(Updates share prices throughout.)Financial stocks sagged along with the wider market Thursday, as a stubbornly high unemployment number dampened traders' spirits ahead of the long weekend. The market traditionally rallies before closing for the Independence Day holiday, but equities sold off almost 2% Thursday and took the financial sector down with it. The NYSE Financial sector index was dropping 3.6% to 3,778 and the KBW Bank Index was off 3% to 35.10. Bank of America ( BAC) and Wells Fargo ( WFC) said they would accept warrants issued by California through July 10, as the state wrangles with a budget crisis. The state has been unable to come up with a budget leaving IOU's as an alternative to making payments. While other banks are waiting to make a decision, BofA and Wells said they will temporarily accept the warrants as deposits at its branches. BofA shares were off 3.1% to $12.64 and Wells Fargo stock was giving back 4.4% to $23.08. E*Trade Financial ( ETFC) said investors tendered roughly $429.5 million of notes due in 2011 and $1.41 billion of notes due in 2017. Chicago-based Citadel Investment Group, the company's largest investor, agreed to swap $230 million in the 2011 notes and $1 billion of the 2017 notes for newly issued zero-coupon convertible debt due in 2019. The stock was losing 4 cents to $1.31. Volume jumped 6% at the CME Group ( CME), but it wasn't enough to get the stock to buck the market downtrend for the day. Futures contracts from May to June averaged 11.4 million contracts per day, giving the exchange its highest monthly volume for the year. Unfortunately, the stock shed 2.2% to $301.24.
Goldman Sachs ( GS) employees look poised to see an uptick in compensation, according to an article by The Wall Street Journal. Analysts forecast that for 2009, the investment bank could potentially double what it paid its employees in 2007. The stock traded down 2.6% to $143.49. One of the few financial winners for the day was American International Group ( AIG). The company completed the sale of two car insurance units to Zurich Financial Services for $1.9 billion. The stock managed to add 17 cents to trade up to $18.25.