Merrill Lynch leaped 26 percent, MBNA 28 percent, Fannie Mae 39 percent, and Lehman Bros. 59 percent. These cuts are welcome, since the financial sector was beginning to show signs of wear and tear as the economy slowed. In recent months, brokerages have suffered from the stock market's plunge, which has strangled lucrative businesses like mergers and acquisitions and initial public offerings. At the same time, the stumbling economy has saddled banks with more defaults by cash-strapped borrowers. Now that rates have dropped, many investors expect financial firms to get their groove back.
Trouble is, after the sector's recent run-up, financial stocks are no longer strikingly cheap.
Yet the sector still trades at a discount to the overall market. Time Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited. Our Privacy Policy . Terms of use .