Countrywide's ( CFC) massive surge spurred the financial sector higher following a considerably volatile day.Shares of the battered mortgage lender rocketed more than 50% after The Wall Street Journal reported that it's
The NYSE Financial Sector Index recently leapt 164.89, or 2.1%, to 7,969.56 as the KBW Bank Index clambered 2.3% higher at 83.87. In less happy news, Capital One's ( COF) swelling loan-loss provision helped
squeeze full-year earnings guidance down to $3.97 a share from the prior $5, with fourth-quarter income set at around 60 cents a share. Analysts, according to Thomson Financial, are seeking a profit of $4.86 for the year and $1.52 for the quarter. Capital One will put aside roughly $1.9 billion on a managed basis to cover bad loans vs. $1.14 billion in the prior quarter. Continuing-operations earnings, which exclude the costs of shutting down its failed GreenPoint Mortgage unit, should come to 85 cents a share for the fourth quarter and $6.55 for all of 2007. Shares of the McLean, Va., credit-card issuer were trading substantially lower prior to the gleeful Countrywide news, which recently helped lighten the loss to a nickel at $43.30. Huntington Bancshares ( HBAN) fell in line here, too, joining a number of its financial-services brethren in saying it will take a fourth-quarter loss which, in this case, will total $239 million, or 65 cents a share. That's largely due to a restructuring of its loans to Franklin Credit Management ( FCMC), which sliced $300 million off Franklin's debt to the bank. Huntington shares lost 41 cents, or 3.1%, to $12.82. Also among the decliners was Thornburg Mortgage ( TMA), which launched a couple of stock offerings in order to amass more adjustable rate mortgages. Proceeds from the offerings -- one for 4.5 million convertible preferred shares, and the other for 11 million common shares -- should come to $200 million. Underwriters have a 15% overallotment option in each case.
After ARM acquisition and origination, any leftover funds from the offerings will go towards boosting liquidity and working capital, and not to any dividends. The Santa Fe, N.M., company just
reinstated its 25-cent common-stock distribution last month. Shares pared some of the losses late in the day, but were still off 4.3% to $8.40. Elsewhere, Freddie Mac ( FRE) spent most of the day down after Moody's said it's evaluating the mortgage investor's current A- rating for bank financial strength, according to several published reports. But, in similar fashion to many financial stocks today, Freddie lately recovered to add 2% to $27.69.