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August 10, 2010 Tuesday 5:12 PM EST
SECTION: NEWS & COMMENTARY; Markets; Financial Stocks
LENGTH: 388 words
HEADLINE: Financials end off day’s lows after Fed statement
BYLINE: April H. Lee, MarketWatch mailto:email@example.com.
April Lee is a MarketWatch Reporter based in New York.
NEW YORK (MarketWatch) — U.S. financial stocks closed lower but pared earlier losses after the Federal Reserve said it would reinvest proceeds from maturing mortgage debt back into the Treasury market.
The Financial Select Sector SPDR (XLF) , an exchange-traded fund that tracks the financial components of the S&P 500 Index ($SPX) , jumped after the announcement, but closed down 0.9% from Monday’s closing price.
The Federal Open Market Committee’s minimal move of reinvesting debt to prop up liquidity — preventing the Federal Reserve’s balance sheet from shrinking — was part of the effort to exhibit central-bank concern about the U.S. recovery, which many analysts expected.
Keeping its benchmark interest rate at a record low, the Fed made no changes to its pledge of “exceptionally low” rates for an “extended period.”
Among its decliners, Janus Capital Group Inc. (JNS) lost 4.1%, while shares of American International Group Inc. (AIG) fell 3.5%. Shares of E-Trade Financial Corp. (ETFC) and Huntington Bancshares Inc. (HBAN) each declined 3.4%.
Insurer XL Group PLC (XL) led the gains in the index, closing up 2.7%. PNC Financial Services Group Inc. (PNC) added 1.2% while Comerica Inc. (CMA) inched 0.8% higher.
Outside the S&P 500, Ambac Financial Group (ABK) tumbled 22.5% to 70 cents a share after the bond insurer said late Monday that it plans to raise more capital and restructure its outstanding debt through a prepackaged bankruptcy proceeding.
Ambac said its second-quarter net loss narrowed to $57.6 million, or 20 cents a share, from a net loss of $2.37 billion, or $8.24 a share, in the year-ago period.
Rival MBIA Inc. (MBI) gained 4.5%, after its results showed that paid losses and new delinquencies had declined. Quarterly income rose to $1.3 billion, or $6.32 a share, from $895 million, or $4.30 a share, in the year-ago period.
CVB Financial Corp. (CVBF) lost 22% after the bank said late Monday that it received a subpoena from the Securities and Exchange Commission.
The subpoena asked for information about CVB’s loan-underwriting guidelines, its allowance for credit losses, the way the bank calculates its allowance for loan losses and its methodology for grading loans.
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