Financial stocks slid along with the wider market Wednesday, weighed in part by Standard & Poor's downgrades of a range of financial guarantors.
S&P cut its ratings on mortgage insurers
Old Republic International
( PMI) and
, citing worry about higher unemployment and sliding home prices. MGIC and Radian's credit ratings were pushed the lowest, to BBB from A- and the stocks fell accordingly, with MGIC dropping 5.1% to $10.90 and Radian plunging 12.6% to $5.14. Old Republic slipped to $13.68, a loss of 2.9% and PMI crumbled 8.3% to $5.66.
The S&P ratings cuts also renewed worries in the bond insurance field with
, sending the stock down 7.9% to $11.97.
The cost of insurance on debt obligations sent the shares of
spiraling downward once again. That coupled with earnings jitters sent the shares to $13.06, a loss of 10.4%. CIT tapped into its $7 billion line of credit recently and will report earnings next week on April 18.
Financial Sector Index declined 125.74 to 7,458.43.
Brokerages were also sliding after
( LEH) said on Wednesday that difficult-to-value assets known as Level 3 assets increased in the first quarter compared to the previous quarter. Lehman ticked down 6% to $41.06, Goldman lost 2.8% to trade at $173.89 and Morgan Stanley was selling shares at $46.03, a loss of 2.8%.
continues its efforts to improve the balance sheet by selling $12 billion in repackaged loans to private equity firms sending the stock upward in early trading.
are said to be buying the loans that were originally part of the $43 billion in financing that Citi agreed to provide for leveraged buyouts last year, before credit markets froze and saddled the New York-based bank with hard-to-sell assets. Unfortunately, Citi couldn't maintain its positive trading and was losing fractional value in the afternoon, along with other financial sector stocks. Citigroup shares closed down 18 cents to $23.58.
Apollo was elsewhere in the news, as it filed paperwork with the Securities and Exchange Commission to go public. The distressed debt firm will be joining the ranks of alternative investment peers Blackstone and
Fortress Investment Group
, which fell 3 cents to $18.56 and 37 cents to $13, respectively.
had coverage initiated by Friedman Billings Ramsey with a market perform rating. Investors didn't focus on the positive comments and instead sent the stock sliding 6.4% to $15.26.