U.S. financial stocks slipped in early trade Thursday, but avoided a wholesale selloff following strong recent gains. Losses were broad but not too deep, with the exception of MGIC Investment, the mortgage insurer, which fell almost 30% amid continuing concerns about the firm's capital position. MGIC (MTG: , , ) traded under $1, at 90 cents Thursday, after breaking the $1 barrier to the downside for the first time Tuesday. Shares of E-Trade Financial fell 10% after Citigroup analysts initiated coverage if the shares with a sell rating. "Discount brokers generate revenue primarily through fees on assets under management net interest margin, and trading commissions. All three drivers are facing headwinds: AUM is down from weak equity markets; interest spreads are contracting with rates at historic lows; and trading activity is slowing from its peak in October 2008," the analysts said. At the same time the Citi analysts rated TD Ameritrade a hold and Charles Schwab a buy. Ameritrade and Schwab both fell 2%. E-Trade has more exposure to loans than the others the analysts said as they rated its shares a sell. "A steady retail platform is clouded by a deteriorating loan portfolio. We expect continued loan provisions to overwhelm earnings (at E-Trade)," the analysts said. They expect E-Trade to hit a target price of 25 cents a share, and the estimate the firm will lose $2 a share this year and, and will lose $1 a share next year. In the broader financial sector, the Financial Select Sector SPDR which tracks the financial stocks in the S&P 500, fell 1%.

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