Financial Winners & Losers: Lehman - TheStreet

Financial Winners & Losers: Lehman

Despite a rash of downgrades, the investment bank and many of its peers made gains Wednesday.
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Financial stocks rallied along with the wider market as crude oil prices fell Wednesday, despite negative analyst sentiment for investment banks like

Lehman Brothers

(LEH)

.

Lehman managed to trade up 4.8% to $13.70 even though analysts at Goldman Sachs and Sanford Bernstein suggested it and a host of other brokers would take hits in the third quarter.

The New York Post

also reported that a financing deal between Lehman and a South Korean fund fell apart.

The Goldman report maintained that

Merrill Lynch

(MER)

would be one of the hardest hit in the third quarter as a result of its exposure to the collateralized debt obligation market. Yet, Merrill jumped 2.5% at $24.41. Goldman also lowered estimates for

JPMorgan Chase

(JPM) - Get Report

due to the hit it took on auction rates securities. But JPMorgan gained 4% to $37. And the analyst even called for a short position in

Citigroup

(C) - Get Report

, but that bank held its own and ticked up 1.8% to $17.49.

The one name that the Goldman analyst maintained a long position in was

Morgan Stanley

(MS) - Get Report

, which tumbled 1.8% to $37.40. The Bernstein analyst also cut his estimates for the same names citing the slowing M&A business.

Goldman Sachs

(GS) - Get Report

itself was not spared, as Bernstein reduced its forecast by 20%. Goldman finished fractionally higher to $158.25.

The

NYSE

Financial Sector Index started out in the red zone, but recovered to advance 59.81 to 6,084.76.

Government-sponsored mortgage giants

Fannie Mae

(FNM)

and

Freddie Mac

(FRE)

were among the hardest hit financial stocks on Wednesday. Fannie tumbled 26.8% to $4.40 and Freddie fell 22.1% to $3.25, as shareholders fretted that the government will end up bailing the companies out -- and likely wipe out the common stock.

The concern in the mortgage market has stretched the downtrend in bond insurers for another day.

Radian Group

(RDN) - Get Report

dropped 16.6% to $3.31 and

PMI Group

(PMI)

gave back 8.3% to trade at $3.22.

And finally,

Sovereign Bancorp

(SOV)

, which holds roughly $600 million in preferred Fannie and Freddie stock slid 7.4% to $8.78.

This article was written by a staff member of TheStreet.com.