Updated from 3:48 p.m. EDT
Financial stocks were volatile in trading Wednesday, after weak demand at an auction of federal bonds weighed on a rally sparked by stronger-than-expected economic data.
Treasury's $34 billion auction of five-year notes was weaker than expected and far weaker than Tuesday's $40 billion auction of two-year notes, according to
contributor Tony Crescenzi. With the government borrowing heavily to fund its bailout efforts, including the
unveiled Monday that will help private investors buy toxic assets weighing on bank balance sheets, a rally in the financials and the wider market fizzled.
The Commerce Department on Wednesday reported that orders for
, or manufactured products expected to last at least three years, increased 3.4% last month. The consensus analyst estimate was a drop of2%. The department also reported that new home sales rose to a seasonally adjusted annual rate of 337,000 from an upwardly revised January figure of 322,000. The results, while better than the drop to 300,000 units that analysts expected, still were the second-worst on record.
Stocks that had been trading higher earlier in the day gave up gains. The NYSE Financial Sector Index closed up 2.6% to 3,010.
Bank of America
shares closed up 6.7% to $7.70 and
shares added 5.9% to $16.42, after Moody's Investors Service cut their credit ratings.
stock closed up 8.2% to $28.56.
shares finished down 2% to $2.95, after Treasury Secretary
said in a speech Wednesday that the Obama administration wanted to push Congress to grant new powers quickly that would allow the administration the power to take over financial institutions whose collapse could jeopardize the U.S. economy, like troubled insurance giant
American International Group
AIG shares shed 13.7% to $1.20.
This article was written by a staff member of TheStreet.com.