"Wells Fargo (NYSE: WFC) absolutely surprised Wall Street, which had downbeat expectations for lower earnings," reports Richard Rhodes, trading expert and editor of The Rhodes Report.

"WFC earned $1.75 billion or $0.53/share for the April to June period, which is down just a bit from $2.28 billion or $0.67 per share for the same period last year. Provisions for credit losses were $3 billion, which included increase in reserves for future losses of $1.5 billion.

"But what really surprised the market was that fact that WFE raised their quarterly dividend to $0.34/share per quarter from $0.31, a near +10% increase. In a world where most, if not all, banks are raising capital and slashing dividends - WFC sees fit to stand on the Left Coast and shout that 'all is fine in the water, come on in!'

"This should support the banking community today, which given yesterday's better-than-expected earnings out of First Horizon (NYSE: FHN), has tended to cause a bit of short covering in the banks.

"In our view, this will be a large test for the banking sector. We are interested in how it trades today given the good WFC news - WFC is higher by nearly +10% as we finish up writing, for if they can rally and hold their gains, we are apt to put on an aggressive long position to capture a sharper short covering rally that may cause value managers to 'dip their toe' into the water and become buyers.

"Expectations have been inordinately low; the regional banks are showing there are managing their businesses relatively well."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.

TheStreet.com's Jim Cramer says our problems are so widespread, he sees lots more IndyMacs before we're out.

You don't need me to tell you it's awful out there. You don't need me to tell you that there's no quick fix for any of these things. But what might help you understand why it feels so bad this time is that I have never, in my career, seen so many companies go off track at the same time. This is one unbelievable moment, and it is made more horrible by the day as companies' stocks just get pummeled, causing people to then question the very viability of the companies involved.

First, obviously, are Fannie Mae (NYSE: FNM) (Cramer's Take) and Freddie Mac (NYSE: FRE) (Cramer's Take). We don't know what will happen, but we do know that their futures are much darker than their pasts. Their best hope: a Democrat becomes president and shows the usual love to both. But as investments, they are pretty much perma-losers going forward. The losses are that heavy. Yes, it is true that two years from now they will be better, but will the government let them limp through to that? View them as calls on a Democratic win.

We all know that Citigroup (NYSE: C) (Cramer's Take), Wachovia (NYSE: WB) (Cramer's Take), Washington Mutual (NYSE: WM) (Cramer's Take) and National City (NYSE: NCC) (Cramer's Take) are in trouble. Bank of America (NYSE: BAC) (Cramer's Take) says it isn't in trouble, but obviously the market doesn't believe management because the stock failed to rally when it said its dividend was safe. Any short-selling hedge fund could hire 30 actors and have them line up at a Washington Mutual or two and get a bank run going. Then we would have to hear about a "hasty" Treasury department plan to bail out WM. Hasty? How can these guys not see it coming?

After the implosion of IndyMac Bancorp (NYSE: IMB) and news of the deterioration of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) last week, there's bound to be a certain level of trepidation as the earnings crunch begins this coming week and many big financial companies report. Here's a look at what Wall Street was expecting (see The week in preview: Expectations as the earnings crunch begins for expectations of other reporting companies.)

Analysts surveyed by Thomson Financial are expecting the following of companies to report lower earnings when compared to the same period of the previous year.

• JPMorgan Chase & Co. (NYSE: JPM): 44 cents EPS (-63.3%) on sales of $16.4 billion (-13.2%)
• Comerica Inc. (NYSE: CMA): 51 cents EPS (-59.2%) on sales of $680.2 million (-7.3%)
• Zions Bancorp. (NYSE: ZION): 75 cents EPS (-47.6%) on sales of $627.3. million (+2.7%)
• Huntington Bancshares Inc. (NYSE: HBAN): 23 cents EPS (-32.4%) on sales of $617.1 million (+50.7%)
• Capital One Financial Corp. (NYSE: COF): $1.31 EPS (-30.7%) on sales of $4.4 billion (+7.8%)
• Wells Fargo & Co. (NYSE: WFC): 50 cents EPS (-25.4%) on sales of $10.7 billion (+7.7%)
• M&T Bank Corp. (NYSE: MTB): $1.50 EPS (-23.1%) on sales of $756.6 million (+1.6%)
• BB&T Corp. (NYSE: BBT): 69 cents EPS (-16.9%) on sales of $1.8 billion (+5.9%)
• U.S. Bancorp (NYSE: USB): 60 cents EPS (-7.7%) on sales of $3.8 billion (+8.3%)
• PNC Financial Services Group Inc. (NYSE: PNC): $1.16 EPS (-7.2%) on sales of $1.9 billion (+8.5%)

MOST NOTEWORTHY: Intel, Respironics and First Horizon were today's noteworthy downgrades:

• JP Morgan lowered its rating on Intel (NASDAQ:INTC) to Neutral from Overweight, as their checks indicate a late-quarter slowdown for Intel in order rates from the PC end market, which offset the upside the company experienced in earlier in Q4.
  
