Updated from 2:32 p.m. EST with new stock prices

Financial stocks see-sawed back into the red Wednesday amid poor earnings, negative analyst research and

Washington Mutual's

(WM) - Get Report

somber warning on the staying power of housing-market troubles.

WaMu itself took a 17.3% slide following those comments, as well as news that New York Attorney General Andrew Cuomo is

expanding his probe into allegations that the company "improperly pressured appraisers to provide inflated" house-price appraisals. Cuomo has sent subpoenas to

Fannie Mae

( FNM) and

Freddie Mac

( FRE) for information on mortgages they bought from WaMu.

Cuomo also cautioned the mortgage investors that they "cannot afford to continue buying" WaMu mortgages "unless they are sure these loans are based on reliable and independent appraisals." Last week the A.G. announced that he

had sued eAppraiseIT, a unit of

First American

(FAF) - Get Report

, over an alleged appraisal-inflation scheme with the bank.

Fannie Mae slid 10.1% to $49.79; Freddie Mac slumped 8.6% to $45.13; and First American was recently off 6.2% to $30.07.

As for WaMu's musings on the housing market, the bank predicted that the "challenging" state of affairs would drive losses at the bank well into 2008, with a fourth-quarter loan-loss provision estimated to be "similar to or slightly higher than" the previously offered outlook for $1.1 billion to $1.3 billion -- at least a 13.8% jump from third-quarter levels.

WaMu shares lost $4.19 to $20.04, which helped pummel the languishing

NYSE

Financial Sector and KBW Bank indices. The former recently tumbled 375.49 points, or 4.2%, to 8,544.84; the latter surrendered 0.3% to 100.86.

Also applying pressure to both sector trackers were

Wachovia

(WB) - Get Report

, which lost 6.4% on a Sandler O'Neill downgrade to hold from buy, and

Capital One

(COF) - Get Report

, which was cut to market perform at Keefe Bruyette on credit-loss concerns. Shares of the credit-card issuer sank 15.5% to $50.21.

Mortgage lender

IndyMac

( IMB), meanwhile, was hit with at least two analyst downgrades on the heels of Tuesday's report of a

far-bigger-than-expected third-quarter loss. Yesterday, IndyMac had nonetheless traded mostly in positive territory before closing lower. Today, shares were down another $1.41, or 11.3%, to $11.08.

A few investment firms were also falling hard on third-quarter financials.

Allied Capital

(ALD)

said third-quarter investment income plummeted 62.4% year over year to $18.3 million, or 12 cents a share -- less than half the average per-share analyst call, according to Thomson Financial.

Apollo Investment

(AINV) - Get Report

sprinted past investment-earnings targets, but the firm also joined Allied in swinging to a net loss vs. a year-ago profit. And

U.S. Global Investors

(GROW) - Get Report

, which reported a slight dip in quarterly earnings to $2.4 million, or a flat 16 cents a share, was also losing ground.

Shares of the firms slid 8% or more.

But a couple of insurers --

Protective Life

(PL)

and

CRM

( CRMH) -- were on today's sparse upside.

Alabama-based Protective rose 6.8% to $42.81 after third-quarter operating income surged 52.8% to $69.6 million, or 97 cents a share, to come in 3 cents ahead of the average analyst estimate. And Bermuda's CRM soared 20.6% after it handily beat the sole analyst's estimate with a bottom line of $7.2 million, or 44 cents a share. Its stock vaulted $1.40 to $8.20.