Financial stocks started off generally dragging lower on Wednesday amid the usual slew of bad news, but the Federal Reserve's 50-basis-point interest rate cut this afternoon spurred the sector choppily higher along with the rest of the market. Recently, the NYSE Financial Sector Index was up 0.6% at 7,969.19, and the KBW Bank Index gained 0.3% at 86.81. Today's rate slashing comes on the heels of last Tuesday's giant three-quarter-point cut , which was an emergency response to the prior day's fear-ridden worldwide market plunge. Still among Wednesday's financial decliners, however, was insurer Allstate ( ALL). The Illinois-based firm said fourth-quarter operating income dropped 37.5% year over year to $701 million, or $1.24 a share -- 8 cents under the average analyst estimate, per Thomson Financial. As Allstate warned last month, claims regarding the Southern California wildfires in October weighed in heavily, with associated costs totaling $318 million. That's near the low end of the range Allstate originally cited, but it still helped vault total catastrophe-related losses by 69.2% year over year to $472 million. Allstate shares were recently off $1.89, or 3.6%, to $50.36. Swiss bank UBS ( UBS) also wound down after estimating a 2007 loss of $4.03 billion (4.4 billion Swiss francs), firming significantly from last month's prediction that a full-year loss was merely "possible." As for fourth-quarter losses from U.S. mortgage exposure, UBS upped its December subprime-writedown estimate by $2 billion to $12 billion, and expects to write down $2 billion from other mortgage-related losses. Its fourth-quarter loss should come to some $11.48 billion. Shares were down substantially today before hoisting themselves up to a 2-cent loss at $43.03. In downbeat analyst notes, T. Rowe Price ( TROW) was cut to underperform at Friedman Billings a day after the investment manager advised its investors "to have modest market return expectations" as the broad market "goes through a period of transition and adjustment," even as it topped fourth-quarter expectations. Shares were losing significant ground earlier, but recently hovered around the flat line. Michigan's Flagstar Bancorp ( FBC) swung to a fourth-quarter loss from a year-earlier profit, after which Moody's knocked its long-term deposit rating to Baa2, according to the Associated Press. That's just a notch above junk status. Shares were sliding $1.04, or 12.5%, to $7.27. Insurer Conseco ( CNO) was cut to neutral from outperform at Credit Suisse, and Merrill Lynch ( MER) got an Oppenheimer downgrade to underperform. Conseco shares were down 2.2%, though Merrill was recently paring back today's early losses to just 13 cents at $57.34. The Oppenheimer analyst, Meredith Whitney, also cut UBS and Citigroup ( C). She predicted that the trio would be among the hardest hit by the downward spiral of bond insurers MBIA ( MBI) and Ambac ( ABK), since they collectively hold some 44% to 45% of that risk exposure. The struggling bond insurers, which depend heavily on their pristine triple-A rankings at credit-rating agencies, have been under intense fire lately: earlier this month, Moody's put MBIA on review for downgrade and Ambac's rating got cut by Fitch . Ambac is also on review for downgrade at both Moody's and Standard & Poor's. Citi shares traded lower for most of the day, but shot up 1.7% at $28.39 following the rate-cut announcement. MBIA stock lost 7.1% lately and Ambac was down 2.1%. Among the day's solid winners was online broker E*Trade ( ETFC) after 10 directors upped their holdings in the company, among them acting CEO R. Jarrett Lilien. He picked up about another 7,000 shares for a total stake of 892,694 shares. Donald Layton more than tripled his E*Trade interest to some 365,000 shares, and Randal Lewis brought his direct holdings above the 500,000-share mark with a 29,500-share purchase. E*Trade shares were lately jumping 13.8% at $4.71.