Shares of investment bank
plunged Tuesday on talk of higher losses than previously expected, pulling other financial stocks down with it.
Lehman's quarter ended in May and analysts had forecast roughly $300 million in losses. However, the number is whispered to be even higher, possibly as much as $2 billion.
The Wall Street Journal
reported that the company was considering raising billions up to $4 billion in fresh capital. Lehman's stock slid 9.5% to $30.61.
NYSE Financial Sector
index declined as much as 95 points midday but recovered in the afternoon to close down 28.75 to 7,220.17.
Continuing Monday's tumble,
shares dropped another 6.3% to $21.92. The company on Monday ousted CEO Ken Thompson. On Tuesday, analysts did not see a clear choice for a permanent successor. The uncertainty is putting pressure on the stock as investors continue to be uncomfortable with the leadership.
Elsewhere, shares of exchange operator
sold off after it agreed to a $1 billion settlement in its dispute with the Chicago Board Options Exchange. By settling the disagreement, the CBOE can proceed with the plan to transform itself from a member-owned organization to a shareholder-owned company. CME lost 2.9% to $400.30.
As many U.S. banks traded down, their European counterparts seemed to be having a better day.
Royal Bank of Scotland
jumped 7.2% to $4.89 as
reported that the Children's Investment Fund, an activist fund, could be interested in buying a stake in the bank.
climbed 2.4% to $23.60 after analysts at Bernstein Research suggested it would be a good fit for Deutsche Bank.
And finally, Massachusetts authorities announced they were suing
for discrimination against black and Latino borrowers. Martha Coakley, the state attorney general, said the company sold "extremely risky loan products" to borrowers. However, the news did not drag the stock down as it moved up 27 cents, or 1.2%, to $23.61.