Updated from 1:24 p.m. EDT
A day after the
half-point interest-rate cut, financial stocks continued to swoon, rocketing out of the gate before cooling off by late morning Wednesday.
Financial Sector Index gained 0.9% to 9295.54, as several of its mortgage-concern components bounced higher than most.
climbed 3.3%, 7% and 4.1%, respectively; and mortgage insurer
Accredited Home Lenders
catapulted 18.2% after finally
reaching an amended merger agreement with Lone Star. The private-equity firm will pay $11.75 a share in cash for Accredited -- just shy of the midpoint between Lone Star's
revised $8.50 offer last month and its
initial $15.10 bid in June. Accredited will also get $49 million in financing from Lone Star, $34 million of which will go to paying off debt.
The per-share price represents a 20% premium to Accredited's latest close. The agreement also brings to an end a
legal stalemate stemming from Lone Star's unwillingness to close the original deal after Accredited was
battered by the subprime market's total collapse. The related lawsuit will be stayed immediately and, on receipt of the takeout payment, dismissed. Shares of the San Diego-based firm surged $1.78 to $11.56.
also got a lift after agreeing to sell between $3.5 billion and $4.2 billion worth of "AAA-rated" mortgage-backed securities to
in a deal that should close later this month. A rating-agency review will determine the exact amount. Shares of New York-based CIT gained $1.06, or 2.6%, to $41.89. Freddie Mac was up 2.8%.
Also among the reams of climbing financial stocks was online broker
, which estimated it will achieve the high end of, or surpass, its prior fiscal fourth-quarter profit guidance of 24 cents to 32 cents a share. Analysts polled by Thomson Financial are seeking 30 cents a share. The Omaha, Neb., company's stock added 2% to $18.81.
On the lonely downside today, meanwhile,
dropping continuing-operations income of $1.47 billion, or $1.38 a share, in the third quarter. A year ago the New York broker made $1.50 a share; Wall Street had sought $1.54. Morgan shares, still feeling the positive effects this morning of the Fed's rate cut, traded choppily in the green before reversing to slide 2.2% to $67.03.
had their buy ratings stripped off at SunTrust and Stifel Nicolaus, respectively. Zions lost 0.5% to help dampen gains at the KBW Bank Index, which was up only 0.3%, and Hancock shares lost 3.1% to $42.55.