free fell Thursday as financial stocks gave up gains made over the past several days.
The Seattle-based thrift has been struggling to recover from the enormous losses it has suffered as a result of the mortgage meltdown. Thursday's decline was attributed to investors not necessarily believing the company's insistence that it won't need to raise more capital.
A Gimme Credit analyst suggested that the bank's decline in purchases of federal funds and commercial paper sent a signal that creditors were pulling funds from the bank. WaMu insists its capital levels are fine. Shares were closed down 13.3% to $4.03.
Financials also were hit by a report from the National Association of Realtors, saying existing homes sales fell 2.6% in June, worse than the 1% predicted by analysts.
, which had been moving up in anticipation the housing bill's passage, sank back into negative territory. Fannie shares fell 19.9% to $12.02, while Freddie slid 18.4% to $8.81.
Financial Sector Index declined 346.92 to 6,403.34.
shares fell 7.1% to $21 after New York State filed a lawsuit alleging the bank marketed auction rate securities as cash equivalents. UBS denied any wrongdoing, but it didn't help that some top executives unloaded the instruments at the same time the bank was aggressively selling them.
fell in sympathy, as it has also been subject to ARS investigations. Wachovia shares slid 11.1% to $15.69.
was downgraded by Ladenburg Thalmann analyst Richard Bove to neutral from buy. He said the bank had potential but was not taking advantage of the opportunities before it. The stock skidded to $10.11, a 14.3% decline. Bove suggested that the bank needs a third party to come in and fix it.
Brokerages were also taking it on the chin as
slumped 13.7% to $29.17. Investors aren't convinced that it won't need to raise additional capital. And electronic broker
plunged 10% to $3.06 on heavy volume as the fallout continued from its dismal second quarter earnings.
Beaten-up Cleveland-based bank
managed to keep its head above water, even after reporting a $1.76 billion loss for the second quarter. The stock was mostly flat for the day finishing down 4 cents to $4.67.
On the positive side, asset manager
reported a 36% jump in its second-quarter profits, sending the stock shooting upward as much as 12% at one point. The stock closed up 3.5% to $28.36.