Sector Snap: Investment Banks

Merrill Lynch shares fell 67 cents, or 2.2 percent, to $30.06 in morning trading.

After the market closed Thursday, Merrill Lynch said it lost $4.89 billion during the second quarter, or $4.97 per share, as it continued to be stung by write-downs tied to deterioration in the mortgage and credit markets.

Analysts polled by Thomson Financial, on average, forecast a loss of $1.91 per share.

The brokerage took $9.4 billion of charges and write-downs from mortgage-backed securities, unprofitable hedge positions, and residential mortgage exposure during the quarter ended June 30.

Banks like Merrill Lynch have taken billions of dollars in losses as the value of mortgage-backed securities and other debt has plummeted over the past year. Investors have shied away from purchasing all but the safest debt as mortgages increasingly defaulted last year leading to fears securities backed by the troubled loans would default as well.

Lehman's shares fell Friday morning after Moody's cut the company's long-term senior rating to "A2" from "A1." The rating is still considered investment grade.

Moody's said it cut the ratings because it expects Lehman to take further write-downs tied to investments in residential and commercial mortgages.

Lehman shares recently traded up 55 cents, or 2.9 percent, at $19.45, but earlier fell as low as $17.76.

Shares of Goldman Sachs Group Inc., which has been the least harmed by the credit market turmoil, rose 51 cents to $181.75, but traded as low as $178.06 earlier in the session.