Updated with closing stock price moves throughout
NEW YORK (
were among the top performers of the financial sector Monday, surging 41.7% and 18.5%, respectively.
Both Fannie and Freddie were benefitting from the
announcement Friday that it bought $5.6 billion of Fannie, Freddie and Federal Home Loan Bank debt. Fannie shares finished up 50 cents to $1.70, and Freddie rose 32 cents to $2.05.
Regional banks gave up early gains and ended the day mostly lower after Rochdale Securities analyst Dick Bove said up to 200 banks could fail. The increase in bank failures indicates that the Federal Deposit Insurance Corp. will seek more funds from healthy banks, he said.
"Therefore, it is likely that there will be another special assessment to banks in the fourth quarter this year and the second quarter next year to build FDIC reserves," Bove wrote in a research note Sunday. "It also means that perhaps another 150 to 200 banks will fail."
More than 80 banks have already failed this year, including
, which regulators shuttered Friday before selling off assets to Spain's
Banco Bilbao Vizcaya Argentaria
In a separate research note clarifying his positions, Bove said to avoid all regional bank stocks, even ones that were considered best in class, such as
He added that
Fifth Third Bancorp
Marshall & Ilsley
were "definitely challenged" and that he expects "a significant pullback in prices for the regional banks near term."
Among those names, KeyCorp dropped 4.8%, Marshall & Ilsley lost 4.4%, SunTrust fell 3.8%, Zions declined 3.6%, Fifth Third slid 3.6%, Regions gave back 2.7%, Comerica was lower by 1.6%, and First Horizon slipped 1.9%.
Most larger U.S. banks finished mixed, paring gains as the session progressed.
added 2.6%, having been higher by as much as 6.4% earlier in the day.
On the other hand,
gave back 1.5%, and
Bank of America
Among other analyst moves, Barclays upgraded shares of
to overweight from equal weight. The firm also upped its price targets for each to $38, $50 and $16 from $28, $30 and $14, respectively.
Barclays said the upgrades come as credit card delinquencies appear to be improving and that the industry has reached an inflection point. The firm said it sees considerable upside for all three, despite the recent strong move in the stocks.
AmEx gave up early gains, finishing down 0.6% to $32.67. Similarly, Capital One shares turned negative late in the session, ending lower by 0.1% to $36.45. Discover eked out a gain of 1.6%, closing at $13.72.