Updated from 1:53 p.m. EDT

Financial stocks were climbing higher than most ahead of this Tuesday's highly anticipated rate-cut decision from the Federal Reserve, and individual names like Lehman Brothers ( LEH) also helped to lighten the mood.

The broker's shares gained 10% to $64.49 on third-quarter earnings that were better than expected , if slightly lower than last year -- $870 million, or $1.54 a share, vs. Thomson Financial's $1.47 average per-share estimate. Chief Financial Officer Chris O'Meara also delivered some soothing comments this morning, intoning that the "worst of credit correction is behind us."

Lehman helped give legs to the NYSE Financial Sector Index, which jumped 348.8 points, or 3.9%, to around 9226.

Capital One ( COF) bolstered the index, as well, after announcing it intends on paying out some 25% of its 2008 income in fixed quarterly dividends. Shares spiked 6.9% to $69.73 as the KBW Bank Index, of which the credit-card company is also a member, gained 4.6% to about 110.5.

Fellow credit-card concern American Express ( AXP) added 4.5% to $60.80 after Standard Chartered agreed to buy its international banking unit for about $1.1 billion. The exact value of the transaction, which should close in the first quarter, is the net asset value of the unit's businesses at the closing date plus $300 million.

Among few financial losers today was online broker E*Trade ( ETFC), which said it will exit or restructure "non-core businesses that lack a direct and strategic connection with its retail customers," including a departure from wholesale mortgage. E*Trade deflated its 2007 guidance to between $1.05 and $1.15 a share (on a GAAP basis), citing the restructuring and an increased loan-loss provision. The prior range had been $1.53 to $1.67 a share.

Shares sank 21 cents, or 1.5%, to $14.

A number of nonprime-mortgage concerns were also on the decline today, among them Impac Mortgage ( IMH). Shares slid 5.7% to $1.66 after the Irvine, Calif., company said it will exit the Alt-A mortgage business and lay off 144 employees due to the "severe dislocation of the market place," including "unprecedented" margin calls. Moreover, Impac doesn't expect to pay common-stock dividends for the rest of the year.

NovaStar Financial ( NFI) will shed its REIT status retroactive to Jan. 1, 2006, after canceling its dividend , which was required at around $157 million in 2006 taxable income. NovaStar blamed its precipitous stock-price decline over the past few months, liquidity struggles and other factors. Shares of the Kansas City, Mo., company gave up 2.6% to $8.03.

Elsewhere, Accredited Home Lenders ( LEND), of San Diego, Calif., closed down 4.9% after filing its delayed first-quarter financials, which revealed it had swung to a big loss -- $260.2 million, or $10.29 a share, compared with a profit of $35.8 million, or $1.61 a share, a year earlier.

The company also said it cannot assure investors it will continue to operate as a going concern, citing "significant challenges due to adverse conditions in the non-prime mortgage industry." Shares closed at $9.78.