Freddie Mac more than reversed a roughly 7% gain on Tuesday, closing down 19.28% to $6.49 Wednesday, after reporting a second-quarter loss of $821 million compared with a $155 million loss in the year-ago period. Freddie Mac also booked $2.5 billion in credit-loss provisions and wrote down the value of $1 billion in securities. Fannie Mae shareholders also sold off on the news, as shares slid 14.71% to close at $11.60.
Despite its ties to the mortgage sector via insurance of mortgage-backed investment vehicles, Ambac Financial Group Inc. soared 23.7% on news that it reported its first bottom-line gain in four quarters. The monoline also said plans to launch a municipal bond insurance subsidiary in the fourth quarter of this year pending regulatory approval are moving forward.
The Dow on Wednesday ticked up 40.30 points to close at 11,656.07 on top of a roughly 330 point gain Tuesday, which was driven in part by the Federal Reserve's decision to leave the Federal Funds Rate unchanged. The broader market was helped Wednesday by a 59 cent decrease in the price of crude oil per barrel to $118.58. - Michael Rudnick
