By John Spence
Freddie Mac shares nearly doubled in early trading Monday, rallying after the mortgage-finance giant reported a quarterly profit and said it won't have to hit up the government for more financial assistance, at least for now.
Freddie Mac (FRE) rallied 80% to start the week. Shares of Fannie Mae (FNM), which with Freddie Mac has been placed in government conservatorship during the credit crunch, were along for the ride, gaining about 30%.
In the broader financial sector, the Financial Select Sector SPDR Fund (XLF) rose fractionally in morning action.
One notable mover to the upside Monday was another bailed-out financial giant, American International Group Inc. (AIG), which rose for the fourth straight session after more than doubling last week. Shares of AIG, the insurance company that is roughly 80% owned by U.S. taxpayers, was up 8% at last check.
Another standout from last week's rally in financial stocks, Citigroup Inc. (C), also saw its shares get off to a strong start to the week.
Conversely, shares of Allied Capital Corp. (ALD) slipped nearly 10% after the business-development company reported a slimmer second-quarter loss but warned its profitability will be reduced and that it would not be able to pay a cash dividend for "an extended period of time."
Meanwhile, shares of Maguire Properties Inc. (MPG) fell more than 15% after the real estate investment trust said its second-quarter loss deepened on lingering woes in the commercial real estate market.
Shares of regional bank Marshall & Illsley Corp. (MI) were roughly flat after the company said it would be adjusting second-quarter financial results based on the sale of a pool of mostly non-performing loans.
The Milwaukee-based bank sold about 800 residential mortgage loans with unpaid principal balance of $297 million. The sale resulted in additional charge-offs of $151 million, yielding a second-quarter loss of 83 cents a share.
In other banking news, U.S. banks are positioned to reap a record $38.5 billion from customer overdraft fees this year, nearly double those reported in 2000, the Financial Times reported.
The biggest chunk of the fees is coming from the most financial stretched consumers, according to the newspaper. The median bank overdraft fee has risen to $26 from $25 this year, the report said.
-John Spence; 415-439-6400; AskNewswires@dowjones.com