Financial stocks tumbled Monday, as
( LEH) said it expects a big second-quarter loss and announced plans to raise $6 billion through common and preferred stocks offerings.
Lehman shares plummeted 8.7% to $29.48 after announcing the news, which further dilutes the value of the stock to existing shareholders. All last week the investment bank fought off rumors that it would suffer higher losses.
Financial Sector Index declined 122.68 to 6,882.50.
Major bank stocks were casualties as well.
shares plunged 17% after a UBS analyst cut his price target and estimates after surmising that the bank would have much higher losses than originally anticipated. WaMu beat Friday's all-time low of $7.12 by trading down to $6.25.
slid 46 cents to $19.60,
Bank of America
gave back 2.9% to $29.61 and
fell 6.2% to $18.89. Wachovia also announced that its bank veteran Randy Johnson would be retiring.
Standard & Poor's on late Friday cut
XL Capital Assurance's
rating by three notches, sending shares down 1.2% to $31.93. S&P said in a statement the company's potential loss tied to mortgage-backed securities "is higher than previous estimates." Fellow insurers traded down in sympathy.
( ABK) sunk 10.2% to $2.11 and
dove 10.1% to $4.89.
Among the day's winners was
Hilb Rogal and Hobbs
( HRH). The insurance and risk management company's stock skyrocketed $12.93, or 41.9%, to $43.82 after it was acquired by insurance broker
Willis Group Holdings
for $2.1 billion in cash and stock.
shares also jumped up as much as 15% after
said it would extend up to $3 billion in credit. CIT has been raising capital on its own, but analysts contended it was not enough. Shares closed 3.2% higher to $9.48.
jumped 11.5% to $3.79 on word that the spread in private student loans was falling. First Marblehead would also benefit from the CIT deal since CIT can use private student loans as backing for the financing it is getting from Goldman.