Fannie and Freddie Downgraded to Sell...

Merrill Lynch downgraded government-sponsored agencies Fannie Mae (FNM) and Freddie Mac (FRE) to sell from neutral Friday, saying that despite recent selling pressure, the share prices don't fully reflect "the severity or duration of the financial headwinds facing the companies." Further deterioration in financial market conditions and worsening credit performance will undermine fundamentals and the market’s assessment of Fannie and Freddie's respective financial position, Merrill Lynch analysts wrote in a note to clients.