The financial sector was replete with bad news yet again on Wednesday, though Tuesday's three-quarter-point rate cut by the Federal Reserve continued to help the sector stay afloat for much of the day. As with so many others in the industry, mortgage-market cavorting has helped infect SunTrust ( STI), making it the latest big bank to report that putrid market conditions essentially annihilated its fourth-quarter profit -- in this case to just $3.3 million, or a penny a share. That almost wholly wipes out last year's earnings of $498.6 million, or $1.39 a share. Analysts polled by Thomson Financial were looking for a profit of 31 cents a share, excluding items. SunTrust blames these results mostly on the shrinking value of holdings in mortgage-backed securities, collateralized debt obligations and structured investment vehicles (SIVs), as well as a costly restructuring of the SIVs. At the time of purchase, it said, these were all "predominantly AAA or AA-rated." The SIV bail-out was announced last month, along with news of SunTrust's share of a Visa antitrust settlement, which ended up costing the bank $76.9 million. Also figuring in prominently were charge-offs of $168 million and a loan-loss provision that more than doubled sequentially to $356.8 million. Both of those figures are slightly under estimates given in December. In spite of all this, shares were climbing 5% to $64.05 following an initial tumble. That, along with Bear Sterns' burly upgrade of the broader large-cap bank sector -- to market overweight from market underweight -- helped push the KBW Bank Index 3.3% higher to 80.14. According to Reuters, the Bear analyst argued that, thanks to the Fed's rate cut and a spree of capital infusions, these stocks can't go down much further. Banking giants Citigroup ( C), JPMorgan Chase ( JPM) and Bank of America ( BAC) were all trading up 5.4% or more. And shares of bond insurer Ambac ( ABK) continued clawing their way back from the precipitous drop they took last week, even after yesterday's report of an enormous fourth-quarter loss , which was followed today by Goldman Sachs slashing its price target to $10 from $14. Regardless, Ambac shares lately took back another 27% to $10.12. MBIA ( MBI), another bond insurer, was adding 13.6%. Elsewhere, California bank Downey Financial ( DSL) set aside $218.4 million to cover bad loans in the fourth quarter, vaulting from credit-loss provisions of $81.6 million last quarter and $200,000 last year. In large part due to that, the bank swung to a fourth-quarter loss of $108.8 million, or $3.90 a share, compared with a year-earlier profit of $1.87 a share. Wall Street was seeking a 6-cent loss per share. First Midwest Bancorp's ( FMBI) fourth-quarter loss, panning out at 11 cents a share, also reverses a year-ago profit. Taking heavy blame here is the dwindling value of the bank's investments in asset-backed collateralized debt securities, without which First Midwest would have earned 56 cents a share. Still, Downey shares were jumping 17.8% to $30.30, and First Midwest was up 3.9% to $27.03. By contrast, asset manager Piper Jaffray ( PJC) actually smashed Wall Street targets with fourth-quarter income of $15.1 million, or 91 cents a share. That's a sizable drop from last year's $1.49 a share from continuing operations, though the year-ago figure had included a massive litigation-related benefit. Analysts were seeking 56 cents a share. The Minneapolis-based firm's stock was leaping $7.74, or 19.1%, to $48.17. Fulton Financial ( FULT) climbed 10.5% after the Pennsylvania bank met Street estimates for the quarter and beat them for the year, and TCF Financial ( TCB) reported a growing quarterly profit of $62.8 million, or 50 cents a share, compared with 42-cent EPS last year. The Minnesota bank also upped its dividend by 3.1% to 25 cents a share. Its shares rode 13.1% higher at $18.61.