Posted by
alfredlester on Tuesday, May 11, 2010 1:06:35 PM
BOSTON (MarketWatch) -- U.S. financial stocks clawed their way into the green Tuesday, recovering from a weak open although the sector remained volatile in the aftermath of the European Union's bailout package intended for debt-ridden nations.
The Financial Select Sector SPDR Fund was fractionally positive in midday trading. The ETF, which had soared nearly 6% in Monday's relief rally, sustained a morning decline as investors focused on the implications of the massive bailout for troubled EU countries.
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Markets on Tuesday also keyed on a report showing higher-than-expected inflation in China, leading to fears the government in Beijing may have to resort to tightening to slow the economy.
A standout was Legg Mason Inc. , shares of which rallied more than 10% after the asset manager reported a better-than-expected profit for the fourth quarter ended March 31 and said it plans to buy back up to $1 billion in common shares guaranteed approval cash loans.
Meanwhile, a strategic restructuring Legg Mason also announced late Monday "is significant enough to cause operating margins to improve materially over the next few years," said Stifel Niclolaus, which upgraded the stock to buy from hold.
Among the sector's decliners, MBIA Inc. shares were down 5% after first-quarter results showed the bond insurer swinging to a first-quarter loss of $1.5 billion as it was hit by losses on insured credit derivatives. Another bond insurer, Assured Guaranty Ltd. , saw its shares weaken by nearly 10% Tuesday following its quarterly earnings report.
Conversely, Ameriprise Financial Inc. climbed after the company unveiled plans to buy back up to $1.5 billion of common stock.
Also higher, American International Group Inc. shares gained 4% at last check on reports the insurer is in talks with Prudential PLC to restructure the sale of AIA Group Ltd. See full story on the potential restructuring.
Financial Stocks: Financials fight to go green after early drop