It's a new sell-off, care of the usual suspects in the financial sector. This time, the culprit is the government-sponsored lenders.
Fannie Mae (FNM) — Down 17 percent
Freddie Mac (FRE) — Down nearly 18 percent
The market is worried the pair won't be able to raise a combined $75 billion in necessary capital if new rules force the lenders to take huge chunks of mortgages back onto their books. The figures come from Lehman via Bloomberg, in a story that also raises fears of more write-downs.
That sent the Philadelphia KBW Banking Index (BKX) down nearly 5 percent and killed today's early trading rally on the Dow, S&P, and Nasdaq.
Simply put, markets can't rally until financials stop falling. Let's hope it happens soon.