Financial stocks were mostly stuck in reverse on Monday as a plethora of bad news countered mounting calls for the government to bail out troubled subprime borrowers.
Treasury Secretary Hank Paulson essentially
confirmed a Friday
report that the government is formulating a plan to help stymie what he called "preventable foreclosures." The plan's intent is to give the economy some traction as it slides seemingly ever downward due to the sinking housing market. And Sen. Hillary Clinton (D., N.Y.), in a letter to Paulson, called for a 90-day moratorium on foreclosures and at least a five-year freeze on adjustable mortgage rates.
Still, individual financial stocks were losing ground.
-- all of which surged Friday on news their executives are
meeting with regulators to formulate the rescue plan -- each were down 0.7% or more.
traded in and out of the red, though it was recently up 0.7%.
Also on Monday, Boston
President Eric Rosengren said evidence points to the foreclosure crisis getting "worse before it gets better." But he also said that one-fifth of subprime borrowers could actually be well-qualified enough to upgrade to prime loans and/or participate in loan guarantee programs.
He also cited the 1.2 million subprime borrowers -- a full 55% of those with non-jumbo adjustable-rate mortgages (ARMs) occupying mortgaged houses -- who haven't missed a payment in the past year and could also qualify for a loan guarantee program.
Financial Sector Index lost 67.66 points, or 0.8%, to 8,614.25. It harbors all of the above-mentioned stocks. The KBW Bank Index, which tracks all of them except for Countrywide, gave up 1.1%.
Among today's worst-performing individual stocks, meanwhile, was
, after Bank of America cut the online broker's rating to sell. The analyst said that its brokerage unit, generally considered the firm's more solid asset, isn't strong enough to offset the
subprime-rotted bank business that has sent its shares into such a tailspin of late. Shares plunged 10.9% to $ 4.10.
In more negative analyst research,
lost 4.9% on a downgrade to neutral from outperform at Robert W. Baird. Friedman Billings cut Wells Fargo's price target, and Deutsche Bank slashed 2008 earnings estimates at
. Bear and Merrill were down 1.9% and 1.4%, respectively, though Goldman managed to add 47 cents at $227.11.
lost 1.6% to $64.55 after
cutting its 2008 guidance to between $5.90 and $6.20 a share. And
said it expects to take a
$422 million charge related to a U.K.-based credit-card business. It also set plans to buy back up to $1 billion of its stock, but shares were still giving up 4.7%.
On the flip side,
Chicago Mercantile Exchange
gained 1.2% to $666.07 after saying that November average daily volume surged 41% year over year to 13 million contracts.
rose 3.3% after
North Valley Bancorp
terminated the companies' April merger agreement. The cash-and-stock deal was worth about $25.14 per North Valley share on the day of the initial announcement, though that amount has deteriorated along with Sterling's market capitalization, which has since gone down by more than one-third. Sterling was up 58 cents to $18.51; North Valley slid 7.3% to $13.53.