Mortgage, bond insurers stage rally in financials sector
PMI Group shares led a surge in mortgage and bond-insurer stocks Wednesday after the largest US mortgage lender unveiled the first plan to cut principal owed on underwater home loans. PMI Group shares closed up 23%, adding to Tuesday's 16% gains. MBIA Inc. shares jumped 14%, MGIC Investment Corp. shares gained 6.4%, Radian Group rallied 22%, and Ambac Financial Group Inc. shares rose 9.2% to close at 80 cents a share. The Financial Select Sector SPDR exchange-traded fund, which tracks financial stocks in the Standard & Poor's 500 Index, closed up a penny to $15.91. The largest percentage gainer in the S&P 500 was Genworth Financial Inc., which closed up 4.2% to a new 52-week high of $17.24. As bond insurers rallied, other financial companies also saw gains. Notably, Bank of America Corp. shares closed Wednesday up 2.6% after the bank said that it made principal forgiveness a priority for certain subprime mortgages.