Investors take Fannie Mae loss in stride

Despite dismal losses, a gloomy outlook and a downgrade from Wall Street's credit analysts, Fannie Mae stock soared nearly 9% on Tuesday as investors cheered the company's efforts to right itself.

The mortgage giant's first-quarter earnings statement, issued early in the day, was a litany of woes, starting with its $2.2 billion loss in the first three months of this year. It was the company's third-consecutive quarterly loss.

Concerned about the possibility of a deeper-than-expected downturn in the housing market, Moody's Investors Service downgraded Fannie Mae's financial strength rating. Standard & Poor's placed some of Fannie's debt on negative credit watch.

Fannie Mae announced it would cut its quarterly dividend to 25 cents from 35 cents. It also said it would raise $6 billion by issuing more stock. Wall Street usually reacts negatively when a company cuts its ...