• Banc of America downgraded shares of Respironics (NASDAQ:RESP) to Neutral from Buy to reflect the acquisition by Philips (NYSE:PHG).
  
• Friedman Billings downgraded First Horizon (NYSE:FHN) to Underperform from Market Perform, citing its exposure to home equity and construction loans and mortgage banking operations. The firm adds that it expects the company to cut its quarterly dividend.

OTHER DOWNGRADES:

• JP Morgan removed General Motors (NYSE:GM) from its Focus List.
  
• Merrill downgraded Hess Corp (NYSE:HES) to Neutral from Buy.
  
• Lehman downgraded Westlake Chemical (NYSE:WLK) to Equal Weight from Overweight.

For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

"For more conservative investors, my favorite idea for 2008 is First Horizon National Corp. (NYSE: FHN), the Tennessee-based holding company for First Tennessee Bank," says Keith Fitz-Gerald, editor of Money Morning.

"Its banks feature all the offerings you might expect from a good regional bank: Savings, checking, mortgages, investment banking, and brokerage services. It's not exactly an innovative idea -- minimize risks and maximize profits.

"But let's face it, it's a tried-and-true strategy that most US banks have abandoned as they chase after the (allegedly) big profits that subprime-backed debt, leveraged buyouts and other similarly esoteric investments appeared to promise.

"Yes, FHN really over-extended itself in the credit markets and recently announced a loss of $14.2 million. More losses may be coming. And its ultra-high dividend yield off 7.93% may be in jeopardy. Nonetheless, we think the stock's beating was overdone.

MOST NOTEWORTHY UPGRADES:

• Hilliard Lyons upgraded Sypris Solutions (NASDAQ: SYPR) to Buy from Neutral on valuation, and expected improvements in the company's Industrial Group and Electronics Group.
  
• TD Newcrest upgraded Quebecor World (NYSE: IQW) to Hold from Reduce, while UBS upgraded Quilmes Industrial (NYSE: LQU) to Neutral from Sell.

MOST NOTEWORTHY DOWNGRADES:

• Respironics Inc. (NASDAQ: RESP) was downgraded to Market Perform from Outperform by BMO Capital, following the company's acquisition by Philips.
  
• Think Equity downgraded Nanophase Technologies (NASDAQ: NANX) to Accumulate from Buy, citing checks that indicate sales for architectural coatings remain sluggish.
  
• Golden Telecom (NASDAQ: GLDN) was lowered to Equal Weight from Overweight by Morgan Stanley.
  
• First Horizon National Corp. (NYSE: FHN) was downgraded to Sell from Hold on Friday by Sandler, O'Neill & Partners.

MOST NOTEWORTHY: IMS Health, Ford Horizon Rite Aid were today's noteworthy upgrades:

• IMS Health (NYSE: RX) was upgraded to Neutral from Underperform at Baird on valuation.
  
• Keefe Bruyette upgraded First Horizon (NYSE: FHN) to Market Perform from Underperform on valuation.
• UBS upgraded Rite Aid (NYSE: RAD) to Buy from Neutral based on valuation and potential West Coast divestiture.

OTHER UPGRADES:

• Schering-Plough (NYSE: SGP) was upgraded to Overweight from Equal Weight at Lehman.
  
• Research in Motion (NASDAQ: RIMM) was upgraded to Outperform from Peer Perform at Bearn Stearns.
  
• Kenexa (NASDAQ: KNXA) was upgraded to Buy from Accumulate at ThinkEquity.

MOST NOTEWORTHY: BioForm Medical, Hexcel and Genesis Energy were today's noteworthy initiations:

• Jefferies initiated BioForm Medical (NYSE: BFRM) with a Buy rating and $12 target and believes the risk/reward is positive given the company's differentiated technology and the strong growth dynamics of the dermal filler market. They also think the possibility of a takeout provides a valuation floor in the stock.
  
