The S&P 500 Financial Index has been a laggard today as it has slid listlessly lower in relatively uneventful trade. The group has had a solid run over the past two weeks but the rally is showing signs of fatigue for a second straight day. A better than expected ISM number has failed to entice more buyers so a short term top could be in place. One item weighing on the markets and the group is tomorrow's BLS report. Earlier in the day, Goldman Sachs lowered their estimate to 25K which has caused some nervousness among investors in front of the report. Financials have naturally seen the most impact but that has not equated to strong selling pressure.

News of Note:

1) Mortgage REITs have been underselling pressure the past two days due to an announcement from the SEC that they would be holding a public hearing on Rule 3a-7. This rule pertains to the treatment of asset-backed issuers as well as REITs and other mortgage-related pools under the Investment Companies Act. A change in the rules could have an impact on REITs debt to equity and debt ratios as well as tax privileges. For more information please see our 13:04 comment on the impact.

2) U.K. banks saw some strength today on a Financial Times article suggesting that British banks will escape restructuring until after the planned 2015 general election, citing unidentified government officials. Business Secretary Vince Cable "whose been one of the more vocal critics of banks and has been making some of the more aggressive recommendations towards the Independent Commission on Banking's potential course of action, has clearly started to moderate his message and this starts to remove some of the regulatory pressure that has been a major reason for U.K. bank underperformance more recently," said Alex Potter, an analyst at Berenberg Bank in London. The Financial Times today reported Cable accepted that it may not be possible to implement reforms before the next election.

3) Interactive Brokers reports brokerage metrics for August 2011; 550K daily average revenue trades 58% higher YoY; Ending customer equity of $25.3 billion, 46% higher YoY. Ending customer margin loan balances of $7.4 bln, 61% higher YoY.

4) Janus Capital: Keefe Bruyette was out on JNS call; notes early call from competitor (Briefing Note: Susquehanna) that suggested it was a takeover candidate; KBW expects to see some short covering (JNS has 10% SI) on report

5) Stifel notes the tone of their meetings with Wells Fargo (WFC) mgmt was positive as they expressed a good bit of confidence and comfort in the way in which the co is positioned (at least relative to others) for the current operating environment. That is not to say that mgmt made light of the challenges facing the industry and the company. The shares continue to be their top pick in the large cap bank space as it: 1) is posting some of the strongest profitability ratios and TBV/share growth (among other reasons) -- trading at under 8.0x our 2012 EPS est of $3.32.

6) Argus' analysis suggests that Bank of America's (BAC) mortgage losses could end up being substantially greater than the bank has reserved for. That said, firm doesn't think BofA will need to rush to raise significant new common equity unless the economy and home prices get much worse in the near term. In short, firm believes that the capital issue is a bit overblown in the near term, though the downside risks to BofA's earnings are increasing.