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Most-Active Stocks: Rise, Fall of Financials

Investors turned bullish on bank stocks, a risky industry with questionable return potential.

Traders moved more shares of

Bank of America





than any other company as investors turned bullish on financial services


, an industry that has earned low grades from Ratings.

Of the 25


and exchange traded funds with the largest trading volume in the U.S. yesterday, 11 were

tied to finance

. Among those, six have "sell"-level grades of D-plus or lower, suggesting they might offer more risk than return potential.

Investors are trying to follow the direction of financial companies' fortunes. John Mack, chief executive officer of

Morgan Stanley


, said 2009 would be a difficult year, and



and Bank of America had said March wouldn't turn out as good as January and February. Those comments followed Citigroup CEO Vikram Pandit's assessment in early March that the bank was profitable in January and February, sending financial shares soaring.

Still, the S&P 500 Financials Index jumped 6.7% yesterday.

Wells Fargo



American International Group


and the

Financial Select Sector SPDR Fund


ranked among the day's 10 most-active securities.

Interest in financial stocks and ETFs is high as investors anticipate the potential for new regulations and accounting rules. World leaders will meet later this week for the Group of 20 summit, where reversing the

global recession

will be at the top of the agenda. Investors are also weighing proposed changes to "mark-to-market" accounting rules, which dictate how banks must value assets. The Financial Accounting Standards Board is expected to

make a decision

this week on adjustments that could help boost banks' profits.


ProShares UltraShort S&P 500


was the only "buy"-rated security on the list, ranking 25th. The fund is designed to deliver the opposite performance of the S&P 500 Index.

General Motors


, the 22nd most-traded stock, holds the lowest grade of the group, E-plus. The company's shares fell 28% yesterday. New Chief Executive Officer Fritz Henderson said bankruptcy was becoming

more probable

. According to a published report, President Barack Obama believes a pre-packaged bankruptcy is the most likely way for General Motors to restructure.

Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.