Financial sector weakest among S&P 500 categories

Financial firms were the worst-performing companies listed in the Standard & Poor's 500 index during the second quarter because of continued worries in the mortgage and credit markets.

Through June 27, financial firms in the S&P 500 fell 17.3 percent for the second quarter and are down 29.4 percent for the year.

Investment banks struggled as they continued to take losses tied to reducing the value of mortgage-backed securities and other debt.

Retail banks struggled as they faced mounting losses tied to rising delinquencies and defaults among residential mortgages and other types of loans. Those mounting defaults are forcing banks to set aside more cash to cover the losses and raise capital through new stock offerings.

Bond insurers were among the hardest hit companies during the quarter as well. Ratings agencies have been worried a potential spike in claims on bonds tied to mortgage securities since late 2007 would lead to billions of dollars in losses for the insurers.

Bond insurer MBIA Inc. and national bank Washington Mutual Inc. have been the worst performing S&P 500 financial members during the second quarter.

MBIA shares fell 65.9 percent between April 1 and June 27. Washington Mutual shares have fallen 53.4 percent.

Shares of insurer Safeco Corp. rose 53.1 percent during the quarter, with nearly all the gains tied to the company's sale to Liberty Mutual. When the deal was announced in April, the sale price represented a 51 percent premium over Safeco's share price.