Rumors of writedowns for Goldman Sachs ( GS) coupled with continuing capital concerns about Lehman Brothers ( LEH) put pressure on financial stocks Wednesday. Goldman reports its quarterly results on Monday and most analysts expect earnings will be reduced, but writedowns on leverage loans could be larger than anticipated, market whispers say. Goldman declined to comment on the rumors. The stock slid $4.81, or 2.9%, to $162.40. Overall, the NYSE Financial Sector Index declined 194.54 to 6,693.68. Lehman plummeted for the fourth trading day in a row, after The Financial Times reported that it was considering Korean financial institutions as a source of capital. The investment bank on Monday has announced plans to raise $6 billion to shore up its balance sheet. Shares of Lehman dropped 13.6% to $23.75. Lehman's slide also hit Morgan Stanley ( MS), whose shares tumbled $2.10 to $37.13. Morgan will be reporting its second quarter on Monday and investors are becoming anxious about what they'll hear. Standard & Poor's analyst Kevin Cole increased his loss estimate and lowered his price target on Washington Mutual, ( WM), citing continuing concerns about losses in the bank's option adjustable-rate mortgage and home equity portfolios. The mortgage lender saw its shares fall 9.3% to $6.06 in afternoon trading, after having dipped intraday to $5.75, a new 52-week low. Private equity firm Allied Capital ( ALD) plunged 11.8% to $15.95 after shareholders were asked to allow the company to sell shares of common stock below net asset value. However, many shareholders were unable to vote on the issue due to Securities and Exchange Commission rules, so the company plans on holding a special meeting to again try to get approval.
Another big loser for the day was health insurer Amerigroup ( AGP), as four different brokerages cut the price target on the stock. Amerigroup backed away from its 2008 profit outlook as a result of slow progress in rate-increase talks with the state of Tennessee. The rate increase is needed to offset the higher costs in the state and without it; earnings are expected to go down. The stock lost $3.17 to trade at $24.02, a decline of 11.6%. XL Capital ( XL) gave back 5% after a court ruled against its affiliate Security Capital Assurance in a dispute with Merrill Lynch ( MER). The stock slid 7.4% to $30.62. One big winner for the day was Republic First Bancorp ( FRBK). The Philadelphia-based bank skyrocketed 15.9% to $6.78 after it completed the issuance of $10.8 million of convertible trust preferred securities in a private placement transaction to a group of investors including Commerce Bancorp founder Vernon Hill. The deal buoyed investors who in turn drove the stock up.