Monday's Financial Winners & Losers
Citigroup upgraded the U.S. banking sector to overweight on Monday, positing that the merciless recent selling has been "overdone," but financial stocks mostly persisted in forging downward amid an otherwise rank outpouring of news.
Citi
(C) - Get Report
itself lost more than 5% after Goldman Sachs
cut the big bank to sell, citing its exposure to all that is the current bane of the financial sector -- collateralized debt obligations (CDOs), subprime mortgages and leveraged loans -- on top of former CEO Chuck Prince's
recent departure.
The "lack of leadership ... could not have come at a worse time," said the analyst, according to
Bloomberg
, as he projected $15 billion in CDO writedowns over the next two quarters. Citi announced moves to bolster its risk management after market close Friday, including the
appointment of 30-year veteran Jorge Bermudez as chief risk officer. Still, shares surrendered $1.80 to $32.20.
Goldman also chopped $9 off
E*Trade's
(ETFC) - Get Report
price target to $6 after last week's
downgrade-catalyzed beatdown, which followed word of
significant fourth-quarter writedowns at the online broker. Last week, shares partially rebounded from the initial Monday plummet; today they pulled back 11.6% at $4.81.
Also among those getting Goldman price-target cuts were
Bear Stearns
(BSC)
, down 4.4%,
JPMorgan Chase
(JPM) - Get Report
, down 3%, and
Merrill Lynch
(MER)
, which lost 3.4% to $54.19. Merrill additionally revealed on Friday that it will
compensate new CEO John Thain some $43.8 million in salary, bonus and restricted stock trading, in addition to largely performance-based stock options.
Thain, who comes from
NYSE Euronext
(NYX)
, will
replace the
recently forced-out Stan O'Neal during a tough time for the brokerage, which reported a
huge third-quarter loss last month. NYSE shares were down 4.5%.
Meanwhile,
The Wall Street Journal
highlighted that mortgage investors
Freddie Mac
(FRE)
and
Fannie Mae
(FNM)
are beginning to show symptoms of the credit-crunch plague as the housing market continues to sink, and pointed out that they have some exposure to subprime mortgages.
That makes investors nervous, said the
Journal
, especially ahead of Freddie's scheduled earnings report tomorrow. Fannie, for its part, today was hit with a Friedman Billings downgrade to market perform from outperform, which comes on the heels of last week's share-hammering
Fortune
report that it could be using
accounting tricks in order to brightly skew its credit-loss ratio. Freddie and Fannie shares were off 7.9% and 7.2%, respectively, in heavier-than-usual trading.
Elsewhere,
UBS
(UBS) - Get Report
gave up 5.8% to $44.80 on a cut to sector perform from sector outperform at CIBC World Markets, and
Huntington Bancshares
(HBAN) - Get Report
lost another 3.8% after Standard & Poor's lowered its outlook to negative from stable, signaling an increased likelihood of a future downgrade at the credit-rating agency. Huntington got a black eye on Friday after saying it will
take a fourth-quarter loss due to inherited bad credit.
The NYSE Financial Sector Index plunged 179.39 points, or 2.1%, to 8,310.74 under the weight of most of the above stocks. The KBW Bank Index, which tracks Citi, JPMorgan and Huntington, shed 1.9 points, or 2%, to 91.52.
The best many firms could do today, it seemed, was to book minimal losses or break even.
PartnerRe
(PRE)
, a Bermuda-based insurer, mostly hovered around the flat line despite adding 2.6 million shares to its stock-buyback program, returning the total authorization back up to the 5-million-share figure last set in May. Shares were dipping 22 cents to $80.46.
Among very few financial stocks spending substantial time in positive territory were
IntercontinentalExchange
(ICE) - Get Report
, lately up 2.9%, and
Chicago Mercantile Exchange
(CME) - Get Report
, which added 0.7%. Fellow exchange
Nasdaq Stock Market
was ticking up 6 cents at $42 amidst very choppy trading.
