The S&P 500 Financial Index continues to show some signs of stabilizing. The Index has pushed back to the 163 area today and is up approx 8% from the recent multi-year lows. The S&P Financial Index saw approx 25% of its value chopped away over the past three months as the European sovereign debt crisis weighed on the group. But recent activity by EU officials to stabilize the situation has been met favorably by market participants who are now sifting through the names and searching for oversold candidate. The group is preparing for a big earnings season which kicks off on October 13 when JP Morgan (JPM) provides Q3 results.

News of Note

1) Dexia Shares Halted-The Franco-Belgium bank saw its shares halted as regulators prepare to review a bailout plan from the Belgium and French governments. The plans are expected to be released over the next 24 hours with the Dexia board expected to vote on Saturday (shares have been halted until Monday). There are some question marks surrounding the plan as France and Belgium governments appear to have different ideas on how to approach the situation. France is looking to avoid a direct capital infusion as this may impact the country's AAA rating. On the other hand, Belgium's government is a major share holder and thus wants to avoid seeing shareholders take the brunt of the losses.

2) MBIA (MBI)/Bank Of America (BAC) Court Ruling- Ticonderoga notes it appeared that Justice Bransten was leaning toward MBI's arguments as she interrupted Countrywide's (BAC) attorneys numerous times while the MBIA attorneys were able to present their case with hardly a disruption; several independent parties in attendance felt the same way. MBIA's attorneys maintain that on the day that MBIA signed the paperwork agreeing to insure a Countrywide RMBS, they were placed into a position of much greater risk than was conveyed to them. MBIA did not agree to take on the level of risk inherent in these securities since many of the mortgages did not meet the underwriting guidelines.

3) CME Group (CME): Stifel Nicolaus notes, following CME's analyst day, it has even greater confidence in its optimistic outlook for the shares. Firm believes that CME is the best positioned player in the exchange space for the impending Dodd-Frank changes surrounding the treatment of OTC derivatives, given its broad array of closely linked futures products and its robust clearing infrastructure. FY11 EPS est raised to $17.85 from $17.78 ($17.68 consensus).

4) BNP Paribas (BNP), Credit Agricole and Natixis rose in Paris trading after Le Figaro said the French government is working on a contingency plan to take stakes in the country's lenders. A French government official, who declined to be identified because he's not authorized to speak to the press, rejected the report, calling it false.

5) A week after the Fed introduced 'Operation Twist' and a MBS purchasing program, mortgage rates in the U.S. fell, sending longer-term borrowing costs below 4% for the first time on record. The average rate for a 30-year fixed loan dropped to 3.94% in the week ended today from 4.01%, Freddie Mac said in a statement. The average 15-year rate declined to 3.26 percent from 3.28 percent last week.

6) Details of the Volcker Rule for Dodd-Frank will be released on October 11. The FDIC is set to vote on the bill that day and three other agencies will eventually vote on the matter. Once the votes are cleared it will go to a public opinion process in December.