Financial stocks finished lower Tuesday in a volatile session in which
skyrocketed and battered mortgage giants
continued to take their lumps.
The government-sponsored mortgage giants were once again a focal point of the market, as Fannie Mae collapsed nearly 30% at one point in trading and Freddie Mac shed as much as 34%, after Moody's cut the financial strength ratings and preferred share ratings for both stocks. The move comes after Sunday's announcement of a federal bailout of the two companies. Fannie shares closed down 27.3% to $7.07, while Freddie shares plunged 26%% to $5.26.
The wider financial sector, however, received a late afternoon boost from Securities and Exchange Commission Chairman Chris Cox, who said the regulator would move to curtail naked short selling in Fannie and Freddie shares, as well as broker dealers like
The beleaguered investment bank had tumbled to a new low at one point in early trading, but then rallied and pushed its way to a gain of 6.6% to $13.22. In addition to Cox's comment, the stock was aided by a report in the
New York Post
that suggested Lehman was considering taking the company private. The share price has plummeted 80% over the past year, which makes privatization a very real possibility.
Washington Mutual, which has lost 92% of its value over the last 12 months, sought to soothe investors by publicly stating it has enough spare cash to handle the current weakness in the economy. Late Monday, WaMu said it had more than $40 billion in excess liquidity and that it exceeds the amount to be considered "well-capitalized." Satisfied investors pushed the stock up 11.8% to $3.61.
shares also rose, even after it reported a net loss of $19.1 million for the second quarter. Net charge-offs increased along with expenses. The bank also named D. Bryan Jordan its new president and CEO. Shares in the Tennessee-based bank shot up 16.9% to $5.89.
also finished in the black, after reporting a solid second quarter. The Boston-based bank reported revenue increases of 39% and gave positive guidance for the back half of the year. Shares finished up 7.1% to $59.65.
Losers, however, ultimately carried the day. The
Financial Sector Index finished down 157.15 to 5,548.67.
dropped 7.7% after Oppenheimer analyst Meredith Whitney said that shareholders' prospects were bleak and cut the rating to underperform from perform. However, the stock managed to recover somewhat to trade at flat to down levels.
Wachovia cut its investment rating and earnings outlook for
American International Group
, sending the insurer's stock down 8.5%. The Wachovia analyst downgraded the stock to market perform and said the insurer could post up to $7 billion in second-quarter losses. Shares finished down $1.91 to $20.64.
Other big losers included
, which lost 20.4% to $3.48, and
, which shed 4.5% to $3.60.