Wells Fargo: Financial Winners and Losers

Updated with closing share prices, additional information on analyst cutting earnings estimates for Goldman Sachs and Morgan Stanley, and the rise in Blackstone shares.

NEW YORK ( TheStreet) -- Financial stocks ended slightly higher Thursday following yesterday's big market-wide rally that carried the Dow Jones Industrial Average past the 10,000 mark.

JPMorgan Chase ( JPM) will kick off earnings season for the big banks a week from now, and a positive outlook from State Street ( STT) fueled investor optimism about the numbers on Wednesday, sending JPMorgan and other big banks like Bank of America ( BAC) and Wells Fargo ( WFC) all up more than 5%.

On Thursday, the action wasn't quite so dramatic, with JPMorgan's stock slipping a penny to $38.16; Bank of America shares up 15 cents to $14.86; and Wells Fargo's stock off two cents to $26.64, and Citigroup ( C) shares adding seven cents to close at $3.97.

High profile bank analyst Meredith Whitney became the latest analyst to cut second quarter estimates on Goldman Sachs ( GS) and Morgan Stanley ( MS). Goldman's stock fell 37 cents to $135.02, but Morgan Stanley's stock shrugged off the report, and rose 25 cents to finish at $24.20.

Wells Fargo was also in the headlines, as the San Francisco-based bank said after Wednesday's closing bell that it plans to cut nearly 4,000 jobs as it restructures its consumer finance operations and stops originating mortgages for customers with poor credit.
More on Wells Fargo
Wells Fargo Exits Sub-Prime

Richard Bove of Rochdale Securities attributed Wells' decision to the coming financial reform bill still winding its way through Congress, and cut his earnings estimate for 2010 by 2 cents to $1.78 a share following the news. Bove has a neutral rating on the stock with a 12-month price target of $29.

"Wells Fargo is clearly a bank in the "too big to fail" category. It must shrink and, therefore, it is taking the very unusual step, for this company, of closing down one of its core businesses," Bove wrote in a report published Thursday.

Bove expects further closures, sales and divestitures by Wells Fargo. He also thinks the fact that the business was closed, rather than sold, is a sign of financial companies' waning interest in consumer businesses in the face of expected tougher laws in this area.

Mortgage insurers were among the biggest gainers Thursday, led by Radian Group ( RDN), which was up 35 cents to $7.93. MGIC Investment Corp. ( MTG) was up 28 cents to $7.78. Shares of Walnut Creek, Calif.-based PMI Group ( PMI) did not participate, however, falling three cents to end at $3.02, even after the company said it was expanding its sales force, with four senior hires, on Wednesday.

Mortgage insurers have been among the most volatile financial sector plays since the 2008 crisis, but have resulted in huge gains for investors who bought them at their lows last March. Despite the volatility in the names in 2010, they have solidly outperformed the S&P 500 year to date, with the S&P down some 4%, MGIC up 34.6%, PMI up 19.83% and Radian gaining 8.48% on the year.

Shares of trust banks, which led Wednesday's rally after the positive view from State Street, were cooling off a bit. State Street itself was off 25 cents to $36.38, while Bank of New York Mellon ( BK)'s stock lost 1.37% to $25.75; and Northern Trust ( NTRS) shares fell 2.52% to $47.90.

Another notable gainer was The Blackstone Group ( BX) The private equity giant saw its shares gain 6.38% as U.S. investors prepare for Blackstone rival Kohlberg Kravis Roberts & Co. to gain its long-sought listing on The New York Stock Exchange July 15.

-- Written by Dan Freed in New York.