• UBS believes Hexcel Corp. (NYSE: HXL) will grow faster than other aerospace suppliers given the production ramp in composite rich aircraft. The firm assumed coverage with a Buy rating and $30 target.
  
• Wachovia expects Genesis Energy (AMEX: GEL) to benefit from recently announced acquisitions, strong tertiary oil recovery activity by Denbury Resources (NYSE: DNR) in Mississippi, and growing industrial gas segment, starting shares with an Outperform rating..

OTHER INITIATIONS:

• Banc of America initiated Dollar Tree Stores (NASDAQ: DLTR) with a Neutral rating and $30 target.
  
• JP Morgan initiated First Horizon National Corp. (NYSE: FHN) with an Overweight rating.
  
• Sandridge Energy (NYSE: SD) was started with an Overweight rating at Lehman, a Neutral rating at Goldman and a Peer Perform rating at Bear.

As if a repeat of yesterday, oil prices continued to be at record high while the dollar hit another record low vis-a-vis the euro. With no major economic data or news today, U.S. stocks will likely continue yesterday's trend and start mixed, looking for direction and continuing to wait for the Fed decision next week. Barring any surprising news, trading throughout the day will also likely continue much the same way as yesterday. Major corporate news is mixed as McDonald's increased cash dividend while Alcatel-Lucent warned.
[Update 9:05: After jobless claims came in better than expected, bulls started generating momentum helped by a GM upgrade that sent GM stock up 4.7% in premarket trading and as Target considering asset sales that sent its share up 2.4%. Futures are now pointing to a higher open. More corporate news to watch this morning here: Before the bell: AAPL, GM, TGT, MRK ... ]

Yesterday, with crude hitting $80 a barrel for the first time, U.S. stocks finished mixed. The Dow industrials and the Nasdaq fell 16and 5 points respectively, while the S&P 500 ended nearly flat.

Today, oil prices retreated somewhat after settling at $79.91 Wednesday and hitting $80.18 a barrel throughout the day. So far in electronic trading today, sweet crude for October delivery lost 13 cents to $79.78. While oil may not be directly counted in core inflation indicators, the Federal Reserve may weigh its trickle effect into other prices. The Fed has always maintained that inflation is its main concern, but has been under pressure the change its hawkish monetary stance and lower rates.

For the second day now, the dollar fell to an all-time low against the euro. Traders may be moving funds to other denominations in anticipation of a rate cut. The dollar was higher against the yen.

Not much economic data is to be released today except for weekly jobless claims at 8:30 a.m. EDT. This, however may be of interest following last week's August employment report.

Overseas, Asian stocks ended mixed with Hong Kong Hang Seng hitting another record high. European stocks dropped as oil hit $80 a barrel and Alcatel-Lucent warned.

Corporate news:

It seems a good thing Alcatel-Lucent (NYSE: ALU) had had a revers stock split, this way it had more room to drop and drop it did today in Europe. Alcatel-Lucent warned. Again. For the third time this year, the company has slashed its forecast for full-year revenue growth. ALU shares are down over 11% in premarket trading.

The mortgage industry continues to be in trouble with what seems daily announcements of job cuts from different lenders. After First Horizon National (NYSE: FHN) announced cuts yesterday, Washington Mutual (NYSE: WM) followed suit today.

McDonald's (NYSE: MCD) announced late yesterday it has raised its annual dividend by 50% to $1.50 as part of a plan to return up to $17 billion to shareholders through 2009. MCD shares gained 2% in after-hours trading.

On today's STOP TRADING segment on CNBC, Jim Cramer said the market is acting like it is immune to falling. Even subprime lenders, First Horizon National Corp. (NYSE:FHN) and Countrywide Financial Corp. (NYSE:CFC) are rising without a deal yet.

Cramer again talked about Illinois Tool Works Inc. (NYSE:ITW) and the Black & Decker Corp. (NYSE:BDK) showing and that the fact it is happening ahead of the Fed announcement tomorrow is a good indicator.

On natural gas being up 11% and crude up 8%, Cramer agreed with SunTrust's call to be in natural gas. SunTrust's picks are ATPG, BBG, BEXP, CHK, EOP, EPEX, ROSE. The one Cramer noted as the play in the area if you are a true believer is Grey Wolf Inc. (NYSE:GW).