Downgrades for giant mortgage buyers
helped send the financial stocks sliding Friday.
Merrill Lynch sliced its rating on government-sponsored entities Fannie and Freddie to sell from neutral, citing more deterioration in financial markets and credit conditions. Fannie shares were down 4.5% at $27.70, while Freddie Mac stock dropped 7.2% to $25.76.
Financial Sector Index was down 1.4% to 352.44, while the
Financial Index slid down 58.41, or less than 1%, to 7,373.70.
The chopping continued at Deutsche Bank, which cut its earnings estimates for bond insurer
, basing the decision on the increased amounts of capital recently raised and the dilutive effect on earnings. The stock dropped 6.6% to $11.11. Not wanting to feel left out, rival
gave back 9%.
The downgrades continued at Keefe Bruyette, which cut
from perform to underperform. Shares fell $1.02, or 8.4%, to $11.17. Late Thursday, the company announced its CFO would resign.
Not to be outdone, a Sanford C. Bernstein analyst slashed his first-quarter profit estimates by more than 40% on
. Bear managed to tick fractionally upward to $82.81 after dropping to $80.21, but Goldman dropped $2.75 to $172.42.
held its conference call Friday, a day after reporting its quarterly profit rose 88%, beating analysts' view. Investors didn't like what they heard on the call and slapped the stock down 7.9% to $80.86.
fell 74 cents, or 2.9%, to $24.50, when the news surfaced that former CEO Charles Prince will testify next week before Congress in a hearing that will review executive pay and the collapse of the mortgage market. Former
CEO Stan O'Neal will also be appearing, but the stock was managing to keep itself in positive territory trading up 7 cents to $50.97
Bucking the downward trend for the day, Morgan Stanley upgraded
Discover Financial Services
, saying the credit card company would outperform rivals
on benefits from moderate credit losses, leverage to lower interest rates and strong liquidity. The investment bank raised its rating to overweight from underweight and expects the company to post 2008 results above consensus estimates. The stock was up 2.6% to $14.54 on the good news.