new guidelines," Freeman wrote.

Goldman's stock was up just 57 cents to $151.55 while Morgan Stanley's was higher by only three cents to $26.50. Both companies' shares were underperforming those of "universal" banks, including


(C) - Get Citigroup Inc. Report


Bank of America

(BAC) - Get Bank of America Corp Report


JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. Report


Wells Fargo

(WFC) - Get Wells Fargo & Company Report



Written by Dan Freed in New York


Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.