Financial exchange traded funds moved to the upside Friday morning as M&A hopes for the banking sector were raised following Capital One’s (NYSE: COF) $9 billion bid for ING Direct (NYSE: ING).
However, shares of ratings agencies traded lower after The Wall Street Journal reported U.S. securities regulators are mulling civil charges against the firms for their role in facilitating mortgage-bond deals that helped trigger the credit meltdown.
The SEC is looking at McGraw-Hill (NYSE: MHP) unit Standard & Poor’s and Moody’s (NYSE: MCO), according to the report. Both stocks lost ground early Friday.
Financial Select Sector SPDR Fund (NYSEArca: XLF) was up nearly 1% but Capital One shares were off after the company announced the ING Direct acquisition.
“The deal will merge the leading direct deposit bank with Capital One’s asset generation capability in cards, auto, other consumer, and commercial lending,” Evercore Partners said in a note. “The main challenges will be in execution … Also, while both banks’ attrition rates have been low, the eventual removal of the ING brand could hamper retention somewhat.”
The financial ETF was lifted Friday by strength in major bank stocks such as Bank of America (NYSE: BAC), Citigroup (NYSE: C), JP Morgan (NYSE: JPM) and Wells Fargo (NYSE: WFC).
Financial Select Sector SPDR Fund
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