With just about every major investment bank stepping up to report subprime-related write-downs, Bear Stearns slashed its rating on the financial sector this morning from market weight to underweight. The broker noted that the financial group is likely to suffer more anemic earnings and hefty write-downs in the future, and Federal Reserve rate cuts only provide a Band-Aid solution to the problem. BSC simultaneously raised its rating on the materials sector from underweight to market weight.

In other financial news, the Fed reported that U.S. banks have just $3 million in outstanding loans from the central bank's discount window as of this past Wednesday. One week earlier, the amount of outstanding loans totaled $10 million. It seems that banks have used the Fed's discount window only sparingly since the central bank slashed its discount lending rate in August.

Checking in on the Select Sector SPDR Financial Fund , however, the exchange-traded fund (or ETF) is up nearly 2% out of the gate this morning. However, the ETF has floundered under resistance from its 20-month moving average since July, with no near-term upside catalysts presenting themselves. What's more, investors seem highly optimistic toward the underperforming sector its Schaeffer's put/call open interest ratio of 1.80 is at an annual low.