financial stocks

Will stocks benefit now that the government is letting investors bet on financial stocks going down?

Federal regulators on Wednesday extended an unprecedented ban against all short-selling in the shares of more than 800 financial companies, keeping it in place at least until after Congress enacts a massive financial bailout plan.

National City Corporation (NYSE: NCC) 46.6% LOWER; growing fears after Wachovia's FDIC facilitated fire sale to Citi.

Soverign Bancorp (NYSE: SOV) 36.9% LOWER; amid the insanity on Wall Street over the last month, Sovereign has now become the second-largest U.S. savings and loan company, making it one of the few large banking targets left on Wall Street.

Today's move comes despite an upgrade to Buy at Janney Montgomery Scott.

The Dutch Finance Minister is banning "naked" short selling of financial stocks for the next three months to increase the stability of financial markets.

StreetInsider.com Pre-Open Movers:

Washington Mutual Inc. (WM) 52% HIGHER; aggressive U.S. government plan to deal with the mortgage crisis and the SEC temporary ban on short selling of financial stocks.

In addition, reports this morning suggest Citi (NYSE: C) group or another larger bank could buy WaMu.

Morgan Stanley (NYSE: MS) 47% HIGHER; aggressive U.S. government plan to deal with the mortgage crisis and the SEC temporary ban on short selling of financial stocks.

The credit-default swaps on Morgan Stanley are also falling.

Wall Street rebounded as oil prices fell and investors took advantage of bargains in financial stocks after two days of heavy declines.

A rule that made it harder to short some financial stocks expired as the Securities and Exchange Commission considered whether to tighten the rules on short selling.

Stocks gave up their biggest gains but still mostly advanced Wednesday after an upbeat employment report from payroll company ADP made investors cautiously optimistic about the government's upcoming July employment report.

A downturn in some financial stocks and a jump in oil prices shaved the market's gains.

Jul. 18 - Gains in financial stocks help Dow snap a four week losing streak - the S&P 500 and Nasdaq snap six weeks of losses.