Updated with closing prices.Fifth Third ( FITB) led the financial sector on an upward trajectory Thursday as the regional bank rose 14% after reporting its second-quarter earnings. The Ohio-based bank recorded a profit for the quarter but got there only as a result of the sale of a majority stake in its processing business, which resulted in an after-tax gain of $1.1 billion and selling shares of Visa ( V) for a $2 million gain. But it wasn't all good; the bank posted a $626 million charge off of bad loans, warned of increasing credit costs and put off the paying back of the government's preferred equity investment from the Troubled Asset Relief Program. The stock trimmed its gains for the day, but still closed up $1 to $8.01, for a 14.3% increase. The NYSE Financial Sector Index finished the day up 121.89 at 4,192.73, and the KBW Bank Index closed up 1.07 to $37.32. The broader market began the day in positive territory, but then gathered steam and shot the Dow Jones Industrial Average past the 9000 level, for a smoking finish at 9069.29, up 188.03 or 2.12%. A red hot bond market led to increased profits for broker Raymond James ( RJF). The financial services company reported its earnings after the close on Wednesday with net income of $43 million, which was down from a year ago, but a 600% increase over the first quarter. Fixed-income trading profits led the way for the Florida-based brokerage, even though securities commissions were down. The stock added $1.04 to end up 5.6% at $19.49. Blackstone Group ( BX) enjoyed a positive day, closing out at $11.60 with a 74-cent gain after CNBC reported that the company might be interested in acquiring Merrill Lynch's Asian Real Estate Opportunity Fund. Merrill's owner Bank of America ( BAC) has been trying to rid itself of Merrill's asset management businesses.
Insurance giant Hartford Financial Services ( HIG) rose 16.9% to $14.38 after The Wall Street Journal reported that variable annuity products were performing well for the year. E*Trade Financial ( ETFC) gained 4.4% to finish at $1.42 after reporting a $143 million loss for the quarter. But the onliine brokerage showed sequential improvement and beat analyst estmates. E*Trade was forced to raise capital after failing to land a government bailout, but the reduction in balance sheet risk and a lowered loan-loss provision pointed the company in the right direction. In the losers column, Huntington Bancshares ( HBAN) sold off 4.8% to $3.73 after it posted a loss of $182.5 million. The company said credit loss provisions jumped to $413 million, and it was premature to talk about paying back TARP. Moody's ( MDO) plunged 3.7% to $25.52 after a company owned by Warren Buffett sold 8 million shares this week in the open market. Insurer National Indemnity, owned by Buffett's Berkshire Hathaway ( BRK-A), which also owns 16% of Moody's outstanding shares, announced the sales. CIT Group ( CIT) shares slid 13 cents to 74 cents after Bloomberg reported that bondholders were pushing the company to file for bankruptcy. The bondholders ponied up a loan earlier this week to stave off bankruptcy and CIT has begun an effort to tender its debt at a discount. But the bondholders are pushing for a pre-packaged bankruptcy to be handled out of court.