Updated from 1:14 p.m. EDT
Financial stocks traded mostly lower Wednesday along with the major U.S. indices, with
one of the many weak spots after a report that it was breaking up a hedge fund unit.
The Wall Street Journal
that focuses on areas like hedge funds, leveraged buyouts and real estate. The report said most of the estimated 150 bankers within the group will be disbursed elsewhere in the bank.
JPMorgan will retain the group's Asian private-equity team, but effectively close operations in Europe and the U.S., the report added. JPMorgan shares gave up early gains and finished down 1.5% to $33.98.
Other bank stocks were in the red as well.
shares shed 3.4%,
was lower by 1.1%, and
Bank of America
BofA's decline can be explained by a research note from Rochdale Securities analyst Dick Bove, who cut his 2009 and 2010 estimates for the bank to reflect the company's ongoing capital raising. Bove reduced his 2009 estimate to 71 cents a share from 74 cents, and he lowered the 2010 estimate to $1.38 a share from $1.79. Bove did, however, raise his 2011 estimate for BofA to $3.16 a share from $3.10.
"Since the capital raise was so quick, it is now assumed that the bank will step up its reserving in 2009," Bove said in the research note. "This will lower results this year but increase results, I believe in 2011 when reserve builds will drop off meaningfully."
was one of few winners after shares were upgraded at Keefe Bruyette & Woods to market perform from underperform after the bank's capital raise and dividend cut. Shares rose 0.6% to close at $21.65.
was among the worst financial performers, losing more than 7% after a
report that said
sold its entire stake of nearly 2% in Barclays at the beginning of 2009 at a significant loss. The report comes a day after word an
Abu Dhabi investor sold 1.3 billion shares
of the bank. Shares fell 7.3% to close at $16.98.
shares were also sliding after CEO Albert Lord told a conference Wednesday that while loan losses are expected to peak in 2009, charge-offs are likely to stay high. The stock was lower by 5.4% at $5.83.
American International Group
lost ground after the troubled insurer said it has agreed to sell two buildings in New York City, including its headquarters. The price and buyer of the buildings were not disclosed. AIG declined 5.8% to end the day at $1.47.
In other financial news, the
said investor requests for loans to buy asset-backed securities increased to $11.5 billion in June from May's subscription total of $10.9 billion as investors become more comfortable with the program.
The Term Asset-Backed Securities Loan Facility, or TALF, for June was the first to be expanded to include newly issued commercial mortgage backed securities, or CMBS, as acceptable collateral. In a research note, KBW analyst Mark Pawlak said the TALF program now has its feet firmly beneath it as many of the initial fears have subsided.
"The program continues to see growth in both the size and the variety of assets submitted," Pawlak said in a research note. "We continue to believe TALF has gone a long way toward unfreezing the
asset-backed securities sector."