AIG, Regions Financial Gain as Financials Close Higher

MarketWatch — July 26, 2010

Shares of U.S. financial companies notched gains Monday after the sector was boosted by better-than-expected housing data.

American International Group Inc.  (AIG 38.51, -0.19, -0.49%) was a top performer, its shares closing up 5.3% after rising as high as 7%.

“The previous earnings results and positive macroeconomic indications this morning set the market up,” which then sent AIG’s stock surging, she said. “We’ve seen this happen a number of times in the past couple months.”

Regions Financial Corp.’s (RF 7.03, -0.05, -0.71%) stock jumped 6.6% ahead of its earnings due Tuesday.

The upturn follows mild gains seen last week after the release of European banks’ stress-test results.

The June report on new-home sales announced Monday morning showed a strong rebound after May’s steep decline.

The rise in new-home sales to an adjusted annual rate of 330,000 was well above the 316,000 pace expected by economists surveyed by MarketWatch. Read more about the housing report.

The positive sentiment buoyed shares of financial companies that are expected to report their earnings later in the week.

After the bell Monday, Legg Mason posted a 4% drop in fiscal first-quarter net income. Profit was $47.9 million, or 30 cents a share, down from $50.1 million, or 35 cents a share, in the year-ago period. Revenue rose to $674.2 million from $613.1 million last year. Profit was roughly in line with analyst expectations; an analyst poll by Thomson Reuters yielded an estimate of 31 cents a share, while analysts surveyed by FactSet Research estimated profit of 29 cents a share.

Shares of Aflac Inc.  (AFL 50.82, -0.22, -0.44%) closed up 1.1%. The company’s earnings report is scheduled for release Tuesday. Lincoln National Corp. lnc (LNC 24.77, +0.03, +0.12%) added 0.7%, with its earnings due Wednesday.

CME Group Inc. /quotes/comstock/15*!cme/quotes/nls/cme (CME 284.78, +1.11, +0.39%) , which is due to release earnings Thursday, fell 1%. IntercontinentalExchange Inc. (ICE 108.00, +0.04, +0.04%) slipped 0.3% while Ameriprise Financial Inc.  (AMP 38.50, -0.15, -0.39%) lost 0.4%. Ameriprise is scheduled to release earnings Wednesday.

After European markets closed Friday, regulators released a positive outcome of the stress tests, with seven out of 91 banks failing to have adequate reserves in the wake of a hypothetical recession and sovereign-debt crisis. Financial shares showed little reaction but posted mild gains Friday. Read more about the stress-test results.

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