Common shares of Fannie Mae and Freddie Mac declined Friday after analysts at Merrill Lynch downgraded the companies from Neutral to Sell. Shares of Fannie Mae declined by 27 cents, closing at $28.72. Freddie Mac's shares fell $1.14, closing at $26.61. In a report, Merrill Lynch said the companies' share prices did not fully reflect the "severity or duration of financial headwinds facing the companies." Merrill Lynch suggested that both firms could see their share prices fall below lows that were hit in 2007 as the housing and credit crisis became apparent. Overall, the Dow Jones industrial average rose 96 points, or 0.79%, on the day, fueled by an afternoon rally.
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